84 this article strives to identify the clujnapoca citizens’ attitude towards advertising. the analysis concludes, based on an empirical study, that the citizens of the third millennium from cluj-napoca have a positive attitude with regard to advertising. the behavior of the citizens from cluj-napoca regarding advertising ioan lazăr professor, department of management, faculty of economics, babeş-bolyai university, cluj-napoca transylvanian review of administrative sciences, 16 e/2006, pp. 84-89 the ad represents “the action meant to attract the consumer’s attention upon a product for a certain purpose”. so the problem is to surprise the individual’s attitude towards it and depending on each one, the attitude of the collectivity. it is a way to check the efficiency of the ad in general and to see whether at the time of the research the action of promoting through ad means is suitable. regarding the ads, we can refer to the following problems: – their contribution to lowering the costs of the products; – the quality of the ads; – the influence of the ads upon the buyer’s choice; – the importance of the ads for economic development; – the veracity of the ads. based on these considerations we built the questionnaire for this chapter, by formulating direct questions, which suppose direct answers, and which enable the use of a scale with only two alternatives (“i agree” and “i don’t agree”). there are also control questions (such as a and c, e and h) that enable the determination of the sincerity degree and the consistency in thinking of the person who answers. the attitude towards ads a. they contribute to lowering the expenses of the products b. generally it is more suitable than unsuitable c. without ads the products would be cheaper 85 d. ads are fun e. the ad helps me make a choice f. they contribute to economic development g. generally one can trust them h. due to the ads i sometimes buy products that otherwise i wouldn’t buy i agree i disagree examining the answers to the questions from the questionnaire, we can draw some important conclusions that show the mature thinking of the consumer from cluj-napoca (table 1). regarding the answer to the first question, if ads contribute to the lowering of products prices, 66,13% of those interrogated didn’t agree with it. we are prone to be on their side because, as they are not specialized in the field, they don’t perceive the mechanism through which the ad can lead to the reduction of costs, through increasing sales. however, what is the most interesting to notice at the consumer from cluj-napoca is the fact that, until 1989 he hadn’t trusted ads because these were only for products that sold hard, after passing to the market economy, the amount of quality products from stores has increased. there was established a certain direct link between the products quality and the policy of promoting them through ads. this makes that 84,25% of those interrogated should consider that advertising products would be cheaper, whereas the majority don’t share this conception. it is important for the future policy of the firms from cost – retailing field that 67,38% declare that advertising helps them make a choice. this means that by supporting customers in choosing products the volume of sales increases. this thing is an instrument for the management of firms in applying the marketing policies as an integrating part of the enterprise management. table 1 question the amount of answers in the total amount i agree i don’t agree a2 b2 c2 d2 e2 f2 g2 h2 33.87 84.35 35.36 73.28 76.38 80.43 53.17 75.17 66.13 15.65 64.64 26.72 36.62 19.57 46.29 24.83 in the same context it is noticed that 80,43% of those used for the study consider that the ads contribute to economic development. the answers to this question are logically connected to those given to the previous question, because by increasing sales one can get under profitability circumstances, to the increase of accumulations and implicitly to economic development. the close values of the two values of the amounts at the specific questions only emphasize the high level of reflection of the questioned regarding the importance of ads and way of adapting to the constructive advertising system through mass media. as corollary to the answers to questions e2 and g2 is the fact that answers to the question h2, respectively the trust in advertising, are more than half favorable (53,17) and that due to the ad people buy products that wouldn’t be bought otherwise (75,17%). 86 taking up again the examination of the answers to the second chapter and taking into account the group ages into which the population was segmented, we can conclude the following (table 1’): table 1’ 87 88 – referring to question a2, the age groups that believe most that ads contribute to lowering prices are those between 39 and 49 years old, and those that believe least in this thing are the groups over 75. the explanation of the results resides in the fact that those from the first category are confronted with the realities of the transition to the market economy, they understand more easily the market mechanism, whereas those over 75, used for 50 years to the absence of advertising, cannot realize its implications upon economic-productive activity. – regarding question b2, if advertising is more a good thing than a bad one, excepting those over 85, who don’t agree with it in proportion of 50%, the rest, almost entirely (over 80%) believe that the effect of ads is positive. – to the question c2, if products would be cheaper without advertising, only the age groups over 80 agree with it, the rest of the sample and especially those between 25 and 65, disagree with this assertion. – to the question e2, if the ad helps people choose the products, the greatest amount of favorable answers belongs to the group 7-19 and 65-74 and 80-84 respectively. those who don’t agree with the importance of ads in the process of choosing a product for buying are from the group 75-79 (41,67%), 50-54 (34,09%) and 30-34 (28,87%). if for the first group, 7-19 years old, it is easy to understand the importance of the ad in the process of choosing, because of the lack of experience, it is difficult to explain the great amount of negative answers for the age groups 50-54 and 30-34. 89 – to the question f2, regarding the importance of ads for economic development, the only age group that considers this thing only in proportion of 50% is that over 85 years. for the rest, all people are aware of the importance of advertising for economic development. – referring to the question g2, if one can trust ads, the population segment that was very favorable to it is comprised between 25 and 49 years, and those with the least trust in the purpose of ads are those from the groups 65-69, 75-79, 50-54 and those over 85, who do not trust ads at all. – finally, the majority of answers to the question h2 are positive, respectively due to advertising we buy products that wouldn’t be bought otherwise. as an interesting and exception is the group 30-34 that, in proportion of 37,11% doesn’t agree with the importance of advertising in the buying process. conclusions after the undertaken analysis, we noticed that the population is favorable to advertising and this constitutes a very important means of promoting the product in order to be introduced on the market of cluj-napoca city. starting from reality, it is absolutely necessary that the firm’s management should allocate more time for organizing and consolidating strong marketing compartments, which can contribute to the increase of sales volume, to the reduction of the financial blockage, through knowing the necessities of the population in order to plan and organize production according to the demands of the market and not to the producer’s wish. of course that the question from the questionnaire didn’t have an exhaustive comprehensive area, but they succeeded in general in surprising the spiritual state of the population from cluj concerning the promotional and advertising policies for products. 101 for romania agritourism development represents the opportunity to differentiate between the rural and urban environment, as well as the best way for the preservation of traditions and customs in the rural areas, supplying a sustainable rural development. this work portrays agritourism as an element of rural development and critically analyzes the way in which the public administration should become involved in sustaining rural development in general and in sustaining agritourism development in particular. agritourism rural development public administration maria mortan associate professor, department of management, faculty of economics and business administration, babeş-bolyai university transylvanian review of administrative sciences, 16 e/2006, pp. 101-105 material and methods in our research we have taken into consideration the reference material, especially the material presented as conclusions after the meetings at an european level (the cork declaration, agenda 2000, including the revision from berlin, the second european conference on rural development in salzburg and the meeting of the european committee in brussels in june 2005). the paper has at its basis the results of a personal study made on a representative sample from a statistical point of view made up of 330 agricultural exploitations in 15 rural places located in the northwestern part of romania, in the beius depression. the investigation intended to identify the problems of the romanian nowadays village, of the potential of practicing agritourism by the investigated exploitations and as well intended to obtain some data able to allow us the elaboration of a strategy of rural development in this area. introduction the eu experts estimate that in its framework but also in other european countries the rurality level of local communities and of the environment is being more and more threatened. the second european conference on rural development, that took place in salzburg in november 2003 considers (among other things) that “the policy for rural development must: serve the needs of the whole society from the rural areas and contribute 102 to cohesion; be implemented as a partnership between public and private organizations and the civil society. also more responsibility should belong to the partnership programs in defining and distributing a corresponding strategy based on the clarity of defining the objectives and the effects, the results, and living in the countryside doesn’t concern only the rural society, but also the society as a whole”. improving life quality and economic diversification in the rural areas is part of the main strategic lines of eu concerning rural development, adopted on 5 july 2005 at brussels by the european commission. agriculture, the main economic activity, in a great number of rural areas, is undergoing a profound crisis. it was noticed that: “diminishing the economic activity, population aging, the youth departure, eliminating the basic services which determine the low quality of the life of quite a numerous population, and others are a few risks many rural areas are subject to”(7). in romania, during the first years of the transitions period, the rural development policy was wrongly equated with the agrarian policy, putting the sign of equality between supporting agriculture and rural development, which was wrong. many of the agrarian policy measures from this period were concentrated on saving the former state agriculture, a totally unfit sector for functioning on market principles. unfortunately, these attempts wasted important money resources, and led to the alteration of the macroeconomic performances and delayed rural development. paradoxically, the concerns for supporting private farmers, the most important segment of rural producers, were marginal. “at present the majority of rural areas are poor and village inhabitants live in poverty”(6). the main cause of rural poverty is the absence of adequate earning opportunities in the rural areas. agriculture had the role of occupational buffer, instead of being an economic growth factor. under the present circumstances a big part of the workforce can leave agriculture without affecting the decrease of agricultural production, but for this to happen it is necessary that the other non-agricultural activities should be able to absorb it. their underdevelopment was made worse by sectorial policies, especially the agricultural one. “measures such as the control of agricultural products prices delayed the development of decentralized channels, competitive and privately administered ones for the acquisition of raw materials and the retailing of agricultural products”(2). moreover, the high percentage of agricultural exploitations that produce for self-consumption slowed down the development of agricultural markets through a reduced demand of raw materials and production factors, respectively through a low offer in agricultural products. all these factors contributed to maintaining a mono-occupational structure in the rural area. the inhabitants from villages practice seasonal occupations with little added value. the migration of activities connected to agriculture, of upstream and downstream branches, in the urban area, made the rural markets weak. “the absence of non-agricultural activities in the rural area made that the multiplication effect between agriculture, industry and commerce should be minimum”(2). results and discussions the tough reduction of employees number blocked the access of rural commuters to urban workplaces, obliged agriculture to absorb the workforce excess leading to high-scale under-occupation and a reduced work productivity. the study carried out shows that the average degree of occupation of the labor-force in agriculture in an exploitation is about 24%, which shows the surplus of labor-force within the investigated agricultural exploitations. among the economic growth strategies, the diversification of activities has a very important place. at present the role of non-agricultural enterprisers, as a source of workplaces and incomes in the 103 rural area is limited. this is why the development of integrated non-agricultural activities in the exploitation and complementing the agricultural ones may be an alternative for the rural society. in order to support the development of non-agricultural in the rural area, the government will have to elaborate a coherent set of policies for stimulating upstream and downstream activities in agriculture, such as the manufacturing of agricultural products, providing raw materials, mechanized services, tourist services etc. in this sense we need an adequate macroeconomic framework, as well as support for credits, training and consultancy services, facilitating the access to information about technology, retailing etc. and the simplification of administrative procedures that affect the environment of small entrepreneurs. supporting these non-agricultural activities in the rural area must comprise a series of measures in which an important place should belong to subsidies for settlement or for investments granted to rural enterprisers who start or run businesses in certain rural areas. these subsidies should be granted not through subsidizing the credit but through applying a simple system in which subsidies should be granted proportionally with the number of workplaces created. this system leads to achieving the objective of rural development with reduced costs. also such a system doesn’t discriminate among different businesses regarding their size or activity. we consider that the distribution of these subsidies should be done according to simplified procedures, without many conditions or eligibility criteria, others than the essential one, creating workplaces in the rural area and obviously the business profitableness eliminating the sectorial eligibility criteria. the local community and the state must find an alternative for the rural development under the present economic conditions. agritourism could be such an alternative as it takes place in the agricultural exploitation and it influences the rural area. generally speaking, rural tourism and agritourism in particular have effects upon the tourists, the agricultural exploitation that offers agritouristic services, the local community and the region. the influences could be economic, social and cultural. the whole rural community has to gain from agritourism that becomes an active factor of rural development. so practicing agritourism doesn’t lead only to unilateral advantages for the agricultural exploitation but also for obtaining advantages both for tourists and for the local rural community and for the whole region. agritourism, through the workplaces it creates, leads to maintaining the population in the rural community, achieving a stability of population and a territory balance. also through the incomes obtained leads to the development of the agricultural exploitation and implicitly of the rural areas, preserving at the same time the values and the traditions of the rural space where there are the agricultural exploitations that have agritouristic activities. the fact that the small agricultural exploitations are administered directly by the owners is because they live in the villages where they develop their activities. they have living spaces that can be adapted to the necessities of agritourism, which allows improving the living conditions and facilitates infrastructure development and prevents damaging the environment. “under the general circumstances of romanian economy, where there is a strong restructuring of the industrial sector, families go back to the rural area”(4), through agritourism it is avoided the decrease of rural population, it reduces the migration process rural-urban or even changes its direction and ensures a continuity of the specific rural life because rural activities will not lose their specificity. summing up we can say that: from the economic point of view agritourism offers to rural communities new opportunities for business, new workplaces, encourages traditional activities and leads to increasing the inhabitants’ incomes through better using the local resources, preserving in the region the incomes from 104 tourist services. also the presence of tourists allows the creation of development funds of the new infrastructures. practicing other forms of tourism in the rural area may have negative effects if these are developed without certain coordination with the rural area. from the social point of view, agritourism contributes to developing life quality in the rural space, developing sanitary and behavioral education for the population, diversifying the occupations of the rural population, especially young people, increasing the stability of rural life, changing the age structure because of the new occupations, educating and preparing the young generation, establishing friendly relationships between tourists and villagers, a better interregional cooperation, preventing social tensions, reducing development differences between regions and creating a more favorable and attractive image for the rural areas in romania. from the ecological and cultural point of view agritourism ensures the preservation of available resources, the integrated development of rural activities, the protection and use of rural landscapes at the same time with preventing damaging the environment, resurrecting, developing and using the traditions and local festivals, the craft activity and the preservation of historical and art monuments, being in this way a direct source of income for the members of the local community. analyzing the information above, we can notice that agritouristic activity stimulates and creates new activities such as: small industry; handcraft, fish breeding, environment protection, activities for the village infrastructure etc. thus, in the current stage, when romanian villages are identifying a future development strategy, agritourism can represent a unitary development system. the fact that this activity is based more on the potential of rural areas and the necessary investments are smaller than in other sectors makes this sector more attractive for the entrepreneurs in the rural area. through the leverages they own, the state and the local administrative units must stimulate agritourism and give it its real importance among other activities. all these can be achieved through common efforts peasants-public entities-state, through a permanent collaboration, the result being a rural environment with high life quality, clean natural environment, and well-preserved traditions and customs. in order to be able to take advantage of the new economic opportunities, we need new knowledge and skills. this is why we consider necessary to apply active methods of developing the human capital, the villagers, such as: – setting up professional training courses in the rural area in order to help the adult population to cover its lacks in general education and to create conditions for professional specialization and its improvement; – stimulating the preparation in the administration of farms and non-agricultural activities from the rural area, subsidizing publications on these topics being an efficient action way for achieving the rural development objective; – ensuring the access of workers from the rural area to the active measures of re-qualification provided to the unemployed; – making public works for improving the local infrastructure especially of those that use the local workforce. initiating programs, maybe financed from money coming from rural development programs, centered on developing the endowments of the community and of the infrastructure would be a major necessity. as we have shown so far, it is necessary for the local administrations to make an association for implementing a regional development strategy. for the same purpose it is necessary to create new programs or support private initiatives for making new facilities for leisure, preparing touristy routes, facilitating access to touristy attractions. 105 taking into account that the system of the agricultural exploitation is on a permanent relation with the community system, the latter supports the system of the agricultural exploitation through ensuring the infrastructure, the community facilities, the community values, the resources as well as the potential or the opportunities for using the workforce and for development. at the same time the community system is supported by the system of the agricultural exploitation through the social and moral values that it provides, through the products and services it offers, through the workforce and other contributions that come from its quality as an element of the rural community system. from all these we have formulated a series of short-term, medium and long-term objectives for the rural community system, objective that, once achieved, are able to support agritourism in the area: – financing feasibility studies oriented towards agritourism; – providing consultancy starting agritouristic activities, juridical, economic and technical; – creating regional development programs through the association with other rural communities in the area; – setting up or supporting some association forms of the exploitations, which want to practice agritourism. this objective will be very difficult to achieve taking into consideration the fact that only about 2% of those investigated are available to make associations in order to practice agritourism. – allocating from the local budget funds for developing the infrastructure (improving roads quality, making channel systems, installing phone lines etc.) – setting up information offices for tourists about the touristy offer; – preparing the access to natural attractions, using at maximum the area potential; – creating rural development plans in order to attract funds through internationally financed programs. we have to take into account that these objectives must be regarded all the time as dynamic, because of the market changes, business environment changes, which impose permanent readjustment of objectives or their strategies. it is also necessary to have a permanent coordination of objectives and rural community programs with short, medium and long-term objectives that form this community that is the agricultural exploitations. without this cohesion the efficiency of the programs and resources used for their achievement will be relatively reduced. in conclusion, we consider that it is urgently necessary to create a national, county and local system for monitoring the rural space in order to know exactly the situation of the romanian village. at the same time we have to elaborate local, regional and national development programs and for arranging the rural area, being necessary to have a new philosophy of the romanian countryside. referencesss 1. buciuman, eugen, (1999), economia turismului rural şi a agroturismului, editura pro transilvania, alba-iulia 2. mortan, maria, (2005), agroturismul – o alternativă posibilă, editura dacia, cluj-napoca 3. otiman, păun, ion, (1997), dezvoltarea rurală în românia, editura agroprint, timişoara 4. otiman, păun, ion, (1999), restructurarea agriculturii şi dezvoltarea rurală a româniei în vederea aderării la uniunea europeană. un punct de vedere, editura agroprint, timişoara 5. otiman, păun, ion, (1999), economie rurală, editura agroprint, timişoara 6. sîrb-mateoc, nicoleta, (1999), exploataţia agricolă, editura agroprint, timişoara 7. ***, (1996), le situation de l’agriculture dans ue, bruxelles 8. ***, (1997), agenda 2000, u.e. 9. ***, (1996), the cork declaration 10. ***, (2003), second european conference on rural development in salzburg 49 1. change and its impact upon organizations the organization is a living economic and social system, which comes into being, develops itself, grows up and then disappears in a certain environment. the organization capacity to adapt to the environment is mostly due to the organizational structure. the process of change requires several activities and management relations in order to implement change and their final purpose is to adapt society to the needs of development. the organization structure or the framework, can be a factor for acceptance the change, repel it or even generating the process of change. the factors that generate change can result either from inside the organization or from the organization’s environment. the essentials of change management are: efficiently achieving the objectives, keeping an internal balance of the organizational systems and leading them onto success, flexibility and the capacity to adapt to the dynamics of the environment. a possible equation of change would be: es = i∗ (c+p)∗ d∗ e where i – the level of discontent with the present situation; c – the level of knowledge at a certain point in time; p – the level of experience; d – the vision, the strategy largely accepted; e p – continuous retrospect to performance if we look from inside the organization, the most frequent situations that require a change in the organizational structure are the following: transylvanian review of administrative sciences, 15 e/2005, pp. 49-55 change management in organizations ioan lazăr professor, department of management, faculty of economics, babeş-bolyai univeristy the article treats the problem of change and of its impact upon the organization and efficiency of organizational structure. 50 • a new type of strategy the objectives and the strategic options stated in the organization’s strategy could be redefined only if they can be found, as specific or individual objectives, at the low management and individual level. using resources efficiently and following the strategic deadlines can only be done when having a good organizational structure. • major changes in the communication system when changing the procedures, suspending the communication channels or building up new ones, changing the volume, the structure or the frequency of data and information, we can directly or indirectly affect the number of positions, departments and the relations between them. • changes in the area of management methods and techniques used the use of new management methods (management by budgets, delegation etc) involves changes both at the individual level and in accomplishing some sub objectives (or minor objectives) at the departmental and functional level. starting from those aspects, the following are the main priorities that must be taken into consideration in the process of implementing change: • implementing a new type of management, which is creative, innovative and where the management process and the management relations will be strongly innovative. • emphasizing the interdisciplinary character of management. the complexity of the problems that occur during the management processes and the nature of the act of management need the use of methods and techniques from other domains or areas, such as economic analysis. • making management a professional job by appointing individuals with college or master degrees in economics or law and with a proper training in management; the hr policies must be made in such a manner that the recruitment will give the management the best employees in terms of knowledge, capacity, abilities and skills. • increasing the flexibility level of the organizational structure. • preparing strategies and management policies with a high level of creativity and innovation. in order to make the change process possible, we must take into consideration the two kind forces: 1. forces that try to maintain the system’s status quo. 2. forces that try to change the status quo. to make the change possible we must either increase the intensity of the forces favorable to change or decrease the intensity of the forces against change. by diminishing the intensity of the forces resistant to change, we’ll have less tension in our system, this being one on the most efficient strategies for implementing change. the process of change has the following phases: • the thaw, meaning reducing the forces that sustain the present system. • the change, meaning changing the system or some parts of it to a new level. • the frost, meaning stabilizing the organization, a new status quo. the process of changing must be implemented step-by-step; the first step is to provide information to the members of the organization about the change, trying to contradict the practices of the old system and to correlate this information with important personal objectives, so that it creates a state of anxiety in the organization, a state that can urge the process of change. this way, we can stimulate the need for a change and the members of the organization will be motivated to accept the change. we cannot go to the next step until we finish the first one because 51 it will be just a superficial change and it could create large gaps between the old structures and the ones. the result would be totally inefficient, loosing time and resources and it could even result, in some extreme situations, in destroying the organizational environment. meanwhile we also need to promote a climate of psychological comfort within the organization: good salaries, being able to develop a career, teamwork, bonuses for successes; all of this will ease the way to change, diminishing resistance to change or denial of the status quo. by this mechanism, the members of the organization will be stimulated to forget the old behaviors, which need to be replaced and to learn new things by identifying them with a model or by acquiring information that is relevant for the type of change that needs to be implemented. change does not have to be looked only as a way to re-conceptualize the organizational structure but as a cognitive change witch leads to new perceptions, feelings, values, thinking and, finally, new behaviors, that are proper for the new context created by the change. emphasizing on the creative side of management allows us to permanently adapt the organizational chart, job requirements and other documents to the requirements of the transition by using creativity methods and techniques: capacity and time. in the same time a special aspect that needs attention are the personnel that need to be encouraged in order to deal with the change. the transition curve shows us the way the capacity varies by time and reflects the eventual changes of mood and character, which means that a person can respond negatively to a change at a certain point, but can have a different attitude in a later stage of the change. source: căruţaşu violeta, planificarea şi controlul schimbării, editura rentrop&straton, bucureşti, 1998 graph 1. transition curve 2. analyzing and evaluating the forces in favor and against change at s.c. rieni drinks s.a. s.c. rieni drinks s.a. (a corporation that is similar in status to the american s corporations) is a manufacturing company that produces alcoholic and refreshment drinks and it is part of the frutti fresh holding. the holding is owned by the nicula brothers and the turnover is $5 billion dollar per year; its market share is approximately 35%-40% of the romanian market. this is due to the fact that the quality to price proportion is excellent and this makes the demand for its products to grow on a regular basis. the activity of the firm is profitable, however, the author of this study believes that there are ways to enhance and improve the organizational structure so that staff costs could be 52 reduced in reference to the total expenses of the organization and the benefits should be stimulating imulative for each stakeholder. the analysis of the force field is a qualitative method which organizes the data from the general analysis of the system correlated with change, obtaining two major categories: • forces favorable to change. • forces against change. the analysis has the following steps: • listing the factors pro change. • listing all the factors, pro and against change, in a hierarchy, by the level of their intensity. • graphic expression of the forces pro and against change. • emphasizing the forces that need to be modified in order to facilitate the implementation of the change. forces in favor of change inside sc rieni drinks s.a. we can notice a seemingly will to elaborate a strategy and that the organization is open to ideas that could lead to improving its results. regarding the marketing, we can say there isn’t such e department and it shows because they want to be receptive to clients and improve their products. the organization has the newest high tech and is capable to adapt to changes needed. more than that, having valuable experts in research and development is an advantage that allows them to proceed to projects at a higher level than the present requirements. the top management admits that, in order to be more productive and to be successful on a long term, some radical changes are needed inside the organization. there is a need to strengthen the management by bringing experts in economics, which are capable of analyzing the activity and issuing solutions to the problems identified. there’s also a need to acquire new information and knowledge about management, so that the organization can be organized based on scientific principles. we also identified the personnel’s need, at all the organization’s levels, of training; we need to separate the responsibilities for each employee and to better evaluate each employee’s activity. forces against change inside sc rieni drinks s.a., although there is a will to create a strategy, it’s only for a short term; the strategic plans are known only by the top management and not by all the employees. there is no marketing department or a marketing strategy. when asked about the need of a marketing department, the top management said it would be useless or, at most, inefficient, cost full therefore not needed in that organization. the employees perceive the possible changes as threats, or pressures to increase the productivity and they fear that the management wants to improve the activity by increasing the amount of work for the employees. more than that, there is a need for a human resources authority; the personnel have a low level of work satisfaction that leads to lack of commitment and involvement towards the organization. we could still see, among the management, the presence of some conservative values and beliefs. 53 force field analysis the activity is centered on the technical aspects and less on the economical ones, which should be the most important. the status quo protects the interests of the less competent employees, due to the lack of evaluating criteria and specific criteria for assigning tasks. the intensity of some forces that are against change can and should be diminished, in order to allow implementing the process of reorganizing and improving the organization. but this process cannot begin without the sustainable support of the top management. once we have this support, we can move on to transform this advantage into a change agent and to diminishing the forces against change. there is a keen need for a clear and long-term strategy. considering the present situation, we can identify the following steps in order to diminish the intensity of the forces against change: • a qualified action of the change agents together with the total support of the top management. the change agents could be chosen from the employees that are considered models by their fellows and that have the abilities, knowledge and skills related to necessity and the nature of change. • a concerted action of the top management, the change agents and, if the nature of the change requires it, outside consultants. • clarifying the vision, the mission, the objectives and disseminating them to all the members of the organization, training the employees from the middle management and above . 3. restructuring the management system the strategic recommendations, the strengths and weaknesses identified in creating and implementing an organizational subsystem allow us to outline the following solutions for the restructuring of sc rieni drinks s.a.: • creating specific organizational documents such as: internal rules, organizational chart, job descriptions. • founding, eliminating and merging functional and operational departments. d e s ir e d l e v e l o f p e r f o r m a n c e s c u r r e n t l e v e l o f p e r f o r m a n c e s 54 • rethinking some departments in terms of human resources. • creating a balance at the top management level. • founding, eliminating and merging some management positions. • increasing the number of assistant managers. • providing training for all the employees and also for managers. • making some changes in the main departments: hierarchic levels, hierarchic weights, departmental functions. 4. evaluating the efficiency of the organizational structure to evaluate the efficiency of the organizational structure, we need more than just analyzing the organizational chart; we need to observe the way both the organization as a whole and its components really work. the evaluation of organizational structure should be done based on indicators and criteria that express, on one side, the culture’s statistics and, on the other side, the structure’s dynamics. in the first class, we have: • the structure’s cost: the weight of the administrative costs among the total cost. • the number of hierarchical levels. • the number of departments. • the balance between functional departments and all the other departments. in the second class, we have the indicators that express the level of accomplishment for the goals ascertained. it is easier to evaluate the activity in the operational departments, because they have measurable goals. in all the other departments, without measurable activity, we can use concrete elements of evaluation: respecting the deadlines, the quality of work etc. evaluating the efficiency of the organizational structure is not a purpose itself, it should be a mean to improve it; as the history shows, a bad and inflexible organizational structure is the main cause for big losses in an organization. this is why improving it, based on a scientific and detailed analysis of the organization can become a instrument for increasing the efficiency of its management. for better understanding the aspects derived from such an evaluation, we will do an analysis from general to particular and this way we will analyze the efficiency of the entire management system. there will be two evaluating methods: quantifiable efficiency and unquantifiable efficiency. of those two, the one that best suites the organizational structure is the quantifiable efficiency. the quantifiable efficiency can be evaluated at two levels: • direct efficiency – which summarizes the direct results of improving the management system. • total efficiency – which shows, in economic terms, the entirety of the effects, direct and indirect, caused by the changes made in the organization. the direct efficiency (edg) can be calculated by summing the direct quantifiable efficiency from the subsystems: edg= edso + edsd + edsi+ edsm+ edd edsothe direct efficiency of improving the organizational structure edsdthe direct efficiency of improving the decisional system edsithe direct efficiency of improving the communicational system edsmthe direct efficiency of improving the management system or the management methods and techniques eddthe direct efficiency of all the other improvements that don’t fit the above to evaluate the total efficiency (etg) of improving the whole management system, we use the following: etg= edg+ eidg eidgthe indirect quantifiable efficiency of improving the management system 55 the capacity of the organizational structure to modify and adapt itself to the exogenous and endogenous variables is an inherent component of the improving process. as a conclusion, the best way not to have discontinuities in the organization’s life and to always be efficient is to regularly take into consideration both the present and the future needs of the organization, to think on a long term bases, so that it will always be adapting to the changes in the economical environment. references: 1. burduş, e., căprărescu, gheorghiţa, fundamentele managementului organizaţiei, editura economică, bucureşti, 1999; 2. burduş, e., căprărescu, gheorghiţa, androniceanu, armenia, miles, m., managementul schimbării organizaţionale, editura economică, bucureşti, 2000; 3. cole, a. g., management, editura ştiinţă, chişinău, 2004. 4. lazăr, i., vereş, v , mortan, maria, lazăr, s., management general, editura risoprint, cluj-napoca, 2004. untitled 168 abstract one of the most important ways of making public institutions more efficient is by applying managerial methodology, embodied in the promotion of management tools, modern and sophisticated methodologies, as well as operation of designing/redesigning and maintenance of the management process and its components. their implementation abides the imprint of constructive and functional particularities of public institutions, decentralized and devolved, and, of course, the managers’ expertise of these organizations. managerial methodology is addressed through three important instruments diagnosis, management by objectives and scoreboard. its presence in the performance management process should be mandatory, given the favorable influence on the management and economic performance and the degree of scholastic approach of the managers’ performance. managerial methodology in public institutions ion verboncu marius profiroiu nicoleta văruicu ion verboncu professor, faculty of management, academy of economic studies, bucharest, romania marius profiroiu (corresponding author) professor, faculty of administration and public management, academy of economic studies, bucharest, romania tel.: 0040-021-319.1900 email: profiroiu@gmail.com nicoleta văruicu phd candidate, faculty of management, academy of economic studies, bucharest, romania transylvanian review of administrative sciences, no. 31e/2010 pp. 168-177 169 1. brief presentation of the managerial methodology managerial methodology is a way of amplifying the scientific dimension, the dynamism of management and, thus, facilitating efficient and effective execution of management processes execution through: • promoting and using systems, methods and appropriate management techniques; and • promoting and using methodologies to designing/redesigning and maintenance the process of management. the management instruments for public organizations include primarily: management by objectives, project management, scoreboard, delegation and organizational diagnosis. managers who frequently use appropriate management instruments for appropriate methodological conditions are managers who are knowledgeable in management, who know to lead and manage efficiently and effectively a socio-economic entity or a socio-economic subdivision. the methodologies of designing/redesigning and maintaining management operation could be classified in two categories: (a) general – the methodology of designing/redesigning the overall management and the strategic management methodology, and (b) partial – the methodology of organizational redesign, decision, information and human resource management. the objective pursued in this material is to highlight the methodological elements of management tools that have an important impact on efficiency and effectiveness (management by objectives, organizational diagnosis and the scoreboard) and to present the particularities of their use in public institutions, either deconcentrated or decentralized. 2. premises for using managerial methodology in public institutions • the stage accomplished by the public institution management; • visible discrepancies between the theory and practice in public management; • the often empiric character of the management; • low degree of promoting and utilizing the managerial instruments; • retrieval of numerous methodological elements, related to some collateral management areas – quality management, performance standards, rules, norms, procedures etc. • scientific nature of the managers’ input is justified by the degree of involvement on methodological component of management. 3. managerial tools 3.1. diagnosis one of the most important management methods that should be frequently used by those that administer and manage public organizations is the organizational diagnosis. its role is to identify the main strengths and weaknesses (failures), the managerial viability and socio-economic potential, and to make recommendations, from a strategic perspective, for how to enhance the identified potential. 170 it is recommended to use the organizational diagnosis by the end of the forecast period (month, quarter, year, etc.), and to use this method as the basis for a comprehensive approach, which highlights the present situation and the potential directions for the future development of an organization, such as development strategy for promoting large-scale changes. performing diagnostic studies at the public organization level (public institutions such as national agencies/authorities, decentralized and deconcentrated public bodies) involves some peculiarities, as follows: • it is important to perform a ‘cascade’ diagnosis, in order to penetrate the privacy of the investigated phenomena and of the processes. ‘cascade’ diagnosis involves two approaches: (a) national authority/agency – public deconcentrated institution – component of its structure or process; (b) public organization – component of structure or process – problem. the two approaches explain, practically, the need for undertaking successive diagnoses: global – partial – specialized, following the cause-effect mechanism. in addition, in the first approach, ‘cascade’ diagnosis is necessary for highlighting the systemic character of the national agency/authority, the approach being a holistic and synergetic. • the large part of the analyzed results, reported to the assumed objectives, are predominantly qualitative, situation that makes difficult the formulation of strong or a weak points, traits that are usually quantifiable. • diagnosis of the internal environment is materialized in causal explanations. • diagnosis of internal environment, which highlights causal strengths and weaknesses, is not sufficient to substantiate the potential of viability. therefore, it is necessary to perform an external diagnosis that identifies the opportunities and threats of the environment (regional, national and international) in which the organization operates. as such, we can talk about swot analysis, embodied in swot matrix (strengths – weaknesses – opportunities – threats), which triggers different interpretations and types of strategies to be developed by the organization. • in terms of methodology, performing organizational diagnostic study involves/ requires completion of several steps, each of them bearing the imprint of the size and functional characteristics of the public organizations, as shown in figure 1. 3.2. management by objectives management by objectives is a complex and sophisticated management tool, designed and used for over 50 years, especially by companies. the management by objectives aims setting up objectives for each member of the staff and motivating the staff in order to achieve them. therefore, the essence of management by objectives is trinomial: targets – results – rewards/penalties, for which retrieval a promotion and methodological scenario use is required containing: 171 preliminary documentation types of characteristics management system economic and financial state managerial and socio economic viability analysis analysis of economic viability economic and financial state casuistic emphasize of main strengths idiom; comparison term; causes; effects casuistic emphasize of main weaknesses idiom; comparison term; causes; effects oportunities determinining the managerial and economic viability treats strategic and tactic recommendations figure 1: diagnosis mechanism setting the fundamental objectives ‘construction’ of objective system by splitting the fundamental objectives in derivate: specific and individual objectives providing the ‘support-elements’ required for attaining the objectives: means, resources, deadlines, methods, budgets, managerial environment attaining objectives (coordination, attaining, monitoring or budgetary execution) evaluation of the results (compared with the objectives) employees’ motivation figure 2: methodology of management by objectives 172 the use of this management system in a public institution implies some particularities: • difficulties in setting targets if we consider that the mission/purpose of such organization is to meet national or community interests in the working domain; therefore, setting targets, with quantitative expression, is very difficult, if not impossible; • lack or insufficient specific organizational culture and values, such as work based on objectives, which hampers the implementation of the management by objectives and especially its finality; • evaluations of the personnel and positions primarily based on tasks and not on achieving the objectives – the expression fulfills the tasks exceptionally tends to become a permanent presence, a situation which shows the subjectivity and lack of consistency of the motivational criteria in public institutions. • individual performances, very frequently invoked in public organizations, are based in fact, on some qualitative and less quantitative assessment of the managers’, contractors’ and subcontractors’ performance. the performance should be evaluated separately, as the objectives need to be addressed systemically (basic, derived, specific and individual objectives, with strong interdependence links), so the performance to be related to individual, group or organization. however, in public organizations, such situations are very rare; accomplishing duties and responsibilities are the main concern. consequently, motivation is not differentiated according to three criteria – individual, group and organizational performance. this situation leads to a low interest in assuming some objectives, superior to the past performance. • it is also almost impossible, due to the lack of experience, the development, implementation and monitoring of budgets based on expenditure centers (departments, divisions etc.); from this perspective, the economic dimension of management by objective is practically inexistent. • participatory dimension of this system is also hampered by insufficient involvement of the staff in setting performance goals; such individual targets do not exist at the job level, and implicitly, in the job description, and managers make exclusively the job evaluation. • at the level of the decentralized public institutions where the use of budgets is more lenient and recommended, there are more favorable conditions to achieve successfully operational management targets. for example, a county council or a local council has a budget that can be the starting point in building a budget system, related to the area of management policies promoted by them: education, health care, culture, sports, entertainment, infrastructure, sanitation, sewage-water etc. if budgets can be substantiated and launched on such budget spending centers, it means that specific objectives and their derivatives can be set. that is why the budget should contain a separate chapter for the objectives, or if the classical formula is kept, the budget needs to be accompanied by a list of objectives, as follows: 173 – fundamental objectives and derived targets i – at the organizational level; – derived objectives and targets ii – at the level of competence (education, health, infrastructure, etc.); – individual targets – at the job level. locating these targets will be ensured by: – the budget of public organization (fundamental and derived objectives i); – budgets on areas of competence (specific and derived objectives ii); – job descriptions (individual goals). only under such conditions, job descriptions are transformed into true management tools, used like budgets, in performing the management processes. fundamental objective derivate objective 1 derivate objective 2 specific objective individual objective personnel motivation organization’s budget budgets on competencies area job description results (individual, group, organizational accomplishments) budge-tary network budgetary execution figure 3: objectives – budgets – accomplishments correlation to some extent management by objectives is reflected in the public organization in a methodological form identical or similar to the design presented, and certainly contributes to imprinting some characteristics of order, discipline and rigor that would allow accomplish its mission. 3.3. the scoreboard the scoreboard is a modern managerial tool, which is based on vertical information transmission regarding the obtained results, in a synoptic which has a dual purpose in the organizational management: 174 • to facilitate the rationalization of informational systems, both in terms of information, routes of information, procedures used in their conduct, as well as regarding the state of affairs of the information (documents) which is recorded; • to ensure better use of managers’ time-budget, users of information; • two important premises are assumed in designing and using the scoreboard: managers do not have enough time to solve the problems encountered through the positions they occupy, and to adopt the basic decisions, hence they need quality information – relevant synthetic, clear, timely. if we include into the ‘managers’ category the presidents of national agencies/ authorities, the directors of deconcentrated institutions, the presidents of county councils and local directors of public-private companies, the heads of departments (services, offices), we find that there are different response manifestation to the issue of time use and the manner of response to the challenges of the field managed and of the regional, national and international environment. we will try to highlight below some common issues: time budget usage inappropriate structure of the workday exceed the normal workday duration causes objective lack or insufficiency of realistic strategies and policies; lack of a grouping system of objectives that should ‘descend’ to the level of jobs, implicitly the execution jobs; inexistence of some pressures applied to the manager – by superiors, collaborators, subordinates and unions. subjective reduced competency or incompetency of some managers (lack or insufficient knowledge, traits and managerial attitudes, absolute necessary for completing the management processes); the trend to ‘pass the buck’ to the vertical of the management system for some problems confronted by managers; the trend to defend the managers situated on an upper hierarchical level, before solving the problem, considering that acting like that, the degree of grounding of a decision will be amplified; insufficient utilization of scientific management principles, of managerial tools offered by management science. figure 4: utilization of managers’ time 175 how does the scoreboard respond to these challenges? first, in compliance with rigorous methodological steps as the figure below shows: scoreboard design filling the fields specific to the scoreboard information transmittal scoreboard usage figure 5: methodology of the scoreboard the scoreboard tries to mitigate and/or eliminate the causes that induce such major disruptions by a new management approach, focused on determining and satisfying the information needs of the managers. since the exclusive concern for managers is to lead and manage public organizations or their structural components, therefore to base and adopt decisions on forecasting, organization, coordination, motivation and monitoring-evaluation, it is clear that they need, firstly, sufficient information – quantity and structure – quality. as such, in advance, is required to establish information needs with/through the decision-information sheets, which should accompany the record files related to the management posts. the model of such a document is given below: table 1: decision-information sheets position decisional – informational file no. competences (the offi cial authority of the job) decisions that could be adopted by the job holder informational need (information necessary for grounding and adopting the decisions) obs. 0 1 2 3 4 moreover, the methodology of design, completion, transfer and use of the scoreboard instrument, highlights this important issue. in designing the scoreboard instrument there is a need for some mandatory steps, such as: • establish the coverage of the scoreboard instrument (could be a complex instrument which concerns the whole organization or a limited instrument, specific to certain processual or structural areas, information sought by a manager); • establish the compartment or professionals involved; • specify tasks (duties), powers and responsibilities necessary to achieve the objectives; • specify duties, powers and responsibilities of departments involved in scoreboard; • determine the information needs of information ‘beneficiaries’; • specify indicators and other ways of expressing the objectives and results; • specify how information is viewed; • design of information models; 176 • determine flows and information flows associated with these models; • determine procedures for information; • establish the periodicity of completion and transmission of the scoreboard. meeting the managers’ information needs is provided by a set of dashboard layouts, structured so as to include: the name, the issuer, the beneficiary, the issue date, the transmission date, the frequency, the form of presentation, the information needs which they provide, the meaning of the main information, the flow/information flow map, the provision of information used and the method of action. completion and submission of information through scoreboard models is done either manually or electronically. we specify that the second option is recommended, ensuring thus a real time information to managers and take appropriate decision, also, conducted in a short period of time. attention should be paid to satisfy their information needs in terms of ensuring fluency cycle information – decision – action at any organizational echelons of public organizations. using the scoreboard depends, quantitatively and qualitatively, on the managers’ knowledge and skills and their managerial and professional traits. flair, insight, experience, talent, desire to lead, ability to drive, intelligence, character, etc. are necessary but not sufficient. exercising the manager profession requires knowledge of management, whose weight tends to increase as structural pyramid ‘climbed’. matching the managers with the posts they occupy is always accomplished through competency. therefore, the personal manager’s authority is a condition for the success of the scoreboard, meaning that information circulating vertically are operatively valorized in relevant decisions. 4. conclusions the managerial methodology of public organizations is an important solution to their efficiency as far as its operational main pillars – the managers – of know management and, thus, they can fully exploit the capacities. we must recognize that not always and not everywhere managers of public organizations have the power, managerial expertise claimed by such a complex and rigorous approach. their nomination by political criteria – sometimes exclusively – makes almost impossible the new in management and, particularly, the management instruments and methodologies that accelerate and relates to scientific performance. and if, in central and local public institutions, it is aimed at costs reduction, management methodology itself does not involve cost, but its implications on expenditure incurred in their operation are obvious. references: 1. nicolescu, o. and verboncu, i., managerial methodologies, bucharest: economic publishing house, 2008. 2. verboncu, i. and purcaru, i., ‘a managerial modernization model in crisis conditions’, 2009, management & marketing, vol. 4, no. 3, pp. 65-76. 177 3. verboncu, i., ‘managerial – methodological novelties (i)’, 2007, review of international comparative management, vol. 8, no 3, pp. 109-119. 4. verboncu, i., ‘new dimensions of the managerial organizing’, 2008, review of management and economic engineering, vol. 7, no. 2, pp. 13-22. 5. verboncu, i., cojocaru, i., ciocănescu, e. and gogârnoiu d., ‘managerial redesign model for public institutions’, 2009, review of international comparative management, vol. 10, no. 2, pp. 207-217. 6. verboncu, i., do we know how the lead?, bucharest: economic publishing house, 2005. 154 this paper tries to measure the level of the digital divide existing in romania and also to verify its relationship with e-government. at the country level, romania is one of the least digitally developed countries in europe, but it has shown a sharp increase in recent years. at the social level, based on data from public opinion surveys, digital divide is analyzed at two levels: lack of access and lack of knowledge. the results are similar to those in other countries: digital divide appears along the same dimensions: rural/urban, age, education, wealth and, to a lesser extent, gender. e-government services, while presumed to be at an adequate level, are used only by a very small number of citizens, thus having no impact upon the digital divide. confronted with a serious divide, and with great possibility of its increasing, romania needs to promote policies designed to increase access and knowledge. also, e-government is not possible, unless administrative culture and procedures change. romania’s digital divide and the failures of e-government sorin dan şandor associate professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca transylvanian review of administrative sciences, 16 e/2006, pp. 154-162 global divide digital divide can be defined as the gap between those persons who are computer literate and have access to information resources like the internet and those who do not. this digital divide is continually narrowing in terms of access to technology and communication, and also in terms of computer literacy. there are two types of digital divide: a global divide between countries and a social divide, inside each nation, based on certain socio-demographic characteristics (telecommunication access, affordability of services, income, skills or education). for the global divide we can see that there is a significant relationship between the wealth of a nation, expressed as gdp/capita, and one of the indicators for information society development, the percentage of population online1. 1 logarithmical scales were used for a better account of the relationship 155 figure 1. population online and gdp/capita romania, as a country with medium gdp/capita scored accordingly on the percentage of population online. while romania is behind the rest of the world, in recent years, it witnessed a greater growth in information society indicators, demonstrating more rapid progress than the world as a whole2: 50.4 59.1 71.1 71.6 71.6 72.9 40 50 60 70 80 90 100 1996 1997 1998 1999 2000 2001 figure 2. romania compared to the globe as a whole the united nations e-government readiness index, comprising the web measure index, the telecommunication infrastructure index and the human capital index; “is a composite measurement of the capacity and willingness of countries to use e-government for ict-led development”3. the 2004 e-government readiness rankings4 show romania progressing, with a 0.5504 coefficient (maximum is 1.00), in 38th place in the world, 12 places higher than in 2003. 2 george sciadas (ed.), monitoring the digital divide...and beyond, orbicom, 2003, p. 44 3 united nations, global e-government readiness report 2004. towards access for opportunity, 2004 4 united nations, op cit, p. 29 156 both of these two types of assessments provide information about the problems romania encounters. the first shows as a weak point the number of pcs and the number of internet hosts5, the other is pointing to general telecommunication index (internet, pcs, telephone, tv sets) of only 0.165 (scale from 0 to 1), compared to 0.606 for web measure and 0.880 for human capital6. in recent years a sharp increase took place for telecommunication indicators. the number of pcs grew significantly, as did the number of internet users:7 700,000 1,500,000 2,100,000 2,500,000 0 500000 1000000 1500000 2000000 2500000 2001 2002 2003 2004 figure 3. pc evolution 2% 9% 19% 24% 0 5 10 15 20 25 2001 2002 2003 2004 figure 4. internet users (%) an equally spectacular growth was witnessed in the area of mobile phones. from 3.860.000 users in 2001, the figure rises to 6.200.000 in 20038 and to 9.000.000 in september 20049. still, romania lags behind most of former eu candidate countries, being the last in internet usage and well below the central and eastern europe average in other indices, except for number of computers in secondary education connected to the internet10. 5 george sciadas, op cit, p. 75 6 united nations, op cit, p. 126 7 romanian ministry of communications and information technology, ww w . m c 8 romanian ministry of communications and information technology, raport de evaluare a stadiului de dezvoltare a societăţii informaţionale în românia, 2003, p. 55 9 romanian ministry of communications and information technology, indicatori it, december 2004, http://www. mcti.ro/index.php?kturl=media/_uploads/indicatori site/2004.12.06 indicatori comunicatii. romana_ana. pdf 10 danish management, central and east european countries information society benchmarks, september 2004, p. 46 157 social divide and telecommunication access usually, in research about the digital divide, we try to explore different dimensions. most often used are such factors as area (rural/urban), sex (or gender), age, wealth, education, race (or ethnicity), and religion. based on data from the open society foundation’s public opinion barometer, october 200411 we can see that in romania there is a significant divide in almost all categories. table 1. telecommunication access divide mobile (%) fixed phone (%) pc (%) internet (%) area rural 23.8 35.8 6.5 1.1 urban 51.3 73.5 29.9 11.9 education less than high-school 22.9 43.3 6.4 0.9 high-school 57.2 67.6 30.3 11.4 undergraduate 76.6 88.4 58.6 28.6 postgraduate 91.3 91.3 82.6 43.5 gender male 41.4 55.6 20.7 8.6 female 37.1 57.5 18.4 5.8 age 18-24 64.7 56.1 36.4 17.6 25-34 52.3 55.9 19.3 7.2 35-44 53.3 57.3 30.3 10.6 45-54 44.9 63.0 23.7 7.1 54-64 25.4 55.6 10.8 4.1 65+ 11.5 52.3 6.4 1.5 wealth12 poor (1-3) 23.0 41.2 8.6 2.5 middle (4-5) 46.1 64.7 23.7 9.2 upper (>5) 60.7 73.8 35.7 12.9 total 38.8 56.6 19.4 7.1 we cannot assess anything about the existence of an ethnic divide. however, it does appear that the roma population, which is known to have a very low standard of living, is not connected to the digital world, but we have only a small number of individuals in the sample, so we cannot draw a definitive conclusion. the difference between romanians and hungarians, the greatest minority, is very small. from the gender point of view, males appear to be better placed, but the relationship between gender and all the four indicators presented is not significant from a statistical point of view. from the regional point of view, the results do respect the social and economical disparities. the most developed regions have a better telephony penetration and more pc and internet users. for all the indicators, the most serious divide is between rural and urban areas, age categories, except for fixed telephony, and wealth. if we take into account only having a pc and internet access we can see that education is becoming very important. 11 data available at http://www.osf.ro/bop/2004/octombrie/db_bop_oct_2004.zip 12 respondent were asked to assess their own position on a scale from 1 – poor to 10 – wealthy. in this table poor represents 40.7% of the entire sample, middle 45.8 and upper 13.5% 158 the most serious problem is in the rural area: there we have a less educated, less affluent and “more” aged population. romania has a very high proportion of its population living in the rural area13. there are other ways to access the internet: workplace (33% of romanians do so), internet café (26%) or schools (13%)14. but all these possibilities are open especially for those who are less threatened by the digital divide: young people, well educated, or getting educated, urban areas, solving a part of the problem for those who can not afford a connection at home. telecommunication issues also can be a problem for public administration. in the recent years, the number of public institutions with computer equipment grew considerably. by early 2003, the number had reached 130.000 computers, 70% being connected to the internet15, enabling 82% of public servants to have access to a computer; also 84% of public institutions, with the exception of except village councils, have internet sites16. social divide and knowledge another important aspect of digital divide is the knowledge divide: some people do not know how to use digital services, especially computer-related ones. based on data from the public opinion barometer, october 2004, we can draw some conclusions. first, age is an important factor (see figure 5). figure 5. age and computer knowledge while we have some oscillations, due to the small number of individuals, the pattern is clear: older people have lesser chances to know how to use a computer. again, as in the case of telecommunication divide, we tried to see how this divide works for different categories of population. the results are similar: those from the rural area, aged, less educated, poor have smaller chances to know how to use computers. there is also a gender difference, relatively small, but statistically significant. 13 46.7%, according to the population and housing census, march 2002 14 european comission, eeurope+ 2003 progress report, february 2003, p. 26 15 romanian ministry of communications and information technology, indicatori it, june 2004 16 institutul pentru politici publice, barometrul funcţiei publice în românia, 2004, p. 41-42 159 table 2. knowledge divide know how to use computers (%) area rural 11.2 urban 38.6 education less than high-school 7.6 high-school 45.9 undergraduate 72.7 postgraduate 82.6 gender male 29.5 female 23.8 age 18-24 70.1 25-34 42.6 35-44 33.9 45-54 21.4 54-64 10.5 65+ 3.7 wealth poor (1-3) 12.8 middle (4-5) 32.7 upper (>5) 43.7 total 26.3 how did some of these people learn how to use computers? the main sources17 are by themselves or at school, accounting together for almost two thirds of the population. at work or by taking some computer courses account for the last third. this can show a lack of concern from employers: they prefer to hire people that have a specific level of knowledge, instead of trying to train them. job announcements are a clear indication: for almost all workplaces that require computer usage, such knowledge is a prior condition for employment consideration. school 32% work 20% alone 32% courses 16% figure 6. knowledge source 17 institutul pentru politici publice, barometrul funcţiei publice în românia, data available at http://www.ipp. ro/altemateriale/bfp%20-%20ipp%20gallup.rar 160 knowledge divide can be important also for public servants. while few are totally lacking computer literacy, we can see that the level of knowledge has a strong association with age (gamma=-0.458)18: the older they are, the lesser their computer knowledge is. e-government usage on february 12th 2001, the european union member states agreed to a common list of 20 basic public electronic services; 12 for citizens and 8 for business. romania made a significant effort in order to provide as many e-government services as possible. the law, 161/2003, a part of an anti-corruption package, instituted the national electronic service, dedicated to electronic services delivery, requiring all administration to start offering such services according to a time schedule. according to an evaluation made by the ministry of communication and information technology19, romania scored on these services the same as greece, ranked 19th among eu countries, and scoring better than 6 out of 8 former cee candidate countries20. the evaluation seems to be highly optimistic, taking into account that there are few services for which we have more than a one-way interaction, and other services are not yet implemented. the time schedule stated in law 161/2003 is not respected, serious delays being encountered for the majority of e-services and institutions. we tried to assess the use of e-government services, using the number of visitors accessing government sites. on the site http://www.trafic.ro are registered and monitored a large number of sites, 17.677, as of april 8th, 2005. among these some are government sites. the most popular is the site of the romanian government, www.guv.ro, but in the general ranking it holds only the 84th place, having 27.267 visitors in a week (0.0018% out of all visitors of all sites). the most visited site of all, a software-related one, had 1.1200.178 visitors in the same period . among ministries sites the first is the foreign affairs ministry (www.mae.ro); second place in government sites, with 13.410 visitors, followed by the internal affairs (www.mai.gov.ro), with 5.278 visitors, and, in third, the ministry for communications and information technology ( www.mcti. ro), with 4.978 visitors. two very important electronic services are also in the top: the electronic public acquisitions portal (www.e-licitatie.ro), with 6.494 visitors and www.e-guvernare.ro, the one stop shop for government electronic services21, with only 2.386 visitors. symptomatic for the low use of government sites is also the case of the agency for employment (www.anofm.ro). on www.trafic.ro the site is ranked only 13th in the category workplaces (653 in the general ranking), with 0.69% of the number of visitors. even if a listing with all available jobs in all counties is provided, private sites are preferred by the population. the fact that romanians do not use e-government services is supported by the findings of eeurope+ survey: only 2% of the internet users downloaded official forms and 3% sent filled in forms22. 18 institutul pentru politici publice, barometrul funcţiei publice în românia, data available at http://www.ipp. ro/altemateriale/bfp%20-%20ipp%20gallup.rar 19 romanian ministry of communications and information technology, raport de evaluare a stadiului de dezvoltare a societăţii informaţionale în românia, 2003, p. 69-70 20 capgemini for the european commission directorate general for information society and media, online availability of public services: how is europe progressing?, march 2005, p. 26 21 presently, on www.e-guvernare.ro are available over 160 forms, involving 465 public institutions and 7 on line services for companies 22 european comission, eeurope+ 2003 progress report, february 2003, p. 34 161 conclusions digital divide is a very serious issue in romania. while the number of digital citizens is increasing, mainly due to economic growth and technology advances, and only in small measure to government policies, significant parts of the population are left behind. the rural population, less educated people, poor people and aged citizens have very little chance to benefit from ict revolution, either by lack of opportunity, or by lack of knowledge. the romanian government should consider taking serious measures in order to narrow this gap which will get larger if unaddressed. serious efforts should be made regarding the rural areas. in 2003, telecommunication liberalization brought in place new companies, which are operating mainly in urban areas. no phone company is willing to penetrate in villages, except those near big cities. a public policy, supported by financial incentives, to encourage phone companies to expand in remote areas should be put in place. public internet access places can help the population to get online; such services should also to be provided by public libraries. in addition, computers and internet should be more present in schools, especially in rural areas, not only in urban ones as has been the case until now23. in regard to the knowledge divide, age and lesser education are the main hurdles. these problems should be addressed at a more general level, considering that life long learning is a very new concept for romania. also, employers will have to consider training as a way to improve performance, not as a useless expenditure. we did expect that the presence of e-government services would boost internet and pcs usage, narrowing the digital divide. in reality, e-government is only following this trend, either in order to fulfill european requests, or just answering to population or business demands. there are several reasons for that: 1. heads of family, who are presumed to have more interactions with public administration, have less knowledge than other members of the family: only 19.9% know how to use computers, compared to 32.8%24. 2. for young people computers and internet are primarily a tool for communication: e-mail, chat, and entertainment (music, movies, games). 3. the content of government sites needs a serious improvement. united nations e-government readiness report had assessed romania’s web presence with a score of 0.606, on a scale from 0 to 1 – 25, which is rank of 26th in the world – a good one, apparently. but, as acknowledged by the authors of the report, this indicator does not measure quality, but mainly online presence of central government. a more recent research ranked romania’s websites 84th in the world26 using as the criteria number of services online and quality of the interaction with the user. romanian public administration sites are suffering in terms of number of online services offered, email contact information, areas to post comments, availability of publications and databases. 4. the number of electronic services, especially for personal documents, car registration, declaration to the police, health related services, and their level of sophistication should be increased. electronic payment of charges for services should be allowed. 23 the national authority for regulation in communications launched in september 2005 a bid for 40 telecenters (point of access for phone, fax and internet services), the objective for 2005 being to reach at least 100. 634 villages did express their interest in having such centers. source: http://www.administratie.ro/articolenou. php?articol_id=3613 24 open society foundation, public opinion barometer, october 2004 25 united nations, global e-government readiness report 2004. towards access for opportunity, 2004, p.134 26 darrell m. west, global e-government, 2005, brown university center for public policy, 2005, p. 11 162 5. the administrative culture is still a bureaucratic one, for each interaction with citizens or businesses a lot of paper work is still required and demanded27. without a drastic simplification of procedures electronic delivery of public services will remain science fiction. 6. interaction with public administration is still seen as a personal one. we are far from a weberiantype bureaucracy, based on strict procedures and impersonal relationships. therefore, in order to get something done, the romanian people continue prefer to have direct, personal, face to face contact and discussions with public, servants in order to be sure that they have provided and received the correct documentation and their requests, needs and obligations are appropriately met, resolved and solved. references 1. capgemini for the european commission directorate general for information society and media, online availability of public services: how is europe progressing?, march 2005 2. danish management, central and east european countries information society benchmarks, september 2004 3. european comission, eeurope+ 2003 progress report, february 2003 4. institutul pentru politici publice, barometrul funcţiei publice în românia, 2004, http://www.ipp.ro/altemateriale/ bfp%20-%20ipp%20gallup.rar 5. national commission for statistics, population and housing census, march 2002 6. norris, pippa, digital divide? civic engagement, information poverty and the internet worldwide, cambridge: cambridge university press, 2001 7. open society foundation, public opinion barometer, october 2004, http://www.osf.ro/bop/2004/octombrie/ db_bop_oct_2004.zip 8. romanian ministry of communications and information technology, indicatori it, december 2004, http://www. mcti.ro/index.php?kturl=media/_uploads/indicatori site/2004.12.06 indicatori comunicatii. romana_ana. pdf 9. romanian ministry of communications and information technology, indicatori it, june 2004 10. romanian ministry of communications and information technology, raport de evaluare a stadiului de dezvoltare a societăţii informaţionale în românia, 2003 11. sciadas, george (ed.), monitoring the digital divide... and beyond, orbicom, 2003 12. united nations, global e-government readiness report 2004. towards access for opportunity, 2004 13. west, darrell m., global e-government, 2005, brown university center for public policy, 2005 27 as an example: in order to obtain an identity card you will have to present a birth certificate, a document to prove your address (either a proof of identity or a rent contract), a fiscal stamp, a receipt for payment (electronic payment is not possible) and, depending on the reason for requesting a new identity card you might be asked to provide documents about your military status, election card, marriage certificate, divorce ruling, the old identity card or another photo id. also, is not possible to send photos in electronic format. 62 abstract this study is an analysis of the main legal aspects related to the activity of consumer associations, seen as promoters of collective interests of their members, in the romanian consumer law. as a social partner of the public administration’ organisms, these associations play three kinds of roles: (1) representing the consumers in the organisms of public administration; (2) informing and advising their members in questions related to the purchase of products or the supply of services; (3) taking legal actions in order to obtain the protection of a collective interest of consumers or the cessation of a illegal commercial practice. this article also stresses the importance of non governmental organizations of consumers’ right to be consulted by the public administration’ representatives, in the process of elaborating legal norms and procedures related to consumers’ protection. the non governmental organizations of consumers are entitled to be treated as social partners, while representing their members in the specialized organisms, at a national or local level, in which the public administration authorities are represented. the legal framework of the consumer associations in the romanian consumer law juanita goicovici juanita goicovici assistant professor, faculty of law, babeş-bolyai university, cluj-napoca, romania tel.: 0040-72 38 70 934 email: juanitag@law.ubbcluj.ro transylvanian review of administrative sciences, 26e/2009 pp. 62-69 63 1. introduction the study of the administrative framework in the field of consumer organizations’ functioning1, in the romanian consumer law implies the identification of two paradoxes. first, the contemporary romanian law permits the simultaneous application of two sets of legal norms, one established by the chapter vi (“consumer associations”) of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007 on repressing illegal commercial practices in contracts concluded by consumers and the harmonization of national law and the european communities law in the field of consumers’ protection (1) and, on the other hand, the one established by the chapter iv of the romanian consumption code (“the nongovernmental organizations of consumers”) (2). surprisingly, the double legislation applicable in the field of consumer associations does not offer details on the concrete role allocated to the mentioned organizations, regarding the defense of individual or collective interests of consumers. subsequently, the simultaneous application of two legal variants testifies about a certain superficiality of the romanian legislator in the mentioned field; the massive modifications of various legal norms concerning consumers’ protection, materialized in a single legal act2 do not participate to clarifying the consumer associations’ mission, as long as the legislator modified, by the law 363/2007 on repressing illegal commercial practices in contracts concluded by consumers, the articles subsumed by the chapter vi (“consumer associations”) of the governmental ordinance 21/1992 on the consumers’ protection, while keeping unchanged the similar articles of the chapter iv of the romanian consumption code (“the nongovernmental organizations of consumers”) and thus generating an incompatibility between the two legal sets of norms. on the other hand, there is a paradox of the insufficient legal regulation of the forming procedure in the field of consumer associations’: the foundation framework of the mentioned associations is not regulated by special legal norms, the sole regulation being offered by common norms applicable to forming non governmental organizations (diaconescu, 2008, pp. 248-272), comprised by the governmental ordinance 26/20003. 1 the consumption code, adopted by the law 296/2004 (published in the official monitor of romania 593/2004 and modified by the law 363/2007 on repressing illegal commercial practices in contracts concluded by consumers and the harmonization of national law and the european communities law in the field of consumers’ protection) defines the consumers as being persons or a group of persons associated in a consumer organization who procure or utilize a product or a service in a non professional purpose (the annex 13 of consumption code). the non professional purpose of the acquisition remains, in romanian consumer law, an essential criterion for delimiting professionals and consumers. 2 the concerned regulation is the law 363/2007 on repressing illegal commercial practices in contracts concluded by consumers and the harmonization of national law and the european communities law in the field of consumers’ protection, which modifies more than 15 previous legal regulations in the field on consumers’ protection. 3 the governmental ordinance 26/2000 has been published in the official monitor of romania no. 39/2000. 64 in terms of a legal definition, the consumer associations are seen as “non governmental organizations enjoying legal capacity, whose mission, excluding an economic pursuit in the name of their members, is that of promoting legitimate rights and interests of their members or of consumers, in general” (article 30 of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007 on repressing illegal commercial practices in contracts concluded by consumers and the harmonization of national law and the european communities law in the field of consumers’ protection). there are three observations to be made, inspired by the mentioned legal text: (1) in romanian consumer law, the condition of the “sole purpose” regarding the protection of the individual and collective interests of consumers erase the possibility, for consumer associations, of including in their statutes other subsequent purposes; (2) an consumer association is not legally forced, in order to be legally formed, to limit its mission to promoting solely the economic and judicial interests of its members, the association having the right to militate for consumers’ security in general; (3) a triple role is reserved by law, for the consumer associations: (a) informing the consumers; (b) representing the consumers in court, in order to promote the collective interests of consumers; (c) participating, in their quality of social partners, in various organs of the public administration. the general legal requirements for the foundation of a consumer association are those enounced by the governmental ordinance 26/2000 on non economic associations: (a) the intent of at least three persons to associate on an agreement bases, while participating materially or intellectually to the functioning of the association (article 4 of the governmental ordinance 26/2000); (b) the materialization of the agreement in a notary public’ authentic act, including the organization’s statute (article 6 of the governmental ordinance 26/2000); (c) an authorization elaborated by the specialized organ of public administration; in the case of consumer associations, competency goes to the national authority for consumer protection (the “anpc”); (d) the compliance of registration forms, in the register of non profit organizations held by the local judicial court (articles 5 and 17 of the governmental ordinance 26/2000). in addition to these requirements and after their legal foundation, consumer associations are compelled to request their registration in the register of consumer organizations held by the national authority for consumer protection (article 34 of the governmental ordinance 21/1992 on the consumers’ protection). as long as the financial sources of the consumer associations are concerned, there are three sources: (1) yearly financial participation of their members; (2) public subventions; (3) legal damages obtained in court by the association. 2. the “social partner” role a. the representation of consumers in the structures of the public administration the exploring of the consumer associations’ mission in the field of protecting the individual or the collective interests of consumers reveals a three-branched role: (a) informing the consumers; (b) representing the consumers in court, in order to promote 65 the collective interests of consumers; (c) participating, in their quality of social partners, in various organs of the public administration. as to the consulting role of consumer associations, conceived as a privilege by the legislator, the mentioned role is, in practice, exercised so rarely that comments on its failure had not been absent. while annexing a description of consumer associations’ mission to the succinct presentation of their rights and duties in relation to public administration authorities, romanian consumption code mentions, in the chapter iv (“the nongovernmental organizations of consumers”) that “the non governmental organizations of consumers are entitled to be treated as social partners, while representing their members in the specialized organisms in the field of consumers’ protection, at a national or local level, in which the public administration authorities are represented as well”. a similar legal text is to be found in the chapter vi (“consumer associations”) of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007 on repressing illegal commercial practices in contracts concluded by consumers and the harmonization of national law and the european communities law in the field of consumers’ protection. as opposed to associations founded for the sole purpose of promoting the legitimate interests of consumers in general, those constituted in the view of militating for the interests of their members only “may become social partners of the public administration authorities and may represent their members in the specialized organisms in the field of consumers’ protection, at a national or local level, in which the public administration authorities are represented as well, if they respect the condition of having more than 800 members” (article 33 of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007). the romanian legislator had expressly included a condition of representation – that of a minimum number of members (800) – as “social partners” for consumer associations who have limited by statute their role to representing solely the legitimate collective interests of their members as consumers. the “social partner” role permits for consumer associations to be consulted by the public administration authorities, at a national or local level, while discussing legal measures related to consumers’ protection. at a national level, groups of consumer associations may form a federation or a confederation. their right to participate to the sessions of the public administration authorities is of great importance, due to the impact of general decisions adopted by public authorities in the field of consumers’ protection after consulting the persons concerned, as these are represented by the consumer associations. consequently, it is because of their right to participate to the sessions of the public administration authorities that consumer organizations make their voice listened, while promoting the collective interests of their members or those of consumers in general and supporting consumers’ claims in discussions related to general legal regulations in the field of consumers’ security. the legal framework of consumer associations’ impartiality implies the impossibility, for an association’s director and for its personnel to held public functions in the public administration structures (article 30 of the romanian consumption code); a similar 66 interdiction is to be found in the 35th article of chapter vi of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007. additionally, in terms of article 33 of the consumption code, the representatives of non governmental consumer organizations do not have a right to conduct investigations on producers and distributors’ activity; an identical prohibition is contained by article 42 of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007. unfortunately, the romanian legislator, as opposed to the french legislator for example (calais-auloy and steinmetz, 2000, p. 556), has not established the interdiction, for professionals in the field of industry, commerce or services, to participate in the directorial board of a consumer association; or, that kind of practice would compromise the independence of the organization in terms of sustaining consumers’ legitimate interests against abusive conduct of professionals; therefore, a legal prohibition for an association’s director and for its personnel to held decisive functions in the enterprises’ structures proves to be vital for the impartial functioning of consumer associations. romanian consumer law does not provide a special agreement (authorization) procedure in order for the consumer associations to be legally formed, other than that applicable to the foundation of any kind of non profit organizations; in addition, the legislator had not restricted the official recognition of a consumer association as a “social partner” of the public administration structures, while conditioning the mentioned role by requirements related to a certain period of existence for the concerned association (at least an year, for instance) or to a certain public activity, measured in terms of associations’ publications or reunions. b. the consultative role of consumer associations the consultative role of consumer associations, while modest in practice, in thoroughly regulated in article 31 of the consumption code, whose text mentions that “non governmental organizations of consumers have the right to be consulted by the public administration’ representatives, in the process of elaborating legal norms and procedures related to consumers’ protection, in terms of: (a) discussing consumers’ complains in the field of quality and security of products; (b) determining producers and distributors’ compliance to legal (non-abusive) commercial practices; (c) preventing abusive commercial practices and the use of defamatory or misleading publicity”. a similar legal text is to be identified in chapter vi of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007, whose article 36 reminds the fact that “consumer associations are to be consulted by the public administration authorities, on the occasion of elaborating legal norms and procedures related to consumers’ protection”. unfortunately, however, the law does not describe the concrete procedure by which the public administration authorities are compelled to make effective or to implement the consultative role of consumer associations. nevertheless, certain administrative authorities play an indirect role in the field of consumer associations’ consultancy; it is the case of the commercial competition 67 council and that of the commission of abusive clauses, whose activity implies a prior consult of consumer organizations. c. the informative role of consumer associations one of the central missions of consumer associations is that of informing consumers, while providing legal expertise. in terms of article 38 of the governmental ordinance 21/1992 on the consumers’ protection, modified by the law 363/2007, the centers of information and consultancy may be organized as bureaus of consumer associations, in order to develop activities of consultancy and recommendations, free of charges, addressed to consumers in general, in the field of commercial contracts, acquisition of products and deliverance of services by professionals. these centers are financed primarily by public sources and require a prior authorization in order to be legally founded, on the criteria enounced by the order no. 256/2000 of the president of the national authority for consumer protection. the main rights and duties of consumer associations are enumerated in article 32 of the consumption code: (a) the right to receive financial and logistical assistance from the public administration authorities, in accordance to their legal mission; (b) the right to receive public financial support for certain activities, at a national or local level; (c) the right to be consulted by the public administration’ representatives, in the process of elaborating legal norms and procedures related to consumers’ protection; (d) the right to address petitions to public administration authorities regarding the appropriate measures to be taken, in view of retiring from the market of dangerous products, whose utilization would endanger consumers’ physical integrity; (e) the right to make propositions addressed to economic agents, regarding the production of special products and the deliverance of special services, as a respond to the special needs of consumers presenting physical disabilities; (f) the right to request information on fixation of prices rules or on qualitative characteristics of products and services, in order to orientate consumers’ decisions; (g) the right to inform consumers, by mass-media, on non security or non conformity of products; (h) the right to take legal actions, in a court of law, in defense of their legitimate interests or of consumers collective interests. exercising their right to inform the public, consumer associations may use the support offered by specialized periodicals and magazines or televised transmissions, as well as publishing comparative essays or organizing information campaigns. unfortunately, in practice, the informative role of romanian consumer associations has been poorly and modestly played, probably due to their lack of experience in the field of informative champagnes. in terms of legal advice and recommendations, however, as opposed to their activity related to consumers’ information, these associations are not entitled by law to provide legal and economic consultancy for persons other than their members. 3. conclusions the hiatus installed between legal theory and practice in the romanian consumer law, is mostly visible in the field of consumer associations’ functioning. this difference in the way public administration authorities distribute the powers of decision within 68 consumers organizations has too often been neglected in legal and administrative science scholarship. revising received theories from the angle of practical importance therefore promises to yield new insights. this study has suggested relationships between the allocation of legal powers for consumer associations, in the process of elaborating legal norms and procedures related to consumers’ protection and the public administration’ structures specialized in consumers’ protection, at a national or local level. in addition to laying new paths for further research, a comparison between the distributions of legal roles in romanian law and in other european states legal systems, as the french consumer law, for example, would foster legal reform initiatives. in the contemporary romanian law, the sole specie of legal actions allocated to consumer associations is represented by “the actions in suppressing an illegal or abusive commercial practice”, based on the identification, by the plaintiff, of a violation, by an economic agent, of one of regulations encompassed by the annex to the governmental decision no. 1553/2004. in terms of legal theory, a consumer association is solicited to play a triple role: (a) informing the consumers; (b) representing the consumers in court, in order to promote the collective interests of consumers; (c) participating, in their quality of social partners, in various organs of the public administration. in terms of legal practice, however, it is not often that a consumer association successfully finalizes its mission, probably due to their lack of experience in the field of informative champagnes, consultancy and legal actions in a court of law. the consultative role of consumer associations, while modest in practice, in thoroughly regulated in article 31 of the consumption code, whose text mentions that “non governmental organizations of consumers have the right to be consulted by the public administration’ representatives, in the process of elaborating legal norms and procedures related to consumers’ protection. unfortunately, however, the law does not describe the concrete procedure by which the public administration authorities are compelled to make effective or to implement the consultative role of consumer associations. therefore, the legislative blank does not facilitate, for consumer associations, the finalization of their mission, while the legislator’s indifference in terms of thoroughly regulating consumer associations’ modalities of intervention in the process of elaborating legal norms and procedures related to consumers’ protection is announcing a cloudy future. references 1. apan, r.d., protecţia juridică a consumatorilor. creditul destinat consumului şi domeniile conexe, cluj-napoca: sfera juridică, 2007. 2. batteur, a., ‘la protection illusoire du consommateur’, 1996, le dalloz. recueil, pp. 82-84. 3. bureau, d., ‘remarques sur la codification du droit de la consommation’, 1994, le dalloz. recueil, chroniques, pp. 291-292. 4. beauchard j., droit de la distribution et de la consommation, paris: presses universitaires de france, 1996. 5. calais-auloy, j. and steinmetz, f., droit de la consommation, paris: dalloz, 2000. 6. calais-auloy j., ‘l’influence du droit de la consommation sur le droit civil des contrats’, 1994, revue trimestrielle de droit civil, 2, pp. 239-240. 69 7. fauvarque-cosson. b., ‘quelle protection des consommateurs pour demain?’, 2007, recueil dalloz, 14, pp. 956-960. 8. guyon y., droit des affaires, tome 1, droit commercial général et sociétés, 9e édition, paris : economica, 1996. 9. de matos a.-m., les contrats transfrontalieres conclus par les consommateurs au sein de l’union europeenne, presses universitaires d’aix-marseille, 2001. 10. paisant g., ‘essai sur la notion du consommateur en droit positif’, la semaine juridique 1993, i., 3655. 11. picod y. and davo h., droit de la consommation, paris armand colin, 2005. 12. piedelièvre s., droit de la consommation, paris: economica, 2008. 13. raymond, g., droit de la consommation, paris: litec, 2008. 14. reghini i., diaconescu ş. and vasilescu p., introducere în dreptul civil, ediţia a 2-a, clujnapoca: sfera juridică, 2008. 15. ripert g. and roblot r., traité de droit commercial, par ph. delebecque, m. germain, tome 2, 16e édtion, l.g.d.j., paris, 2000 16. scoditti e., ‘regole di efficacia e principio di correttezza nei contratti del consumatore’, 2006, rivista di diritto civile (padova), 1, pp. 119-126. 17. teleagă c., armonizarea legislativă cu dreptul comunitar în domeniul dreptului civil. cazul răspunderii pentru produsele defectuoase, bucureşti: rosetti, 2004. 18. trochou m., ‘la protection des consommateurs’, 1999, in le dalloz. recueil, 1999, chroniques, pp. 81-82. 19. le tourneau, ph. and cadiet, l., droit de la responsabilité et des contrats, paris: dalloz, 2000. 20. vasilescu, p., (ed.), consumerismul contractual. repere pentru o teorie generală a contractelor de consum, cluj-napoca: sfera juridică, 2006. 21. zana m., ‘la tutelle du consommateur dans le droit italien des contrats’, studia universitatis babeş-bolyai. jurisprudentia, 2005, 2, pp. 168-170. 121 the 1989 – 2004 periods were times of profound changes and reforms at almost all levels in eastern european countries. it was necessary to transform a socialist communist economy into a market economy. this reform had to be built upon a new fiscal system in order to meet the market economy’s requirements. as a matter of fact, every eastern european country has been experience this problem. however, the main objectives of any eastern european countries have been as follows: 1. to generate enough resources in order to cover public expenses needs. 2. to build up a modern and simple fiscal system that stimulates foreign and nation capital investments and controls tax avoidance and evasion. 3. to harmonize their fiscal system with western european countries regulations as condition to be integrated in european union. at the same time, these countries have been confronted with both strategic and operational problems regarding the national fiscal policy. some authors showed that ex-communist governments had to choose between implementing a simple, but efficient fiscal policy, or a complex, but more equitable system (stiglitz 2000, wright 1997). the main concentration has focused on the variation in income tax policy regarding the two models followed by eastern european countries: the flat income tax (russia, estonia, lithuania, etc) and the progressive income tax (hungary, romania, bulgaria etc). however, in matters of tax evasion control, it is obvious that a complex fiscal policy (progressive tax) is, inconvenient transylvanian review of administrative sciences, 15 e/2005, pp. 121-130 the tax reform of romania since the transition to market economy dan tudor lazăr associate professor, the department of public administration, the faculty of political, administrative and communication sciences, the “babeşbolyai” university, cluj-napoca this paper is trying to analyze the financial and fiscal reforms in romania since 1989. the study is based on the necessity to be built a new fiscal system that meets the market economy’s requirements. the main concentration is focused on the debate of choosing tax policy. there are presented the two models of variation of income tax policy followed by eastern european countries: flat income tax – a simple, efficient, but inequitable system (estonia, russia, romania, etc.) and progressive income tax – a complex, inefficient, but equitable system (hungary, czech republic, slovenia, etc). at the end of this article are presented, also the main advantages and disadvantages of this these tax policies based on national statistics and other countries experiences. 122 for governments because fiscal pressure naturally leads to tax evasion. this was one of the reasons that some countries (slovakia, poland, romania) decided to change their fiscal policy from a progressive tax rate to a flat tax rate. the transition of romania to capitalism has had strong implications at the taxation level. before 1989 the state revenues were collected by taking a large percentage of state owned companies benefit and a tax on wages paid not by employers, but by companies. we can identify at least three stages of fiscal reform during last 15 years. the first occurred between december 1989 1992 when have been adopted the most important fiscal rules (i.e. wages tax law, corporate income tax law, and public finance law). the second 1993 – 2002 was the period when appeared valued added tax, capital tax, global income tax, and other important regulations concerning the financial and fiscal intergovernmental relations. at the end in 2003 the romanian parliament approved the fiscal code of romania that came up to solve some discrepancies between different fiscal regulations and to simplify the tax administration system. an additional important reform was made at the end of 2004 with the introduction of flat income tax – 16% at both corporate and individual level. the structure of tax system in romania the romanian taxes are shared by three levels of government and are presented in figure 1. the national taxes in 2004 were 68 % of romania’s total tax revenues and are based, as we can see in table 6, mainly on indirect taxes (vat, excise tax, customs tax, corporate tax, etc.). the corporate income tax has been a proportional tax and introduced by law no 12 since jan 1st, 1991 based on the amount of profits earned, regardless of the type of property and organizational structure of the taxpayer. law 12/1991 is considered to be one of the most important measures of fiscal reform initiated after the revolution of december, 1989. table 1 romanian statistic institute annually reports table 1:direct taxes/indirect taxes % year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 direct taxes (%) 50,5 47,7 54,6 50,7 42,5 31,3 28,2 17,9 30,5 25,7 21,3 23,5 26,4 indirect taxes (% 49,5 52,3 45,4 49,3 57,5 68,7 71,8 82,1 69,5 74,3 78,7 76,5 73,6 total fiscal revenues (%) 100 100 100 100 100 100 100 100 100 100 100 100 100 the collection efficiency of corporate tax was, at the beginning, very high (in 1995 55% of the revenues collected through direct taxes), but started to decrease, because there were too many loopholes allowing for tax evasion. in order to control this dangerous phenomenon the fiscal legislation suffered several amendments (1994, 1995, 1997, 2001 2003, 2005) establishing new accountancy standards and rules and enforcing drastic sanctions for breaking the fiscal legislation (table 1). on the other hand trying to stimulate the economic development and to avoid tax evasion the rate of corporate tax has declined since its peak in 1994 (38% in 1994, 25% in 2001, and 16% in 2005). currently in romania the corporate tax is imposed either on companies profit (16% for companies with turnover more than $120.000), or on small companies gross income (3% turnover less than $120.000). the global income tax has been applied since january 1st, 2000 and imposed on the following types of income: wages, independent activities, pensions, gambling and awards revenues, capital investment revenues, rental revenues, agricultural activities revenues, and other revenues. 123 central authorities national taxes • shared incometax (18%) • shared vat • corporate tax • excise tax • customs tax • capital tax national programs defence foreign affairs internal safety social welfare higher education justice local taxes • shared incometax (47%) • shared vat (50%) • property tax • tax on advertising • tax on autovehicles • stamp duty • tax on professions • tariffs and fees • other local authorities local programs • public transportation • elementary education • leisure & recreation • urban planning • social services • utilities services • environmental protection county taxes • shared income tax (22%) • grants • user charges • duties and fees • other county authorities county programs • health • culture • sport • subsidies for poor cities • regional transportation revenue expenditures figure 1 the structure of romanian tax system during 2000 – 2004, the global income tax was a progressive tax. in 2004 the marginal rates of income are showed in table 2. table 2 – marginal rates for individual income tax – 1$ = 2.8 rol table 2:marginal rates for individual income tax annual income ($) annual tax < 1,030 18% 1,031 – 2,486 185 $ +23% > 1,030 $ 2,487 – 3,986 520 $ +28% > 2,486 $ 3,987 – 5,571 940 $ +34% > 3,986 $ > 5,571 1479 $ +40% > 5,571 $ monthly income ($) monthly tax < 86 18% 87 – 207 15 $ + 23% > 86 $ 208 – 332 43 $ + 28% > 207 $ 333 – 464 78 $ + 34% > 332 $ > 464 123 $ + 40% > 464 $ 124 each individual who earned legal income was allowed to deduct at least the minimum monthly wage (64 $) from the tax base table 3. a person with severe handicap deducted in 2004, 2 minimum monthly wages (128 $) and if he would have 2 children to keep, the deductions increased to 3 minimum monthly wages. this is the maximum deduction that was permitted by romanian income regulations in 2004. table 3 – 2004 individual monthly deduction – 1$ = 2.8 rol table 3 2004 tax deduction in romania no. crt. tax deductions 2000 2001 2002 2003 2004 1. basic individual deduction 1 1 1 1 1 sever handicap individual deductions 1 1 1 1 1 regular handicap deductions 0,5 0,5 0,5 0,5 0,5 2. additional deductions: wife/husband to keep 0,6 0,6 0,5 0,5 0,5 for children 0,35 0,35 0,5 0,5 0,5 other family persons to keep 0,2 0,2 0,5 0,5 0,5 starting with 2005, after the introduction of flat income tax, the taxation systems was radically changed, but were maintained regressive individual tax deductions because of social protection reasons, presented in table 4. table 4 – 2005 individual monthly deduction – 1$ = 2.8 rol table 4 individual monthly deduction number of people to keep gross montly income (gmi $) 0 1 person 2 persons 3 persons 4 or more persons < 357 90 125 160 196 232 358 -1071 90 x [1-(gmi – 357) / 714] 125 x [1-(gmi – 357) / 714] 160 x [1-(gmi – 357) / 741] 196 x [1-(gmi 357) / 741] 232 x [1-(gmi 357) / 741] > 1071 0 0 0 0 0 property tax the property tax is the major source of local fiscal revenues. this tax is imposed for the following items: • buildings and land for buildings owned by individuals • buildings and land for buildings owned by companies • agricultural lands not used for their specified purpose the tax on land is established by central government, annually, accordingly with the yearly state budget law, which sets an interval of values for square meters of land, depending where the land is situated. municipalities may assign individuals and companies properties to one of four zones of taxation provided by romanian fiscal code, no 571 / 2003. the local councils can, also adjust the rate of tax for each zone, within a narrow bands provided annually by the state budget law. the tax on buildings represents 0.2% from the imposable value in urban areas and 0.1% in rural zones. the imposable value is calculated on built square meter taking into consideration: the structure of building (1st, 2nd, 3rd floor, etc), construction materials used (wood, concrete, reinforced concrete, bricks, etc), the age of building, and city ranking. the taxes on means of transportation are imposed through yearly state budget law, and differentiated after the cylindrical capacity of the means of transport, and owners, including some reductions or exceptions (handicap person, pensioners, etc.). they are paid quarterly in equal parts every year. 125 value added tax was introduced in 1992 through a government decree no.3 and it has been one the most important fiscal revenues of the state (table 7). during last 15 years experienced several modifications concerning exemptions, taxable goods, collection procedures, etc. the most recent important changes have been done in 2002 through law no.345 when was established the 19% rate on all delivered goods, services or accomplished works. the vat in romania is included and added in the selling price. the goods, raw materials, services, etc. purchased from the suppliers are taken over with, so called, “the deductible vat”. at the end of the month, companies calculate the vat to be paid by subtracting the deductible vat from the collected vat. in case that the collected vat is less than the deductible vat, companies are allowed in a specified period of time (depending on the company turnover) to retrieve this difference, and is called receivable vat. excise taxes were introduced since july 1993, through the law no.42/1993. while the general taxes on consumption, such as vat, show common traits of the countries, the special taxes on consumption may vary in role and form from a country to another. in romania excise tax is imposed on two forms of consumption: • imported goods – the excise tax rates may vary depending of the type of good and their destination. • domestically goods such as: crude oil or derived oil goods, alcohol, tobacco and coffee. we have to note that excise taxes are paid only once by either producers, importers or purchasers. the rate of excise taxes is the same for any domestically or foreign individual or company. in same time we have to mention that excise taxes proceed vat in the process of taxation consumption goods and they are thereby included in the basis of vat. customs duties are a way to stimulate exports or to deject imports and to expand economic cooperation between countries. import customs duties in romania have had in recent years a dramatically decreasing fiscal efficiency because of the exemptions provided by romanian adherence to european union treaty. this regulation exempts from customs duties all european union manufactured goods accompanying with eur 1 certificate (provides the origin of the good and its manufacturer). romania uses only import customs duties and transit customs duties. subjects of taxation could be companies with import activities or individuals authorised to conduct this kind of operations. the unauthorised persons who imports goods are subject of taxation if the goods value exceeds a certain value. customs duties on imported goods are expressed in percentage according to the general agreement on tariffs and trade (gatt) and calculated accordingly with romanian customs tariffs catalogue, which contains about 3000 categories of product with their market value. this list can be updated and revised by the ministry of finance when is felt necessary (inflation reasons). the transit customs duties are not widely used and they are imposed on the goods which are transiting romania. tax reform in romania the tax reform in romania should be focused, according with european union commission, on three major directions: stimulation of private entrepreneurship, foreign investments attraction and encouragement of free initiative and competition. the past years main criticism was concentrated on two major directions: • high fiscal pressure at both individual and corporate level • correspondence with european union fiscal policy regulations regarding the fiscal pressure, a study made by romanian chamber of commerce and industry – bucharest (2003) showed that, if we are taking in consideration all central and local taxes and 126 duties, the fiscal ratio in romania was 45% from gdp, more than in united states and other european countries (between 20-30 % of gdp). actually, romania has had until 2004 one of the highest rates of taxation individual income and corporate level (table 5). table 5 –income taxation in europe heritage foundation statistics 2005 the level of income and corporate tax % tax on income (%) corporate tax (%) 2004 2005 2004 2005 austria 50 50 34 34 belgium 50 50 33 34 bulgaria 29 29 15 19,5 croatia 35 45 20 20 czech republic 32 32 31 28 ciprus 30 30 15 15 denmark 59 26,5 30 30 estonia 26 26 0 reinvested profit 0 reinvested profit finland 36 35,5 29 29 france 49,6 49,6 34,3 34,3 germany 48,5 47 27.9 26,4 greece 40 40 35 35 hungary 40 38 18 16 ireland 42 42 12,5 12,5 italy 45 45.6 34 34 latvia 25 25 19 15 lituania 33 33 15 15 luxemburg 38,95 38,95 30,38 22,9 malta 35 35 35 35 holland 52 52 34.5 34,5 poland 40 40 27 19 portugalia 40 40 30 30 romania 40 16 25 16 slovak republic 38 19 25 19 slovenia 50 50 25 25 spain 48 45 35 40 sweeden 60 60 28 28 turkey 40 40 33 30 great britain 40 40 30 30 on the other hand the exaggerated number of taxes and duties (220), high level of para-fiscality (state social and health insurance duties – table 7) and unequal treatment of the taxpayers made romania long time unattractive for foreign investors. as a matter of fact goldstein (2001) has identified “six commandments of good governance” in romania: 1. low inflation 2. low taxes 3. public services development 4. individual and public safety 127 5. tax equity 6. individual liberty and integrity of any citizen. unfortunately his and others voices were not heard by romanian executive until 2004, when our new government radically change the financial and fiscal policy by introducing flat income tax and social and health insurance reform. at the beginning of 2005 the romanian mass-media presented these reforms as follows: “flat tax – economic panacea or pandora’s box”? if we are looking at the baltic countries, russia and, recently, ukraine and slovakia, the idea of flat tax was not new concept in eastern europe. the necessity of flat tax in developing countries, as a condition to increase the level of gdp and to sustain economic development (table 6) was demonstrated by a study made by alexis de tocqueville institute (1998). table 6 alexis de tocqueville institute – 1998 – the effect of taxation on economic growth. study on 86 countries. gdp growth (%) 19811997 flat tax rate progressive tax rate all countries 2.1 1.1 developing countries 2.7 1.7 in fact, romanian academic society highlighted in 2003 that the introduction of flat tax will double the forecasted rate of growth of gdp as compared to a progressive rate tax (table 8), will increase the revenue collection more than 20% and will reduce the revenues collection costs with 100%. table 7 – the impact of tax reform. imf report 2004 the impact of tax reform/gdp (%) 2004 2005 2nd suppl. budget baseline notax changes impact of tax reform draft budget tax revenue 28.80 29.10 -0.5 28.6 corporate tax 2.8 2.9 -0.5 2.4 income tax 3.1 3.1 -0.1 3.00 social security 9.6 9.7 -0.2 9.4 other direct taxes 0.9 1.0 0.1 1.0 vat 7.3 7.3 0.0 7.3 customs duties 0.7 0.7 0.0 0.7 excise taxes 3.5 3.6 0.3 3.8 other indirect taxes 1.0 1.0 0.0 1.0 besides, government report statistics (september 2005) show that after 6 month the revenue collection increased with 16% in comparison with last year same period , despite the fact that the imf report predicted a decline of tax revenue by 0.5 % reported at gdp (table 7). 128 this new reform has not had only partisans. many critics have indicated that romania will be forced to contribute for european union budget with 2.1% from gdp, table 8 2004 imf report on romania tax revenue / gdp (%) 2003 2004 2005 final budget original budget 1st suppl. budget 2nd suppl. budge draft budget total revenue 30.00 29.00 29.80 30.70 30.60 tax revenue 28.20 27.20 28.00 28.80 28.60 total expenditure 32.30 31.80 31.90 32.40 32.10 current expenditures 28.70 28.30 28.70 29.10 28.9 overall balance -2.30 -2.90 -2.10 -1.60 -1.5 primary balance -0,20 -0.80 -0.5 0.0 0.2 and to control de general government deficit (table 7). considering that the romanian government maintains the same fiscal system, it will be necessary to choose one of these three alternatives: table 9 2004 imf report on romania macroeconomic variables (%) 2003 2004 2005 final original program revised program original program revised program real gdp growth 4.9 5.0 5.8 5.0 5.0 current account deficit -5.9 -5.2 -5.3 -5.3 -5.2 general government deficit -2.3 -2.1 -1.6 -1.9 -1.5 1. raising the taxation level 2. introducing new taxes and duties 3. reducing public expenditures the majority of professionals consider that the most feasible solution would be to raise the taxation level because the other two solutions are very unpopular. actually, they agreed that the appropriate decision would be to increase the vat rate from 19% at 22-23%. unfortunately, this measure will affect especially poor people because of the neutrality of indirect taxes. in any case this reform was a courageous decision and has had both advantages and disadvantages. the main advantages are considered to be: • reducing fiscal bureaucracy • decrease of revenues collection costs • offers incentive to work, to save and to invest capital • to control the tax avoidance and evasion. among disadvantages we are presenting: • favors wealthy people • raise the inflation level by growing the aggregate demand 129 • the revenues distribution (musgrave, 1973) is done only by public expenditures what however is affected by the political factor • fiscal inequity (maurice allais) • remains a progressive tax, because of the regressive deductions system. therefore we are considering that the introduction of flat tax in romania has been a courageous and adventurous decision that will affect romanian future development. this reform is bereft of positive outcomes if it will not be consorted by other important reform such as: health and social insurance system, privatization of all state companies, eliminating all discriminatory fiscal exemptions and deductions, and strongly enforce the control of tax evasion. having a strong social support, the success of flat tax in romania depends by how executives and legislators will know to implement this reform taking in consideration romanian particularities, updating legislation, monitorising and evaluating possible threats. references: 1. atkinson a. b., stiglitz joseph, lectures on public economics, mc graw hill book, new york, 1982 2. bahl r. şi linn, j., urban public finance in developing countries, oxford university press, new york, 1992 3. bird r. m., vaillacourt, f., fiscal decentralization in developing countries, cambridge press, 1998 4. gaudemet paul marie, molinier joel, finances publiques, tome 2 fiscalite, 6-ed., ed. montchrestien, paris, 1997 5. musgrave r. & p., public finance in theory and practice” ed. mc. graw-hill book company, 1973. 6. rosen harvey, public finance, 6-th ed., ed. mcgraw-hill, new york, 2002 7. schick allen, capacity to budget, ed. the urban institute press, washington d.c., 1990 8. stiglitz joseph, economics of the public sector, 3-rd ed., ed. r.s. means company, usa, 2000 9. văcărel iulian, finanţe publice, ed. didactică şi pedagogică, bucureşti, 1994 10. wright glen, public finance theory and practice in the central european transition, nispacee publications, bratislava, 1997 collection of romanian articles and reviews from: capital weekly journal, economic tribune, transilvanian public administation review 1992 2003 international monetary fund (imf), world bank and european commission reports on eastern european countries www.imf.org/external/country/, www.worldbank.org/wdr/reports, www.europa.eu.int/ comm/internal_market/en/intprop/docs/ 87 the concept of quality in the public realm the concept of quality has started to become an important factor for public organizations starting with the ‘90s. before the world war ii quality was only used in order to describe the physical characteristics of an industrial product. more recently, the concept has been applied to the service sector as well. this trend is accompanied by a shift in perspective as well. at the beginning one may talk about conformity in relationship to existing standards. then the conformity is evaluated against the expectations of the clients, costs, and more recently against latent expectations (the ability to anticipate demand). today the concept of quality includes both technical aspects (focus is on the client) as well as functional aspects (focus is on how the interaction with the client is carried out). several of the most important functional factors include1: 1. tangible assets: buildings, equipments, personnel, communications; a framework for the selfevaluation of the functioning of public institutions: incentive toward an increased quality or merely a formality? sorin dan şandor associate professor, the department of public administration, the faculty of political, administrative and communication sciences, the “babeşbolyai” university, cluj-napoca public administration can no longer ignore quality. total quality management is trying to change the philosophy of the area. there are many tqm-inspired tools that can help this process: quality (or excellence) awards, iso standards, common assessment framework (caf). caf is a tool developed by the european union in order to assess the capacity of public institutions to produce quality. comprised of two main dimensions, enablers and results, nine criteria and 27 sub-criteria, the instrument allows a self-evaluation of the state of a specific institution. romania intends to apply this framework in public administration. we have tried to see how this can work and several problems did occur: essential ingredients are missing – mainly systematic planning and performance measurement. beside this, subjectivity and lack of commitment and knowledge can undermine such assessments. romanian public administration reform strategy needs to start from the beginning, involving the entire organization towards quality, planning, developing and improving constantly performance measurement systems, without those being impossible to speak of quality management. transylvanian review of administrative sciences, 15 e/2005, pp. 87-95 1 valarie a. zeithaml, a. parasuraman, leonard l. berry, delivering quality service: balancing customer perceptions and expectations, ny, the free press, 1990, p.226. 88 2. credibility: the ability to act upon your obligations as rigorously as possible; 3. promptness: the willingness to help clients, to be as prompt as possible; 4. expertise: abilities and knowledge; 5. politeness: respect, consideration, and cordiality; 6. honesty: correctness and rigor; 7. surety: the lack of danger, of risk, and uncertainty; 8. communication: informing the client in a timely manner while using an easy to comprehend language; 9. access: how easy it is for the client to get in touch with the provider; 10. the understanding of the client: efforts made to understand the client and its needs. the change in attitude with regard to quality is due mainly to a model called total quality management (hereafter tqm). tqm is comprised of a set of principles, tools, and procedures that help accomplish the mission of the organization both from a qualitative and quantitative standpoint. tqm is a managerial philosophy that is accomplished within the framework of a managerial system that promotes a continuous improvement with regard to all the activities within an organization. the process of continuous improvement involves three key dimensions: focus o the client; betterment of processes; and total involvement. in this context one should also refer to a change in the approach with regard to the relationship that exists among management, employees, and clients. the client becomes extremely important and in order for his needs and expectations to be fulfilled the employee is the key actor. the employee is to be considered the main provider of quality. the role of management is to support and engage employees so that they obtain the desired outcomes. employees need to enjoy autonomy, the decisionmaking process is decentralized, and the leadership of the organization promotes collegiality and it is not based on hierarchy. an organization that functions according to the principle of tqm is characterized by flexibility, which is necessary to adapt to an ever-changing environment; within this environment the organization functions as a cohesive entity that is not based on hierarchy and rigid rules but it rather implies the adhesion of all members to the goals and values of the organization, whom they are able to establish and adjust themselves. in 1988 14 major corporations have created the european foundation for quality management with the declared goal of promoting quality management in europe. in 1991 the european award for quality2 has been created; it promoted the model of the european award for qualitythis name has been changed in the 1997 into the european model for excellence, known also by its short name of efqm. the success of this model is the result of its simplicity; it is also due to the fact that it provides enough guidelines with regard to the organizational dimensions, however it is not normative that makes it in turn flexible. as the efqm model has a pre-determined set of criteria underlying its formulation, this has somehow limited up to a detain extent the need for determining which part of the tqm philosophy should be adopted by the organization3. another model can be defined in connection with the iso standards 9000:2000 that also deal with the systems of quality management. these standards are not substantially different from the models 2 similar awards exist in the us (malcolm baldridge national quality award of 1987) as well as in japan (deming award as of 1950s). in romania the foundation for the romanian award of quality j. m. juran has been created in 1999; the first award has been granted in 2001 but few people know about it and its meaning. under the romanian award there is a section for public institutions. 3 dotun adebanjo, tqm and business excellence: is there really a conflict? in measuring business excellence, nr. 3, volume 5, p.39; 89 presented so far. there are 8 principles underlying the quality management: 1. customer focus 2. leadership 3. involvement of people 4. process approach 5. system approach to management 6. continual improvement 7. factual approach to decision making 8. mutually beneficial supplier relationships this standard is extremely popular maybe also because an iso certification may lead to an increase in the business profit. at the end of 2003 there were over 500,000 iso certifications in 149 countries4. currently attempts to develop a guideline for the application of the standard 9001:2000 for the field of public administration5 are made. common assessment framework (hereafter caf) based on the efqm model, at the initiative of the european union, a common assessment framework for the public administration has been developed. a similar concept can be found in the romanian legislation. an initial version of this model has been presented for the first time at lisbon, spain, during the first european conference on quality within the public administration of the member states. a revised version was officially lunched in 2002. caf draws upon the logic and structure of efqm, trying to provide in the same time the necessary adjustments of this model to the public sector. the most important adjustments include: the distinction between a citizen and a client, focus on the management of change, and the impact on the society. in addition, there are specific examples for each sub-criterion that should guide evaluation. the following graphical structure replicates the logic underlying the model: caf enablers results innovation and learning 1. leadership 5. process and change management 3. human resources management 2. strategy and planning 4. partnerships and resources 7. people results 6. customer/citizenoriented results 8. society results 9. key performance results 4 the iso survey of iso 9001:2000 and iso 14001 certificates, http://www.iso.org/iso/en/iso9000-14000/pdf/ survey2003.pdf 90 enablers within an organization determine the way in which the organization reaches its goals; for each goal there are sub-criteria with regard to a practice meant to lead to excellence. evaluation is made based on pdca (plan-do-check-act) or deming’s wheel, a tool borrowed from the tqm model. the aforementioned sub-criteria are listed in the table below: table 1: table for the evaluation of enablers does not know how to answer, does not understand the question, or this question does not apply to the organization 0 there is no action or significant project that would contribute to the achievement of this goal 1 an action plan p has been defined plan 2 an action plan has been defined and implemented; pd do 3 an action plan has been defined and implemented; its implementation is monitored; pdc check 4 an action plan has been defined and implemented; its implementation is monitored; also corrective actions has been undertaken where necessary; pdca act 5 plan definition, implementation, monitoring, and the adaptation of its realization are all part of a continuous cycle (process of continuous improvement). p a d c for the results of an organization there are also 3 sub-criteria in place. they are listed in the table below: table 2: table for the evaluation of results does not know how to answer, does not understand the question, or this question does not apply to the organization 0 no result is measured. 1 key results are measured and show negative or stable trends. 2 results show modest progress. 3 results show substantial progress. 4 excellent results are achieved and positive comparisons to own targets are made. 5 excellent results are achieved, positive comparisons to own targets are made and positive benchmarks against relevant organisations are made. in the end we have the following structure: 1. leadership; what is its role in relationship to the following tasks: 1.1 give a direction to the organisation: develop and communicate vision, mission and values; 1.2 development and implementation a system for managing the organization; 1.3 motivate and support the personnel, and act as a role model; 1.4 manage the relations with politicians and other stakeholders; 2. strategy and planning; what does the organization do to: 1.1 gather information relating to present and future needs of stakeholders; 1.2 develop, review, and update strategy and planning; 1.3 implement strategy and planning in the entire organization; 3. human resources management; what does the organization do to: 3.1 plan, manage, and improve human resource with regard to strategy and planning; 3.2 identify, develop, and use competencies of the employees aligning individual, team and organizational targets and goals; 3.3 involve employees by developing dialogue and empowerment; 91 4. partnerships and resources; what measures have been taken in order to be sure that the organization: 4.1 develops and implements key partnership relationships; 4.2 develops and implements partnerships with the clients/citizens; 4.3 manages knowledge; 4.4 manages finances; 4.5 manages technology; 4.6 manages buildings and assets; 5. process and change management; to take into consideration how the organization: 5.1 identifies, creates, manages and improves processes; 5.2 develops and delivers products and services and products by involving the customers/ citizens; 5.3 plans and manages modernization and innovation; 6. customer/citizen-orientated results; to what extent, the organization succeeds to satisfy customers/ citizens’ needs and expectations by: 6.1 results of the customer/citizen satisfaction measurements; 6.2 indicators of customer/citizen oriented measurements; 7. people results: 7.1 results of satisfaction and motivation measurements; 7.2 indicators of people results; 8. society results: 8.1 results of societal performance; 8.2 results of the environmental performance; 9. key performance results: 9.1 goal achievement; 9.2 financial performance. caf is implemented through a process similar with some versions of delphi and it has the following stages: 1. at the institutional level, the consensus regarding the implementation of caf is established; 2. a person is assigned to manage the caf implementation; 3. a certain number of members are selected from the organization (most commonly between 10 and 15); 4. the members of the group should be aware of the goal of the assessment and about the caf method; 5. each assessor evaluate each criterion; 6. the assessors try to get a consensus regarding the evaluation of each criterion; 7. new methods to improve the performance of the institution are identified; 8. improvement strategies are selected; 9. an action plan is developed and implemented; 10. the results are monitored and the caf process is restarted. in order to evaluate the progresses, the process will be repeated at certain time intervals (2-3 years). tqm needs continual improvement. in general, the implementation of caf is considered to be a step ahead. some specialists think that caf is a first step in the transition to efqm, iso or other quality assessment methods. 92 caf in romania in romania, the first attempts to implement caf occurred in the public administration reform. in the context of european union criticism regarding the weak administrative capacity, using this instrument for evaluation and diagnosis was considered necessary. in this sense, the institutional twinning project between the romanian ministry of administration and interior, french ministry of public service, reform of the state and spatial planning and presidency of council of ministers from italy. until now, the translation of the documents was completed and a pilot project was implemented (but its results are not available yet). the problems have started with the translation. the romanian translation is based on the french version of caf. many problems, that could have been avoided, arise from it. the romanian translation uses the word administration instead of management, idiosyncrasies that is specific to french language, but not to romanians. another interesting option would be to change the expression clients/citizens with the word customers. an even more serious problem regards the translation of the word leadership by the expression nivele de conducere (an romanian expression that has means management), which comes from french word encadrement. but in the same time, caf ask for a correct and complete understanding of leadership notion and not to limit its understanding to management6. the tqm philosophy implies that in order to achieve quality all the hierarchical levels are involved and the initiative can occur at any of these levels. also, at criterion 3, human resources management, sub-criterion 3.3 regarding the empowerment of the employees, it is translated by responsibility and autonomy. this tendency is even more obvious, in the way the first example at this sub-criterion is translated. instead of “promoting an open, non-hierarchical culture of communication and dialogue” the translation is “to promote a climate of openness, communication and dialogue and establishment of hierarchical non-authoritarian relations”. it is true that the eu member states agreed that each country should adapt caf to the national context7, but this does not imply that the base concepts of caf and tqm should be misinterpreted. calin popescu tariceanu government will continue the reform of public administration drafted during the governance of social democrat party, because caf is included in the strategy of the new government. in the implementation calendar of the measures and actions for achieving the provisions of the governmental program 2005-2008 from april 20058, it is stated that caf will be extended at the level of pubic authorities and services by the end of 2007 (action 1.13.2, p.197). the central unit for public administration reform (cupar) is responsible for achieving this goal. training sessions regarding the total quality and caf will be organized. this activity is the major component of action 1.13, “establishment of the performances evaluation and monitoring system”, which has as deadline the first semester of 2006, under the control of the department for deconcentrated public services, within the ministry of public administration and interior. caf is included also in another part of the calendar for the implementation of the governmental program, being referred by the goal institutional capacity, action 3.11, further implementation of caf. deadline for this action is december 2005. 5 http://www.iso.org/iso/en/commcentre/pressreleases/2005/ref951.html; 6 christian engel, common assessment framework, the state of affairs, in eipascope nr. 1/2002, p.36 7 european institute for public administration, study of the use of the common assessment framework (caf) in the european public administration, synthesis paper prepared for the 41th meeting of the directors_general of public administration (rome, december 2003), p.8 93 the conclusions of a pilot study in may 2005, we conducted a pilot study within faculty of political and administrative science, babes-bolyai university. the goal of this study was to test the reaction of the civil servants when they act as caf evaluators. we selected 9 high rank and executive civil servants, who were in the same time enrolled in the master program organized by the faculty in collaboration with national institute for administration. first, we made sure that they know the goal and the caf method. then we asked them to evaluate their own institution and to explain for each criterion why they gave a certain grade and also the difficulties that they encountered. in the end, we organized a focus group in order to evaluate the chances to implement caf in romania. the results that we obtained are the following: criterion grade 1 leadership 2.64 2 – strategy and planning 2.47 3 – human resources management 2.69 4 – partnerships and resources 3.26 5 – process and change management 3.11 6 – customer/citizen-orientated results 3.18 7 – people results 3.24 8 – society results 3.35 9 –key performance results 3.83 mean 3.04 the average result that we obtained is very good, 3.04 comparatively with 2.42 that the european institute for public administration obtained in 125 institutions from 14 countries of western europe. we have to mention that the higher score we obtained regards the key performances, and lower score regards strategies and planning. can we trust these results? is the romanian public administration doing so well? a more detailed analysis of the answer sheets and of the answers from the focus group shows that we should not completely trust the results. first and maybe the most important conclusion is that the tables for evaluation of enablers/results weren’t taken into consideration. this is explained by the fact that very few institutions have actions plans, not to mention other stages of the deming’s wheel, and the performance evaluation systems almost do not exist. in the absence of this information at the institutional level, the civil servants based their evaluations on more subjective criteria that would make the results to sound in a more desirable form. in many cases, the respondents did not answer to all the addressed questions, which confirmed the supposition of lack of interest in giving meaningful information to the researcher. the ignorance of the responsibilities of the other departments within the institution that they work for represented another major difficulty encounter by the respondents in answering to all the questions. another problem regards deconcentrated institutions from state level at the county level, which are limiting their activity in implementing the directions received from governmental level. these institutions are less interested in adapting these general directions to the specific characteristics of a county. in this context, the deconcentrated institutions do not perform such task. another observation refers to the fact that as the participants to the research have a higher position within the institution they work for, they tend to have a more favorable perspective of the institution that they belong to and seeing the opportunity to participate to the research as an opportunity to praise 94 their institution. the executive civil servants tend to be more critical and objective in evaluating the institution they work for. conclusions caf can be a very useful tool in evaluating the institutional capacity (which is considered by the reports of the european union to be still an important problem for romanian public administration) and for improving it. if we forget the context, there are several problems that can occur. common assessment framework can be applied only in an environment characterized by high level of consensus regarding the implementation of tqm. as long as the public administration environment is not open to the ideas and the philosophies of the total quality, caf will be regarded as an unpleasant and formal procedure and people will use subjective criteria in evaluating the institution. there are major barriers in the romanian public administration that make the implementation of this method very difficult. firstly, there are no action plans to guide the activity of public institutions, and in consequences there are no implementation, evaluation and improvement efforts (deming’s wheel – pdca). secondly, the romanian public institutions do not have a culture orientated toward evaluation. public institutions do not conduct evaluations of their programs, public policy analysis, impact studies, customers/employees’ satisfaction measurement, and they lack performance measurement systems. public institutions do not acknowledge these weaknesses and there are no strategies to strengthen them. analyzing the strategy for the reform of public administration, we understand that it is aimed to improve the formulation of the public policies, and to develop the competence of the public institutions to implement caf. but in the same time we can observe that it lacks some important elements. the strategy does not elaborate on evaluation a key element.9. according to lascelles and dale (d.m. lascelles, b.g. dale, the road to quality, ifs, 1993), the romanian public institutions can be characterized as organizations that do not support the idea of quality (first stage out of seven identified by these two authors). these institutions are characterized by a strong emphasis on legal requirements that specifies exactly when the quality evaluation initiatives should take place and by a vague understanding of the basic concepts regarding tqm. in this moment, the major focus is to get the support of the public institutions for the quality assessment procedures, at least regarding the management. otherwise, caf or any other instrument (iso, efqm) will be regarded as another formal procedure imposed from outside, and which will have a low support from the institution. the process toward a management of quality widely used takes time (lascelles and dale approximates that it takes approximately 10 years). in order to achieve this goal, the following requirements are needed: involvement of the institution and of all its customers, strict performance measurement systems that should be improved continuously and a change in the way quality is understood from a formal understanding to quality as a way of life. 8 http://www.guv.ro/obiective/pg2005-2008/calendar-actiune-pg-guv.pdf 9 the scheme proposed by the government to analyze the formulation of public policies (http://www.mai.gov. ro/index18.htm) has as the final objective the implementation of public policies, and ignores the last stages of the process regarding the evaluation and assessment. 95 references: 1. adebanjo, dotun, tqm and business excellence: is there really a conflict, în measuring bussiness excellence, nr. 3 vol 5, p. 37-40 2. bovaird, tony, elke loffler, moving from excellence models of local service delivery to benchmarking `good local governance’, international review of administrative sciences, nr. 1 (68)/2002, pp. 9-24 3. dale, b.g., m. zairi, a. van der wiele, a.r.t. williams, quality is dead in europe long live excellence true orfalse, quality focus, vol.4, nr. 3, pp. 4-7 4. drăgulănescu, nicolae, magdalena drăgulănescu, managementul calităţii serviciilor, agir, 2003 5. engel, christian, common assessment framework: the state of affairs, eipascope nr. 1/2002, pp. 35-39 6. european foundation for quality management, introducing efqm, v2.1/en, 2003 7. european foundation for quality management, the fundamental concepts of excellence, v2/en, 2003 8. european institute for public administration, study on the use of the common assessment framework (caf) in european public administrations, synthesis paper prepared for the 41th meeting of the directors-general of public administration (rome, december 2003) 9. guvernul româniei, calendarul de aplicare a măsurilor şi acţiunilor pentru îndeplinirea prevederilorprogramului de guvernare 2005-2008 (proiect), aprilie 2005, http://www.guv.ro/obiective/pg2005-2008/caledaractiuni-pgguv.pdf 10. lascelles d.m., b.g dale, the road to quality, ifs, 1993 11. loffler, elke, defining and measuring quality in public administration, bristol bussiness school teaching and research review, nr. 5/2001, pp. 1-21 12. stanciu, ion, managementul calităţii totale, cartea universitară, 2003 untitled 40 employee retention. building organizational commitment. recommendations for nonprofit organizations paula beudean paula beudean head of programs department, the romanian foundation for children, community and family, romania tel: 0040-740-426889 email: paula.beudean@frccf.org.ro abstract the paper provides recommendations on building commitment which can be used by the nonprofit agencies that experience high personnel turnover. the recommendations are based on the theories and research concerning retention and organizational commitment. the study focuses on the organizational actions needed to build commitment and to retain employees. transylvanian review of administrative sciences, 25e/2009 pp. 40-50 41 scope employees’ retention is an important challenge in the nonprofit sector. the forprofit sector can use the money (high salaries, benefits and bonuses) as a tool to motivate and retain its employees, and the public sector can count on the job security and the benefits. meanwhile, the nonprofit sector seems to have only one main tool to keep its employees and this is the mission that agencies fight for. nonprofit organizations, such as the one that the author of this paper works for, the romanian foundation for children, community and family, might experience high personnel turnover, caused by different issues such as low salaries, job insecurity, increasing competition, or bad management. in this context, the mission does not seem to be enough to convince people to stay within the organization. however, if retention is viewed as a process that maintains and strengthens the relationship between the employees and employers, there is another way through which the nonprofits can keep their staff. they have to create commitment and to focus on building relationships that last. this tool can help in employee retention, but its effect is still limited. commitment can reduce the impact of other issues such as low salaries or job insecurity, but it cannot solve them. most of the researchers interested in this issue looked at organizational commitment in the for-profit sector, but there are some studies examining the public and nonprofit sector too. this paper’s intention is to make recommendations on building commitment, which can be used by the nonprofit agencies that experience high personnel turnover. the recommendations are based on the theories and the researches concerning retention and organizational commitment. the paper will focus on the organizational actions needed to build commitment and retain employees. in the first part of the paper, retention will be defined and general strategies of retention will be presented. the second part of the paper will look at the organizational commitment and its connection with the retention process. the third part will present the actions recommended by researchers to the organizations which want to build commitment and to retain their employees. the last part of the paper will provide recommendations for the nonprofit agencies which experience high personnel turnover. retention the harvard business school guide, motivating people for improved performance, makes a clear distinction between motivation and retention, though most of the times these two issues are presented together as they partially overlap: “you’ve got motivated employees – so what will you do to keep them?” (motivating people for improved performance, 2005, pp. 137). this paper will look at retention as a way to motivate people to stay within the organization, in contrast with motivation which is used as a way to make people perform better. another important point supported by this paper is that the organizations do not have to retain every single employee. they have to focus their attention and efforts on the most talented employees. the harvard guide suggests that it is not helpful 42 to look at overall attrition and retention rates, and that it is better to focus only on the retention rate of the best people and the attrition rate of the low performers. in other words, the organizations should keep their best employees as long as they can, meanwhile the low performers should be managed just as aggressively, but in the opposite direction (motivating people for improved performance, 2005, pp.141). the strategies for retention always start with the process of hiring, and this is focused on getting new employees who are talented, and who perfectly fit within the organization (as members of the group, and as well as regarding their personal goals that should match the organizational goals). then, the next step is finding out what employees want from the organization and for themselves. taking into consideration these needs and wishes, the organization should adapt and build itself, so that it can respond to people’s interests and to its own goals. the harvard business school guide recommends the following actions as part of a retention strategy: – hire for retention; – research what people want; – structure the organization to allow choices; – single out people for special programs (motivating people for improved performance, 2005, pp.150-155). as it can be observed, this strategy starts with the hiring process too, and then it recommends looking at people’s needs. the next step is about designing the organization in such a way that it will allow employees to choose, for instance, different and personalized benefit plans or career paths. the last action refers to special opportunities (such as promotions, raises, trainings, internships, leaves) that should be tailored for individuals’ needs, and which should not be provided as group programs that do not fit people’s specific needs. carpenter, in his article from the nonprofit times, presents retention tools that can be used specifically by the managers of nonprofit agencies. the actions that managers should focus their attention in a retention strategy are: – talent selection (use the proper hiring procedures to hire the most suitable, highly talented employees); – achievement support (make clear the performance expectations and help the employees to reach them); – learning and professional growth (provide opportunities to grow within the organization); – ensuring recognition (use recognition tools, but adapt them to each individual’s needs); – nurturing careers (provide opportunities to build a career in the organization); – team collaboration (supports the teams and helps the teams’ members to work together) (carpenter, 2001, pp.10). in summary, the organizations should think strategically about retention and they should be careful in the selection of the tools of retention which should be adjusted to the organization and to the employees’ needs. 43 retention by building relationships that last retention means to motivate people to stay within the organization, to motivate employees to keep their relationships with employers. at the base of all the tools and strategies of retention is the relationships built between the employees and employers and among the employees themselves. if these relationships are not perfectly understood or are neglected, then no strategy can help to retain the employees. in other words, each strategy should be applied taking into consideration these relationships. the most important part of a relationship’s survival is to be committed to the relationship. thus, organizational commitment is an important factor in the retention process. both the employees and the employers should be committed to the relationships. they should feel connected and motivated to keep the connection established between them. commitment rebirth human resource research suggests that the relationships between employees and employers have changed significantly, especially in the last decade. tsui and wu summarize this change: “the bond between employer and employee no longer is a long-term relationship, involving loyalty and commitment, but a contract like economic exchange” (tsui and wu, 2005, pp. 115). the authors suggest that this new relationship is less attractive than the previous one, because it doesn’t bring job security or commitment, and affects the overall performance of the organizations, and the employees’ involvement (tsui and wu, 2005, pp.116). at the same time, they recommend a return to the traditional relationship, based on mutual investment, loyalty, trust, and in which both the employers and the employees are interested in long-term connections (tsui and wu, 2005, pp.121). in this context, o’malley talks about the “rebirth of an old-fashioned value – commitment” (o’malley, 2000, pp.1), and he suggests that there are two reasons for this rebirth: “first, commitment is perceived as a business necessity. worker shortages are seen as a barrier to growth among fast-growing companies. (…) the second reason why commitment is back in style is because it is becoming very hard to replace workers – and not just because they are hard to find. employees’ knowledge and skill sets are more refined. today, the work of organizations requires more intimate knowledge of the industry and of the specific company, as well as constant skill renewal and updating” (o’malley, 2000, pp. 1-3). moreover, mendes connects the american workplace crisis to the lack of commitment: “an insidious crisis is infecting the american workplace, draining job performance, quality, and profitability. (…) the crisis arises from within the individual. it is the lack of commitment. (…) the blind loyalty that was part of the typical business trade-off (work hard for our company and we guarantee your job) is gone” (mendes, 1996, pp. 1-11). 44 but mendes is optimistic and suggests that a new type of loyalty can be created, if the managers dedicate time and resources to this process (mendes, 1996, pp.11-12). in summary, even if the relationship between employers and employees changed significantly, the employers still need the employees’ commitment. so they have to create new methods to recapture this commitment. organizational commitment liou and nyhan summarize the theories of the organizational commitment, by presenting the two approaches that were used in defining it: 1) the attitudinal approach, and 2) the behavioral approach. the first approach “sees commitment as an attitude reflecting the nature and quality of linkage between an employee and an organization” (liou and nyhan, 1994, pp.100). from this perspective, a committed employee believes and accepts the organization’s goals and values; he/she has a willingness to exert considerable effort on the behalf of the organization, and he/she has a desire to keep the relationship with the organization. the second approach is “concerned mainly with the process by which individuals develop a sense of attachment not to an organization but to their own actions” (liou and nyhan, 1994, pp.101). the same approach also talks about another dimension of the commitment, the normative one, which is reflected in “employee’s feeling of obligation toward the organization” (liou and nyhan, 1994, pp.101). in conclusion, the theories speak about affective commitment (attachment to the organization), continuance commitment (attachment to their own actions), and normative commitment (no attachment, only obligation). o’malley proposes another definition for commitment, that combines the previous ones, but which responds better to the work-place reality, in which the employee’s attachment and feelings are not so clearly separated. he suggests that commitment has five overlapping dimensions: acceptance (fit and belonging), esteem (status and identity), security (trust and reciprocity), growth (emotional reward), and sustenance (economic interdependence). these five components converge to form different species of commitment: – non-commitment (low on all commitment components); – consummate commitment (high on all commitment components); – affiliative commitment (high fit and belonging); – associative commitment (high status and identity); – moral commitment (high trust and reciprocity); – structural commitment (high economic interdependence) – affective commitment (high emotional reward) (o’malley, 2000, pp. 37-39). o’malley’s model, even if it seems more complicated than the previous ones, is better, because it can help the managers to be more precise when they look at their employees’ commitment. it can also help them to understand better the employees, by taking into consideration individuals’ needs (acceptance, esteem, security, growth and/or sustenance). being more precise about employees’ needs and about the type of commitment they express makes the selection of the managerial actions easier. 45 commitment in the nonprofit sector goulet and frank studied the organizational commitment across the three sectors: public, non-profit and for-profit. the results of their study revealed that for-profit workers are the most committed to their organization, followed by non-profit employees, and then by the public employees. “employees of public and non-profit organizations were expected to exhibit the highest level of organizational commitment given their motivation by both extrinsic (e.g. salary, benefits) and intrinsic (e.g. job satisfaction) rewards. surprisingly, the results of this research indicate precisely the opposite of what was expected” (goulet and frank, 2002, pp. 206). the authors believe that the disparity in extrinsic rewards between the non-profit/ public and private sector may, in part, explain the differences in the organizational commitment rates. in other words, the managers should understand that “while intrinsic motivators are important to non-profit and public sector workers, extrinsic motivators, such as pay and benefits, are critical” (goulet and frank, 2002, pp. 207). in other words, the nonprofit employees are strongly motivated to stay with the organization by the cause or the mission of the agency, for instance, but they are not completely committed if the compensation is not what they expected it to be. in summary, the nonprofit managers should understand that their employees are not there only for the mission of the organization, and that compensation is really important to them. then, their understanding of the importance of the salary should be reflected in the hr policies and in the compensation system which should provide the right price for the employees’ work and performance, and which should be fair and avoid any discrimination or subjectivism. organization’s actions commitment depends on the organization’s characteristics and actions, on the individuals’ characteristics and actions, and on the job’s characteristics. in other words, an employee’s commitment is determined by the organization, by his/her own predisposition to be committed, and by the fact that he/she likes or does not like the job. this paper is interested in what organizations and managers should do in order to create commitment, and the relationships that last with their talented employees. in other words, the paper will look at the organizational characteristics, because they seem to be the most important factors in predicting employees’ commitment and because managers can control these characteristics and bring change in the organization. research on predictors of job satisfaction and organizational commitment in human service organizations documents the dominance of organizational characteristics in predicting commitment: “the hierarchy of effects points clearly to the dominance of job characteristics in predicting satisfaction and the dominance of organizational characteristics in predicting commitment. results also indicate that worker characteristics significantly predict commitment but play no role in predicting satisfaction” (glisson and durick, 1988, pp. 75). 46 going back to the five dimensions of commitment, o’malley offers concrete approaches to building commitment which can be used by managers (o’malley, 2000, pp. 55-220). on the first dimension of “fit and belonging”, the organization should self-disclose to employees or potential employees and make them feel they are part of the organization. this should be done through open, honest and clear communication of the organization’s mission, goals, values, or policies and it should start with the process of hiring. by the time the employees start the job, they should already know a lot of things about the organization, so that they can feel like “insiders”, and not “outsiders”. on the second dimension of “status and identity”, managers should work on creating an organizational group that employees are proud of. then, they should make sure that every individual receives a status in this group, and that the group works perfectly for the organization’s mission and for individuals’ goals. even if the group splits in more teams, the managers should pay attention to how these teams stay connected and interact with each other. the individuals should feel satisfied with the group they are in and with the role and the status they receive in the group. then managers can work on “trust and reciprocity” by always taking into consideration the needs and the interests of their employees before they make decisions which are in regard to them or the organization. this does not mean that they have to follow only the employees’ interests. sometimes, these interests conflict with the organization’s interests, but the managers have to show at least their good intention and find solutions that can satisfy both sides. at the same time, the managers should prove that they value: individuals’ growth, their health and safety, individuals’ accommodation and work-personal integration. in other words, the organizations should support people to develop their skills, knowledge, and even advance in their career. moreover, they should provide a safe and proper work place environment and health insurance, or access to health insurance. in addition to these, the organization should respond to the individual’s needs, and not to the needs of a group. on the dimension of “emotional reward”, the organization has to work on job satisfaction, happiness and work-life satisfaction. the organization and the work should be interesting and satisfying, they should allow for fun, and they should allow people to live their non-work lives. this dimension cannot be covered if the managers do not know their employees very well and what makes them happy. the last dimension of economic interdependence refers most of all to compensation. the rules are simple. first, the organization should provide the right price for the work done by its employees, at the market level. second, it should be fair in compensating and rewarding its employees, by staying away from discrimination or subjectivism. these actions are summarized in the table 1. table 1. organization’s actions and commitment dimensions commitment dimensions organization’s actions i feel fit & belonging mutual self-disclosure (attraction, selection, hire, organizational entry) 47 i am status & identity create a group provide status i should trust & reciprocity consider the needs and the interests of “the other” value: growth, work-personal integration, individual accommodation, health and safety i want emotional reward provide: happiness, job satisfaction, work-life satisfaction i must economic interdependence provide: the right price and fairness besides these actions, there are two other things that the organization should think about: the style of leadership and the organizational culture. walumbwa (walumbwa et al., 2005, pp. 236) suggests that the style of leadership that enhances organizational commitment is the transformational one. the transformational leaders are those who “transform the values, needs, aspirations and priorities of followers and motivate them to perform beyond the expectation.” they are visionary and mission-driven. the four components of transformational leadership are: charisma, inspirational motivation, intellectual stimulation, and individualized consideration. in other words, the leaders have charisma, they are able to inspire and stimulate the followers, and they treat them as individuals, and not as a group (walumbwa et al., 2005, pp. 238). moreover, the same authors have documented that the transformational leadership can be used as an important managerial tool in order to enhance organizational commitment even across cultures, but this will be effective only if the unique local cultural complexity is taken into account (walumbwa et al., 2005, p. 251). in addition, odom, boxx and dun suggest that commitment can be built in organizational cultures that are people-oriented, encouraging, equitable, trusting, innovative, and allowing greater personal freedom. at the same time, the managers should remove bureaucratic structures and barriers, and become more supportive and closer to their employees (odom, boxx and dun, 1990, pp.167-168). ito and brotheridge looked at another factor that can influence the organizational commitment and that can be controlled in part by the organization and its managers. they were interested in the relationships between organizational commitment and career adaptability. career adaptability is defined by the authors as hr practices that promote and create autonomy, high employee involvement in decision making, supervisor support, and career development (ito and brotheridge, 2005, pp. 5-6). as their study shows, all these practices are positively correlated with high commitment, and are recommended as good practices for building and increasing commitment. but the same study documents that the results of career adaptability can bring turnover, because the employees gain more knowledge, skills, and abilities that allow them to look for better jobs or better organizations (ito and brotheridge, 2005, pp. 14-15). in addition to that, it has to be mentioned that the employees’ value on the labor market increases significantly and other organizations can “hunt” them. even if these practices are risky, the authors recommend their implementation, and they suggest 48 that the organizations should focus on building the affective commitment which makes employees really attached to the organization, and less to their careers (ito and brotheridge, 2005, pp.16). at the same time, organizations can use employees who are already committed, especially managers, to build commitment into the others. a study made by buchanan provides two ideas in this respect. first, the study looks at the managers’ commitment and it suggests that their commitment is essential to the organization and to the employees’ commitment: “the commitment of managers is essential for the survival and effectiveness of large work organizations because the fundamental responsibility of management is to maintain the organization in the state of health necessary to carry on its work” (buchanan, 1974, pp. 533-534). second, the author found out that the social interaction with peers and superiors is related with high commitment to the organization (buchanan, 1974, pp. 545). all the research mentioned previously supports indirectly the idea that the commitment can be built and it can be managed, if the leaders of the organizations are aware of all commitment’s implications and factors of prediction. but there are other authors who question the idea of managing commitment. this is probably because commitment depends on other factors, such as those related to individuals’ characteristics or jobs’ characteristics. iverson and buttigieg ask in their research if the commitment can be actually managed by the organization. their answer is not clear, but they suggest that the managers can at least control the organizational factors, and in this way they can minimize the other factors, such as personal traits or the other alternatives available to the employees on the labor market (iverson and buttigieg, 1999, pp. 227-228). in summary, this paper supports the idea that organizational commitment can be built and managed by the organizations, as long as leaders invest time and resources in this process. at the same time, they have to know their employees and their organizations very well and have the proper knowledge about how to build the commitment and relationships that last. they have to go even deeper than that and look at their own style of leadership and change the organizations by changing themselves. recommendations for nonprofits and conclusions the recommendations given to the nonprofit leaders can be split into three categories. the first is related to general knowledge and skills that they should have. the second is about the analyses that they should make in order to learn more about themselves, and about their employees and their organizations. and finally, the last one is about the actions that should be taken in order to build the organizational commitment. general knowledge and skills needed by the nonprofit leaders include: – the leaders should develop their knowledge and skills related to the organizational commitment and the retention and to the methods of working with these issues; 49 – they should be self-learners and they should also search for some professional help; – they should accept the importance of long-term relationships with their employees in the organizational development; – they should accept that they do not have to retain every single employee, and focus more on the most talented people who also fit the organization. analyses steps include: – the leaders should “explore” themselves to understand and change (if necessary) their own style of leadership; – they should “explore” their employees to understand what their needs, wishes, expectations and professional plans are; – they should analyze the relationships and the groups existing in the organization and propose changes (if necessary) for these; – they should analyze the hiring process, and the compensation system. actions for building commitment include: – apply the o’malley model on building commitment, when developing plans, policies and procedures related to this issue; – encourage employees’ autonomy; – involve employees’ in the decision making process; – promote creativity; – promote peers and supervisors’ support; – provide career development programs; – build trust; – treat people as individuals, and not as a group when responding to their needs, wishes, expectations and professional plans; – be fair and promote fairness; – train managers about commitment and ways of building commitment; – allocate enough resources and time for these actions; – believe in the process and get the managers to buy-in. in conclusion, these recommendations are general and represent the first steps that one organization should take in order to build relationships that last with its employees and reduce the turnover rate. moreover, these should be adjusted to the organization’s context and its needs. the recommendations are also limited by the fact that they do not take into consideration the individual and job’s characteristics which can still have an important influence over employees’ commitment to the organization. 50 references 1. buchanan ii, b., ‘building organizational commitment: the socialization of managers in work’, 1974, administrative science quarterly, vol. 19, no. 4, pp. 533-546. 2. carpenter, c., ‘human resources: discovering talent and keeping it’, nonprofit times, september 15, 2001, p. 10. 3. glisson, c. and durick, m., ‘predictors of job satisfaction and organizational commitment in human service organizations’, 1988, administrative science quarterly, vol. 33, no. 1, pp. 61-81. 4. goulet, l.r. and frank, m.l., ‘organizational commitment across three sectors: public, non-profit, and for-profit’, 2002, public personnel management, vol. 31, no. 2, pp. 201210. 5. ito, j.k. and brotheridge, c.m., ‘does supporting employees’ career adaptability lead to commitment, turnover, or both?’, 2005, human resource management, vol. 44, no. 1, pp. 5–19. 6. iverson, r.d. and buttigieg, d.m., ‘affective, normative and continuance commitment: can the ‘right’ kind of commitment be managed?’, 1999, journal of management studies, vol. 36, no. 3, pp. 307-333. 7. liou, k.t., and nyhan, r.c., ‘dimensions of organizational commitment in the public sector: an empirical assessment’, 1994, public administration quarterly, vol. 18, no. 1, pp. 99-118. 8. mendes, a., inspiring commitment. how to win employee loyalty in chaotic times, chicago: irwin professional publishing, 1996. 9. o’malley, m.n., creating commitment. how to attract and retain talented employees by building relationships that last, new york: john wiley & sons, inc., 2000. 10. odom, r.y., boxx, w.r. and dunn, m.g., ‘organizational cultures, commitment, satisfaction, and cohesion’, 1990, public productivity & management review, vol. 14, no. 2, pp. 157-169. 11. tang, t.l. and kim, j.k., ‘the meaning of money among mental health workers: the endorsement of money ethic as related to organizational citizenship behavior, job satisfaction, and commitment’, 1999, public personnel management, no. 28, pp. 15-26. 12. tsui, a.s. and wu, j.b., ‘the new employment relationship versus the mutual investment approach: implications for human resource management’, 2005, human resource management, vol. 44, no. 2, pp. 115–121. 13. walumbwa, f.o. et al., ‘transformational leadership, organizational commitment, and job satisfaction: a comparative study of kenyan and u.s. financial firms’, 2005, human resource development quarterly, vol. 16, no. 2, pp. 235-256. 14. *** motivating people for improved performance, harvard business school press: boston, massachusetts, 2005. untitled 244 abstract the author explores some of the generally overlooked roles of police force in contemporary world. the last decade was strongly marked by a need for increased safety, and police forces were strongly motivated to change the security paradigm. however, a connection between police and security can be seen as well, through the budget, where the activity of the police is measured using the amount of revenues obtained from fees and fines. in the case of the slovenian security situation and fine revenues, police has both the main role in providing a certain level of national internal security and an important budgetary role by providing 1% of the slovenian budgetary revenues that are sufficient to cover the expenses of approximately 15 main institutions belonging to the political system. budgetary perspective on police force: a case study on slovenia uroš pinterič uroš pinterič assistant professor, school of advanced social studies, nova gorica, slovenia tel.: 00386-312.371.85 e-mail: uros.pinteric@gmail.com transylvanian review of administrative sciences, no. 33 e/2011, pp. 243-254 245 1. introduction providing the overall security of a country is one of the most important roles of the modern state. this statement became even more emphasized after the terrorist attacks from september 11th 2001 on the symbols of the coercive capitalist world order. simultaneously, we are facing a ‘privatization’ of security that is widely spread in ‘western’ democracies, and quickly develops in transitional countries. the states transfer different police competences to other security institutions (other than private protection agencies), such as municipal patrols or agencies for highways. all these agencies are competent to maintain peace and order (in a broader sense) in the society. on the other hand, they are usually seen as the repressive apparatus of the government, suppressing the freedom of individuals while appearing very ineffective in their protection role. however, the insight into the state-building role of these institutions is limited. in this article we will attempt to understand the budgetary role of repressive institutions, especially police force. firstly, we believe that in the modern state, police force has only limited interest in providing general security. secondly, it appears that security providing institutions are strongly concerned about collecting relatively large sums of money from fees and fines. in general, money is paid to local or national budgets. the paper attempts to show how the slovenian police force contributed to the security and budget. in this sense we can paraphrase adam, tomšič and kristans (2008, pp. 60-61) according to which slovenia, as one of successful models of transition, started to develop dysfunctions on the basis of positive elements. what in the socialist regime was seen as mildly positive (compared to other socialist states in central and eastern europe) control turned into high control that is financially motivated. police is both the most important national institution for providing internal security and one of the public sector’s components. according to different definitions of public administration, the police may also be considered as an integrant part of the public administration. this statement can be valid in slovenia, where police is a subordinated institution of the ministry of interior and where each ministry is defined as public administration. be it so or not, one of the main tasks of modern police is to protect the state and the citizens from different individual threats made by individuals or institutions other than those belonging to the national or foreign army. such consideration of the police forces as part of the public sector/public administration adds to this debate a component that even though it is not discussed in this article, it is certainly important for the perception of police work. despite the rare discussion in this matter, the police work can and shall be systematically subordinated to the main principles of the last decade public administration reform. here we are referring to new public management as a set of certain principles introducing private sector working principles into the sphere of public sector work (klimovský, 2010). however, especially in the case of police work we have to be very selective in applying new public management (or other similar) principles into practice. in fact, one would expect that the main priority in police force reform to be the movement from the state centric 246 approach (providing security of the state), to the citizen centric approach (providing security of the citizens and for the citizens). however, in many cases, it is obvious that the police usually understand reform and new public management wrongly, simply increasing efficiency and effectiveness of its budgetary role. this aspect will become obvious in the empirical case of our article. the peak of such behaviour can be seen in the market-oriented behaviour of the police force. in some of these cases, the police price their services as their additional institutional income (see talaga and tucci, 2008). in this context, klimovský (2010, p. 193) stresses the importance of new public services concept as a possible answer to all lacks of new public management concept. at the same time, this concept shall answer to all dysfunctions of classical bureaucratic behaviour of public administration. on the other hand, lazăr (2005, pp. 126-127) is pointing out six main principles of good governance to be implemented in romania and slovenia as well. these principles are: low inflation, low taxation, development of public services, individual and public safety, tax equity and individual liberty and integrity of any citizen. lazăr (2005, p. 127) argues that these six principles were not taken into account until the 2004 change of the romanian government. on the other hand, in the case of slovenia, we can argue that since 2004 the situation is worsening concerning public safety, individuals’ liberty, low taxation burden and low inflation situation. despite most of the presented changes suggested by klimovský (2010, p. 193) are irrelevant for the police (due to their specific nature), there is an important statement saying that within new public services it is important to serve the citizens and not the government. developing this implication of new public services and respecting at least two points from lazărs’ list (2005, pp. 126-127), the police needs to take all necessary actions to protect citizens from any significant danger and to help them in different situations in a customer-friendly way, rather than to strictly serve the governmental interests by collecting budgetary money. 2. the socio-economic situation in slovenia state related security issues are strongly connected to the cultural and socioeconomic situation in the state. a high level of drug-addiction will raise the level of robberies, thefts and burglaries, just as a high level of poverty will do. a high presence of different mafias in a country will normally raise the number of gunfights, violent deaths and kidnaps. a high number of cars in a state will result in a higher share of car accidents and consequent injuries etc. the cultural situation in a country can influence the tolerance to different habits, such as drinking and driving, state activities as raising and introduction of taxes, the tolerance towards different minorities (national and societal), the tolerance towards rules or ability to comply with them. in table 1, we present some basic information on general crimes in slovenia. overall, one can see that the number of discovered and punished crimes is increasing. in this 247 respect, the number of reported crimes and violations can be useful information as well. however, we can see that the overall violence is relatively high (compared to all convictions), and that there are some additional specifics. it seems that the courts are able to convict more persons of violations against human rights, and that crimes against property are not only the most common, but they can be interpreted as result of an unfair society and of different other issues. crimes against public order are mainly connected to fights, inappropriate behavior etc., mainly due to abuse of alcohol. on the other hand, the number of public transportation violations is decreasing, especially in connection with more and more repressive sanctions against drivers. table 1: convicted adults by type of criminal offences 1995 2000 2004 2005 2006 2007 2008 total 3462 6304 7974 7718 8119 8685 8739 against life and body 405 691 826 815 838 765 785 against human and civil freedoms and rights 155 368 607 705 734 756 779 against sexual inviolability 43 73 92 91 118 123 112 against human health 36 213 332 252 383 356 345 against matrimony, family and youth 41 103 110 116 164 151 165 against employment and social security 28 30 34 against property 1453 2449 3364 3376 3490 3828 3787 against economy 73 376 443 352 479 467 472 against offi cial obligation and public authority 23 20 14 15 19 32 27 against public order and peace 164 479 689 657 723 822 882 against the general safety of people and property 80 53 57 72 43 46 74 against the safety of public transport 543 811 702 531 459 446 385 against the environment, space and natural assets 23 30 33 28 25 29 30 source: http://www.stat.si/letopis/2009/11_09/11-07-09.htm the main reason of death in slovenia is connected to various diseases, such as heart and veins illnesses (over 7,000 deaths per year), illness of respiratory or digestion system etc. according to the statistical data, in slovenia each year die more than 18,000 people, of which about 50-55% people dies in hospital. however, table 2 shows some crucial data on violent deaths. in general, we can see that between 7-9% of all deaths in slovenia are violent. the number of direct killings or homicides is almost irrelevant in the percentage of all deaths and also only barely worthy to mention within violent deaths. about 2% of all deaths are suicides, which are not mainly connected to adolescence; it seems in fact, that there are favorable conditions for senior citizens to appeal to suicide. in such case, social security (demanding great amount of money and returning only low taxes) failed. it seems that old males, often under influence of their drinking habits, are not given enough support to live and die naturally. 248 table 2: deaths due to accidents, homicides and suicides 1995-1999 20002004 2004 2005 2006 2007 2008 total 1721 1537 1492 1435 1590 1597 1515 accidents 1091 954 942 909 1048 1142 1094 homicides 37 26 38 23 13 21 13 suicides 593 557 512 503 529 434 408 cause of accident1) 1092 954 942 909 1048 1142 1094 transport accidents 381 308 307 277 293 319 251 poisoning 38 29 24 26 28 37 70 falls 382 330 309 321 437 485 550 fire and explosions 16 11 7 10 7 13 10 suffocations and drowning 59 55 42 45 68 70 52 all other causes 216 221 253 230 215 218 161 suicides total 593 557 512 503 529 434 408 men 461 427 370 391 415 335 324 women 133 130 142 112 114 99 84 age groups (years) 0-19 24 15 15 6 10 6 13 20-49 286 240 215 221 205 163 172 50 + 283 302 282 276 314 265 223 per 100 deaths violent deaths 9.1 8.2 8.1 7.6 8.7 8.6 8.3 accidents 5.8 5.1 5.1 4.8 5.8 6.1 6.0 homicides 0.2 0.1 0.2 0.1 0.1 0.1 0.1 suicides 3.1 3.0 2.8 2.7 2.9 2.3 2.2 the international statistical classifi cation of diseases and related health problems, tenth revision classifi es the causes of death. source: http://www.stat.si/letopis/2009/04_09/04-16-09.htm on the other hand, it is evident that a vast majority of all violent deaths are caused by different accidents. it is interesting to note that traffic accidents are not the main cause of accidental deaths. most of accidental deaths are caused by different falls, including those of falling on the ice, due to bad maintained road in the wintertime, falling when mountain climbing, due to bad physical condition or bad equipment or due to bad luck at paragliding. however, it is obvious from statistics that the number of traffic accidents deaths is declining, while the number of deaths by different events categorized as falls is increasing. for the safety on the road we can blame/praise higher fees and other repressive sanctions in slovenia introduced in recent years. however, 249 it is hard to determine how is it possible that the number of incidental deaths by falling increased significantly when compared to the decrease of traffic accident deaths. there are few different explanations: the decrease of the safety in construction areas (in the last few years, the number of fatal working accidents increased, mainly in construction); the need for adrenalin, causing the decision of greater number of people to start extreme sports (usually badly prepared); and the increasing number of (especially foreign) tourists in slovenian mountains, who are badly equipped for walking and climbing on altitudes 1000 m above sea level. it seems that the slovenian institutions responsible for providing the overall security situation in slovenia are performing bad their job. the 2009 yearly report shows that the police force in slovenia is able to solve less than one half of all crime cases in the period between 2005 and 2009. the police was in the same period able to indicate only each ninth criminal act, while victims of citizens reported the other eight. briefly, this last conclusion may explain the basic security situation in slovenia. meško and lobnikar (2005) on the other hand conducted research on local communities on most important measures for maintaining the security in local communities in slovenia in 2003 and 2004, showing that local community security councils assess that following security measures should take place in order to prevent crime and disorder: organized work with youth, more leisure activities available, professional policing, anti-unemployment measures, training for parents, schoolteachers competent for work with ‘difficult children’, solving social problems etc. according to meško and lobnikar (2005, p. 360), police control over problem areas came only tenth, traffic regime 18th and repressive policing 26th from 28 different options. from this perspective it is rather visible that slovenian population understands security in a social and not crime way. such perspective brings up numerous financial problems from gathering resources to their allocation. 3. slovenian police force according to the yearly report of the ministry of interior of the republic of slovenia, in 2009 there were 10,985 systematized working places (in 2008 this number was 10,590) and out of them 9,349 (9,300 in 2008) were occupied. among them about 6,200 of staff were members of uniformed police, while the rest were administrative personnel. in 2009, the slovenian police force bought or rented 50 unmarked police cars and 61 marked police cars or vans. from 2008, the ratio between hired marked to unmarked police cars changed from 30% to almost 41% of all patrol cars (there is no info available about the police cars that are owned by police). in this manner one can argue that slovenia is heading back on the road of control. in opposition to what adam, bernik and rončević (2005, p. 66) are arguing for the ideological control in the times of socialist yugoslavia1, the slovenian police force 1 klimovský (2008, p. 46) nicely expressed the main problem of any public administration reform, that can be applied for political system as such as well, is that any reform starts with enthusiasm and high expectations and in most cases ends with low results and 250 is recently developing a sophisticated system of total control over traffic that can be even misused for collecting data on personal routes. despite the economic crisis, the number of police force was increasing, just as the undercover police presence did. according to the 2009 police yearly report almost 78% (258,642,122 eur) of the police budget was spent for salaries of the staff. from 2008, the amount of money for salaries of the police increased by 7.4%. 4. the budget of the republic of slovenia the republic of slovenia has two-year budget with fiscal year covered by calendar year. for 2009 estimated budgetary revenues were 8,986,762,000 eur, mainly collected from taxes (7,669,825,396 eur). the estimated amount of collected fines and fees was 46,469,549 which is about 0.52% of all budgetary revenues. this sum was changed to 72.199.071 eur (with budgetary rebalance made on july 16, 2009) as well as all budgetary revenues that dropped to 7,920,040,319 eur. according to the abovementioned rebalance of budget, fees and fines in 2009 represented more than 0.9% of the slovenian budget. at the same time, the revenues from state selling goods and services were almost unchanged due to the rebalance (the state did not try to offer more services to the citizens and enterprises) and, at the same time, according to the rebalanced budget, the state expected 7 fines on one sold service (initially 1:4). this is completely against klimovský’s new public services principles (2010, p. 193) that the public sector serves primarily the government and not its citizens. in the case when the government is able to change revenues from fines to almost twice within the budgetary year and to count on these revenues, it is rather evident that governmental demands have higher priority than citizens needs (in this case citizens have no need for fines, but for security, and fines cannot be the main measure for providing security). the final budgetary report shows that the realized 2008 budgetary revenues for services were approximately equal as planned for 2009 and amount from fines was much closer to the 2009 rebalanced budget plan than to initial budget for 2009 (http://www.mf.gov.si/slov/proracun/proracun.htm). the 2009 budget of the republic of slovenia confirmed the 9,112,167,385 eur of expenditures. the expenditure budget of the ministry of interior in 2009 was 322,397,582 eur. on the other hand, the ministry of healthcare received 97,004,755 eur and the ministry of economics received 274,573,571 eur of the total budgetary expenditure. from these data it is evident that the ministry of interior spent 3.5% of the national budget and at the same time gained much more money than the ministries of healthcare and economics (two important sectors for development and quality of life). in 2009, 983,606,070 eur were allocated for salaries paid by the state to the employees in public sector. according to the data on salaries in police force, 26.3% of all budgetary expenditures for salaries went to salaries for the police. according to dissapointment. we can add that includes it lots of social/political ‘extrenalities’, which can lead to devolution of quality of life. 251 these data, the slovenian police force adds great share to the budgetary expenditure with only small possibility to find some reserves in a sense of greater efficiency and effectiveness side of police work or on the side of possibility to limit expenditures of ministry of interior. 5. the budgetary role of police the slovenian police have a double budgetary role. as we saw from previous parts, it is one of the greatest spenders of budgetary revenues, especially if considering the amount of money spent for the salaries. on the other hand, the police force is one of the most effective institutions for collecting additional budgetary revenues. the majority of fines are connected to traffic violations, mainly due to speeding, driving under influence of alcohol and other violations. it is not surprising that fines are established in order to suppress these violations. according to the act on traffic security, in slovenia, the lowest fine for violating a traffic sign is 40 eur, and the highest one, for speeding, is 1,000 eur. this means that if one drives (without causing accident) into one way street from the wrong end, the driver risks a 40 eur fine, but if one drives 80km/h in a settlement where the speed limit is 50 km/h, he/ she will receive a 1,000 eur fine and endure some other non-financial consequences. according to this, it is necessary to be aware of two facts. for any fine paid within 16 days without complaint or court procedure, there is a 50% discount. and second, in many cases speed limits in slovenia are set in a manner that they allow fining (e.g. the town mark is put 100-300 m before first house, speed limits indicators not removed after reconstruction of the road etc.). so we have to be aware that our further calculation is of limited validity. for reasons of comparison, we present first some data on fines for speeding, alcohol driving and some other dangerous violations of traffic rules in slovenia and some relevant for slovenia’s neighbor countries austria, italy and croatia. table 3: fines for most common traffic violations in slovenia and some of neighbor countries (eur) slovenia croatia austria italy intoxicated driver 180-950 100-2100 300-5900 500-6000 speeding 250-1000 70 70 150-600 driving into the red light 250 290-700 72-2180 150-600 non-use of safety belt 120 70 35 74-295 use of the cell phone 120 70 50 70-290 intoxicated driver speeding into the red light with no use of safety belt and using cell phone (highest fi nes) 2440 3010 8235 7785 source: http://www.zurnal24.si/slovenija/kazni-179588/clanek from table 3 it is obvious that slovenia has lowest fines for driving under the influence of alcohol and highest fines for speeding. it is necessary to stress that speeding is categorized by place of violation and speed measured. 252 the slovenian police force is organized into two different working unions (union of slovenian police and slovenian police union) with about 50-50% membership. on october 5th 2009, they organized a two-hour strike that included about 3,000 policemen. the strike was organized in a way that the police would only respond to emergency calls and interventions and issuing no fine tickets. information was that in one day with an average fine of 200 eur, two hours of no fining meant a budgetary deficit of 200,000 eur. this number is close to the estimated daily budgetary revenues expected in 2009 for achieving the goal of 72,199,071 eur from fines and fees (197,805.7 eur per day). this number will certainly vary due to weather conditions and other legal conditionalities not taken into the account here (such as paying half of amount in 16 days, which gives space for revenues from other fines and sanctions). according to this information we can make a small calculation of informative nature, which is far from being exact. an average shift is 8 hours; the police are working 24 hours/day and 365 days per year. the traffic control squad is composed from a car and two officers. according to the previously mentioned data on cars, at any given moment 75 traffic patrols can be active, but due to the diversity of tasks only about one third (25) patrols are working on traffic control at any given time, with smaller numbers during nights and bad weather conditions. the budgetary importance of the slovenian police force can be measured as well in relative way compared to different other elements. first, we can see that for 208 slovenian municipalities the expected budgetary revenues from fines are higher than 2009 yearly budget. only the biggest two slovenian municipalities had larger budgetary revenues in 2009 than the expected state revenues from fines and fees. on the other hand, 40 (20%) municipalities with lowest revenues all together were not able to realize the 2009 expected budgetary revenues from fines and fees. on the other hand revenues from fines (72.2 mil. eur) according to the rebalanced budget of slovenia for 2009 can cover expenditures according to the same document for: the office of the president of the republic of slovenia – 3.6 mil. eur, the national assembly of republic of slovenia – 29.2 mil. eur, the national council of the republic of slovenia – 2.3 mil. eur, the electoral commission of the republic of slovenia – 3.8 mil. eur, the ombudsman of the republic of slovenia – 2.3 mil. eur, the information security office – 1.3 mil. eur, the constitutional court of the republic of slovenia – 4.9 mil. eur, the court of accounting of the republic of slovenia – 6.9 mil. eur, the anti-corruption commission of the republic of slovenia – 1.1 mil. eur, the slovenian academy of sciences and arts – 4.3 mil. eur, the prime minister cabinet – 2.3 mil. eur, the governmental offices – 32 mil. eur, the ministry without portfolio for development and european affairs – 22.9 mil. eur, the slovenian intelligence agency – 15.3 mil. eur and the cabinet’s office for legislation – 2.5 mil. eur. from this list, it is obvious that revenues from fines can cover budgetary expenditures of many slovenian political system institutions; and that many institutions are hardly reaching the levels of fine revenues. with 1% of expected budgetary revenues we are 253 able to cover expenses of about 10-12 political system institutions, responsible for general situation in the state as well as for the specific areas important to any democratic country such as human rights protection and anti-corruption activities. however, we have to be aware that the amount collected yearly from fines and fees cover only 1/3 or one 1/4 of money necessary for salaries of police force. such comparison of budgetary items can go on and on but the picture will remain about the same. 6. concluding remarks statistically speaking, the slovenian police force receives about 1% from the national budget revenues and about 30% on expenditure side concerning salaries paid from the national budget. however, one can conclude that the level of fees and fines revenues has to be seen in double perspective. on one hand, the amount of fees is enormous, and in some cases it is even endangering the existence of individuals, while enabling numerous state functions to be carried out. not only fees’ levels are a reflection of state perspective on ‘dangers’; according to the statistics they have some effect on the overall security. however, their role on the budgetary revenues side is much greater. a second side of the fees’ role in the slovenian traffic system seems to be according to the national character that the legal system and traffic security policy has to be connected to the long-term budgetary effects that shall be achieved. despite the fact that a large number of fatal accidents include drunken persons, the main cause of accident is usually unadjusted speed (not too high speed). intoxication can be almost seen as apologizing circumstance for unadjusted speed (which is any speed at which a person is not able to control the vehicle completely), while inability to control the car completely at a certain speed is not connected to the intoxication, even when sober individual would be able to avoid the accident at the same speed. however, in the situation where taxation reform is unpopular and can be strongly politically opposed, one of easiest way to increase the budgetary revenues is to increase police control over citizens’ daily routine and impose higher fines and fees for most common legal violations that are highly unavoidable. in this sense, the police force can be seen as an important regulatory mechanism that can strongly influence the level of public debt and deficit. in the case of slovenia, excluding the revenues from fees and fines, the budgetary deficit would be higher than previously mentioned 1%. references: 1. adam, f., bernik, i. and rončević, b., ‘a grand theory and a small scientific community: niklas luhmann in slovenia’, 2005, studies in east european thought, vol. 57, no. 1, pp. 61-80. 2. adam, f., tomšič, m. and kristan, p., ‘political elite, civil society, and type of capitalism: estonia and slovenia’, 2008, east european quarterly. vol. 41, no. 1, pp. 43-67. 3. cohen, m.a., rust, r.t. and steen, s., ‘prevention, crime control or cash? public preferences towards criminal justice spending priorities’, 2006, justice quarterly, vol. 23, no. 3, pp. 317-335. 254 4. klimovský, d., ‘politics and its impact on the reform processes: the case of public administration reform in slovakia (1989-2006)’, in musil, j. (ed.) space and historical time as dimensions of social change, prague: matfyzpress, 2008, pp. 45-64. 5. klimovský, d., ‘geneza koncepcie good governance a jej kriticke prehodnotenie v teoretickej perspective’, 2010, ekonomicky casopis, vol. 58, no. 2, pp. 188-205. 6. lazăr, d.t., ‘the tax reform of romania since the tansition to market economy’, 2005, transilvanian review of administrative sciences, vol. 15e, pp. 121-130. 7. meško, g. and lobnikar, b., ‘the contribution of local safety councils to local responsibility in crime prevention and provision of safety’, 2005, policing: an international journal of police strategies & management, vol. 28, no. 2, pp. 353-373. 8. roche, s., ‘the transferability of evaluation and the ‘what works’ approach in france’, 2005, european journal on criminal policy and research, vol. 11, no. 3-4, pp. 297-320. 9. talaga, j. and tucci, l.a., ‘pricing police services: theory and practice’, 2008, policing: an international journal of police strategies & management, vol. 31, no. 3, pp. 380-394. 10. zedlewski, e.w., ‘conducting cost benefit analyses in criminal justice evaluations: do we dare?’, 2009, european journal on criminal policy and research, vol. 15, no. 4, pp. 355-364. 11. http://www.mf.gov.si/slov/proracun/proracun.htm, accessed on july 20, 2010. 12. http://www.policija.si/index.php/statistika/prometna-varnost, accessed on july 20, 2010. 13. http://www.stat.si/letopis/2009/11_09/11-07-09.htm, accessed on july 20, 2010. 14. http://www.stat.si/letopis/2009/04_09/04-16-09.htm, accessed on july 20, 2010. 15. http://www.zurnal24.si/slovenija/ne-stavka-manj-kazni-176820/clanek, accessed on july 20, 2010. 16. http://www.zurnal24.si/slovenija/kazni-179588/clanek, accessed on july 20, 2010. 94 abstract in the last eight years romania has encountered a significant growth of the gdp. however, the economy does not seem capable to value this growth by balancing the budget and reducing the current account deficit, problems that are persistent during the last period. in 2008 the romanian economy had the highest level of budget deficit since the 90’s. there is an important debate between the economists on this issue and we have to see if there is any reason to worry, having in mind the current global financial crisis. this paper tries to analyze the problems of budgetary deficit, current account deficit and economic growth. we will take a look on last period statistics and on specific literature, see how those variables evolved over time and in different cases and we will try to identify possible connections between them. deficits and growth from romania's perspective bogdan andrei moldovan dan tudor lazăr bogdan andrei moldovan assistant professor, public administration department, faculty of political, administrative and communication sciences, babes-bolyai university, cluj-napoca, romania tel/fax: 0040-264-431361 email: moldovan@apubb.ro dan tudor lazăr associate professor, public administration department, faculty of political, administrative and communication sciences, babes-bolyai university, cluj-napoca, romania tel/fax: 0040-264-431361 email: danlazar@apubb.ro transylvanian review of administrative sciences, 26e/2009 pp. 94-105 95 introduction last year, romania recorded the highest level of budget deficit since the 90’s, and caused a fervent debate at the level of politicians. having in mind that in november 2008 we had election going on, and that the level of deficit was used to win votes, we tried to take this debate to the level of economics and finance and conduct a research on the evolution of some financial indicators. we decided to tackle the problems of budgetary deficit, current account deficit and economic growth, in order to make a broader image of the situation. the first part of the paper focuses on the indicators mentioned above and their evolution in the past years. another issue that appeared on the public agenda due to the large deficit recorded is that romania may be subject to the “excessive deficit procedure”. on the other hand we tried to give an answer to the problem of deficit: should its level be a matter of concern? finally, we studied possible connections between the evolution of the budgetary deficit, the current account deficit and economic growth, through “the twin deficits hypothesis”, and see how the variables affect each other. 1. romania: figures and facts starting from the year 2000, romania has recorded a yearly average of 5.8 % of gross domestic product growth, with a peak of 8.5% attained in 2004 (table 1). table 1: romanian macroeconomic indicators romania 2005 2006 2007 2008 gdp mp (million ron) 288,955.0 344,651.0 412,762.0 503,959.0 growth rate of gdp % change from previous year 4.2 7.9 6.2 7.1 government deficit (-) / surplus (+) (million ron) -3,344.0 -7,474.0 -10,466.0 -27,295.0 % of gdp -1.2 -2.2 -2.5 -5.4 government expenditure % of gdp 33.5 35.3 36.6 38.5 government revenue % of gdp 32.3 33.1 34.0 33.1 government debt (million ron) 45,626.0 42,583.0 52,292.0 68,532.0 % of gdp 15.8 12.4 12.7 13.6 source: “eurostat newsrelease, euroindicators”, 56/2009 data released by eurostat shows that in the last years romania along with slovakia, estonia and latvia had one of the highest levels of growth in the eu. in 2008, due to the financial crisis, estonia and latvia did not manage to maintain the growth path of the economy. the latest forecasts of international monetary fund expect romania to have a negative percentage change in gdp of – 4.1% in 2009 and stagnation in growth for 2010. 96 in 2008 romania registered 5.4% of gdp budgetary deficit, the highest since 90’s. according to eurostat, romania has been confronted with the third of the highest level of budgetary deficits after ireland (-7.1%), the united kingdom (-5.5%). on the other romania recorded, at the end of 2008, 13.6% of gdp government debt, the second of the lowest ratios in the eu zone. we choose to present these indicators in order to be able to tackle the problem of excessive deficit procedure that may concern romania due to the high deficit recorded in 2008. the stability and growth pact opens the way for the council to penalize any participating member state that fails to take appropriate measures in order to reduce and control (the “excessive deficit procedure”). initially, the penalty would take the form of a non-interest-bearing deposit with the community, but it could be converted into a fine if the excessive deficit is not corrected within two years. however, there is no formal rule concerning these penalties: the council decides penalties, taking into consideration the gravity of the situation and the economic circumstances faced by that state. the excessive deficit procedure is governed by article 104 of the treaty establishing the european community, under which the member states are forced to avoid excessive deficits in national budgets. the protocol on the excessive deficit procedure, annexed to the treaty establishes the reference values of macroeconomic indicators for any european union member: – 3% for the ratio of the planned or actual government deficit of gdp at market prices; – 60% for the ratio of government debt of gdp at market prices. the european commission launched the excessive deficit procedure and adopted so-called “excessive deficit reports” against greece, spain, france, ireland, latvia and malta, because all of them overcome the 3% of the gdp barrier. several european countries have already been subject to this procedure – portugal and germany – 2002, france – 2003, the netherlands, greece, malta, cyprus, slovakia, czech republic, – 2004, uk, italy, portugal again in 2005. in the case of these countries, the procedures were closed by council decisions with no penalties. hungary and the uk are facing ongoing procedures under excessive deficit procedure. in their case there are decisions of the ec on existence of excessive deficit – july 2004 – hungary and july 2008 – uk. the deadline for correction is 2009 for hungary and financial year 2009/2010 for the uk. as the statistical data for 2008 shows, romania has exceeded the reference value of 3%, and could be subject of a recommendation to rectify the situation within a given period. however the low level of government debt (13.6% of gdp) related to the 60% threshold could be an advantage that romania has over other countries in similar situations. some economists questioned the efficiency of the stability and growth pact: is this pact still in effect with the deficit limits being regularly broken? (stiglitz, 2006) 97 2. are deficits bad? theoretical approach • classical and keynesian approaches on deficits the classical approach considers that the budget deficit has negative impacts on the economy. one of those is the higher fiscal pressure that will be laid on the following generations to pay the future debt in order to finance the state budget deficit. moreover the state’s need to borrow money increases the credit demand. in this situation the banks rates of interest increase and affects the level of inflation. the conservative approach considers that reducing the budget deficits will be good for the economy. when the government runs a budget deficit, it spends more than it collects and it has an immediate effect on the level of investments. in the same time the low level of investments will have a negative effect on the economic growth. in conclusion the main effects of budget deficit are lower investments and higher interest rates and it has a bad influence on the economy on the long term. one of the most important turning points in economics was the insight of john maynard keynes that government could help countries to recover from economic recession, by spending more and lowering taxes and interest rates (stiglitz, 2006). john maynard keynes in its general theory of employment, interest and money (1936) considered capitalism as unstable. however, he thought that there is no need to nationalize the economy, to impose price-wage controls, and to interfere with the supply and demand. he agreed that the government should intervene and settle the situation when things are going bad. many of keyne’s followers saw fiscal policy as a lever that can be twisted in order to control economy. in their opinion, a larger budgetary deficit means a stimulus for economic growth, through which unemployment could be reduced and the economy would get back on track. in addition, a smaller budget deficit or a surplus could be useful for overheated economies in order to slow growth rate and reduce the inflation danger. (samuelson, 2000) the classical approach considered an action on prices and wages, but keynes saw the solution in deliberately running federal deficits and spending money on public works that eventually would expand aggregate demand and restore confidence in the economy. once the economy recovers, keynes thinks that the government would no longer need to run deficits (scouse, 2007). friedrich hayek and the london school of economics believed that the economy was self-adjusting and was in favor of wage reductions and balanced budgets as solutions to the depression (stiglitz et al., 2006). actually, keynes criticized friedrich hayek and the london school of economics for believing that the economy was self-adjusting and for urging wage reductions and balanced budgets as solutions to the depression (scouse, 2007). the keynesian approach suggested that reducing deficits can be bad for both the economy and confidence. keynesians though that rescheduling debt can provide funds for a country to finance expansionary fiscal policy, and capital control might allow a country to maintain lower interest rates. in this view, restoring strength to the 98 economy is far better for building confidence than the conservative measures (stiglitz et al., 2006). keynes did not agree with the classical solution – “tighten one’s belt” by cutting prices, wages, and wasteful spending while waiting to get out the recession. as we can see in the paragraphs above, he thinks different and recommended deliberate deficit spending by the us federal government to jump-start the economy during the depression of the 1930s. he actually said that government spending could be totally wasteful and it would still help – “pyramid-building, earthquakes, even wars may serve to increase wealth,” he proclaimed. of course, “it would, indeed, be more sensible to build houses and the like,” but productive building was not essential. according to keynes, spending is spending, no matter what the objective, and it has the same beneficial effect – increasing aggregate demand (scouse, 2007). samuelson is another advocate of the benefits of budgetary deficits. during the time he was a close advisor to president j.f. kennedy he helped steer through us congress a keynesian program designed to stimulate economic growth through deliberate deficit financing. the effects of this policy were positive, as the us economy flourished through the mid-1960s (scouse, 2007). 3. modern approaches the modern approaches on budget deficits are based especially on the way budget deficits are financed and on the problem of the sustainability of the deficit. in the matter of the budget deficit financing there are several options that states can take into consideration (vit, 2004): 1. government bonds selling 2. borrowing from abroad 3. monetization 4. selling of state assets. first we tackle the options that concern government bonds and borrowing. considering the first alternative mentioned, bond selling leads to an increase of demand for private funds in the economy. higher deficit leads to higher interest rates, and the higher interest rates reduce private investment (stiglitz et al., 2006). this means that more funds the government deficit demands, a lower amount of money will remain for the private investments. the excess demand for money will determine a rise in interest rates. the higher interest rates will stimulate private sector and households to increase savings and shift some investments towards the future. in this case we say that public expenditures (deficits) crowd out private investments – crowding out effect. some authors believe that international borrowing by governments may be more bad than good. this is possible because the ability to borrow from abroad will exacerbate a political bias toward budget deficits and an intrinsic tendency to accumulate too much debt (roubini and setser, 2004). the third option to finance budget deficit is monetization. this method of budget deficit financing is actually forbidden in many industrialized and some developing 99 countries because it can lead to hyperinflation. we used the quantitative equation of money to identify the negative effects of monetization as a source of financing budget deficit. irving fisher’s quantitative equation of money points out the relationship existing between the money stock, the velocity of money and the volume of transactions (irving fisher – „the purchasing power of money” 1911): m*v = p*t where: m – money supply; v – velocity of money; p – price level (average); t – transaction level. based on this formula of this equation, at a given transaction level, an increase in the money supply in circulation (inclusively as a consequence of new money issuing for financing the budget deficit) is directly reflected in a raising level of prices. the increase of the level of prices, at a constant level of the individuals’ income, will cause the reduction of their real income, traduced in a decrease in the purchasing power of these persons. considering the fourth option of budget deficit financing, countries can reduce their deficits by cutting down forests, selling national assets, giving away their natural resources at a fraction of the full value (stiglitz, 2006). asset sales (including sales of natural resources and privatizations) are misleadingly being used to make deficits looking lower than they otherwise would be. this could be the case of romania which in the last years ”benefited” from the privatization of important state-owned companies and banks – petrom, commercial bank, and romgaz. another response from the government to increase level of deficit, besides financing, is represented by the fiscal policy. some economist argue that governments should not be forced to counteract the deficit increase by tightening fiscal policy, especially during a recession, because fiscal deficits naturally widen during an economic slowdown as tax revenues fall and the need for government expenditures rises in event of social protection programs being put in place. standard macro-prescriptions hold that government should respond to a downturn by counter-cyclical fiscal policies — increasing expenditures or cutting taxes (stiglitz et al., 2006). in their work, “stability with growth – macroeconomics, liberalization, and development” stiglitz, ocampo, spiegel and french-davis and nayyar identified two possible risks that governments are facing up during the budget deficit periods – the risks of deficit fetishism and the risks of excessive debt. the risk of deficit fetishism assumes that policy-makers should respond to a crisis by cutting back on government expenditures to reduce the deficit. the argument is that reducing the deficit enhances confidence in the economy and the country’s government 100 and results in more investment, leading to stronger long-term economic growth. analyzing the case of some developing countries that applied cut-back policies, it has been found that in most countries, such cutbacks actually affect public investment and long-term growth (stiglitz et al., 2006). the risks of excessive debt involve a large amount of debts than can affect future economic growth, especially when the deficit is financed abroad. the countries become hostage to the vagaries of the international financial market and lose the ability to engage in counter-cyclical monetary and fiscal policies if the debt is short term (stiglitz et al., 2006). another point of view over deficits and their financing method is roubini’s and setser‘s model, that puts in debate the credibility of governments, and their ability to borrow. they said that countries can sustain current account and budget deficits as long as they have the capacity to issue new debt. in their opinion a credible government can run larger fiscal deficits in the face of a temporary adverse shock without creating concerns about its future solvency. a government with large debt stocks, large fiscal deficits, and a primary balance insufficient to assure long-term debt sustainability may be able to lower its borrowing costs if assures its long-term solvency (roubini and setser, 2004). as a conclusion of the three perspectives analyzed (classical, keynesian and modern) we can say that: – the problem may not be the existence of deficits, but whether the deficit and the capital flows that finance it are sustainable; whether the financing of the deficit is sustainable over a period of time; – it depends very much on how the money is spent if a particular level of borrowing is sustainable; – deficits can be sustained if the funds are spent on investment. as the main statistical indicators show, romania recorded budget deficits for a long period of time. we concluded that the problem may not be the existence of deficits, but whether they are sustainable, and that is possible if the funds are spent on investment. in order to see, as much as possible, if the budget deficit was spent on investment we analyzed the evolution of two variables budget deficit and gross capital formation (gcf). in the absence of relevant data referring to the level of public investment as a percentage of gdp, gcf was the best option available. gross capital formation (gcf) is one of the main aggregates in the eurostat expenditure classification. gross fixed capital formation (gfcf) is the largest component of gross capital formation and it measures the level of net new investment in the domestic economy in fixed capital assets, during an accounting period. analyzing data related to government expenditure by function we noticed an increase in gcf during the period 2002-2007. correlating the gcf’s evolution with budget deficit in the same period we can observe that the trend of the two variables is somehow similar. the fact that government 101 expenditures in capital formation is rising could be an explanation for the level of budget deficit. this could mean that the expenses that led to the level of budget deficit financed investment and they should positively influence economic growth. by this, keynes assumption which saw budget deficit as positive as long as spending is made on public investment would be verified in the case of romania. 4. twin deficits hypothesis starting with the mid 1980’s the ‘twin deficits’ theory was very popular among economists. this was based on the observation that current accounts deficits and government budget deficits tend to work together. the theory is based on the evolution of us budget and current account deficits – from being balanced in 1980, the deficit increased to nearly 3.5 per cent of gdp in the mid-1980s before returning to balance in 1990 (iley and lewis, 2007). the twin deficit hypothesis suggests that a larger fiscal deficit, through its effect on national saving and consumption, leads to an expanded current account deficit. according to the twin-deficit hypothesis, when a government increases its fiscal deficit – for instance, by cutting taxes – domestic residents use some of the income windfall to boost consumption, causing total national (private and public) saving to decline. the decline in saving requires the country either to borrow from abroad or reduce its foreign lending, unless domestic investment decreases enough to offset the saving shortfall. thus, a wider fiscal deficit typically should be accompanied by a wider current account deficit (bartolini and lahiri, 2006). stiglitz agreed with the twin deficit hypothesis, with an exception. he considered that fiscal deficit – the difference between government’s revenues and its expenditures – is simply negative savings. he explained that when the fiscal deficit goes up, then overall national savings is reduced; this is possible, unless household or corporation savings goes up. in the conditions of an unchanged level of investment, it will be a shortfall of funds, so the country has to increase its loans from abroad. that is why the fiscal and trade deficits move in tandem if investments or private savings do not change simultaneously (stiglitz, 2006). gross capital formation and budget deficit romania 0,00 1,00 2,00 3,00 4,00 5,00 6,00 2002 2003 2004 2005 2006 2007 2008 budget deficit % of gdp gross capital formation % gdp source: eurostat figure 1: budget deficit and gross fixed capital formation. 102 iley and lewis on their analysis over the us budget took into consideration the importance of the theory in the context of the widening the us current account deficit in recent years. their argument is that a budget deficit implies a decrease in national saving, which is the sum of private saving aggregated with the government fiscal balance. when national saving falls and it is insufficient to finance investment, it requires loans from abroad, so the current account is in deficit (iley and lewis, 2007) the current account balance is determined by the difference between national (public and private) savings and investment according to roubini and setser. a budget deficit is equal to public dissavings (excess of public spending including interest payments over its income – i.e., revenues), and leads to a current account deficit unless private savings rise or private investment fall (roubini and setser, 2004). iley and lewis concluded about the twin-deficits argument that, in theory, budget deficit and current account deficit should work together. they also, like robini and setser, considered that fiscal deficits are a form of dissaving, and reduce the availability of domestic saving to fund investments. unless matched by an equal reduction in domestic investment, the net demand for foreign saving and the current account deficit will rise (iley and lewis, 2007). according to stiglitz’ point of view over the twin deficits, iley and lewis think that the budget balance and the current account balance would not necessarily move in the same direction in the face of a large productivity-driven increase in investment (iley and lewis, 2007). stiglitz summarized the twin deficit hypothesis and has seen that trade deficits and external loans are two sides of the same coin. the trade deficit will grow up if the external loans go up. this means that if government loans go up, unless private savings go up commensurately (or private investment decreases commensurately), the country will have to borrow more from abroad, and the trade deficit will increase. that is why economists often talk about the twin deficit problem: when government loans increase – the fiscal deficit increases – and it is likely that the trade deficit will increase (stiglitz, 2006) at first glance, post-1996 data on fiscal and current account deficits of romania, offers some support for the twin-deficit hypothesis. budgetary and current account deficits, romania -15,00 -10,00 -5,00 0,00 5,00 10,00 19 96 19 98 20 00 20 02 20 04 20 06 20 08 % o f g d p budget deficit % of gdp current account balance % of gdp source: imf statistics figure 2: budget and current account deficit, romania. 103 taking a look at the data, starting from 2004, the deficit of the current account balance is rising over the threshold of 10% of the gdp. the peak of the current account deficit, almost 14% of gdp was reached in 2007 and in 2008 remained at a level over 12%. the data of the last quarter of 2008 and the first quarter of 2009 shows a significant reduction in the level of current account deficit, and the perspectives of 2009 are good in this matter. the available data shows that between 1996 and 2008 most of the changes in fiscal and current account balance are accordingly with the predictions of the twin-deficit view. an empirical analysis on the twin deficit hypothesis regarding the case of romania is needed. further work in this area is a must in order to offer sustainable arguments and validate the hypothesis. econometric empirical methods are needed to evaluate the validity of the twin deficits hypothesis. 5. conclusions and remarks about the current situation a study conducted by aleksander aristovnik from the faculty of administration, university of ljubljana, analyzing most important economic indicators of countries in transition from europe sustain the assumptions in this article. the data analyzed covered the period 1992-2003, and included romania. the findings of the study revealed that economic growth has a negative effect on the current account balance, implying that the domestic growth rate is associated with a larger increase in domestic investments than savings. the study confirmed the “stages of development hypothesis” which states that poorer countries in the region revealed higher current account deficits. furthermore, the study validated the “twin deficit hypothesis” in the region – public budget deficits are likely to be accompanied with current account balance deterioration, by this confirming the significant positive relationship between the government budget balance and the current account (aristovnik, 2006). another study conducted by christopher adam and david bevan examined the relation between fiscal deficits and growth for a panel of 45 developing countries, including romania. the results of the study finds evidence of a threshold effect at a level of the deficit around 1.5% of gdp. the empirical analysis suggested a statistically significant non-linearity impact on growth by the budget deficit at around 1.5% of gdp. the implication is that for values of the deficit less than or equal to 1.5 % of gdp a marginal increase of the deficit is locally growth-enhancing: an increase in the deficit of one percentage point (for example from a balanced budget to 1% of gdp) would increase the average annual per capita growth rate by around a quarter of one percent. by contrast, at levels of the deficit greater than the threshold the effect is reversed (adman and bevan, 2002). the present study manages to attain its objective of proving the connection between economic growth, budget deficits and current account deficits. the growth recorded in the last period raised the wages and retail prices and favorised the imports and, by this current account deficit increased. 104 a major factor in the crises of recent decades has been trade deficits; when countries import more than they export, they have to borrow the difference. romania should have a prudent policy in this matter and maintain an adequate level of current account deficit to gdp. roubini and setser consider that long-term solvency requires, at minimum, that the country’s external debt to gdp ratio (or the government debt to gdp) should not exceed certain limits (roubini and setser, 2004). until 2008, romania managed to maintain a low ratio of government debt to gdp – 13.6%, but the latest evolution – the loan package of almost 20 billion euros from the imf, world bank and european union contracted in 2009 could negatively affect longterm solvency. on the other hand this is a sign of the credibility that romania benefits from the main international financial institutions. considering the budget deficit problem, some economists suggest that an excessive deficit should be temporarily allowed in the case of the small and less developed country, in order to improve economic convergence and wages within the european union (alfonso and alves, 2006). fiscal and trade deficits mean that the government and the country is increasingly in debt. both can be a problem, especially when countries or governments spend what they borrow on consumption rather than investing it (stiglitz, 2006). the hypothesis that public investment leads to stronger long-term economic growth was proven to be correct in most cases. it is a challenge for romania to validate this assumption in the following period by raising the level of government investment. in the face of limited public support for policy actions, this could be a test for the romanian government in a worldwide context characterized by deteriorating financial conditions and weakening economies. references 1. afonso, o., and alves, r.h., ‘to deficit or not to deficit: should european fiscal rules differ among countries?’, 2006, fep working papers, n. 219, cempre – centro de estudos macroeconómicos e previsão, [online] available at http://ideas.repec.org/p/por/ fepwps/219.html, accessed april 1st, 2009. 2. aristovnik, a. ‘the determinants and excessiveness of current account deficits in eastern europe and the former soviet union’, 2006, working paper number 827, william davidson institute, [online] available at http://ideas.repec.org/p/wdi/papers/2006-827. html, accessed april 1st, 2009. 3. bartolini, l., and lahiri, a., ‘twin deficits, twenty years later’, 2006, current issues on economics and finance, volume 12, no. 7, [online] available at http://www.newyorkfed. org/research/current_issues, accessed april 1st, 2009. 4. christopher, a., and bevan, d., ‘fiscal deficits and growth in developing countries’, 2002, discussion paper series number 120, department of economics oxford, [online] available at http://ideas.repec.org/p/oxf/wpaper/120.html, accessed april 1st, 2009. 5. eurostat statistics, [online] at http://epp.eurostat.ec.europa.eu/portal/page/ portal/eurostat/ home. 105 6. eurostat newsrelease, euro indicators, 56/2009 – 22 april, eurostat press office [online] available at http://ec.europa.eu/dgs/eurostat/contingency/2-22042009-en-bp.pdf, accessed april 1st, 2009. 7. iley, r.a.m and lewis, m.k., untangling the us deficit: evaluating causes, cures and global imbalances, mpg edward elgar publishing, 2007, pp. 3-237 8. international monetary fund, 2009, world economic outlook: crisis and recovery (washington, april). 9. roubini, n. and setser b., ‘bailouts or bail-ins? responding to financial crises in emerging economies’, institute for international economics, 2004, pp. 37-78. 10. samuelson, p. and nordhaus, w., economie, teora, 2000, pp. 746-753. 11. scouse, m., the big three in economics: adam smith, karl marx, and john maynard keynes, new york: m.e. sharpe, inc., 2007, pp. 136-170. 12. stiglitz, j.e., making globalization work, w. w. norton & company, 2006, pp. 154-334 13. stiglitz, j.e., ocampo, j. a., spiegel, s., french-davis, r., and nayyar, d., stability with growth. macroeconomics, liberalization and development, oxford university press, 2006, pp. 128-238. 14. vit, k., ‘the possibilities of budget deficit financing’, [online] available at http unpan1. un.org/intradoc/groups/public/documents/nispacee/unpan009155.pdf, accessed april 1st, 2009. untitled 195 abstract in europe today, economic success is often dependent on a region’s capacity to develop networks with other regions. cooperation and experience sharing between regions can be a key trigger in stimulating a dynamic, forwardlooking regional development process. the eu has an important role to play in brokering and supporting partnerships between regions within the union. thousands of projects developed over many years under the interreg initiative have demonstrated the benefits for regions of working in partnership, sharing ideas and charting new and innovative ways of harnessing european investment. the analysis of the implementation of the projects financed through the interreg ivc program proves that the development of the interregional european cooperation is constrained by the practical difficulties generated by various administrative systems and by the differences among competences on the levels of the public administration of the european union member states. opportunities and difficulties in the implementation of projects financed through the interreg ivc program in romania. case study: the project ‘public policies and social enterprises’ daniela pîrvu emilia ungureanu natalia ciorchină daniela pîrvu lecturer, department of economic theory and finances, university of piteşti, piteşti, romania tel.: 0040-744-217.879 e-mail: ddanapirvu@yahoo.com emilia ungureanu professor, department of economic theory and finances, university of piteşti, piteşti, romania tel.: 0040-722-760.883 e-mail: emiliaungureanu@yahoo.com natalia ciorchină project manager, public policy and social enterprises, argeş county council, argeş, romania tel.: 0040-721-075.575 e-mail: natalia.ciorchina@yahoo.com transylvanian review of administrative sciences, no. 32 e/2011, pp. 195-206 196 1. introduction as a community initiative, interreg was originally launched in 1988 by the european commission to promote cross-border cooperation projects by acting directly at the level of sub state actors, and particularly with regional governments and local authorities. the interregional cooperation program enables cooperation between regional and local authorities from different countries in the eu 27, norway and switzerland. this takes the form of projects in which these authorities exchange and transfer their experiences and jointly develop approaches and instruments that improve the effectiveness of regional development policies and contribute to economic modernization. the 2007-2013 interregional cooperation program (intereg ivc) builds on the experiences of the community initiative interreg iiic (2002-2006), which was designed to strengthen europe’s economic and social cohesion by funding operations that boost cooperation between regional and local authorities from across the eu, leading to a balanced development of the continent. by creating new development poles, the cooperation often serves to counterbalance both the remoteness and the peripheral situation of these areas. they play a significant role in the rapid acquisition of modern management and public administration methods in regions belonging to the candidate countries. it can also foster neutral examination of sensitive subjects (racism, combating the social exclusion of the roma, the status of linguistic minorities etc.), which can enrich and reinforce local democracy (jouen et al., 2001). the interregional cooperation program is crucial for transnational cooperation initiatives, commissions and projects. good results for the integration of national or regional organizations into international cooperation can be found at the east european borders (heiland, 2008). it has been demonstrated that in certain cases the rise of cross-border cooperation has had an important impact on administrative routines of territorial management in europe (polard, 1999). investigations made on the results of interregional cooperation programs conducted so far showed that achievement of all their goals is conditioned by two things: first, a previous regional decentralization policy had to be realized; second, regional governments have developed a significant capacity of cross-border management through the involvement of sub regional actors in stable networks during the previous versions of interreg (harguindéguy, 2009). in these conditions we intend to analyze, using a case study, opportunities and difficulties created by implementing projects financed by the interreg ivc program in romania. 2. presentation of the interreg ivc program the interreg ivc program is part of the european territorial cooperation objective of the structural fund policies for the period 2007-2013. it aims, by means of interregional cooperation, to improve the effectiveness of regional development policies and to contribute to economic modernization and increased competitiveness 197 of europe, by: – enabling local and regional actors across the eu to exchange their experiences and knowledge; – matching regions less experienced in a certain policy field with more advanced regions; and – ensuring the transfer of good practices into structural funds mainstream programs. two types of projects may be developed within the interreg ivc program: a. regional initiatives, initiated by regional stakeholders, with the purpose of sharing experience in a certain field, for the identification of good practices and for the development of new tools and approaches in their implementation. the duration of these projects is 3 years, and the project partners come from at least 3 partner states, out of which 2 from the european union; b. capitalization projects, including fast track, which provide for the transfer of good practices identified within previous programs (interreg iii, the regional operational program etc.) to the programs associated to the following objectives: convergence, regional competitiveness, and employment, as well as european territorial cooperation. the duration of these projects is 2 years, and the partners come from 6-10 partner states, out of which 2 from the european union; insofar as these projects benefit from additional expertise from the european commission, they are referred to as fast track projects. the priorities of the interreg ivc program are:  priority 1: innovation and knowledge economy;  priority 2: environment and risk prevention;  priority 3: technical assistance. the following entities may be partners in the projects financed through the interreg ivc program: central public authorities (ministries and national authorities), local public authorities (county councils, town halls, county directorates etc.) and public law organisms (regional development agencies, national institutes, state universities etc.). the projects eligible for financing within the interreg ivc program include study visits, joint training sessions, studies and reports, data analyses, comparative case studies, meetings, and events (interregional meetings, seminars, conferences), information and publicity actions (official statements, brochures, websites, radio and tv broadcasts), pilot development and experiments. the main expected results are: (a) the increased knowledge and capacities of regional institutions; (b) improvements to regional policies and instruments that contribute to the lisbon and gothenburg strategies. in order to obtain such results, the european commission conducted an “ex-ante” evaluation through which it forecasts the following: – the participation of at least 1,400 public authorities/public law bodies; – the improvement/development of at least 150 local/regional policies; 198 – the identification of at least 2,400 good practices through regional initiative projects and the successful transfer of at least 200 of such practices; – the provision, through capitalization projects, of the conditions required for the transfer of at least 250 of the good practices identified in the previous period. the interreg ivc program is financed through the european regional development fund (erdf), whose principles and regulations are laid down in council regulation no. 1083/2006 (general regulation), council and parliament regulation no. 1080/2006 (erdf regulation) and commission regulation no. 1828/2006 (implementation regulation). eligible projects are co-financed at a rate of 15% from national resources (13% of state budget resources and 2% of the recipient). this co-financed percent is available for member states whose average gdp per capita for the period 2001 to 2003 was below 85% of the eu-25 during the same period. for all other member states, the maximum erdf contribution is 75% of the eligible expenditure. for the projects financed through the interreg ivc program, no advance payment is granted. the indicative value is 0.3 3 million euro for the capitalization projects and 0.5 5 million euro for the regional cooperation projects. available resources in the project are presented in table 1. table 1: the financial allocation on priorities within the interreg ivc program (euro) budget distribution total eligible funding erdf funding national funding axe 1 220,908,711 176,726,969 44,181,742 axe 2 156,644,359 125,315,487 31,328,872 axe 3 27,541,866 19,279,306 8,262,560 sum 405,094,036 321,321,762 83,773,174 source: interreg ivc program handbook, [online] available at http://www.interreg4c.eu projects are financed through the interreg ivc program in a competitive manner, within open calls (public tenders) for project proposals. up to now, 3 calls for proposals have been launched (the last one was concluded on march 5, 2010). within the first call, 495 project proposals were submitted, out of which 41 were accepted for financing, requiring a total budget of 89,376,162 euro. within the second call, 481 project proposals were submitted, out of which 74 were accepted for financing, requiring a total budget of 162,126,284 euro. the structure of the projects accepted for financing within the two calls, on financing fields, is the following: 199 table 2: projects structure approved for funding in the first two calls, on areas of finance the area of fi nance number of projects approved in the fi rst call number of projects approved in the second call employment, human capital and education 4 7 entrepreneurship and smes 11 15 innovation, research and technology development 6 15 information society 4 8 biodiversity and preservation of natural heritage (including air quality) 2 3 cultural heritage and landscape 2 3 energy and sustainable transport 7 7 natural and technological risks (including climate change) 5 6 waste management 0 4 water management 0 6 source: authors’ own determination based on data available at www.interreg4c.net/load/first_call_approved. xls and www.interreg4c.net/load/second_call_approved.xls for the third call for projects, a maximum budget of 15 million euro was allocated from erdf, and for this specific call only capitalization projects, including fast track projects will be supported. 3. romania’s participation into the interreg ivc program romania’s participation into the interregional cooperation program represents a real challenge for the involved stakeholders, due to their limited experience and to the relatively low level of decision-making power of the local public authorities and public law organisms. the romanian eligible entities took part as partners into 17 projects approved within the first call and into 30 projects approved within the second call of the program. the local public authorities are responsible for the largest participation, as shown in table 3. we can notice that the participation of the county councils and of the regional development agencies into the projects financed through the interreg ivc program is significant, due to the fact that these entities have specialized internal operational structures (directorates for the implementation of projects financed by the european union, in the case of the county councils) or because, from the perspective of their activity, they are much more interested in taking part into projects similar to those financed through the interreg ivc program. for example, 13 county councils, and 6 of the 8 romanian regional development agencies take part into projects financed through the interreg ivc program (15 projects in the case of the county councils and 11 in the case of the agencies). 200 table 3: romania’s participation in the interreg ivc program, in the first two calls for projects the area of fi nance number of member entities in projects approved in the fi rst call number of member entities in projects approved in the second call central public authorities local public authorities bodies governed by public law central public authorities local public authorities bodies governed by public law employment, human capital and education 1 1 2 2 entrepreneurship and smes 5 3 5 3 innovation, research and technology development 1 1 2 4 information society 1 1 2 1 biodiversity and preservation of natural heritage (including air quality) 1 1 cultural heritage and landscape 1 1 energy and sustainable transport 3 1 1 1 natural and technological risks (including climate change) 1 2 waste management 2 2 water management 1 2 1 source: authors’ own determinations based on data available at www.interreg4c.net/load/first_call_approved. xls and www.interreg4c.net/load/second_call_approved.xls the romanian eligible entities’ initiatives of coordinating projects financed through the interreg ivc program were poor. only two eligible romanian entities took part into the first call as project coordinators (and were not elected). 4. opportunities and difficulties in the implementation of the project “public policies and social enterprises” starting with 2008, the argeş county council has had the chance to take part into the implementation of the project ‘public policies and social enterprises’ approved within the first call for projects financed through the interreg ivc program. the general objective of the project is to increase the efficiency of the regional public policies in promoting and supporting social enterprises as trump card for the local economic development and the territorial competitiveness, since the european parliament, the european commission and the economic and social committee have acknowledged the capacity of enterprises in the social economy sector to correct a number of major economic and social imbalances and to contribute to the achievement of certain general interest objectives. 201 the 9 partners (marche region, andalusian government, city of forest – brussels capital region, argeş county council, crakow university of economics, adult education center of the city of hannover, south madrid consortium, regional council provence alpes cote d’azur and municipality of rome) of the project will cooperate with the purpose of achieving the following specific sub-objectives of the project: 1. finding a common definition of the concept of social enterprise and its scope, within the partnership. 2. facilitating the access of decision-makers operating at the regional/local level and other local interested stakeholders to information concerning the legal framework and the public policies concerning social enterprises, from each country involved in the project. 3. improving the knowledge of the decision-makers concerning: – national and local support systems for the support and promotion of social enterprise; – regional business support structures and, implicitly, social enterprise support structures; – specific actions for the assistance development and promoting innovation in the social enterprises concerning the regional operational program by which structural funds or other support systems operate; – good practices in the public-private partnership systems and instruments for the support and promotion of social enterprises and social entrepreneurship. 4. increasing the capacity of the decision-makers and local stakeholders to identify those strategies, public systems and good practices that promote the creation, innovation and sustainability of social enterprises. 5. the consolidation of social enterprises and social economy at the regional and local level by transferring some good practices from the areas in which they have already had concrete and quantifiable results into countries with less experience (poland and romania). 6. increasing the number and diversifying the type of instruments available for the promotion of various models of social entrepreneurship meant to meet the requirements of the local community, by identifying and experiencing new approaches in the process of social service (public) procurement process. 7. promoting the dissemination and the transfer of the results obtained. social enterprises are organizations that contribute to the creation of a sustainable economic model, in which people are more important than capital, and which associate the economic performance with the democratic functioning and solidarity among their members. these organizations supply the financial resources required for the achievement of significant general interest and community objectives: (1) providing services meant to meet important and urgent public needs; (2) integrating disadvantaged persons into the labor market; (3) building the infrastructure necessary in order that the disadvantaged persons may establish small enterprises, or in order 202 that the local communities may start income-generating projects; (4) carrying out a business activity from which private entities have withdrawn due to low profitability; (5) encouraging the communitarization of public services, to the detriment of their privatization. the main medium-term benefit of the efforts made for the development of social enterprises shall be represented by the change of the traditional model of providing public services in which the beneficiaries are only passive recipients of the services provided (leadbeater, 2002). the social enterprises sector is strongly developed in the partner states of the projects which are characterized by a federal-type administration system (germany and belgium) or unitary regionalized administration systems (italy and spain). the local public administration authorities of the countries in question have recognized the importance of this sector for the provision of solutions to certain specific local community problems, and had countless tools derived from the legislative powers and their high autonomy at their disposal, which they used with the purpose of developing social enterprises. also, great opportunity for funding projects in the social economy from the european social fund has been an important stimulus for defining a coherent conceptual framework and for the regulation of specific social economy activities. by early october 2010, argeş county council representatives have made study visits in marche region – italy, in paca region – france, in madrid and andalusia regions – spain, in hanover – germany and in malopolska region, krakow – poland, in order to evaluate models of good practice in social economy, identified by foreign partners. in these countries, the involvement of public authorities through specific social economy levers is different. for example, local public authorities in andalusia – spain offer direct financial support for the development of social enterprises’ technical capital, in the andalusian program for the development of social economy. the funds necessary for developing the program come from its own sources and from european funds. a first evaluation of the implementation effects of the program shows that 690 social enterprises were created (2,300 jobs) and 204 enterprises have been upgraded/ extended (417 jobs) from 2001 to 2005. a similar situation was observed in the paca region – france, where the public authorities’ tools for the social enterprises’ support include, in addition, the securing bank loans. the high level of social economic development in andalusia – spain was facilitated by the creation of the ministry of regional social economy – a structure that manages both the financial resources necessary to encourage business creation and expansion of social enterprises, and human and information sources that help to reinforce the social economy sector by activities such as consulting, training, technical assistance and others. to support the regional economic and social development, public authorities in madrid created an original structure: south madrid consortium – an association of five municipalities in the south of madrid, who undertakes various initiatives – i.e. the creation of a common fund for financing projects in the social economy. in germany, the size of social economy is estimated at about 2,000 social firms, operating in order to integrate the disadvantaged people on the labor market. many 203 social enterprises in germany have a number of similarities with protected units in romania: they aim to integrate persons with disabilities on the labor market, they are exempted from certain taxes, and they are largely dependent on government subsidies for employees with disabilities. the major difference between the two types of organizations consists in the magnitude and nature of their activity. thus, at the end of 2008, in romania there were 262 authorized protected units which employed 1002 persons with disabilities (pirvu, 2009) while in germany, a single organization – hannoversche werkstätten gem.gmbh (hanover: sheltered workhouse for people with disabilities) employed in 2010, approximately 1,000 persons with disabilities. also, german sheltered workhouse’s main objective is the training of persons with disabilities, enabling their activation on the labor market. in the marche region – italy, the public intervention in the social economy is facilitated by the provisions of national laws that give the right to local public institutions to procure from social enterprises goods, works and services. as in other countries visited, sources of financing the social economy are the european social fund and the state budget but subsidies and direct aids are less used like financial instruments. the romanian initiatives of establishing social enterprises are quite poor, despite the numerous advantages given by the establishment of such enterprises, due to the lack of joint actions performed by the public authorities with the purpose of promoting and supporting this type of initiatives. under these circumstances, the problems targeted by this project are complex and quite new, and the products of the project may be a possible answer to the current necessity to modernize the romanian social and financing policies by: (1) stimulating the disadvantaged groups’ participation into the labor market; (2) developing the entrepreneurial spirit in persons for whom the active inclusion into the labor market is difficult; (3) enhancing the economic and social cohesion at the level of the local communities; (4) replacing, where possible the public supply of public services with the private supply of such services. by analyzing the operating mechanism of social enterprises from the partner states, we can define some assumptions concerning the measures the romanian public authorities could take for the development of this sector: – creating a stimulating legal framework (exemption from paying certain duties, taxes and mandatory contributions, decreasing financial obligations required for the establishment of social enterprises, guaranteeing loans contracted for the development of the economic activity, subsidizing public interest goods and services supplied by social enterprises); – facilitating the access to public procurement contracts, by granting a certain score to the companies which meet certain social criteria (employ disadvantaged persons, provide public interest goods and services etc.); – facilitating social enterprises’ access to exhibition spaces; – promoting the image of social enterprises; – advising/assisting the persons interested in establishing social enterprises etc. 204 the specific organization and functioning of the argeş county council (in romania, there is only administrative and financial local autonomy, and this is exercised based on, and within the limits stipulated by the law, in compliance with article 4 of law no. 215 on local public administration from 2001) does not allow it to use the first tool, which is the tool that could have the strongest impact on the development of social enterprises. consequently, in order to guarantee a successful transfer of the good practices identified within the project ‘public policies and social enterprises’, it would have been much better if an authority representing the central public administration had taken part in the project, such as, for example, the ministry of labor, social solidarity and family, or one of the governmental agencies with social responsibilities. the participation of a representative of the central public administration would have been all the more recommended when taking into account that the development of social enterprises may represent a solution for a problem affecting the whole romanian society, not only a local community: the large number of socially assisted persons. using the second tool with important impact on the development of social enterprises – public procurement – is controversial because the purchase of goods or services provided by social enterprises may reduce the efficiency of the public spending (as the labor productivity in social enterprise is lower, the price of their goods and services is greater than the price of goods and services provided by traditional firms in the market). we also expect the occurrence of some problems caused by the absence of an equal treatment between companies participating in public procurement procedures. in this sense, a cost-benefit analysis of the introduction of social clauses in public procurement procedures is required. the relatively low volume of romanian local authorities’ own financial resources (the biggest part of public revenue are concentrated at central level) and existing difficulties in the romanian public finance system do not permit the creation of a fund available for argeş county council to finance some substantial start-up initiatives or the development of social enterprises. the easiest way to transfer some of the partner countries’ best practices in argeş county council is represented by the training of specialists in the social economy (they could work in a specialized structure of argeş county council). thus, social enterprises could receive advice, assistance and other. schools with specialization in social economy of the countries where social enterprises are recognized as a major player in the economy and specific phenomena and processes have been conceptualized should represent the providers of educational services. financial resources available through the human resources development operational program (funded by european social fund) are an excellent opportunity for development of argeş county council’s specific human capital in the social economy issues. conclusions the research performed concerning romania’s participation into the interreg ivc program and the case study of the project ‘public policies and social enterprises’ 205 allow us to draw the following conclusions: – the stakeholders involved into the implementation of the projects financed through the interreg ivc program will have the opportunity to access tools, methods and technologies etc., that proved to be efficient in other european countries, and to create strategic partnerships with similar organisms from the other member countries of the european union. – the specific objective called ‘transfer of good practices’ will be hard to reach due to the reduced participation of the central public authorities to the projects approved within the first two calls and to a small number of tools available for the local public authorities and public law organisms for the achievement of this objective. the case study – the project ‘public policies and social enterprises’ – demonstrates that the transfer of the best practices between the stakeholders involved into the implementation of the projects financed through the interreg ivc program (one of the priorities of the program) is difficult because the level of skills and knowledge of partners is different. in this context, identifying methods and tools that could be taken and adapted by partners in order to achieve specific project objectives is a difficult endeavor. – due to the specificity of each project, the coordinators should have been more careful in evaluating the romanian partner institutions’ capacity to contribute to the achievement of the project objectives. – territorial regionalization in our country represented one of the european standards to be achieved in order to access structural funds but it was not accompanied by a consistent public debate, concerning the aspects involved by the regional development, the balance between the central and the local public power levels, and a better territorial and administrative organization. therefore, the implementation of projects financed through the interreg ivc program will provide the romanian public administration authorities with the opportunity to recognize the need for the enhancement of the regional administrative competences and will probably contribute to the intensification of the regionalization process. the analysis of the project ‘public policies and social enterprises’ demonstrates that the probability of enhancing the governance capacity of romanian local public authorities through interreg ivc initiatives is low and the probability that the cross-border initiatives to be used, generally, as a convenient arrangement for local public authorities to obtain more money is great. this situation is caused by the peculiarities of the romanian public administration system, mentioned in the paper. in the particular case of the project ‘public policies and social enterprises’, the interreg ivc initiative offers romanian stakeholders the chance to change the way in which they approach the problems of the vulnerable or disadvantaged social groups and to understand that measures meant to lead to the inclusion of these persons into the labor market are possible and very necessary in the current social and economic context. 206 references: 1. european commission, ‘interregional cooperation programme interreg ivc, contributing to the european commission initiative regions for economic change’, 2007, [online] available at www.interreg4c.net/load/2007-07-26_interreg_ivc_ op_final.pdf, accessed on december 12, 2010. 2. european economic and social committee, ‘the social economy in the european union’, summary of the report drawn up for the european economic and social committee by the international centre of research and information on the public, social and cooperative economy (ciriec), 2007, [online] available at http://www.eesc. europa.eu/groups/3/index_en.asp?id=1405gr03en, accessed on december 12, 2010. 3. heiland, p., ‘lessons learned in the transnational river basins of elbe, oder and danube. strengths and weaknesses when building up transnational cooperation structures’, risq-ue 2008 conference, meddat afcn, 26-28 november 2008, [online] available at www.afpcn.org/081126risque/afpcn-081126-heiland.pdf, accessed on december 12, 2010. 4. harguindéguy, j.b., ‘does cross-border cooperation empower european regions? the case of interreg iii-a france – spain’, 2009, environment and planning c: government and policy, vol. 27, no. 4, pp. 747-760. 5. jouen, m., scott, j., jurczek, p, köppen, b., miszlivetz, f. and dardanello, f., ‘is the new europe inventing itself in its margins? cross-border and transnational cooperation’, 2001, groupement d’etudes et de recherches notre europe, october 2001, [online] available at www.notre-europe.eu/uploads/tx.../etudfrontieres-en_01.pdf, accessed on december 12, 2010. 6. law no. 215 of 2001 on local public administration (republished), published in the official monitor no. 123 from 20.02.2007. 7. leadbeater, c., ‘life in no man’s land’, new statesman, 3rd june 2002, [online] available at www.newstatesman.com/pdf/upstarts2002.pdf, accessed on december 12, 2010. 8. pirvu, d., premises for development of social enterprises in the argeş county, craiova: sitech, 2009. 9. polard, j., ‘les régions européennes sur la scène internationale: conditions d’accès et systèmes d’échanges’, e′tudes internationales, vol. 30, no. 4, 1999, pp. 657-678. 10. scott j.w., ‘planning cooperation and transboundary regionalism: implementing policies for european border regions in the german – polish context’, 1998, environment and planning c: government and policy, vol. 16, no. 5, pp. 605-624. 53 free access to public information: enforcement, appeals and judicial review. a comparative perspective from cee countries bianca v. cobârzan dacian c. dragoş bogdana neamţu bianca v. cobârzan assistant professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, romania tel/fax: 0040-264.431361 email: cobarzan@apubb.ro dacian c. dragoş associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, romania tel/fax: 0040-264.431361 email: dragos@apubb.ro bogdana neamţu assistant professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, romania tel/fax: 0040-264.431361 email: bogdananeamtu@apubb.ro abstract foias were adopted in central and eastern europe rather late after the regime changes. after adopting the laws, however, there are still many powerful forces that are working against extensive access to information – they can be static opaque administrative practices, general inaptitude or the lack of sufficient human and material resources – or active – agents that resist openness due to private interests, or agents that use institutional scenarios to prevent public scrutiny over corruption and incompetence. the paper approaches the jurisdictions from hungary, poland, czech republic and romania, emphasizing the topic of enforcement mechanisms provided by the foias. it is a follow up of an article published two years ago in the same journal. transylvanian review of administrative sciences, 24e/2008 pp. 53-63 54 introduction while the importance of good governance receives increasing recognition, increased transparency and accountability are seen as much-needed antidotes to the corruption that otherwise undermines good governance (osborne, 2004). the issue openness and transparency is tightly connected with the free access to public information, as the second is a condition for the first. the concept typically means having access to files, or to information in any form, in order to know what the government is up to (birkinshaw, 2003). together, they are a key element of reform in public administration, much needed especially in former communist countries. it was expected freedom of information laws to be among the first priorities of the new regimes from central and eastern europe, in transition after the 1989 changes. although pressure to open archives and secret police records increased, there was little public pressure to adopt general sunshine laws related to all categories of information (brown, angel and derr 2000). this is why the majority of these countries adopted such legislation only around year 2000. a major factor that slowed post-1989 development of laws and practices for government transparency was the preoccupation of many central european and former soviet countries with reviving their own national legal traditions. adopting and integrating western european or international practices and trends were of secondary interest. because of this approach, in many ways, regulating public access to government-held information in these countries was certainly more difficult than in countries that are establishing entirely new systems of government. even after a right of access to information is established, remain questions about the timing, accurateness and worth of the information disclosed, especially due to the fact that the experience of these nations had led to a genuine distrust of the citizens in their governments (brown, angel and derr, 2000). freedom of information regime in hungary rather than adopting a brand new constitution, as has been done in most countries of central and eastern europe, or revitalizing an old one, as has been seen in the baltic states, hungary has chosen to continue its pre-transition constitution (1949) in force, although thoroughly amending it in 1990. recognizing the shortcomings of this process, however, the political forces shaping the country have discussed drafting an entirely new constitution, with a goal of adoption soon after mid-decade, but this intention was never materialized. article 61 of the constitution establishes a right to access and distribute information of public interest, and by a majority of two-thirds of the votes the legislative can pass the law on the public access to information of public interest and the law on the freedom of the press. thus, hungary adopted in 1992 the act on the protection of personal data and the publicity of data of public interest. the purpose of the act is first and foremost to guarantee that everybody may dispose of his personal data himself, and secondly that everybody may have access to data of public interest. regarding this common regulation of data protection and freedom of information, the former data protection and freedom of information commissioner observed that hungarians tend to be much more sensitive to violations of their privacy than to secrecy over data of public interest. in 2004, the commissioner received 30 55 submissions that had to do with the boundary separating privacy from the public sphere (commissioner’s report, 2004). in europe, hungarian legislation stands alone in having opted for the rather common-sense solution of enacting a single law to regulate freedom of information in conjunction with the protection of personal data. again pioneering in europe, the hungarian act has assigned the protection of freedom of information and of personal data to the very same specialized ombudsman, the data protection and freedom of information commissioner (majtényi, 2004). this solution has been recently adopted also in the 2000 freedom of information act in the united kingdom. in a recent development towards modernizing means of access to public information, the hungarian parliament has passed the 2005 law on electronic freedom of information, which according to the ministry of informatics and communication, makes hungary “one of the most progressive countries in the world with regard to the publicity of public interest information”1. the law imposes the on-line publication of draft bills, laws, and – partially – the anonymous form of court decisions, while a search system that makes the published data searchable and retrievable is to be created simultaneously. another important betterment regards the creation of the electronic collection of effective laws, which shall contain the effective text of all laws in force on a given calendar day in a unified structure. the law on electronic freedom of information has been programmed to enter into force in several steps: the electronic collection of effective laws is to become operational as of january 1st, 2006, while public authorities’ obligation to publish information on-line is scheduled for january 1st, 2007, respectively january 1st, 2008. freedom of information regime in the czech republic in the czech republic, prior to 1999 the right of information was regulated briefly by the constitution and the charter of rights and freedoms ratified in 1991 (articles 17 and 35), but were not rare the cases of this right being ignored and abridged. the need for a freedom of information act was clear acknowledged. the freedom of information act passed in 1999 entered into force in january 1st, 2000 and has 22 articles that set forth the basic conditions by which the information is provided. in a recent development, the czech legislative body adopted the act no. 412/2005 on classified information, which sets forth a very elaborate system of protecting state secrets, confidential documents and sensitive information. freedom of information regime in poland in poland, before the new constitution was enforced (october 17, 1997) poles were able to claim the right to information under the convention for protection of human rights and fundamental freedoms of 1950. then, article 61 of the constitution established rights to collect, receive and disseminate information and specifically stated the right of access to government-held information. in order to expand the constitutional provisions, but also due to the pressure from european union integration process, ngos and media, poland adopted rather late, on september 6, 2001 (binding from january 1, 2002) the law on access to 56 public information, whose purpose is to guarantee to everyone the right to public information which includes the right to: 1) obtain public information, including obtaining information processed in the scope, in which it is particularly significant for the public interest, 2) examine official documents, 3) access to sessions of collective public authority agencies elected by ballot. there are exemptions for official or state secrets, confidential information, personal privacy and business secrets. appeals are made to a court. at some point, the parliament discussed amendments that would have created an independent commission to enforce the act (banisar, 2004), but no result came out of it. public bodies are required to publish information about their policies, legal organization and principles of operation, contents of administrative acts and decisions, public assets. the law requires that each public authority should create a public information bulletin to allow access to information on-line. right to information derives also from press law and other statues and codes. in particularly, the role of the press law in enlargement of the openness is significant as it endorses the citizen’s right to information and participation in public affairs (kaminski, 2000). under article 4 of the press law act, provisions of which are applicable also to audio-visual media, all state institutions, economic entities and organizations have the obligation to disclose information concerning their activities to the press. only when it is required by the interest of keeping state, official or other secret protected by law these subjects may refuse to provide information. in such a situation the refusing institution or person must specify in written and within three days which are the reasons justifying the refusal. however, the doctrine has emphasized that the right to information is primary the right of citizen, and rights of mass-media are only part of problem concerning regime of the right to information (kaminski, 2000). poland has signed the aarhus convention on access to information in june 1998 and ratified it in february 2002; as a consequence, the act of 9 november 2000 on access to information on the environment and its protection and on environmental impact assessments implements the convention2. due to pressure exercised by the conditions required in order to join nato, by the time of the enactment of the freedom of information act, the polish legal regime had already been endowed with a law on protection of classified information, adopted in 1999. other exceptions from access to public information are regulated by the act on protection of personal data; on the other hand, under this act, individuals can obtain and correct records that contain personal information about themselves from both public and private bodies. the act is enforced by the bureau of the inspector general for the protection of personal data. freedom of information regime in romania the state of the art in romania provides for a set of regulations, adopted in recent years, regarding a framework law on free access to public information (law no. 544/2001) but also on classified information (law no. 182/2002), transparency in decision making (law no. 52/2003), and, finally, regarding transparency in public office, in commercial transactions and in debts to the state (law no. 161/2003). also, 57 for public’s access to environmental information, a special governmental decision was adopted (878/2005), applying the aarhus convention. the freedom of information act adopted in 2001 has proven to be incomplete, and the discretionary power that is given to public authorities is not used properly. on the other hand, shortly after the enactment of the law on access to public information was enacted another law, on classified information, that gives to the head of the public institution the right to decide if some information is confidential. the difficult issue here is that there is no control over this illegal decision, and the petitioner has no alternative but to go to the courts against the lack of disclosure. enforcement. appeals and judicial review this study is focused on the enforcement provisions of the laws that guarantee the right to access information in the jurisdictions analyzed. an appropriate legal framework is clearly needed as a condition for transparency, but it will not be sufficient, a wide array of factors should be in place to ensure that these legal provisions are in fact implemented. among these, the doctrine has identified the condition that the existing legislation should provide not only responsibilities, but also the consequences of non-compliance (abramo, 2002, p. 146). from a comparative perspective, the enforcement regime can be structured around three procedures: a) the administrative internal review addressed to the public authority that refused the access to public information, as a mandatory precondition for judicial review or just as a mediation procedure; b) a review by an ombudsmantype authority, which can have the power to enforce the legislation or just to mediate the conflict; c) a right to judicial review against the refusal by the courts. jurisdictions studied here have opted for two major systems of control over the implementation of the freedom of information regime: a) the specialized commissioner (ombudsman) system complemented with the judicial review in front of the courts (hungary), respectively b) the judicial review in front of the courts, preceded by administrative internal appeals (romania, czech republic). it has been argued that an excess of procedural stages leads to expense and delay in making information available, but in the same time a right of recourse to the court only is likely to deter applicants from challenging refusals because of expense (macdonald and jones, 2003, p. 222). the existence of a commissioner makes the procedure for challenging decisions of public authorities cheaper and more readily available. it has to be mentioned, though, that even in countries that do not have a specialized ombudsman specialized on freedom of information matters, the “ordinary” ombudsman can intervene in such issues, but only in the same manner and with the same powers as in other administrative conflicts. the main line of criticism regarding freedom of information act in poland concerns the lack of a specific public authority (like the information commissioner or ombudsman in hungary or united kingdom) responsible for ensuring that the provisions of the law are properly implemented. other important weakness of the law is considered to be the whole construction of it, which may give impressions that secrecy is more important than access to information. this is the consequence 58 of earlier adoption of law concerning limitations of the right to information on the basis defined in regulation on protection of secret information and about other secrets protected by law, for example privacy of individuals. as in other central and eastern european countries, implementation of an electronic version of the bulletin on public sector information constitutes a challenging task, due to the large number of public authorities required to provide information by use of this bulletin (over 100 000 in poland). finally, it was argued that the procedure of judicial review is time consuming and may be a real obstacle for citizens. from 1989 to 1995 an average time of legal proceedings on criminal cases increased three times and in economic matters more than twelve times (sakowicz, 2002). in 1999 and 2000, the polish ombudsman, which is the public authority entitled to hear complaints in civil rights cases, took upon itself the initiative to examine also the regulations of municipal deliberative and executive bodies regarding the implementation of the right to access public information. the ombudsman investigation aimed to investigate the manner in which protocols of board meetings are disclosed, local decisions concerning public procurement and financial performance of executive boards are made publicly accessible. most of the cases brought before ombudsman targeted the “no reply” approach or delays in disclosing information, lack of trustworthiness of local officials and violation of constitutional right to information. in his evaluation, the ombudsman indicated that: territorial self-government units usually do not regulate in their statutes the implementation of the right to information. by contrast, municipal authorities very often refer to law which allows them to act under the veil of secrecy: in one case, a citizen was forbidden to record on tape municipal council sessions (sakowicz, 2002). withholding the information usually occurs when it regards financial aspects of municipal companies or access to protocols from sessions or committee meetings. it was also noted that not only citizens, but also members of the local councils or members of board of control commissions are treated in the same restrictive manner (sakowicz, 2002). as a best practice imperative, the possibility of a review procedure must be notified to the applicant together with the decision on a request for information. the importance of internal administrative appeals should also be noticed, as they provide a quick, cheap and simple mechanism for resolving the conflict. nevertheless, an internal appeal will never be impartial and fair, so the judicial review has the important role of covering the situations where the applicant does not find justice with the public authority. on the other hand, the principle is that while an erroneous decision of refusal can be overturned by way of internal administrative appeal, an erroneous decision of disclosure cannot be overturned in this way. according to the romanian foia (art. 21, 22), the explicit or tacit refusal of the employee appointed by an authority or a public institution to carry out the provisions of the law constitutes a breaking of the law and brings about the disciplinary responsibility of the culprit. against the refusal, an internal administrative appeal addressed to the manager of respective public authority or of the respective public institution can be handed in, in 30 days since the harmed person has taken note of the respective refusal. if, after the administrative investigation, the complaint proves well-grounded, the answer shall be communicated to the harmed person in 59 15 days since the complaint has been handed in, and the answer shall contain both the initially requested information of public interest and the disciplinary penalties taken against the culprit. furthermore, in case that a person considers that his/her rights recognized by the law have been harmed, the person can bring a complaint to the administrative section of the court within the jurisdiction of which the respective person live or the headquarters are located, or within the jurisdiction of which the headquarters of authority or public institution are. the deadline for this procedure is 30 days since the answer (express of implicit) to the internal appeal was received. although there are not many non-governmental organizations active in the field of freedom of information, those who are active make a lot of difference and impact positively the implementation process of the law. thus, in 2003 upon a complaint of the association for the defense of human rights in romania – helsinki committee (apador-ch), a bucharest court fined prosecutor-general of romania for refusing to disclose how many people his office has allowed to be wiretapped. the problem in this case is that the fine is too small, and there is no instrument to adapt these fines to the rate of inflation. eloquently enough, in the case presented above the fine was only 500 lei ($.015) per day until the information was released. another court action initiated by the non-governmental organizations regarded an internal document of the central government. in july 2004, the romanian media reported the existence of a secret government decision imposing on all executive agencies to obtain the prime minister’s approval as a pre-requisite for concluding advertising contracts. shortly afterwards, two non-governmental organizations (initiative for justice and center for independent journalism), which were researching the abuse of government advertising as a tool for restraining media freedom in romania, filed a freedom of information request regarding the existence and content of the decision. in response to the silence of the prime minister’s office, a complaint was brought to the administrative section of a court. in 2004, the court ordered the government to provide the requested information. the newly elected government that took office in early 2005 quickly put an end to the quarrel and agreed to settle the case by providing all available information. romanian experience shows that due to the fact that judicial review is the only real chance to enforce the freedom of information legislation, public authorities are typically reluctant to disclose information and use judicial review as a delay in implementing the law. this happens in the context in which romanian administrative practice still allows public authorities to pay from public budget damages imposed by court decisions, without really bringing about the disciplinary responsibility of the person which refused the access to pubic information. even though there are provisions in this direction, in practice they are not respected, and the public auditors go along with this practice. in hungary, article 21 of the act no. lxiii of 1992 provides the right to institute court proceedings within 30 days from the refusal to disclose public information. the lengthy judicial process is considered a factor that deters applicants from seeking review in the courts. the doctrine noted that, although “promptness is an 60 essential element of the exercise of the right to have access to information of public interest”, the case-load on the courts prevails sometimes (halmai, 2005, p. 44). in the czech republic, the law provides for an administrative appeal at the same authority that refused granting access, then judicial review at administrative court according to the act no. 150/2002 on judicial rules of administrative procedure. in the first stage the court from the region where the public authority functions is competent. an appellate review (remedy against the regional court decision) is decided by the supreme administrative court in brno (kužílek, 2004). the action must be filed within two months from the delivery of the decision on the administrative appeal. the applicant can represent himself in the first stage of the suit, but in the supreme administrative court it is compulsory to be represented by a solicitor. the administrative appeal can be sent only by e-mail, if it is necessary for meeting a deadline, but within 5 days there is compulsory to supply it in written form or in electronic format with guaranteed electronic signature, or orally into the protocol (rules of administrative procedure, § 37 par. 4). a research conducted in 2000 (osf prague, 2002) shows that in the czech republic there were few appeals against the refusal of public institutions to provide information. thus, 55% of the institutions scrutinized on internet and 80% of the municipalities did not report even a single appeal. on the one side, the low numbers of appeals against the decision of an office not to grant an information can reflect satisfaction of the applicants, but, on the other side, it could be also the evidence of not sufficient courage of some citizens to continue the process of gaining information or of the resignation at the very first refusal. if the compulsory subject gives only the obligatory information, it is not possible to learn from the register how many requests were withheld. the law does not explicitly order to itemize the results of appeals in the register, although the numbers of appeals are obligatory and so the estimate is based only on the part of reports about three quarters of appeals were dismissed. there was also small number of lawsuits concerning the right of information (12). finally, there were no officers sanctioned for breaking the n. 106/ 99 act. an important method of enforcement of freedom of information regimes, especially regarding the ex-officio publication of public information, is represented by the reports drafted by public authorities or by supervising public bodies. thus, in most jurisdictions, the periodical reports of the implementation level of the freedom of information laws play a very important role in drawing the attention of the public on the issue of transparency, and in the same time make public authorities aware of the public scrutiny of their openness. most countries have a single national ombudsman (romania, czech republic), but hungary appointed three parliamentary commissioners: a general commissioner, a commissioner on the protection of minorities, and a data protection and freedom of information commissioner, who is competent for all the rights related to data protection and freedom of information. the other commissioners are entitled to examine only the institutions of the state – first of all public administration – but the data protection and freedom of information commissioner has the right to examine every person, institution or organization if they are processing personal data both in 61 the state and in the private sector. the commissioner is elected by the parliament from the hungarian citizens with a college degree, a clean criminal record and an outstanding academic knowledge or at least 10 years of professional practice, who are widely esteemed persons with significant experience either in conducting or supervising proceedings involving data protection or in the scientific theory thereof; its mission is to safeguard the constitutional right to the protection of personal data and to public access to data of public interest. the statute of the commissioner is regulated by the provisions of the act on the parliamentary commissioner for civil rights, which are applying accordingly. the information commissioner has among its competences investigative powers regarding complaints brought to him. he is in charge with promoting an uniform application of statutory provisions on the processing of personal data and on public access to data of public interest, and can issue a recommendation within his field of competences generally or for a specific data controller; the recommendation issued in a specific case, is not officially binding for that case, but it has to be considered as a way of interpreting the law. in addition to these competences, the commissioner has the right to form opinion in connection with the activity of an institution performing state or local government functions. considering the fact that the commissioner does not possess binding powers over the controlled public authorities, its strength and best weapon are independence, professional knowledge and the publicity (péterfalvi, 2005). the main attribution of the commissioner is to observe the implementation of the data protection and freedom of information act and other laws on data processing, to examine complaints and to ensure the maintenance of data protection register. he makes proposals for the adoption or amendment of legislation on access to data of public interest and gives opinion on such draft legislation. a very important competence regards the initiation of narrowing or broadening of data categories classified as state or service secrets. anyone may report to the data protection commissioner if he thinks his rights have been violated, or that there is an imminent danger of such a thing to happen, in connection with the processing of his personal data or with the exercise of his right to have access to data of public interest, except when judicial proceedings are already pending concerning the case in question. no one shall suffer any prejudice on grounds of his reporting to the data protection commissioner. in performing his tasks, the data protection commissioner may request the data controller to supply information on any matter related to personal data or public information, and he may examine all such documents and request a copy of and have access to all such data processing operations. the public authority shall reply to the recommendation issued in relation with its activity within 30 days. if the data controller or technical data processor fails to discontinue the unlawful processing (technical processing) of data, the data protection commissioner orders the blocking, deletion or destruction of unlawfully processed data, prohibits the unlawful processing or technical processing of data, and suspends the transfer of data to foreign countries. the classifier may, within 30 days, go to the metropolitan court of justice to have it established that the 62 demand has not been well-founded. until a final court decision, the data concerned may not be deleted or destroyed; the processing of data, however, shall be suspended and the data shall be blocked. state and official secrets shall not prevent the data protection ombudsman from exercising his rights stated in the act, but the provisions on secrecy shall bind him as well. the solution of having the information commissioner dealing also with data protection issues is controversial. it is evident that the two philosophies are opposed and may lead to inconveniences in applying the legislation. on the other hand, this dual position precisely could make things go better when trying to balance the right to know with the right to privacy. in this context, such a solution is to be considered at the next revision of the romanian constitution. concluding remarks reforming former communist public administrations is a daunting task, and it takes more than a decade until the first signs of success can be observed. the process is a painful one and it has to be further approached with great care so that new mistakes would not draw it back. the developments presented in this paper are the expression of initial stages of the reform, while considering at any time the resistance of the political parties and of the old mentalities entrenched in public officials’ mind to this endeavor. there are many things to be done in the future in order to make the regime of transparency to function properly, besides adopting new regulations inspired by western european models. it is known that implementation is the “missing link” in reforming public administration in central and eastern europe (dunn, staronova and pushkarev, 2006). references: 1. act lxiii of 1992 regarding the protection of personal data and public access to public interest data – hungary. 2. act on free access to information no. 106/1999 coll – czech republic. 3. apador-ch, press release, 27 of april 2006, [online] available at www.apador.org 4. banisar, d., freedom of information and access to government record laws around the world. the freedominfo.org global survey, 2004, [online] available at http://www.freedominfo. org/documents/global_survey2004.pdf 5. birkinshaw, p., freedom of information. the law, the practice and the ideal. 3rd edition, london: butterworths, 2001. 6. brown, h.s., angel, d. and derr, p.g., effective environmental regulation: learning from poland’s experience, praeger: greenwood publishers, 2000. 7. dunn, w.n., staronova, k., and puskarev, s. (eds), implementation – the missing link in public administration reform in central and eastern europe, bratislava: nispacee, 2006. 8. halmai, g., report on the situation of fundamental rights in hungary in 2004. e.u. network of independent experts on fundamental rights, 2005. 9. hungary data protection and freedom of information commissioner, 2004 report. budapest: office of the data protection commissioner, 2005. 63 10. kamiński, i.c., evaluation of levels of media freedom in polish law and practice, 2000, [online] available at http://www.policy.hu/ipf/fel-pubs/index.html. 11. kužílek, o., another 106 answers to your questions (with judgments). a handbook for citizens on the free access to information and the transparency of public administration, prague, 2004, [online] available at http://otevrete.cz/files//copyofdocuments/handbook_ for_citizens.pdf. 12. law regarding the access to public information, journal of laws no.112, item 1198 poland. 13. law no. 544/2001 regarding the free access to public information published in official monitor of romania of october 12th, 2001 – romania. 14. macdonald, j. and jones, c., (eds), the law of freedom of information. oxford: oxford university press, 2003. 15. majtényi, l., freedom of information. experiences from eastern europe, 2004, [online] available at http://www.osce.org/documents/rfm/2004/08/3441_en.pdf. 16. open society fund prague, free access to information in the czech republic, 2002, [online] available at http://www.otevrete.cz/index.php?akce=clanek&id=142. 17. osborne, d., ‘transparency and accountability reconsidered’, 2004, journal of financial crime, vol.11, no.3, pp: 292-300. 18. sakowicz, m., the problem of access to information and effective communication at local level. information program group, 2002, [online] available at http://www.policy. hu/~sakowicz/finalpolicy.pdf. 1 press release, e-strategies on-line, issue 15, 26.10.2005, http://www.britishpublishers. com/ezine/ezine15.htm 2 http://www.mos.gov.pl/mos/akty-p/dostep_eng.html untitled 114 abstract the reform process of the state and implicitly of the public administration was a priority for the past governments of romania. during 20042009, within the reform process, the main actors involved in the coordination, implementation and monitoring of reform measures were: the prime minister, the superior council for public administration reform, public policy coordination and structural adjustment, the ministry of public finance, the general secretariat of government, ministry of administration and interior (renamed for a short time ministry of interior and administrative reform), the central unit for public administration reform, national institute of administration, the national agency of civil servants, and the national modernizers network. for evaluation of aspects related to the reform process it was designed a selective research within the members of the national modernizers network, for assessing their perception of the public administration reform undertaken by the institutions presented above. evaluating their opinion can be an important point in the revitalization of the area of the administration reform process. also, the research conducted aimed at assessing the degree of modernizers’ involvement in activities related to important aspects of the reform process: strategic planning, formulating and evaluating public policies, financial management, human resources management, decentralization, introduction of new information and communication technologies and administrative simplification. analysis of the national modernizers network for the support of the public administration reform process from romania*1 alina profiroiu tudorel andrei marian nica elena daniela ştefănescu alina profiroiu (corresponding author) associate professor, faculty of administration and public management, academy of economic studies, bucharest, romania tel.: 0040-021-319.1900 email: alina_profiroiu@yahoo.com tudorel andrei professor, statistics and econometrics department, faculty of cibernetics, statistics and economic computation, academy of economic studies, bucharest, romania marian nica phd candidate, academy of economic studies, bucharest, romania elena daniela ştefănescu phd, national institute of statistics, bucharest, romania *1 acknowledgement: the research was conducted under phase v of the project quantitative and qualitative analysis of public administration reform impact on the eu integration process from the perspective of decreasing inequalities in economic regional development, funded through national priority programs (np ii). transylvanian review of administrative sciences, no. 31e/2010 pp. 114-132 115 1. introduction the reform process of the state and implicitly of the public administration has become a priority for the past governments of romania. during 2004-2009, within the reform process, the main actors (strategy for the public administration reform in romania, 2004) involved in the coordination, implementation and monitoring of reform measures were following: • the prime minister – who coordinated the overall government reform and delegated specific tasks to all ministers. • the superior council for public administration reform, public policy coordination and structural adjustment – which analyzed the sectoral strategies for each individual ministry or in whole, and made suggestions and recommendations to ministers and to the prime minister; this council was dismantled and replaced in 2005 with an inter-ministerial permanent council for administration and civil service, decentralization, local communities. • the ministry of public finance – which develops and implements the government’s strategy in public finance; together with the ministry of administration and interior are responsible for carrying out fiscal decentralization process, providing technical support to the inter-ministerial technical committee and working groups on financial issues specific to decentralization process; the ministry has an important role in providing financial support to civil service reform. • the general secretariat of government, the public policy unit – strengthening the government capacity to coordinate the process of formulation, implementation and monitoring of public policies and providing the interface between different institutions which have an important role in public policy formulation. • the ministry of administration and interior (renamed for a short time the ministry of interior and administrative reform miar), which had a role in public administration reform process, by its special structure – central unit for public administration reform (cupar). at the level of the ministry of administration and interior the following actors were involved in the reform process: • the central unit for public administration reform1 (cupar), structure within the ministry which provided the technical support and monitored the entire reform process, as well as implementation of the decentralization and deconcentration process; provides together with the public policy unit (ppu), the secretariat of the governmental council and executes its decisions; 1 cupar was created in 2002 and is divided into 2 units (modernization and decentralization) and a monitoring service. its mission is to coordinate the reform process in the public administration by proposing instruments, mechanisms and procedures for a new public management which should be implemented at the level of local and central public administration, for meeting the citizens’ demand. 116 • the national institute of administration (nia), which currently has been dismantled, developed and ensured the implementation of the strategy for training of civil servants, played the role of a training school of excellence for civil servants, and it was the coordinator of the network of regional centers for continuous training at local administration level and support within the network of partners; • the national agency of civil servants (nacs) is responsible for managing the civil service; • the groups for monitoring the public administration reform at counties and ministries level, coordinated by the central unit for public administration reform. public managers2, which are a category of officials with special status, might be part of these groups. for the evaluation of some aspects related to the activity of some actors involved in the support of the reform process it was designed a selective research within the members of the national modernizers network (nmn). the research was carried out within the 5th phase of the project quantitative and qualitative analysis of the effects of the public administration reform on the eu integration process in terms of reducing economic development disparities between regions, funded through the national programs by priority domains (np ii). in this approach was applied a statistical survey at the level of a group of 72 modernizers from the entire network. to achieve this objective the following stages took place: – develop a tool for measuring the capacity of actors involved in supporting public administration reform process; – implementation of the national network tool. the questionnaire was applied in april 2010 to the modernizers network, with the support of the central unit for public administration reform. the questions integrated into the questionnaire took into consideration the evaluation of the public administration reform undertaken by the following institutions: government, ministry of administration and internal affairs (mai), ministry of public finance (mpf), national agency of civil servants (nacs), national institute of administration (nia), central unit for public administration reform (nacs) and public policy unit (ppu). the research conducted on the national modernizers network was aimed to have the modernizers’ assessment on several aspects of the work undertaken by different 2 governmental emergency ordinance no. 56/2004 regarding the creation of the special status of the civil servant called public manager, approved with changes and amendments through the law no. 452/2004, with its changes and amendments. the public manager, through its attributions and responsibilities, should contribute to the efficiency and continuity of the public administration reform, from the strategic levels to operational ones, as well as to the integration within eu structures through adopting and implementing the communitarian acquis, within the authority or institution where s/he is working. 117 actors involved in implementing reform measures. evaluating their opinion can be an important point in the revitalization of the area of administration reform process, taking into account several issues: – resize this sector in relation to new restrictions imposed by the economic crisis, nationally and worldwide, but also the need to create a modern administration that supports the development of the economic environment; – excessive politicization of state institutions and its effects on economic performance and social process at national and regional level; – the need for the implementation of the new wage system. 2. developments at the level of national modernizers network a first question in the survey was to assess the view of the modernizers on the public administration reform process in the past four years. based on the question, it is defined an ordinal variable based on the application below: q 1 : n {1,2,3,4,5} to define this variable it was used a measure scale with five levels, coded as 1 – if there is a negative opinion; 2 – if the view is moderately negative; 3 – if an opinion is neutral, meaning that respondents may not be aware of any remarkable changes in the reform process; 4 – if the view is moderately positive; 5 – if the opinion is positive. distribution of answers to this question is presented in table 1 and in figure 1. table 1: distribution of answers regarding the evolution of the reform process (%) relative frequency cumulative frequency it is noticed an involution every year 4.1 4.1 there are no important changes 8.2 12.3 the process is perceived in small degree 45.2 57.5 the process is perceived in high degree 38.4 95.9 changes are radical 4.1 100.0 for this variable we calculated the average. it is obtained an amount equal to 3.30. the result highlights a slight evolution of public administration reform process. in fact, almost half of the respondents considered that the reform process is perceived at small degree. however, it should be noted that a majority (38.4%) of modernizers perceived at high degree the process of administrative reform. 118 figure 1: distribution of answers regarding the evolution of the reform process an important aspect to be considered within the implementation of the reform process in any sector is the motivation of its promoters, by assessing if there is a match between their aspirations and changes in the system. to determine whether changes in public administration coincide with the aspirations of the modernizers, the following variable was defined: q 2 : n {1,2,3,4} to define this variable a scale with four values was used: 1, if change in the system does not coincide with the aspirations of the modernizers; 2, if there is a small correlation between the system change and their aspirations; 3, if there are considerable similarities between changes and aspirations; 4, if the aspirations of modernizers fully coincide with changes in the system. the d\distributions of values of this variable are presented in table 2 and in figure 2. table 2: distribution of answers regarding the degree in which the changes coincide with the modernizers’ aspirations (%) relative frequency cumulative frequency not at all 6.8 6.8 in a small degree 58.9 65.7 in a high degree 34.2 100.0 the average of this variable, which is 2.27, indicates that the current changes coincide to a lesser extent with their expectations. in fact, more than 50% of respondents considered that change within public administration coincide to a lesser extent with their own aspirations. 119 figure 2: degree in which changes correspond to modernizers’ aspirations to assess the quality of the work of the national modernizers network three issues were considered: work undertaken at national level; work undertaken by team members at county level; and quality of coordination work performed by cupar. for each case it was used a scale with five levels. these values are defined as follows: 1, for an unsatisfactory appreciation; 2, two for a satisfactory opinion; 3, for a better appreciation of the work performed; 4, for a good appreciation; 5, no answer. based on information collected directly from the application of the questionnaire the following three variables can be defined: q 31 , q 32 , q 33 : n {1,2,3,4,5} we used only the values of primary variables which have values in the crowd {1,2,3,4} thus defining the following variable for a global assessment: q 3 : n [1,4], q 3 = 1 (q 31 +q 32 +q 33 )3 the value distribution for each variable is presented in the following table: table 3: distribution of answers regarding the appreciation on the work of national modernizers network activity at national level activity at county level network coordination by cupar not satisfactory 11.0 13.7 4.1 satisfactory 17.8 38.4 24.7 well 47.9 38.4 56.2 very well 6.8 2.7 8.2 i do not know 16.4 6.8 4.1 no answer 0.0 0.0 2.7 for an overall assessment of the national modernizers network on each component it is calculated the mean of the three primary variables based on questionnaires 120 which have an assessment in relation to each criterion considered. average for the three variables are: for work at national level was obtained 2.60; for the activity at the county level it was obtained 2.32; for the coordination of the network by cupar it was obtained an average of 2.73. average aggregate variable q 3 is equal to 2.55, indicating a negative assessment of the work of the national modernizers network. figure 3: appreciation of the activity of national modernizers network reported to the activity at national, county and cupar coordination using two questions from the questionnaire we highlighted the most important strengths and weaknesses of the national modernizers network. therefore, among the network’s strengths it can be mentioned: coordination of the network by cupar; making a more efficient public administration through alternative methods presented; support for strengthening the role of the prefect in managing the process of deconcentration of public services and ensuring integrated management of public services of the ministries, for improving the human resources policy; expanding the communication with the citizens; modernization instruments launched at the level of public institutions; the increased availability of cupar experts’ advice, ensuring prompt information and undertaking objective evaluations; work in team with maximum openness; opportunity of experience sharing and best practices. among the weaknesses of the system can be noted: sometimes poor communication and lack of information on standing issues; lack of communication between the networks from county level and cupar, as coordinator of the nmn, poor communication between modernizers and public institutions leadership; lack of information on modernizers’ activity; people which should be part of the modernization do not have the necessary knowledge and as a consequence do not have responsibilities in the job description; at this moment, the modernizers’ group (at least at county level) does not add value to the process of public administration modernization as it is 121 not operational; little monitoring of the implementation of reform measures at the local level, lack of implementation of measures that require material costs and of the obligation to apply certain modernizing instruments; failure to support the process of simplifying administrative procedures; insufficient training of the modernizers’ groups and reduced number of the meetings with nmn members at national level, determining a low cohesion at nmn level; poor coordination of the modernizers groups at the level of some counties; transfer knowledge and best practices among network members is done sporadically; lack of a plan of action at the network level; poor preparation of network members in terms of reform. an important aspect of nmn is related to the number of meetings from 2006-2009. thus based on information obtained after processing the questionnaire, distributions data were obtained, as presented in table 4. table 4: distribution of modernizers by the number of meetings they attended number of meetings 2006 2007 2008 2009 0 2.7 5.5 12.3 16.4 1 19.2 23.3 13.7 9.6 2 16.4 11.0 2.7 2.7 3 5.5 2.7 0.0 0.0 4 2.7 1.4 1.4 0.0 na 53.4 56.1 69.9 71.2 based on the above table we can make the following comments. during the period analyzed there is a reduction from year to year in the number of meetings of the nmn. there is large number of modernizers which did not provide any response to the question above. the lowest level of activity is noted in the year 2009. an important tool that can ensure good communication within nmn, is an information bulletin. to determine the extent to which nmn members know of the existence of a newsletter it was ashed a question whether there is a newsletter. distribution of answers to this question is presented in figure 4. figure 4: answer distribution regarding the newsletter’s existence 122 to determine to what extent the newsletter fulfills the expectations of nmn members, for those who answer affirmative to the previous question, it was inserted a question to assess the satisfaction regarding the newsletter. based on this variable variable q 6 is defined, by the below application: q 6 : n {1,2,3,4} for the definition of the above variable it was used a scale with four levels defined as follows: 1, the interviewee believes that newsletter is not useful; 2, the utility of newsletter is low; 3, the newsletter has a large utility; 4, the usefulness of this tool is very high. the overall results are presented in table 5 below. table 5: appreciation degree of the newsletter, by nmn members (%) 1 (not useful) 2 (low) 3 (large) 4 (high) no answer weight 0.0 2.7 23.3 0.0 74.0 following the distribution of the above table, it is shown a poor appreciation of the quality of the newsletter by the nmn members. it should be noted that most of the respondents (74%) were not aware of the existence of this instrument. 3. promoting modern tools at the level of public administration an important role in modernizing public administration it played by the use of modern instruments implementing specific eu policies to the national context. we included a question in the questionnaire to assess the awareness regarding the implementation of three modern instruments: common assessment framework (caf), multi-annual plan of modernization (mpm) and strategic planning (sp). distribution of the answers to this question is presented in table 6. table 6: application of three instruments at the institutions’ level caf mpm sp no 32.9 11.0 17.8 yes 41.1 71.2 60.3 do not know 13.7 8.2 15.1 no answer 12.3 9.6 6.8 for caf and mpm it is evaluated the modernizers’ opinion on their usefulness at the level of the institutions where they are implemented. to define this question there were considered the following response alternatives: implementation of the instrument is a bureaucratic activity which supports the reform process (a); implementation of the instrument is cumbersome in the current stage of the development of public administration (b); each tool is effective in modernizing the administration and the application has already brought results (c); each tool is effective in modernizing and will produce results in the future (d). distribution of responses on the usefulness of the two instruments at the level of public administration is presented in table 7. to determine the two distributions 123 there have been used only modernizers’ answers who mentioned at previous question that caf and mpm are used. table 7: use of caf and mpm at the public administration level caf mpm a 0.0 0.0 b 6.7 15.4 c 36.7 44.2 d 53.3 36.5 no answer 3.3 3.8 to assess the modernizers’ opinion regarding the usefulness of mpm implementation there were considered the following four aspects: internal organization; human resource management; use of methods and tools of public administration management; introduction/extension of the use of information and communications technologies. in all four cases a five values scale was used to measure the five variables: 1 – if the implementation of mpm was not a positive contribution; 2 – if contribution was to a lesser extent; 3 – if there was a moderate contribution; 4 – if the contribution was pretty good; 5 – if there was a very large contribution. within the questionnaire it was introduced a question to determine to what extent mpm helped to improve some aspects related to the functioning of the institution. based on the information gathered, through the application of this question there were defined four primary variables and an aggregate variable. these are listed below: • for evaluation of mpm contribution to in internal organization: q 131 : n {1,2,3,4,5} distribution of values of this variable is presented in table 8. table 8: appreciation of mpm contribution to internal organization relative frequency (%) not at all – 1 2.3 lesser extent – 2 11.4 moderate – 3 29.5 pretty good – 4 36.4 large contribution – 5 9.1 i don’t know/no answer 11.3 total 100.0 • for evaluating the contribution of mpm to the improvement of human resource management: q 132 : n {1,2,3,4,5} the distribution of the values of this variable is presented in table 9. 124 table 9: contribution of mpm to the improvement of human resource management relative frequency (%) not at all 1 2.3 lesser extent 2 22.7 moderate 3 43.2 pretty good – 4 18.2 large contribution 5 2.3 i don’t know/no answer 11.3 total 100.0 • for evaluating the contribution of mpm to the improvement of using the public management methods and instruments: q 133 : n {1,2,3,4,5} the distribution of the values of this variable is presented in table 10. table 10: contribution of mpm to the improvement of using the public management methods and instruments relative frequency (%) not at all – 1 2.3 lesser extent – 2 22.7 moderate – 3 38.6 pretty good – 4 25.0 large contribution – 5 0.0 i don’t know/no answer 11.4 total 100.0 • for evaluating the contribution of mpm to the improvement of using the new information and communication technologies: q 134 : n {1,2,3,4,5} the distribution of the values of this variable is presented in table 11. table 11: contribution of mpm to the improvement of using the new information and communication technologies relative frequency (%) not at all – 1 2.3 lesser extent – 2 11.4 moderate – 3 18.2 pretty good – 4 38.6 large contribution – 5 18.2 i don’t know/no answer 11.3 total 100.0 125 • for evaluating the global contribution of mpm to the improvement of activity in the public institution in which it was implemented. this is a variable defined as the arithmetic mean of the four primary variables defined above: q 13 : n [1,5], q 13 = 1 (q 131 +q 132 +q 133 +q 134 ) 4 the distribution of values for this variable is presented in figure 5. figure 5: distribution of modernizers’ appreciation of mpm utility average utility of this variable shows a low utility of mpm at the level of public administration institutions. 4. activity of the actors involved in the public administration reform in assessing the work of important stakeholders involved in implementing public administration reform process a question was introduced in the questionnaire with four possible answers: unsatisfactory, satisfactory, good and very good. for assessing the activity of each actor involved in this process one variable was defined as follows: • for the government activity it was defined the following variable: q 141 : n {1,2,3,4}; • for mai activity it was defined the following variable: q 142 : n {1,2,3,4}; • for mfp activity it was defined the following variable: q 143 : n {1,2,3,4}; • for nacs activity it was defined the following variable: q 144 : n {1,2,3,4}; • for nai activity it was defined the following variable: q 145 : n {1,2,3,4}; • for cupar activity it was defined the following variable: q 146 : n {1,2,3,4}; 126 • for ppu activity it was defined the following variable: q 147 : n {1,2,3,4} to define these variables a scale with four values was used: 1 – for an unsatisfactory assessment of the stakeholders’ activity; 2 – for a satisfactory assessment; 3 – for a good opinion; 4 – for a very good opinion. the distribution of answers to this question is presented in the table below. table 12: appreciation of involved stakeholders in the reform process unsatisfactory satisfactory good very good non answer government 9.6 23.3 45.2 12.3 9.6 mai 5.5 9.6 58.9 19.2 6.8 mpf 12.3 37.0 35.6 6.8 8.3 nacs 9.6 27.4 42.5 13.7 6.8 nai 4.1 20.5 46.6 19.2 9.6 cupar 2.7 6.8 45.2 37.0 8.3 ppu 8.2 16.4 42.5 12.3 20.6 for each of the seven variables their means was computed and the following results were obtained: for the government’s activity in public administration reform, it was obtained the value of 2.67; for the mai activity the mean was 3.00; mpf activity was assessed with 2.40; nacs assessment yielded an mean equal to 2.65; nia was assessed with an mean of 2.89; cupar activity was assessed with 3.26; ppu was assessed with the value of 2.74. the means obtained for the involved actors in the reform process are shown in figure below. figure 6: appreciation of activity of involved stakeholders in the reform process for an overall assessment of the actors involved in the reform process the variable is defined as the arithmetic mean of the seven primary variables defined above: q 14 : n [1,4], q 14 = 1 (q 141 +…+q 147 ) 7 127 the mean of this variable is 2.77, which indicates a negative opinion of the modernizers regarding the work undertaken by the stakeholders involved in this process. there should be noted the negative opinions expressed by modernizers related to the activity of mpf, but positive views regarding the activity of cupar. the distribution of the values of the variables used for global assessment of the work of important stakeholders in the public administration reform is presented in figure 7. figure 7: distribution of variable values q 14 5. independence of civil service by political system an important result of the reform process in public administration must be reflected in the increased independence of the civil service from the political level. to assess the modernizers’ opinion about the magnitude of civil service change on the political criteria, the following question was introduced into the questionnaire. two variables were developed in order to assess the extent of personnel changes as a result of changes in the political system. q 151 ,q 152 : n {1,2,3,4} to define the two variables a scale with four values was used, assigned as follows: 1, if in the modernizers’ view there were no changes in civil service following political changes; 2, changes were insignificant; 3, changes were significant; 4, for changes that were generalized, in which political changes have caused a large fluctuation of management and implementation staff from the institution. the distribution of values for the two variables is presented in the table and figure below. 128 table 13: frequency of personnel changes on political criteria (%) management level execution level no changes 11.0 23.3 changes were insignifi cant 21.9 46.6 changes were signifi cant 46.6 19.2 changes were generalized 15.1 5.5 no answer 5.5 5.5 figure 8: frequency of personnel changes on political criteria the results obtained above reveal a reduced independency of civil service from the political system. thus, more than 60% of the modernizers appreciated that changes of management staff on political criteria are significant or widespread. 6. including in the modernizers’ job description the tasks related to the reform to track the extent to which activities related to public administration reform process by modernizers are stipulated into the job description the following question was included into the questionnaire: are your tasks related to the reform included in your job description? to define this question it was used a five values scale, as follows: 1 – in case in which the tasks related to reform are included in full in the job description; 2 – where most of these tasks are included the job description; 3 – if such tasks are shown only partially in the job description; 4 – for negative situation in which reform-related tasks are not at all mentioned; 5 – for the case when modernizer does not know if these tasks are included in the job description. the distribution of answers to this question is presented in figure 9. 129 figure 9: distribution of answers regarding the inclusion of tasks related to the reform into the job description the results obtained show that modernizers’ tasks related to public administration reform are not very often specified in their job descriptions. to estimate the time allocated by modernizers to issues related to public administration reform process, in the questionnaire was included a question with four response alternatives: every day an insignificant portion of the program; occasionally, as required; a significant part of the daily work; most of the work program. the results obtained are shown in the table below. table 14: time allocated to tasks related to the reform process relative frequency (%) insignifi cant portion of daily program 1 2.7 occasionally 2 69.9 a signifi cant part of the daily work 3 23.3 most of the work program 4 2.7 no answer 5 1.4 total 100.0 7. conclusions finally, the research conducted aimed at assessing the degree of modernizers’ involvement in activities related to seven important aspects of the reform process: strategic planning, formulating and evaluating public policies, financial management, human resources management, decentralization, introduction of new information and communication technologies and administrative simplification. to assess the views of employees in public administration regarding the extent to which they were involved in supporting reform processes in relation to the above issues, in the questionnaire there were introduced eight related questions. based on these questions, primary variables were defined as follows: improving the capacity of strategic planning q201; improving public policy formulation and evaluation q202, 130 improving financial management q203, improving human resource management (planning, recruitment and advancement based on merit, pay based on performance) q204, commencement of organizational change for a better implementation of decentralization q205, introduction of practice on information technology and communications (icts) q206, introduction of management performance related techniques (the introduction of measurement systems performance, benchmarking, performance-based funding) q207, and involvement in the implementation of quality improvement initiatives q208. to measure the modernizers’ opinion in relation to each criterion presented above it was used a scale to measure the following five values: 1 – if it has been heavily involved; 2 – if it has been pretty much involved; 3 – for moderate involvement; 4 – if it has been involved in an insignificant degree; 5 if he was not at all involved. the results are presented in table 18. table 18: distribution of answers regarding modernizers’ implication in various activities (%) high degree considerable moderate insignifi cant degree not at all no answer improving the capacity of strategic planning 21.9 20.5 21.9 16.4 12.3 6.8 improving public policy formulation and evaluation 12.3 0.0 27.4 26.0 27.4 6.8 improving financial management 1.4 13.7 19.2 24.7 34.2 6.8 improvement of human resource management (planning, recruitment and advancement based on merit, pay based on performance) 4.1 17.8 26.0 20.5 26.0 5.5 commencement of organizational change for a better implementation of decentralization 5.5 9.6 28.8 16.4 34.2 5.5 introduction of practice on information technology and communications (ict) 15.1 24.7 28.8 6.8 20.5 4.1 introduction of management performance related techniques (the introduction of measurement systems performance, benchmarking, performance-based funding) 9.6 17.8 31.5 19.2 15.1 6.8 implementation of quality improvement initiatives (introducing standards for public services, introducing information stop shops, involvement of the clients and partners from the services sector in the process of making decisions; quality control in offering public services through adoption of a citizens’ charter’, simplifi cation of administrative procedures) 26.0 24.7 34.2 2.7 8.2 4.1 for each of the seven primary variables it was calculated the average of the modernizers’ opinion. the obtained average values and standard deviations are presented in table 19 and are plotted in figure 13. 131 table 19: means for variables used for quantifying the modernizers’ involvement variable variable’s mean standard deviation q201 2.76 1.371 q202 3.59 1.289 q203 3.82 1.136 q204 3.49 1.218 q205 3.68 1.242 q206 2.97 1.381 q207 3.11 1.204 q208 2.48 1.226 2.76 3.59 3.82 3.49 3.68 2.97 3.11 2.48 0 0.5 1 1.5 2 2.5 3 3.5 4 q201 q202 q203 q204 q205 q206 q207 q208 figure 13: level of involvement of modernizers in different type of activities for an overall assessment of the extent of modernizers’ involvement in certain categories of activities undertaken to support the reform process, it was defined variable q20, as the average of the eight primary variables defined above: q 20 : n [1,5], q 20 = 1 (q 201 +…+q 208 ) 8 it should be noted that a low average of this variable highlights a high level of modernizers’ involvement in various activities to support the reform process. it is noted that the greatest involvement relates to the improvement of financial management and the lowest involvement is related to the implementation of quality improvement initiatives. the variable’s mean is equal to 3.23. mean values and distribution obtained from the figure below highlight a reduced modernizers’ involvement in the mentioned activities to support the reform process of the institution. 132 references: 1. allen, r. and tomassi, d., managing public expenditure, paris: sigma oecd, 2001. 2. boston, j., martin, j., pallot, j. and walsh, p., public management. the new zeeland model, auckland: oxford university press, 1996. 3. bouckaert, g., nemec, j., nakrosos, v., hajnal, g. and tonnisson, k., public management reforms in cee, bratislava: nispacee, 2008. 4. coombes, d. and verheijen, t. (eds.), public management reform: comparative experiences from east and west, european commission, 1997. 5. gajduschek, g. and hajnal, g., ‘evaluation of the hungarian general civil service training program’, lgi discussion papers no. 16, 2000. 6. hovsepyan, a. and khudaverdyan, a., ‘public reforms in armenia 1999-2005: achievements and challenges’, siprg (armenian international policy research group) working paper no. 06/03, 2006. 7. jenei, g.r. and szlai, a.k., ‘modernizing local governance in a transitional nation: evaluating the hungarian experience’, 2002, public management review, 4/2, pp. 367-86. 8. norman, r., obedient servants? management freedoms and accountabilities in the new zealand public sector, wellington: victoria university press, 2003. 9. perry, j. and kraemer, k. (eds.), public management: public and private perspectives. california: mayfield, 1983. 10. petters, b.g., the future of governing: four emerging models, university press of kansas, 1996. 11. strategy for the public administration reform in romania (2004-2007), [online] available at http://www.gov.ro, accessed on march, 10, 2010. 247 abstract in the corruption literature, most of the studies indicate that corruption has adverse effects on the investment environment and thus it diminishes foreign direct investment (fdi) inflows. however, regarding the so-called adverse effects between fdi and corruption, it is noticed that some studies reached to conclusions in the opposite direction. in this study, the causality relationship among corruption, political risk, industrial production index (as a proxy to gross domestic product) and fdi entrance variables for turkey over the period 1992m01-2010m12 is analyzed by means of pesaran, shin and smith (2001) bounds test approach of cointegration and error correction methods. as a result, it is found that corruption has distortive effects on fdi in turkey both for short and long run periods and this indicates that ‘helping hand’ corruption does not exist in turkey. in addition, in the long run, fdi increases with raising income. contrary to the expectations, it is detected that increase in political risk contributes to fdi inflows in the short run. keywords: foreign direct investments, corruption, political risk, income, bounds test. the relationship between corruption and foreign direct investment inflows in turkey: an empirical examination m. umur tosun m. onur yurdakul pelin varol i̇yidoğan m. umur tosun (corresponding author) associate professor, department of public finance, hacettepe university, ankara, turkey tel.: 0090-312-297.8675 e-mail: utosun@hacettepe.edu.tr m. onur yurdakul phd, finance expert, financial crimes investigation board, ministry of finance, ankara, turkey e-mail: moyurdakul@gmail.com pelin varol i̇yidoğan assistant professor, department of public finance, hacettepe university, ankara, turkey e-mail: pelinv@hacettepe.edu.tr transylvanian review of administrative sciences, no. 42 e/2014, pp. 247-257 248 1. introduction after the 1980s, foreign direct investments (fdi) performed by the international companies have burst into prominence. financial liberalization process and globalization triggered by the technological developments mentioned in this period have provoked the establishment of international companies and stimulated different markets for the production and marketing activities with the purpose of getting the edge on competition. in this regard, making a decision about investment in a foreign country requires a multidimensional evaluation. accordingly, the expectation of earning profit in the country where investment takes place is determined by economic, social and political factors which makefdi become more of an issue. the effect of corruption as a variable that determines fdi is mentioned in several studies. although it is mostly supposed that there is a reverse relationship from fdi to corruption in the literature, studies that give opposite results exist as well. contributing to the literature by examining the mentioned relationship empirically, in terms of turkish economy where capital movements have liberalized at the end of the 1980s, is the aim in our study. in this regard, in the period of 1992 m01-2010 m12, the causality relationship among corruption, political risk, industrial production index being proxy to gdp and fdi inflows is analyzed by utilizing error correction and cointegration methods based on the bounds test approach of pesaran, shin and smith (2001). in addition, we aim to examine the validity of the ‘helping hand’ type corruption, which is especially seen in some asian countries, for turkey. this approach suggested by frye and shleifer (1997) asserts that the income and investment level of an economy could rise although organized corruption is recorded. our study consists of three sections. in the first section, the literature about the relationship between corruption and fdi is examined. in the second section, empirical findings, the data and the method which are used in the causality analysis are covered. finally, in the last section the results and the evaluation are presented. 2. corruption and fdi relationship: literature review in the literature that examines the corruption and fdi relationship, it is commonly accepted that corruption will negatively affect the investment choices by creating a risk factor. in this regard, the literature related to our study is categorized in three different types as follows: (i) studies supporting that corruption has a negative effect on fdi (alesina and weder, 1999; campos and lien, 1999; abed and davoodi, 2000; wei, 2000; wei and smarzynska, 2000; habib and zurawicki, 2001; lambsdorff, 2003; aizenman and noy, 2006; mathur and singh, 2007; hsu, 2007; al sadig, 2009); (ii) studies supporting that corruption effects fdi positively (hines, 1995; egger and winner, 2005); and (iii) studies supporting that fdi has an effect on corruption (larrain and tavares, 2004; pinto and zhu, 2008; craigwell and wright, 2011). as a study included in the first group, alesina and weder (1999, pp. 1-20) find that private capital movements including fdi are negatively affected by corruption increases but foreign government aid originated from the us turns toward the more 249 corrupt countries. campos and lien (1999, p. 1065) state that corruption reduces the ratios of both local and foreign gross investments to gdp. however, it is emphasized that the mentioned effect decreases by the predictability of the corruption. wei (2000, pp. 316-317) concludes that the triggering effect of corruption on fdi is higher relative to the negative effect of tax increase which is used as another control variable in the study. wei and smarzynska (2000, pp. 4-5) assert that foreign investors canalized to the economies with high corruption are in search of local partners, and that corruption triggers the union of the companies which are joint venture type. abed and davoodi (2000, pp. 14-15) suggest that corruption as a factor that decreases institutional quality hampers fdi inflows. habib and zurawicki (2001, pp. 687-700), which is one of the studies that analyzes the effects of corruption on local and global investments, reach a conclusion that the effect of corruption on foreign investments is more significant in comparison to the impact on local investments. on the other hand, lambsdorff (2003, pp. 229-243) finds evidence supporting that corruption shows negative effects on foreign investment inflows rather than on the local investments. aizenman and noy (2006, pp. 317-337) conclude that the countries with high trade openness also exhibit high fdi mobility together with low corruption level. mathur and singh (2007, pp. 14-16) find that besides the negative effects of corruption on fdi, developing and more democratic countries have less fdi inflows than expected. hsu (2007) states that an increase in savings has a negative effect on fdi as well as on corruption. al sadig (2009, p. 283) determines that corruption shows a negative effect on fdi inflows within the scope of developing countries sample group. furthermore, the negative effects of corruption on fdi disappear when the rule of law and democracy variables as the indicator of institutional quality are included in the model. as a study in the second group that suggests that corruption is a triggering factor for fdi, egger and winner (2005, pp. 932-952) find that legal quality, human capital quality and real gdp variables have significant and positive effects on fdi attraction. the effects of corruption on fdi show up in the long run and corruption increases fdi inflows. this result is qualified as an empirical proof toward the validity of the ‘helping hand’ approach. hines (1995) comes to the conclusion that the us companies lost the competitiveness in the activities that they interfere abroad after the 1977 legal regulations that ban paying bribes in the foreign country business relations. it is concluded that increases in corruption levels had a detractive effect on the 1977 us investment stock in the period of 1978-1982 (hines, 1995, pp. 10-11, pp. 24-25). mathur and singh (2007) and campos and lien (1999), stating that corruption has a detractive effect on fdi, come to the conclusion that the ‘helping hand’ is valid in some cases. accordingly, mathur and singh (2007, pp. 16-17) establish a reverse relationship between corruption increase in china and asia region and the fdi inflow turning towards all other countries. on the other hand, campos and lien (1999, p. 1064) come to the conclusion that the predictability of corruption will decrease the effect of corruption on investment. another strand of the literature examines the reverse relationship between the variables, in other words the impact of fdi on the 250 corruption. in their model investigating the determinants of corruption, larrainand tavares (2004, pp. 217-230) find that fdi decreases corruption. pinto and zhu (2008, p. 28) present that the marginal effect of fdi on corruption depends on the income level of the country. craigwell and wright (2011, pp. 2272-2283) state that there is a bi-directional causality between corruption and fdi with regard to the panel causality analysis. besides, it is found that the causality runs from fdi to corruption in a nonlinear framework. 3. econometric analysis of causality relations among fdi, corruption, political risk and gdp in turkey our study examines the impact of corruption together with the income and political risk as other control variables on the fdi after the review of literature on the relationship between corruption and fdi flows. it is evaluated that the membership negotiation process with eu has an important effect on fdi in turkey. such that, as stated in the documents of 2001, 2003 and 2008 national program which published the intentions to undertake the eu acquis in turkey, it is committed that privatization applications will be speeded up in order to meet the copenhagen economic criteria1 and the obstacles will be removed against the foreign direct capital entrance originated from eu2 member states. in this perspective, the foreign investment legislation has been liberalized and bureaucratic obstacles which create an opportunity for the corruption were decreased via foreign direct investment law no. 4875. turkey has started the membership negotiations with eu in accordance with the decision taken in 2004, in brussels, during the meeting of the council of the european union which has led to an improvement in fdi inflows. in the term afterward 2005, while fdi flows to turkey showed an improvement on one hand, on the other hand it can be seen that turkey has maintained being a country in which middle level corruption existed. this middle corruption level can be seen in the fragment of prs group icrg, corruption index; transparency international corruption perception index; world bank institute and heritage foundation indexes. in this context, our study sheds light on the issue of whether corruption and economic and political development levels in turkey have an effect on fdi and – if there is such an effect, which is its direction. 1 in the fragment of adopted economic criteria in the meeting of 1993 copenhagen council of the european union, it is stated that there must be an active market economy and a capacity to resist to market powers in the union and the pressure of competition in an eu member state. 2 for the speeding up of the privatization, see 2001 national program pp. 15-31, 2003 national program p. 12, 2008 national program p. 16. for the commitments for removing the obstacles against the foreign direct investment see 2001 national program pp. 127-134; 2003 national program pp. 19-20, 2008 national program pp. 44-49. source: ministry for eu aff airs, national program (available at htt p://www.abgs.gov.tr/index.php?p=194&l=1 04.02.2013). 251 3.1. data and method in our study, the presence of the causality relationship among the fdi, corruption, gdp and the political risk variables in turkey is analyzed by means of the cointegration and error correction models based on ‘bounds test’ approach developed by pesaran, shin and smith (2001) over the period 1992 (m:1) and 2010 (m:12). the motive behind the choice of bounds testing procedure is that it provides the opportunity of testing long-run relationship regardless to the series are i (0), i (1) or mutually cointegrated. after obtaining evidence of cointegration, the short-run relationship is analyzed by using granger causality test applied to the error-correction model. in this context, the foreign direct investment data is obtained from the central bank of the republic of turkey (cbrt) electronic data distribution system. the fdi series are converted to real series by using consumer price index series obtained from the us bureau of labor statistics. since monthly gdp series are not available, industrial production index from the turkish statistics foundation which is 99% correlated with gdp series is used as proxy. the presence of 99% correlation between industry production index and gdp series is an important factor for this preference. because fdi inflows to turkey have showed a great improvement following the launch of negotiations with eu in 2005, ‘eu’ dummy variable is used as exogenous variable after the beginning of negotiations. moreover, ‘crsis’ dummy variable is included in the model in order to take into account the effects of 1994, 1998, 2000, 2001 and 2008 crisis periods which have led to considerable decreases in gdp and fdi inflows. turkey’s corruption and political risk indices are obtained from the icrg indices published by political risk services (prs) group. icrg corruption index represents obtained and digitized political corruption in related countries while icrg political risk index illustrates level of digitized and consolidated of the evaluations in the perspective of all risk components formed by group personnel indices. while there is no important difference in the corruption indices of the countries in the short run, it can be observed that the political risk obtained from icrg index which is effective on the attraction of fdi can show a great difference. prs – icrg political risk data involves the components related to variables of government stability, socio-economic conditions, investment profile, internal and external conflict environment, interference of the military on the politics, law-order and state, democratic accountability, ethnical and religion tension, bureaucratic quality. by using this index, we aim to determine whether (i) turkey is an attraction point for fdi investments, and (ii) whether there is a relationship between political risk and fdi. the bounds test for the analysis of cointegration relationship among the logarithmic series is applied via conditional error correction model with trend in equation (1). 0 1 1 1 2 1 3 1 4 1 1 11 2 3 4 1 20 0 0 ln ln ln ln ln ln ln ln ln (1) k t t t t i ti k k k i t i i t i i t i ti i i fdi t fdi cor pr pi fdi cor pr pi eu crisis u                                            252 in equation 1 representing the model with trend, α0, t, k, ut represent the constant term, deterministic trend, order of the var system and white noise errors respectively. the model without trend can be estimated from equation (1) by omitting the trend variable. thus, the bounds test approach is performed by means of the estimated models with and without trend. 5 alternative cases are defined in the testing procedure of pesaran, shin and smith (2001). in all cases, the cointegration is tested by using two statistics which are the f-statistics for the joint significance and the t-statistics suggested by banerjee, dolado and mestre (1998, pp. 267-283) for the significance of each variables. since asymptotic distributions of each statistics violate standard distributions, obtained results are compared to bounds test critical values suggested by pesaran, shin and smith (2001). the bounds testing approach in our study is based on the test of case 3, case 4 and case 5, which are defined by pesaran, shin and smith (2001). more clearly, case 3 involves the test of joint significance of the one lagged fdi, corruption, political risk, industry production index values and test of significance of the one lagged fdi values in the model without trend, while case 5 tests the same null hypothesis for the model with trend in equation (1). in addition to those, case 4 embodies the joint significance test of the one lagged variables and trend variable. according to pesaran, shin and smith (2001) and banerjee, dolado and mestre (1998), if f or t-statistics are higher than the upper bound critical values, the presence of the long run relationship can be claimed. in contrast to that, if for t-statistics are less than the lower bound, the null hypothesis of no cointegration cannot be rejected. in the case of statistical values being between the critical values, the result is inconclusive. after finding evidence of a cointegration, the presence of the long run relationship among the variables in question is reexamined via the model in equation (2) which is estimated by ols. 0 1 2 3 tlnfdi lncor lnpr lnpi u        (2) in the final step, in order to confirm the causality relationship among the variables, we utilize the error correction model which is based on the auto regressive distributed lag – ardl approach. the presence of long or short run relationship is analyzed through the error correction model in equation (3) which is formed by means of the lagged error terms obtained from equation (2). 1 1 1 0 1 1 2 31 0 0 1 4 1 1 20 ln ln ln ln ln n n n i t i t i i t ii i i n i t i t ti fdi fdi cor pr pi ecm eu crisis u                                     (3) the negative sign and significance of ecmt-1 implies the long-run relationship between the variables. furthermore, the significance levels of β2, β3 and β4 show the individual and joint causality from corruption, political risk and gdp to foreign direct investment, respectively. 253 3.2. empirical results following the stationarity tests which yield the results prompting the bounds testing approach for cointegration analysis,we determine the appropriate lag lengths for the models with and without trend. in this context, in order to estimate the appropriate models, first we began testing the difference values of lnfdi, lncor, lnpr and lnpi variables until 12 lags. then we omitted the insignificant lagged values and estimated alternative equations. afterwards, within the estimated equations, we noted to the equation with lowest akaike information criteria (aic), schwarz criteria (sc) statistics, no serial correlation and heteroskedasticity problems, correct specification length and normal distribution of residual terms. fand t-statistics obtained from the test of null hypothesis in the estimated models are compared to the critical values in pesaran, shin and smith (2001). the results are reported in table 1: table 1: analysis results of cointegration model model with trend-ardl (9,9,1,5) model without trend-ardl (4,5,1,3) k fıv fv tv k fiii tiii 3 6.00*** 7.43*** -4.72** 3 6.61*** -5.04*** signifi cance level %1 %1 %5 signifi cancelevel %1 %1 lower bound critical value 4,30 5,17 -3,41 lower bound critical value 4,29 -3,43 upper bound critical value 5,23 6,36 -4,16 upper bound critical value 5.61 -4.37 note: *,**,*** denote the significance of %10, %5 and %1 levels respectively according to the test results, the null of no cointegration is rejected in both models with and without trend at %1 significance level since fand t-statistics exceed the upper bound critical values. as an exception, case 4 gives the same result at %5 significance level for the model with trend. therefore, we can conclude that there is at least one dimensional causality relationship among the fdi, political risk and industry production index series in turkey. according to pesaran, shin and smith (2001, p. 20), the long-run relationship among the variables requires the utilization of error term obtained from equation (4) in the error correction model estimated through ardl approach. ( ) ( 3,270) ( 4,690) ( 1,645) (12,203) 10, 389 1, 796 1, 510 4, 324 tt stat lnfdi lncor lnpr lnpi v          (4) we form the error correction model in equation (3) by using the lagged error correction term (ecmt-1) obtained from equation (2) in order to analyze the short run relationship. the negative sign and significance of error correction term implies both the presence of long-run relationship and the movement of short-run shocks to a longrun equilibrium. in the estimated error correction model, lag length is determined by using aic while the validity of the assumptions of classical linear regression model (absence of serial correlation, heteroskedasticity, non-normal distribution of the error terms and 254 specification errors) are examined by means of breusch godfrey, breusch pagan godfrey, jarque bera, ramsey reset tests, respectively. according to the test results, ardl (4,1,1,0) is determined as the appropriate model to examine the short-run relationship between the variables. the estimation results of ardl (4,1,1,0) model is presented in table 2 while granger causality test results based on the ardl model are given in table 3 and 4. table 2: ardl (4,1,1,0) estimation results of the short run error correction model variable coeffi cient standard error tstatistic c -0.114874 0.073111 -1.571240 ∆lnfdi (-1) -0.387759*** 0.084980 -4.562919 ∆lnfdi (-2) -0.389134*** 0.086228 -4.512856 ∆lnfdi (-3) -0.163617** 0.077043 -2.123713 ∆lnfdi (-4) -0.204260*** 0.061444 -3.324319 ∆lncor 1.954252** 0.969275 2.016200 ∆lncor (-1) -1.781314* 0.976302 -1.824552 ∆lnpr -3.227701 2.135464 -1.511475 ∆lnpr (-1) -5.737538*** 2.143361 -2.676888 ∆lnpi 0.459311 0.765327 0.600150 ecm (-1) -0.507888*** 0.085289 -5.954883 eu 0.328648** 0.127970 2.568174 crisis 0.216815 0.244339 0.887353 diagnostic statistics statistic probability bg lm autocorrelation test f st. 0,315106 0,7301 bpg lm variable variation test f st. 1,665014 0,0764 jb normality test 2,613314 0,2707 rr specifi cation length test 1,097147 0,2961 aic: 2,53, sic 2,73, hq:2,61 r2: 0,54,a.r 2 : 0,51, f -stat. 20,33, dw: 1,97 notes: i) *,**,*** show the significance at %10, %5 and %1 levels, respectively. according to table 2, the negative sign together with the high value and the significance of error correction term refer to the presence of short-run relationship among the series in question. ‘strong granger causality’ which implies the test for the significance of error correction term together with all independent variables by means of wald test and f-statistic provides the examination of long-run relationship from the error correction model. 255 table 3: granger causality tests null hypothesis wald tests f statistics (probability value) result lncor, lnpr, lnpi are not granger cause of lnfdi 1. h0: β2i= β3i = β4i= 0 3,588 (0,00) h0 rejected, signifi cant 2. h0: β2i= β3i = β4i= ρ=0 8,938 (0,00) h0 rejected, signifi cant 3. h0: β2i =0 3,909 (0,02) h0 rejected, signifi cant 4. h0:β3i =0 4,326 (0,01) h0 rejected, signifi cant 5. h0:β4i =0 0,647 (0,42) h0 not rejected, insignifi cant 6. h0: ρ=0 -6,06 (0,00) h0 rejected, signifi cant the analysis results given in tables 3 and 4 show that both corruption and political risk granger cause fdi inflows in the short run. furthermore, an interaction between fdi and corruption control index in the same direction, but a reverse relationship between fdi and political risk index are found. although we reach a result of positive relationship between production improvement and fdi, in the short-run the relationship becomes insignificant. the short run causality made in this way with the help of f-test can be specified as ‘weak granger causality’ (asafu-adjaye, 2000, p. 619; mehraraand firouzjaee, 2011, p. 227). table 4: granger causality test – summary table depended variable causality type short run effects (f statistics) long run effect (t -stat.) strong causality (f stat.) ∆ (lnfdi)t-i ∆ (lncor)t-i ∆ (lnpr)t-i ∆ (lnpi)t-i ecmt-1 ∆ (lncor)t-i, ∆ (lnpr)t-i, ∆ (lnpi)tand ecmt-1 ∆ (lnfdi)t 3,984** 3,984** (-) 0,360 -5,95*** 8,707*** notes: i) *, **, *** show the significance at %10, %5 and %1 levels, respectively ii) (-) sign in the parenthesis expresses that causal relationship is in the negative direction. although we find income growth as a causing variable for fdi inflow in the long run, a significant relationship between the index value and fdi is not confirmed in the short run. as an explanation for this finding, both the possible effect of the usage of monthly series and the direct investment being a long-run activity which prevents the reaction of investors against the risks in short-run should be considered. 4. concluding remarks our study confirms that the causality runs from corruption to the fdi in the turkish economy for the period in consideration. therefore, it is obvious that the control of corruption improves fdi inflows. more briefly, ‘helping hand’ type corruption being common in some asian countries as analyzed by hines (1995), egger and winner (2005) is not valid for turkey. on the other hand, regarding the political risk and fdi relationship, it is found that increase in the political risk develops fdi inflows in the short run. furthermore, income growth and negotiations of eu membership are found to have positive effects on fdi. 256 eu dummy variables are strongly significant in both cointegration and error correction equations. in the negotiation process for eu membership, the obstacles are eliminated for the foreign investors and privatization applications are speeded up. thus, fdi inflows showed an improvement trend. from the result it can be assessed that fdi inflows to turkey were not affected negatively from the increasing political risk in the short run. investors are assumed to take their positions in the perspective of economical parameters and eu process since the industry production index as a proxy to gdp has positive effects on fdi inflows in the long run. in addition, in the long run the political risk variable is getting marginally insignificant. thus, in parallel to the findings of lambsdorff (2003), mathurand singh (2007), hsu (2007), it can be commented that economic freedom is more important than the political risks for fdi directed towards turkey. it should be evaluated that the argument of ‘irreversible but delayable investment’ which is developed by pindyck (1990) may be valid for turkey. pindyck (1990, pp. 1-5) supports that it is impossible in most cases to recover the investment decision due to higher sunk costs, but investors can delay the entrance on the market under risks which can affect the cash flow expected from the investment and final cost. within the context of our study, it may be assessed that although the investors have not changed the investment decision against the developing risk of politics of turkey in the short run, it is possible to delay investing in order to evaluate the effects of these risks on the economic stability. this may constitute another possible explanation of political risk and fdi relationship in turkey as the unexpected short run relationship which disappears in the long run. finally, we conclude that the fdi inflow to turkey represents market and efficiency seeking characteristics as fdi is positively affected from the convenience on the entrance of market, economic stability, political consistency and combating corruption. references: 1. abed, g.t. and davoodi, h.r., ‘corruption, structural reforms and economic performance in the transition economies’, imf working paper, wp/00/132, 2000. 2. aizenman, j. and noy, i., ‘fdi and trade – two way linkages?’, 2006, the quarterly review of economics and finance, vol. 46, no. 3, pp. 317-337. 3. al sadig, a., ‘the effects of corruption on fdi inflows’, 2009, cato journal, vol. 29, no. 2, pp. 267-294. 4. alesina, a. and weder, b., ‘do corrupt governments receive less foreign aid?’, national bureau of economic research, working paper no. 7108, 1999. 5. asafu-adjaye, j., ‘the relationship between energy consumption, energy prices and economic growth: time series evidence from asian developing countries’, 2000, energy economics, vol. 22, no. 6, pp. 615-625. 6. banerjee, a., dolado, j.j. and mestre, r., ‘error-correction mechanism tests for cointegration in a single-equation framework’, 1998, journal of time series analysis, vol. 19, no. 3, pp. 267-283. 7. campos, j.e. and lien, d., ‘the impact of corruption on investment: predictability matters’, 1999, world development, vol. 27, no. 6, pp. 1059-1076. 257 8. central bank of the republic of turkey, cbrt, ‘balance of payment statistics’, [online] available at http://www.tcmb.gov.tr/, accessed on june 3, 2013. 9. craigwell, r. and wright, a., ‘foreign direct investment and corruption in developing countries: evidence from linear and non-linear panel granger causality tests’, 2011, economics bulletin, vol. 31, no. 3, pp. 2272-2283. 10. egger, p. and winner, h., ‘evidence on corruption as an incentive for foreign direct investment’, 2005, european journal of political economy, vol. 21, no. 4, pp. 932-952. 11. frye, t. and shleifer, a., ‘the invisible hand and the grabbing hand’, 1997, the american economic review, vol. 87, no. 2, pp. 354-358. 12. habib, m. and zurawicki, l., ‘country level investments and the effect of corruption – some empirical evidence’, 2001, international business review, vol. 10, no. 6, pp. 687-700. 13. hines, j.r., ‘forbidden payment: foreign bribery and american business after 1977’, nber working paper no. 5266, 1995. 14. hsu, y.h., ‘is corruption a grabbing hand? a panel data study of fdi’, graduate institute of political economy, national cheng kung university, taiwan, 2007, pp. 1-18, [online] available at http://udd.ord.ncku.edu.tw/ezfiles/78/1078/img/510/970106. pdf, accessed on december 10, 2011. 15. lambsdorff, j.g., ‘how corruption affects persistent capital flows’, 2003, economics of governance, vol. 4, no. 3, pp. 229-243. 16. larrain, f.b. and tavares, j., ‘does foreign direct investment decrease corruption?’, 2004, cuadernos de economia, vol. 41, pp. 217-230. 17. mathur, a. and singh, k., ‘foreign direct investment, corruption and democracy’, aei working paper 135, american enterprise institute for public policy research, 2007. 18. mehrara, m. and firouzjaee, b.a., ‘granger causality relationship between export growth and gdp growth in developing countries: panel cointegration approach’, 2011, international journal of humanities and social science, vol. 1, no. 16, pp. 223-231. 19. ministry for eu affairs, national programme, [online] available at http://www.abgs. gov.tr/index.php?p=194&l=1, accessed on february 4, 2013. 20. pesaran, m.h., shin, y. and smith, r.j., ‘bounds testing approaches to the analysis of level relationships’, 2001, journal of applied econometrics, vol. 16, no. 3, pp. 289-326. 21. pindyck, r., ‘irreversibility, uncertainty and investment’, nber working paper no. 3307, 1990. 22. pinto, p.b. and zhu, b., ‘fortune or evil? the effects of inward foreign direct investment on corruption’, 2008, saltzman working paper no. 10, [online] available at http://www.siwps.com/programs/swp.attachment/no-10---pinto/no%2010%20-%20 pinto%20zhou.pdf, accessed on september on 11, 2013. 23. prs group, ‘icrg methodology’, [online] available at http://www.prsgroup.com/ icrg_methodology.aspx, accessed on august 10, 2011. 24. transparency international, ti source book 2000. confronting corruption: the elements of a national integrity system, berlin, 2000. 25. wei, s.j. and smarzynska, b.k., ‘corruption and the composition of foreign direct investment, firm level evidence’, the world bank policy research working paper, wps 2340, 2000. 26. wei, s.j., ‘local corruption and global capital flows’, 2000, brookings papers on economic activity, vol. 2, pp. 303-354. 5 mediation, as an alternative procedure of solving conflicts, is relatively unknown in romania and, so far, insufficiently regulated by law. in the last five years there have been several attempts to promote a law regarding mediation per se and the exercise of the profession of mediator. the initiatives to regulate this profession have come from both governments and lawmakers, but, for different reasons, none of the projects has succeeded. they have either been withdrawn by their own initiators, or the means of promoting them have been rejected, with or without good cause. this year, the ministry of justice restarted the regulating procedure, and the final draft of the law1, as well as the recitals2.can be seen on its website. below, we will provide an overview of the “joyful” history of a draft law – with direct reference to the way the romanian authorities (the ministry of justice, the government and the parliament) have approached a transylvanian review of administrative sciences, 15 e/2005, pp. 5-14 christian radu chereji phd university lecturer, the department of communication and public relations, the faculty of political, administrative and communication sciences, the “babeş bolyai” university, cluj-napoca ciprian tanul assistant professor, the department of communication and public relations, the faculty of political, administrative and communication sciences, the “babeş bolyai” university, cluj-napoca conflict resolution by mediation – a short analysis of the situation in romania alternative dispute resolution methods (adr), although more than two decades old in northern-american and western-european legal systems, are almost unknown in romania. only arbitration in commercial matters and mediation of labor conflicts are regulated by law and practice. the present article describes the efforts made by lawmakers to pass a bill of mediation as a non-judiciary method of conflict resolution, and offers an insight into the main aspects contained in the project currently being discussed in the romanian parliament. 1 http://www.just.ro/rtrv_mc.php?param=proiect_lege_ mediere_2005 2 http://www.just.ro/rtrv_mc.php?param=expunere_lege_ mediere_2005 6 matter related, in the final analysis, to the free access to justice. we will describe the efforts of the civil society (to be understood as the few ngos running programs in this field), and, last but not least, we will attempt to do a short punctual analysis of the draft law, within the limitations of the medium, and we will return to this subject which remains very much a mystery. i. recent history a) in 2000, the draft law regarding mediation3 was registered at the chamber of deputies under number 62/14.02.2000, initiated by the pdsr deputies dumitriu carmen and ionescu mariana. “during the debates regarding the draft law regarding mediation, deputy wittstock eberhard-wolfgang has shown that, by adopting this law, the duration of dispute settlement, already long in the romanian justice system, would increase to the disadvantage of the protection of the citizen’s rights. also, he pointed out that the legislative council had given negative opinion on this draft law, and, as a consequence, he proposed that it not be given favorable opinion. by majority of votes, the commission adhered to this point of view, and the draft law was not approved.”4 the legislative procedure for this proposal ended on february 1, 2001, by falling outside of the provisions stated in article 60(5) of the constitution of romania, of 1991.5 we did not have access to the documents related to this proposal (recitals, text of the proposal, opinion of the legislative council), and, therefore, we cannot opine on its contents. it is the first mention of the term “mediation” in the title of a draft law, after 1990, registered in the database of the chamber of deputies, and its first failure. b) in 2001, in the chamber of deputies the draft no. 508/18.09.2001 (draft law regarding conflict resolution by mediation),6 was registered, initiated by the pnl deputies andrei ioan chiliman, titu nicolae gheorghiof, ion mogoş, valeriu stoica and cornel ştirbeţ. it was actually an attempt to resuscitate a former attempt to regulate this field of legislation. as the opinion of the legislative council no. 1065/10.10.2001 points out: “a previous project with similar content was part of the bundle of normative acts which was nominated as <reform of justice> which was going to be promoted, initially, by government accountability, then by emergency ordinance, which received negative opinion in 2000 from the legislative council, and was then abandoned, in order to follow the common way of draft legislation. [...] the recitals and the draft law are integrally identical to the form proposed by the previous government, incorporating certain observations and proposals of the legislative council”.7 the importance of this project consists in the fact that, for the first time in an official document, the three great shortcomings of the classical form of conflict resolution, adjudication/ appeal to a court, were pointed out: duration – a normal trial can last for years; costs – taxes, public funds allotted for the functioning of the courts, lawyers’ fees, experts’ fees, expenses related to the application of the courts’ decisions etc., social costs – each time one of the parties “loses”; especially when trials are lost on procedural grounds, the frustration of the party who is convinced that “he or she is right” leads more often than not to an escalation of the conflict. 3 http://www.cdep.ro/pls/proiecte/upl_pck.proiect?idp=1524 4 taken from the minutes of the works of committee on human rights, cults, and the problems of national minorities of the chamber of deputies, 21.06.2000, on the following website http://www.cdep.ro/pls/proiecte/ upl_com.lista 5 which stated that “procedure for draft legislation and legislative proposal put on the previous parliament’s agenda is to be continued under the current parliament.” therefore, the project “died” because it was not put on the agenda. 6 http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=2677 7 the opinion of the legislative council on the draft law regarding conflict resolution through mediation is available, in facsimile, on the website: http://www.cdep.ro/caseta/2001/10/11/pl01508_cl.pdf 7 thus, in their recitals, the initiators state that: “the simplification and the acceleration of the legal procedures, the increase in the quality of the legal act, the reduction of the tasks for the courts and of the trial-related costs are, undoubtedly, an absolute priority. [...] in the context where traditional means of conflict resolution are insufficient, the courts are suffocated by the huge number of files whose final resolution can last, according to procedure, for years and the simple sentencing can lead to an escalation of the original conflict between the parties and not to a reduction thereof, the danger of creating a potential blockage in the legal system begs for the adoption of emergency measures. to this purpose, concrete solutions must be found in order to reduce the burden carried by the legal courts, as well as the economic and social trial-related cost and, last but not least, to answer the need for “another type of justice”, based on the reconciliation of all the parties involved in a conflict. not lastly, it must be stressed that, at this time, the romanian society can no longer ignore and neither put an end to the mediation phenomenon, which exists in more or less organized forms, especially in the private initiative area, at the level of a training form more or less professional and which is, anyway, winning more and more field.”8 the last phrase can cause some confusion given that mediation is a “phenomenon” in exactly the same measure in which reconciliation of the parties in criminal causes or arbitration in commercial causes are phenomena. only the lack of serious legal research in the matter can justify such an alarmist choice of words, given that the adr (alternative dispute resolution) techniques have a significant weight both in american and western european law. in the absence of institutional interest from the public authorities, it is not surprising that the private sector took the initiative of developing a method to solve conflicts which is more advantageous from many points of view than the “traditional”, time and money-consuming trials. suspicions regarding the professionalism of the private training forms are part of a legacy of stereotypes which we will not delve into here. the document which “buried” the debate on mediation in the parliament until recently was “the government’s point of view” sent to the chamber of deputies by the ministry for the relation with the parliament by address no. 1059/mrp/11.03.2002, which provides the following quote: “given that, both the recitals and the text of the draft law are integrally identical to the draft law elaborated by the ministry of justice and sent to the parliament for approval during the previous legislature, the government does not support the adoption of the draft law as a parliamentary legislative initiative and will promote its own draft law which can be amended by the current initiators, according to parliamentary procedure”.9 this point of view was adopted by the deputies in the committee for legal matters, discipline, and immunities, who, during the december 2003 session “decided, by majority of votes, to submit to the plenary of the chamber of deputies the rejection of the draft law regarding conflict resolution by mediation.”10 c) on january 6, 2004, the draft law regarding mediation in civil matters and the organization of the profession of mediator11 was published on the website of the ministry of justice and, two months 8 taken from the recitals of the draft law regarding conflict resolution by mediation, http://www.cdep.ro/proiecte/ 2001/500/00/8/em508.pdf 9 http://www.cdep.ro/caseta/2002/03/12/pl01508_pvg.pdf 10 the conclusion to the report of the committee for legal matters, discipline, and immunities of the chamber of deputies no.796/r/18.12.2003. it is also stated in the report that “mrs. maria mariţescu, manager, also took part in the committee’s works, on behalf of the ministry of justice, and informed the members of the committee that, shortly, a draft law will be promoted, which was elaborated on the basis of the expertise performed by the council of europe and which took into consideration the provisions included in the current draft law”. the report is signed by the president of the committee, the lawyer and university professor ion neagu. source: http://www. cdep.ro/caseta/2004/01/28/pl01508_rp.pdf (the “shortly” referred to in the paragraph actually took two years –n.n.) 11 http://www.just.ro/proiecteinlucrulamj.php 8 later, it is registered by the senate, on march 10th, under no. l.166/200412. debates on this project did not last long, as it is withdrawn by its initiator, through the general secretariat of the government. there is no public data on the reasons this draft law was withdrawn only a month and a half after having been promoted, and because of that we can only speculate that the new minister of justice, cristian diaconescu, appointed on the same day that the project was registered by the senate, march 10, 2004,13 felt that the project was not complete. d) a new attempt to promote the draft law took place on december 14, 2004, when in the draft law regarding the government’s right to issue orders sent to the senate by address no. e.493/14.12.2004, in chapter iii – justice, there is a point regarding “mediation in civil matters and the organization of the profession of mediator”. we can perceive what happened with this attempt from the minutes of the senate’s session on december 27th: “mr. eckstein kovács péter: thank you. on 23 december 2004, the committee for legal matters, discipline, and immunities was notified of the draft law regarding the government’s right to issue orders, by notification sent by the government and supported by the minister for the relation with the parliament. the committee adopted two amendments and two eliminations, respectively, both in chapter iii justice elimination of point 2 – mediation in civil matters and the organization of the profession of mediator, given that the senate and the parliament have recently rejected a draft law with similar content.[...]”14 unfortunately for the senator concerned, his last observation is false, the rejection he mentions being, actually, a withdrawal. e) a new project, initiated by the new minister of justice, mrs. monica luisa macovei, is currently under parliamentary debate, registered to the senate under no. l229/200515. it is important to state here that the form of the draft law submitted to the parliament is greatly improved over the form which was submitted to public debate at the beginning of the year. a major improvement, is the extension of the field of competencies on which this type of conflict resolution can operate, from civil matters to commercial matters, family law and even criminal law. also, the organization of the profession of mediator, the establishment of occupational standards and the regulation of the procedures reflect a major change regarding the current opinion of the ministry of justice on the part it must play in the regulation of this field. although the project submitted to public debate in march, 2005, simply made partial improvements in the previous legislative draft, the final text sent by the government to the parliament for approval shows clear efforts to reform justice. ii. civil society in romania and the conflict resolution by mediation procedure given that the romanian authorities have allowed this important issue to languish for five years essentially in its exact initial phase, we have no guarantee that, this time, parliament will decide to proceed in a different way than it has done so far. however, the current proposals appear to be superior from the previous attempts, and a few ngos have developed a series of projects aimed at familiarizing the romanian citizens with the new procedure. thus, among the pioneers, the foundation for democratic change ran a series of training programs in the field of conflict resolution by alternative means, and it edited a series of papers, among which, 12 http://80.97.216.132/senat.proiect.asp?cod=9108&pos=0 13 decision no.5 of 10 march 2004 for the approval of the amendment to the structure and form of the government, published in the official gazette of romania, part i, no.212/10 martie 2004 14 taken from the minute of the senate’s session of december 27th 2004, published in the official gazette of romania, part ii no.12/31.12.2004 15 the initiator’s form can be downloaded from http://webapp.senat.ro/pdf/05l229fg.pdf, and the recitals from http://webapp.senat.ro/pdf/05l229em.pdf on the www. 9 was a code of conduct for the mediator. in 2001, the foundation organized a center for documentation for peaceful conflict resolution16. the center for mediation and community security, from iaşi, in collaboration with the faculty of psychology of the “al.i.cuza” university, organized a ma program in conflict mediation and offers training for mediators17 in 2003, the “pro medierea” association in bucharest established “the center for mediation of conflicts between consumers and economic agents”, in partnership with the association for the consumer’s protection in bucharest. more and more professional companies, law and consultancy firms, especially in the human resources management field, offer specialized training programs in conflict mediation. iii. what mediation is, is good for and how it works together with conciliation, mediation is one of the new methods of conflict resolution outside the courts of law and other authorities with judicial and arbitrational attributes. its main purpose is ending the conflict by the intervention of a third party, the mediator, whose function is to facilitate the negotiation of a mutually beneficial solution for the parties, by utilizing specific communication means and techniques. the mediator cannot impose a solution on the parties, which is what differentiates mediation from arbitration, and the parties have the freedom to reach an agreement or not. in arbitration they can opt for the classic judge/arbitrator solution. mediation works only on “negotiable” issues for the parties, it cannot operate in situations where the parties cannot decide on their rights, such as strictly personal rights. in europe, the main area of application is in civil law (including family law), commercial law and consumer protection . in the us and canada, it covers many more areas, including administrative conflicts, work conflicts and a large part of penal law, the negotiating stance of the parties being stronger than in europe. thereafter, we will use the following names for the four romanian legislative drafts: the “stoica draft”; for the parliamentary legislative initiative of 2001, the “stănoiu draft” for the initiative of the ministry of justice of 2004, the „macovei i draft” for the proposal of the ministry of justice open for public debate in march 2005 and the „macovei ii draft” for the proposal sent for approval to the parliament in june 2005. as for the conflicts which can be solved by mediation, the romanian legislative proposals have yet to choose between the european model and the north american model. the „stănoiu” and „macovei i” drafts are closer to the european forms, while „stoica” and „macovei ii” drafts follow the north american examples. work conflicts mediation is still subject to the provisions of the special law. at this time, there is no specific reference to introducing this method in public administration, or when conflicts within public institutions (public servant vs. institution), interinstitutional conflicts (i.e. mayor’s offices vs. government appointed local authorities) or citizen vs. institution-type conflicts are concerned. by comparison, each agency in the us administration is under legal obligation to create an adr department. the way in which parties to the conflict end up in front of the mediator differs from case to case: mediation being regulated as compulsory preliminary procedure (in the us, for certain types of 16 for more details regarding the activity of this foundation its webpage is http://www.fdc.org.ro/ro/despre/realizari. html 17 http://www.cmsc.ro/mediere.htm 10 conflicts) or as voluntary procedure (regardless of whether the parties addressed a court of justice or not). in the first example, the parties must go through mediation before taking their case to court; or, in the case that they have already taken their case to court, the judge suspends all legal proceedings until they have completed the mediation procedure. in the voluntary mediation case, the parties call in a mediator voluntarily before suing or, if the trial has been initiated, the judge informs the parties of their option to follow the procedure of mediation, of their own will. if mediation is chosen, all legal proceedings and all the terms thereof are halted during the procedure. all romanian proposals have opted for the voluntary mediation principle. thus, the “stoica” draft proposes that: “mediation is optional for the parties and cannot take place in the absence of their written approval”, [in article 3(1)] “legal bodies must inform the parties about the opportunity and the advantages of using the mediation procedure and to counsel them to use it in order to solve the conflicts arisen between them.” [in article 10] the “stănoiu” and “macovei i” drafts provide variations on this theme: “mediation is optional. unless otherwise provided for in the law, the parties, both physical and legal entities, can use mediation (either in order to avoid a court’s trial or an arbitration procedure, or after having taken a matter to court. – „stănoiu”, article 2(1), “voluntarily, even after having taken a matter to court, regardless of the stage of the trial.” („macovei i”article (1). both drafts state that the arbitration and court authorities („stănoiu”), the “legal and arbitration bodies, as well as other authorities with attributions in the field of law” respectively (“macovei i”), may inform the parties of their option and of the advantages of using mediation and may counsel them to use it in order to solve conflicts arisen between them.” (article 7). the “macovei ii” draft mistakes the access to this procedure for the application field, but provides for the compulsory informing of the parties by the authorities and maintains the optional feature of the counsel. (article 2(1) – “unless otherwise provided for in the law, the parties, both natural persons and legal entities, can use mediation voluntarily, including after having taken the matter to the competent court of law, by agreeing to solve any civil conflicts in this manner […]; article 2(3) – “the procedure of mediation can be used according to this law and before using the compulsory procedures of amiable conflict resolution provided for in the legislation.” and, especially article 6 – „legal and arbitration bodies, as well as other authorities with attributions in the field of law shall inform the parties of the possibility and the advantages of using mediation in order to solve conflicts arisen between them”. we feel that the obligation to inform the parties of their options is a welcome one and we believe that in a reasonable timeframe, the system will evolve toward making the procedure compulsory, at least in certain types of conflicts. also, it would be interesting to study the possibility of including this obligation in certain cases in order to defeat the inherent resistance to change, also given that “the mediator does not wear a uniform”18. the parties are free to choose their mediator. it is a universally accepted principle, present as such in all the above-mentioned draft laws. the details about who can be a mediator, what the conditions for working as such are, and what qualifications are required – these are some of the points to which the draft laws provided similar answers, regardless of their author. all of the proposals include, as they should, that the mediator should be completely capable to accomplish his or her duties and in 18 an argument used in an informal conversation by a young lawyer which was expressing his skepticism regarding a successful implementation of mediation on the romanian market. 11 good health (“stoica” and “stănoiu” also include psychological disposition here). higher education is required (with the exception of „stănoiu” – „high school or higher education” – article 8(1) point (b), while seniority conditions differ (no seniority – “stoica”; “at least five years in the field” – “stănoiu” article 8(1) point (b); “at least five years in a similar position” – “macovei i” – article 8(1) point (c), down to three years in a similar position in „macovei ii” – article 7(c). the person in question has never been convicted in a court of law (changed to “has never been sentenced without appeal for a felony, which may affect the reputation of the profession” – which is an important change, since not all convictions should forbid someone from having a certain profession – a car accident can happen to anyone) and must be an upstanding citizen – a mention which appears in all four proposals. we go no further. the condition of speaking the romanian language was dropped from the “macovei ii” draft, probably in order to insure the free circulation of the work force. parliamentary debate is sure to be heated on this point, and it would not be surprising if the condition were reintroduced at a later stage. finally, a condition which can be found in all four proposals is being a graduate of the mediator training courses and having received a license to practice mediation. as for which authority should be in charge of organizing these courses, the thinking has shifted from the public and private entities authorized by the ministry of justice („stoica”, article 12), by which we understand public institutions, universities, ngos and professional organizations authorized by the mediation council and the ministry of justice through the national institute of magistrates (“stănoiu” and “macovei i” article 9) to the following statement “...ngos and professional organizations which were authorized according to the relevant law regarding professional adult training by agreed higher education institutions. the training programs in the mediation field shall be elaborated based on criteria from the training standards applicable to the field elaborated by the mediation council, after being approved by the council” (“macovei ii” – article 9). the mechanism by which romanian citizens having taken such courses abroad and foreign nationals from member states of the european union and the european economic space and other states is duly regulated. the procedure is different according to whether the persons concerned practice mediation permanently or temporarily (see “macovei ii” – article 8). advertising for mediators is done through the mediators’ “display” – a solution which can be found in all the proposals. commercial advertising is an absolute first (“macovei ii”, article 25 –“the conditions under which the profession of mediator can be advertised are established by the regulation.”), as this is the first permissive (although shyly so) regulation in this field, after a long period when advertising for the liberal professions was forbidden from the very start. the regulating authority was initially the ministry of justice (the “stoica” draft), then the mediation council (drafts “stănoiu”, “macovei i and ii”). the fundamental difference between the latest draft and those which preceded it, is in making the profession autonomous and restricting the influence of politics upon it. unlike previous proposals, in which the minister of justice, either directly or through the council, held most of the attributes regarding the elaboration of the professional standards, the authorization of the training institutions, the authorization of practicing the profession of mediator and the withdrawal of these authorizations, the latest proposal provides for the setting up of a completely autonomous professional organization. thus, the mediation council is defined as “an autonomous organism with legal personality, of public interest” (“macovei ii”article 17(1), “made up of nine members elected by direct ballot or by representation, by the authorized mediators...” (“macovei ii”article 17(3). the only attribution of the minister of justice is to validate this election (“macovei ii”article 17(4). the mandate of the members if of two years, with one possible renewal for the same duration. its sessions are public and it is financed by its own revenue, except during the first year of functioning. 12 as its main attributes, the law mentions the following: promoting the mediation activity and representing the interests of the authorized mediators; elaborating professional training standards in the field of mediation; approving the professional training programs for mediators; creating and updating the list containing the mediators’ training institutions; authorizing mediators; creating and updating the authorized mediators’ display; keeping a list with the offices of the authorized mediators; overseeing compliance with the training standards in the field; adopting the code of ethics and professional deontology of the authorized mediators, as well as the disciplinary standards thereof; making proposals for adding or correlating the legislation regarding mediation; establishing its rules of procedure.19 a real problem of mediating is covering expenses without affecting the principle of the mediator’s neutrality and impartiality. the starting point is to negotiate the mediator’s fee with the interested parties. the proposal contained in the “macovei i” draft was interesting, although unrealistic, namely “for conflicts whose object can be evaluated in money, the pay cannot be established proportionally to the object’s value”. it is obvious that the financial capability of a normal person cannot be compared to that of an institution (either public or private), or, in financial disputes, to establish the fee proportionally to the object of the dispute and to split it equally between the parties equals, in practice, to exclude from mediation the person who is financially vulnerable. on the other hand, a disproportionate fee which puts one of the parties in advantage over the other may induce suspicions regarding the mediator’s neutrality and impartiality. this issue continues to be an object of controversy internationally, and the solutions so far described are many, yet all suggest the establishment of the fee at the beginning of the mediation process, and to specify it in the mediation contract. what the romanian lawmaker understands is that „the mediator’s fee shall be reasonable, and take into account the nature and the object of the conflict”, which should be guaranteed by the mediation council. another important principle upon which mediation is based, together with the neutrality and impartiality principle is confidentiality. actually, these are the constitutive elements of the framework upon which the confidence of the parts is built. accepting the third party in the conflict, as a mediator, and accepting or rejecting the solutions proposed by this person is based, first and foremost, upon confidence that the three principles are complied with and only subsidiary to that to the confidence in the professional abilities of the mediator. if there is no confidence in the process itself, there are minimal chances that a particular mediation procedure will be accepted, regardless of whether the proposed solution is rational and reasonable, or the mediator is a professional with a good reputation in the field. this is why the provisions meant to guarantee the confidentiality of the mediation process include the inviolability of the mediator as a person and of his or her headquarters, the obligation to maintain the professional secrecy, as well as serious sanctions for the failure to comply with the latter. actually, all of the above-mentioned proposals deal with these ideas in one way or another. thus, “the professional headquarters of the mediator is inviolable. a search of the mediator’s headquarters can be performed only after the issue of a warrant by a judge and shall be performed only by the district attorney or the legal authority who is in charge of an investigation, according to the code of penal procedure.”(“macovei ii”article 28). “the mediator is under obligation to maintain the confidentiality of the information that he or she is given access to, during the course of his or her mediation activities, as well as of the documentation which was handed to him or her by the parties 19 the attributions listed here are taken from the “macovei ii” draft, article 20. 13 during mediation, even after ceasing to practice mediation.” (“macovei ii”article 32). “the mediator is under obligation to return the documentation that he or she was entrusted with by the parties during the mediation procedure.”(“macovei ii”article 35). “the mediator cannot be brought as a witness in a court of law in relation to acts or documents that he or she became aware of during the mediation procedure. in court cases, the mediator can be brought as a witness only after having been authorized explicitly and in writing by the parties and, if need be, by other interested persons. […] in all these cases, after having been heard as a witness, the mediator cannot continue the mediation procedure in the cause in question.” (“macovei ii”article 37) confidentiality is not only the obligation of the mediator, but also of the parties. in this case, the sanction is applied by the mediator by withdrawing from the procedure and keeping a part of the mediator’s fee proportional to the expenses incurred and the stages of the procedure that had been completed. also, the mediator can ask the parties to sign a confidentiality agreement. “assertions made during mediation by the parties to the dispute, […] are confidential to third parties and cannot be used as evidence in court or during an arbitration procedure, unless otherwise provided for in the law or otherwise agreed upon by the parties. the mediator will remind the persons who take part in the mediation process […] of their obligation to maintain the process confidential and may ask them to sign a confidentiality agreement.”(“macovei ii”article 53) actually, all proposals provide for, although not in identical form, the mediator’s obligation to inform the parties if, during mediation, a situation occurs which might affect the purpose of the mediation, and the mediator’s neutrality or impartiality. at that juncture, it is the decision of all the parties involved as to whether to continue the procedure or not. there may be situations when the parties want to continue the process, and the mediator decides to end the procedure and repay the part of his or her fee which is proportional to the cost for the steps of the procedure which were not covered. (see “macovei ii”article 54) logically, a mediation procedure ends in three cases: a) if the parties reach an agreement and therefore the dispute is settled, in which case a report is to be established, which will contain all the details of the dispute; b) if the mediation procedure runs its course, but the parties do not reach an agreement, in which case the mediator states the mediation’s failure; c) if any of the parties denounces the mediation agreement. in the last two situations, the mediator will file a report and the parties will be able to take the matter to court, in keeping with tradition. an interesting solution, suggested by the “stoica” and the “stănoiu” drafts, was to allow the mediator, if mediation fails, to settle the dispute by arbitration, upon demand of the parties, according to the provisions of the code of civil procedure. (“stoica” – article 73 and “stănoiu” – article 65). the benefit of such a regulation would be the fact that it increases the chances of reaching an agreement, even if arbitration means that the resolution is imposed by a third party and not mediated. probably the reason this idea was abandoned was in order to channel the mediator’s interest to the mediation process, rather than toward obtaining a result, regardless of its nature. we can easily imagine a situation where, knowing that arbitration is an option, the mediator would have little interest in the mediation process and would rather insist on arbitration, imposing resolution upon the parties. the fundamental idea on which mediation, as an alternative means of conflict resolution, is based is to reach, after negotiations, a long-term win-win solution. arbitration, like the trial procedure, is based upon having a third party impose a solution, regardless of whether the parties to the dispute agree with it or not. a positive aspect of all the four proposals is the legal force of the mediation agreement. even if, initially, it only has value as an agreement under private signature, it can be authenticated by a 14 notary public or approved by a court of law and, thus, becomes an authentic act with the value of a definitive court decision. because the mediator is not necessarily qualified in legal sciences, the option to turn to law professionals (lawyers, experts, counsels etc.) is also provided for in instances where legal controversies might arise. also, the parties can be represented by a lawyer for the entire duration of the mediation process. moreover, lawyers, notaries public and legal counsels who become mediators can include this activity among the attributions of their profession. (see “stoica – article 84 , “stănoiu” – article 75 (1), “macovei i” article 74(1) – only regarding lawyers and notaries public and “macovei ii” article 75). it is slightly funny, in these circumstances, to hear fears (publicly addressed or not) of the lawyers of losing one of the objects of their profession, in the case that mediation is legalized. it is obvious that the number of disputes (and of clients) would remain the same, and the lawyers’ activity would actually be simplified. a complementary effort is, nevertheless, required – in order to practice mediation, one has to obtain the necessary qualifications. to conclude, we hope that the parliament will soon adopt the draft regarding mediation and the organization of the profession of mediator. the courthouses will be freer, the legal expenses will be lower, the duration of the proceedings will be shorter and, most importantly, the citizens will have better access to the materialization of their own ideas of justice. because justice does not equal law, does it? references: public documents 1. hotărârea nr. 5/2004 pentru aprobarea modificării structurii şi componenţei guvernului, publicată în monitorul oficial al româniei, partea i, nr.212/10 martie 2004 2. stenograma şedinţei senatului din 27 decembrie 2004, publicată în monitorul oficial al româniei, partea a ii –a nr.12/31.12.2004 web resources 3. http://www.just.ro/rtrv_mc.php?param=proiect_lege_mediere_2005 4. http://www.just.ro/rtrv_mc.php?param=expunere_lege_mediere_2005 5. http://www.cdep.ro/pls/proiecte/upl_pck.proiect?idp=1524 6. http://www.cdep.ro/pls/proiecte/upl_pck.proiect?cam=2&idp=2677 7. http://www.cdep.ro/caseta/2001/10/11/pl01508_cl.pdf 8. http://www.cdep.ro/proiecte/2001/500/00/8/em508.pdf 9. http://www.cdep.ro/caseta/2004/01/28/pl01508_rp.pdf 10. http://www.just.ro/proiecteinlucrulamj.php 11. http://80.97.216.132/senat.proiect.asp?cod=9108&pos=0 12. http://webapp.senat.ro/pdf/05l229fg.pdf, 13. http://webapp.senat.ro/pdf/05l229em.pdf 14. http://www.fdc.org.ro/ro/despre/realizari.html 15. http://www.cmsc.ro/mediere.htm untitled 220 abstract this paper presents a scheme for managing waste, proposed for the urban community of arieş, cluj county, in which we are going to show the main activities that should be accomplished with the support of the local public administration. based on the analysis of the waste flows, the demographic trends and the waste generating trends, we propose a scheme for managing waste that has a major investment component, an administrative re-organizing component and an educational one. we suggest a scheme which includes advanced techniques and methods for treating waste. moreover, we demonstrated that the efficiency of the scheme cannot be conceived outside a circuit for valorizing and recycling the useful materials contained in the waste. the financial analysis of a modern scheme for managing waste proposed for the urban community arieş, cluj county lucia monica scorţar ioan lazăr mirela popa diana zagan zelter ioan pop lucia monica scorţar assistant professor, department of management, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-418654 email: lucia.scortar@econ.ubbcluj.ro ioan lazăr professor, department of management, faculty of economics and business administration, babeş-bolyai university, clujnapoca, romania tel.: 0040-264-418654 email: ioan.lazar@econ.ubbcluj.ro mirela popa associate professor, department of management, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-418654 email: mirela.popa@econ.ubbcluj.ro diana zagan zelter assistant professor, department of modern languages and business communication, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-418654 email: diana.zelter@lingua.ubbcluj.ro ioan pop lecturer, faculty of business, babeş-bolyai university, clujnapoca, romania tel.: 0040-0264-599170 email: ioan.pop@tbs.ubbcluj.ro transylvanian review of administrative sciences, 27e/2009 pp. 220-234 221 1. introduction any human activity generates waste. if it is found in big quantity in a certain perimeter any waste produced by a human activity may cause damage to the environment. the environment has a certain self-generating characteristic; it absorbs the waste by preserving its basic features. if this capacity of regeneration is exceeded, the degradation starts a process which can become very accelerated and irreversible at a certain moment. due to these considerations, acknowledged both by the international organizations and by the local specialists and administration, a series of systems for managing the waste in order to limit the negative impact on the environment were elaborated. the proposed scheme serves a group of associated communities that includes two urban communities and six rural communities, which make up the urban community arieş (117.780 inhabitants). 2. purpose, objectives and location the situation of waste management which describes the researched area cannot be accepted any further, as the requirements of the european union in this field are very clear. the main purpose of the present paper lies in the presentation of a scheme for waste management proposed for the urban community arieş, according to the requirements of the european union. at the present moment, in this area there is no adequate system for waste management, and the uncontrolled accumulations of waste have a negative impact on the environment and on the citizens’ health. in the financial analysis undertaken by us, we demonstrated the profitableness and the suitability of the proposed scheme for this area. by applying this investment project we aim at (1) increasing the citizens’ awareness concerning the practical activities of selective waste collection, (2) increasing the number of sanitation services at affordable prices, (3) minimizing the quantities of waste that are eliminated, and (4) valorizing the useful materials contained in waste. all these actions attempt to provide a healthy and clean environment. the urban community arieş is an association of local authorities from the arieş-turdacâmpia turzii area; it is granted with public institutions and attributions for cooperation created through the free will act expressed by the participating local councils, according to their legal prerogatives, the current regulations and the regulations of the european union. the legislatures bestowed on the member councils to perform for them and on their behalf the common interest public services. for each local council the fundamental criteria for joining and participating in the urban community arieş are the efficient access to common resources and their rational and integrated management, aiming at environmental protection. table 1: the urban community arieş the urban community arieş urban area turda câmpia turzii rural area mihai viteazu călăraşi frata aiton luna petreştii de jos sănduleşti tritenii de jos viişoara 222 the waste management scheme proposed for the urban community arieş includes the following actions: (1) waste pre-collection at the source (in the apartment or house), (2) waste collection (at the collection container, where the responsibility of the public service starts), (3) waste transportation with special vehicles, (4) intermediary waste storage (at the transfer station placed between turda and câmpia turzii), (5) valorization of the selected fractions, made by the recyclers, and valorization of mixed collected waste, treated in the sorting/treating station placed on the platform of the former chemical plant in turda, (6) final storage of the remaining waste at the ecological warehouse, ought to be opened in feleacu village. regarding waste collection, the project proposal has the following aims: the urban areas. the non-selective collection of waste means taking the waste from each household that has collection containers (gate to gate collection), respectively taking the waste from the non-selective collection points which are placed in the blocks area (there will be non-selective collection points for about 100 flats). in order to collect waste selectively, we propose the organization of selective collection points. there will be four containers for collecting the recoverable waste. we suggest the collection of recoverable waste in four fractions: (1) glass, in a two-compartment container, (2) metal, (3) paper and cardboard, and (4) plastics. in the household area, for every 100 houses there will be a selective collection point, and for the blocks area there will be similar points for every 200 flats. exclusively for the urban region, for social-administrative areas (administrative and commercial units, schools and nurseries) we intend to purchase a number of collection containers with a capacity of 1.1m3. the rural areas. the collection and transportation equipments will take over the non-selected waste from each gate in the village. in order to collect selectively there will be collection points at the level of each village. the selective collection points from the villages will serve 150 rural households, as a result of a reduced quantity of waste compared to the urban area. the structure of the collection points is identical to the one in the urban area (three containers per collection point, adding to those a two-compartment container) 3. data for analysis and interpretation the proposed waste-management scheme is designed for an area including 117.780 inhabitants dispersed in two towns and nine villages. as the next step after the analysis and the description of the waste management scheme we detailed the object estimates of the investment components, as well as the general estimate of the proposed management scheme, as follows: object estimate 1: setting up 388 collection points � 211.217 euro (with vat) object estimate 2: purchasing transportation means � 773.500 euro (with vat) object estimate 3: setting up the transfer station � 450.466 euro (with vat) object estimate 4: setting up the sorting/treating station � 4.838.724 euro (with vat) object estimate 5: purchasing and distributing collection containers to the population – 555.603 euro (with vat) 223 w as te c ol le ct ed f ro m t he p op ul at io n c on ta in er 1 .1 m c re fu se g ar ba ge c an 2 40 l t ra ns fe r st at io n t re at in g/ so rt in g st at io n w ar eh ou se w as te f ro m e co no m ic a ge nt s c ol le ct io n po in t se le ct iv el y co lle ct ed w as te v al or iz at io n valorizable fractions fi gu re 1 : t he fu nc tio na l s ch em e fo r w as te m an ag em en t 224 the calculations at the local level revealed the following inventory of collection containers and collection points (selective and non-selective): table 2: the inventory of collection containers and collection points community population total collection containers out of which: number of collection points garbage cans 240 l containers 1.1m3 containers 0.6 m3/twocompartment turda 55.887 4.523 3.894 93 536 134+68 câmpia turzii 26.823 3.413 3.027 46 340 85+23 mihai viteazu 5.749 809 757 0 52 13 călăraşi 4.450 830 790 0 40 10 frata 4.382 655 615 0 40 10 aiton 1.338 345 333 0 12 3 luna 4.450 473 433 0 40 10 petreştii de jos 1.891 429 413 0 16 4 sănduleşti 1.892 497 481 0 16 4 tritenii de jos 5.066 731 687 0 44 11 viişoara 5.852 964 912 0 52 13 total 117.780 13.669 12.342 139 1.188 388 the general total sum of the investment, as it results from the general estimate, including vat, is situated at 9.687.679 euros. this value, although it seems a high value, compared to the usual schemes promoted in our country (see phare ces programs 2004, 2005, 2006 where the total budget of the project is limited to approximately 1.000.000 euros because of the conditions imposed by the financier for non-reimbursable financial assistance) cover those segments of the management scheme which are not usually included in the budgets of the projects which need financing, such as the distribution of collection containers to the population, including in the rural area, as well as the expenditures for setting up a modern sorting/treating station. the specific investment value of de 82.25 euros/inhabitant is justified by the costs for the modern sorting and treating station, as well as by the inclusion of the containers necessary for the population in the rural area, without which we consider the proposed scheme impossible to be transposed in reality. the respective value is similar to the typical values from the ispa waste management schemes. in the waste management scheme proposed for the urban community arieş we took into account the pre-existing endowments of the local sanitation systems and this is why we also considered the fact that a part of the population living in private houses and a part of the economic agents already own adequate containers for waste collection. in this respect, we included investment costs just for the difference in the containers inventory, costs which would be directly recovered from the direct beneficiaries based on a conscription tariff. thus, it is considered that the local authorities will distribute 225 these containers in adequate conditions, and will charge a tariff from those who will benefit from the respective services, recovering in this way their equivalent value. we cannot consider the free distribution of these containers based on the following assumptions: (1) the equivalent value of these garbage cans is very high (12.342 garbage cans x 35 euros/garbage can = 431.970 euros without vat) and has an important ratio in the total investment. (the 2.68% ratio represents the garbage cans distributed directly to the population in total general estimate, respectively 4.07% represent the total of endowments with collection containers, in total general estimate). (2) if the distribution of these pre-collection containers is done for free, those who previously purchase adequate containers would be in disadvantage in comparison to those who would get them for free; in this way the fundamental principle of chance equality would be broken. thus, the project implementation funds would be supported exactly by those persons who do not make the smallest effort or show the minimum interest for the problem of waste management. (3) if the entire population has to support equally the costs of this action, this would lead to an increase in tariffs over the acceptable level, which would also affect those who before the implementation of the waste management scheme manifested a minimum effort for the adequate management of waste by purchasing containers. this situation can be also characterized as unfair. 4. the presentation of the scenarios for the proposed financial analysis a. alternative zero (no investment) from the citizens’ point of view, the non-selective collection of solid waste probably represents the most convenient method, in terms of time and space. in this case, in the urban community arieş uca there will be no investment for organizing a selective collection system of the waste, setting up the transfer station and the sorting-treating one, as well as for transporting the final waste to the ecological county warehouse from feleacu. however, according to the current legislation the urban community arieş will have to find the necessary funds for closing the existing urban warehouses (turda and câmpia turzii), and the inadequate storage points from the rural area. under these circumstances, the investment costs would be reduced to those necessary for closing the urban warehouses from uca. moreover, we must take into account the necessity of transporting the collected waste to the warehouse to be opened in feleacu, a fact that will create supplementary costs for the transportation and storage. b. the proposed alternative (with investment) this option includes the alternative analyzed in this paper: ensuring the selective collection service, operating a transfer station, operating a sorting-treating station, transporting the useful fractions to the recyclers, and transporting the remaining waste to the ecological warehouse of cluj county. for a successful alternative, an awareness and publicity campaign will be created to convey to the citizens the different problems 226 associated with uncontrolled generation and storage of waste. in this scenario, the sorted waste will be valorized by selling it directly to the recyclers. thus we can obtain revenues which will allow the support of exploitation expenditures with direct impact on the tariff settled for the sanitation service. the duration proposed for the implementation of the investment project at the level of the urban community arieş is 24 months; the execution period would last 12 months. the exploitation period calculated in the analysis is 20 years. table 3: the forecast for the dynamics of the population in the proposed scheme year population urban population rural total population economic agents/institutions 2009 82.710 35.070 117.780 2.975 2010 82.462 34.965 117.427 2.966 2011 82.214 34.860 117.074 2.957 2012 81.968 34.755 116.723 2.948 2013 81.722 34.651 116.373 2.939 2014 81.477 34.547 116.024 2.931 2015 81.232 34.443 115.676 2.922 2016 80.989 34.340 115.329 2.913 2017 80.746 34.237 114.983 2.904 2018 80.503 34.134 114.638 2.896 2019 80.262 34.032 114.294 2.887 2020 80.021 33.930 113.951 2.878 2021 79.781 33.828 113.609 2.870 2022 79.542 33.727 113.268 2.861 2023 79.303 33.625 112.929 2.852 2024 79.065 33.525 112.590 2.844 2025 78.828 33.424 112.252 2.835 2026 78.592 33.324 111.915 2.827 2027 78.356 33.224 111.579 2.818 2028 78.121 33.124 111.245 2.810 2029 77.886 33.025 110.911 2.801 population decrease factor: 0,003 for the discussed environments (urban and rural) the forecast for the generation of collected waste is made based on the following indicators: (1) the evolution of the population at county level, (2) the evolution of the waste generation index. table 4: the forecast of the waste quantities generated by the urban community arieş year quantity population urban tones quantity population rural tones quantities economic agents tones total quantities tones indicator waste generation kg/person/day urban indicator waste generation kg/person/day rural 2009 27.170 5.120 13.127 45.417 0,90 0.40 2010 27.414 5.166 13.232 45.812 0,91 0.40 2011 27.660 5.212 13.338 46.210 0,92 0.41 2012 27.907 5.259 13.445 46.611 0,93 0.41 227 year quantity population urban tones quantity population rural tones quantities economic agents tones total quantities tones indicator waste generation kg/person/day urban indicator waste generation kg/person/day rural 2013 28.158 5.306 13.552 47.016 0,94 0.42 2014 28.410 5.354 13.661 47.424 0,96 0.42 2015 28.665 5.402 13.770 47.836 0,97 0.43 2016 28.922 5.450 13.880 48.252 0,98 0.43 2017 29.181 5.499 13.991 48.671 0,99 0.44 2018 29.442 5.548 14.103 49.094 1,00 0.45 2019 29.706 5.598 14.216 49.520 1,01 0.45 2020 29.973 5.648 14.330 49.951 1,03 0.46 2021 30.241 5.699 14.444 50.384 1,04 0.46 2022 30.512 5.750 14.560 50.822 1,05 0.47 2023 30.786 5.802 14.676 51.264 1,06 0.47 2024 31.062 5.854 14.794 51.709 1,08 0.48 2025 31.340 5.906 14.912 52.158 1,09 0.48 2026 31.621 5.959 15.031 52.612 1,10 0.49 2027 31.905 6.012 15.151 53.069 1,12 0.50 2028 32.191 6.066 15.273 53.530 1,13 0.50 2029 32.479 6.121 15.395 53.995 1,14 0.51 based on this scenario we will make a prognosis for the expenses and the incomes that the waste management scheme involves, as well as for the determination of the efficiency of such a system. 5. the presumed evolution of the incomes obtained in the proposed scheme there are three different income sources in the proposed waste management system which will cover the operation and maintenance costs. these are (1) incomes from the sanitation tariffs for waste from physical entities, (2) incomes from the sanitation tariffs for waste from economic agents, and (3) incomes from selling the recovered materials (selectively collected waste and the bio-degradable waste sorted in the sorting station). table 5: total forecasted incomes year total value recoverable materials (euros) equivalent value services physical entities (euros) equivalent value services legal entities (euros) total incomes (euros) 2009 964.547,68 1.413.360,00 234.410,71 2.738.297,26 2010 1.002.840,13 1.440.120,56 239.567,75 2.807.512,80 2011 1.042.866,71 1.467.387,80 244.838,24 2.878.976,15 2012 1.084.708,15 1.495.171,32 250.224,68 2.952.774,63 2013 1.128.448,95 1.523.480,90 255.729,62 3.028.999,28 2014 1.174.177,57 1.552.326,48 261.355,68 3.107.745,08 2015 1.221.986,59 1.581.718,23 267.105,50 3.189.111,12 2016 1.271.972,95 1.611.666,49 272.981,82 3.273.200,73 2017 1.324.238,11 1.642.181,78 278.987,42 3.360.121,76 2018 1.378.888,29 1.673.274,85 285.125,15 3.449.986,73 2019 1.436.034,66 1.704.956,63 291.397,90 3.542.913,02 2020 1.495.793,62 1.737.238,28 297.808,65 3.639.023,16 228 year total value recoverable materials (euros) equivalent value services physical entities (euros) equivalent value services legal entities (euros) total incomes (euros) 2021 1.558.287,01 1.770.131,15 304.360,44 3.738.445,01 2022 1.623.642,35 1.803.646,82 311.056,37 3.841.312,02 2023 1.691.993,17 1.837.797,06 317.899,61 3.947.763,48 2024 1.763.479,22 1.872.593,91 324.893,40 4.057.944,79 2025 1.838.246,80 1.908.049,61 332.041,06 4.172.007,73 2026 1.916.449,07 1.944.176,62 339.345,96 4.290.110,78 2027 1.998.246,35 1.980.987,66 346.811,57 4.412.419,36 2028 2.083.806,46 2.018.495,68 354.441,43 4.539.106,23 2029 2.173.305,09 2.056.713,88 362.239,14 4.670.351,75 table 6: forecasting the operating costs in the proposed scheme year storage fee (euro/tone) the value of the storage fee (euro) overheads (euro) expenses for fuel and maintenance vehicles (euro) depreciation (euro) equipments maintenance (euro) salaries (euro) 2009 8,00 137.238,06 31.200,00 83.660,00 430.289,00 64.264,00 383.160,00 2010 8,60 146.366,27 31.824,00 85.333,20 430.289,00 64.264,00 417.644,40 2011 9,20 155.198,61 32.460,48 87.039,86 430.289,00 64.264,00 455.232,40 2012 9,80 163.701,63 33.109,69 88.780,66 430.289,00 64.264,00 496.203,31 2013 10,40 171.839,71 33.771,88 90.556,27 430.289,00 120.000,00 540.861,61 2014 11,00 179.574,94 34.447,32 92.367,40 215.145,00 120.000,00 589.539,15 2015 11,60 186.866,97 35.136,27 94.214,75 215.145,00 120.000,00 642.597,68 2016 12,20 193.672,88 35.838,99 96.099,04 215.145,00 120.000,00 700.431,47 2017 12,80 199.947,05 36.555,77 98.021,02 215.145,00 120.000,00 763.470,30 2018 13,40 205.640,95 37.286,89 99.981,44 215.145,00 120.000,00 832.182,63 2019 14,00 210.703,05 38.032,63 101.981,07 215.145,00 120.000,00 907.079,07 2020 14,60 215.078,58 38.793,28 104.020,69 215.145,00 120.000,00 988.716,18 2021 15,20 218.709,39 39.569,14 106.101,11 215.145,00 120.000,00 1.077.700,64 2022 15,80 221.533,72 40.360,53 108.223,13 215.145,00 120.000,00 1.174.693,70 2023 16,40 223.486,04 41.167,74 110.387,59 215.145,00 120.000,00 1.280.416,13 2024 17,00 224.496,80 41.991,09 112.595,35 215.145,00 120.000,00 1.395.653,58 2025 17,60 224.492,23 42.830,91 114.847,25 215.145,00 120.000,00 1.521.262,40 2026 18,20 223.394,05 43.687,53 117.144,20 215.145,00 120.000,00 1.658.176,02 2027 18,80 221.119,31 44.561,28 119.487,08 215.145,00 120.000,00 1.807.411,86 2028 19,40 217.580,01 45.452,51 121.876,82 215.145,00 120.000,00 1.970.078,93 2029 20,00 212.682,91 46.361,56 124.314,36 215.145,00 120.000,00 2.147.386,03 increase storage fee rate (euros): 0.60 salary increase factor: 0.09 the analysis of the efficiency of an investment project can be done with the help of an investigation instrument which is represented by the investment efficiency indicators. the indicators used in the financial analysis aim at quantifying the efficiency of a project taking into account the costs and the effects that the investment project involves at investor level or investment objective. the main efficiency indicators calculated and interpreted are the benefit-cost ratio (bcr), the net present value (npv), and the internal financial rate of return (irr). 229 the first analysis indicator results from comparing the costs and benefits for the entire life duration of the project, an indicator represented by the benefit-cost ratio (bcr) and which results from the comparison between the present value of benefits and the present value of costs. pvc pvb bcr = , where: bcr the benefit-cost ratio; pvb the present value of benefits; pvc the present value of costs. from the point of view of this indicator, the condition for financial efficiency is that the benefit-cost ratio should be more than 1, which means that the present value of benefits should be bigger than the present value of costs. in this case, the benefit-cost ratio isn’t more than 1, at an adequate updating rate, we don’t recover the total updated expenses, thus the project is inefficient and the investment of the capital is not justified. the second indicator for an investment project analysis is the net present value (npv), which is a fundamental financial analysis indicator for an investment project. this indicator also refers to the effort and the effects of the investment project for the whole duration of the project; it reflects the difference between the present value of benefits and the present value of costs (capital expenditure and operating costs). npv = pvb – pvc the condition for the investment project to be efficient is that the net present value should be positive (npv>0). the internal financial rate of return (irr) represents the fundamental indicator for accepting a project. it refers to the updating rate for which the present value of the benefits equals the present value of the costs, consequently the benefit-cost ratio equals 1 and npv equals 0. the irr calculation is done through successive approximations, where we determine the net present value at a corresponding updating rate, considered to be the minimum rate and for which it should be positive. then, we calculate the net present value at a higher updating rate than the minimum rate, high enough to obtain a negative net present value. in the end, the exact determination of the internal financial rate of return is done through interpolation, according to the relation: )npv()npv( )npv( )r(rrirr minmaxmin −++ + ×−+= where: irr the internal financial rate of return; rminthe minimum present rate; rmax the maximum present rate; npv (+) the positive net present value, obtained at the minimum rate; npv (-) the negative net updated income, obtained at maximum rate. 230 table 7: the structure of the investment project proposed for the urban community arieş year updating factor (a = 5%) annual incomes annual updated incomes operating costs updated operating costs annual investments (euros) 2008 0,952 4.687.679,00 2009 0,907 2.738.297,26 2.483.716,34 699.522,06 634.487,13 5.000.000,00 2010 0,864 2.807.512,80 2.425.235,11 745.431,87 643.932,08 2011 0,823 2.878.976,15 2.368.540,81 794.195,35 653.386,48 2012 0,784 2.952.774,63 2.313.576,18 846.059,29 662.909,59 2013 0,746 3.028.999,28 2.260.285,90 957.029,48 714.150,13 2014 0,711 3.107.745,08 2.208.616,41 1.015.928,81 722.001,64 2015 0,677 3.189.111,12 2.158.515,93 1.078.815,66 730.184,90 2016 0,645 3.273.200,73 2.109.934,38 1.146.042,39 738.749,14 2017 0,614 3.360.121,76 2.062.823,28 1.217.994,15 747.742,75 2018 0,585 3.449.986,73 2.017.135,79 1.295.091,91 757.213,42 2019 0,557 3.542.913,02 1.972.826,54 1.377.795,82 767.208,27 2020 0,530 3.639.023,16 1.929.851,68 1.466.608,74 777.773,93 2021 0,505 3.738.445,01 1.888.168,77 1.562.080,28 788.956,69 2022 0,481 3.841.312,02 1.847.736,76 1.664.811,07 800.802,59 2023 0,458 3.947.763,48 1.808.515,94 1.775.457,50 813.357,54 2024 0,436 4.057.944,79 1.770.467,87 1.894.736,82 826.667,40 2025 0,416 4.172.007,73 1.733.555,39 2.023.432,79 840.778,12 2026 0,396 4.290.110,78 1.697.742,51 2.162.401,80 855.735,82 2027 0,377 4.412.419,36 1.662.994,45 2.312.579,53 871.586,90 2028 0,359 4.539.106,23 1.629.277,52 2.474.988,26 888.378,14 2029 0,342 4.670.351,75 1.596.559,15 2.650.744,86 906.156,79 total 41.946.076,70 16.142.159,45 updating rate: 0.05 npv (euros): 16.804.313,66 table 8: the calculation of the internal financial rate of return irr year annual investments (euros) operating costs (euros) annual incomes (euros) cash flow (euros) updating factor (a = 30%) updated cash flow (euros) 2008 4.687.679,00 0,00 0,00 -4.687.679,00 0,769 -3.605.906,92 2009 5.000.000,00 699.522,06 2.738.297,26 -2.961.224,80 0,592 -1.752.204,02 2010 0,00 745.431,87 2.807.512,80 2.062.080,92 0,455 938.589,41 2011 0,00 794.195,35 2.878.976,15 2.084.780,80 0,350 729.939,71 2012 0,00 846.059,29 2.952.774,63 2.106.715,33 0,269 567.399,69 2013 0,00 957.029,48 3.028.999,28 2.071.969,80 0,207 429.262,85 2014 0,00 1.015.928,81 3.107.745,08 2.091.816,27 0,159 333.365,05 2015 0,00 1.078.815,66 3.189.111,12 2.110.295,46 0,123 258.700,01 2016 0,00 1.146.042,39 3.273.200,73 2.127.158,35 0,094 200.590,17 2017 0,00 1.217.994,15 3.360.121,76 2.142.127,62 0,073 155.385,98 2018 0,00 1.295.091,91 3.449.986,73 2.154.894,81 0,056 120.240,06 2019 0,00 1.377.795,82 3.542.913,02 2.165.117,20 0,043 92.931,12 2020 0,00 1.466.608,74 3.639.023,16 2.172.414,42 0,033 71.726,41 2021 0,00 1.562.080,28 3.738.445,01 2.176.364,73 0,025 55.274,49 2022 0,00 1.664.811,07 3.841.312,02 2.176.500,95 0,020 42.521,50 231 year annual investments (euros) operating costs (euros) annual incomes (euros) cash flow (euros) updating factor (a = 30%) updated cash flow (euros) 2023 0,00 1.775.457,50 3.947.763,48 2.172.305,98 0,015 32.645,80 2024 0,00 1.894.736,82 4.057.944,79 2.163.207,97 0,012 25.006,98 2025 0,00 2.023.432,79 4.172.007,73 2.148.574,94 0,009 19.106,02 2026 0,00 2.162.401,80 4.290.110,78 2.127.708,98 0,007 14.554,21 2027 0,00 2.312.579,53 4.412.419,36 2.099.839,83 0,005 11.048,90 2028 0,00 2.474.988,26 4.539.106,23 2.064.117,96 0,004 8.354,57 2029 0,00 2.650.744,86 4.670.351,75 2.019.606,89 0,003 6.288,01 total: -1.245.180,00 updating rate: 0.3000 npv (euros): -1.245.180,00 graphically, the internal financial rate of return is at the intersection of the abscissa with the line that joins the points of the coordinates minimum rate and positive net present value, respectively maximum rate and negative net present value. the higher the internal financial rate of return, the more viable the project is, its efficiency being increased. from the point of view of this indicator, the efficiency condition of a project is that irr should be superior to the corresponding updating rate. 6. the results of the research the three main efficiency indicators have clearly demonstrated the profitableness and the suitability of the waste management scheme proposed for the urban community arieş, as follows: 66,1 58,603.999.845,159.142.16 70,076.946.41 = + =bcr >1 the 1,66 value obtained for bcr being more than 1 proves the fact that the project is efficient, justifying by this the capital investment. through its content, npv characterizes in absolute value the gain, or the reward for the invested capital. in this case, the net present was calculated at a minimum present rate of 5%. npv = 41.946.076,70 – (16.142.159,45 + 8.999.603,58) = 16.804.313,66 euros %28,28 180.245.166,313.804.16 66,313.804.16 )530(5irr = + −+= x irr = 28,28% (the rate is high, much higher rate than the minimum rate, which proves once again the viability of the proposed project). the analysis of the efficiency of an investment project, but especially its financial analysis can be considered complete only after making the sensitivity analysis (known also as the sensitivity analysis of the internal financial rate of return). the sensitivity analysis consists of modifying certain variables and re-calculating the efficiency indicators for the investment project under the new circumstances. next we will be making a detailed analysis of the sensitivity by studying the tendencies of the financial indicators according to the evolution of the relevant variables, both for 232 the collection activity and the waste transportation, as well as for the activity of the transfer and the sorting-treating stations. this analysis studies the influence that the relevant variables have on the profitableness of the investment project for the urban community arieş. the variables with the highest impact upon the profitableness of the project are: (1) the variation of the sanitation tariffs for waste, (2) the variation of the selling price for the recyclable materials sold to recyclers and of the compost, and (3) the variation in operating costs. we present below the variation of the main parameters of the project between the limits -/+ 20% and the impact of the critical parameters on irr: table 9: the main parameters of the project impact on: the internal financial rate of return (irr) the critical parameter: sanitation tariff 28,28% 0,80 0,85 0,90 0,95 1,00 1,05 1,10 1,15 1,20 26,22% 26,83% 27,37% 27,85% 28,28% 28,65% 29,00% 29,31% 29,60% impact on: the internal financial rate of return (irr) the critical parameter: the selling price of the recyclable materials 28,28% 0,80 0,85 0,90 0,95 1,00 1,05 1,10 1,15 1,20 26,88% 27,28% 27,64% 27,97% 28,28% 28,55% 28,81% 29,04% 29,26% impact on: the internal financial rate of return (irr) the critical parameter: operating costs 28,28% 0,80 0,85 0,90 0,95 1,00 1,05 1,10 1,15 1,20 29,30% 29,07% 28,83% 28,56% 28,28% 27,95% 27,60% 27,21% 26,78% impact on: the internal financial rate of return (irr) the critical parameter: combined impact of the 3 critical parameters 28,28% 0,80 0,85 0,90 0,95 1,00 1,05 1,10 1,15 1,20 26,49% 27,01% 27,47% 27,89% 28,28% 28,84% 28,93% 29,22% 29,49% necessary data for the graph of the sensitivity analysis -20,00% -15,00% -10,00% -5,00% 0,00% 5,00% 10,00% 15,00% 20,00% 26,22% 26,83% 27,37% 27,85% 28,28% 28,65% 29,00% 29,31% 29,60% 26,88% 27,28% 27,64% 27,97% 28,28% 28,55% 28,81% 29,04% 29,26% 29,30% 29,07% 28,83% 28,56% 28,28% 27,95% 27,60% 27,21% 26,78% 26,49% 27,01% 27,47% 27,89% 28,28% 28,62% 28,93% 29,22% 29,49% taken individually, none of the selected variables can jeopardize the irr level so as to put under question the feasibility of the investment, as the irr modifications are very small. for a combined modification of the critical parameters, the irr variation is also reduced (1-2%) proving that the project proposed for the urban community arieş 233 is not sensitive to the modifications that may appear in time, therefore this investment objective is functioning. figure 2: the graph of the sensitivity analysis of irr 7. conclusions the proposed and analyzed waste management scheme is based on the access of the population to sanitation services, according to which the public authorities are responsible for organizing public utility services for the community so that all the members of the community should have equal access to these services. it is supposed that the waste management targets and objectives must comply with the national strategic plan, the specific policies in the field and the specific national objectives. consequently, we stated in the analysis made in this paper that these sanitation services must be provided in such a way as to ensure the availability of the tariffs and equal access of the population to these services. the proposed scheme solves the problem of waste management at local level, introducing directly, both at the level of the urban population and the rural population, the selective collection of the waste generated in households, the advanced treatment of all collected fractions, including an adequate step for reducing the organic charge of the waste sent for final storage, by valorizing their energetic potential. however, besides the quantifiable benefits, the project also brings non-quantifiable benefits that we consider to be the most important gains for the citizens from the researched area: – the improvement of the environment and the population’s health as a consequence of developing an efficient system for waste management, due to improvement of water, soil and air quality; – the increase of life expectancy due to reduced pollution; – the increase of the real estate value (land and buildings); – the development of tourism in an area in which there is a suitable waste management system, as a consequence of the esthetical and hygienic aspect of the area; – the attraction of the investors and the creation of workplaces for citizens. 234 the calculated values of the financial indicators demonstrate the fact that waste management in compliance with the harmonized european policy in this field is benefic, which shows the real importance that should be given by local public authorities to this sector. the values of the investment effort, when there already exists a correct project for suitable storage, financed from other sources (the so-called ecological waste warehouses), are not very high and they are easy to be borne by the regional and county authorities, a fact which makes these local public authorities responsible for the future of the waste management schemes at the local level. references 1. baum, f., umweltschutz in der praxis, munich: r. oldenbourg verlag gmbh, 1992. 2. binţinţan, p., managementul investiţiilor. aplicaţii. evaluarea proiectelor, cluj-napoca: presa universitară clujeană, 2004. 3. binţinţan, p., strategii şi politici de investiţii, cluj-napoca: casa cărţii de ştiinţă, 2005. 4. bişa, c., (ed.), elaborarea studiilor de fezabilitate şi a planurilor de afaceri, bucureşti: bmt publishing house, 2005. 5. bold, o.v., depozitarea, tratarea şi reciclarea deşeurilor şi materialelor, petroşani: editura tehnoart, 2003. 6. brown, l.r., flavin, c. and postel, s., saving the planet: how to shape an environmentally sustainable global economy, london: earthscan publications ltd., 1991. 7. ‘comunitatea urbană arieş’, association statute, turda town hall. 8. ‘county plan for waste management’, cluj county council, [online] available at http://www. cjcluj.ro/useruploadedfiles/file/programe/pjgd%20cluj%20alternativa%20finala.pdf. 9. florio, m., ‘ghid pentru analiza cost-beneficiu a proiectelor de investiţii’, fondul european pentru dezvoltare regională, fondul de coeziune şi ispa, 1997. 10. grădinaru, g., ‘actualizarea în procesul de evaluare a investiţiilor de mediu’, 2003, informatica economică, vol. 2, no. 26, pp. 132-138. 11. ‘închidere şi monitorizare rampă de reziduuri menajere pe strada cheii, în municipiul turda’, feasibility study, turda town hall. 12. lazăr, i. and scorţar, l.m., ‘environmental education basic rule of sustainable development’, 2008, quality access to success, pp. 140-144. 13. lupu, l., analiza cost-profit în protecţia mediului, iaşi: editura ecozone, 2003. 14. macoveanu, m., metode şi tehnici de evaluare a impactului ecologic, iaşi: editura ecozone, 2006. 15. mcdougall, f., white, p., franke, m. and hindle, p., integrated solid waste management: a life cycle inventory, oxford: blackwell publishing, 2001. 16. mcharry, j., reuse, repair, recycle: a mine of creative ideas for thri y living, gloucestershire: gaia books ltd, 1993. 17. rusu, t. and bejan, m., deşeul sursă de venit, cluj-napoca: editura mediamira, 2006. 18. scorţar, l.m. and lazăr, i., ‘the recycling of the main fractions that can be revalued from the household waste’, 2008, quality access to success, pp. 145-152. 19. ‘sistem zonal de colectare şi depozitare temporară a deşeurilor în oraşul brezoi’, feasibility study, râmnicu vâlcea town hall. 20. ‘studiu de oportunitate privind delegarea gestiunii serviciului de salubritate în municipiul turda’, gpa business consulting, august 2006. book 3.indb 28 corruption and ethical issues regarding public-private partnership bianca cobârzan cadru didactic asociat, departamentul de administraţie publică, facultatea de stiinţe politice şi administrative, universitatea “babeş-bolyai” cluj-napoca roger e. hamlin professor of public administration and urban planning, michigan state university, east lansing, michigan the paper raises general questions about ethical problems that taint public-private partnership. everybody talks about the economical benefits of encouraging firms to invest in the community using different incentives offered by the public institutions. in the same time, every day, newspapers bring to our attention cases of misuse of public resources for private gain or cases of private investors who give bribes in order to get a contract with a public institution. the purpose of this paper is to synthesize our understanding of the entrepreneurial movement and analyze its implications for potential problems of corruption that can arise in the relation between the public and the private sector. recent years have witnessed a revolution in the way governments work. the world has moved away from centralized governments and controlled economies, toward decentralized governments and market-driven economies, and those decentralized governments have been pushed to be more entrepreneurial (hamlin and lyons 1993). some have termed this a movement from bureaucracy to entrepreneurship (farrell 1986). as the “public vs. private” paradigm diminishes, the walls between the traditionally defined sectors are falling within countries and within communities. a pragmatic, approach to mixed governmental/economic systems is becoming the order of the day. some examples of this trend include the privatization of government owned properties and government services, governmental use of incentives to promote public goals through the success of privately owned business, and public choice in the consumption of government services through fees instead of taxation. this trend has proven to have many positive results for the achievement of public goals, but also puts strains on some of the most basic values of any public system, fairness, equity, transparency and ethical behavior. discussion of the ethical consequences of this pervasive international entrepreneurial tendency revista transilvană de ştiinţe administrative, 3(15), 2005, pp. 28-37 29 is a subject for interdisciplinary analysis and synthesis. we need to understand the effects of the trend described above on governmental systems and the concept of a public. the purpose of this paper is to synthesize our understanding of the entrepreneurial movement and distill its implications for systems of ethics and issues of corruption in government. the first section provides a definition of public-private partnerships, a term often applied to this movement. the second section offers background to the concept and outlines the benefits of the use of mixed venture arrangements. the third section provides examples of public-private partnerships. the forth section describes some dangers of public private partnerships in terms of ethical problems and corrupt practices. the fifth section offers some solutions. the final section provides a summary and draws preliminary conclusions. it attempts to outline an action and research agenda for improving ethics and avoiding corruption in public administration in the new era. definitions to discuss this complex subject we must define terms precisely so as to proceed with a common vocabulary. numerous popular terms refer to aspects of this entrepreneurial movement. several labels are confusing and some are already tainted with controversy and carry emotional baggage. the term “privatization,” is one example. the term describes activities ranging from selling state-owned factories in poland to contracting out municipal garbage collection in peoria. while nearly all forms of privatization belong to the entrepreneurial trend, they only represent a portion of the issue. “public choice theory,” implies that the population should have greater choice in using and paying for governmental services. often residents pay a fee for a service rather than have it financed out of general taxation. sometimes public agencies “compete” for “customers” and raise their own revenues. while also a part of the entrepreneurial movement, “public choice” is very different from privatization (lyons and hamlin, 2001). “reinventing government,” uses and expands not only on public choice and fee-for-service theory but also on the privatization of local services approach (osborne and gaebler 1992). “reinventing” advocates see governmental agencies competing with private firms and other agencies for service contracts that provide limited monopolies or franchises for certain areas of local services. “reinventing government,” is clearly part of the world entrepreneurial movement. during the 1980’s, the phrase “public-private partnerships” became popular. the label originally described governmental use of incentives to leverage private investment, particularly with respect to economic development projects. the goal was almost always to promote private physical and economic development in places needing economic rejuvenation (hamlin and lyons 1996). in every case, the terminology mentioned above starts with a public sector and a private sector and talks about how the two sectors relate to one another. this is a false dichotomy. the new movement requires a new paradigm. the last twenty years have seen an explosion in the number and importance of intermediate sector organizations and activities. these promote the public interest, but must also be sensitive to the need to reward investors for taking risks. while “pure public” and “pure private” represent theoretical ends of a spectrum of entities, intermediate sector behavior is increasingly becoming the accepted practice (hamlin and lyons 1996). the phrase, “public-private partnerships”, is now used more broadly than the original projectorientation mentioned above. it refers to a variety of activities in which the public sector, the private sector and an array of intermediate entities, influence one another by becoming partners. “partnership” connotes relationships much broader than its legal definition, and, “public” and “private” refer to goals (pursuit of the public interest vs. the need to reward investors for taking risks) rather than pure organizational forms. this article uses public-private partnerships broadly to refer to all aspects of the public entrepreneurial movement discussed above. 30 one long-standing definition of public-private partnership comes from the committee for economic development in the united states (ced): “public-private partnership means cooperation among individuals and organizations in the public and private sectors for mutual benefit. such cooperation has two dimensions: the policy dimension, in which the goals of the community are articulated, and the operational dimension, in which those goals are pursued. the purpose of public-private partnership is to link these dimensions in such a way that the participants contribute to the benefit of the broader community while promoting their own individual or organizational interests.” (holland 1984) collaborations are not just organizational arrangements, but processes. the partnership process involves both establishing structures and using those structures to achieve mutual benefit. when referring to this broader definition of public-private partnership, only the imagination limits the methods for carrying out such alliances. the goal and the result of promoting interaction between sectors have, in many cases, been nothing short of the dynamic transformation of an entire social and governmental system (hamlin and lyons 1996). to summarize the definition, by public-private partnerships the authors mean a society in which a high percentage of its formal and informal organizations are not identifiable with either the public sector or the private sector. while the public interest is identified and sought, and while investor risk is respected and rewarded, public and private goals are often pursued simultaneously within organizations and through alliances of organizations. benefits of public-private partnership a primary benefit of public-private partnerships is that each sector contributes what it most has to offer, and the combination of these skills abilities and powers has the potential to produce the best results. the public sector is best at defining public goals by creating a consensus of citizen’s diverse attitudes. government should be good at serving a broad spectrum of society in an equitable fashion with respect for the rights of various minorities. the public sector is given greater power in certain areas such as condemning property with due compensation when land and asset assembly is in the public interest, and using police powers. the public is best at providing large-scale infrastructure such as a city street system or storm drainage system. the private sector is generally better at managing factors of production for greatest efficiency in a competitive environment. this means getting maximum use of land, labor, technology, energy and other resources. the private sector is also expert at attracting investment capital. because necessity is the mother of invention, the private sector, responding to competitive pressures is often thought to be more innovative in creating and using new technology. the combination of these two ends of the spectrum often means that public goals can be accomplished more efficiently and effectively through a public-private partnership. government can operate at lower cost by using private contractor. it can use the private partner to raise financing for projects, and the private sector can offer innovation in the pursuit of public goals, to name a few. if the private sector can increase profits because of governmental assistance, it is better able to raise investment capital by offering a greater return on investment. generally greater quantity and quality of goods and services can be provided to all of society. examples of how public-private partnership works one area of public-private partnership is the privatization of government services. an example of such privatization is contracting out of garbage and refuse collection. in its simplest form, this means that the municipality chooses a private company to collect garbage and refuse and pays the company a fee for the service. 31 on the surface, this seems straightforward. if the fee that the city pays the private company for this service is less than what it would cost for city employees to do the job, then municipal taxpayers save money that ca be used on other activities or to reduce taxes. and, good reasons exist for why a private company might be able to do the job for less. possible reasons include lower labor costs, better management, greater experience from doing the same service in other communities, better equipment, and better technology. a private company that is in competition with other companies might have more incentive to be innovative, seek lower cost labor, and develop better technology. a second example of public-private partnerships is where the two form a formal partnership on a development project. a city, for example, might decide that it does not have an international quality, executive hotel. it might be particularly lacking in high quality rooms in key locations such as in the business center or near a university. the lack of such a hotel might be holding the city back economically by making it difficult for the city to attract international investors and business people. private hotel developers might conclude however that the high cost of assembling land, redeveloping it and sufficiently improving infrastructure would make the project so expensive that it would be unprofitable. as a result a stalemate exists in which the city is held back because of the lack of an amenity, but the private sector will not step forward on its own to supply the amenity. the municipality does not want to get into the hotel business because it does not have the expertise to build or run a hotel. but, it could form a partnership with a hotel developer. the municipality could use its powers to assemble land, clear land where necessary, and improve the infrastructure. it could do this using low interest municipal bonds. it could then lease the land on a long-term basis to a private developer who knows how to raise private financial capital, design hotels to satisfy the international market, and manage hotels effectively. because of the beneficial public involvement in preparing the site, the hotel developer has lower development costs and is able to make a profit. the developer is therefore attracted to the project that it did not want to pursue on its own. the general public gains from the project through the creation of a necessary city amenity. the project provides increased employment to citizens both directly and because of the general increase in business activity. the government also receives greater tax revenues that can be use to improve other city services. the private sector gains profits and repayment on investment capital. potential problems regarding public-private partnership looking at the example of garbage collection described above this simple process of contracting out government services raises a multitude of issues. first, how is the company chosen? is the selections process objective or are there non-objective forces such as: companies giving campaign contributions to decision-makers, companies paying bribes or kickbacks to decision-makers. second, what is the quality of the work done? is the company short-changing the city by using poor quality supplies and equipment, reducing the level of service? how does the municipality oversee quality and performance? is the oversight process objective or tainted with the same conflict of interest or corruption concerns of the selection process? what happens if low quality or non-compliance, or corruption is detected? how does the municipality implement controls? is the company provided incentives for good quality or penalties for bad? are quality controls truly enforced? is the quality control process objective or tainted with political pressure, conflicts of interest or corruption? these are general questions that can be asked about many other activities related to public-private partnerships. as long as there is no understanding of the needs of both partners and of the importance of collaboration, it is more difficult to achieve the public interest of the community. the main goal of the private investors is to gain profit, and investing in public services is not always very profitable. 32 the private companies seek to reduce costs imposed on them by government. for example, time is important for firms. we often say that time is money. so private investors will want to avoid delays in getting authorizations (like construction authorizations), because the officials may delay issuing these decisions for months, even if the firm is qualified to receive them. in this case, the public officials can demand a bribe in order to issue the authorization. as long as there is no competition in granting of these authorizations and there is no other option to private firms to get them, the firms will be forced to give bribes. in the same time, the firms could simply want to reduce the time of getting an authorization through the payment of bribes. another important asset in the investments projects developed through public-private partnerships is the land. there are different cases of corruption related to reducing the costs of using the land in a development project. for example, a private company can be interested in redeveloping a certain lot, but it cannot afford to buy the land at the selling price or to invest money in developing the infrastructure. but it can bribe the local councilors to write down the selling price of the land or to decide to concentrate infrastructure improvements in the area targeted for redevelopment. also, the decisions that are related to particular use of private land (zoning laws) can be subject to corrupt practices. the local councilor can decide whether the same piece of land can be used only for agriculture, or as residential or commercial area. beside the costs related to time and land improvements, private investors seek to reduce the costs imposed on them by government in the forms of taxes, fees, and regulations. the government holds the discretion to give different incentives to firms that are willing to invest in the community, like subsidies, tax incentives, and free lease. for example, the government can give a private company a space or the use of something for free. also, the government can provide access to credits with interest rates below market. in all these cases, firms may use different forms of corruption to obtain incentives in order to have access to all these fiscal incentives and to reduce the investment costs. the main cause of corruption in government is the discretionary power that the public officials hold, which refers especially to public officials who are in “positions where they have discretion over important decisions” that affects the business of the others (vito tanzi 1998, susan rose-ackerman 1999). the level of corruption is directly related to the level of discretionary power that the officials hold, meaning that “greater the discretion of officials and the fewer the options open to private firms, the higher the costs of a system that condoms corruption” (susan rose-ackerman 1999). there are certain areas, related to public-private partnerships, whereby the public officials have a great discretionary power and which are more vulnerable to different forms of corruption. the procurements are the most vulnerable (icac 2001) because the government transfers large financial benefits to private firms through procurement contracts and the award of concession. in these cases, the private companies often make false statements to the government regarding the price, which means overcharging the government in connection with products or services delivered. also, the firms can deliver inferior products to the government. these involve substitution of inferior materials or fraudulent testing. conflict of interest was reported as another problem that raised ethical issues regarding procurement and contracting out process (icac 1997). it refers to the pecuniary or non-pecuniary interests that civil servants and local councilors hold in any contract or proposed contract with the council. there are many activities related to development projects that can create conflict of interest for public officials, like planning approvals or licensing. for example, a councilor may be tempted to influence an application to set up a new business in the town if his own business could lose custom as a result. this situation occurs often due to business and professional interests in the local government area that many councilors have. conflicts of interests arise if public officials have access to information and opportunities that could be used to advance their personal and business interests. another very common conflict of interest can occur in the contracting-out process. for example, a council has advertised for 33 a firm to supply office equipment. a councilor, who is a member of the commission assessing the bid, has a relative who is an executive director of a firm that submitted a bid. this may affect, or may be suspected to affect, the councilor’s ability to make an unbiased decision. the private companies have several reasons to pay off officials in order to get procurement or a concession contract. very often the firms pay for inside information or to be included in the list of pre-qualified bidders. also, the public officials are induced through bribe to “structure the bidding specifications so that the corrupt firm is the only qualified supplier”. the firm pays bribes to be selected as the winning contractor, or once the firm wins the contract, “it may pay to get inflated prices or to skip on quality” (susan rose-ackerman, 1999). it is cheaper to pay off the officials than to invest in the improvements required respecting the standards imposed through the contract. the “services” which the corrupt official provides in order to achieve the result for which they were bribed consist in some cases in influencing the outcome of public procedures or the influencing decisions assigning benefits. in other cases, the corrupt official may provide confidential information, thus increasing the corrupter’s chances of obtaining a benefit (della porta and vannucci 1997). in the case of public contracts, information may relate to aspects of contracting procedure, which are intended to remain secret in order to ensure fair competition. for example, public officials may provide information about the minimum and maximum price for inclusion in competitive tenders, about the average-offer price, or about particular criteria to be taken into account in evaluating projects. at different times, investment projects have been carried out to provide opportunities to some individuals or some political groups to get “commissions” from those who are chosen to execute the projects. the privatization process mentioned above as one form of public-private partnership was designed, especially in former communist countries, as a measure of reducing corruption “by removing certain assets from state control and converting discretionary official actions into private, market-driven choices” (susan rose-ackerman 1999). however, the process of transferring assets to private ownership is seen in the same time as a source of many abuses. the privatization process creates situations “whereby some individuals (ministers, high political officials) have the discretion to make some decisions” (vito tanzi 1998) in favor of the clienteles of particular political groups. in the same time, other persons (like managers or civil servants) have access to information not available to outsiders, so they can use the process for their private gain. conflicts of interest may give opportunities for other corruption cases and refers to public officials who design and manage privatization-bidding process and who are on the staff of those companies that received the contract. another important issue regarding the ethics of public-private partnerships that we want to analyze briefly is the impact of perception at the individual, institutional and community level. “the perceptions are more important then reality” (hamlin and lyons 1996) and “it can substitute for both the law and trusting personal relationships” (susan rose-ackerman 1999). at the individual level, the reputation is very important because it can affect one’s objectivity. for example, a public official may be offered by a group of private investor a free plane ticket to participate to a business convention (richter, burke and doig 1990). but there are several ethical issues that could affect the reputation of the public official, and which could appear to the others to be unethical. the first issue relates to the possibility that the free plane ride will incline the public official to view the their interests more favorably than he or she should do. so, the gift may tend to create a public impression that the free travel was made to influence the public official’s actions or to obtain preferential treatment. the other issue relates to the possibility that the gift will affect in the future the reputation of objectivity and effectiveness, if the free ride is reported by the media. other similar examples refer to cases of conflict of interest based upon a family relationship, close friendship, which induce the reputation of favoritism and lack of impartiality. these cases appear when people are involved in making decisions from which they or relatives might benefit. 34 at the institutional level, there are other ethical issues that can affect the institution’s reputation. the perception of corruption may generate a loss of public trust and confidence in the corrupt professional person and. also, the institutional processes and their roles are undermined (miller, roberts and spence 2005). for example, close-working relationships between government and corporate officials may be essential in development projects, but these relationships may affect the objective evaluation of the performance of the projects. if private investors view the situation as being unstable, some of them will not have the incentive to invest and some of the investments will flow in other communities. but other investors will choose to pay bribes to obtain certainty, which is risky because they can not enforce corrupt deals. in both situations, the community will lose. in the first case the investments will flow elsewhere. in the second case the investors that have benefited from payoffs “will resist efforts to increase the clarity of rules and laws” (susan rose-ackerman, 1999) and, in general, the improvement of the services delivered to the citizens. solutions for corruption problems after we analyzed some ethical issues related to the public-private partnership, the first question that comes in our minds regards the solutions to all the identified problems. for example, how does a government of the people, engaged in various forms of private negotiations and interactions with private businesses and citizens, ensure that the views of the general public are properly included, and that objectivity in selection, oversight and mutual compensation is maintained? having anticorruption strategies shows local council commitment in encouraging ethical behavior and helps increase transparency. and related to what we discussed before regarding the perception of the citizens, it is important to keep the community informed about the existence of strategies. the citizens have the right to know that the council is aware of and takes seriously its obligation to perform its functions impartially and in the public interest. informing the citizens that the council has a detailed policy and procedures on combating corruption, that complaints concerning corruption are taken seriously into consideration, and how the policy and procedures have taken effect, is a useful accountability mechanism. in the following paragraphs we will analyze some solutions related to the corruption problems presented before. we will refer especially to those problems that were mentioned as being more often encountered in the relation with the private investors. we will analyze the solutions related to the problems occurred in the procurement and contracting out processes, privatization, and to quality and standard inspections. the most corrupt activities encountered by the city hall are those related to procurement of goods and contracting-out services. the most common measure to combat these problems is by establishing codes of conduct, which let everybody know what is considered to be acceptable and ethical as well as what is unacceptable or unethical. the codes of conduct should be sent to the private contractors in order to keep them informed about ethical expectations. because one of the most important problems related to the procurements and contracting-out regards the conflict of interests, other measures should address this problem. the easiest way to deal problems regarding conflicts of interest is to avoid them through a strict division of duties and responsibilities (miller, roberts and spence 2005). but it is not always possible to avoid conflicts of interest. the next best solution is to disclose them. the members of a council or a committee should be required to disclose any direct or indirect pecuniary interest in any contract or proposed contract with council (icac 1997). additionally, they should be required to refrain from discussing or voting on any matter to which it relates. keeping the process simple and transparent is extremely important. the more obscure and uncertain are the procedures by which a decision is arrived at, the more valuable to the corrupter 35 is the information relating to them (della porta and vannucci 1997). also, if the rules for taking the decisions are technically complex and even more, having a “reliable” interpretation, they create many opportunities for using the information for corrupt deals. in this respect, accountability established through institutional mechanisms is necessary for the control of corruption. the establishment of clear instructions for building inspections, for internal audit, and internal reporting procedures is important. related to the management system, it is important for the city hall to keep records of contracts that the council issued. these contracts should be reported annually. also, it is important to make the reporting procedures transparent in order to reduce the temptation for corrupt practices and to make the officials more accountable to the citizens. in this way, the citizens should have opportunities to report procedures. a committee should be set up to foreshadow possible problems and to decide how to deal with the corrupt issues. even if the privatization is seen as means of reducing corruption, the process is tainted with many corrupt activities. in this respect, it is necessary to establish a credible privatization by respecting several principles (susan rose-ackerman 1999). the process should not favor different consortia with strong ties to the local elite, but should assure a wide participation of the private investors. also, it has to be transparent and well publicized, especially in the evaluation of the assets. the way the privatization process is organized is also extremely important. the regulatory framework should be set up in a credible way before the tendering begins. also, the regulators must be protected from improper influence, through a transparent appointment process, and cases of possible conflicts of interests should be limited as much as possible. the consumers and the citizens in general should have the possibility to report contractors’ failure in meeting the defined performance obligations. related to the performance obligations, it is important for the city hall to have specific measures that can be used in preventing low quality and fraud cases related to supervising the quality of goods and services delivered by the private contractors. the management system (icac 1998) is one of these measures, and it is used especially in health and building inspections. it refers to the use of computerized inspection bookings. by recording all requests for inspections, councils are able to randomly allocate work among surveyors and monitor work in progress. also, the supervisors are expected to keep official diaries of their inspections appointments. besides these, performance audits are necessary, which means that the city hall employs a form of “staff appraisal to measure an employee’s performance against a council’s goals” (icac 1998). another way of ensuring the quality of the services delivered by the private contractors is through the “buddy system” (icac 1998) or “competitive bureaucracy” (susan rose-ackerman). both terms refer to reducing the discretionary power of any single bureaucrats by having more civil servants that can perform the same job. for example, a council can divide their area into regions for building regulations. when a supervisor responsible for a region is unavailable on one day to work, another surveyors designated as a “buddy” can take responsibility for that region. for example, the private companies that reported corrupt demands can reapply to a new official in the case the first official asked for a bribe. in this way, the discretionary power of a bureaucrat over a certain regulation is limited, as well as the bribe potential. summary and conclusions one of the most important trends in governance and economics is the increasing collaboration between the public and private sectors for mutual benefit. innovative thinkers in both sectors have created mechanisms for promoting the accomplishment of public policy while at the same time compensating investors and entrepreneurs for taking financial risks. this process has brought greater innovation to government and a greater sense of enlightened self-interest to business. but this trend has significant implications for democratic oversight of the public policy process. governmental policy that utilizes complex relationships between the public and private companies challenges the moral and 36 ethical fiber of both the legal and cultural system. greater levels of trust are required and new forms of oversight must be developed. definitely, corruption implies financial loses for the community, even if the purpose of the publicprivate partnership is to bring wealth in the community. private investors may deliver private goods and services to the public institutions at a higher price than their value to the seller (della porta and vannucci 1997). a part of the difference in the value is sometimes given as a kickback to the public official whose influence resulted in the favorable decision. also, the public institution may accept less for the right of the resources than the private purchaser would be willing to pay. in the case of an urban planning program, which increases the value of a certain plot of land – the presumption is that the decision might be inspired by a bribe paid to the public official. the landowner thus receives the profit equal to the entire increase in value of the land. beside financial loses, corruption may impose future costs on public institutions and on community in general. the inspector, who overlooks irregularities, allows the corrupter to avoid paying the fine provided by the law. the future costs are represented by the possible problems that can occur due to not respecting the standards required by law. people eating in a restaurant that does not respect the hygiene standards may get sick, so they need health care services. buildings that do not respect construction standards or were built using low quality materials may fall apart and causes damages for the people that live in or may even hurt them. in this context, a public-private partnership brings many benefits for the community, but in the same time it can generate harm at individual, institutional and social level, if it is not managed properly. it destroys the trust of the citizens in public officials’ objectivity and in public institutions. also, it destroys the citizens’ trust in their representatives and raises questions whether or not they are motivated in their actions by the concern with the broad interests of the community or with private gains. at the same time, corruption deters investment and undermines competition (world bank 2000) and therefore affects productivity. this paper is just an outline of different issues regarding corruption in public-private partnerships and their implications for the community. the first part of the paper regarded definition of publicprivate partnership, its importance for the community and some examples of how this partnership works. the second part of the paper analyzed very specific corrupt practices that can occur in this partnership, their implications for the community and solutions for combating them. further research related to this topic is important. some areas of interest include the implications of corruption on the economy at the community level, the mechanisms that sustain the corrupt practices, and the role played by cultural in fostering corruption. more case studies should be analyzed for each type of problem in order to have a complete imagine of the phenomenon. we should pay special attention to the post-communist countries that are privatizing the state enterprises and are in the process of developing new forms of public-private partnerships in order to promote economic development. past experimentation with mixed governmental systems illustrates what while ethical problems do arise, the challenge can also have the effect of strengthening professional ethics. public-private partnerships can have the effect of opening up each sector to the scrutiny of the other and induce the actors, and the public at large, to think more clearly about issues of ethics and corruption. references: 1. della porta, donatella and vannucci, alberto. 1997. the resources of corruption: some reflections from the italian case. in crime, law & social change, kluwer academic publishers. 2. diiulio, john (editor). 1994. deregulating the public service. can government be improved? washington d.c.: the bookings institution. 3. farrel, larry. 1986. building entrepreneurship: global perspective. training, vol. 23, (nov. 7): pp. 42-50. 37 4. hamlin, roger e. and lyons, thomas s. 1993. public, private, and nonprofit sector interactions for economic development in a restructuring world: implications for professional planning, in gill-chin lim and man-hyung lee (eds.), dynamic transformation of societies. seoul: nanam publishing house. 5. hamlin, roger e. and lyons, thomas s. 2003. financing small business in america: debt capital in a global economy. new york: praeger. 6. hamlin, roger e. and lyons, thomas s. 1996. economy without walls: managing local development in a restructuring world. new york: praeger. 7. holland, robert c. 1984. the new era in public-private partnerships. in paul r. porter and david c. sweet (eds.). rebuilding america’s cities: roads to recovery. new brunswick, nj: center for urban policy research. 8. international commission against corruption. 1997. under careful considerations: key issues for local government. march on http://www.icac.nsw.gov.au 9. international commission against corruption. 1998. accountable health and building inspections: recommendations for local government. a corruption prevention project. june on http://www.icac.nsw.gov.au 10. international commission against corruption. 2001. corruption resistance strategies: researching risks in local government. june. on http://www.icac.nsw.gov.au 11. lyons, thomas s and roger e hamlin. 2001. creating an economic development action plan: a guide for development professionals. revised and updated edition. new york: praeger. 12. miller, seumas, roberts, peter and spence, edward. 2005. corruption and anti-corruption. an applied philosophical approach. pearson prentice hall. 13. miller, william l., grodeland, ase b. and tatyana y. koshechkina. 2001. a culture of corruption? coping with government in post-communist europe. ceu press. 14. osborne, david & ted gaebler, 1992. reinventing government: how the entrepreneurial spirit is transforming the public sector. reading, ma: addison wesley. 15. richter, william l., burke, frances and doig, jameson. 1990. combating corruption. encouraging ethics. american society for public administration. 16. rose-ackerman, susan. 1999. corruption and government: causes, consequences, and reform. london: cambridge university press. 17. rosen, bernard. 1989. holding government bureaucracies accountable. praeger publishers. 18. tanzi, vito. 1998. corruption around the world: causes, consequences, scope, and cures. international monetary fund. 19. varese federico. 2000. pervasive corruption. in ledeneva, a.v. and kurkchiyan (eds.) economic crime in russia, kluwer law international. 20. world bank. 2000. anticorruption in transition. a contribution to the policy debate. washington d.c. 124 the present study portrays customer satisfaction and service quality as a multidimensional construct and investigates the link between customer satisfaction determinants and service quality determinants. based on arguments that customer satisfaction should be operationalized along the same determinants/factors and dimensions (and the corresponding items) on which service quality is operationalized, the results of study indicate that the two constructs are indeed independent but closely related, implying that an increase in one is likely to lead to an increase in another. determinants of customer satisfaction and service quality – the case of romanian public services – horia mihai raboca phd candidate, faculty of economics and business administration, babeş-bolyai university, cluj-napoca transylvanian review of administrative sciences, 16 e/2006, pp. 124-135 i. introduction services quality and customer satisfaction have been for over a decade two important topics both for the academic world and for the researches in the field of marketing. the attention directed to these two concepts, services quality and customer satisfaction is mainly due to the harsh competition among private companies on the market, as well as to the pressure of political factors and of the population, over organizations in the field of public administration. the key to the competitive advantage is to deliver high-quality services, services that in exchange will generate the customer satisfaction. (sureshchandar et. al., 2002) if the preoccupation of the private companies for the two concepts „ service quality” and „customer satisfaction” is a major factor in maintaining an advantage over the competitors, an advantage that in the end will generate the economic success of the company, the preoccupation of the organizations in the field of public administration and public services, respectively, vis-à-vis service quality and customer / citizens’ satisfaction derives from the changes due to the implementation of new philosophies regarding administration, known as “new public management”, changes that are based on the interest in measuring performances and revitalizing the public and the nonprofit organizations and that are generated by the convergent result of two forces: (1) the pressure of demand for a higher responsibility of the organizations, coming from the political factors, the public and 125 the media, (2) the deliberate growth of the organization leaders’ engagement towards results and performance. (poister, 2003) one of the important preoccupations related to the service quality regards the relationship and the construction of this concept with the concept of “customer satisfaction”. thus, regarding the construction of the two concepts, generally the researchers’ opinions converge towards the following theory: quality of services and customer satisfaction can be seen as conceptually different things but very close to each other for the point of view of their construction (parasuraman et.al.1994; shemwell et. al., 1998; sureshchandar et al, 2002). if in the case of product delivery (products being tangible objects) the difference between the two concepts is obvious enough (in this case quality can be defined as the degree of perfection related to the quality standard of the object and satisfaction as a fulfillment or the satisfaction of certain previous expectation related to the product), in the case of delivery of services (and in the case of public services as well) the definition of quality by the quality standards of the object is no longer valid, and this fact is mainly due to the „immaterial” feature that a service implies, the short time of production and consumption and the client’s subjectivity in assessing the service. (gronroos, 1990) also, although there are studies that highlight the fact that: customer satisfaction and the service quality, in the case of certain public services, are different and distinct concepts from the customer perspective (athiyaman a., 1997; sureshchandar et al, 2002), the difference between them becomes unclear and it grows dim in the case of old or traditional clients (bigne, 2003), there is still no agreement regarding the clear and consistent definition of the relationship between them, these concepts being often used unclearly. oliver (1997) suggests the fact that the difference between the concepts “service quality” and “customer satisfaction” can be synthesized from the perspective of three major aspects: – assessment of the service quality can be done by the assessment of different attributes and aspects specific to the service, whereas the assessment of satisfaction is more general and more global. – expectations regarding service quality are based on the perception of perfection, whereas the satisfaction is done by assessments that include certain reference aspects, as: personal necessities and requirements, the equitable treatment to which it is subjected. – analysis and assessment of service quality is a more cognitive thing, whereas the analysis and assessment of satisfaction has a largely emotional side. the aim of this work is to highlight the relationship between service quality offered and customer satisfaction, from the perspective of the construction of concepts, within a public organization (the romanian customs system) and to investigate, at least for some public services, if the two abovementioned concepts are close as far as the conceptual structuring form is concerned and / or if they can be seen as different but strongly related concepts or not. also, the conclusions and the results of the investigation suggested by this work, in my opinion, have to give an answer to the following two questions: 1) can service quality and customer satisfaction be regarded as two conceptually opposed constructions in the case of services in the public sphere? 2) in case the answer to the first question is affirmative, can the two concepts be correlated or not? for practical reasons, the investigation of difference / similitude of the construction of the two concepts has been carried out via the inquiry method, in which economic agents within the range competence of the cluj regional customs inspectorate took part. the territorial competence includes the following counties: alba, bistriţa-năsăud, cluj, mureş, sălaj. the economic agents included in the inquiry were those who asked for a permit of perfectioning to be delivered in 2004, a document that 126 is mandatory for the economic agents in order to carry out customs operations in the perfectioning system (in compliance with the regulations for applying the customs code of romania, approved by the government decision no. 1114/2001). ii. the determinants of the service quality although there is no general agreement in defining the concept of “service quality”, the general conclusion that can be drawn from the specialist literature is based on the following remarks: (1) certain authors suggest that: service quality is associated with providing a certain material or immaterial “something” in a way to create pleasure to the consumer and that leads either to the fulfillment of a need and/or to the creation a certain value. (brysland, 2001), (2) other authors suggest that: the definition and the description of the service quality should be done by means of the notion of attitude – long-term general assessment that drafts the general appreciation of the service. (sureshchandar et al, 2002) certain authors have suggested the introduction of the “perceived service quality” term, term defined as “a difference, which the consumer seizes between the perception of the service and the expectations of the service””, „ ..., a generalization of the discrepancy between the customers’ expectations or wishes and their own perceptions” (parasuraman et.al, 1991) other authors again (cronin et taylor, 1994; asubonteng et al.; 1996, haksik et.al, 2000), criticizing the above-mentioned approach consider service quality a kind of conceptualized attitude, rather as the “perceived quality performance” than “the difference between the perceived quality and the customer a priori expectations related to it” (haksik et. al, 2000). service quality, from the clients’ or the customers’ point of view, appears as a multidimensional concept (parasuraman et. al, 1991; cronin and taylor, 1992; mcdougall and levesque, 2000; sureshchandar et al., 2002; kang and james, 2004; hakis et. al., 2000; bigne et.al, 2003) even though there is no general agreement regarding the number and the nature of the dimensions that the service quality concept implies. if certain service quality models have been conceived around two major elements, which in their authors’ opinion, (gronroos, 1990; mcdougall and levesque, 2000; kang and james, 2004), are the basis for the conceptualization of the service quality: (1) the content or the resulting (contractual) aspects of the service – “what” is actually delivered by the service (the technical aspect) and (2) the relational or process aspects ( customer – employee relationship) of the service – “how “and “in what way” is the service delivered (the functional aspect), most models try and define the dimensions of quality from the perspective of those aspects/factors of assessment that form, from the customers’ point of view, the general and essential appreciation of the service (parasuraman et.al., 1991; cronin and taylor, 1992; sureshchandar et al, 2002). as far as the public organizations are concerned, referring to the organizations in the sphere of public services, the problem of clearly and comprehensively defining the dimensions of service quality, as well as the causality of the factors which it depends on is made difficult, even more than the issues described above, by the appearance of two major elements that the organizations needs to take into account: 1) the feature of social responsibility both vis-à-vis the customers themselves and the population or the socio-professional strata. 2) the “multi-service” feature, characteristic for a large number of public organizations, the “multi-service” features implying the simultaneous delivery of a large number of diverse main and auxiliary services, with a high level of complexity. among all models of conceptualizing the service quality, applied by public bodies, the model based on the instrument of measuring quality “servqual” developed by parasuraman a, zeithaml 127 v. and berry l.l. (1991, 1994) can be considered the most usual and most frequently used by the researchers, being under certain aspects the fundament and the starting point for several other studies in the field. although in time, servqual has been the object of controversies and criticism (asubonteng et.al., 1996; buttle,1996; cronin and taylor, 1994, haksik et al., 2000), this tool measures the perceived quality of the service from the perspective of the five dimensions of service quality: trust, safety, physical aspects, empathy, promptness (buttle,1996), dimensions of service quality, which are generally accepted in the academic world (however, there are studies that refute he existence of the dimensions as defined by the authors of the servqual instrument). another model referring to the dimensions of service quality, which can be applied to public bodies is the model of “multiple service organizations” suggested by bigne (bigne et al., 2003) who introduces two service concepts for the organizations the provide multiple or complex services (as for example, the services offered by town halls, universities and hospitals): 1) the main service offered by the organization – the service, which is the main aim. 2) peripheral or related services offered by the organization – the services that are offered related with the main service and that helps providing the main service under good conditions. basically, the above-mentioned model suggests the following fact: the general quality of a multiservice relies on both the perception of the main provided service and on the peripheral or related services, and the quality of peripheral services can be considered a major factor in the general assessment and appreciation of the service. another reference model that tries to conceptualize the dimensions of service quality from the customers’ perspective is the model suggested by g.s. sureshchandar (2002) who considers that the defining dimensions of the service quality from the customers’ perspective are those presented in the following table: (table i) no. dimensions (factors) of the service quality dimension (factor) description of the service quality 1 the content of the service or the product of the offered service – it refers to the content of effective elements provided by the service and is made up of the features of all the things a service offers 2 the human element in providing the service – it refers to all aspects related to the human factor 3 systematization of providing the service – it refers to the aspects made up of procedures, proceedings, standards and systems that systematize the process of service delivery. 4 tangible aspects of the service – it refers to the tangible aspects of service delivery, aspects that are not related to the human factor and which are made up of: what the surrounding in which the service delivery takes place, looks like,ease and accessibility in the building, accessibility to the utilities in the building, the existence and/or the way in which the materials necessary for the service delivery are presented – proper forms and petitions, information and descriptive material. 5 social responsibility it refers to those aspects that contribute to the ethical and moral feature of the organization vis-à-vis its clients as well as towards the members of the community in general. these aspects that contribute to the formation and maintenance of the image and of the opinion about the organization have a significant influence on the assessment of the general service quality. source: g.s. sureshchandar, c. rajendran, r.n. anantharaman, (2002), the relationship between service quality and customer satisfaction – a factor specific approach, journal of service marketing, vol.16 nr.4, pp.365 128 iii. the determinants of customer satisfaction defining customer satisfaction for public bodies as opposed to private organizations, generally imply certain different aspects, aspects, which are based on the very much different and more complex “customer” concept for public bodies as opposed to private organizations (brysland and curry, 2001; şandor and raboca, 2004), and the role the customers play in the process of providing/ offering certain services. the customers’ role, particularized for public organizations in the process providing/delivering services takes up one of the following aspects (bitner et al., 1997): • customers as a productive source – for example: the patient of a health organization that contributes with specific and real information to the diagnosis effort becomes part of the process of service production. thus the quality of the patient’s information by the quality of the treatment results suggested by the doctors can largely affect the quality and performance of the health service offered by the organization. • customers, as contributors to quality, satisfaction and value creation – by the contribution of one’s own satisfactions/dissatisfactions on the service quality. generally customers do not care about the productivity growth registered by the organization but they certain do pay attention to the way in which their demands and/or their needs are fulfilled by the service. in this case, customers become an integral part of the service. • customers as competitors of the organization thatoffers/provides services – from certain points of view, customers can have the role of competitors for certain companies that provide services, especially in cases when the organization holds the monopole or if the offered service is of low quality and/or extremely expensive (the relationship between price and quality is extremely high). also, besides the above-mentioned roles, the customers of public government services can be considered as “bosses” of these organizations (with certain restrictions, certainly), keeping in mind the “citizen” character, tax payer, respectively, that they have, characteristic that confers to the customers both the right of referring to the said service for free, and their legal right to be informed, to supervise and control the way in which the organizations administers, ear-marks and spends its funds. (şandor and raboca, 2004) gilbert (2004) notices the fact that: “the measurement of customer satisfaction depends and varies regarding the presumptions and hypotheses made concerning what satisfaction means”, identifying three main approach directions in measuring and defining customer satisfaction: – the “expectations confirmation/disconfirmation” approach “ – an approach that stands at the basis of the acsi models (american customer satisfaction index) and ecsi (european customer service index) regarding the measurement of customer satisfaction, an approach that defines customer satisfaction as a function (a comparison) of the quality that customers perceive in relationship with their expectations (confirmation/disconfirmation of the expectations regarding the perceived quality); – “performance” approach, an approach in which customer satisfaction is defined and measured by the level of quality performance perceived by the customers; – “the importance of attributes” approach, an approach that focuses on the levels of relative importance that customers grant to those attributes, which in their opinion can e associated with service or product satisfaction; generally speaking, the majority of studies highlight and confirm the following fact: just as in the case of service quality, customer satisfaction can also be seen as being complex and multidimensional and can be defined both as a general assessment of the service/product and a specific-transitory assessment 129 (for example: the immediate and episodic assessment of certain aspects and features of quality, without long-term implications as far as the general service/product assessment is concerned. bitner and huber (1990, 1994) suggest in their studies that customer satisfaction is highly determined by the way in which their contact with the organization providing the service takes place, the operationalization of satisfaction being made by the concept of “contact/meeting satisfaction” – the satisfaction of contacts established by the customer with the organization, by its employees, in the process of service offering and reception. otherwise, according to the model they suggest, general satisfaction and contact/meeting satisfaction are two distinct concepts, which together determine service quality. (duffy and ketchand, 1998) other interesting theories (approaches), applicable in the field of providing public services, regarding the factors that can determine customer satisfaction are those in which general customer satisfaction is regarded either as being influenced by: the managerial style and the managerial team as well as by the company policy (madill et al., 2002), or in which the content/discontent state concerning the customer’s life (together with the service quality) is the determinant factor for the general service satisfaction (duffy and ketchand, 1998), and service satisfaction depends on certain immaterialintangible factors, as for example: the satisfaction of the patients in a hospital determinately depend on immaterial-intangible factors, as: doctors’ professionalism, professional skills and knowledge (sharon et al., 1998). however, keeping in mind the existence of obvious relationships between service quality and customer satisfaction, a large number of studies in the matter have a slightly different approach as to those mentioned above, in the sense that, although they see customer satisfaction as a multidimensional concept, the factors/dimensions according to which one can operationalize this concept are the same as in the case of service/product quality measuring. some researchers introduce the term “quality dimensions” in a tight relation with customer satisfaction, “quality dimensions” being the dimensions that characterize a product/service from the point of view of satisfying the customers’ demands, dimensions that are at the basis of creating an opinion about the product/service and that lead to the occurrence of the satisfaction phenomenon. in this respect, bitner and hubert (1994) stated that servqual can be seen from the perspective of two situations: (1) as an tool that measures the level of service quality within a company – situation in which servqual can be considered as a good predictor of service quality and (2) in the situation in which servqual is seen as a measure of the customer-company multiple experience function, situation in which, it can be considered a good predictor of general satisfaction. also, g.s. sureshchandar, c.ranjendran and r.n. anantharaman (2002a; 2002b) in their studies concerning the relationship between service quality and customer satisfaction, operationalize the concept of customer satisfaction according to the same dimensions, according to which they operationalize the concept of service quality. (table i). 130 iv. the relationship between service quality and customer satisfaction a) methodology this study starts from the premise that: customer satisfaction and quality are operationalized according to the following dimensionsfactors (table ii): no. dimensions factors 1 systematization of service delivery (f1+f2+f3) (1) the duration of obtaining a permit. (f1) (2) the number of documents necessary to obtain the permit.(f2) (3) the procedure (ease, complexity of the procedure) of obtaining the permit .(f3) 2 the human element in service delivery (f4+f5+f6) (1) the staff’s attitude (politeness, courtesy).(f4) (2) the professional training level of the staff .(f5) (3) promptness in the assistance granted to customers.(f6) 3 tangible (material) aspects of product delivery (f7+f8+f9) (1) environment conditions.(f7) (2) volume and variety of materials: guidance, information and documentation .(f8) (3) quality of guidance, information and documentation materials. (f9) 4 social responsibility (f10+f11+f12) (1) fairness of the treatment to which the economic agents are submitted (f10) (2) corruption of the staff.(f11) (3) responsibility towards the citizens – the employees’ awareness of the fact that they work for the citizens (f12) at the same time, one has to mention that the inquiry was carried out via the questionnaire and for this study two sets of questions are relevant, that for the answers uses the continuous scale of 10, each set of questions being meant to investigate and measure the dimensions and the factors of operationalizing the two concepts (investigation of the dimensions and factors presented in table ii). of a total number of 320 questionnaires given to the subjects (economic agents) only a number of 270 can be considered valid for the analysis of the proposed matters, a number that covers about 83% of the entire segment of economic agents. b) hypotheses of the study in order to test the constructive difference/ similitude of the concepts: “customer satisfaction” and service quality” we formulated a set of hypotheses, presented below: (1st set of hypotheses): h1.1. – there is no significant difference between the concepts customer satisfaction” and service quality” from the point of view of dimension – “systematization of service delivery” h1.2. –there is no significant difference between the concepts customer satisfaction” and service quality” from the point of view of dimension – “the human element of service delivery” h1.3. – there is no there is no significant difference between the concepts customer satisfaction” and service quality” from the point of view of dimension – “tangible (material) aspects of service delivery” h1.4. – there is no there is no significant difference between the concepts customer satisfaction” and service quality” from the point of view of dimension – “social responsibility” in order to test the strength of the link and relationship between service quality and customer satisfaction, we formulated a set of hypotheses, presented below (2nd set of hypotheses) h2.1. – there is no significant correlation between the concepts customer satisfaction” and service quality” from the point of view of dimension – ”systematization of service delivery” 131 h2.2. – there is no significant correlation between the concepts customer satisfaction” and service quality” from the point of view of dimension – ”the human element of service delivery” h2.3. – there is no significant correlation between the concepts customer satisfaction” and service quality” from the point of view of dimension – “tangible (material) aspects of service delivery” h2.4. – there is no there is no significant correlation between the concepts customer satisfaction” and service quality” from the point of view of dimension – “social responsibility” c) the interpretation of the resulting data thus, for testing the first set of hypotheses (1st set of hypotheses) we used the “paired t test”, test by which we checked the difference (the difference between means) between service quality and customer satisfaction from the point of view of the 12 factors that define the 4 dimensions mentioned-above: the systematized results for the 4 dimensions are presented below (table iii): no. dimension paired differences mean standard deviation “t” value 1 systematization of service delivery (f1+f2+f3) ,904 3,009 4,74* 2 the human element in service delivery (f4+f5+f6) ,652 2,149 4,79* 3 tangible (material) aspects of service delivery (f7+f8+f9) 1,27 3,586 5,62* 4 social responsibility (f10+f11+f12) ,728 2,387 4,82* remark: * results are significant at p<0.05 the above-mentioned results highlight the fact that customer satisfaction and service quality significantly vary from the point of view of the four dimensions. also, the results of testing the first set of hypotheses (h1.1.-h1.12) totally refute the hypotheses of this set of hypotheses, underlining the fact that: customer satisfaction and service quality are two distinct concepts as conceptual constructions, concepts, which from the customers’ point of view appear as distinct concepts. in order to test the second set of hypotheses (2nd set of hypotheses: h2.1-h2.2) we turned to the calculus of correlation between customer satisfaction and service quality regarding the 12 factors, and the four-operationalization dimensions, respectively. the correlation results between the dimensions are systematized and presented below (table iv) dimension correlation 1 systematization of service delivery 0,805* 2 the human element in service delivery 0,812* 3 tangible (material) aspects of service delivery 0,793* 4 social responsibility remark: * results are significant at p<0.05 0,788* the correlation coefficients between the two concepts are rather high (keeping in mind the distinctiveness of the two concepts), fact that demonstrates that between service quality and customer satisfaction there is a rather important relationship. in order to further illustrate the relationship between the two concepts, we resorted to crosstabs. in this sense we used the transformation of measurement scales both regarding service quality and customer satisfaction, in the sense that the above-mentioned data were transformed from a continuous 132 measurement scale of 10 into an ordinal measurement scale with three hierarchical levels. (1 = low, 2 = medium, 3 = high) the result of the crosstabs (tables: v-viii) provide important information concerning the degree of matching / agreement between the ordinal levels of the answers (degrees of association among ordinal levels: 1 = low, 2 = medium, 3 = high). thus, we wished to emphasize, for each dimension/factor separately, the percentage of answers that grant the same ordinal level both for service quality and for customer satisfaction, and the percentage of answers that gave totally different levels for quality in relationship with customer satisfaction. table v satisfaction referring to systematization of service delivery 1= low 2 = medium 3 = high total systematization of 1= low % of total 7,33 0,8 0,00 8,13 service delivery 2= medium % of total 1,2 39,06 7,73 47,99 3= high % of total 1,2 11,62 31,06 43,88 total % of total 9,73 51,48 38,79 100 table vi satisfaction referring to systematization of service delivery 1= low 2 = medium 3 = high total the human element 1= low % of total 1,47 0,15 0,00 1,62 in service delivery 2= medium % of total 0,00 20,8 3,4 24,2 3= high % of total 0,27 6,91 67,00 74,18 total % of total 1,74 27,86 70,7 100 table vii satisfaction referring to systematization of service delivery 1= low 2 = medium 3 = high total tangible (material) 1= low % of total 13,86 1,6 0.95 16,41 aspects of service 2= medium % of total 3,4 35,73 3,06 42,19 delivery 3= high % of total 2 14,4 25 41,4 total % of total 19,36 51,73 9,67 100 table viii satisfaction referring to systematization of service delivery 1= low 2 = medium 3 = high total social 1= low % of total 4,2 0,2 0,4 4,8 responsibility 2= medium % of total 0,00 20,6 4,5 25,1 3= high % of total 0,5 10 59,6 70,1 total % of total 4,7 30,8 64,5 100 for a more appropriate interpretation, the data regarding the results were centralized in accordance with the degree of matching/agreement among the ordinal levels of the answers. (table xvii) 133 no. factor the total degree of matching/agreement ( % ) the total degree of nonaccordance/disagreement ( % ) 1 systematization of service delivery 7,33 + 39,06 + 31,06 = 77,45 1,2 2 the human element in service delivery 1,47 + 20,80 + 67,00 = 89,27 0,27 3 tangible (material) aspects of service delivery 13,86 + 35,73 + 25,0 = 74,59 2,95 4 social responsibility 4,2 + 20,6 + 59,6 = 84,4 0,9 from the data centralized in table xvii, one can notice that the values referring to the total degree of matching/agreement of ordinal levels among the answers regarding service quality and customer satisfaction vary along the 12 factors of operationalization (the 4 dimensions) between the percentage limits of: 74.5-89.2%, whereas the total degree of non-accordance/disagreement of the ordinal levels of the same answers is situated within the percentage limits of: 1.2-2.95%. these data indicate the following fact: the subjects whose perception on service quality is bad have a low level of satisfaction, the subjects whose level of on service quality is medium have a medium level of satisfaction and the subjects whose perception on service quality is high have a high level of satisfaction. approximately 2/3 of the subjects have a total degree of matching/agreement of the ordinal levels, whereas the percentage of those who have a total degree of non-accordance/disagreement of the ordinal levels is extremely low (max. 2.95%). consequently, both the correlation coefficients and the result of the crosstabs calculus among the ordinal levels of the answers regarding service quality and customer satisfaction confirm the second set of hypotheses, that is to say, they confirm the fact that there is an important dependence betweenservice quality and customer satisfaction and a growth of the service quality will most probably lead to a growth in customer satisfaction. v. conclusions of the study although the majority of researches anterior to this study confirm the multidimensional character of the concepts: “service quality” and “customer satisfaction” the relationship and the link between them are not very clear. while customer satisfaction appears as o reflection of the customers’ feelings regarding the numerous contacts/meetings between customer and employee, and the experiences they had in the process of service delivery within the organization, respectively – a combination between affective and cognitive, service quality is defined at the level of the cognitive, taking on a more abstract form than customer satisfaction, being influenced both by the perception and the level of service quality itself and by the customers’ previous experiences. the results of the investigation concerning the relationship between service quality and customer satisfaction, undertaken by this study, confirm the fact that: for a part of public services service quality and customer satisfaction are two different and independent issues (as constructions) from the customers’ point of view. the results of the study also reveal the fact that, although the two concepts mentioned above can be seen separately, they are strongly correlated between themselves regarding the operationalization dimensions and/or factors (a fact proven by the relatively high correlation coefficients and the crosstabs of the ordinal levels of the answers). from the point of view of managerial implication, where clear quality standards and levels can be defined, any (manager’s or his team’s) initiative concerning the improvement of the service quality should focus both on improving the perception and the level of service quality itself and on improving customer satisfaction. 134 in exchange, in the case of organizations in the field of public services – where standards or quality levels cannot be defined or are rather difficultly observed (being influenced by different factors), customer satisfaction is an important and inevitable constituent for the improvement of service quality. references 1. athiyaman, a. 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(2002), “the relationship between service quality and customer satisfaction – a factor approach”, journal of services marketing, vol. 14, nr. 4, pp. 363-379 109 abstract this article deals with the changes that have taken place in the supilinn district in tartu, estonia due to the gentrification process. the gentrification process affects the cultural, social, economic, and physical environment of the area. people have been interested in this topic since the 1960s. nowadays, there is also reason to discuss this issue in the context of estonia and of the supilinn district. studying and understanding the processes that take place in the living environment, provides an opportunity to be more aware about them and to influence the development of these processes. this article provides an analysis of the conditions necessary for gentrification in the supilinn district, describes the process of gentrification, and tries to assess the current developmental stage of the gentrification process. cities are shaped by their people. every area has a unique look that is shaped not only by the physical environment, but also by the principles, values, and wishes of its residents. local residents influence the image of the mental and the physical space of the area. what changes has the development of the supilinn district caused in the population of the area, and how have the residents, in turn, changed the district? keywords: estonia, gentrification, urban revitalization, post-socialist, historical wooden architecture, cultural value, social diversity, supilinn. gentrification in a post-socialist town: the case of the supilinn district, tartu, estonia nele nutt mart hiob sulev nurme sirle salmistu nele nutt (corresponding author) lecturer, department of landscape architecture, tallinn university of technology, tartu college, estonia tel.: 0037-2-501.4767 e-mail: nele.nutt@ttu.ee mart hiob lecturer, department of landscape architecture, tallinn university of technology, tartu college, estonia sulev nurme lecturer, department of landscape architecture, tallinn university of technology, tartu college, estonia sirle salmistu lecturer, department of landscape architecture, tallinn university of technology, tartu college, estonia transylvanian review of administrative sciences, special issue, pp. 109-123 110 1. understanding gentrification in the urbanism literature the changing process of deprived neighborhoods into a popular and prosperous district is most often called gentrification. its role in urban processes, causes and consequences has been debated since 1960s when sociologist ruth glass invented the term (grifith, 1996; atkinson, 2004; brouillette, 2009). the term was applied to the phenomenon of upper middle class households purchasing properties in rundown working class neighborhoods. gentrification may completely change the character of a neighborhood in a short time, transforming it from a neglected district to a trendy, upscale neighborhood (grifith, 1996). research evidence suggests that gentrification has been a largely negative process resulting in the breaking-up and displacement of poorer communities (anderson et al., 2005; atkinson, 2004). other negative aspects are original residents’ displacement, loss of affordable housing and consequent homelessness (atkinson, 2000; 2004). supporters of gentrification often clash with residents resisting change. supporters are mostly private real estate development companies and government (betancur, 2002). on the positive side, the rehabilitation of the physical fabric of the housing is mentioned as well as the change of image of a neighborhood associated with renewal and further investment (atkinson, 2004). sometimes gentrification helps to avoid demolition of a historical district as new residents value the existing environment (männik, 2008). in addition, increased property values, and thereby larger tax revenues and wider span of local services are seen as positive effects of gentrification (atkinson, 2004). there is some controversy in gentrification: many new, young and professional residents are very concerned about gentrification in the neighborhood; yet new, young professional residents are a major cause of gentrification, and the older residents who are most affected by gentrification are encouraged by the new, young residents and the energy they bring to the neighborhood (koschmann and laster, 2011). often an underestimated result of gentrification is the change of the identity of a place. in the gentrification process the identity is often changed to the unrecognizable. sometimes this is caused by unprofessional planners who do not know the neighborhood and its context enough (kotval, 2005). the need to maintain place as a stable, secure and unique entity is one of the main topics discussed in this paper. both physical and sociocultural aspects of the place have to be considered. the best way for building social capital and preserving community coherence is by community participation in decision making process (crawford et al., 2008). while gentrification is perhaps better understood in the western world, it is not a common phenomenon in post-soviet countries. in estonia, it is a relatively new development, and policy makers are not necessarily ready to deal with the unintended consequences. one small neighborhood in tartu, the educational center of estonia, is a classic case of this phenomenon. the neighborhood is called supilinn, literally translated to ‘soup town’. this neighborhood makes for a good case study for two reasons. firstly, it is a changing neighborhood that is feeling the pressures of growth and gentrification. sec111 ondly, it is one of the first neighborhoods to form an organized neighborhood association, again a relatively new organizational structure in estonia. due to its professional leadership and neighborhood based membership, the supilinn neighborhood society understands the pressures and phenomena of gentrification. they strive hard for community participation and cohesiveness. while signs and concerns for gentrification are evident, the society is working actively to stem the displacement of residents and promote a common set of values. what differentiates supilinn selts and other societies is that the lifestyle in supilinn has been especially embraced. non-residents are also included as members because they care about preserving this unique community character. the president of the republic of estonia is also a member and he is a very active supporter of the concept of civil society. the residents and the society see a constant need to concentrate on urban planning topics, since supilinn faces continuing building pressure, despite the economic downturn. 2. supilinn district case study ‘i live here’ in addition to the physical conditions, the people who live there also play an important role in studying the gentrification process, and therefore, since the socioeconomic status of the people who live or used to live in the area affects the area and the developments that take place there, observations have to be made about both the people who contributed to the development of the area, and about those who currently live in the area. most of the supilinn district has been part of tartu city at least from 17th century (hiob, 2012). lea teedema (teedema, 2010), who has thoroughly studied the residents of the supilinn district in the 18th and 19th centuries, has stated that in the mid18th century landowners in the supilinn district were mostly city government members, wealthy citizens, clerics or nobles. land plots were mostly used for gardening and grazing. the owners of the land plots usually did not live there, instead, the renters did, and they were mostly non-german common people and craftsmen. during the 18th century land owners changed and by the end of the 18th century most of the landowners were commoners. the population record of 1793 indicates that about 100 male persons were counted in the supilinn district, and most of them were working class estonians. in 1807 most of the counted 250 residents were craftsmen and other workers. in the second half of the 19th century more buildings were added to the supilinn district and the number of the residents grew, especially around 1860, and also during the 1870s to 1890s. the first all-russian population census (1897) provides an overview of the professions of the area’s residents (berendsen and maiste, 1999). the residents were still mostly commoners, workers, industrial workers, and servants. there were also many students and a few factory owners, professors of the university, and other elite members (berendsen and maiste, 2012). therefore, in the 19th century it was an area of residents who were mostly commoners and had affordable cheap apartments. people with similar social background constituted the majority of the population also during the 20th century. most of the 112 historical buildings of the area that have been preserved until today can be dated back to the second half of the 19th century and the first decades of the 20th century. the most common building type of that time was a two-story wooden tenement house with one or two central staircases. most of the buildings were constructed in the 1870s to 1890s, and also at the beginning of the second decade of the 20th century (siilivask, 2012). the plans after world war i and especially since world war ii, during the soviet occupation (1944-1991), stated that the area should be demolished either partly or completely, and that a new modern district should be built in its place. the extent of demolition varied according to different plans. luckily, these developments did not take place, and, therefore, there is little need to discuss these plans or their causes in connection with this topic. however, we can remark here that, because of the status as a renewable area, no major investments were made in existing infrastructure and housing. in estonia people started to pay attention to gentrification at the end of the 1990s. those research projects dealt with the gentrification of tallinn’s old town, the kadriorg district, and some other districts (kurist, 2004). previously, two studies have been completed on gentrification in the supilinn district (männik, 2003). it has been five years since the last supilinn district project was compiled (männik, 2008). when we look back at the processes that took place in the supilinn district, we can see that the gentrification process has constantly developed (nutt et al., 2012), and it is still a topic that needs to be discussed. so far, mostly observations have been carried out (external visual observations were carried out in order to assess the state of the house restoration process1), and, in the case of the supilinn district, also in-depth interviewing was used. this particular article is based on the results of in-depth interviews and a structured questionnaire (supilinn society, 2011); these were carried out in 2011, and they allow evaluating the course and the current state of the gentrification process in the supilinn district. the survey of 2011 was conducted within the project called ‘using participatory planning methods in the supilinn thematic plan’ by supilinn society, estonian planners’ association and tartu city government, and it was financed by national foundation of civil society (küsk). the survey covered all residents in the supilinn district. there were distributed 1,152 questionnaires on paper (two in every mailbox with possibility to ask for additional exemplars). there were ca. 1,250 adult residents in supilinn according to official data. the number of returned questionnaires was 286; the youngest respondent was 16 years old and the oldest 85 years old. the majority of the respondents were between 25 and 45 years old, 59% were female and 41% male. a little more than half of the respondents had children in their household. the proportion of respondents with higher education was extraordinary high, 64%. the retired persons made up 7% and students 9%. respondents were distributed evenly over the supilinn district; there were respondents from all streets. 1 property restoration is one of the indicators of gentrification. 113 the supilinn district (hiob and nutt, 2010), which was once a slum area and was ordered to be demolished forty years ago, has now become a highly regarded residential area where housing prices compete with the city center (kruuse, 2012). however, the lack of investments combined with continuous residency has had a significant effect on the gentrification process; the group of run-down, cheap houses was perfect for the gentrification process to start. most of the contemporary area layout can be dated back to the period that preceded the demolition plans. the basic spatial development consisting almost exclusively of wooden houses took place from the 18th century until the second and the third decade of the 20th century, it was temporarily in almost a frozen state in the middle of the 20th century, and later new construction layers were added (siilivask, 2012) making up about a quarter of the total number of the buildings (hiob and nutt, 2010). among those layers are also the soviet era buildings. unfortunately, the few buildings from the earlier period (some 8.5%) have been demolished over the years. nowadays, the valid planning documents give the plot owners the right to construct new buildings that would constitute 12.8% (hiob and nutt, 2010) of the total housing stock. since the demolition plans were not put into action people continued to live in the area, and, in addition to the local (permanent) residents, people whose financial situation prohibited them from having a place in one of the nicer neighborhoods moved to the cheap apartments of the supilinn district. in addition to them, the district also housed petty criminals, homeless people without a regular income, and other disadvantaged persons. the unpopular area of 1970s and 1980s had in the last decades of soviet era until the middle of 1990s an influx of the so-called pioneers (in the context of gentrification), and their arrival had a significant influence on the area. first wave of gentrification (starting) consisted of students, musicians, poets, and artists who chose to live in the cheap and comfortless, but authentic and human scale living quarters. the members of the first wave were not numerous, but they were well-known people. while the area was run-down and considered unsafe, it was also located near the city center and the real estate prices were low. the creative movers regarded the supilinn area as perfect place to express their wish for alternative lifestyle and artistic projects. already at the end of the soviet period we dreamt about making a festival in supilinn. it seemed as an avant-garde idea not realized anywhere else in estonia before.2 the example of the pioneers was followed by young low income families with children who looked for reasonably priced housing. considering the general unpopularity of the area (in 1998 over 60% of the residents of tartu thought that the supilinn district was unsuitable for living (tartu city government, 1998)), it is likely that most of the people who arrived in the district in the mid-1990s chose the area because of their financial limitations (supilinn society, 2011), while the renewed reputation cre2 toomas kalve, photograph; interview by aliis liin in 2011. 114 ated by the pioneers made the district acceptable as a living space. as one of the residents put it: having moved from a stone house to a wooden house, there is a big difference between them that needs to be mentioned. it is an economic choice not a conscious one (supilinn society, 2011). there has been a constant growth in the popularity of the district. while a research project carried out in 2003 found that 50% of the respondents (citizens of tartu) considered the supilinn district to be an unsuitable living area, in 2008 only 25% of the respondents thought the same (tartu city government). naturally, more newcomers regarded the attractiveness of the area as an important reason in the choice of living, as the real estate still had inexpensive prices: it was a conscious choice, as the city center was the destination and the supilinn district was my first preference so i would not depend on my car (supilinn society, 2011). you can live in the city center but be surrounded by greenery (supilinn society, 2011). supilinn has a good living environment and it is well located (supilinn society, 2011). it was my dream apartment-in terms of price and quality, location, a nice street; strategically well located, the city center, the river, the wild-uncivilized greenery (supilinn society, 2011). together these newcomers are considered as the second wave of gentrification (from the middle of 1990s until the middle of 2000s). the creative first wave and the young active newcomers had similar values, and, therefore, the conditions were perfect for working together. this cooperation resulted in the creation of the area’s neighborhood society organization (supilinn society in 2002). the most active members of the society were those who have moved recently to the supilinn district (the second wave) and wanted to preserve those values that had made them appreciate the area. i go there and i know that the people from there are different, those who purposely go there are like me, the run-down thing intrigues (supilinn society, 2011). the peaceful natural environment, there were no disturbing developments, the social environment, peaceful because it is not a central traffic area (supilinn society, 2011). people with similar values quickly found common ground, came together, and began cooperating for their worldview in a more organized manner (hiob and nutt, 2012). some quicker and more visible changes started to take place in the appearance of the streets at the end of the 1990s when the real estate market became more active due to the real estate restitution. the rightful owners regained their plots and houses, and since they did not live there, they sold them to interested persons or companies dealing with real estate. at the end of the 1990s about one hundred land plots had 115 private owners (tartu city government, 1998); however, in three years the number of land plots in private ownership doubled (in 2003, 225 land plots were privatized (nutt and hiob, 2012)). this created an economic situation that favored the further progress of gentrification due to the fact that low-priced real estate was available near the city center. the economic boom, which reached its peak in the mid-2000s (2005-2008), sped up the changes that were taking place in the area. banks placed cheap loans and a general renovating and building frenzy broke loose. real estate companies benefited from building new houses and then selling them for as much profit as possible. from 1991 till 2012, 27 new houses were built in the supilinn district, which made up 8.4% of the total number of the area’s buildings (hiob and nutt, 2012). in addition to new houses, the real estate companies renovated also a number of old houses. the number of detailed plans that were approved shows that there was a demand to build more. since 1999, 36 detailed plans for supilinn have been created. during the economic boom when real estate businessmen were active in the area, supilinn society had to become increasingly more involved in the hope of preserving the things it valued. as a result of increasing pressure applied by the real estate developers, changes started to take place in the supilinn district. the run-down slum where one could take a shortcut through a hole in the fence to the local shop was regulated and fixed up. the unused wastelands characteristic to the district were increasingly turned into asphalt covered parking lots. from the middle of 2000s these changes attracted new residents with different attitudes into the area – the third wave of gentrification arrived. together with new people came different values that were evident in locked front doors and remote controlled gates. old sheds and washing kitchens that had fallen out of use were considered unnecessary and demolished. the third wave of gentrifiers wished to reshape the area according to their desires and needs in sharp contrast with the previous newcomers who valued the area as it was. hence, it is not surprising that conflicts arose between the two groups with different values. the earlier residents, who had moved to the area because they appreciated the casual milieu, suddenly found themselves opposed to the new wave of residents who would rather see their neighborhood squeaky clean than casually unkempt. previously supilinn society had been opposed to the city government decisions, but now, because of the arrival of the third wave, there was also an internal opposition. supilinn society advocated for slowing down the gentrification process by preferring cobble stone paving of the streets instead of smooth asphalt, promoting restrictions on new houses, and opposing new streets that would divide up city blocks. despite the fact that in 2001, ignoring the residents’ strong opposition of that time, the city government approved a supilinn district general plan that promoted radical densification of housing by splitting up city blocks with new streets, supilinn society has managed to win popular support both among the residents and in city government for a more restricted development plan. 116 3. the current state of the gentrification process we can conclude that in the supilinn district, the necessary preconditions for the gentrification process to start and to develop further has existed and still exist. supilinn was an old wooden house district that was in a relatively poor state, but favorably located in relation to the city of tartu; it was right next to the city center, but also bordering to the countryside along the river emajõgi. it was a district where the difference between real estate prices was noticeable, and the population was made up of poorer people, and a contingent of the creative occupations and university students, but little by little residents with different values started to arrive. today, supilinn is a highly valued residential area, and now the third wave of gentrifiers has arrived. there used to be more rentals, rockers, bohemians, students; today there is the rich crowd (supilinn society, 2011). in order to get a better understanding of the current residents of the supilinn district, their wishes and their vision for the future, two opinion polls were carried out among the residents over the last couple of years – in 2010 (hiob and nutt, 2010) and 2011 (supilinn society, 2011). in the current article we use the results of the last survey from 2011. the results of the opinion poll indicated that the residents highly value the living environment of the area. almost all the residents of supilinn (99% of the respondents3) like living in the supilinn district, and most of the respondents (86%) would like to continue living in supilinn during the next decade (supilinn society, 2011). however, even more surprisingly the residents show a strong sense of regional identity. 96% as figure 1: answers to the question: how important are for you topics concerning new buildings? source: opinion poll in the ‘using participatory planning methods in the supilinn thematic plan’, 2011 3 yes, i definitely like (80%); i quite like (19%). 117 of all respondents4 identified themselves as citizens of supilinn. this shows that the residents, no matter how long they have been living in the area, consider it to be their own. the area was highly liked by the long-time residents as well as by those who had just moved there; nevertheless, in regard to several issues their values turned out to be quite different. the gentrification tendency is most clear when the respondents evaluate their financial situation – 40% of the people who moved to the area up to 15 years ago considered their financial position very good and good, and only 20% of those who lived there for 16 years or more rated it very good and good. the differences between different newcomers appear when asking about the future development of the district. in this case, the second wave of gentrifiers (who moved into the area approximately in the period 1995-2005) distinguishes themselves as most concerned with the outlook of new buildings – more than half declared the appearance of new buildings as very important, while only a third of the longer-term residents and a quarter of the newer residents had the same opinion. the second wave is the only group where at least half of the people are satisfied with the pace of changes as they have taken place in last decades, and they are against faster changes, while older and newer residents are less opposed to faster changes. the arrival of the third wave is indicated by the fact that the financial security of the latest newcomers is the highest – about 50% of the respondents who have recently moved to the area (in the last year) claim that their family’s financial situation is very good or good. another tendency detected in the survey is that residents of the old houses (built until 1940) value higher the existing historical milieu and favor changes that respect the traditional ways. residents of the old buildings consider the integration of the new buildings into the environment more important than the residents of the new buildings. using traditional wooden constructions is considered to be important by 60% of all the respondents. however, when making observations about the opinions of the residents of the new and the old buildings separately, we can see that less than 40% of the residents of the new buildings are in favor of using full wooden constructions, but 70% of the residents of the old buildings consider it important. here we see also a connection with different gentrifiers as three quarters of the second wave people have chosen to live in older houses, while 60% of the longer-term and newer residents live in older houses. on the other hand, building new houses is more favored by people who themselves live in new houses. 70% of them think that new houses could be built in the supilinn district, unlike the residents of older (built before 1940) buildings. out of them, only a bit more than 40% are in favor of building new houses and more than 15% of them are definitely against that kind of development. there is also an important dif4 to some extent, i feel like a citizen of supilinn (33%); i definitely feel like a citizen of supilinn (64%). 118 ference in their attitudes towards the pace of change. residents of the new buildings (built in 2001 or later) are in favor of faster changes (more than 30% of the respondents wish that changes would take place faster than before); however, residents of the old buildings (built before 1918) are more in favor of slower changes (30% of the respondents wish that changes would take place more slowly than before). social interaction with other residents of supilinn also has to do with the type of house a person lives in. residents of the new buildings interact less than the residents of the old houses. as expected, this trend is also evident in the context of the time period a person has lived in the area – people who have lived there longer interact more. here we see that building new houses is a self-strengthening development that would result in arriving of people who prefer larger alterations. therefore, the protection of old houses is important not only for the built up environment but also for the social composition of the neighborhood. the different values of residents arrived in different periods is also exemplified in the answers to a question like ‘do children play in the streets?’ – more than a third of people who arrived in the supilinn district between 1995 and 2005 agree completely with that claim, while less than a quarter of more recent newcomers and a little more than 20% of most experienced residents agreed. the second wave people notice better the social and communal activities as playing children in the streets appears to be. there is a difference between the old and the new residents in general in the context of using street space. fewer new residents (70%) think that it is acceptable for children to play in the streets, but most of the residents (85%) who moved there a long time ago think that the children should use the streets for playing. the current stage of the gentrification process can also be evaluated on the basis of age-specific makeup of the area. the gender makeup of the area is similar to the rest of the city of tartu – a few more women live in the area (54%) in comparison with men (46%). however, the age structure of the area’s population differs from the age structure of the total population of estonia and the city of tartu. in comparison with other districts of tartu, there are more small children in supilinn (children aged 0-6; 3.8 % more than tartu average) and less elderly people (7.2% are at least 65 years old; that is 7.5% less than the tartu city average (tartu city government)). this is also approximately 17% (statistics estonia) lower in comparison with the average of the total population of estonia. when looking at the population’s age structure change over the past five years, it can be said that the population has become younger (figure 2 and figure 3) (tartu city government); this indicates that gentrification is progressing. it can be concluded that in the supilinn district three distinct groups of gentrifiers exist. the results of the opinion poll indicate the arrival of the third wave. the survey shows that the people who have moved to the area over the past few years have a different vision for the area and its future than the earlier residents (original inhabitants as well as the first and the second wave). 119 figure 2 and figure 3: population’s age structure in the supilinn district and in the city of tartu in 2005-2011 source: annual statistical overview of tartu from 2005 through 2011 4. summary when we look at the aspects that contribute to gentrification in the supilinn district, we see financial interests, which are evident in the differences between the potential and actual real estate prices and consumer interests, which are evident in the popularity of the supilinn district as a residential area. there are plots that are located close to the city center and are potentially worth much more than their current prices, and people are interested in moving to the area. investing in the area near the city center is financially rewarding because of the difference in real estate prices. therefore, the conditions necessary for the gentrification process continue to exist in the supilinn district. there are two possible patterns of further development. the first possibility is that gentrification process is carried out at its full extent – the social and architectural multiplicity will be replaced by a homogenous, affluent population and new modern expensive housing and well developed streets. after a while, the district will become again less attractive as its charm and its reputation as a highly appreciated elite district will deteriorate. as the real estate prices will decline, the population will be replaced by residents with lower incomes and lower social status. only the people, who, because of their financial situation, cannot afford anything but inexpensive dwellings, will move into the unpopular area. when taking into account the experiences elsewhere, the following developments could, after a while, lead to a new beginning of the gentrification process. the second opportunity is that the gentrification process is inhibited, and social and cultural diversity is preserved. there are several possibilities for promoting the second scenario. the most obvious ones are to avoid demolishing old houses, there among sheds, and to minimize the new constructions. moreover, all changes in the environment should take place as smoothly as possible to let the residents get used to the alternations, and thereby not to spoil their familiar surroundings. for preserving the traditional milieu the new constructions should be subordinated to the old ones – the new houses should be smaller in size, follow the old houses’ form, and painted in modest colors, as well as the street pavement should use the traditional materials like cobble stone. 120 in addition to purely construction restrictions, there are also other possibilities to promote social diversity. there should be apartments for families with different needs – single people, couples and couples with children, households with car as well as without car, expensive and non-expensive, for self-owning and for rental etc. city government may keep the social diversity in the district by owning apartments for social housing for disadvantaged people. if all the named measures are consciously taken, it is possible that the social and architectural mix will be preserved in the supilinn district for coming decades and possibly longer. in other parts of the world, gentrification began in the 1960s, but in estonia it started in the last decades of soviet occupation that ended in 1991. in the areas that were advantageously located near the city center and had inexpensive run-down buildings, the conditions were set for gentrification to occur. the real estate boom, which resulted from the country’s economic development, also had an enhancing effect on this process. in many districts in estonia (supilinn, karlova, kalamaja, uus maailm, rääma, kassisaba, and pelgulinn) the necessary economic conditions for gentrification existed. gentrification causes the intensity of land use to increase (plots are split and new houses are built), and run-down areas are fixed up, and these can be seen as positive effects. however, since there is a flip side to every coin, too much reorganization can significantly alter the milieu, and the valued environment may practically disappear. investments that are made in areas with valuable milieus are often seen as positive, since they help to save the cultural heritage from destruction. however, modification that borders destruction is actually inevitable, because total renovation is also a form of destruction. a positive effect is the raised awareness among the residents. this becomes evident as more frequently old, original windows are restored, and wooden rather than plastic windows are installed. the improved financial situation of the residents makes it possible to use high-quality wood, instead of cheap plastic. on the other hand, a good financial situation also allows one to replace things that actually do not need replacing when making repairs. moreover, a good financial situation also creates the need for more amenities and conveniences such as more parking spaces and street paving, for better traffic conditions. the negative effects are evident in the architecture of the new buildings. the new houses are not adapted to the area, they are characterless, and are not connected to the supilinn district. this case study, while set in estonia, is not unique to the country. many post-soviet countries and even other countries where real estate prices have skyrocketed in the last decade, face similar circumstances. while the speculators and real estate developers stand to make significant profits, the existing area residents tend to lose their cohesive settlement. too often, the existing infrastructure, such as roads, water and sewer capacity, cannot keep up with the accelerated rate of growth. old, comfortable values and habits are destroyed as new development forces changes in infrastructure and development patterns. the pioneers, who settled in the neighborhood due to necessity and affordability, and made great efforts to make the area livable and characteristic to 121 their own values and community preferences, see the influx of new generations who appreciate the cohesiveness and value. this phase is in fact necessarily to breathe life into old places. however, sheer speculation and development based on proximity to areas of greater market demand could destroy the value of these special places. this case study highlights two major lessons for other similar communities. the first is to understand, acknowledge and prepare to notice gentrification and change as it is happening in the area. there is much that can be done before the neighborhood is changed beyond recognition. the second is the value of neighborhood organization and participation. the area residents need to come together as a unified voice to avoid piecemeal changes to development patterns and community values. this unified voice, or neighborhood association, has the power to change development policy at a higher level. furthermore, a unified neighborhood that understands its values, is able to articulate them and create solutions to maintain and enhance them are seen as proactive players. when community character and values are at stake, market forces alone should not determine the future. references: 1. amster, r., ‘patterns of exclusion: sanitizing space, criminalizing homelessness’, 2003, social justice, vol. 30, no. 1, pp. 195-221. 2. anderson, a., platt, j., skelton, i., butler, g., chorney, p., funk, e. and grant, b., ‘social investment in the inner city: community and capital in west broadway, winnipeg’, 2005, canadian journal of urban research, vol. 14, no. 1, pp. 8-31. 3. atkinson, r., ‘the evidence on the impact of gentrification: new lessons for the urban renaissance?’, 2004, european journal of housing policy, vol. 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(eds.), gentrification of the city, boston: allen and unwin, 1986, pp. 15-34. 31. supilinn society, ‘using participatory planning methods in the supilinn thematic plan’, 2011. 123 32. tartu city government, ‘statistical overview of tartu, 1999, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009 and 2010’, tartu, estonia: tartu city government. 33. tartu city government, ‘tartu and the citizens of tartu’, 1998, tartu, estonia: tartu city government. 34. teedema, l., ‘supilinna asustuse kujunemine 1704-1899’, [the development of the settlement in supilinn from 1704 to 1899], university of tartu, master thesis, 2010. 35. the supilinn district general plan, 2001. untitled 172 abstract the goal of this study consist of identifying and testing in operational terms the concept of city image in the decision-making processes, both as far as the urban planning and the future policies of local and regional development are concerned or in the management of public spaces. it is well-known the fact that the simple series of statistical data and the models based upon them do not sketch out a complete image regarding the urban reality, the perception of habitants at a micro-scale level about habituation conditions, illustrated by the city image, presenting itself as a barometer of the dysfunctionalities encountered in the city. thus, the practical implications of this concept based on a new vision in the philosophy of the management of urban spaces are likely to be interesting enough. using this tool in the policies and in the activity of public administration, in urbanism etc., complementarily to statistical analyses, should accompany any type of local development policy in order to enhance life quality and to transmit a certain life style, well appreciated by the residents which should bestow the city distinctiveness and a particular status in the regional and national hierarchy. the conceptual scheme of this study is based on three elements: theory (what does the city image represent?), method (how could we map at a micro-scale level?), case study (which are the results and the tests of the applicability in the city of ploieşti). the city image and the local public administration: a working tool in urban planning marius cristian neacşu marius cristian neacşu lecturer, faculty of international business and economics, academy of economic studies, bucharest, romania tel.: 004-021-3191900 (interior 145) email: marius.neacsu@biblioteca.ase.ro transylvanian review of administrative sciences, 27e/2009 pp. 172-188 173 1. introduction the city, seductive from a scientific point of view, has known, with the passing of time, different and diverse approaches in the academic community, according to the complexity of its concerns and in perfect correspondence with the scientific trend of the moment and the state of knowledge at the time. thus, the attempt to understand the urban metabolism and its dynamic so as to maximally optimise the functionality of urban spaces was almost naturally followed by the mental, perceptive dimension. a dilemma was born: the urban “characters” are “prisoners of their own habitat” or are they its “beneficiaries”, the city having to provide, besides habitual security and identity, satisfaction, significations, meaning? as such, there is a shift from urban systemology to urban phenomenology (figure 1), and the conclusion which is settled is obvious: from the point of view of scientific analysis, the city possesses a character thoroughly interdisciplinary. cityurban system urban image feed-backgeographic determinism geographic position natural setting resources urban flows: sustance matter t on informa i urban elements: urban spaces tion human activities popula urban : urban marketingbranding urban : design urban forms visual personalityurban psychology: significance, meaning urban identity u r b a n sp a c e o r g a n is a t io n u r b a n im a g e a n d id e n t ity figure 1: city paradigm in fact, the urban space paradigm, situated between objective existence and social construct, between real city and mental city, between the city as a machine/system and the city as an image, between the city as a “function” and the city as “text” with meanings and significations occurs as a result of the encounter of two trends of thinking and ways of perceiving the urban space: the modernist one, appeared as a reply to the industrial city of the coal century (the 19th century), in which the city was a product of rationality, with a logical and hierarchical organisation and the postmodernist one, according to which the city is an incomprehensible complex, a result of the manifestation of triple spatiality: perceived space (the objective one, of material shapes), conceived space (mental) and lived space – a hybrid space of direct experience, in which the first two are simultaneously transposed; it is a social space, of physical and imagine-symbol representations (lefebvre, 1974; soja, 1996). for the american urban planner kevin lynch, the city should be like a „text” to be deciphered, decrypted by the inhabitants or by simple spectators of the respective urban life. thus, the city should be „legible” (lynch, 1960, pp. 1-2). if it is „legible” it is decoded and correctly perceived by people, meaning it carries significations and 174 promotes a sense of place – genius loci (jive’n and larkham, 2003, pp. 67-81). if the urban elements and shapes are loaded with significations, the city has an identity. thus, urban shapes and elements create certain connexions and significations in the mind of urban actors. the physical city is doubled by the mental city (city image). the mental city shapes or should indicate the dysfunctions of the physical city. people are no longer “prisoners” of a predefined urban model, totally determined, but manifest a repulsive attitude towards certain elements or shapes that appear in the urban landscape. inhabitants thus become an active element in the (re)configuration and (re)shaping of urban spaces architecture and significations. thus, the policies of local development, the management of public spaces, urbanism and other disciplines and professions which have as a study and activity object the city, can no longer exclusively rely on the objectivity of statistical analyses that offer an analytical image at a macro level, but which do not bring to light the detailed dysfunctionality, connected for example to the fact that the inhabitants of the city have a certain attitude and a different spatial behaviour towards particular places (neighbourhoods, streets etc.) – some of them are seen as attractive areas while towards others they show repulsiveness or neutral attitudes. in this context, the city image could become a communicational platform, an interface by means of which one can mediate the relationship between territorial reality, specialists (theoreticians and professionals), local authorities (political decision) and that urban community and on the other hand, a working tool in elaborating the policies of local development. 2. the city image – operational tool in the activities of the local administration for understanding why the city image can be an operational instrument in activities specific to the local public administration we must first briefly present the concept and also several directions in which the local public administration can use it in an applied manner. the interpretative analysis of the literature for achieving the current study has set off at least three dimensions for pursuing the concept of city image: the sphere of mental image and related concepts (tolman, 1948; kosslyn, 1980; golledge, 1977, montello, 1989; tverski, 1993, pylyshyn, 2002), the city image properly (lynch, 1960; jacobs, 1961; downs and stea, 1973; nasar, 2001) and as an urban marketing technique or branding (ashworth, 1993, 2005; kotler et al., 2002; metaxas, 2002; kavaratzis, 2004; deffner and liouris, 2005). the current study will focus on the concept of city image, as a standalone theoretical notion, and through its interpretative analysis, by presenting its essential characteristics we will highlight the major role it could play in stimulating the decision processes at an administrative level. to this end, we consider it well timed to present its main characteristics. generally speaking, the image of a place has a large connotation representing the visual impact, as a whole, of a place or the general impression people have about a 175 place or simply, qualitative characteristics (positive or negative) that the name of a place evokes (cowan, 2005, p. 192). if visual impact is determined by the perceptible attributes which accompany a place (everything that can be seen in the ensemble of conditions which manifest, invisibly at first, behind the visual personality of that place), the other meanings attributed by literature (urban marketing and branding) are more related to the image as built information about a specific place. the concept of city image the „father” of this concept is considered to be the american town-planner kevin andrew lynch, who cements the notion of city image both terminologically and conceptually, in 1960, in his fundamental work: the image of the city1. in relation with the concept analysed, lynch introduces several notions regarding the perception of urban space: legibility and imageability. the first notion expresses the degree of clarity of the urban landscape, meaning the easiness with which any part of the city can be identified and its image organised into a coherent model. „legibility” defines the degree in which a city is capable of generating a lesser or broader visual quality for the receiver subject2. on the city’s legibility degree depends whether or not its image is positive or negative, a perception that, through its dimension, forms attitudes towards that town. it is natural that a city with a good, positive image will always attract investors, tourists and new residents in detriment of a city with a less favourable image. also, during the search process of the best way between two places in the town, the image of urban space – the mental image generalised at an individual level, a product of both the immediate perception and past memorised experiences, becomes a reliable instrument in interpreting and organising information that can be used in making a decision. the image of the 1 by using three cities as case studies (research done over the course of five years) – boston, jersey city and los angeles, lynch brings into discussion the way the inhabitants perceive their own city during their daily travels through it, how they organise this information at a mental level (building cognitive/ mental maps) and how these constructs influence their bearing, decision making and behaviour. for the american townplanner “each inhabitant identifies with a certain part of the city in which he lives and his image of that place is loaded with significances and meanings” (lynch, 1960, p. 7). the perception of a place is complex and is not the simple result of direct, visual or any other sensory observation, but a memorised construct, permanently updated with new information which retains the memory of past experiences and carries emotions, sensations, meaning, significance, and identity. 2 in that direction lynch associates urban space to a coherent and grammatically and literary correct text which, through its coherency and logic, is able to produce a strong feeling to the reader. residents or passer-by’s must be able to similarly and easily “read” the city, as a result of the current mode of organisation and planning, which means that understanding and organising information, orienting through the urban landscape, are easy. the marks, strong visual elements, are easily recognisable and at a mental level symbols are assimilated after a coherent cognitive structure. 176 place hereby works as guide of the decision making behaviour. a city or a place well decrypted and understood by its inhabitants leads to a very clear image. a clear image of the place dictated by a systematised organisation of the urban environment and easily decipherable can be a frame of reference in organising the activity or cognition, a starting point in receiving and accumulating future information, contributing to the individual development. urban legibility also carries an important social role through the powerful collective image it can generate, thus contributing to the development of an identity feeling, of membership to a certain place, guaranteeing a type of emotional security. a good image of the external environment can stimulate a positive attitude and a harmonic behaviour in the same way as the feeling of disorientation, determined by an undecipherable or hard to decipher urban landscape, strengthens the sensation of fear. the second notion, imageability, refers to a city’s quality to induce the perception of a powerful image to an external observer. to this quality contributes not only the visual perspective of the urban landscape, but also the coherent structure and the feeling of identity that the city is able to generate. a “good place” is the one that can be mind mapped by individuals, with an easy to memorise spatial organisation. building the city image being a cognitive process, creating a city image implies the existence of two entities (figure 2): the city through its genetic nature, urban space confers distinctiveness (elements, urban shapes, processes and phenomena) and relations to the observer. its dynamic is permanent and can be perceived at different space-time observation scales, a dynamic which fuels a permanent change of information. receptive subject each individual that intersects with the city becomes an observer who receives information offered by the external environment by means of his own purposes and needs (which means that for the same given space, perceptions are different and personalised at an individual level), selecting it, organising it and loading it with meanings (which carry emotional states, attitudes, behaviour). at this moment, the observer has essentialized the processed information from the urban space as a mental image which updates permanently, at the same time with filtering any informative flux and which in time will reach the coherence of a mental map (“mental city”). the city image’s accuracy and coherence increases as the individual familiarises with the external environment, assigning identity and meaning to urban elements and shapes, sometimes even generating stereotypes (a resident can easily identify a gas station or an apothecary in any city). on the other hand, an element with a strong visual personality will leave its mark on the perception of space. 177 lynch (1960) also stated in his work that town-planners, as manipulators of physical shapes are directly interested in the visual impact of new forms that (re)create, morphologic modifications of the urban landscape being able to show resistance or facilitate the image creation process. figure 2: building the city image synthesizing, the city image (table 1) represents “a city level essentialized reality, filtered by a subject (directly or indirectly, active or passive, official or unofficial, unintentional or deliberate) and placed in circulation as information” (ianoş, 2004, p. 185). reality expresses life lived in that urban space, in its full complexity, with daily events and feelings, emotions and sensations. this reality is essentialized at a dwelled space level (the interaction between physical space, of direct experience and that of mental perception, of emotions imposed by it). the subject is both the individual and the human group, and based on their provenance, they can be: residents (who perceive the city directly, every day) and non-residents (who perceive the city directly, through limited experiences or indirectly, through means of oral communication, mass-media, publications, articles or books etc.). the information, incredibly complex as construction and contents, is also synthesised to the impact generated by the city’s visual personality (a result of the balance between urban space functionality and dysfunctionality, between a planned way of organisation and terrain usage and the city’s evolution as such), to the general impression that people have towards a place, which most of the time expresses positive or negative qualities that the name of the place invokes at a mental and sensory level. thus, the city image can be considered an integrating interface that mediates the conflict between urban space perceptions and acceptations, adequate to just as many urban actors, that participate directly or indirectly, actively or passively, officially or unofficially, deliberately or unconsciously to building the city image. 178 table 1: types of city images, attitudes, behaviours based on their genesis urban actors type of perception city image types of mental spaces (city, neighbourhoods) urban attitude/ behaviour residents • direct • positive • neutral • negative • attractive • neutral • repulsive • topophilia • topoindiference • topophobia non-residents • direct, comparative (ex temporary residents) • partially direct (commuters, occasional visitors) • indirect source: adaptation after ianoş, 2004, p. 186. the city image and its role in urban planning and management in the ratio between the two notions: city image – micro scale urban planning, the first one is an instrument used to identify dysfunctionalities and discontinuities in the relation individual/ urban community – urban space, while the second one refers to the complex process of functionally streamlining and optimising space and its characteristics, an expression of urban management and development policies. thus, city image, by shaping the perception of the city/neighbourhood at a mental level, constitutes an urban habitat “barometer”, emphasising the “mistakes” in understanding urban space, in fact, dysfunctionalities in the organising manner at that time. the relation with space shapes attitudes and human behaviours both at an individual level and also at a social group or community level. zoning and mapping them leads to the individualisation of associated mental spaces, respectively: repulsive, neutral, attractive. as such, the applicative valences of the city image concept incarnate through the fact that it can become an instrument for designing the future model of space organisation, an instrument which will have to accompany the development policies of such a complex territorial system as the city. any urban space or component of it is characterised by certain strengths and weaknesses, which at an analytical – theoretical level, cannot be the exclusive privilege of statistical data or individual/group perceptions, but a balanced combination between the quasi-objective reality of figures tables and its perception in the minds or urban residents, who, through experience and meanings associated to the places, fill the picture of urban reality. in that direction, the city image can become “a valuable instrument in identifying strengths (opportunities) or weaknesses” that a city or urban space confer (ianoş, 2004, p. 189). the same author states that exaggerating the two extremes can lead to two types of city image: an “ideal” one and an “inhibiting” one, a mediation between the two leading to a “constructive image”, as operable as possible in the decision making process (figure 3). 179 opportunities space urban perception vulnerabilities city image preferential image evaluative image overvalued debased decision overvaluation undervaluation figure 3: city image, an instrument in the decision making process (adaptation after ianoş, 2004, p. 190) 3. methodological aspects theoretical substantiation implied, as a method of research, using interpretative analysis in scanning field literature. this route was individualised by underlining the main markers in developing “the city image theory”, basically, the development of notions such as: urban space, urban space perception – mental image, mental map. the city of ploiesti has been chosen as a case study, considering the mapping of the city image at a micro-scale level (city and neighbourhood) and the forecasting of some future scripts of evolution through the integration of the city image obtained in the elaboration of these ones. mapping the city image elements and, in general, the perception of residents (endogenous) and non-residents (exogenous) upon the living conditions of ploieşti, but also the general impression towards the city has been done using the questionnaire method. thus, a survey was done, through a questionnaire, in two temporal sequences and two different ways: – in 2001, through direct approach, on the street, stochastic (350 interviewees, 36 have refused the interview, the rate of representativeness being 89,7 %) and – in 2004-2006, by using a web questionnaire unfolded over the internet (200 interviewees). the results of the two researches are similar, but we can still enumerate a few limitations of the obtained results such as: the comparison between the two moments is relative taking into account the different techniques of sampling; samples are experimental; one being interested by the tendency and not by their generalisation. the application of this questionnaire aimed at, in essence, shaping the image evoked at a mental level by the city of ploieşti, also resulting a few other secondary objectives: the people’s perception of the urban habitat (living conditions), the correlations that can be established between the perception of the city and different independent variables selected in the questionnaire’s header – sex, age, studies, civil status, for how long has the subject been living in the neighbourhood etc., identifying new relations of causality between the perception of different living and dwelling conditions in the city (urban habitat) and the general image of the city, shaping new territorial disparities and mapping a new mental map. 180 regarding the mode of organisation and management of the urban space, the diagnostic analysis of the current model was followed by the use of the swot analysis, through which, thanks to the main factors that condition the city’s evolution, identified and oriented into the four categories (favourability, vulnerability, opportunity and risk), have been identified four possible (theoretical) evolution scenarios: 1. sustained development; 2. development imprinted by a high potential, but in a risky environment; 3. development influenced by a favourable environment, but with a low potential; and 4. the regress situation, of impossible development. the real evolution of the city will be within these limits. this method has been chosen for forecasting a future evolution model of the urban system and a future organisation model of the urban space. 4. case study: town of ploieşti. integrating the city image into urban space management centralising the questionnaire’s results, applied in the two temporal sequences, has led to the shaping of the following results: • the direct relation between the perception of living conditions and the mental image, based on the observation scale, ambiguity (corresponding to a diffuse, unclear image) rising at the same time with the shrinking of the observation scale (from city level to neighbourhood and then street); • shaping attractive, indifferent and repulsive areas in the town of ploieşti. thus, the following have been individualised (figure 4): attractive areas repulsive areas i. central area; ii. republicii boulevard; iii. independenţei boulevard. i. bereasca; ii. mimiu; iii. vest i. + + + _ _ _ x x x x x x x x x + _ xcity center atractive areas neutral areas repulsive areas x ii ii iii 1 2 3 figure 4: the chorematic representation of the image of ploieşti, as a result of applied questionnaires (topophilias şi topophobias) 181 the central area represents “the heart of the city” towards which all the roads converge, being best known for its functionality – a space for shopping, financialbanking services, administration (the city hall and local and county councils can be found here), culture (the palace of culture which holds the largest public library in ploieşti – nicolae iorga, the toma caragiu theatre, the philharmonic, the national colleges i.l. caragiale and mihai viteazul, the museum of clocks, oil etc.) and is also, in a smaller degree, a residential area. the second and third places in the attractive areas hierarchy, converge in the inhabitants’ perception because of the presence of green space, independenţei boulevard surnamed the “chestnut boulevard” (in weekends the road traffic is forbidden) and the mihai viteazul park (republicii boulevard), with recreational valences, to which we can add the semi-commercial function of republicii boulevard. important to add is also the fact that the two boulevards represent the city’s vital axis, oriented from north to south, on which there is an intense traffic both towards braşov (north), but also towards bucureşti (south). as for the neighbourhoods that are mentally identified as negative, generating repulsive attitudes and topophobic urban behaviours (bereasca, mimiu and vest i), the three areas are located in the eastern, southern and western outskirts of the city, beyond the “limits” that separate them from the city’s body – dâmbu stream and the railroad (east), the railroad and industrial platform (south) and the west road (west), outskirts situated in proximity of the industrial platforms, true “colonies” in which the problems of infrastructure and urban services (street quality, cleanliness state, public lighting and security etc.) are numerous. also, it is noticed a distortion of perception regarding these areas, the main reason being ethnical segregation (the presence of rroma communities in the area of these neighbourhoods). using city image in urban space management; swot analysis with over 230 000 inhabitants and with an economic profile dominated by the tertiary sector and industry, the town of ploieşti imposes itself in the territorial relations as a converging centre of human and material fluxes (the ratio of the hypertrophy index being 3/1 up against the second town of the county, câmpina, also concentrating half of the economic agents present in the county, in comparison with câmpina, which concentrates only 8%) and also as an information flux diffusion centre. applying the swot analysis with the purpose of identifying several possible evolution scenarios and forecasting future organisation and urban space management models for the town of ploieşti has revealed the following situations (figure 5): scenario 1 is the ideal future development situation, resulting from the perfect convergence of the strengths it has and the capitalisation of all the opportunities, together with the full minimisation of the risks and the elimination or change of the vulnerabilities’ tendency to slow the settlement’s economic and human growth. as strengths, the town of ploieşti mainly “counts on” its geographical position. it is a location that enables intra and extra-carpathian transit (between transylvania and 182 muntenia and from here on towards the danube or the black sea), transit on prahova’s valley, with profound historical roots, a corridor that is a part of the urban-industrial axis bucharest – ploieşti – braşov, but also a segment of the paneuropean communication corridors ten iv (berlin – budapest – bucharest – sofia – istanbul), heading from west to east and ix (helsinki – sankt petersburg – chişinău – bucharest – plovdiv), heading from north to south and in proximity of corridor vii (transcontinental waterway danube – main – rhin). this location and reconfirmation of ploieşti as one of the most important road and railroad nodes, allowing access from the capital towards transylvania and moldova, is doubled by its proximity to bucharest, respectively to the international airport henri coandă (approximately 35 km). to the favourable geographic position we can add: the permissive topographic surface of the natural units in proximity which ensures a complementarity of resources, the intracity available space and the polarising role of the city, being the residence of the most populated and urbanised county in romania, which assures a pretty consistent human resource pool, thus the disadvantage of demographic aging and natural population deficit can be minimised by attracting young people from the university studies in ploieşti and “settling” them through programs that would guarantee a profitable relation between studies – research and the market of work – production. the constant growth of students registered in the public superior education institutions, from a little over 3 000 in 1991 to over 10 000 in 2006 is remarkable. this rise is due to the introduction of economical and humanist education to the university of ploieşti, besides the traditional specialisations in oil industry. on the other hand, as far as the workforce quality goes, the city has at its disposal a specialised workforce, a great deal of it working in the manufacturing industry (one third), while most of it works in the tertiary system (approximately 65% in 2006). although it has a manufacturing tradition, seconded by an industrial one, the city has a poly-functional structure presenting economical alternatives, for instance the boom of the tertiary sector (in which case, at least hypothetically, the workforce specialisation could have worked as a “break”, through the stiffness manifested towards professional reconversion). also, even if it concentrates only a third of the county’s population, ploieşti produces more than 80% of the overall county commercial value. another strength is the good equipping of the territory, the modernising and extension process following an ascending curve, to which we can add the pronounced dynamic of the constructions sector, as proof of a high development potential. also as a plus, we can add the municipality’s capacity to apply for various european projects and attract investment funds, for instance the high number of projects unrolled during the last few years, such as: infrastructure projects (for example „the municipal project – ploieşti begins from the neighbourhoods towards the centre”, which had as a subject the infrastructure rehabilitation and redefining the city image at a neighbourhood level (being included in the project the neighbourhoods identified through this study as spaces that generate repulsive attitudes), projects within partnerships between public 183 institutions, projects within public-private partnerships, european projects („the local agenda 21”, „civitas-success”, „spicycles”, „practise”) and so on. scenario 2 represents the situation of a high development potential, but in a risky environment. the main risk categories which might affect the city of ploieşti are either natural (earthquake, floods, global warming etc.) or technological (the proximity of the industrial platforms to the residential areas, secondary activity, plus traffic jams generate high atmospheric pollution), legislative (the dependence of the economic domain on the political one and the clear inseparability of the two, the frequent substitution of policies, instability or legislative ambiguity etc.), social (social segregation, economical poverty, stiffness to professional reconversion) or economical (the second city of the county, together with many other cities compete on the same niche of resources and activities). scenario 3 is the obvious inverse to the previous one, the environment being very favourable, but the development potential rather low due to the identified vulnerabilities. the favourable environment is maintained by the general historical and socio-economic context in which our country currently is (member of the european union, situated at the black sea on the route of caspian energy from the asian space towards the large western european consumers), this offering the possibility to obtain structural funds for developing and modernising the infrastructure to the union’s standards. on the other hand, the “appetite” for direct foreign investments is rather high, taking into account that romania is a rising market, unsaturated, therefore a “fertile field” in terms of costs, corroborated with certain facilities offered by the authorities to attract investors. also, the industrial restructuring has allowed a fast paced development of the tertiary sector, services rising considerably as volume and value over the last few years. at the same time, in the urban space, different marketing techniques have broken through, urban marketing as such, becoming a main component of space management in the city. to all of the above we add the attempt to revitalise the city from an identity point of view, creating images, brand-images to revive the consciousness and civil spirit of its residents. worth mentioning are: unesco year „i.l. caragiale” (cultural program unfolded on the occasion of 150 years since the birth of the great dramatist), the international festival of poetry „nichita stănescu”, the national contest of classical music „paul constantinescu”, the international festival of caricature with the theme „home at caragiale”, the “chestnut” festival (with contests and folk music), international festivals of classical music etc. scenario 4 is totally situated in the negative area and can appear as a result of the convergence between risks and vulnerabilities, economical development of the city being impossible under the conditions of an unfavourable, risky environment, with a low profitable capacity and having a low development potential. 184 the geographical transit position at a regional, national and e level permissive natural environment y to the l specialised human resources chief town of a highly urbanised county specialisation and economic alternatives tion in the oil industry and machine manufacturing good territorial outfitting developed infrastructure y es ation the oil and gas university reserves of intra-city free terrain the community\s capacity to apply for european structural projects uropean ; ; proximit capita ; ; ; ; tradi ( ); ; . ; ; : industr , servic , educ ; , co robor at ; ; ; natural population deficit an economy dominated by multinationals r r ed with the weak development of smes territorial disparities in land outfitting segregation of the residential areas low accessibility because of the street deficiencies and heavy traffic the old age of utility equipments y to industrial platforms and intense lution; substituting policies with the politic. ; ; proximit pol regional competition on the same economic niche -slow functional and professional reconversion instability of the legislative and financial environments; natural risks technological risks ; ; ; . attracting structural funds increase of direct foreign investments development of the tertiary sector the existence of university education promoting urban marketing strengthening the urban identity and using the urban image as a new philosophy of urban space management ; (branding), ; ; ; . ; + +_ _ strengths opportunitiesrisks weaknesses 1. sustained growth2 ,. high development potential risky environment 3. low development potential favourable environment ,4. impossible development, sregres figure 5: theoretical diagram of the swot analysis in the town of ploieşti vulnerabilities have been identified in several fields, such as: – demographic: accelerated population aging and natural deficit both in romania and in europe. these have repercussions on the workforce, the problem of developing a coherent policy of attracting immigrants from the eastern part of the continent or asia becoming more serious every year; the effects are: emergence of ethnical segregation, problems with cultural integration in the adoptive community etc. in ploieşti the rate of the natural balance was of approximately -1 0/00 over the last few years. – economical: local economy is dominated by monopolistically multinational companies, the smes field being weakly represented. – social: social segregation, manifestation of the poverty phenomenon etc. – town-planning: low accessibility in the intra-city space and in the city outskirts, the road network presents discontinuities in its radial and ring-like structure, exponential growth of motor traffic surpassing by a lot the existent infrastructure leading to traffic jams, the old age of utility equipments and so on. – ecological: intense atmospheric pollution, the risk of polluting the waters or soil with oil, phonic pollution etc. 185 – political: excessive politicisation of local structures and interference in the economical sector. the above analysis, of possible evolution scenarios, but also of the main component categories that may influence future evolution leaves to loom several priority directions for urban management and space organisation in the near future (institute for housing and urban development studies romania, 2007): spatial-territorial integration by connecting to the european transport network. it is an immediate priority because the main element of economic development is infrastructure. in that direction the problems related to maximising intra-city and city outskirts accessibility must be solved. also, ploieşti is situated on the urban, economical and communication axis bucharest – braşov, a future segment of paneuropean transport corridors. thus, four major categories of infrastructure investments have been identified: 1. the „mărăşeşti” motorway: continues the homonym street and connects the city, over the bucharest – braşov railroad, with the national road 1 (e 60), on which the ten iv paneuropean corridor is overlapped. thus, approximately 12% of the intra-city space re-enters economic circulation and also, the ploieşti vest neighbourhood (mitică apostol), at the moment “separated” from the city’s “body”, is territorially integrated. 2. the motor ring south railway station – west railway station – north railway station – bereasca – râfov – south railway station which will allow: cleaning and regulating the dâmbu stream, increasing mobility and accessibility, plus eliminating an important part of the traffic from the city centre, with effects such as reducing pollution, preventing traffic jams and so on. 3. closing the tram ring (or surface subway) which will connect the south railway station and the west railway station on the route of the following streets: democraţiei – n. bălcescu – gh. doja – şoseaua vestului, with positive long-term effects: a viable, high capacity, fluent and ecological public transport system. 4. rehabilitation and introduction in real estate circulation of fields south of the city, today enclosed between the industrial and residential areas, situated beyond the southern railroad. fulfilment of integrated projects – „the city’s gates”. western gate. integrating in the urban texture the ploieşti vest neighbourhood (mitică apostol) by increasing accessibility (mărăşeşti passage) and by raising the residents’ living standard (introducing basic utilities, specific to the city, water, sewage, gas or modernising the existent ones; the neighbourhood is today more of a suburban village, with a rural aspect). given its proximity to the ploieşti industrial park, developing complementary economic activities, high end industries or research institutes integrated into a research – it – production area, is compulsory. southern gate and central axis: the development of the urban axis south railway station – central area – republicii, based on a future relation (centred on the oil186 gas university) – cbd (central business district), with a mix of activities, taking into account the attitude of attractiveness towards this area revealed by the results of the research. eastern gate: the rehabilitation of bereasca and râfov neighbourhoods, identified in the residents’ perception as repulsive areas, development of the ecologic axis of the dâmbu stream by cleaning and regulating it, modernising the infrastructure and raising the quality of life. as far as the east and the west of the city are concerned, the research field materialised through the mapping of the city image has emphasised the strongly repulsive attitude of the residents towards these areas, their rehabilitation becoming a priority. • orienting towards local economy competitiveness. mentioned and detailed before, among the city’s strengths we also find its favourable position and technological reputation which represent attractiveness factors for investments. leading these investments towards knowledge, innovation and high technology specialization is necessary. thus, the following actions are mandatory: supporting cooperation with the private environment and developing the business environment, supporting cooperation with the university environment (creating a research – development area centred on the university of ploieşti), professional reconversion and workforce specialisation in the non-polluting and high end industries. • reducing territorial disparities. territorial disparities are strongly highlighted in the fields of quality of life, public services, infrastructure and territory equipment between the old eastern part of the city or the outlying neighbourhoods and the central area. • cleaning the city. through its position and economic functionality, the city is subjected to natural risks (earthquakes, floods), but mostly to technological risks, pollution being a major problem. it requires complex waste management programs, soil and used water cleanup, extending and modernising the sewage and gas network, especially in the east and south, outside the railway ring, cleaning and regulating the dâmbu stream, as well as creating detailed plans of action in case natural disasters occur. • imposing a new vision towards urban marketing by implementing new marketing techniques, such as urban branding. under the conditions of global competition and in the context of the post-industrial society, to which we add the experience of “ex”-industrial western cities, it is required an economic revitalisation of the city through culture, seconded by a powerful image marketing. it is necessary to “rehabilitate” the city’s cultural identity and create a brand that would bring extra value, by reviving the cultural traditions of poetry, music, theatre etc. thus, it becomes necessary to rehabilitate unique romanian museums or very rare in europe, such as the national museum of oil or the museum of clocks. it could also be done a theme-cultural park, bearing in mind the oil manufacturing tradition which is the base of most of the urban identity, to which we can add the increase of public domain attractiveness. 187 5. conclusions the analytical thoroughgoing study of city image, both as a theoretical concept and in immediate relation with urban space management and organisation has led to several conclusive ideas. therefore, city image: appeared as a necessity to analyse, synthesise and essentialize a territorial manifesting reality; what does city image synthesise? all the perceptible dysfunctionalities in the urban habitat, which create certain spatial attitudes and behaviours: of attractiveness, indifference or repulsiveness. what does city image essentialize? the integrating character of global image, over the respective place (neighbourhood, city etc.), this being a result of individual image interaction. a positive image indicates an attractive space (at a mental level) which gives birth to a topophilic behaviour while a neutral image defines an indifferent space, towards which, an individual manifests a topo-indifferent attitude or behaviour. on the other hand, a negative image shapes a strongly repulsive space towards which, the individual displays a hostile attitude, a topophobic behaviour, of rejection (with effects on the territorial mobility within the city, investments, real estate prices etc.). this highlights the operational availability that the city image creates in relation with the local public administration, taking into account its integrating character at a city level. it is an operational instrument in the decision making process; any urban space or component of it is characterised by certain strengths and weaknesses, which at an analytical – theoretical level, cannot be the exclusive privilege of statistical data or individual/group perceptions, but a balanced combination between the quasi-objective reality of figures tables and its perception in the minds or urban residents, who, through experience and meanings associated to the places, fill the picture of urban reality. thus, city image can become an operational instrument in tracking these “strengths” or “weaknesses” of an urban space when they are not the result of statistical analysis or mathematical modelling. and this can only be achieved with the help and through activities specific to the local public administration apparatus. city image can become a method or instrument of diagnostic analysis of urban planning; by overlapping the two images – the objective one, resulted from mathematical modelling of statistical data and the subjective one (individual and at an urban community level), obtained by mapping perceptions over urban elements and shapes – the distortions have become visible: either the tendency to super-evaluate the city image (generated by an ultra-positive image based on affective considerations of a personal nature – birthplace or a place loaded with meanings of a certain nature), or to under-evaluate it (generated by an extremely negative image). correcting these distortions leads to a preferential or evaluative image closer to the reality of territorial objectivity. 188 references: 1. cowan, r., the dictionary of urbanism, london: streetwise press, 2005. 2. downs, r.g., image and environment: cognitive mapping and spatial behavior, chicago: aldine, 1973. 3. ianoş, i., dinamica urbană. aplicaţii la oraşul şi sistemul urban românesc, bucureşti: ed. tehnică, 2004. 4. institute for housing and urban development studies romania, ‘strategia de dezvoltare a municipiului ploieşti 2007-2025’ (local development strategy for the city of ploiesti, 2007-2025), [online] available at www.ploiesti.ro), accessed on august 14th, 2009. 5. jive’n, g. and larkham, p., ‘sense of place, authenticity and character: a commentary’, 2003, journal of urban design, vol. 8, no. 1, pp. 67-81. 6. jones, t., ‘spatial cognition: learning what has been ‘learnt’ from cognitive maps (lecture notes), university of bath, u.k., 2006. 7. lefebvre, h., the production of space, london: blackwell publisher, 1991. 8. lynch, k., image of the city, cambridge, ma: mit press, 1960. 9. montello, d., ‘cognitive map-design research in the twentieth century: theoretical and empirical approaches’, 2002, cartography and geographic information science, vol. 29, no. 3, p. 283-304. 10. pylyshyn, z., ‘return of the mental image: are there really pictures in the brain?’, 2003, trends in cognitive sciences, vol.7, no.3, p. 113-118. 11. pylyshyn, z., ‘mental imagery: in search of a theory’, 2002, behavioral and brain sciences, vol. 25, no. 2, pp. 157-182. 12. richardson, a., mental imagery, new york: springer publishing company inc., 1969. 13. soja, ed., thirdspace. journeys to los angeles and other real and imagined spaced, malden: blackwell publishers inc, 1996. 44 abstract the collapse of the soviet communist political system led to forced public sector reforms in the respective countries. a rather complex system of public service has emerged in russia over 25 years of reform. the purpose of the article is to conduct a stratification analysis of the current state of the public service in the russian federation in the context of public service reform by the case study method. the article presents a case study of the current situation of stratification of public servants in russia. the analysis is based on the application of a group of methods: analysis of statistical data, a questionnaire survey of public servants and secondary data analysis. the analysis allowed for the stratification of public servants in russia on the following parameters: type of service, branch of authority, level of authority, sectoral and territorial affiliation of government authorities, gender and age of employees, level of education, income, self-identity. keywords: public service, public service reform, public servant, stratification. stratification of public servants in the russian federation as the result of the public service reform: case study svetlana n. kostina ekaterina v. zaitseva galina a. bannykh svetlana n. kostina associate professor, chair of theory, methodology and legal support of state and municipal management, institute of public administration and entrepreneurship, ural federal university, yekaterinburg, russian federation e-mail: s.n.kostina@urfu.ru ekaterina v. zaitseva associate professor, chair of theory, methodology and legal support of state and municipal management, institute of public administration and entrepreneurship, ural federal university, yekaterinburg, russian federation e-mail: e.a.zaitseva@urfu.ru galina a. bannykh associate professor, chair of theory, methodology and legal support of state and municipal management, institute of public administration and entrepreneurship, ural federal university, yekaterinburg, russian federation e-mail: g.a.bannykh@urfu.ru doi:10.24193/tras.si2018.3 published first online: 2018/12/28 transylvanian review of administrative sciences, special issue 2018, pp. 44-59 45 1. introduction in the early 1990s, several dozen communist states were forced to re-build public administration systems taking into account the regime change, the demands of the time and the economy. however, there was no uniformity in the choice of technologies and directions for reform in the post-communist states. the reform of the public service also had its own specifics. the formation of the public service of the russian federation began in 1991 with the adoption of the decree of the president of the rsfsr on the establishment of a rational public service (decree of the president of the rsfsr, 1991). it involved the normative provision of the public service and the establishment of the main directorate for personnel training. the modern stage of the public service reform in russia began in 2001 with the adoption of the concept of public service reform in the russian federation. in subsequent years, this process was carried out within the framework of three federal programs for the public service reform – in 2003-2005, 2009-2013 and 2015-2018. the basic normative legal acts that determined the structure of the russian public service were adopted in 2003-2005. the following areas of administrative reforms in the 21st century russia are of great importance for our analysis. firstly, a change of the public service system of the russian federation as a result of the adoption of a number of federal laws – ‘on the public service system of the russian federation’ in 2003, ‘on the public civil service of the russian federation’ in 2004, ‘on municipal service in the russian federation’ in 2004 and their subsequent amendments. secondly, a reduction of the number of the state apparatus, including attempts to downsize the public and municipal services’ employees. thirdly, a qualitative improvement of employees: rejuvenation of the service, rise of the level of education of employees, etc. the fourth area of interest is the anti-corruption measures. they include a system of restrictions for all categories of public servants on generating income, as well as the requirement to report the income of employees and their family members. 2. theoretical approaches to the stratification of public servants in the early 1990s, reforms in the management system, the public sphere and the public service passed through the western countries like a tsunami, forcing researchers to consider a new management paradigm. the public service and its reform gradually became a focus of research, which allowed for formulating a new methodological approach – the neo-managerial approach (toonen, 2007). this scientific discourse has stayed relevant for a long time. it is developing in the direction of pa-democracy and the creation of the european administrative space (eas), ‘the new approach developed after 2000, triggered formally by the united nation’s (un) millennium declaration, has tended to institutionalize and foster cooperation and strengthen public services in each country’ (leskoviku, 2011) and ‘institution-building and public administration reform (par)’ (muhhina, 2018). 46 thus, the key task of the formation of the executive branch of the post-communist countries is to increase its capacity in the field of policy development and to improve the professionalism of its employees (goetz and wollmann, 2001). changes in the implementation of the reform began everywhere and they were connected with the observance of anticorruption ethics, efficiency of work, ‘transparency’, improvement of professionalism in quality management, e-government development, etc. (spacek, 2018; pesti and randma-liiv, 2018; nemec, 2018). the issue of the staffing implications of such a large-scale approach to the public sector reform is being actively discussed. some authors adhere to the idea that these changes will have a negative impact on those who enter the public service or work in it. for example, ‘we argue that reinventing government, contrary to its most ardent proponents’ rhetoric, threatens to undermine the important role played by public servants in modern democratic governments’ (kearney and hays, 1998). others, on the contrary, are convinced of the need for ongoing changes, and point out that modern human resources technologies take into account the potential of the information society and allow the use of social networks for hiring employees. it also allows transition from the commission selection to the decentralized selection, which makes the service itself more efficient (berman et al., 2015; papapolychroniadis, rossidis and aspridis, 2017). new conditions for public administration also change the requirements for personnel as a modern public servant is assessed and selected not only based on educational qualification or work experience, but also based on the results of their activities (pichas, 1999). studies also focus on a specific group of public servants – senior personnel – and the process of their recruitment (kuperus and rode, 2016). a big problem of the recent years is the politicization of senior employees, favoritism and patronage in the recruitment of employees, as noted in the oecd materials (oecd, 2011). it is known that the adoption of new laws on public service and the revision of old ones did not lead to depoliticization and professionalization of employees (meyer-sahling, 2009). increasingly, researchers put forward ideas about the lack of strategic prospects of such reforms. these ideas are associated with a high degree of misunderstanding of the ideas and values that should underlie the public service by reformers and employees themselves (hințea, 2018; bileisis and kovac, 2017). under these conditions, the study of the stratification of public servants is becoming quite a relevant direction, which allows assessing the differences that have developed within this group. it is necessary to turn to the theories presented in the works of sorokin (1992) to analyze the stratification of public servants. sorokin’s (1992) theory of stratification points out that the basis of differentiation of groups is the uneven distribution of different rights, duties, privileges, values, authority and other ways of influencing individuals both within and between groups. thus, sorokin identified strata or social groups based on three grounds: economic, political and professional. theoretical approaches to the problem of social stratification have been developed in numerous recent works, a short inventory of such papers can be found in dyadin’s study (2015, p. 17). 47 3. research matter and methodology the article is based on the case study method. the choice of this method is due to the peculiarity of the research problem, which involves studying the particularity and complexity of one case. the case study method gives an idea of a solution or a set of solutions, describes why the decisions were taken, how they were implemented, and what the result was (schramm, 1971). to implement the case study method, we used a situation-procedural analysis of the interpretation and description of the existing situation of stratification of public servants. despite the complexity of the public service structure in russia and the diversity of processes, factors and development trends, we outlined common characteristics which resulted from the processes of social change and the public service reform of the russian federation. the stratification of public servants was considered within the framework of class-stratification, functional and gender approaches. the authors analyzed the theoretical and methodological literature devoted to the study of the professional stratification of public servants, analyzed normative and legal documents regulating the public service system of the russian federation, and studied implemented socio-economic programs, reviews of the country’s socio-economic development, various regulatory and methodological documents. a comprehensive approach was also implemented through the application of historical and problem-chronological methods. they allowed us to consider the stratification of public servants at the present stage of the country’s development as a result of not only the collapse of the world socialist system and the political transformation of the ussr, but also the public service reform in russia. the study identified the internal differentiation of the public service of the russian federation, which was formed under the influence of the administrative reforms of the last 25 years, as the most important basis of the stratification of public servants. the authors formed a system of indicators for analyzing the stratification of public servants, which are as follows: type of service, branch of authority, level of authority, sectoral and territorial affiliation of government authorities, gender and age characteristics of employees, level of education, income and self-identity. the authors conducted a desk study on various indicators of stratification of public servants. the data was taken from the official statistics of the russian federation, which is collected by the federal state statistics service of russia (rosstat). however, all the statistical data necessary for the study was not presented in this source, which hampered the solution of the research task. in addition, official statistical data was collected at different periods by different methods. for example, data on individual departments was gradually introduced into the system of statistical observation of the public servants. data on employees of customs, which received the status of territorial authorities (fcs) of russia, were introduced in 2002. data on the number of employees of the state courier service and the federal drug control service and their territorial authorities was introduced in 2005, data on rosgvardia employees and its territorial authorities – in 2018. part of the data is not aggregated. for example, there 48 is no data on employees substituting at the state and municipal positions, as well as on the public servants of other types of services. therefore, we used statistical data from other sources, including normative acts, official documents and official internet resources of state authorities and the media. the analysis of the statistical data in the study was carried out using various methods. a summary and grouping of statistical observation materials was carried out in order to identify common features and patterns. salaries of certain types of employees were converted from rubles to euros (at the exchange rate at the end of the analyzed year) for the analysis of income. a relative coefficient was calculated in order to compare the incomes of various types of public servants. the coefficient is the ratio of the average monthly salary of certain categories of public servants to the average monthly salary of all workers of the russian federation. the data is presented in table 1. the ratio of incomes of various types of public servants (federal, regional, municipal) to the average salaries of employees of the respective region or subject of the russian federation was calculated to analyze regional differences and assess the level of incomes of public servants. the data of our own empirical sociological research was used in the study of self-identification of public servants. this study analyzed the problems of stratification and identity of public civil and municipal servants in one of the subjects of the russian federation – the sverdlovsk region. 490 employees in more than 40 localities of the region were interviewed using the quota sample questionnaire (which included two parameters – the type of employees and gender). 290 municipal employees and 200 public civil servants of the sverdlovsk region were represented among the respondents. in total, data was collected on 55 questions (including tabulated data), which amounted to 154 initial variables. 4. results of the study and discussion 4.1. organization of the public service in the russian federation in determining their public services, eu member states used different approaches, usually rooted in the history of their states and changing over time. however, this experience was quite new for post-communist countries: they were approximately in the same position by the beginning of the reforms of the 1990s, when all public services (except military service) were not separately distinguished and regulated (dimitrova, 2005). as a result of the reform, the analyzed countries adopted a limited concept of public service, where only professionals in public service and administration and professionals with state authority were public servants (russia, ukraine, belarus, romania, hungary, etc.). let us consider the structure of public servants of the russian federation. it should be noted that the structure of the public service in russia is determined by several factors: firstly, the aforementioned limited concept of the public service adopted in russia; secondly, a federal structure of the state, which distinguishes the levels of service – federal and subjects of the federation; thirdly, the separation of the local government and the corresponding service from the system of public administration. 49 the most important aspect of the organization of the russian public service is the separation of the political and administrative service. persons holding public offices are excluded from the public service in russia. these positions are established for the direct exercise of the authority of state agencies. decree of the president of the russian federation approved the list of government positions (decree of the president of the russian federation, 1995): the president, the chairman of the government and his deputies, ministers, chairmen, deputy chairmen and heads of committees and commissions of both chambers of the federal assembly of the russian federation (rf from here on), as well as heads of higher state executive authorities of the subjects of the rf, positions of ambassadors and representatives of the rf, positions of judges, and also heads of a number of other state bodies. the subjects of the russian federation can also make their lists of government positions; at the municipal level, the positions of elected officials of local authority (for example, heads of municipal entities). in the russian federation there are two separate types of services – state and municipal. the first one works in state authorities, defines the public service as professional activity to ensure the execution of authority of the rf and the regions of the rf, public authorities and persons who hold public office (federal law no. 58-fz, 2003). the second one works in local government; the municipal service, according to the norms of the russian legislation, is not part of the public service system. the public service of the russian federation is extremely differentiated. firstly, the public service is divided into types – civil, military and other types of services (until 2016, law enforcement was called the third type of service), which includes the service in law enforcement and security agencies, customs, etc. secondly, depending on the level of authority, the public service is divided into the federal service and the service of the russian federation subjects. internal stratification of various types of services of the russian federation is based on a legislatively fixed job hierarchy. thus, the legislation of the rf divides positions of the public civil service in 4 categories (managers, assistants (advisers), specialists and providing specialists) and 5 groups (higher, major, leading, senior and junior). the positions of the municipal service are divided into groups only. in the civil service, specialists are the most numerous category (bulletin of the federal state statistics service, 2017). both civil and municipal services are dominated by the positions of the senior group, followed by the leading group. it is worth noting that the share of employees occupying positions not classified as public or municipal (i.e. technical or support personnel) appeared and began to grow in public authorities of the rf after the reform associated with a reduction of the total number of employees. 4.2. the number of certain types of public servants let us consider the number of public servants in the russian federation. according to rosstat, the total number of workers in these positions in the rf was 1,161.5 thousand in 2000 and 2,172.9 thousand at the end of 2017. at the end of 2017, there were 1,438.4 thousand employees in the state authorities, 262.2 thousand in the state 50 authorities of the subjects of the russian federation, 472.2 thousand in municipal authorities (rosstat, 2017). when considering the distribution of personnel of public authorities by branches of power, the absolute majority belongs to the executive authorities – 1,888.3 thousand workers. 230.3 thousand employees work in the judiciary and the prosecution authorities, 30.6 thousand work in legislative authorities and 21.4 thousand in other authorities. let us consider the share of political and administrative employees in the number of employees of public authorities. there are more than 40 thousand government positions in russia. most of them are in the judicial system: there are more than 16,000 judges of federal courts (presidential decree no. 1758, 1999) and 14,000 justices of peace, which means that persons occupying these positions hold public office. there are more municipal positions in russia. according to the ministry of justice of russia, in 2017 there were 22,891 heads of municipalities which held municipal positions. in addition, the positions of chairmen of the representative authority also belong to municipal positions if the head of the municipal entity is the head of the executive and administrative authority. according to our estimates, there are more than 4,500 such positions in russia. at the end of december 2017, the number of civil servants in federal state authorities amounted to 38.3 thousand people, or 77% of the total number of employees of these authorities (rosstat, ‘on the number and pay...’, 2017). at the regional level (in federal state authorities and state authorities of the subjects of the russian federation), 696.7 thousand people occupied the positions of the public civil service in 2017, which amounted to 42.2% of the total number of employees of these authorities. 302.3 thousand people were employed at the positions of municipal service (64% of the total number of employees in municipal authorities) (rosstat, ‘on the number and pay...’, 2017). thus, it can be said that public servants make up just over half of the state authorities’ employees. there is a large proportion of employees of other types of services in a number of federal state authorities providing security and law enforcement. for example, the number of workers of the ministry of internal affairs of russia is 894,871 people: 130.8 thousand employees, 17,199 have the status of federal public civil servants, and 746.9 thousand are officers – employees with special titles (presidential decree no. 652, 2017). these include, for example, police officers and officers of the state inspection for road traffic safety. the number of employees of state and municipal authorities has increased by 1.85 times over the years (see figure 1). as already indicated above, the public service system includes the military service. by the time of the collapse of the ussr, the strength of the soviet armed forces was 3.7-3.8 million, without the civilian personnel. the number of servicemen in the armed forces of the russian federation had dropped to 2.1 million by 1994, and to 1.7 million by 1996 – by almost 40% compared to 1992. 51 0,0 500,0 1000,0 1500,0 2000,0 2500,0 3000,0 3500,0 4000,0 4500,0 5000,0 2000 2002 2004 2006 2008 2010 2012 2014 2016 total legislative executive judiciary and the prosecutor's office other figure 1: dynamics of the number of public servants of state and municipal authorities in the russian federation the change in the strength of the armed forces of the russian federation on january 1, 2017 was the eighth in a row since 1997 (zhukovsky, 2018). since january 1, 2018, the strength of the armed forces is 1,902.8 thousand people, which include 1,013.6 thousand servicemen (presidential decree no. 555, 2017) – the rest are civilian personnel. 4.3. stratification of public servants of russia by gender for the past twenty years, the public service has maintained a gender asymmetry as most of the employees at state and municipal positions are men. out of 31 positions in the government of the russian federation, only 4 are occupied by women. as of june 2018, there were only 4 women among 85 governors of the russian federation subjects. there are 15,195 men and 6,786 women among heads of municipalities (information and analytical materials on the development of local government in the russian federation, 2016-2017). only the judicial authorities, where 2/3 of employees are women, are an exception to this rule (volkov, 2015, p. 87). among public civil and municipal employees, the majority, more than 70%, are women, and their share is even greater in the municipal service; at the same time, men more often occupy higher positions, including managerial positions. thus, in the municipal service, the ratio of men and women in positions of the higher group is 0.85:1, of the senior group – 0.18:1. in the civil service, the ratio of men and women in positions of the higher group is 1.46:1, of the senior group – 0.33:1. in recent years, the number of women in military and other types of services has been increasing. currently, more than 177 thousand women serve in the internal affairs authorities of the russian federation, which is about a quarter of employees. over 143 thousand women are on the positions of middle and senior commanding 52 staff. women prevail in units of inquiry, investigative, for work with personnel (official website of the ministry of internal affairs, 2018). the number of women among servicemen, although growing, remains small. the modern russian army has about 45,000 female contractors (women in the army of russia, 2017), which is less than one percent of the total number of servicemen. 4.4. stratification of public servants of russia by education the results of the research showed a high level of education of public servants as, on average in russia, the level of higher education among the employees is 33%. public servants have a much higher education level. there is a differentiation in the level of education among state and municipal employees due to differences in the legal requirements for holding certain types of positions. educational qualification is not established for deputies of legislative (representative) authorities. the education requirements can be established for the heads of municipalities (if elected by the competitive commission). in 2017, 75.6% of the heads of municipalities of russia had higher education (information and analytical materials on the development of local government in the russian federation, 2016 – 2017). the judicial authorities are the most highly educated, since a law degree is a prerequisite for becoming a judge (rf law no. 3132-1, 1992). civil and municipal servants have an above average higher education level for russia. the share of civil servants with higher education is 94.2%, for municipal servants – 79.9%. such a high level of education of employees is due to qualification requirements established by the law; higher education is compulsory for all groups of civil servants, except for the junior group, and for all groups of municipal servants, except for the junior and senior groups. for these groups, secondary vocational education is compulsory (federal law no. 79-fz, 2004). education requirements are lower for military service and other types of service. for example, a citizen with a secondary general education may become a police officer or a contract serviceman. 4.5. stratification of public servants of russia by income level let us consider another criterion for the stratification of public servants – income. in general, salaries of employees in the sphere of public administration and security are above the average for russia. the average monthly salary of public servants is ranked third or fourth among representatives of other economic activities in the country. it is comparable to the salary in the real-estate sphere, and is second only to the salary in the financial and mining sectors (zaitseva and kostina, 2018, p. 22). table 1 presents data on the average salary of certain categories of public servants in rubles and euros (at the exchange rate at the end of the year), as well as the ratio to the average salary of workers in russia as a whole. as can be seen, salaries of public servants are basically equal to or above the national average. 53 table 1: average monthly salary of public servants in absolute and relative indicators average monthly salary (rub) average monthly salary (eur) coefficient to the average wage, caw all employees in the russian federation 39,167 537 – deputies of the state duma 399,300 5787 14.8 judges 85,170 1,166 2.17 public servants in the central apparatus of federal state authorities 118,800 1,627 3.03 public servants in federal state authorities at the regional level 41,300 565.8 1.05 public civil servants of the subjects of the russian federation 56,400 773 1.44 public servants of military service 61,800 847 1.58 police officers 40,000 579.7 1.02 municipal employees 39,000 534 0.99 undoubtedly, political employees are the most well-off financially. salaries of the rf ministers are quite different – from 443 thousand rubles a month to 1.73 million rubles. salaries of governors range from 70 thousand to 500 thousand rubles a month. the sum is determined by the deputies of the region, there are no general principles. the highest salary level among civil and municipal employees belongs to the central apparatus of federal state authorities. the highest salaries are in the government of the rf (227,267 rubles or 3,293.7 euros) and the administration of the president of the rf (217,453 rubles or 3,151.5 euros), 68% of civil servants in federal state authorities have an average salary of more than one hundred thousand rubles (more than 1,450 euros). there is an increasing wage gap between the central and territorial apparatus of federal authorities. in 2003, employees of territorial authorities received 80% of their colleagues’ salaries in the central apparatus. by 2014, this share was reduced to 26%. analysis of the wages in 2016 showed that the average salary of civil servants of the subject of the russian federation in all regions (except moscow) is higher than the average for the region. salaries can be higher by 2 times (orenburg region) and more (khabarovsk region) (zaitseva and kostina, 2018, p. 22). the situation is worse for municipal servants – their average salary is lower than the region average in 39 regions of the russian federation. at the same time, the wage gap varies almost eightfold – from 135,956 rubles, or 2,158 euros, in the yamal-nenets autonomous district to 17,383 rubles, or 276 euros, in the pskov region. 4.6. self-identification of civil and municipal servants self-identification plays important role in determining the social status of the group. the assessment of financial well-being of public servants is constantly changing among the general population and the employees themselves. according to the results of surveys conducted by russian academy of public administration (ranepa) (bartsits, borshchevskii and magomedov, 2018, pp. 33-36), in 2006, a significant share of the population (almost a third of the respondents) and ex54 perts considered public servants a high-income category of workers. the assessments of the public servants’ income worsened in 2012 and sharply increased again in 2017. according to our research (described in section 3 of the article) civil and municipal servants self-identify as the middle-income and high-income social strata of the population. in general, they estimate their financial situation as average (when the income is enough to cover only food and current purchases – 45.8%) and good (which, however, does not allow them to purchase an apartment or a car – 32.3%). only 9% of respondents do not experience any financial difficulties. almost the same share of respondents does not always have enough money for food – 9.8%. in this situation, it seems surprising that the absolute majority of the respondents self-identify as the middle class – 86.5% (kostina, zaitseva and bannykh, 2017). 2.1% of public servants self-identify as the higher class, while 40% of them assessed their financial situation as average. and it seems logical that those who ranked themselves in the lower class (11.3%) assessed their financial position as average (59.9%) and below average (37.7%). if we consider the indicators of the middle class (the nature of labor, education, income, property), then only two of them are present in full among public servants – the mental nature of labor and the presence of higher education (in more than 90% of public servants, according to statistics). 5. conclusions for more than thirty years, the russian society has experienced the transformation of the socialist state-administrative model into a new capitalist model compliant to the requirements of the european democratic principles of the constitutional and social state. these radical changes occurred in russia after 1990 and led to a radical modernization of the entire administrative and political system of the country. the changes inevitably affected the sphere of the state administration and the order of formation and operation of the state apparatus. in general, the modern structure of the state apparatus of russia was formed by the mid-1990s in accordance with such principles of the state as democracy and federalism. this led to the separation of the state apparatus into levels (federal and subjects of the federation), branches of authority (legislative, administrative and judicial), and the establishment of local government authorities. however, the inability to immediately depart from the state participation in various spheres of public life led to the need to form a complex branch structure of government authorities and to the growth in the number of personnel of state and municipal authorities. further attempts to reduce the number of employees by outsourcing a number of functions of state authorities did not lead to a significant result. at the same time, the complex structure of the state apparatus created a high level of stratification of public administration personnel. it can be noted that the construction and reform of the public service system in russia proceeded in the spirit of the principles underlying the formation of the govern55 ment of the european union, including the ‘principles of the european administrative space’ that were developed by the s i g m a program in the late 1990s (sigma, 1999). as a result, a rather complex system of public service was formed in russia, which includes not only public servants themselves, but also municipal servants and employees holding state and municipal offices (not formally related to public servants). in accordance with the limited concept of the public service in the russian federation, only employees of the state apparatus, not of the state and municipal organizations, are considered to be public servants. at the same time, a part of the employees of state and municipal authorities with technical functions also formally do not belong to public servants. in turn, the public service is extremely differentiated – it is divided into types and levels, each of which has a fairly complex structure. the bulk of public servants are employees who hold rather low positions (senior group). in the analyzed group, employees of the military service, civil service and other services are represented in approximately equal parts (approximately 1 million people). political employees, including persons holding state and municipal offices, constitute a much smaller group. there is a significant gender asymmetry among public servants, the main factors of which are the scope of authority and the salary level. although there is the predominance of women among employees in the state and municipal positions in general, men prevail in the highest positions of the public and municipal service. the exception is the military service, where the number of women remains insignificant regardless of the job hierarchy. public servants, without exaggeration, are the second most educated social and professional group in russia, after scientific and academic staff. this situation is due to high requirements for the education level of public and municipal servants, as well as judges. at the same time, public servants are significantly differentiated in terms of salaries – they can vary fifteen fold (between the salary of deputies of the state duma and municipal servants). in general, the salary level of public servants is above average for the russian federation and is considerably higher than the salary level in similar sectors, such as education, social services and healthcare (zaitseva, kostina and voronina, 2017, p. 537). civil servants of the central apparatus of federal authorities and regions of the rf are in the most advantageous position, while municipal servants are in the worst. the salary level depends on the type of service (the average salary of public servants is higher than that of municipal servants), the level of the public-law entity, and the authority itself. as a result, we can conclude that the group of public servants is fairly homogeneous in terms of its education level, but stratified by legal status, level of authority, gender, and income level. the causes of inequality are primarily due to the peculiarities of the state administration system in russia, which is quite complex in nature, is distinguished by multi-level and hierarchical, relative autonomy of public legal entities in the organization of its public service (including the definition of wages). secondly, the existing system of legal regulation in the framework of the limited concept 56 of the civil service resulted in a high degree of differentiation of the public service according to the formal status. unfortunately, the administrative reforms carried out over the past two decades in russia, the purpose of which was to equalize the position of employees of various types of service according to legal status, wage level, selection criteria for the service, etc., could not solve the problem of high inequality. in line with the european tradition, russian reformers focused more on the issues of anti-corruption ethics, labor efficiency, openness, improvement of professionalism, development of e-government, etc. in relation to public service. the results of the study helped to identify the main problems of the modern civil service system in russia related to the status of public servants, their stratification and identification. to solve these problems, it is recommended to develop and verify the concept of public servant status (by type and level of public service), containing concepts, goals, functions, structure and other aspects of the development of public servant status. the concept can also resolve the issue of a more unified and transparent mechanism of salary for employees, as well as the issues of the ‘glass ceiling’ and stimulating career development. only systematic efforts will help enhance its prestige and transparency and occupy a 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of justice of the russian federation, [online] available at minjust.ru/sites/ default/files/monitoring-msu-201711283.docx, accessed on may 6, 2018. 45. ‘women in the army of russia’, [online] available at https://topwar.ru/110572-zhens chiny-v-armii-rossii.html, accessed on june 6, 2018. 57 the paper gives an overview of the roles played by the hungarian nonprofit organizations in the eu accession process. these roles are as follows: • to encourage and organize a dialogue and direct contacts between the “old” and “new” european citizens. • to assist people in becoming informed about and involved in european networks, to build solidarity and develop participative european citizenship. • to tackle the problems which constitute serious obstacles in the way of meeting european standards. the paper also tries to identify the very first impacts of the eu accession on the hungarian nonprofit sector. the authors detect the implications of the regional approach for the co-operation between nonprofit organizations and analyze whether the hungarian third sector and its governmental partner institutions are prepared for a prompt reaction to the accessibility of the eu structural funds2. the eu accession’s impact on the hungarian nonprofit sector, the nonprofit organisations’ role in the accession process1 györgy jenei professor, department of public policy and management, faculty of economics, corvinus university of budapest éva kuti associate professor, budapest college of management transylvanian review of administrative sciences, 16 e/2006, pp. 57-70 introduction the countries of east-central europe have traditionally had a strong european identity. the more it was challenged by the actual conditions, the more this identity was cherished and defended. the gap between these aspirations and the peripheral position was permanently wide. this is how and why “joining europe” became emblematic of the irreversible political and economic changes in 1989 when eastern european societies were in a state of euphoria. this euphoria has dissipated since then, euro-scepticism spread across eastern europe. under these conditions, like always when a deep social transformation is needed, voluntary organisations3 are of crucial importance 1 paper prepared for the meeting of the study group on third sector at the next annual egpa conference to be held in ljubljana, 1-4 september 2004 on the theme four months later: administering the new europe 2 this paper was supported by otka fund nr. to47043 (politicians and civil servants in the policy making process) 3 the terms voluntary organisations, nonprofit organisations (npos), non-governmental organisations (ngos), and civil society organisations (csos) are used as synonyms in the paper though their meaning and connotations are slightly different. for more details of the definition problem see salamon et al. (1999) 58 because they are able to reach all segments of society and can help people to orientate and organise themselves in the changing environment. this paper gives an overview of the framework of public policy making in the european union, explores the position of non-governmental organisations in this framework and describes the roles played by the hungarian nonprofit organisations in the accession process. it also makes an attempt to identify the very first impacts of the eu accession on the hungarian nonprofit sector. the authors try to detect the implications of the regional approach for the co-operation between nonprofit organisations and to analyse whether the hungarian third sector and its governmental partner institutions are prepared for a prompt reaction to the accessibility of the eu structural funds. it is also interesting how quickly the advocacy organisations and nonprofit umbrella groups are able to adapt their strategies and arguments to the new legal environment, to find their counterparts in the eu member states and to develop co-operation and common projects with them. the paper concludes with an overview of the three different approaches shaping the public policy toward the hungarian nonprofit sector in the post-accession period. framework of public policy making, non-governmental organisations and politico-institutional setting in the european union while new opportunities – widened horizons, increasing mobility etc. – have been opened up for the new member countries, a series of challenges also have to be faced by them. one of the major challenges is an urgent need for orientation and adaptation. the new eu members must get informed about and adapt themselves to a public policy making process with many actors in a complex political arena. non-governmental organisations have decisive role in the political arena of the european union. they are integral part of the policy making as partners of the four key actors of politics in the eu with of strategic importance: 1. the territorial state, 2. the european union, 3. the regions, 4. and the autonomous networks. 1. nowadays ngos have a substantive and increasing role in the functioning of the territorial state. but it was not the case in the past. the territorial state is a firmly grounded construction in europe. it has been the great survivor of the european history. the fundamental characteristics of the territorial state – sovereignty, state government, state territory and people – had precursors, the monarchies in the middle ages. the consolidation of this form of the territorial state was accompanied by an ever-stronger monarchy with the financial means to establish institutions and strengthen military capabilities. at this stage the consolidation meant reasonably fixed external boundaries, institutionalised exercise of power and some kind of cultural foundation. at this stage civil society and civil society organisations did not exist. the territorial state was closely tied to the ruler’s claims and rights. the identity of the people or of communities was bound to more tangible realities than states, such as the families or local communities. this state meant sovereignty for the dynasty. for the people, the state had little significance. in the second stage of the history of the territorial state the emergence of nationalism played an important role. state-building and nation-building often became parallel processes; the principle of nationality and national identity required that the boundaries of the state and nation should coincide. in this european super ideology nation building was closely tied to democracy building and the main objective was to achieve a coincidence of state and civil society through the creation of the nation state. 59 nationalism was political particularism but also the political expression of a community, the civil society. the rise of the nation state was functionally connected to the emergence of the industrial society. the nation state could mobilize popular energies and resources and could create a homogeneous culture in the form of language and symbols based on national education and national media. however, it also turned out that the social boundaries of culturally cohesive nation groups and the political boundaries of given states seldom coincided in the history of europe. nationalism was integrative and conflictual at the same time. one conflictual issue was that citizenship meant and means not being simply a subject, but being born to freedom. but this freedom was limited when citizenship was always bound to a particular state. civil society organisations were established to express the expectation and the demands of the individuals that state should take into consideration their human rights and must not impose limitations on them. secondly, a conflictual issue was the national self-determination. at that point the requirements of democracy and the reality of the nation states resulted in conflicts. basically nationalism and the aspirations to democracy and personal freedom are part of the same social, intellectual and moral revolution. but it turned out already at the nineteenth century that personal freedom was not automatically guaranteed. it also turned out by the beginning of the twentieth century that national self-determination had serious limitations in the system of the territorial states. therefore, civil society had to create its organisations in order to implement its interests, to express its basic expectations, to defend its achievements, its way of life. the third stage in the history of the territorial state is the welfare state. welfare regimes mushroomed in western europe after world war ii. states created comprehensive systems of service provision in education, health care, social services etc. this trend raised the issue of co-operation for ngos with service providing functions. at the present stage the territoriality and the sovereignty of the state was challenged by technological, economic, ecological and demographic factors. it resulted in an erosion of the traditional notion of territoriality and sovereignty. the welfare state came into crisis and its response had two basic features: externally the welfare state has become a part of international – to some extent globalized – competition. in the first place it meant to provide relatively favourable investment conditions for transnational capital, last but not least with the development of societal factors which have of strategic importance in the economic competition, such as human capital, infrastructure, support for research, public services to assure a good quality of life; internally the welfare state had to share the function of governance with other actors such as private companies and ngos. negotiating and networking have become key features of the day-to-day function of the welfare state. at that point there are two different explanations of the current trends: the welfare state was replaced with the competition state and the negotiating state; the welfare state has survived its crisis through a shift from government to governance, with an innovation process involving the elements of competition and negotiation. to sum it up: the territorial state had and has a lot of challenges throughout its history. it was challenged by the nationalism, the industrial revolution, democracy, general education and universal suffrage etc. now it is challenged from two directions: in the first place from the globalisation (among others from the european union) and on the other hand from the regionalisation. but the territorial state – no doubt about it – will survive these challenges as well. it will change its form once again as it was its natural ability throughout its history. 60 nevertheless, the territorial state has to share its sovereignty and responsibilities with the european union, as an institution being integral part of the globalized world and with the regions. these changes have essential impacts on the development of the ngos. in the first place ngos has been also part of the globalisation process. a lot of ngos have been evolved or strengthened with transnational characters especially in the field of environmental protection and in connected with the strengthened international status of human rights and democratic values. on the other hand a lot of ngos are active long-run partners in almost every field of the state programs and actions. their relationship is different to the state. in the partnerships two extremes, the sovereignty bound and the sovereignty free positions can be observed and we can find ngos in both extreme positions, but lot of them are somewhere between the two extremes. one thing is sure: the period of monopolistic state sovereignty is over. it has been replaced by an interdependent sovereignty and democratic legitimation. ngos have been integral part of this interdependent sovereignty. partly they are involved by the key actors (state, eu institutions, regions), but partly they are among the challenging factors with the expression of the demands and expectations of the civil society. in central and eastern europe the development of relationships between ngos and territorial states followed a modified version of the classical west-european pattern. in the middle ages regional great powers were established; in poland, under king kasimir (the house of piast), bohemia under king charles iv (the house of luxemburg), and hungary under king louis (the house of anjou). all three kings had the epithet “the great”. in hungary the kingdom of matthias (house of hunyadi) was a further step, perhaps a precursor of the modern state in the direction of creating a feudal absolutism. but it had no continuation because hungary together with the region became increasingly unstable. it was partly the result of the ottoman expansion. the first form of a modern, territorial state was established only in the eighteenth century by the habsburgs, emerging to an enlightened form. nation building and state building were separated from each other. the habsburg empire oppressed hungarian nation building. on the other hand a lob of innovation was taking place in the state, which was not always accepted by the hungarians because they considered it a threat to their national independence. nation building and state building was harmonised only in 1867 with the historic compromise and with the establishment of the austriahungarian monarchy. with this step hungary got closer to the west european pattern. the state was a monarchy in its form but a lot of liberal values were implemented especially in the economy. civil society and its organisations expressed their expectations toward the implementation of human rights and democracy. but opposition was not strong enough to result in a break through. national self-determination represented by different ethnicities of the monarchy was also oppressed. the austro-hungarian monarchy did not survive world war i. the new hungarian state could not harmonize the establishment of a nation state with strengthening democracy and civil society. however, a lot of voluntary organisations were established mainly in the fields of education, sport and culture. they also played an increasing role in providing services in health care and social support. this process was cut off by world war ii and afterwards with an exported version of a totalitarian state. there were certain symptoms of a revival of the civil society in the 1980s and ngos were supportive factors of the transition in 1989-1990. after 1990 the hungarian state has had to manage a transition from the pre-weberian phase to a state with institutional capacities being able to implement the eu requirements. in this functional 61 type of transition state was the key actor. private enterprises and ngos were not strong enough to initiate an organic type of transition to a market economy and to a liberal democracy. during the last 15 years, ngos have become increasingly influential factors but their external pressure power is still not sufficient and they have limited capacities in taking over responsibility in service provision. 2. the european union is a unique construction in the european history. after several previous efforts of uniting europe by force, after world war ii west-european states decided to unite europe through peaceful co-operation between formerly rival european countries. there was a shift from territorial states toward european union. in the latest phase opened up in maastricht, member states have partly lost their traditional sovereignty. the influence of the eu has been increased not only in strengthening the economic and monetary union but also in the development of common regional policy, police coordination, coordinated border controls, environmental protection and common foreign and security policies. we must not overestimate this shift of responsibilities from the states toward the eu institutions. the eu basically is a regulatory state. it does not engage substantially in the redistributive, stabilization, and symbolic functions of government. by concentrating on the control and management of international externalities it can manage with a very small revenue base. in the territorial state – eu relationship basically the state is the principal and the eu is the agent. this can be proved by the fact that the extractive capacity of eu institutions is very modest: the eu spends only about 1.3 per cent of the combined gdp of its member states. (caporaso, 1996; majone, 1992) being a new member state, hungary has to learn the rules and regulations of the participation in the institutions of the eu. this is basically the task of the hungarian state, but also it has of great importance for representatives of the regions and of the autonomous networks, among them the ngos as well. all these actors of the accession process have to understand that the eu relies on a political division of labour between member states, focusing on social and redistributive policy and the eu institutions, focusing on regulatory policy. the eu rests on intergovernmental bargaining and decision-making, this is embedded in processes that are provoked and sustained by the expansion of transnational society, the prointegrative activities of supranational organisations, and the growing density of supranational rules (stone sweet and sandholtz, 1995). the eu is not a supranational state, but it is an ambitious intergovernmental organisation, basically limited to the implementation of those tasks, which are in the interest of the member states. the eu has fluidity and complexity and it is in constant transformation. the eu therefore should be understood as a process rather than a frozen institution. governance characterises the eu institutions. governance is about “coordinating multiple players in a complex setting of mutual dependence” and refers to “the patterns that emerge from governing activities” (kohler-koch, 1995, p. 188) in the eu, negotiations are the key processes and networks are they key structures. they have various levels and they contribute to the complex and dynamic nature of the eu. the different actors – among then the ngos – are not ordered hierarchically in a system of superordination and subordination. eu is rather a complex policy network with diffuse formal political structure and it gives rise to more informal structures. the hungarian ngos have to learn how to move in this set of networks, how to explore common interests and aspirations with other csos and how to articulate their own interests at the eu level. 62 a 1992 inventory identified some 3000 special interest groups of various kinds in brussels, employing up to 10000 persons – approximately the same number as commission officials, excluding translators and secretarial staff (grande, 1997). these groups represent not only business interests, but labour interests, public interests (for example, environmental and consumer groups) as well as territorial interests. the eu networks – containing of ngos as well – are relatively non-hierarchical. through participating in these networks, the hungarian ngos can become a part of lobby power in two directions; to the direction of the eu institutions and also to the opposite direction. they may become vehicles of “reverse lobbying”, supporting the commission’s policies by putting pressure on governments, business associations and other actors at the national level. obviously, there is a certain division of labour between several ngos and the commission that, in turn, needs the ngos as coalition partners in policymaking. 3. regions have been challenging the territorial state from another direction than the eu. they have become key actors of the politico-administrative setting because of a systemic and comprehensive decentralisation. they express what is unique is europe: its diversity and variation. globalisation has been accompanied by regionalisation, and the two trends reinforce one another. there are complementary relationships and tensions between them at the same time. regionalisation was a general trend in the eu member countries. political power and public services were transferred from the central government to administrations and councils in the regions. now we can speak about “the regions of europe”. following the period of twenty years regionalisation, researchers came to the conclusions that institutional effectiveness and economic prosperity of a region is closely related to the level of civic involvement (putnam et al, 1993). this means that economic progress and institutional effectiveness depends on a well-developed civil society and social networks; the various forms of public involvement are the most important factors of regional development. this statement can be proved for instance with the italian process of regionalisation. it is well known that in the early 1970’s the political system of italy underwent a substantial and comprehensive process of regionalisation with significantly different results between northern and southern italy. economic progress and efficient institutions were achieved during the past decades in northern italy where civil society is deeply rooted in the history and public life is organised horizontally. in other words, in northern italy “civic-ness” predicts the economy; dense social networks are the pillars of institutional effectiveness. in southern italy, where public life is organised vertically, the concept of “citizen” never took root, power was based on clientism and for the average citizen, societal issues remained the responsibility of others. only few citizens were ready to participate in the public debate and their personal involvement was driven by the aim of getting personal advantages, rather than following collective purposes. the relationship between regionalisation and the strength of the civil society is a relevant problem in hungary as well. we have a delay in the process of regionalisation compared to the “old” member countries and among the reasons of this delay the relative weaknesses of the hungarian civil society can be found as well. a huge diversity can be observed in the hungarian civil society. in this period of transition and transformation new types of communities have already been formed but the old, traditional, clientism, a “protection mentality” is still characteristic in a series of communities as well. in a classification of the types of regions we can differentiate four mains types: physical-geographic regions (e.g. islands, peninsulas, plains, valleys) ethnic and cultural regions (e.g. basque, catalonia, wales, scotland, wallonie, sicily, lombardy) 63 functional regions (e.g. city-regions, urban-regions) administrative regions (e.g. länder in germany, departements in france, cantons in switzerland) it means that ngos are bound to various values. in the case of physical-geographical regions the physical configuration of a territory is anchored in the consciousness of its inhabitants with the help of common symbols. in the ethnic and cultural regions a regional identity is developed and it serves as value basis for public policy making. functional and administrative regions have common institutions. they are driven by competition and the development of administrative capacities. ngos have different roles in the different forms of regionalisation. one form is the decentralisation that is supported by the subsidiarity principle accepted in the eu. it is basically an administrative process by its nature and needs a functional approach of the ngos in order to being integral part of this form of regionalisation. the second form of regionalisation is bound to regional identities and cultural expressions. it is basically a political process and this political decentralisation – socalled devolution – needs a political approach of the ngos in order to participate. the third form of regionalisation is region building, a combination of political and administrative decentralisation. therefore it needs a combined, politico-administrative approach of the ngos as well. 4. the autonomous networks are relatively new actors in the public policy process. they are not continuous like the territorial state they consist of discrete points bound together by lines. we can differentiate the following types of networks: physical networks are the networks of highways railroads, waterways, airways, electric grids and telecommunications, institutional (or organisational) networks are actors of economic and political life, those that produce goods, those that administer and those that offer services, social and cultural networks are active in the fields of education, especially higher education, research, cultural life, and social environment. they are partly internal, partly transnational. most of the important economic and societal functions are organised in these networks in the european union, therefore we may speak about an emerging network society. this means that many of society’s major functions are organised as networks. as castells (1997, p. 469) explained, “networks constitute the new social morphology of our societies, and the diffusion of networking logic substantially modifies the operation and outcomes in processes of production, experience, power and culture”. ngos as (certain) forms of the autonomous networks have become not so hierarchical than the traditional forms of organisations. they rest on links among independent actors and on the coexistence of autonomy and interdependence. they are open systems compared to the conventional closed systems and they put more emphasis on interactions than orders and on informal, personal relations than formal relations of authority. ngos are integral parts of the autonomous networks. territorial states in the eu are often dependent on them in the area of social and cultural activities, for instance in providing development aid or halting the spread of epidemics. the role of nonprofit organisations is crucial in the different fields of economic life not only in service provision but also in the implementation of democratic control, for instance, in the field of environmental protection. especially important is the emerging role of the ngos in the institutional networks dealing with decision making in public policy and with provision of goods and services at the regional, territorial state, and eu levels. to sum it up: non-governmental organisations are connected to all of the above mentioned and described four key actors (or four organisational spheres) of public policy making. ngos have regular interactions and co-operations with the “eurocracy” on the european level. they are promoters of 64 “regionalism” and negotiating partners of the territorial state. they participate in the service provision and play an important role in the democratic legitimisation of the whole system. their role is also essential in representing the interests of different social groups. nonprofit organisations’ role in the accession process and beyond some of the above listed roles of nonprofit organisations are of crucial importance in the context of the eu enlargement. they are as follows: building trust and european identity, building solidarity. ensuring citizens’ participation in public policy making, implementing public policy. building trust and european identity. the process of the eu enlargement has made some already existing problems more visible. the european union as an economic and political entity has reached a high level of its development. however, despite its unquestionable economic success, the union has remained faraway political machinery for most of its citizens. in the long and complicated negotiations national interests are defined and represented by the national governments. numerous technical details become available for the public, but the negotiations quite often seem a “tug-of-war” and the outcome is just some compromise. people do not feel either involved in or even properly informed about the public policy making process. though it was called european community for several years, the eu has never been emotionally considered a community by its citizens. in a sense it has developed from a common market into an economic and political union without raising a general feeling that eu membership is a synonym for being a member of a special european community. wherever the membership became an issue, economic and political considerations, concrete advantages and disadvantages were the focus of attention. western european citizens are unlikely to think that their european status depends on whether their country has joined the european union or not. ironically enough, this symbolic meaning of the eu membership emerged only in eastern europe when the collapse of the soviet empire opened up new perspectives for the former communist countries. for a rapturous moment eastern europeans imagined that western europe would welcome them and the inevitable transformation of their economy could be carried out with the help and guidance of the european community (balázs, 1997; 6 and kuti, 1993). the disillusionment was prompt and cruel. eastern europeans had to face the brutal truth that their countries are not developed enough, not “civilised” enough, and not attractive at all for the european union (anheier and seibel, 1998). eu officials distrusting the somewhat chaotic eastern european institutions and western producers fearful of new competitors were equally reluctant to promote the immediate enlargement of the union. as a result, euro-scepticism had spread across eastern europe much before its first countries acceded to full eu membership. by the time the enlargement finally happened, the enthusiasm of the new members significantly decreased while the other eastern europeans bitterly speak about a new division of europe: “enlargement brings, no doubt, merits to new candidates and members, new challenges to both the eu and nato institutions, and a new east-west division between the newly enlarged euro-atlantic community and the rest of europe (aspirants and nonaspirants alike).” (tarasyuk, 2003. p. 4) the tension and distrust between the old and new eu members and the european countries, which remained outside the eu, are partly based on conflicting interests; partly they are an outcome of mutual ignorance and misunderstandings. as far as interests are concerned, voluntary organisations could do a lot in order to mediate between the different players and raise awareness of the interest conflicts. there is not even a hope 65 for reconciliation until the actors do not know, understand and appreciate each others’ points. once the positions are clarified and a dialogue has started, there is some chance that a compromise can be achieved. moreover, it may turn out that long-term interests of eu members and candidate countries are much less conflicting than the short-term ones. if leonard (1998, p. 5) is right that “europeans want the eu to solve ‘problems without frontiers’ (72 per cent see protecting environment and solving international crime and terrorism as priorities; 68 per cent support a common defence and military policy)”, then they are basically interested in further enlargement and present co-operation. similarly, close contacts and common projects may dispel prejudices resulting from the lack of knowledge or from fear and distrust of ideas different from our own. there is an extraordinary contrast between the strong european identity of the eastern european countries and their image formed by western europeans (kuti, 1998). much more direct contacts and a lot of personal experiences would be necessary in order to come closer to the truth which is probably in between. to encourage and organise this dialogue is obviously one of the most important missions of voluntary organisations and the only way of restoring european identity. building solidarity. whatever image they manage to develop and communicate, eastern european countries do need both financial and technical assistance. it is extremely important that the support coming from the eu funds be completed by private donations of the local, regional, national and international nonprofit organisations. these private donations are especially precious because they are an embodiment of solidarity, a basic value of the european culture. the foreign donations are important for eastern europe for two reasons. first, they can de facto play some role in the solution of social and economic problems. second, they express solidarity and symbolise the union of european nations. their ultimate message is that eastern europeans (either inside or outside the european union) are not alone, they can count on their more affluent counterparts all over the continent. at the same time, through their voluntary contributions, the donors are likely to get emotionally involved in the unification of europe, which may strengthen their own european identity. this second “solidarity-building” function of donations seems to be even more important than the first one. in order to fulfil this social function, a growing part of foreign donations should be shifted towards indigenous, grass roots, community-based voluntary organisations that are definitely closer to the citizens and more likely to meet their psychological needs than the national governments and the creatures of international bodies and foreign nonprofit organisations. it is similarly important that the nonprofit sectors of the new member states become active donors in the short run even if they will obviously remain recipients of foreign donations, as well. their presence in the system of foreign aid targeted to the non-member countries would be useful for several reasons. first, they have more knowledge about the needs and more contact with the potential supportees in eastern europe, thus they may contribute to increasing the efficiency of foreign support. second, they face a series of both positive and negative expectations from the part of the non-member countries. europe-wide solidarity can hardly develop if these latter feel deserted and neglected. third, the combination of the donor’s and donee’s roles may help the npos of the new member states to feel more or less equal with their western european counterparts. this equality is a necessary condition for becoming conscious and self-confident actors of the networks that try to influence the public policy making process. participation in public policy making. to make the enlarged europe work is an extremely complex task, which can be performed only through the mobilisation of the whole society. voluntary organisations can play a crucial role in encouraging participative citizenship. npos of the new member states are definitely willing to become useful allies of the already existing advocacy organisations of the european union. 66 the motivation for shaping public policy was exceptionally strong in eastern europe after the collapse of the state socialist regime and has been made even stronger by the recent social developments and the lack of an appropriate social policy response to them. a series of voluntary organisations have been established in order to actively influence policy formation, to represent the interests of specific social layers and large groups of the citizens. by now, these npos have accumulated some experience in participating in the policy dialogue without encroaching on the sphere of political parties. the protest culture (szabó, 2004), which was practically non-existent under state socialism, has developed a lot. there are lots of demonstrations organised by voluntary organisations, trade unions, interest groups, sometimes even by the business community against additional taxes, industrial-technological projects, pollution, discriminative government measures etc. it also happens, though less frequently, that npos develop their own concepts and policy proposals, raise questions, suggest solutions and strategies. important initiatives come from voluntary organisations; several of them are able and willing to develop their own policy alternatives and to start a dialogue with political decision makers at the local, regional and national level. by contrast, they do not have much experience in acting at an international level. there is a general feeling even among the locally quite successful advocacy organisations that they are not well informed enough and organised enough to have an influence on the eu policy. they know they should follow the political debates, get access to the different proposals, be knowledgeable about the relationships, keep contacts with politicians, commission officials and other npos, be prepared to analyse the newly emerging issues and start action at any moment when it is necessary. however, these kinds of knowledge and skills are not easily accessible. it is to be seen whether they will be able not only to join the transnational advocacy networks but also to shape the strategy and actions of these international ngos. another question is how they will behave in delicate situations when the position of the international umbrella organisations and the interests represented by the national government are different or even conflicting. the solution of this kind of problem can be especially difficult for those npos which are also active in implementing public policy and, consequently, they are dependent on government funding as service providers. implementing public policy. a large part of the voluntary organisations are involved in tackling the problems which need special attention in the new member states according to the eu priorities (kuti, 2001). most of these problems (environmental pollution, regional inequalities, social and economic exclusion of disadvantaged groups, unemployment etc.) are of the same kind: they cannot be even alleviated (not to mention to be solved) without an active and creative participation of citizens’ organisations. in fact, the nonprofit service provision in these fields emerged spontaneously; its development was not a response to the challenges of the eu-accession (harsányi, 2004). when the political changes opened the floor for the nonprofit service provision in the early 1990s, citizens created several npos in order to meet the unsatisfied demand or at least to alleviate the shortage in the fields of health and social care (e.g. sos telephone lines, family planning assistance, home care for the elderly, special assistance for the disabled etc.), in education and culture (integrated education programs for handicapped children, preparatory courses for the poor, language schools, programs for the preservation of minority culture etc), in environment protection and emergency (projects related to natural disasters, pollution monitoring services and pollution abatement programs etc.), in economic and community development and public safety (sheltered employment and training for the unemployed, neighbourhood watch services etc.), and in human rights (psychological support for victims, legal consulting, protection of the consumer rights etc.). though the initiators have been mainly the potential clients (e.g. unemployed people, parents of handicapped children etc.) or enthusiastic professionals (teachers, librarians, social workers, artists 67 etc.), co-operation with the government and funding from eu sources are frequently important elements of these service programs (jenei and kuti, 2003). it looks probable that this co-operation will become even more intensive as a result of the eu membership and service providing nonprofit organisations will play an important role in implementing the common european policy. the eu accession’s first impacts on the nonprofit organisations only four month have passed since the eu enlargement. most of the possible impacts of the membership simply cannot evolve for such a short time. consequently, what we can say about these impacts are rather impressions and guesses than empirically based research findings. the interest of the european union in the voluntary sector works as a signal for the national government and the business community. the eu is able to influence both the general climate and the attitudes of economic actors toward non-governmental organisations. when it states in one of its documents that “public authorities should review public policy and make proposals about what would need to be done for policy to help the voluntary sector to increase its capacity and where relevant to improve its skills in order to that it can best fulfil the new roles it is being called on to address” (communication..., 1997, p. 11), this is an important message for the local decision makers and for the nonprofit sector itself, a message which definitely strengthens the sector’s position. beyond this general political support the eu can influence the development of the hungarian nonprofit sector in more concrete ways, as well. its attempts to develop a common legal regulation for voluntary organizations (anheier and kendall, 1997; kendall and anheier, 1999) serve as a point of orientation for the national policy makers. its emphasis on the principle of subsidiarity and its recommendations on the public/private partnership have some impact on the hungarian welfare system, on the division of labour between private nonprofit and public service providers, thus on the npos’ capacity to plan, finance and implement service delivery programs. similarly, the region as a focus of eu development policy creates a climate that is very favourable for all kinds of regional co-operation. in addition, a significant part of the support from the eu structural funds is distributed through competition open to npos. about half of the calls for applications that have been published between may and august 2004 mentioned the nonprofit organisations among the possible recipients. the amount of the support for which the npos can compete is 155 billion huf (620 million euros). support from the eu structural funds available for nonprofit organisations through open competition in hungary between may and august 2004 field of the supported projects amount of available support thousand huf thousand euro community development, local and regional infrastructure 52,528,700 210,115 education and research 44,922,860 179,691 economic development 26,151,040 104,604 employment 22,840,063 91,360 social care 8,455,440 33,822 total 154,898,103 619,592 note: information on the amount supporting environmental projects is not available, yet. source: www.nfh.hu about 10 per cent of this sum is only available for nonprofit organisations involved in alleviating the unemployment problem and offering sheltered employment for the disabled and other socially deprived people. the rest of the money is targeted to several kinds of economic actors (including public institutions, local governments, and for-profit firms). it is to be expected that there will be 68 a sharp competition and nonprofit organisations will finally receive only a small part of the whole amount. however, for some of them the eligibility for this kind support may represent an important step towards the consolidation of their service providing activities. there is also an indirect financial impact of the eu accession. several national grant-making bodies seem to realise that special support is needed in order to enable the hungarian npos to compete for the eu funds, to pay the membership fees of the international advocacy organisations, to be present in brussels and at the key european events. for example, this summer the national civil fund4 distributed 368 million huf among nonprofit organisation which applied for grants in three eu-related fields, namely the “civil participation in the decision making process in the european union”, “assistance in npos applications for eu funding”, and “promotion of the hungarian npos presence in transnational organisations, supporting the international exchange and dissemination of experience”. there are some signs that npos can also be involved in monitoring and evaluating the eu-funded programs. this is typically the kind of activity in which the local npos’ participation is not only helpful but also indispensable. a careful investigation into the large scale, far-reaching social and economic impacts of these programs is hardly possible without the involvement of nonprofit activists and researchers who can scrutinise development projects from the perspective of civil society. this co-operation of different experts will hopefully yield useful and insightful studies. conclusion to be summarized, one can identify three different approaches in the debates about goals and functions of voluntary organisations and possible policies toward the nonprofit sector, namely those of the “économie sociale”, “social capital” and “civil society”. “économie sociale” (social economy) is originally a french concept that has been accepted by the european union, too. it is found attractive by a growing number of hungarian policy makers because it emphasises the importance of sharing responsibility between governments and all kinds of private social establishments and services, including not only the nonprofit organisations but also the co-operatives and mutuals. this approach implies that a major goal of the relatively broadly defined nonprofit sector is to participate in solving economic and social problems. the “social capital” concept (based on the work of putnam et al., 1993) places the emphasis on special features of social organisation, such as trust, norms, and networks that can improve the efficiency of society by facilitating co-ordinated actions. this efficiency is desperately needed in the new member states where the whole fabric of society was seriously damaged by a series of authoritarian regimes. hence, building social capital is of utmost importance all over eastern europe, including hungary. “civil society” is a political concept revived and adapted to the actual conditions in eastern europe in the 1980s. civil society is constituted and developed by various forms of civic initiatives and self-organisation, mainly institutionalised as voluntary organisations that mediate between the citizen and the state, and between the citizen and economic power. when used in setting the goals for nonprofit organisations, this approach results in a focus on the civic education aspect of voluntary activities and service programs. 4 the national civil fund is the largest hungarian grant-making organisation which exclusively supports the development of the nonprofit sector as a whole. it was established by the government, it is financed from the central budget, but the distribution of the grants is not controlled by the government. the priorities and support policy are developed by a council elected by npo representatives. the actual grant making decisions are also made by special elected boards. 69 the goals of the nonprofit organisations and the policies toward the nonprofit sector are numerous and varied. the definition of the goals and the evaluation of the impacts, naturally enough, depend a lot on the position of the actors who make the decisions. theoretically there is a general agreement on the importance of all three approaches, but in fact most politicians and government officials tend to give preference to the social economy approach. they clearly think that nonprofit organisations running output-oriented service programs are more likely to directly help them in solving social problems in the short run. by contrast, several activists and some policy makers would give preference to those voluntary actions and nonprofit projects that can considerably increase social capital. they argue that building trust, networks, relations and improving co-operation skills are outstandingly important in hungary where the economic and social transition resulted in growing inequality and newly emerging problems like unemployment, homelessness, drug addiction, extreme poverty that had not existed before and are extremely dangerous for both solidarity and adaptation skills. a large part of the voluntary sector leaders are deeply committed to the civil society approach. they emphasise the importance of developing a common strategy with a large view of society, to develop the feeling that civil society organisations have a mission not only of solving small, specific problems, but also to deal with major issues of the society as a whole. the actual weight and influence of these different approaches in forming the national and the eu policy might have an important impact on how large and strong the hungarian nonprofit sector will be, to what extent it will be able to actively work for a europe of citizens. references 1. anheier, helmut k. and kendall, jeremy (1997) the nonprofit sector and european union policies: what are the issues? paper presented at the 1997 voluntas symposium, london school of economics and political science, london 2. anheier, helmut k. and seibel, wolfgang (1998). the nonprofit sector and the transformation of societies: a comparative analysis of east germany, poland, and hungary. in w. w. powell, and e. s. clemens (eds.), private action and the public good, yale university press, new haven and london 3. balázs, péter (1997) integration ‘traps’ in the relationships between the european union and east central europe. közgazdasági szemle 44/11 4. caporaso, james a. (1996) the european union and forms of state: westphalian, regulatory or post-modern?, journal of common market studies, 34 5. castells, manuel (1996) the rise of the network society, oxford: blackwell 6. communication from the commission on promoting the role of voluntary organisations and foundations in europe (1997) commission of the european communities, brussels 7. harsányi, lászló (2004) organised civil society in hungary. in: ágh, attila (ed.) magyar hozomány. magyarország az eu-csatlakozás küszöbén. bm kiadó, budapest 8. jenei, györgy and kuti, éva (2003) duality in the third sector. the hungarian case. the asian journal of public administration 1 9. kendall, jeremy and anheier, helmut k. (1999) the third sector and the european union policy process: an initial evaluation, journal of european public policy, 2 10. kohler-koch, beate (1995) the strength of weakness: the transformation of governance in the eu, in sverker gustavsson and leif lewin (eds) the future of the nation state. stockholm: nerenius & santerus 11. kuti, éva (1998) easing the transition? ngos and eu integration for central and eastern europe. in: ian christie (ed.): eurovisions: new dimensions of european integration. demos 12. kuti, éva (2001) different eastern european countries at different crossroads. voluntas 1 13. leonard, mark (1998) making europe popular: the search for european identity. demos, london 14. majone, giandomenico (1992) regulatory federalism in the european community, environment and planning c: government and policy, 10, 299-316 70 15. putnam, robert d., leonardi, r. and nanetti, raffaela y. (1993) making democracy work. civic traditions in modern italy. princeton university press, princeton, nj 16. salamon, lester m., anheier, helmut k., list, regina, toepler, stephan, sokolowski, wojtech and associates (1999) global civil society. dimensions of the nonprofit sector. the johns hopkins center for civil society studies, baltimore 17. stone sweet and sandholtz, integration, supranational governance, 5 18. szabó, máté (2004) civic engagement in east-central europe. in: zimmer, annette and priller, eckhard (eds) future of civil society. making central european nonprofit organisations work. vs verlag für socialwissenschaffen, wiesbaden 19. tarasyuk, borys (2003) the new east-west divide. ngo news 22. spring-summer 20. perri and kuti, éva (1993) into the european community: impacts of future membership on hungary’s nonprofit sector. journal of european social policy 4 untitled 197 abstract based on a socio-spatial analysis, this paper aims at drawing the authorities’ attention on a few bucharest ghettos that occurred after the 1990s. after the revolution, bucharest has undergone many socio-spatial changes. the modifications that occurred in the urban perimeter manifested in the technical and urban dynamics, in the urban infrastructure, and in the socio-economic field. the dynamics and the urban evolution of bucharest have affected the community life, especially the community homogeneity intensely desired during the communist regime by the occurrence of socially marginalized spaces or ghettos as their own inhabitants call them. ghettos represent an urban stain of color, a special morphologic framework. the bucharest “ghettos” appeared by a spatial concentration of roma population and of poverty in zones with a precarious infrastructure. the inhabitants of these areas (zăbrăuţi, aleea livezilor, iacob andrei, amurgului and valea cascadelor) are somehow constrained to live in such spaces, mainly because of lack of income, education and because of their low professional qualification. these weak points or handicaps exclude the ghetto population from social participation and from getting access to urban zones with good habitations. the socio-spatial dimension of the bucharest ghettos viorel mionel silviu neguţ viorel mionel assistant professor, department of economics history and geography, faculty of international business and economics, academy of economic studies, bucharest, romania tel.: 0040-213-191.900 email: viorel.mionel@rei.ase.ro silviu neguţ professor, department of economics history and geography, faculty of international business and economics, academy of economic studies bucharest, romania tel.: 0040-213-191.900 email: silviu.negut@gmail.com transylvanian review of administrative sciences, no. 33 e/2011, pp. 197-217 198 1. theoretical notions about “ghetto” and “ghettoization” the process through which the formation of a closed physical and social space, as well as a marginal space is formed in an urban area where ethnic, racial, sexual etc. minorities live, due to poverty and other social constraints is called ghettoization (gyöngyi and lászló, 2007, p. 279 in zamfir and stănescu, 2007). this definition is almost identical with the one given by peter marcuse (2001, p. 4), who states that the ghetto is the geographic area of spatial concentration, that is forcefully used up until the dominant society separates or limits a group of persons, defined as racial, ethnic or foreign and which is treated as inferior by the dominant society. such studies can be found in the romanian specific literature as well, but they refer mainly to the formation of some poverty “bags” in the urban space, often referred to as ghettos or slums. the notion of “ghetto”, in comparison to the one of “slum” has a prevalently ethnic and/or racial connotation (mionel, 2010, p. 125 apud popova, 2010). the term – which is european but which was used in the united states in the past century both in the urban geography and sociology – is ethnic in nature. this urban socio-spatial structure originates in antique rome. in the medieval europe, the ghetto identified a particular part of the city where jews used to live, being separated from the christian population of the city. in venice, a ghetto also meant a special place belonging to the jews where one could find a workshop in which workers used to cool the casted iron. it was a campo gheto1. the american sociological literature assigns a racial connotation to “ghettoization”, mostly because these studies often focused on the places inhabited by the afroamericans representing black immigrants from the south attracted by the industrialized cities of the north. this movement from south to north was generated by the discrimination policy promoted by the white population. in other words, the ghetto refers to the segregated neighborhoods which are mostly populated by ethnic minorities that are usually very poor (gyöngyi and lászló, 2007, p. 279). such cases can also be encountered in bucharest. in certain neighborhoods there are large areas that are inhabited by ethnic minorities – mainly roma – with a low living standard; there are such areas in the ferentari, rahova and militari neighborhoods. the economic changes that occurred mainly after the 1950s, as well as the flows of immigrants, revived the term of ghettoization. this time, the term was used to designate the new realities of poor ethnics; the maghrebians in france, the turks in germany, the greeks in sweden, and recently, romanians in italy. the process of “ghettoization” is very ample and extremely complex. generally speaking, this is the process through which very poor neighborhoods are formed, the neighborhoods being closed from both social and cultural points of view and usually populated by ethnic groups. the process itself is complicated and specific to the social and historic context in which it takes place. however, what is defining for the 1 in an approximate translation, it used to mean the place of freezing the iron. 199 ghetto and the ghettoization are linked to the ethnic composition of the respective geographical area. thus, the ghetto is isolated and segregated as well, a fact which differentiates it from other forms of segregation. figure 1: the stages of ghettoization process through the disadvantages cycles source: made by author the process of ghettoization involves certain stages (henderson and ledebur, 1972, pp. 180-189) in the formation and development of th e ghetto (figure 1): 1. the discrimination on the labor force market; 2. the economic devaluation of the zone; 3. the discrimination on the real estate markets; 4. the discrimination regarding the access to services; 5. the architectural space degradation; and 6. the isolation and self-isolation. the stages mentioned above are self-generating and lead to poverty, dirt and exclusion. what happens subsequently to the six stages is nothing else than what is called the disadvantages cycle (omenya, 2003, p. 14). this cycle of disadvantages is a result of the segregation itself. as far as perception is concerned, the geographical space that is represented by the ghetto is seen by the majority of the population as a different physical and social reality, with inhabitants defined as different and quite often inferior. such places show up on the mental maps of the majority of population as being “shady” urban spaces. even in our country, the dimension of the issue is growing and this fact can lead in the future to the generalization of the collective behavior such as urban riots that could later cost important resources for reinsertion and for reintegration. 200 2. research methodology the analysis of the socio-spatial dimension of the bucharest ghettos is based on three types of data: a first set of data coming from the relevant literature regarding the concepts of ghetto and ghettoization and from the analysis of specific papers and press articles that refer to the bucharest ghettos; the second package of information comes from interviewing a number of persons having their residence in the analyzed spaces; and the third set of information was selected from some field analyses. interviews were more like open discussions with some of the locals. following discussions in the ghetto, some qualitative information were collected, which were correlated subsequently with data from national literature concerning this topic. furthermore, the study started from a few key-words that helped us to decipher the urban dysfunctions, such as: ghetto, poverty, urban segregation, community, local administration, urban space, education, social assistance etc. 3. the urban segregation in bucharest: overview after 1989, the bucharest municipality faced many urban transformations. the modifications that happened in the urban space manifested both in the area of technourban dynamics or in the one of urban infrastructure in general, as well as in the socio-economic field. the dynamics and the urban evolution of bucharest marked the life of the community and what is more, the community homogeneity that was so much aimed at during the communist regime. democracy and capitalism brought advantages and disadvantages to the city. among the advantages, one could count: social freedom, a bigger residential mobility, the possibility to earn a bigger financial income, the possibility – depending on the individual professional capacities and abilities – to obtain a better job, the insertion on the bucharest market of multinational companies etc. however, on the other hand, disadvantages are not less numerous at all. together with the possibility of a bigger earning, socio-economic discrepancies showed up. certainly, there were such social differences before the democratic revolution too, but they were much smaller in comparison to what one may observe after 1989. the socio-economic discrepancies range is quite ample starting from the income level, the quality of the residential space, the dimensions and the number of properties, life quality or the living standard to the spatial individualization of certain social classes. more exactly, the urban evolution of bucharest for the last twenty years has manifested in a quite chaotic way, despite the fact that it was at another scale and intensity in comparison to the previous periods of time. the persons with high and very high income or urban privileged, or the new urban elites, as these inhabitants are also called, wanted to occupy the best residential spaces or to settle on the town skirts where they created numerous community clusters based on high level of income. this evolution is natural if one takes into account that every human being who enhances the level of his/her income wants to improve his/her living standard, this fact also involving a new and spacious house in a quite central/good area/zone, far from the 201 daily agitation of the city. however, things did not always evaluate in a desired urban direction. frequently, new owners built their residences in a chaotic way, in the peripheral space. simultaneously, the residential projects that were initiated by the real estate developers intersected at the periphery with houses built by the owners, on their own, visually inducing the sensation of an amalgam of space which is not systematized, evolving in a chaotic way. almost without exception, in the bucharest neighborhood, along the main roads one may come across this type of landscape. the separation from the city population or the development towards periphery in search of a “country-side” atmosphere, generated a socio-economic segregation in the bucharest peripheral space. this is obvious in areas such as pipera in the north of bucharest and prelungirea ghencea in the south-west (figure 2). figure 2: the map of bucharest urban segregation: empirical evidence source: made by author a situation somehow linked to the previous one can be found within the city. those who are willing to lead a more quiet life within the city try to settle in areas with old houses or villas, built long time ago. these zones are far from the noise and agitation of the city center with a lot of greenery and tranquility, at a great distance from the big crowded boulevards, such as the cotroceni, kiseleff or tei districts. here, as well as at the periphery, one can notice a socio-economic segregation or self-segregation of the new urban elites. 202 on the other side of the barricade there are the poverty zones or bags and they are not few, at all. in these urban “lock-ups”, a great deal of the marginalized live. the most, if not all of the areas belonging to these outsiders were formed after the revolution. their appearance is the result of socio-economic and political postrevolution changes. the transition period disturbed the ancient social structures of bucharest. nevertheless, one must not forget the fact that, being the capital of romania, bucharest kept attracting people from outside the city: in order to find a job, to study or to carry out other activities. not all of them succeeded and not all of them acquired a qualification. as a consequence, a part of those who came – mostly those unqualified – ended up settling in the marginalized areas, depending on the financial possibilities they had. this aspect refers to poverty and urban segregation, excluding the persons who came to study and who belong to other categories of sociospatial dimensions and possibilities. social segregation caused by poverty is present in many areas of bucharest. one can also notice that they differ in terms of dimension. maybe the most relevant example is the ferentari-rahova zone in the fifth district, then aleea livezilor, tunsu petre, zăbrauţi, amurgului and the prelungirea ferentari perimeter where social problems are profound. the urban space covers an extreme form of segregation in this case. segregation caused by the poverty can be found in all the districts of bucharest. it is worth mentioning that there are also several micro-spaces of incipient segregation. by means of analogy with the already world-wide consecrated slums, forms of geographic segregation have occurred in bucharest too. however, they are not the result of human concentration in an already built urban space which is subject to change by the inhabitants’ quality, but, on the contrary, they are areas in which social segregation has created thoroughly new sites or spatial patterns. these patterns made of huts which do not look at all similar to what is known to be a house/building in bucharest and which look strikingly like the extreme zones of segregation from the periphery of big cities in the world, will be referred to as slums in this analysis, in order to avoid the terminological confusion which may occur in connection with the romanian term “mahala” (approximate equivalent to slum), which in bucharest has another socio-spatial connotation). such an area, formed by more than thirty shacks/hovels there are in the district 6 of bucharest in a quite civilized zone. there was a similar place in the văcăreşti area up until 2010 when the public authorities decided to stop the phenomenon by demolishing the shacks or the informal settlement as sociologists call it. 4. empirical evidence on several bucharest ghettos the so-called bucharest ghettos, as their inhabitants call them, do not resemble very much their american counterparts from the racial composition point of view, but they rather define themselves by a specific spirit. they represent a stain of urban color, a special morphologic framework. the ghetto connotation in the bucharest area was born as a consequence of the spatial concentration of poor roma population in 203 zones with precarious technical and urban infrastructure. in fact, the term of ghetto comes from the spatial predominance and from the ethnic homogeneity of roma population, locally associated with the phenomenon of poverty. social problems of the ghettos are similar to those found in florencio varela, a ghetto from buenos aires (saravi, 2004, p. 36). the inhabitants of these zones are somehow constrained to live in such spaces, mainly because of lack of income, education and because of their poor professional qualification. these types of disadvantages or handicaps exclude such individuals from the social participation and from getting access to urban zones with good habitations. such areas are present mainly in districts 6, 5 and 4, being less numerous or absent in the other administrative units of the city. 4.1. the zăbrăuţi ghetto the zăbrăuţi ghetto is formed by houses originally built for single persons who came to bucharest for work. the more ample general profile that determined the process of segregation specific to this area was created in the 1960s. in order to improve the housing shortage, in the context of an ambitious extensive program of industrialization, one of the components of the habitation policy was represented by the construction of houses for single persons. these houses have mainly been occupied by the young employees who came from the rural environment. that was meant to be a temporary situation and the communist authorities wanted to demolish them ever since 1980 because of their wearing out and low quality that made their rehabilitation extremely expensive. in 1989, the inhabitants of these houses were evacuated and the blocks were erased from the property registers of the enterprises they belonged to, being scheduled for demolition. the project failed at the same time with the communist regime and the degradation of these houses advanced seriously after the revolution. in parallel with this, their doors, windows and sanitary system were stolen or destroyed (zamfir and rughiniş apud zamfir and preda, 2000). in the spring of 1990, bucharest registered a great demand for residences; however the offer was almost inexistent. consequently, new people moved in the old ghetto and this led to occurrence of the zăbrăuţi community. whoever wanted to come in the zăbrăuţi area could find a shelter which could be transformed into a habitation, rooms being empty and available. the new inhabitants rapidly attracted relatives, friends or other acquaintances. over time, these rooms have become the object of an informal commerce. it is true that only the right to occupy such a residence/ room could really be traded because there was no owner of the residence. in the 1990s, the ghetto did not have the required utilities such as water, electricity, gas or sewerage. however, through a rehabilitation project within the united nations development program (undp), these blocks’ infrastructure was improved, cold water was supplied and the sewerage network was repaired. however, problems continued to arise. 204 figure 3: the zăbrăuţi ghetto, ferentari neighborhood source: made by author if the pipera periurban neighborhood represents the most typical segregation of financially superior classes, the zăbrăuţi community, as well as the other areas mentioned so far, is a typical example of geographic segregation of poor persons. a large number of the ghetto inhabitants are of roma ethnicity. foto 1: a usual landscape from the zăbrăuţi ghetto source: http://bukresh.blogspot.com, http://santierul.wordpress.com/ and http://www.reportervirtual.ro 205 from the geographic point of view, the space occupied by the zăbrăuţi ghetto represents one of the most marginalized areas of the city. situated in district 5 – maybe the poorest district of bucharest –, the ferentari neighborhood, this ghetto is formed by nine block type buildings that include small studios with bathroom and kitchen. the zone is territorially bordered by the pieptănari boulevard, zăbrăuţi street and ştefan popa street. the quality of the residences is rather low and the habitable space is extremely small. the garbage is thrown out of the window, in the spaces situated between the blocks of flats and electricity supply is still a problem. at the end of the 1990s collective power counters were installed, but because of the high consumption, the inhabitants could not pay or they refused to pay the invoices and, consequently, their access to the public network was cut off. even at present, zăbrăuţi is the zone with the highest level of power theft in bucharest (zoltan, 2006). the question which is asked is: what contributed to the formation of such a segregated community – a ghetto? the answer lies partially in the social context created after the revolution, not only at local level, but also at national level, because such ghettos are not accidentally encountered in bucharest; they are present in other cities of the country, as well. thus, the relative prosperity of bucharest attracted many young people in search for opportunities and the residence crisis which followed the revolution urged them to adapt by improvising, to find solutions. the nine blocks of studios for singles offered such solutions. amid the alarming rise of prices for good residences and faced with the lack of subsidized rents from public funds, the option to occupy a habitation without payment or purchasing it at extremely reduced2 prices represented the most viable and convenient solution for some categories of people. the great majority of these inhabitants are young families and the zăbrăuţi area represented for them the opportunity to live in the capital city, since they are allogeneic. another category of “owners” came here, after some traumatic experiences, being marked by extreme poverty and ending in some cases with the loss of their own habitation. as a consequence, many of them perceived the settlement as an essential stage in their social (re)invention.hence, the problems specific to these areas are: – lack of living room, as these habitations are much under the normal standards ; – lack of hygiene, as well as the lack of elementary facilities of habitation (furniture, sanitary equipment etc.); – lack of identity documents; – lack of ownership rights in a great number of cases; – lack of education and a high level of school dropout; – violence; intra-community conflicts; – high delinquency (robberies, protection taxes, menaces, kidnappings etc.); – drug trafficking; – lack of sanitation which favors the persistence of garbage; and 2 the flats in this area obtained through informal commerce were at least ten times cheaper in comparison with those from the real market. 206 – pollution caused by the abundance of garbage which are often thrown out of the window; a genuine urban ecologic disaster because the multitude of garbage attracted the presence of the vectors of diseases dissipation (http://stirileprotv.ro/)3 (rats, bugs etc.) what is interesting is that in spite of all serious poverty problems the area faces, the community polarization is very intense, thus creating an internal blockage as far as the taking of immediate actions is concerned in order to diminish the phenomenon. as for the social links and connections which human beings have at their disposal or the possibility to come in contact with the outside world, there are serious problems. the internal polarization leads to a radical attitude of the community which is translated through a rejection of outsiders. the entire dynamics of the socio-spatial relationships is directed by the tension of two fundamental attitudes towards “the opportunities” offered by the neighborhood. for some human beings, zăbrăuţi embodies the chance of a new life and for others it represents the perpetuation of a degrading life of poverty and adaptation to dirt. simultaneously, the zăbrăuţi ghetto forms an atomized fragmented society, crossed especially by relations and kinship networks and immediate vicinity. insecurity deriving from the need to survive, which is doubled by the diffuse insecurity coming from a rather hostile community generates an ambivalent attitude: on the one side, individualism and isolation, for fear of contacts with the others and on the other side, the acute need of solidarity and social support at a collective level (zamfir and rughiniş, 2000, pp. 65, 76). 4.2. the aleea livezilor ghetto according to the association for the ferentari community development (acdf), the disadvantaged groups from the ferentari neighborhood include approximately 12,000 persons, concentrated mainly in the aleea livezilor–tunsu petre, zăbrăuţi, prelungirea ferentari and amurgului areas. except for the last area, situated in the neighborhood of rahova, all others are situated in the ferentari neighborhood; administratively, these units belong to district 5 of the capital city. here, as well, the majority of those who populate the aleea livezilor ghetto are formed by young families, socially excluded and multifold marginalized. the history of the community, the social exclusion of the inhabitants along with the very precarious infrastructure, confer to this neighborhood an aspect of closed, hermetic community. the problems the community face are almost similar to those in the zăbrăuţi ghetto: precariousness of sanitary services, lack of identity documents, a low level of education, lack of medical insurance, of medical assistance and of sanitary 3 in a piece of news entitled the zăbrăuţi ghetto from the capital – city, a real outbreak from july 2010, posted on the site http://stirileprotv.ro/, it was stated that ”the garbage has soared to the sky, the rats lurk and life goes on in the unbearable smell”. 207 units able to provide services to those in need, insanitary habitation spaces4, an enhanced risk of getting sick, lack of sanitary education, drug use (popular among young people), lack of playgrounds for children who often frolic on the fields full of garbage and syringes from the drug consumers, lack of communication with the relevant authorities etc. figure 4: the space occupied by the aleea livezilor ghetto, ferentari neighborhood source: made by author being the biggest space affected by urban segregation ending in a closed community of the ghetto type, this area (aleea livezilor–tunsu petre) deserves greater attention both for geographical reasons and for potential difficulties. from the geographical point of view, namely the urban spatial distribution, the respective ghetto is bordered by prelungirea ferentari, lacul bucura, aleea livezilor, imaşului, lacul orza, trăgaciului and tunsu petre streets. the zone inside these street limits includes approximately sixty residences made up of studios similar to those in zăbrăuţi classified as level 3 of comfort. the inhabiting surface in these rooms/studios does not exceed 17 m². in many cases, such studios make a home for at least three-four family members; even more, sometimes. a realistic analysis of the situation has revealed the serious problems this community is faced with. an acdf group of initiative has rigorously evaluated these problems over a period of time from october 2009 to january 2010, and has reached the following conclusions (http://asociatiaferentari .blogspot.com): 1. a first cause which leads to the exclusion of this community is the lack of identity documents for its members. from this point of view, two categories of people have been established: 4 the reference to the inappropriate habitation spaces by the association for the ferentari community development is made in the following way: the disadvantaged population is concentrated on studios of the ghetto type. 208 people that had identity documents but lost or destroyed them, including those whose expired identity documents could not be renewed for lack of officially recognized residence; and people who never possessed an identity document. the number of those in the second category is more reduced as compared to those in the first category. 2. the great number of persons that reside in this area without legal forms. abusive occupation or purchasing of flats without the property documents add as burdens to the inhabitants who cannot benefit from social protection as long as they live outside the habitation law. 3. restricted access to the workforce market due to low professional qualification. being unable to be employed, many persons work illegally. 4. one of the biggest problems this social group confronts with is the low quality of their residences. paradoxically as it may seem, there is an important segment of inhabitants that live in insanitary studios which are deprived of water, heating or gas supply. many buildings are not even connected to the heating system of the zone. the basements are flooded because of the drain system degradation. these are the conditions which many families with a significant number of children are exposed to. 5. diseases such as b and c hepatitis, tuberculosis, hiv, pulmonary diseases, cardiovascular disease, diabetes etc., are frequently encountered in the aleea livezilor ghetto. moreover, the high consumption of injectable drugs is another factor that affects the inhabitants’ health. according to acdf, those who are addicted to injectable heroine frequently share syringes, which alarmingly increase the risk of getting hiv and c hepatitis. 6. children represent the most exposed category. their playground is near the garbage perimeter where syringes used by the drug consumers are thrown. children are not carefully supervised as parents are either away with work or in prison. often kids play with the syringes that are thrown anywhere in the street by drug consumers, this being the biggest risk for their health. 7. in comparison with the other bucharest ghettos, the one in aleea livezilor faces the biggest difficulties as far as health insurances are concerned. being unable to pay their taxes at the home health insurance, they are not eligible to have a family doctor or health services in general. only in some extreme emergencies they ask for help at the health units. the inhabitants often state that the sanitary units of all type are placed at a great distance from their community. 8. the lack of a local health unit is another serious problem of the community. the nearest health unit is at ten bus stations away from the community. even so, it is not available for all members. however, until 2002 there was a health clinic in the area, but it was decommissioned because of litigation. for this reason, it cannot be renovated either by the local authorities, or by the ministry of health. 209 foto 2: landscape of the life environment in aleea livezilor source: http://soferul.wordpress.com/ the history of this community is similar to that of all the other ghettos in bucharest. it was formed in an area of empty, cheap, uncomfortable buildings once built for single people. however, what one must not neglect is that the lack of coherent and immediate policies for this type of urban ghettos can affect the city even more. the aleea livezilor community already entered in what was called in the theoretical section, the cycle or the circuit of disadvantages and deprivation. this spiral reinvents itself in a negative sense, both at the community and spatial level (santos, 1979). according to a previous analysis (enache, 2008), while the students of prestigious educational institutions from the capital city learn marketing and consider to study abroad, children from aleea livezilor go to school through mountains of garbage, having as a (possible!) main goal to get out misery. school no. 136, situated in the interior of the ghetto, completes the demoralizing framework of students’ perspective. “i do not think that there is a child, a single child in this school, who has not seen drugged persons”, states a girl in the fifth grade, quoted in the study. the school does not have a fence, and in its courtyard garbage is piling up. the perspectives of the pupils in school no. 136, if any are invariably linked to the desire to get rid of the stigma of their ghetto life: “not even friendship is friendship here”, says another girl in the seventh grade. to her, a better future means to go as far as possible from the place of her childhood. these children’s future options depend, in their turn, on education, on what they learnt to think, on the models they found in the environment they have lived in etc. for example, many boys want to become football players, while girls want to become actresses or to marry a “cool” guy, to be respected and “to avoid hassle”. 210 for the kids in aleea livezilor, school is not a life solution, as it does not offer models of success that may coincide with their real needs. it is difficult to evaluate the situation on a long term when educational needs depend on some primary needs that are to be solved. parents are rather preoccupied with covering their financial needs, for which education is not an immediate solution. therefore, the majority of parents encourage their children to work from their early childhood and to drop out of school. in one of the few happy cases, students succeed in attending an industrial high school after the gymnasium. under these conditions, those preoccupied to build bridges between school and community (enache, 2008) consider that the only chance for the kids in the aleea livezilor segregated community is education, with teachers that may become models for their students. one can rhetorically ask: “if teachers, who have the moral duty to do something for these kids, do not do anything, then who will?!” 4.3. the iacob andrei ghetto the geographical position of this ghetto within the city is also linked to the ferentari neighborhoods, in district 5 of the capital city. situated near the aleea livezilor ghetto, to the right side of the prelungirea ferentari street, the iacob andrei ghetto is second in rank in bucharest, as a segregated space, considering the number of buildings. the dimension and the spatial distribution include more than thirty-five blocks. thus, the iacob andrei ghetto forms the homogeneous urban space enclosed by the following streets: iacob andrei, soldat gheorghe florea, pavel constantin at the crossroad to căpitan constantin radu, close to the ferentari atab (autonomous transport administration of bucharest) depot. the buildings in this area are extremely degraded and need serious consolidation works. the distressing landscape of these buildings is well-emphasized in an article (mateescu, 2010) where one can read: “the blocks of four floors, placed side by side such as soldiers, are dirty and everything around them stinks”. most of the people living here are also of roma ethnicity and come from the neighboring counties (teleorman, giurgiu, ilfov etc.). the same problems, such as those mentioned before, can be found in the iacob andrei community. the same script was at the basis of the community (abusive occupation or informal commerce). most of the inhabitants here evoke the moment of their arrival in the zone as a moment of action, as they keep saying that they found “four empty walls” when they reached the place. thus, the organization of the room as a habitation became a “common action of the family”. though the very poor studio is not perceived as a value in itself, just because it was cheaply procured, it however seems to mark a moment of success in life, an experience which cannot be forgotten since the 17 m² studio represents a first firm step in their life. the attempt to legalize the possession of the flat is for most of them a second chance to move towards a normal life. the manifold marginalization is similar to that in other ghettos and the opportunities of escaping the community are also linked to education and qualification. here, as well, children are those who suffer from the enclosure in such an urban space that lacks real opportunities for social evolution. 211 figure 5: the iacob andrei ghetto, ferentari neighborhood source: made by author the police perceive spaces like the iacob andrei, zăbrăuţi and amurgului ghettos as sanctuaries of delinquents sought for different crimes and, at the same time, the framework where various antisocial deeds occur. for this reason, police raids are quite frequent. often, these raids end up in fines for illegal residence and in retaining certain persons considered suspects. only in 1997, when the first habitation contracts were drawn up, residence was legalized for some of them. until that year, virtually any person living there did not have an officially recognized residence. the habitation could not be certified since there is no official owner of the buildings. under these conditions, the district 5 city hall became the owner of the buildings through a special judicial procedure. moreover, according to the building ownership regulation, these blocks have been declared social habitations through law no. 161/1996 (republished). even so, authorities had to accept some compromises in order to stabilize the community. 4.4. the amurgului ghetto amurgului is an area where certain investments have been made lately in order to give a new dimension to the urban space, as well as for the social inclusion of the community. the street with the same name links calea rahovei, the rahova market and şoseaua sălaj. the community here is situated between two quite good urban zones and with a far bigger social potential in comparison with those presented previously. the so-called amurgului ghetto has developed towards south, starting from the immediate vicinity of rahova market. the area covered by the amurgului community is within the borders of the following streets: şoseaua alexandriei, 212 pucheni, munţii carpaţi and amurgului. the community is concentrated in a group of nineteen buildings (eleven are five floors tall and eight are three floors tall). the buildings are connected at the public water supply system – both cold and hot water – and at the heating system as well, but not all of them can benefit from the advantages given by these facilities. some of the people living here cannot pay their bills for lack of income. by a measure taken ten years ago, the amurgului buildings benefited from water, electricity, heating but not gas supply. over time, the supplying companies stopped delivering their services for several buildings due to client outstanding payments. in some cases, without any water or heating, the habitation quality became a burden for their inhabitants and at the same time the danger of getting sick occurred. illegal power connections have been repeatedly reported in the area, especially in winter, affecting the general power system. the lack of garbage removal contracts leads to garbage piling up among the buildings. such garbage mountains use to stay there for months. out of the nineteen blocks, only four have a garbage removal contract. the practice of throwing the garbage out of the window is regularly performed here. many inhabitants who live on the ground floor try to enlarge their space by unauthorized constructions added to the existing ones. figure 6: the amurgului ghetto, rahova neighborhood source: made by author according to some previous research in the field, the number of roma people living in this ghetto is not so big and they use to sell various products (clothes, cigarettes, perfumes, vegetables etc.) – of course, illegally – in the rahova market. being placed near much more civilized urban spaces, the amurgului area also attracted romanian families, concentrated especially in p1, p5 and p6 blocks. the investments made here improved the landscape by asphalt alleys between the blocks, street lighting, parking areas and play grounds for children. garbage is deposited in specially arranged places and collected at certain intervals. however, from a geographical point of view, these investments did not modify the urban landscape too much. the garbage is often left in place for months; the buildings are still grey, sometimes even black, wet, degraded and dirty. the blocks’ ugliness is particularly evident in rainy days when water 213 infiltrates through the buildings fissures and in the basement. the syringes used by drug consumers are also present. drug consumption is often made in public, in the staircase, in front of many persons. the most encouraging thing here seems to be the “ion i.c. brătianu” school in which many investments have been made in recent years. the school is attended by both children from the ghetto and by children outside the ghetto community. the social heterogeneity of the school helps integrating the marginalized pupils into the larger society by means of institutionalized education where they can find positive models to follow. 4.5. the valea cascadelor ghetto a segregated space, outside district 5 (where all the other ghettos are placed) is on valea cascadelor street, in district 6. three things make it different from the other ghettos: its reduced dimension, the great distance from the city center and the fact that it is surrounded by building materials warehouses (extremely numerous in the area). this marginalized community lives only in six blocks, of the same type as those in the other ghettos, made up of studios of reduced dimensions. the small number of buildings, as well as the distance from the city center makes this ghetto less visible in the urban landscape. the buildings are strikingly similar to those in the ferentari area by degradation, ugly image, dirty walls and garbage between the blocks. the community is placed at the crossroad between valea cascadelor and liniei street (which is nothing else but an old dismantled railway that goes towards the old cotroceni station), in the immediate vicinity of militari atab (autonomous transport administration of bucharest) depot. figure 7: valea cascadelor ghetto, militari neighborhood source: made by author 214 5. theoretical and practical importance of bucharest ghettos it is very true that following the presentation of the ghettos encountered in bucharest a series of fundamental questions for the present study show up. first of all, why should one be interested in the bucharest ghettos and why are they important? and after having accounted and identified the specific problems of the ghettos, what measures should be taken by the urban authorities? and, last but not least, one must see which is the connection between them and the political sphere. as for the economic and social problems and symptoms they are confronted with, bucharest ghettos resemble their counterparts from other sides of the globe. however, in geographic and social terms, they eminently represent a local problem. the bucharest ghettos were formed after 1989; as a consequence, they are “young” ghettos, arisen from the economic transition through which romania passes. the importance of knowing them resides in understanding the way in which they were formed and in the palette of socio-economic problems, in the spirit of taking definite measures. the obvious lack of such spaces during the anterior period of time is due to the communist politics of social smoothing. in other words, from here also begins the incapacity of urban authorities to take definite measures of reducing poverty and other economic dysfunctionalities. the lack of money and opportunities pushed the inhabitants of ghettos towards illegalities, drug consumption and violence. simultaneously, the lack of education perpetuates the social agony of these urban spaces. not taking urgent measures to eradicate poverty from ghettos means accelerating the spatial dynamics of population that lives here. in other words, not taking measures now means far greater costs in the future. the actions that the urban authorities must take ought to be as pragmatic as possible and at the same time to be based on definite socio-spatial studies. starting from this type of studies, the local authorities must exactly identify the cause/source of the presented problems, and afterwards to try their elimination with the lowest possible costs and without falling into the trap of “social assistance”. in other words, taking measures will be based on the saying do not give fish to the flemish, but rather give him a rod and teach him to fish. thus, creating jobs specific to the educational and professional training for the inhabitants of the affected area, appears to be a possible modality to exit the “ghetto state”. at the same time, promoting some specific educational programs – that could include even repetitive internships (if not permanent ones) of schooling in educational units out of the ghetto – may have beneficial effects on the long term. in time, they will be able to be aware of the fact that there really are beneficial socio-economic alternatives in comparison to those encountered in the ghetto. last but not least, the strict application of law could diminish in the future the unwanted effects of urban segregation. all the elements exposed above undeniably involve the politics. whether one talks about the district management or the one of the capital as a whole, the political side is omnipresent. as the inhabitants of the city are those who benefit from the facilities and the urban space quality (governed by politicians) and simultaneously 215 they represent the crowd that brings the votes (for the politicians), the urban benefits should be equal on both sides. however, this thing does not happen in the capital. paradoxically or not, instead of being diminished as it is normal, in bucharest the state of social “vegetation” from the ghettos is rather maintained. the poor crowd from the ghettos can thus be easily manipulated in an electoral goal through different “presents”. as a consequence, from a politic point of view –at least for the poor areas and populated by the roma people from the fifth district – ghettos must rather be maintained than eradicated as they bring votes. they can very easily be electorally blackmailed. the poor population from the bucharest ghettos rewards very easily – in exchange for goods/products or money – their electoral behavior. 6. conclusions generally speaking, according to what was presented above, ghettoization is the process by which poor urban areas are created. these areas are closed from both social and cultural points of view and are usually populated by ethnic groups. in fact, the process itself is quite complicated and specific to the social and historic context in which it develops. a characteristic of the ghetto is the ethnical composition of the respective geographic space. consequently, the ghetto is isolated and segregated that makes it different from other forms of segregation. in bucharest, the geographical space of the ghetto is perceived as a different physical and social reality, with inhabitants who are described as being different and perhaps inferior to the majority. on the mental maps of the majority people in bucharest such places seem to be “shady” urban spaces. often, the ghetto inhabitants admit that the areas they live in are dangerous, because they are ghettos. after the revolution the socio-economic discrepancies have multiplied, starting from the income differences, the habitation quality, the dimensions and the number of properties, the life quality or the living standard and ending with special individualization of certain social classes. the urban evolution of the capital city in the last twenty years has manifested in a somehow chaotic manner. yet it seems to be structured on two directions. the first direction refers to the new urban elites that searched to occupy the best intra-urban residential spaces (dorobanţi, cotroceni, kiseleff etc.), or to settle in the nearby city areas where they created genuine community clusters based on huge economic capitals: the periurban neighborhood of pipera in the northern part of bucharest and the prelungirea ghencea in south-western part. the second direction has led to the creation of certain areas of poverty bags, real urban “lock-ups” where a great part of the bucharest marginalized population has settled. many, if not all the areas of those who are marginalized, have been formed after the revolution and their appearance is the result of socio-economic and political post-decembrist changes. the most obvious case is the ferentari-rahova zone in district 5 (aleea livezilor, tunsu petre, zăbrauţi, amurgului, prelungiea ferentari) where the social issues are profound; the urban space here involves extreme forms of segregation. the negative connotation associated with the ghettos in bucharest 216 should be connected with the spatial concentration of roma population and of poverty in zones with a precarious technical and urban infrastructure. in fact, the term ghetto comes from the predominance and ethnical homogeneity of roma population, locally associated with the phenomenon of poverty. the inhabitants of these areas are somehow constrained to live in such spaces mainly because of lack of income, poor education and poor professional qualification. social disadvantages such as: lack of habitation space, precarious hygiene, lack of habitation facilities, lack of identity documents, lack of ownership rights, lack of education, high level of school dropout, violence and intra-community conflicts, drug trafficking, drugged consumers, lack of opportunities that practically exclude the ghettos’ population from social participation and from good urban areas. the lack of some coherent and immediate policies can damage the city even more. since the community polarization is very intense, immediate measures for diminishing the phenomenon can be often blocked. consequently, serious problems may occur in creating real opportunities for this category of population to get in contact with the outside world. the internal polarization makes the community’s attitude more radical, leading to the rejection of outsiders. the communities presented in the analysis as case studies seem to have entered in a certain cycle of disadvantages, a spiral that reinvents itself both communitarily and geographically. the ghetto children are the ones who suffer mostly in this situation as they do not seem to have any alternatives. however, it is difficult to evaluate the situation on a long term, as long as there are primary needs that have not been solved. as it came out from the survey, parents are rather concerned about the financial needs of the family, and they encourage their kids to work from their early childhood and ignore education. under these conditions, the only chance for the ghetto children is education, where they can find good models in their devoted teachers. if this thing is not possible, then one can rhetorically ask what solution could prove to be viable and what future the bucharest ghettos may have. references: 1. enache b., ‘şcolile capitalei între elită şi ghetou’, [online] available at la http://stiri. rol.ro/scolile-capitalei-intre-elita-si-ghetou-155551.html, accessed on march 9, 2011. 2. gregory d., ‘segregation’, in gregory, d., johnston, r., pratt, g., watts, m. and whatmore s. (eds.), the dictionary of human geography, malden, ma: willey-blackwell, 2009, pp. 673-676. 3. gyöngyi, p. and lászló, p., ‘ghetou şi ghetoizare’, in zamfir, c. and stănescu, s. (eds.), enciclopedia dezvoltării sociale, bucharest: polirom publishing house, 2007, pp. 279-281. 4. henderson, w. and ledebur, l., urban economics: processes and problems, new york: john willey and sons, 1972. 5. knox, p. and stephen, p., urban social geography: an introduction, 5th edition, new york: pearson education, 2006. 6. lefebvre, h., the urban revolution, minneapolis: university of minnesota press, 2003. 217 7. lussault, m., ‘ségregation’, in levy, j. and lussault, m., dictionnaire de la géographie et de l’espace des sociétés, paris: belin, 2003, pp. 830-832. 8. marcuse, p., ‘enclaves yes, ghettoes, no: segregation and the state’, 2001, lincoln institute of land policy, conference paper. 9. mateescu, r., ‘la pas prin ghetourile capitalei’, [online] available at http://www. inpolitics.ro/la-pas-prin-ghetourile-capitalei-art61380.aspx#, accesed on march 10, 2011. 10. mionel, v., ‘the urban segregation concept’, in popova, j. (ed.), methodology of interdisciplinary studies in the area of social sciences, ruse: tiscass, 2010, pp. 120-130. 11. omenya, a., ‘theoretical conceptualisations of urban segregation and their relevance to housing in post-apartheid south africa’, 2003, cnr conference glasgow. 12. santos, m., the shared space: the two circuits of the urban economy in underdeveloped countries, new york: methuen, 1979. 13. saravi, g., ‘urban segregation and public space: young people in enclaves of structural poverty’, 2004, cepal review, no. 83, pp. 46-91. 14. schwirian, k., contemporary topics in urban sociology, morristown: general learning press, 1977. 15. zamfir, c. and rughiniş, c., ‘mecanismele sociale ale dezvoltării comunitare – studiu de caz al comunităţii zăbrăuţi, bucureşti’, in zamfir, e. and preda, m. (eds.), diagnoza problemelor sociale comunitare, bucharest: expert publishing house, 2000, pp. 49-90. 16. zoltan, p., ‘frăţia ghetourilor’, newspaper jurnalul naţional, december 12, 2006, [online] available at http://www.jurnalul.ro/special /reportaje/fratia-ghetourilor-6094. html, accessed on marche 8, 2011. 17. ***http://stirileprotv.ro/stiri/social/ghetoul-zabrauti-din-capitala-un-adevarat-focarde-infectie.html, accessed on march 20, 2011. 18. ***http://asociatiaferentari.blogspot.com/2010/03/descrierea-comunitatii-ferentarisect-5_07.html, accessed on march 9, 2011. untitled 147 treatment of nationals by their kin state – the romanian case* simina elena tănăsescu simina elena tănăsescu professor, department of public law faculty of law, university of bucharest, romania tel/fax: 0040-21-3120719 email: simina-elena.tanasescu@drept.unibuc.ro abstract treatment of nationals by their kin state deals with what legal science amuses itself to call “concepts à géometrie variable” or even “non-identifiable objects” (horchani, 2003, pp. 189). to the date there is no broadly accepted definition of the concept of nationalities or national minorities and, in order to identify a kin-state**, one needs to clarify the concept of nation, which remains a challenge even in postmodern era (toperwien, 2001, pp. 44, 187-189). postmodern writings have criticised modern definitions of the concept of nation as relying too heavily on objective criteria and neglecting a possible more subjective approach. also, globalisation might necessitate a new concept of nation. no attempt to provide formal definitions will be attempted in this article, but some explanations regarding the use of words and concepts are deemed necessary before sketching some features of history in order to venture understanding the treatment that the state reserves to romanians living abroad. ** it is the venice commission which has coined the term “kin-state” in order to indicate the country where the identity of the national minority is that of the dominant culture, particularly with regard to relations between neighbouring states where a minority in one is a majority in the other. various bodies (parliamentary assembly, council of ministers) of the council of europe seem to prefer this terminology as the word “kin” is considered to be more neutral than the word “motherstate”, which is common in some texts, but may wrongly suggest that such a state has formal relations with citizens of other states. transylvanian review of administrative sciences, 25e/2009 pp. 147-164 * this paper represents the finalised text of a conference held by the author at the institute of federalism of the university of fribourg (switzerland) on august 15th, 2008. 148 i. on words and concepts the current use of the concept of national minorities presupposes that nation and people are somewhat different entities. in fact all these words refer to communities of human beings, describing a part or the entirety of the more general concept of state population. it would be easy if population, people and nations were all synonyms, but they are not. the history of the formation of the present population differs from one state to another. the population of only a tiny minority of states comprises only persons of a single ethnic origin (iceland), while the population of the majority of states represents nowadays a nation mainly amalgamated, although originally composed of different ethnic groups (netherlands, france) or it represents a multi-national society (switzerland, belgium, canada) or a community where the dominant ethnic group lives alongside others which are numerical minorities (hungary, italy, romania, slovenia). the population of some states has been formed by indigenous populations and successive waves of immigration, while integration of the entire population has been only partially achieved (australia, brazil, new zeeland). the national unity demonstrated at the time when independence was granted to some newly created african states proves today to be rather fragile (nigeria, rwanda, sudan). the dissolution of (long time presumed) integrated multi-national societies in europe (soviet union, yugoslavia, czechoslovakia) proved the frailty of their homogeneity. seen from this perspective, one might conclude that history proved georges scelle was right when claiming that “nation-states are, in principle, stronger and last longer than multi-national states (scelle, 1948, pp. 83). state populations are currently identified via normative concepts (as members of a legally defined group and no longer subjects of a government) which give little consideration to ethnical, linguistic or religious characteristics of individuals thus related into a community, despite objective evidence that any community is bound into an integrated body via elements which also refer to such distinctive characteristics. there is no generally accepted definition of the terms people or nation, rather nation is generally explained as a people wanting its own state. however, self-determination has been recognised as a fundamental right in legal texts (charter of the united nations, international covenant on civil and political rights, first protocol to the geneva convention relating to the protection of victims of international armed conflicts) without consensus on its content or beneficiary: there is no enlightenment whether it means right to statehood or merely self-government via thorough autonomy or whether it belongs to demos or ethnos. and if self-determination leads to the creation of a new state, this last one may well include groups which can claim specific characteristics as a community and thus request implementation of the right to self-determination. in this way the right to self-determination of one group/community may impede on the right to self-determination of others or, indeed, on the very essence of the state. according to the predominant paradigm, nation is a concept of comparatively recent origin and a result of modernism; following the american constitution and the french revolution the modern concept of nation has spread all across europe (to start with) via the principle of people’s sovereignty and cultural standardisation within a 149 given territorial boundary. one of the leading exponents (gellner, 1983, pp. 39) of such (functional) theories argues that nations are products only of industrial and capitalist societies because earlier societies did not need nations as a vehicle for the state power, while another (hobsbawm, 1990, pp. 9) insists that nations emerged only in the modern era at a particular stage of economic and technological development of society; they are constructed by nationalists, that is by intellectual elites who invented the nation’s history and myths (anderson, 1991, pp. 5). under west european terminology a nation can be the total of the citizens of a state; under east european terminology it can also be equivalent of people meaning ethnic community. indeed, literature displays two completely different and opposed types of definitions of what kind of group can form a nation, both relying on supposedly objective criteria. according to the ethnic definition, a nation is a community based on common descent or culture. according to the civic definition, a nation is a sovereign people demos living under common political institutions. as a consequence, nationality, which in french and anglo-saxon public law was initially identified with citizenship, has always had the significance of people – and, at times, of ethnic group – in central and eastern europe, meaning a large ethnic community, however always within the boundaries of a state. a good case in point are the nationalities established under the austrian empire and defined by the constitution of 1867 as „tribes” or “races” meaning the today currently used term of ethnic groups. more numerical minorities, which did not make up any compact group or which had not formed any united community in any location, were not recognised as nationalities and, consequently, not as ethnic groups (jews or tziganes-roma). it is still the case even nowadays that in multinational states, where pluralism is effectively taken into account, groups which take part in the full exercise of state power are called nationalities, whereas the ethnic groups which do not participate in the running of the state are called merely national minorities or ethnic groups. according to the ethnic definition, these last ones are not part of the nation. the concept of national minorities has existed only since the end of the first world war and the creation of the league of nations. as mentioned above, groups of persons that differed linguistically, religiously or ethnically from the other inhabitants of any given state existed long before, but whenever they represented a numerical minority – which was not always the case – they were referred to as nationalities and not as national minorities. indeed, the word natio was used under the austrian empire to stress quality over quantity; it encompassed only those individuals who possessed special rights and immunities that allowed them to participate in the government of the state. exceptionally such individuals could constitute ethnic groups, but they were not national minorities, as a certain status and not numerical dominance was required in order to be recognised as natio. however, history has also recorded cases where individuals who belonged to ethnically different groups were considered inferior beings (hitchins, 2001, pp. 83) and were denied rights of political representation or participation in the government (e.g. unio trium nationum); such ethnical minorities were known as minorities (hitchins, 2001, pp. 78), although numerically they represented the majority of the population. 150 in fact, legal systems of past empires (british, french or austrian, russian, turkish) were more concerned with the definition of social estates than of nationalities, by awarding them unequal rights and duties and thus consolidating horizontal lines of distinction and, eventually, exclusion from the exercise of some (mainly political) rights. modern states have replaced the historical structure of the population with the idea of equality. however, the new model of legal inclusion based on equality of all citizens before the law evolved in parallel with a vertically structured form of exclusion, whereby the exercise of political and economic rights became linked to the concept of citizenship. in this respect, it is worth recalling that in the nineteenth century all inhabitants of a territory, irrespective of their language, religion or ethnic origin, were considered to be subjects of the state. it is only after the “national” revolutions of 1848-1849 that citizenship got gradually “nationalised” and equal treatment before the law became a privilege only for nationals, while foreigners were treated differently as an inherent consequence of their social condition. the horizontal distinction between social estates, which in some cases coincided with ethnical groups or nationalities, has been replaced with the vertical distinction between nationals (read citizens) and aliens. therefore, all citizens (read nationals) are entitled to participate in the government of the state, irrespective of their nationality (read differences on the account of ethnicity, religion, language etc.). this explains the use of the word “co-inhabiting nationalities” in some constitutions (romania in 1948 or the preamble of the 1990 croatian constitution). thus, nationalities are peoples or parts of the population who participate in the government of a (multinational) state. even if the criterion of participation in government and not a numerical reference (based on ethnical grounds) to the population of the state makes the difference between nationalities and national minorities, the famous definition francesco capotorti suggested for national minorities (“national minorities are ethnic, religious or linguistic groups numerically smaller than the rest of the population of the state to which they belong and possessing cultural, physical or historical characteristics, a religion or a language different from those of the rest of the population”) seems quite operational, although it has been criticised as having some flaws (veiter, 1977, pp. 273 et seq). mention has to be made here that the absence of any normative definition of the concept of nation and, consequently, of national minority suits well not only states, but even some minorities: some states might take this opportunity in order not to recognise existing minorities and thus deny them any form of protection (bahaï minority in iran or german minority in france), while some national minorities may try to share granted protection by the host state only with particular ethnic groups and not with other types of numerical minorities (csango, religious minority within the ethnic magyar minority in romania1). 1 in its second opinion on romania adopted on 24 november 2005, the advisory committee of the council of europe on the framework convention for the protection of national minorities notes that persons belonging to other groups than those included in the romanian council of national minorities have expressed interest in the protection afforded by the framework convention. „this primarily concerns the hungarian csangos, who informed the advisory 151 in this context it is worth to mention that an ethnic group is part of a people which lives in a state having an ethnically different majority, both in national and numerical terms. far from being a national-socialist creation, the term ethnic group has rather been distorted by the german use during the second world war. ethnic groups and national minorities may, at times, be synonymous, but according to various criteria. for instance, perfect equivalence of the two terms is common to some united nations documents, the most prominent being article 27 of the international covenant on civil and political rights, generally considered as the most protective provision of general international public law concerning minorities (in general). article 27 provides: „in those states in which ethnic, religious or linguistic minorities exist, persons belonging to such minorities shall not be denied the right, in community with the other members of their group, to enjoy their own culture, to profess and practise their own religion, or to use their own language.” but here the numerical criterion is used. however, this identification no longer subsists when the ethnic group does not represent a numerical minority. in fact, an ethnic group which is numerically the largest, but politically the weakest represents a national minority in terms of decision-making power, although the situation becomes rarer recently (flemish in previously unitary state of belgium or hutu in rwanda before the genocide of 1994). also, for instance, it is not common to speak of national minorities in switzerland, where linguistic groups which take part in government have no minority characteristics, although french, italian or rumanch ethnic groups do represent, each, a numerical minority at the level of the confederation (while in some cantons they are the numerical majority). only in specific cases can ethnic groups be synonym of national minorities from the numerical standpoint and the typical example is the situation of (neighbouring) states which are kin, each other, for small parts of their respective population. mention has to be made here that this does not refer to the situation of neighbouring states which all host and share the same nation, while also integrating numerical minorities of halogen ethnic origin or indigenous peoples (north african states, also known as maghreb or even pan-arabia). committee of their wish to receive support from the state for their efforts to preserve their linguistic identity and their artistic, cultural and religious traditions.” according to the official results of the last population census 1,226 individuals identified themselves as csangos. in the documentation provided to the advisory committee by this group, the term used is hungarian csangos. in this context it worth mentioning that within the csango community diverging opinions exist with regard to their definition as a separate ethnic group or as a religiously distinct group belonging to the magyar national minority. “authorities seem to privilege the view that csangos form a separate (catholic) religious group within the majority population, but do not have a distinct ethnic identity, therefore, in practise, members of this community have for several years been able to study hungarian in public schools and the number of pupils concerned has increased (from 32 in 2001/2002 to 725 in 2005/ 2006).” (http://www.coe.int/t/e/human_rights/minorities/2._framework_convention_ (monitoring)/2._monitoring_mechanism/4._opinions_of_the_advisory_committee/1._ country_specific_opinions/2._second_cycle/pdf_2nd_op_romania_en.pdf (last consulted on the 1st of august 2008). 152 there may also be ethnics groups which are not ethnic communities and this does not make them less national minorities and not only on numerical grounds. thus, when common characteristics are no longer vital for the individuals and an ethnic group is no longer dominated by the instinct of preservation as a community, it tends to become a simple numerical minority, thus paving the way towards political minority; this merely makes easier the process of assimilation. the example of arumanians or cutzo-vlahos in what used to be istria under the austrian empire is a case in point. immigrants might well be another example. although (mainly economic) immigrants do not necessarily constitute ethnic communities in their host countries they pose the same challenges as any numerical and, indeed, national minority (turks in germany, albanians in switzerland, romanians in italy or spain). whether, in time, such individuals might become (or not) ethnic groups, eventually synonym of national minorities mainly from the numerical standpoint, depends on a great number of factors. typically, such a transformation would require that migrants acquire the citizenship of their host state, since “as long as they have not done so, we cannot in any case speak of ethnic groups, while we can speak of minorities in conformity with article 14 of the european convention on human rights” (veiter, 1977, pp. 283). however, postmodernism has had its influence in this area as well, and a new tendency seems to be developing in this respect. according to the advisory committee of the council of europe the romanian legal definition of national minorities should “prefer a formulation that, rather than excluding certain potentially concerned groups altogether, would leave scope for the possibility that, in the future, additional groups would fall within the scope of domestic minority legislation as well as within the scope of application of the framework convention. the advisory committee further considers that while citizenship is a legitimate requirement in areas such as representation in parliament, the general application of this criterion nonetheless raises problems in relation to guarantees linked to other key areas covered by the framework convention, such as non-discrimination and equality, and certain cultural and linguistic rights.” therefore, “in order to avoid arbitrary and unjustified exclusions and to maintain the possibility of the future inclusion of other groups, including non-nationals where appropriate, in the application of the framework convention” domestic authorities “should ensure that a flexible and open approach to the scope of application the framework convention is reflected”; in other words, non-nationals (read non-citizens in west european meaning) may be considered as national minorities where appropriate.2 one has to acknowledge that in international public law there is no clear distinction between nationality, ethnic group and national minority, while at state level there are regulations which differ widely one from another as well as in time. but one has 2 second opinion on romania adopted on 24 november 2005 by the advisory committee of the council of europe (http://www.coe.int/t/e/human_rights/minorities/2._framework_ convention_(monitoring)/2._monitoring_mechanism/4._opinions_of_the_advisory_ committee/1._country_specific_opinions/2._second_cycle/pdf_2nd_op_romania_en.pdf (last consulted on the 1st of august 2008). 153 also to take into account that nation is a concept highly charged with historical and political connotations, even before it came to bear also legal consequences. in fact, from a rationally legal perspective nation does not always equate with state, although nation-state is a widely used expression. alike, national minorities and ethnic groups are not always synonyms, rather to the contrary. ii. short history of the romanian modern state and nation following attempts of national revolutions in 1848, romanian principalities of moldova and wallachia united in 1859, enthroned karl von hohenzollern as prince and adopted a modern and democratic (for those times) constitution in 1866, wining “independence and sovereignty”, in accordance with the treaty of berlin, after a victorious war (1877-1878) against the turkish empire (in which they were partially supported by the russian empire). after the first world war, in 1918, the romanian kingdom united with former habsburg provinces (transylvania, banat and bukovina) and former tsarist province of bessarabia, where the numerical majority of the population was of romanian ethnical origins, and became what is commonly known as great romania. this democratic state lasted until 1938 when, under pressure from two sides (germany and russia), romania lost bessarabia and part of bukovina towards russia, parts of transylvania towards hungary and fell under the ruling of various right extremists. after the second world war, romania got back part of transylvania, but not bessarabia and north-bukovina, which remained under soviet ruling. until 1989 romania was governed by communists, who emphasised a nationalistic discourse. this short history seems to point rather to a romanian state based on the ethnic concept of nation, meaning a people that fought for its rights (including selfdetermination) during the revolutionary period of 1848 and undertook a secession war from a broader state (turkish empire) in order to establish its own nation-state. however, the post-independence period seems to be governed by a different approach, based on a civic definition of the concept of nation, as the romanian kingdom did not show irredentism after gathering its independence in 1878 and even neglected the fate of romanians outside the country, although they were denied elementary (political) rights both in transylvania and in bessarabia. moreover, it did not expand beyond its borders of the time and did not use the argument of ethnic romanians living outside the frontiers of the nation-state. in other words, romania gave higher priority to its interests as a state than to its interest as a nation (including romanians living abroad) (alexandrescu, 2001, pp. 154-155). this translated into genuine interest for political nationalism and less for cultural nationalism and could explain why vociferous elites (from poet mihai eminescu to internationally renowned historian nicolae iorga in the rank of “traditionalists”, or from literary important nechifor crainic to famous writers such as mircea eliade or emil cioran in the rank of “modernists” (livezeanu, 2001, pp. 110) were ignored by or put aside from political power, although they were granted freedom of speech. it may also explain why even nowadays the constitution makes clear room for a civic definition of the nation (article 4 defines romania as homeland of all its citizens), while still imposing a duty on the state to support 154 romanians living abroad for the development and expression of their ethnic identity (article 7). preferential treatment of (ethnic) romanians, even though only abroad, may be considered problematic in a civic nation (toperwien, 2001, pp. 47), but can be explained both historically and legally. in fact, the switch of the romanian nation from ethnos to demos can also be traced in legal documents. the foundational document which is the statute developing the paris convention of 1858 only refers to the set-up of political institutions of the newly created romanian state, and this despite the fact that it was not yet independent and it had not been yet internationally recognised. however, since this document is one of the best expressions of the aspirations to self-determination of the romanian people it seems reasonable to assert that it only referred to ethnic romanians. but the constitution of 1866 is different: octroyée by karl the ist, who was “designated ruler of romanians through the will of the nation”, it specifically mentions that only christians can be romanians (article 7) and that “any romanian from whichever state, regardless of his place of birth, if he can prove that he no longer enjoys foreign protection, can immediately get the full exercise of political rights through a vote of legislative bodies” (article 9). in other words, the romanian ethnos is acknowledged as possibly wider than the recently created romanian state, but it is only the romanian demos that may express the will of the nation. the entire ambiguity of the current constitutional provisions is to be found already in this historical legal text. later on, the civic definition of the romanian nation is predominant in all constitutional texts. within the league of nations several states were required to enter into minority guarantee treaties or to give unilateral declarations to the same effect in order to be recognised and admitted to the league. the preamble of the “treaty on the protection of minorities” signed between romania and the main allied powers in paris on the 9th of december 1919 announced that “romania wishes to offer safe guarantees of freedom and justice to all its inhabitants, without distinction on the account of their race, language or religion”. the text of the treaty mentions the principles of nondiscrimination as well as the respect of the individuality, personality and distinctive characteristics of citizens belonging to ethnic, religious or linguistic minorities, while romania obliges itself to recognise via internal “fundamental laws” the provisions of the treaty and not to alter such provisions without prior agreement from the majority of members of the council of the league of nations. article 5 the 1923 constitution makes reference to “equality of all citizens, irrespective of their ethnical origin, language or religion”. this civic definition of the romanian nation amply profited the ethnic minority of jews, who previously were not recognised the status of citizens. it was a rather indirect way of implementing article 7 of the treaty, which automatically granted romanian citizenship to all jews living on the state’s territory and who could exhibit another one. the same approach, based on equality of all citizens without differences related to ethnical criteria, has been followed by the constitution of 1938, although otherwise this fundamental law was heavily influenced by the national-socialist conception of state and society. in fact, a bilateral “agreement between germany and romania” has 155 been signed in vienna on 30 august 1940, followed by the adoption on 21 november 1940 of a “decree on the creation of the german ethnical group of romania”. the purpose of these acts was to regulate the “co-habitation of romanian citizens of german ethnic origin with the romanian people, while recognising legal personality to this ethnical group as constitutive element of the romanian state”. after the end of the war, under the influence of the ideology coming from the soviet union, romanian constitutions addressed the issue in varied terms. while the first communist constitution, of 1948, refers to nationalities as constitutive parts of the romanian people (article 24 quoted above), the one of 1952 provides for “full equality between national minorities […] and the romanian people”, at the same time guaranteeing them “free use of maternal language, education at all levels, books, newspapers and theatres in maternal language”. similar provisions are to be found in the last communist constitution, adopted in 1965. in all cases, romanian citizens are to be treated equally, thus demos formally prevailing over ethnos. the current constitution, adopted in 1991, has been revised in 2003. while protection of national minorities has seen significant improvements3, nothing was changed with regard to the protection granted by the state to romanians (ethnos or demos) living abroad. iii. protection of nationals by their kin-state as mentioned earlier, nation does not always equate with state, particularly when ethnos does not equate demos, and ethnic groups are not always synonyms of national minorities, except in the case when an ethnic nation is spread across several (neighbouring) states and the numerical criterion is used. in such a specific situation national minorities are confronted with the complex situation where their integration 3 the second advisory opinion on romania, adopted on 24 november 2005 by the advisory committee in charge with the monitoring of the implementation of the framework convention for the protection of national minorities (legal instrument of the council of europe) notes: “since the adoption of the opinion of the advisory committee in april 2001 and the resolution of the committee of ministers in march 2002, romania has continued to pay particular attention to the protection of national minorities. important steps have been taken to consolidate and build upon romania’s existing legislation and practice in the field of minority protection, while constantly involving the representatives of national minorities in this process. on the legislative level, these steps have resulted in new constitutional and legislative provisions in areas of direct concern to persons belonging to national minorities. increased efforts have also been made to develop an adequate legal and institutional basis for preventing and combating manifestations of discrimination, intolerance and hostility based on ethnicity. in addition, a draft law on the status of national minorities is currently being examined by parliament. special measures adopted in order to promote the full and effective equality of persons belonging to national minorities have produced results in various fields, including education, the use of minority languages in the public sphere, and participation in decision-making. representatives of national minorities acknowledge the existence of a social climate favourable to tolerance and intercultural dialogue and agree that progress has taken place in this regard.” 156 into the state(s) depends on pleading for both undifferentiated treatment based on the formal link of citizenship and differentiated treatment based on the status of numerical minority. however, all these complex relations refer to the state of which persons belonging to national minorities are citizens and pertain to its domestic area and sovereignty. the (eventually preferential) treatment which reserves them their kinstate pertains to the international area and has to stand by international public law. the approach taken by international public law with regard to the protection of national minorities has varied widely between the creation of the concept (and of the league of nations) and nowadays. because new states were created “on the residuals of multinational empires which had deceased following the first world war” (ermacora, 1983, pp. 258 et seq.) their respective populations could not fulfil the criterion of ethnic purity and necessarily included numerical minorities of other nationalities/ethnical groups. in order to equilibrate the situation, the allied powers (which had won the war) created an international protection of national minorities under the responsibility of the council of the league of nations. the general outcome of this system of protection being far from commendable (sofronie, 1940, pp. 105 et seq.), after the second world war at international level emphasis was put mainly on the protection of individual rights of human beings, with the added corrective of the right to self-determination of peoples. thus, over the last century, the accent moved from primarily international mechanisms, which required implementation at national level for the protection of specificities of national communities, towards national protection of individual rights of human beings based on the principle of non-discrimination and complemented by international guarantees, when and where deemed necessary. the new approach has the double advantage of respecting the formal principle of equality while being able to deal with the variety of situations existing within states’ populations (ethnic purity, multiple nationalities, indigenous peoples etc.). however, international mechanisms of protection continued to exist even under the new approach, as safeguard against possible defections of national systems of protection. in this context, specific treatment of nationals living abroad by their kin state represents a relatively new approach, which combines domestic protection with international mechanisms. therefore, design of such a tool needs particular attention, including for domestic law of the host state of respective national minorities and to existing customs and rules of jus cogens in international public law. 1. preferential treatment of national minorities by their kin-state “in the last decade, hungary (as kin-state) accorded great importance to the fate of hungarians living outside its borders. this grew into one of its main foreign policy goals, playing an important role in hungary’s bilateral and international affairs” (horvath, 2000-2001, pp. 279). impetus could be noticed with regard to measures fostering links of hungarian minorities living in neighbouring states with their kin state and encouraging their sense of belonging to the hungarian nation defined as an ethnic community. in parallel, hungarian authorities initiated a set of policies intended to ensure that hungarian minorities living in neighbouring countries do not 157 wish to move to hungary and they are properly represented at all institutional levels in their host state. on 19 june 2001, the hungarian parliament passed the “law on hungarians living in neighbouring countries” which aimed to provide economic, social, cultural and educational assistance to people of hungarian identity who are citizens of neighbouring countries (austria excepted) and who consider themselves as persons belonging to the magyar national, cultural and linguistic community. although this law did not constitute a novel instance of treatment granted by a state to individuals who have links of kinship, it has aroused anxiety in some neighbouring countries, mainly due to the unilateral approach taken by the hungarian state and its definition of the concept of nation. in its “report on the preferential treatment of national minorities by their kinstate” the european commission for democracy through law (venice commission) concluded that “responsibility for minority protection lies primarily with the homestates. kin-states also play a role in the protection and preservation of their kinminorities, aiming at ensuring that their genuine linguistic and cultural links remain strong. however, respect for the existing framework of minority protection must be held as a priority. in this field, multilateral and bilateral treaties have been stipulated under the umbrella of european initiatives. the effectiveness of the treaty approach could be undermined if these treaties were not interpreted and implemented in good faith in the light of the principle of good neighbourly relations between states. the adoption by states of unilateral measures granting benefits to the persons belonging to their kin-minorities, which in the commission’s opinion does not have sufficient diuturnitas to have become an international custom, is only legitimate if the principles of territorial sovereignty of states, pacta sunt servanda, friendly relations amongst states and the respect of human rights and fundamental freedoms, in particular the prohibition of discrimination, are respected.” in fact, several were the points of criticism brought to the initial version of the “law on hungarians living in neighbouring countries”: its unilateral approach in disrespect of the neighbours’ sovereignty, its definition of the concept of nation, its inconsistencies (with regard to the exclusion of austria out of neighbouring countries and inclusion of family members having no magyar kinship, as well as the discrimination operated with regard to magyars living abroad elsewhere than in neighbouring countries to hungary) and, finally, the involvement of non-governmental organisations of kin-minorities created within host-states in its implementation. the osce high commissioner for minorities pointed out that unilateral measures taken by states to protect national minorities living outside their jurisdiction could cause tension and should be avoided, while, in its 2001 regular report on hungary’s progress towards accession, the european commission considered that some provisions of the law in question conflicted with the conception of the protection of minorities prevailing in europe. in the face of international criticism, hungarian authorities embarked on consultations with neighbouring states on the implementation of the law and, eventually, revised it. as a consequence, on the 23rd of june 2003, the parliamentary assembly of the council of europe adopted “resolution 1335 (2003) on the preferential treatment of 158 national minorities by the kin-state: the case of the hungarian law on hungarians living in neighbouring countries (“magyars”) of 19 june 2001” stating, inter alia, that responsibility for minority protection lies primarily with host states and existing multilateral and bilateral framework of minority protection, including european norms, must be held as a priority, while the emergence of new and original forms of minority protection, particularly by their kin-states, constitutes a positive trend in so far as they can contribute to the furthering of diversity in europe. however, the resolution took note that neighbouring countries to hungary felt that “the definition of the concept of nation in the preamble to the law could under certain circumstances be interpreted – though this interpretation is not correct – as non-acceptance of the state borders which divide the members of the nation” and “up until now there is no common european legal definition of the concept of nation”. as a follow up, on january 26, 2006, the parliamentary assembly of the council of europe adopted “resolution 1735 (2006) the concept of nation” where it asserts that in various european states the term nation may stand either for ethnos, either for demos, or for both, while the concept of national minorities has a merely numerical meaning, without any political connotations, although it is often a direct consequence of “changes in state borders”. it also notes that “the general trend of the nation-state’s evolution is towards its transformation, depending on the case, from a purely ethnic or ethnocentric state into a civic state and from a purely civic state into a multicultural state where specific rights are recognised with regard not only to physical persons but also to cultural or national communities”. therefore it recommends that the council of ministers invites member states of the council of europe: – to promote in their national legislation the recognition of the cultural rights of minorities; – to reject any attempt to promote the ethnic purity of the state or to organise the territory and the administration of the state on an ethnic basis, with the exception of affirmative measures which aim to achieve a fair representation of the national minorities in their country’s administration, at central and local level; – to stop defining and organising themselves as exclusively ethnic or exclusively civic states; – and to draw up guidelines on procedures for developing relations between a state and the minorities residing in a different state – mainly in its neighbourhood. as noted before, ethnic minorities do not always equate national minorities and the case of (neighbouring) kin states is particular; hispanic, jewish or magyar minority in, say, the united states of america are not the result of “a change in state borders”. since georg jellinek (jellinek, 1914, pp. 394 et seq.) legal science defines states using the tool called “theory of three elements”, namely “population, territory and sovereignty”, which has been confirmed not only by other scholars, but also by state practise. changes in a state’s population may result not only from changes in one of its elements, territory, but also from changes in the other two, sovereignty and population itself, and we have seen that migration may bear important consequences in this respect. besides, national minorities is a concept highly discussed at political level since the parliamentary assembly acknowledges that its origin, namely “the term nation is 159 deeply rooted in peoples’ culture and history and incorporates fundamental elements of their identity”. and the objective numerical criterion is nor the only, neither the most important for its understanding. also, there are national minorities which do not enjoy a kin-state and this does not make them less ethnical groups, subject of protection under the framework convention of the council of europe, roma being the best example. moreover, only exceptionally state populations are ethnically pure so that at least one of the so-called “general trends” noticed by the parliamentary assembly with regard to the evolution of nation-states seems rather difficult given the scarcity of its prerequisite. as to the second one, the latest evolutions of both domestic and international law confirm that protection of collective rights of national minorities is not envisaged. paragraph 31 in the explanatory report of the framework convention on the protection of national minorities states that article 1 ”refers to the protection of national minorities as such and of the rights and freedoms of persons belonging to such minorities. this distinction and the difference in wording make it clear that no collective rights of national minorities are envisaged (see also the commentary to article 3). the parties do however recognise that protection of a national minority can be achieved through protection of the rights of individuals belonging to such a minority.”4 members of the council of europe set the protection of national minorities as a goal best achieved through conferring effective protection to individual human rights of persons belonging to such groups (vukas, 1991, pp. 504). in this context it seems somewhat difficult to clearly assert whether the parliamentary assembly makes any distinction at all between nationalities co-existing in a multinational state and national minorities in a state where numerical majority belongs with a different ethnic group. in fact, the paragraphs laying foundation of the resolution mainly underline one of the two possible definitions of the term nation, placing it in a highly specific historic, geographic and political context. however, the recommendations to the council of ministers have a broader vocation and member states of the council of europe focused on these last ones. the answer provided by the council of ministers on the 28th of february 2008 stated that: – a common definition of the concept of nation is not necessary for the effective implementation of council of europe standards pertaining to national minorities; – “promotion of ethnic purity” has no place in a democratic society, while efforts need to be made to facilitate contacts between all persons, irrespective of their ethnic, cultural, linguistic or religious identity, – and, in order to be able to decide on the advisability of elaborating guidelines on procedures for developing relations between a state and kin minorities residing in a different state, including in neighbouring states, council should first ask for an opinion on the potential added value of such guidelines given that, according to article 18 of the framework convention, „parties shall endeavour to conclude, 4 http://unpan1.un.org/intradoc/groups/public/documents/untc/unpan017004.pdf (last consulted on the 1st of august 2008). 160 where necessary, bilateral and multilateral agreements with these states in order to ensure appropriate protection”. in other words, effective protection of national minorities does not depend on the ethnical or civic definition of the nation and kin-states are encouraged to promote international cooperation and not ethnic purity in all their approaches of the issue, including in their relations with neighbouring countries. 2. support for the development of nationals living abroad it is important to underline that the hungarian law on the preferential treatment of magyar minorities in neighbouring countries was not a novelty. in fact, most of its neighbouring countries display similar constitutional or legal provisions. romania, slovenia, croatia, macedonia, ukraine have constitutions which include specific references to nationals outside kin-state borders. austria, bulgaria, italy, romania, russia, slovakia or slovenia have adopted domestic legislation regarding nationals living abroad. however, the underlying idea in most of these laws was support for nationals regardless their current settlement outside national borders rather than preferential treatment of national minorities in neighbouring countries. furthermore, such legal provisions only occasionally had extraterritorial effects, most of them referring to actions of support taken by the kin-state on its own territory. but what they all underline is the ethnical link between individuals declaring themselves of a specific descent or origin and another nation-state than their host. in other words they all presuppose the ethnic definition of the concept of nation. the romanian constitution adopted in 1991 contains complex and, at times, ambiguous provisions in this respect. article 2 declares that “national sovereignty shall reside within the romanian people”, while article 4 puts emphasis on the unity of the romanian people and the solidarity of its citizens, declaring that “romania is the common and indivisible homeland of all its citizens, without any discrimination on account of race, nationality, ethnic origin, language, religion, sex, opinion, political adherence, property or social origin.” so far, the civic definition of the romanian nation seems to prevail, but article 7, entitled “romanians living abroad” clearly uses ethnos when providing “the state shall support the strengthening of links with the romanians living abroad and shall act accordingly for the preservation, development and expression of their ethnic, cultural, linguistic and religious identity, with the observance of the legislation of the state whose citizens they are.” all the more since article 17 regulates “romanian citizens while abroad”: “romanian citizens while abroad shall enjoy the protection of the romanian state and shall be bound to fulfil their duties, with the exception of those incompatible with their absence from the country.” the law adopted in 1998 regarding the support granted to „romanian communities from all over the world” clearly specified in its first article that it was meant to support „romanian communities on the territory of other states”, i.e. ethnic romanians not having lost their feeling of community, irrespective of the fact that individuals were no longer holders of romanian citizenship. but the following law, adopted in 2007 and published in official gazette no. 792/2007, concerned “support for romanians 161 living anywhere abroad” instead of ethnic “romanian communities”, thus inspiring itself from the very ambiguity of the title of article 7 in the constitution. indeed, in the process of revision of the romanian constitution (2003) voices were raised in support of a single constitutional provision regarding romanians abroad, be them citizens who immigrate, temporarily or not, or individuals no longer holding romanian citizenship. over the last decade romania being confronted with the phenomenon of migration (both emigration and immigration) to a greater degree than in the past, awareness and sensitivities inevitably raised. be it as it may, no changes were brought to relevant constitutional articles and ethnic criterion in dealing with romanians living abroad remained prevalent. however, the law adopted in 2007 is an illustration that international (mainly european) developments in the treatment of national minorities by their kin-state were not in vain. thus, the preamble of this piece of legislation makes good reference to the framework convention on the protection of national minorities of the council of europe, to the “report on the preferential treatment of national minorities by their kin-state” drafted in 2001 by the venice commission and to the “declaration for sovereignty, responsibility and national minorities” of the high commissioner for security and cooperation in europe of the same year. its second article duly enumerates all principles underlined in the 2001 report of the venice commission: territorial sovereignty, good neighbourhood, pacta sunt servanda and non-discrimination in the protection of fundamental human rights. its third article ensures that all its provisions are implemented on the basis of agreements and programmes concluded with states where beneficiaries of the law exist. but in its first article, the law declares as beneficiaries “ethnic romanians, as well as those who belong to the romanian cultural vein, living outside the borders of romania, and who endeavour to maintain, promote and assert their cultural, ethnical, linguistic and religious identity”. the scope of this provision is enlarged by article 4, which states that individual rights such as free access to cultural institutions or non-discriminatory access to education, scholarships and professional training are granted also to “any person who studies or teaches abroad in romanian language, irrespective of its ethnic origin”. the 2007 law on the support for romanians living anywhere abroad is clearly a statement of the ethnic romanian nation and one which takes into account relevant international treaties and other documents. but evolutions at international level in 2007, some of which involved romanian immigrants, particularly in italy, have determined romanian authorities to adopt a different approach. considered responsible for a big proportion of petty crimes and even some serious crimes (murders) committed in italy over the past years, romanian immigrants started to face not only a hostile italian public opinion, but also a harsher attitude from italian authorities. the latest change of government in italy has only added more in the same direction. the second destination of recent romanian emigration, spain, started also to give signs of worry with regard to the involvement of romanian immigrants in petty crimes committed on its territory. in reaction, the romanian government proceeded to closer cooperation with law enforcement agencies in all states where romanian emigration is relatively strong, but also revised the domestic law dealing with “romanians living abroad”. 162 emergency ordinance no. 10 was adopted in march 2008 (and published in official. gazette no. 131/2008) in order to revise the law of 2007 with the dual purpose to „enhance support for the activities of representative organisations of ethnic romanians in their relation with authorities in the states of which they are citizens” and to prevent „the negative consequences of the implementation of this law on the ethnic romanians and romanian citizens (mine emphasis) who expect the support of the romanian state in their effort to maintain romanian identity”. consequently, beneficiaries of support from the romanian state are now “persons who freely assume the romanian cultural identity – persons of romanian origin and those who belong to the romanian linguistic and cultural vein and who live outside romanian borders”, but also “persons belonging to national minorities, linguistic minorities or ethnic autochthon groups existing in states neighbouring romania, irrespective of the ethnic name they use” and “immigrant romanians, irrespective of the fact that they have conserved or not romanian citizenship, their descendents, as well as romanian citizens residing abroad who work outside the territory of romania”. the new legislative framework is clearly expanding its scope and objectives, but in a way which is both compatible and strange with regard to relevant documents issued by the council of europe. while maintaining basic principles and the mechanism of implementation already in place, the new provisions expand the protection previously granted to ethnic romanians to various other categories of persons. thus, not only national minorities are included, according to resolutions 1335 (2003) and 1735 (2006) of the council of europe, but also autochthon groups which were not concerned by these documents. it may be interesting to note that some of the communities directly concerned by these provisions have the status of national minorities on the territory of romania (e.g. aromanians), while some others are not recognised this status in their respective hoststates (e.g. cutzo-vlahs or vlahos in less cases). as for immigrants, romania attempts to put into practise advice it has received from the advisory committee of the council of europe, only in a reversed way: if citizenship is considered “to raise problems in relation to guarantees linked to key areas covered by the framework convention, such as non-discrimination and equality, and certain cultural and linguistic rights” a “flexible and open approach” is ensured via including romanian citizens living and working abroad in the scope of protection offered by the framework convention on national minorities. this very broad legal definition of “romanians living anywhere abroad” questions the dogma of the ethnos v. demos definition of the concept of nation and seems to open a new approach with regard to treatment reserved to nationals by their kin-state, approach which goes beyond mere national minorities and includes other types of individuals sharing not only common ethnic origins, but also language, religion, culture and even citizenship. iv. instead of conclusion protection of national minorities is, above all, an internal issue of the state. protection of nationals by their kin-state is, above all, an international issue. in extreme cases it may threaten international stability if secessionist claims of national minorities are supported by their kin-states and eventually succeed, in contempt of 163 international public law (e.g. recognition of kosovo, particularly within the european union). in any event it should involve careful design and due consideration to both individuals and states concerned. last but not the least brief mention must be made of an idea which has become recurrent in the post-modern discourse regarding the state, namely that its role is obviously decreasing under the coordinated attack of globalisation at international level and protection of individual rights at internal level. as corollary, this has been considered opening new perspectives and possibilities for the accomplishment of requests coming from national minorities. but let us not fall into the trap: neither the predisposition of the contemporary state to participate in the development of international law, and thus to internationalise its constitutional legal system, nor the democratic idea, which contributed to the constitutionalization of international public law, should not conceal the reality that the state is and remains the common denominator of all communities of human beings (populations, peoples, nations, minorities) and the unique guarantor of their human rights. references 1. advisory committee on the framework convention for the protection of national minorities, second opinion on romania, adopted on 24 november 2005, [online] available at http://www.coe.int/t/e/human_rights/minorities/2._framework _convention (monitoring)/2._monitoring_mechanism/4._opinions_of_ the_ advisory_committee/1._ country_specific_opinions/2._second_ cycle/pdf_ 2nd_op_ romania_en.pdf, accessed on the 1st of august 2008. 2. alexandrescu, s., towards a modern theory of romanian nationalism in the interwar period in nation and national ideology – past, present and prospects, bucharest: new europe college, 2001. 3. anderson, b., imagined communities, london, 1991. 4. council of europe, doc no.11531/2008, ‘the concept of nation’, [online] available at http://assembly.coe.int/main.asp?link=/documents/workingdocs/doc08/edoc11531.h m, accessed on the 1st of august 2008. 5. council of europe, framework convention for the protection of national minorities and explanatory report, [online] available at http://unpan1.un.org/intradoc/ groups/ public/ documents/untc/unpan017004.pdf, accessed on the 1st of august 2008. 6. council of europe, resolution no.1335 (2003), preferential treatment of national minorities by the kin-state: the case of the hungarian law on hungarians living in neighboring countries (“magyars”) of 19 june 2001, [online] available at http://assembly.coe.int/main. asp?link=/documents/adoptedtext/ta06/erec1735.htm, accessed on the 1st of august 2008. 7. ermacora, f., ‘the protection of minorities before the united nations’, 1983, recueil des cours de l’académie de droit international, pp. 258 et seq. 8. fowler, b., ‘fuzzing citizenship, nationalising political space: a framework for interpreting the hungarian ‘status law’ as a new form of kin-state policy in central and eastern europe’ in one europe or several?, working paper 40/02, university of sussex, 2002, [online] available at http://ideas.repec.org/p/erp/oneeur/ p0040.html#abstract, accessed on the 1st of august 2008. 9. gellner, e., nations and nationalism, new york: ithaca, 1983. 10. hitchins, k., ‘the idea of nation among the romanians of transylvania, 1700-1849’, nation and national ideology – past, present and prospects, bucharest: new europe college, 2001. 164 11. hobsbawm, e., nations and nationalism since 1780, cambridge, 1990. 12. horchani, f., ‘constitution, normes internationales et protection des minorités’ in droit constitutionnel & minorités (ed), recueil des cours de l’académie internationale de droit constitutionnel, vol. xii, tunis, 2003. 13. horvath, i., ‘state, minority and identity aspects related to romania’s hungarian minority’, new europe college yearbook 2000-2001. 14. jellinek, g., allgemeine staatslehre, 3rd edition, berlin: o. haring, 1914. 15. livezeanu, i., after the great union: generational tensions, intellectuals, modernism and ethnicity in interwar romania in nation and national ideology – past, present and prospects, bucharest: new europe college, 2001. 16. ‘report on the preferential treatment of national minorities by their kin-state’, the european commission for democracy through law [online] available at http://www.venice. coe.int/docs/2001/cdl-inf (2001)019-f.asp, accessed on the 1st of august 2008). 17. scelle, g., manuel de droit international public, paris: domat-montchrestien, 1948. 18. sofronie, g., ‘la reconstruction du droit des minorités à la lumière de la doctrine juridique national-socialiste’, 1940, affaires danubiennes, no. 3-4, pp.1 05 et seq. 19. toperwien, n., nation-state and normative diversity, fribourg: iff, helbing & lichtenhahn, 2001. 20. ‘unio_trium_nationum’, [online] available at http://en.wikipedia.org/wiki /unio_trium_ nationum, accessed on the 1st of august 2008. 21. veiter, th., ‘commentary on the concept of national minorities’, 1977, human rights journal, pp. 273 et seq. 22. vukas, b., ‘states, peoples and minorities’, 1991, recueil des cours de l’académie de droit international, pp. 504. 74 abstract the article pursues two related ambitions. firstly, it seeks to give an overarching view of post-transition hungary’s agency field by giving a qualitative description and analysis of the development of the legal-institutional framework, and by characterizing the proliferation of agencies with quantitative information. secondly, and more specifically, the article explores certain aspects of agencies’ politicization; in particular, it seeks to identify the extent to which central governmental policies related to agencies serve the latent function of strengthening political control over agencies. the analysis corroborates the results of an earlier, more limited one: the hypothesis regarding the existence of such political control functions is supported by the empirical evidence. keywords: hungary, agencies, politicizatism, political control. agencies and the politics of agentification in hungary hajnal györgy hajnal györgy hungarian academy of science, institute for political science, corvinus university of budapest, budapest, hungary tel.: 0036-14-825.032 e-mail: gyorgy.hajnal@externet.hu transylvanian review of administrative sciences, special issue, pp. 74-92 75 1. introduction the ambitions of this article are twofold: firstly, to give an overarching, synthesizing view of the development of the hungarian agency landscape and secondly, to delve into the specific problem area of political control and politicization of agencies. the first ambition is justified by the more general ambition of the current special issue of the transylvanian review of administrative sciences; namely, to offer a comparative insight into the largely unexplored area of central and eastern european agencification. the latter ambition of this article is justified by the fact that the relationship between politics and agencies is one of the focal problem areas, on which the current special issue focuses. moreover, this issue area seems to be particularly relevant in understanding the dynamics of hungarian agencies. as to the empirical data utilized in the study, two sources deserve to be mentioned. the legal-institutional framework of agencification is analyzed mostly on the basis of the basic legal measures that have defined the field throughout the past 20 years. in addition, published analyses of different aspects and problems of the legal-institutional framework were relied upon (for an extended overview see hajnal and kádár, 2008; hajnal, 2010a). in addition to that, systematized empirical data on hungarian agencies were collected and analyzed. information regarding organizational changes and functions was obtained from diverse sources of information, including government data files, legal data bases and other publicly available information (for technicalities see hajnal and kádár, 2008). this data-collection resulted in a database containing dynamic, longitudinal information (including data on ties between antecedent and successor organizations). this database – and thus the empirical basis of the study – currently extends to the 2002-2009 period. the significance of this data set is that there has been little systematic study of agencies in hungary; almost all of the existing writings were confined to the analysis of specific legal problems or legal measures from a purely legal positivist (and practitioner oriented rather than academic) perspective. empirical studies are rare, and with a few exceptions largely descriptive, single-case studies (nyitrai, 1996; budai 2008a-b; papházi and rozgonyi, 2008). therefore the ability to characterize and analyze agency dynamics in broad, quantitative terms constitutes an important step towards a better empirical grasp of a number of key issues. the next section outlines the conceptual and theoretical framework of the study, and locates more precisely the above, broad research ambition in that context. the third section aims at giving an overarching overview of the dynamics of hungarian agencies, while the last section presents the analyses related to the politicization of agencies. the article ends with a brief section on conclusions. 2. agencification and political control of agencies 2.1. the quest for political control: previous findings on the driving motives of agency policy in hungary a first question of agency research aims at explaining the phenomenon of politicians refraining from the exercise of some of their powers and delegating certain 76 competencies to agencies. in the north american and west european contexts a number of such explanations were proposed and, partly, supported by empirical evidence (for an overview see christensen and laegreid 2006; pollitt et al., 2004, pp. 20-21). empirical results are distinctly scarcer in the hungarian context. beside the generally modest volume of such research this scarcity has much to do with some deeper, more structural factors, which may be referred to as the lack of the agency concept in the hungarian professional and academic discourse. prior to 1989-1990 agency-like organizations operated in a context that was fundamentally different from the politico-administrative landscape of the 1990s and the 2000s (beblavy, 2002). in a society where the vast majority of social and economic activities occurred within the realm of the state “whenever the political leadership wished to make the direction and control of a sphere more direct the affected tasks were declared state administrative tasks and these tasks were assigned to a newly created administrative organ” (nyitrai, 1996 apud papházi and rozgonyi, 2008, p. 96). therefore central government organizations in the socialist era cannot be easily treated as the functional equivalents of today’s agencies and should therefore not be part of the “agencification story” – even though they meet the agency definition. the analysis of agencies and agencification in post-transition hungary continues to pose some specific conceptual and methodological problems that are missing in other (western) countries. in the 1990s and 2000s – although there was a broad public discourse about administrative policy and reform – central government administrative structures changed, with certain exceptions, according to short-term, and mostly party political or personal considerations. terms such as “agency” or “agencification” – either in english or in hungarian – did not appear at all in the public or professional discourse or only marginally. neither did agencies in the strict sense – that is, characterized by some extent and form of contractual, performance-based relationship between the agency and its parent ministry – appear in the organizational landscape of hungarian government. in sum, the ideal type “autonomous agency model” is practically non-existent in hungary as one of its defining characteristics – output control and contractual arrangements, as opposed to hierarchy-based, input and process oriented commandand-control – was throughout the examined period absent. moreover, agencies are not seen as a structural solution contributing to organizational or policy performance, the achievement of which would be based on the application of such means as extended autonomy and improved (ex-post) control mechanisms. rather, agencies in a sense “happen to be there” as a result of some other driving factors not exposed or discussed either in the narrower professional or in the broader public discourse. consequently, there is an idiosyncratic lack of correspondence between the conceptual framework (or cognitive map) related to agencies in hungary on the one hand, and the “international mainstream” conceptualization, on the other. this lack of correspondence is probably characteristic for many other post-communist countries as well (see moynihan (2006) in relation to slovakia). it complicates a 77 discussion of (effects of) agencification, because the various effects attributed to the autonomous agency model are simply not expected by hungarian policy makers and the broader public as they lie beyond the scope policy outcomes deemed relevant. consequently the expectation that agency autonomy would lead to results like a substantial (positive) change in performance, transparency, coordination, credibility, accountability, legitimacy and so on is not discussed/analyzed in any significant form and extent in relevant government documents or academic research. beside the above mentioned absence of the agency concept from the hungarian discourse the reconstruction of the normative argument(s) underlying the creation and/or preservation of agencies is hindered by two additional problems. firstly, as mentioned earlier there is little empirical evidence on patterns of agencification prior to 2002. and secondly, analyses, policy papers or broad policy statements with an even minimum extent of argumentative ambition and logic are extremely rare (a notable exception is rozgonyi, 2008). however, despite the above bottlenecks four broad – partly hypothesized – motives of agency formation can be deduced from previous research done in this field (hajnal, 2010a). agencification may have been used as an anti-corruption and rule-of-law measure. agencification usually affected functions related to the execution/enforcement of law. moving such functions out of the ministry in charge meant that the agency became able to act as the administrative authority of first instance. in this new administrative setup the ministry could oversee administrative decisions of first instance as the administrative authority of second instance. this two-tier arrangement was expected to limit the possibility of “politicized” and possibly corrupt administrative practices. moreover, it was seen as being more in line with liberal democratic, rule-of-law requirements vis-à-vis administrative decision-making. agencification was in some cases imposed by external actors or donors. moving (mostly implementation, information and support) functions out of ministries appeared as a frequent element of international technical assistance programs since for much of the period under study this was regarded as an integral component of the “international best practice”. moreover, the eu accession process induced the creation of a limited number of agencies, as well (such as the ones in charge of distributing eu funds or of anti-discrimination measures). agencification could be used to create more flexibility in hrm. there is a growing tradition in hungary that – like in a number of other countries – government organizations are, from time to time, exposed to unexpected and harsh downsizing campaigns initiated from the top political leadership. these campaigns usually occur as responses to – or at least are usually justified by – acute budgetary crises. they involve most of all, an across-the-table cutback of personnel. as a counter-measure, ministries (and, to a lesser extent, other governmental organizations) have for quite some time been striving to create buffer organizations – most of all, agency type ones – where “downsized” personnel and management could be temporarily transferred to and retained until the downsizing campaign was over. 78 finally, in contrast to the above motives having a chiefly “administrative” character, “agency policy” seemed to have served different, rather subtle, political ends as well. for example, the almost constant (re)creation and reorganization of agencies may serve as an instrument of politically controlling “broken-free” administrative apparatuses and as a means of building political and organizational hintergrund. moreover, agencies could function as a barter good in political transactions (for example, paying a political ally or neutralizing an opponent with a new, prestigious agency). most of these motives – as well as numerous other ones – were, to a smaller or greater extent, exposed and examined in the international literature (for an overview see pollitt et al., 2004, p. 20). in the following, i will focus on the latter, fourth set of triggering factors: the “political use” of agencies, or at least certain aspects thereof. 2.2. the “political use” of agencies as argued before, the “autonomous agency model” as it is understood in the international academic and practitioner discourse is, by and large, unknown in hungary. nevertheless – as the analyses presented above show – it is still possible and meaningful to examine “what has been going on” in relation to agencies, particularly for the past ten years or so. most administrative reforms were not specifically related to agencies. but, throughout the past years there were some “grand themes” appearing – sometimes reappearing – in relation to ministries, agencies, local governments and other public organizations alike. probably one – possibly the most frequent – of these grand themes was the politicization and the centralization of the central state administration. increasing politicization was undergoing at least since 1998 (the starting year of the first centerright orbán cabinet). this development gained substantial impetus with the reforms initiated by the second (center-left) gyurcsány cabinet in 2006 extending, besides agencies, much or all of the central government machinery. these measures included, among others, the abolition of the permanent state secretary position in ministries; moreover, numerous other changes weakening the depoliticized, career type nature of the civil service system were implemented. the further centralization and strengthening of political control were to be achieved by, among others, transferring “sensitive” tasks to higher levels of the politico-administrative hierarchy. for example, public procurement, hrm and logistic functions – which have a key role in nurturing ministries and ministers’ informal, organizational power base (papházi and rozgonyi, 2008, p. 94) – were transferred to the prime minister’s office. this pattern appeared on the level of agencies as well; many important tasks previously serviced by agencies were hived back into the parent ministries. this political and discursive context signifies the central role of the different, mostly informal and subtle, channels and fields of politicization in understanding the hungarian agency field. in the following subsection, therefore, i will present a theoretical framework of politicization, which will serve as a basis for formulating the research question more precisely. 79 2.3. politicization and political control: a conceptual framework politicization of government apparatuses is often conceptualized simply as the politicization of the civil service; that is, as “the substitution of political criteria for merit-based criteria in the selection, retention, promotion, rewards, and disciplining of members of the public service” (peters and pierre, 2004, p. 2; flinders, 2008). there are numerous attempts to broaden this conceptualization so as to embrace the many other ways, in which government apparatuses and thus the implementation of government policies can be influenced by informal societal, political or organizational values, interests and aspirations. for example, eichbaum and shaw (2008) differentiate between the extent to which (senior) appointees are or can be assumed to be partisan on the one hand, and the extent to which policy support and advice given to ministers by the (senior) civil servants are actually politically distorted. however, the focus of the current study is on organizations, rather than individuals, as primary units of analysis. moving on to this higher level of analysis peters (2001) differentiates between two kinds of politicization. firstly, the interaction between „informal” political actors – pressure groups, societal interest groups and so on – on the one hand, and administrative apparatuses, on the other. secondly, when administrative apparatuses interact with other, formally defined entities/actors of the state then what we have at hand is bureaucratic politics. it is this latter aspect of the politics-administration interaction, in which the focal issue of this study – political control – may be located. the formal political institutions of liberal democracies are organized around the concept of the chain of accountability – that is, elected politicians being accountable, through democratic elections, to the citizenry while administrative apparatuses being accountable to, and being controlled by, their political masters. in his research on (regulatory) agencies in four of the largest european countries thatcher (2002) concludes that there are important channels of exerting direct, institutionalized, formal political control over agencies at politicians’ disposal. these include the nomination and early dismissal of senior staff, setting the resources – especially budgets – of the subordinate organizations, and the power to overturn (important) decisions of these organizations. interestingly however his empirical analysis concludes that politicians – with some minor exceptions – don’t use their formal powers of controlling regulatory agencies. according to thatcher this finding raises the question whether elected officials control agencies through “means such as creating resource dependencies and/or informal relationships” (thatcher, 2002, p. 962). what are these informal channels of influence? peters (2001, p. 244) goes into substantial detail in enumerating and delineating politicians’ – formal as well as informal – tools or, as he puts it, “ploys” of politically controlling bureaucratic apparatuses. these tools are as follows. – special budgetary institutions (such as the office of management and budget) controlling budgets and spending; – organizational differentiation enabling executive politicians and legislature to follow the specialization and differentiation happening in bureaucracies; 80 – “counterstaffs” providing independent sources of information (especially in political systems characterized by deep and lasting social, religious, ethnic or political divisions); – managerialism – understood as the redefinition of the role of (senior) civil servants in a way that distances them from policy advice and especially policy formulation and, instead, emphasizes their role in the implementation of policies; – “customer-driven government” understood as the redefinition of citizens’ role and entrusting them with some extent of control powers; – control of staff, which involves what was earlier referred to as the politicization of civil service, that is, the totality of institutions, practices and techniques used by/enabling politicians to employ (senior) administrative personnel in line with their political/ideological dispositions, and to induce those in office to align with these values; – the existence of a strong ideological party, which especially – but not only – in single-party political systems may ensure compliance and/or reduce bureaucratic initiative; and – finally, by threatening with the employment of physical coercion the military – constituting a special case of party governments – may increase, in certain political systems, the ideological and political compliance of the bureaucracy. some of the above-mentioned “ploys”, such as the creation and use of special budgetary institutions, the politicization of civil service and – more lately, to some extent – customer orientation seem to be present in the toolbox used by politicians in hungary. other means, such as managerialism, “the party” or the use of military threat are, by and large, absent from the hungarian practice. on the basis of the sporadic qualitative evidence and earlier analyses performed on a limited data set (hajnal, 2010a) it seems, however, that the above typology of the means and “ploys” employed by politicians does not include an important one: namely, the use of restructuring as a tool of political control. the ambition of the current paper is, therefore, to examine the hungarian agency field in the view of the above analytical framework, in particular, to test the hypothesis that – in addition to those listed, with reference to the “western” practice, by peters (2001) – politicians in hungary use another important tool of politically controlling agencies: the frequent reorganization of agencies. 3. agencification in hungary: the development of the legal-institutional framework and the proliferation of agencies the development of the legal-institutional framework of agencies in post-transition hungary can be divided into two phases: the first one starts in 1990 and ends with the adoption of a new overarching legal framework in 2006; the second phase ends in the last year covered by the current study, 2010. these historical epochs are briefly overviewed in the below subsections. the third subsection characterizes the proliferation of agencies in quantitative terms, focusing on the 2002-2009 period covered by the data set underlying the current research. 81 3.1. agencies between 1990 and 2006 the hungarian central government subsystem is divided into ministries, the number of which ranged between 12 and 18 in the period under study. at the core of the central government structure lies the prime minister’s office. ministries are chiefly responsible for policy-making while most of the implementation tasks – especially those with a territorial dimension – are carried out by agencies (albeit that there are important exceptions to the above role, such as centralized public procurement, which is located in the prime minister’s office). the local governmental system is a two-tier one involving, at the first tier, nineteen counties and the capital city budapest, and, at the lowest, municipal tier almost 3200 local governments governed by elected councils. local governments are responsible for another broad set of public service provision tasks, including child care, education, health, and local physical infrastructure services. in the hungarian government apparatus there are various sorts of organizations possibly regarded as (and/or satisfying the definitional criteria of) agencies1. because of the practical limitations of the research reported here – most of all, the rather dynamic nature of the institutional landscape and limited existence of, and access to, data – throughout the study the term “agency” is used in a somewhat restricted manner. by “agency” it is referred to public administration organizations (i) directly subordinated to the government (i.e., either the cabinet or a ministry) and (ii) falling into the organizational scope of law on civil service. this latter restriction means that some clusters of agency type organizations that should “normally” be included in the analysis are omitted. these omitted clusters include: – the armed forces (military, police, customs guard, border guard and secret service organizations); and – certain public budget organizations staffed by public servants (as opposed to civil servants) exerting research, policy support, (higher) education, cultural, health, or social service etc. functions. before 2006, there was no general legal regulation on the structural features of organizations in the executive branch. competences and structures of individual ministries were regulated by various, and frequently changing, government decrees. the government had extensive freedom to establish the government structure within the broad limits specified by law and constitution. both academics and practitioners were dissatisfied with this unregulated nature of the central government organizational universe – and specifically that of agencies – and persistently argued in favor of common legal standards as a token of effective central government structure. it 1 the term “agency” is understood in a relatively narrow sense, as the sum of “category 1” and “category 2” agencies (van thiel, this issue), whereby agencies are conceptualized as a public organization “(i) structurally disaggregated from the government and (ii) operat[ing] under more business-like conditions than the government bureaucracy” (talbot, 2004, p. 5 apud van thiel et al., 2009, p. 2). 82 is illustrative of the gross legal-institutional ambiguity that even ministry leaders are uncertain and legal documents are erroneous regarding the legal status of the organizations subordinated to their own ministry (papházi and rozgonyi, 2008, p. 86). between 1990 and 2006, there has been only one significant event regarding the legal framework of agencies. the 2040/1992 government resolution (1992) created a three-category typology for agency-type organizations. however, the resolution did not classify the existing agencies accordingly. moreover, the resolution was not to be applied in a consistent and compulsory way for subsequent organizational decisions. this measure could therefore not settle the problem of unregulated proliferation of agencies. in the following fourteen years a series of government resolutions repeatedly tried to eliminate opaque and overlapping agency structures and to develop and clarify the legal-structural principles underlying them (hajnal and kádár, 2008, p. 5) – with relatively little success. the typology outlined in the above-mentioned government resolution were, at least until 2006, also applied in the academic and practitioner literature dealing with this subject (balázs, 2004; sárközy, 2006; vadál, 2006). it defines three agency types2: (a) the so-called ohsz’s (országos hatáskörű szerv); (b) central bureaus (központi hivatal); and (c) ministry bureaus (minisztériumi hivatal). the list reflects a clear and institutionalized organizational hierarchy, going from the most to the least autonomous type of organization in terms of formal, legal-institutional autonomy, ohsz’s and central bureaus being more structural autonomous (“category 2” of the typology developed by van thiel et al., 2009, p. 22), while ministry bureaus being less structural autonomous (being mostly “category 1” agencies, ibid.). however, all three types of organization are separate legal entities with nationwide competence that perform some specialized public administration task(s). all organizations operate under the full authority of the appointed agency director. some additional features of the three agency types are outlined in the table below. as the table shows increased structural autonomy – that is, the extent, to which an organization is able to entrench itself from its politico-administrative context – emanates from a variety of sources. firstly, autonomy may depend on the “rank” of the politico-administrative entity deciding upon the agency at hand. for example, ohsz’s are founded by the parliament by a law; hence their statute (and any amendments thereof) involves a complex and highly visible legislative process involving numerous players and veto points. in contrast, central bureaus may be founded/modified/ended by cabinet decisions while the fate of ministry bureaus can be simply decided by individual, across-the-table ministerial decisions. 2 note that the category of ministry bureaus is, both conceptually and operationally, quite vague. not only is this legal category not defined in the confidential and unpublished 1992 government resolution but it is also used in a somewhat vague and contradicting manner in the academic course. 83 table 1: typology of agencies based on their legal-structural features structural features ohsz(type a) central bureau (type b) ministry bureau (type c) founder/form of founding document (statute) parliament / law government /government decree minister / ministerial decree superior organ cabinet ministry ministry appointment/dismissal of agency head by the cabinet / prime minister appointed for a term of 4-6 years by the minister appointed for an indefi nite period by the minister appointed for an indefi nite period remuneration of staff (according to law on civil service) same as for ministry staff less than for ministry staff less than for ministry staff participation in the governmental decision-making bodies may participate in meetings of permanent state secretaries may participate in cabinet meetings* may participate in meetings of permanent state secretaries may not participate in governmental decision-making bodies budgetary status (position in the law on budget) separate section in the law on budget* subsection within the ministry’s section in the law on budget not included explicitly in the budget * this applies to a smaller set of ohszs only. secondly, the issue whether it is the cabinet or the minister who is charged with the supervision of the agency has far-reaching significance. naturally, the former has no appropriate apparatus for directing an organization effectively, thus by all means this kind of supervision is less operative and powerful than that of the ministry. from a functional perspective this is related to the fact that an ohsz’s duties do not fall into the portfolio of any ministry (as they were established for providing functions besides ministries), therefore it is independent from the ministerial structure, as being typically subordinated to the cabinet. this implies the following with regards to its autonomy: – there is no ministry which could absorb its duties. – the designated minister bears only minor supervisory functions over the ohsz, but (s)he cannot issue instructions to carry out specific tasks or to rectify the ones already taken. – its head is appointed and dismissed by the prime minister or the cabinet, hence the prime minister (and not a minister) is responsible for the body’s activity before the parliament. – the ohsz can appeal directly to the cabinet, and their leaders are invited to the cabinet meetings, unlike other types of agencies represented only through their parent ministries. unlike ohsz’s, central bureaus’ duties fall into the portfolio of the parent ministry. central bureaus have no direct relation with the cabinet. ministry bureaus have no separate scope of duties from that of the ministry’s. what differentiates them from the central bureaus is that they have no legally defined and addressed competence; they only perform the devolved/assigned competence and duties of the ministry. this 84 practically means that, in contrast to the case of central bureaus, the minister may freely reshuffle or even cease the ministry bureau on his/her own decision. with regards to the shielding and legal entrenchment of managerial positions, in the case of ohsz’s, the leader is appointed for a term of four or six years, and can only be dismissed in extraordinary cases. consequently, (s)he enjoys a significantly higher extent of employment security than the leaders of most other agencies. some of the most autonomous ohsz’s gained further privileges in the field of shaping government policy, for instance by signing international treaties or directly taking part in preparing draft bills. with regards to budget procedures, a set of the most autonomous ohsz’s are entitled to take a direct role in the budgetary bargaining process (i.e., they directly negotiate with the finance ministry). in contrast, central bureaus are represented in this process only via their minister, while ministry bureaus are – as a general rule – simply not a party in the budget bargain as they simply receive what the minister decides to allocate to the given agency. the extent of autonomy differs also with regards to agencies’ ability to modify approved budgets. many features of the aspects discussed above continue to characterize agencies’ legal-institutional setup even after the 2006 reforms marking the end of the first, long period of agency development. despite this significant extent of continuity there are, however, a number of important differences between the preand post-2006 legal framework, too. a brief overview of these follows in the next subsection. 3.2. the 2006 reform to central government apparatus given the scope and limits of this paper it is possible to enumerate only some of the most important elements of the policy related to the period 2006-2010 and the political developments characterizing this extremely hectic period. by 2006, the overly ambitious expenditure programs and welfare policies launched in 2001 and strengthened further in the subsequent years have bumped into harsh and clear fiscal limitations. although the “statistical make-up” performed by the government for the spring elections in 2006 could postpone the open facing with these realities the new cabinet had to take immediate and severe restrictive steps. these included a series of steps downsizing public sector personnel, and ceasing or merging numerous public organizations. these government policies faced an extraordinarily effective and coordinated strategy of resistance pursued by a broad host of diverse, otherwise often strongly contradictory, societal and political actors. this resistance included, among others, elements ranging from unprecedentedly violent street protests to popular referenda, and to the opposition’s fierce and persistent parliamentary and communication campaign. the economic and fiscal crisis starting autumn 2008 and the resulting further series of harsh restrictions required by the imf came on top of the aforementioned crises (and counter-crisis measures). the last observation included in the database referring to 1 january 2009 can be regarded as reflecting the end stage of the gyurcsány era: after the crisis and the dissolution of the (center-left) socialist-free democrat coalition 85 the government resigned and a new minority socialist cabinet was inaugurated in april 2009, which already lies outside the temporal scope of the present study. as part of its attempts to (re)gain control over government apparatuses in 2006 the incoming, second gyurcsány cabinet initiated a law regulating the basic structural features of agencies, in an attempt to create some order after more than a decade of mushrooming central government organizations and organizational units. the key element of the new law created an overarching, uniform regulation of central government organizations, including agencies3. this regulation included a clearly defined, closed agency typology, which all existing and new agencies had to comply with. the new typology in part followed the pre-existing, albeit non-compulsory, typology reflected in the above table. from our current perspective, however, two differences deserve mentioning. firstly, the law abolished the category of ministry bureaus, all of which were (meant to be) converted into some other type (usually central bureau). however, this measure was not implemented in practice to a full extent as a small number of agencies continued to exist – de jure and/or de facto – in the form of ministry bureau. secondly, the terminology has slightly changed as one of the remaining two categories – “ohsz” – was renamed “government bureau”. besides their fundamental impact on the agency field the 2006-2007 administrative reforms deserve attention also because of their unusual thrust and doctrinal clarity. market type mechanisms, (multinational) corporate management practices, performance orientation, monetary incentive systems, competition, and contracting out are all core elements of the npm toolbox and rhetoric but had never appeared so strongly and consistently on the hungarian reform agenda before then. from the point of view of agencies this implied, interestingly, not agencification in the usual sense of the word but in some respects the opposite thereof. a core element of the reforms was downsizing both in terms of organizations and staff (the original plans foresaw a staff decrease of about 10% for central administrative organs). the integration of administrative organizations affected the agency population particularly strongly, because sometimes as many as six organizations were merged into one. interestingly however, the stated objective of amalgamations was different from the one(s) usually appearing in other countries’ post-npm reforms taking place in the name of “joined up government”. rather, the objective here is to achieve economies of scale, thereby realizing cost savings. however, whether or not this hypothesis holds true was very rarely argued for (or even questioned), let alone empirically tested. 3.3. the proliferation of agencies agencies operate in quite diverse functional/policy fields. however, much of them are concentrated in a few areas. in 2006, for example, almost half of them were involved in sectoral (34%) or general (12%) economic affairs, while one fourth of them provided general public services. 3 law on central state administrative organizations and on the legal status of cabinet members and state secretaries (law lvii/2006) 86 as regards agencies’ proliferation quantitative data are not available for the period 1990-2001. on the basis of available, sporadic evidence it seems however that there has been an upward trend in agencies’ number and importance throughout much of this period. this is corroborated by an unpublished government report cited by papházi and rozgonyi (2008, p. 96) which states that between 1995 and 2004 a 23% increase occurred in the number of “central state administrative organizations” (an analytical category not clarified in the report). the figures below show that this trend continued until 2006, the first year of the second gyurcsány cabinet. table 2: proliferation of agencies between 2002 and 2009 (broken down by legal status) count legal status 2 total ohsz/gov. bureau central bureau ministry bureau year 2002 2003 2004 2005 2006 2008 2009 total 14 17 20 24 19 7 7 108 27 30 29 26 25 31 30 198 11 14 15 15 17 4 3 79 52 61 64 65 61 42 40 385 between 2002 and 2006, the total number of agencies – as operationalized in this study – increased from 52 to 65. this upward trend was present in all three subsets of agencies. however, as the table shows in the course of 2006-2007 a sharp u-turn occurred in the patterns of agency proliferation as the number of agencies decreased dramatically. this spectacular trend change was composed of such elements such as hiving tasks back into the parent ministries, a very strong strife to merge existing agencies into larger units, and granting them less and less formal autonomy (hajnal, 2010). interestingly, these elements are just the opposite of many of the mainstream npm agencification principles. as already noted above in relation to the changes in the legal-institutional framework, these patterns in fact have more in common with “whole of government” attempts to counterbalance the perceived limitations and dysfunctions of agencification reforms in certain other countries (pollitt, 2003). it is plausible to presume that these changes are, at least in part, attributable to similar factors as in other countries. especially the (perceived) weakening of the political center and the dilution of its control capabilities seems to be a major underlying factor. at the same time, some other factors seem to play an important role in the shifting patterns of hungarian administrative policy. firstly, the alarming fiscal pressures – threatening, at some points, with the collapse of government finances – was and continues to be the rhetorical cornerstone of most of the structural changes. according to this argument the amalgamation of different agencies is expected to create serious economies of scale by allowing for the elimination 87 of overlapping functional (it, hr etc.) units. secondly, tendencies to diminish the scope and the role of civil service appeared especially for the first two years of the second gyurcsány cabinet (in office between 2006 and 2009). condemnations of the “rigid, inefficient, lazy bureaucracy” (thereby referring to the professional civil service) and praising of corporate style governance were frequent elements of the government rhetoric of the time. the opposite trend of extending the scope of civil service regulations to new organizational areas can be assumed to be motivated by such factors as more advantageous employment conditions (salary, work intensity, employment security) and the increased organizational prestige associated with civil service. the below table illustrates the organizational weight of different administrative organizations within the broader public administration structure, using the most recent data available. table 3: number of executive branch organizations and civil servants falling within the scope of the law on civil service4 organization type organizations employees4 b1 – ministries 14 6,675 b2 – autonomous state admin. organizations 4 806 b3 – government bureaus (previously: ohsz’s) 6 2,303 b4 – central bureaus 33 12,270 b5 – national hq’s of armed bodies 4 304 bt – territorial state admin. organizations 179 40,708 bh – local state admin. organizations 196 4,862 c – local government admin. organizations 1,922 43,366 total 2,358 111,294 source: compiled from kim (2010) * staff fi gures include full time and part time employees as well as of january 2010 approximately 111,000 civil servants were employed (a marginal number of additional civil servants were employed by organizations outside the executive branch). approximately 60% of civil service personnel worked in organizations hierarchically subordinated to central government while the remaining 40% was employed in local government offices. agencies in the broader sense involve organization types b3 to b5. in terms of staff these organizations (b3 to b5) employ about 22% within the central state apparatus. 4. restructuring as political control 4.1. operationalizing the research question as discussed earlier at the heart of the agencification lies the phenomenon of executive politicians granting subordinate agencies some extent of autonomy. autonomy itself, however, is a multifaceted concept involving such diverse sub4 staff figures refer to staff employed in civil servant status only. total staff may include employees employed by regular labor contract framework and, in the case of armed bodies, a large number of military/police personnel. 88 concepts as formal, legal, structural, policy and managerial autonomy, to mention but a few (verhoest et al., 2004). the following investigation focuses on the relationship between formal autonomy and de facto autonomy. formal autonomy is understood in the sense of what thatcher calls formal institutional framework of controlling agencies (thatcher, 2002, p. 958). referring to yet another conceptual framework, it is the formal autonomy (yesilkagit and van thiel, 2008), which legally codifies channels and measures through which executive politicians (most of the time the minister in charge) are able to control the behavior of the agency on the one hand, and the barriers and constraints of this controlling capacity, on the other. this concept is, in the context of hungarian agencies, well operationalized by the legal status of agencies (see above section on the legal framework of agencies). reflecting the fundamentally formal, institutional focus of the current study (and the underlying data) the conceptualization of de facto autonomy is confined to a specific and narrow aspect sense: the extent, to which agencies are able to retain their basic legal-structural features in the face of political turbulence and pressures of the day. political rhetoric and the broader public discourse in hungary and abroad, and a significant proportion of academically oriented models as well as explanations based on “less noble motives” (pollitt et al., 2004, pp. 19-20) involve the precept that politicians grant different levels of formal autonomy to agencies (thus different legal statuses) in order to ensure their different positions on the “full political control” versus “full entrenchment from political control” imaginary axis. indeed, it is not easy to explain the existence of agencies with different degrees of formal autonomy (i.e., having different legal statuses) otherwise as on the basis of politicians’ intention to create – for one reason or another – agencies with different extent of autonomy. in practice, however, the relationship between formal and de facto autonomy is not that straightforward. for example, yesilkagit and van thiel (2008) found that while there are significant differences of de facto autonomy between (groups of) agencies characterized by different formal levels of formal autonomy, the relationship is oftentimes not linear: formally more autonomous agencies may have – in some respects and in certain cases – less de facto autonomy, and vice versa. previous research on hungarian agencies (hajnal, 2010a) found an even more counter-intuitive – one may say perverse – relationship between agencies’ formal and de facto autonomy. namely, instead of the rather haphazard relationship found by yesilkagit and van thiel there seemed to be a clear and linear – however clearly negative – relationship between the two. that is, more formal autonomy seemed to imply less de facto autonomy. this finding – reached in an earlier phase of the research underlying the present article – was based on a more limited data set of agencies ranging from 2002 to 2006 only. on the basis of this limited data set two hypothetical explanations of this strange finding were formulated (hajnal, 2010a, pp. 60-65). the first explanation is related to the, so to say, “political value” of the organization. this value – not to be mixed up with policy saliency – is determined by such factors as the capacity they offer to their political masters (i) to place senior party cadres or 89 clientele into prestigious and well-paid positions, and (ii) to exert influence on larger and more important apparatuses, budgets and policy fields. moreover, (iii) these capacities extend to the future possibility of a political shift in the governing coalition or party, thereby creating an organizational hintergrund for party cadres and clientele. agencies having higher structural status (and thus political value) are likely to be used more often as a kind of “exchange good” in political transactions – i.e., to “pay the price” of political deals between allies and adversaries alike – more frequently than structurally less autonomous ones. however, as a result of its structural entrenchment such “payments” usually require some sort of seemingly elaborate and well-founded structural re-arrangement; simply substituting the agency head with one belonging to another party or power grouping would be overly obvious and difficult to explain. the second explanation – not necessarily excluding but possibly supplementing the previous one – is based on the idea of using restructuring decisions as a means of political control and accountability. it seems that in a number of cases the extent of political control over agencies and/or charismatic agency heads tends be perceived insufficient by the agency’s political masters. because of the limited effectiveness of institutionalized, formal control arrangements an important way of regaining control over such organizations is to “punish” and remove agency management by means of reorganization. it is this latter explanation, which is put to further scrutiny. however, in comparison to the previous analyses (e.g. those presented in hajnal, 2010a) the analysis that follows is extended in two respects. firstly, the empirical basis is substantially broadened as the time period covered by the data set is extended from 2006 to 2009 (the starting date continues to be 2002). this temporal extension had the consequence of increasing the number of observations by about 50%, to n = 152 organizations. secondly, more elaborate analytical tools are utilized: survival times of agencies – that is, the length of time elapsed between two organizational changes affecting the agency’s basic structural features – are calculated and used for the analysis5. 4.2. empirical findings the results of an extended analysis of the above problem are presented below. the research question may be re-stated as follows: to what extent does agencies’ formal autonomy go hand-in-hand with their de facto autonomy? formal autonomy continues to be operationalized as legal status of the organizations. de facto autonomy is operationalized, in line with the principally formal-structural focus of this study, as the extent to which a given agency’s formal structural features remain unaffected by political decisions. 5 put simply, the survival time of an agency is the length of time elapsed between the change event (i) starting, in a given form and legal status, the organization at hand, and (ii) the event ending it. thus the survival index can be interpreted as a measure of the extent, to which an organization is/was able to retain its key structural features in a highly dynamic and hectic environment. 90 the below figure visualizes the relationship between formal autonomy and agencies’ average survival times in the three groups defined by legal status. legal status ministry bureaucentral bureauohsz s ur vi va l ( ye ar s) 3,4 3,2 3,0 2,8 2,6 2,4 2,2 2,0 figure 1: average survival times of agencies with different legal status (2002-2009, n = 152) as the figure shows the formally most autonomous organizations (ohsz’s) “survive” on average 2.2 years without being restructured, whereas the formally less autonomous central bureaus’ life span is 2.5, and that of the (formally least autonomous) ministry bureaus is as much as 3.3 years. in order to test the statistical significance of the differences anova test was performed. the difference between the three groups proved to be statistically significant at the p = 0.48 level. these results corroborate the conclusions based on earlier analyses performed on a significantly more limited data set (hajnal, 2010a). that is, contrary to both: – the intuitive, normative assumption of a positive relationship between formal versus de facto autonomy, and – the empirical finding of a haphazard relationship between these two variables established by yesilkagit and van thiel (2008). hungarian agencies exhibit a clear negative relationship between their formal and factual structural autonomy. this finding supports the present study’s hypothesis about the existence of – supposedly relatively new – means of agencies’ political control not identified/described by pre-existing scholarship. as a note of caution it has to be noted nevertheless that – as it is usually the case – the pattern identified in the empirical data may be consistent with a number of other explanations, most notably the “political value”-hypothesis elaborated elsewhere (hajnal, 2010a) and briefly discussed earlier. still it seems somewhat difficult to develop any alternative interpretation of the empirical finding presented above not involving the quest for subtle and informal means of political control and/or realizing political benefits on the part of executive politicians. 91 5. conclusions “agencies” and “agencification” – fervent topics in the international public administration discourse – figured only marginally, or even less, in the hungarian government practice and scholarship throughout the past decades. despite this conceptual – and even terminological – gap it is both theoretically relevant and empirically possible to analyze the proliferation and dynamics of agency-like organizations. one of the key conclusions reached thereby is that the importance and proliferation of agency-like organizations grew throughout much of hungary’s post-transition administrative history. moreover, the development pattern found in hungary, including the reversal of the agencification trend in the second half of the 2000’s, is in several respects noticeably similar to the path followed by other post-transition countries of the region (randma-liiv, nakrosis and hajnal, this issue). another important finding relates to the special, to some extent possibly even idiosyncratic, ways, in which agencies seem to be utilized by executive politicians. the finding that agencies’ formal and de facto autonomy (or at least some important aspects thereof) are in a clear and almost perfect linear, but nevertheless negative, relationship highlights some of the possible “misuses” (hajnal, 2010a) of agencies. these and similar kinds of other misuses – such as those reported by moynihan (2006) in relation to slovakia – are likely to play quite important roles in the functioning of governments and should therefore be a key topic on the research agendas of the future. references: 1. balázs, i., ‘a központi közigazgatás különös hatáskörű szerveinek szabályozási koncepciója’, 2004, magyar közigazgatás, vol. 54, no. 9, pp. 513-528. 2. beblavy, m., ‘understanding the waves of agencification and the governance problems they have raised in central and eastern european countries’, 2002, oecd journal on budgeting, vol. 2, no. 1, pp. 121-139. 3. budai, g., ‘a második gyurcsány-kormány által meghirdetett államreform a sajtó tükrében’, in rozgonyi, t. (ed.), államreform, közigazgatás, háttérintézmények, budapest: gondolat, 2008a, pp. 50-81. 4. budai, g., ‘változás és alkalmazkodóképesség’, in rozgonyi, t. (ed.), államreform, közigazgatás, háttérintézmények, budapest: gondolat, 2008b, pp. 19-49. 5. christensen, t. and laegreid, p., ‘agencification and regulatory reforms’, in christensen, t. and laegreid, p. (eds.), autonomy and regulation: coping with agencies in the modern state, cheltenham: edward elgar, 2006, pp. 8-52. 6. eichbaum, c. and shaw., r., ‘revisiting politicization: political advisers and public servants in westminster systems’, 2008, governance: an international journal of policy, administration, and institutions, vol. 21, no. 3, pp. 337-363. 7. flinders, m., ‘the politics of patronage in the united kingdom: shrinking reach and diluted permeation’, 2008, governance: an international journal of policy, administration, and institutions, vol. 22, no. 4, pp. 547-570. 8. hajnal, g. and kádár, k., the agency landscape in hungary: an empirical survey of non-departmental public bodies 2002-2006, ecpr standing group on regulatory governance, annual conference, utrecht, the netherlands, june 5-7, 2008. 92 9. hajnal, g., ‘failing policies or failing politicia ns? policy failures in hungary’, 2010b, world political science review, vol. 6, no. 1, article 13. 10. hajnal, g., ‘the agency landscape in hungary 2002-2006’, in laegreid p. and verhoest, k. (eds.), governance of public sector organizations. autonomy, control and performance, houndmills/new york: palgrave macmillan, 2010a, pp. 44-65. 11. közigazgatási és igazságügyi minisztérium, adatok a magyar közigazgatás személyi állományáról a 2010. január 1-jei állapot szerint, budapest: ministry of public administration and justice, unpublished government report, 2010. 12. moynihan, d.p., ‘ambiguity in policy lessons: the agencification experience’, 2006, public administration, vol. 84, no. 4, pp. 1029-1050. 13. nyitrai, p., ‘adalékok az országos hatáskörű szervek rendszerében 1990-94 között bekövetkezett változások elemzéséhez’, in fogarasi, j. (ed.), a magyar közigazgatás korszerűsítésének elvi és gyakorlati kérdései: oktatási anyag, budapest: unió, 1996, pp. 146-153. 14. papházi, t. and rozgonyi, t., ‘minisztériumi háttérintézmények a teljes átalakulás szélén’, in rozgonyi, t. (ed.), államreform, közigazgatás, háttérintézmények, budapest: gondolat, 2008, pp. 419-465. 15. peters, b.g. and pierre, j., politicization of the civil service in comparative perspective: the quest for control, london: routledge, 2004. 16. peters, b.g., the politics of bureaucracy, london: routledge, 2001. 17. pollitt, c., talbot, c., caulfield, a. and smullen, a., agencies. how governments do things through semi-autonomous organizations, new york, ny: palgrave macmillan, 2004. 18. pollitt, c., ‘joined-up government: a survey’, 2003, political studies review, vol. 1, no. 1, pp. 34-49. 19. randma-liiv, t., nakrošis, v. and hajnal, g., ‘public sector organization in central and eastern europe: from agencification to de-agencification’, 2011, transylvanian review of administrative sciences, special issue, pp. 160-175. 20. sárközy, t., államszervezetünk potenciazavarai, budapest: hvg-orac, 2006. 21. talbot, c., ‘the agency idea: sometimes old, sometimes new, sometimes borrowed, sometimes untrue’, in pollitt, c. and talbot, c. (eds.), unbundled government: a critical analysis of the global trend to agencies, quangos and contractualisation, london/ new york: routledge, 2004, pp. 3-21. 22. thatcher, m., ‘regulation after delegation: independent regulatory agencies in europe’, 2002, journal of european public policy, vol. 9, no. 6, pp. 954-972. 23. vadál, i., a közigazgatási jog kodifikációja – stabil kormányzás, változó közigazgatás, budapest-pécs: dialóg campus, 2006. 24. van thiel, s. and cripo team, the rise of executive agencies: comparing the agencification of 25 tasks in 21 countries, egpa, annual conference, malta, september 2-5, 2009. 25. verhoest, k., peters, g.p., bouckaert, b. and verschuere, b., ‘the study of organisational autonomy: a conceptual review’, 2004, public administration and development, vol. 24, no. 2, pp. 101-118. 26. yesilkagit, k. and van thiel, s., ‘political influence and bureaucratic autonomy’, 2008, public organization review, vol. 8, no. 2, pp. 137-153. untitled 178 transylvanian review of administrative sciences, no. 31e/2010 pp. 178-179 book review edoardo ongaro public management reform and modernization, trajectories of administrative change in italy, france, greece, portugal and spain, published by edward elgar publishing limited, glos, uk, 2009 public management reform is a topic that sparks a growing interest in romania. after (too) many years when the legalist model has dominated the system, nowadays all the topics related to managerial reform are increasingly being studied. in this context, edoardo ongaro’s new book, public management reform and modernization, is of particularly importance. although it is available (for the moment) only in english, it is a mandatory reading for anyone interested in this field. the book is a thorough analysis of public management reform in the „napoleonic” states (france, greece, portugal and spain) and tries to establish patterns of reform and comparisons at this level. such an approach is extremely difficult and requires both a general understanding of public sector management reform and an analysis capacity specific for the studied countries. public management reform and modernization focuses on very contemporary topics for the central and eastern european countries: public sector reform in the context of a fluctuating political-administrative environment, organizational performance measurement, financial management, human resource management, organizational reforms etc. the author’s approach to analyze and explain the dynamics of the public management reform in italy is a complex one and full of lessons for the scholars and practitioners in romania. mr. ongaro’s ability to initiate a strategic perspective regarding the change of an administrative, structured, legalistic and highly influenced by politics model is impressive. we believe that this book has two main advantages for those interested in the administrative reform in central and eastern europe, in general, and in romania, in particular: a flawless methodological approach of the trend and direction of public management reform and an intelligent application of the concepts to a specific area, different from the anglo-saxon one. we need books such as this one primarily 179 because they teach us what understanding and implementing managerial reform (broadly defined) to specific situations means; if we had several similar approaches in the central and eastern european countries, researchers and practitioners’ work would be much relieved. eduardo ongaro’s book should be included into the library of those who believe that public management reform is both possible and necessary. călin hinţea associate proffesor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: hintea@polito.ubbcluj.ro untitled 147 abstract public marketing has grown to be an everincreasing part of the general concept of marketing, especially after the late 1970s when a series of fundamental changes occurred concerning the structure and functioning of the welfare state. since then, public marketing has been constantly expanding as a field of study and has becoming ever more important especially with the new managerial paradigms that emphasize the role and needs of the citizens-clients in developing public policy. the present paper aims to put together a general picture regarding the concept, its development and characteristics, challenges posed by the specific conditions of the public sector and some basic conditions necessary for adopting public marketing as a managerial component of any public organization. in the second part of the paper, we present the results of a qualitative pilot study that aims to identify whether the local public authorities from cluj county, romania have the basic conditions for implementing a strategic public marketing component. the results show that the institutions analyzed are far from offering a framework needed to encourage and eventually adopt public marketing as a regular and necessary activity of any modern public organization. public marketing as a strategic component of public management. a pilot study in cluj county on the existence of basic marketing conditions in the local public administration in romania tudor ţiclău cristina mora andrei ţigănaş laura bacali tudor ţiclău research assistant, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-753-688.192 e-mail: tudor.ticlau@apubb.ro cristina mora lecturer, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: cristina@apubb.ro andrei ţigănaş phd student, faculty of machinery constructions, department of management and systems engineering technical university, bucharest, romania tel.: 0040-0722-885.430 e-mail: a_tiganas@yahoo.com laura bacali professor, faculty of machinery constructions, department of management and systems engineering, technical university, bucharest, romania tel: 0040-0722-218.167 e-mail: laura.bacali@mis.utcluj.ro transylvanian review of administrative sciences, no. 31e/2010 pp. 147-167 148 1. introduction marketing, as a field of study, has a history of almost a century and still finds ways to redefine itself and expand its boundaries. public marketing is one of the so called new “reinterpretations” of the marketing concept, by supporting not only the use, but most notably the necessity of marketing in the public sector. the infusion of marketing in the public sphere is somehow natural, taking into consideration the evolutions of the general thinking regarding the state and its role at the beginning of the 80’s when new public management (npm) started to change the ways in which public organizations function. this is not to say that npm is a panacea for all public sector problems, far from it. it is probably too early to evaluate clearly and objectively the results of all these reforms under the npm umbrella. it is however a fact that marketing can be seen as something specific for the npm movement – trying to import particular private market instruments or techniques in order to raise the efficiency of public organizations – that’s the principle behind public marketing as well. the current paper will give a general overview on the field of marketing, with an emphasis on public marketing, presenting the constraints and challenges the public sector poses for implementing a marketing approach. in the last part we present the findings of a pilot qualitative study, carried out in july-august 2010 in cluj-napoca, romania. our goal was to find out whether the basic conditions necessary for implementing a marketing component in a public organization exist. we measured these basic conditions using 5 indicators relating to the existence of marketing structure, specific personnel, budgeting and past and present marketing activities. results show that there is still a long way until we reach a basic level of “possibility” that will encourage the development and implementation of a marketing component in public institutions the concept of marketing – general considerations the concept of marketing, although with a history of almost a century, has constantly evolved, especially during the last decades, becoming more complex and far reaching. perhaps, one of the possible explanations of this popularity is that living in a society in major part based on the free market economy involves, among other things, buying and selling numerous products and services aimed at raising the quality of life. buying and selling are also based on the concept of voluntary exchange which further implies pricing, promoting, branding or, in just one word, marketing. there have been numerous attempts in the literature to define the concept of marketing, but due to its size and complexity few (if none) have succeeded to offer a complete image regarding its scope, importance and impact on organizations. few have succeeded to grasp all the aspects regarding the economic, social or strategic side of it. and this is probably natural and healthy, as with any discipline, marketing has always been dynamic, and constantly evolving and continuously expanding its area of coverage. kotler is one of the first to recognize this: “one sign of the health of a discipline is its willingness to reexamine its focus, techniques and goals as the 149 surrounding society changes and new problems require attention.” (kotler, 1972, p. 1). he continues by defining marketing as the disciplined task of creating and offering values to others for the purpose of achieving a desired response (kotler, 1972, p. 1). more recent tasks of defining marketing see it as the management process that identifies, anticipates and satisfies customer requirements profitably (the chartered institute of marketing); marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations and events to create and maintain relationships that will satisfy individual and organizational objectives (boone and kurtz, 1998) or a systematic research process leading to the knowledge of the market (nedelea, 2006). in trying to better explain this broad concept, kotler uses 4 major assertions which he calls axioms (1972, pp. 49-50): 1. marketing involves two or more social units1, each consisting of one or more human actors. by this, kotler wants to stress that marketing is a social activity. 2. at least one of the social units is seeking a specific response from one or more other units concerning some social object. in other words, the marketer (the social unit seeking) is trying to influence the demand for its product. 3. the markets response is probably not fixed. by this, kotler tries to eliminate the situations where the influence of marketing would be close to 0 thus rendering the activity useless2. 4. marketing is the attempt to produce desired results by creating and offering values to the market. in other words, as kotler explains, “marketing is an approach to producing desired responses in another party that lies midway between coercion on the one hand and brainwashing on the other” (kotler, 1972, p. 50). besides factors as exchange, satisfaction of customer requirements, knowledge of the market, fulfillment of needs and willing, there are also criteria of effectiveness and efficiency to be taken into account. throughout time, marketing has always shifted focus; from a commodity focus (products and goods) it went to institutional focus (the retailer, producer, salesperson) then to a functional focus (buying, selling, pricing, promoting) then to a managerial focus (analysis, planning, controlling) and then a social focus (social impact and utility) (kotler, 1972). in the last decades marketing has become part of a strategic approach along with the rise of the idea of shareholder value (rappaport, 1986). the main two benefits for management were that the interests of the shareholders were always part of the organizations strategy and secondly it generated a long-term approach to business with other objectives than just profitability (proctor, 2007, p. 5). 1 kotler refers by social units to either individuals, groups, organizations, communities or even nations. 2 the most relevant situation is either response by obligation – addiction – or no response at all because there is no interest. 150 regardless the approach we have on marketing, it is important to know that today marketing “is no longer restricted to transactions involving parties in a twoway exchange of economic resources” (kotler, 1972). a pertinent explanation of this phenomenon is one that “service based organizations are essentially concerned with managing relations because they manage the total buyer – seller interaction process by attracting, monitoring and improving customer relations” (proctor, 2007, p. 5). therefore, marketing, despite being considered something specific only to the private sector, “may be instrumental in promoting key political objectives” (proctor, 2007, p. 5) which may lead to important social effects. this could be a reason why nonprofit organizations, including those from the public field, tend to have an increasing need for marketing. some of the following arguments may crystallize this idea (coita, 2005): marketing helps defining and establishing the identity of an organization, and it offers information needed for the mission statement and generates operational value aimed at raising the level of efficiency. 2. public vs. private the debate regarding differences between public and private organizations is one that surely will not find a definitive answer here, but it is worth mentioning as it is one of the most substantial arguments for public marketing. as far back as max weber, the subject was worth pointed out, with weber claiming that “his analysis of bureaucratic organizations applied to both government agencies and business firms” (rainey, 2009, p. 57). weber was not the only exponent of the idea that the differences between private and public are minor. herbert simon, one of the leading figures of organizational theory in the mid 20th century, had the same view on the issue as weber, seeing “much of his work as being applicable to all organizational settings, both public and private” (rainey, 2009, p. 57). this assertion is sustained not only by the views of prominent thinkers like weber or simon, but by a number of studies starting from the middle 1960s until late 1980s, that were concerned with either creating taxonomy of organizations based on organizational characteristics (haas, hall and johnson, 1966), either analyzing structural differences (pugh, hickson and hinings, 1969). all this would point out that public-private distinction is inadequate for a general typology or taxonomy of organizations (mckelvey, 1982). more recent studies also show that there’s a certain amount of overlapping and interrelation between the two sectors (haque, 2001; kettl, 1993, 2002; moe, 2001; weisbrod, 1997, 1998). on the other hand, there are a number of authors that have highlighted significant differences between public and private organizations (dahl and lindbloom, 1953; downs 1967; lindblom, 1977; wamsley and zald, 1973; rainey, 1989). the first major difference between public and private organizations is their purpose. one useful analysis of the “raison d’être” of public organizations was made by dahl and linbloom who stated that “in advanced industrial democracies, the political process involves a complex array of contending groups and institutions that produces a complex, hydra-headed hierarchy which they call polyarchy” which is used for 151 social control (rainey, 2009, p. 63). in other words, while the free market is based on voluntary exchange, and it has the individual (and thus individual interest) as its core, public organizations represent communities (not just individuals) and thus follow common interest. starting from this, at least 4 situations have been identified where markets fall short of functioning, the famous market failures (lindblom, 1977; downs, 1967): externalities or spillovers, public goods, asymmetric information and monopoly. besides these economical aspects there is also the issue of public value, which moore (1995) describes as “what governmental activities produce, with due authorization through representative government, and taking into consideration the efficiency and effectiveness with which the public outputs are produced” (rainey, 2009, p. 69). on the same matter, bozeman (2007, p. 13) sees public value as follows: “a society’s ‘public values’ are those providing normative consensus about (a) the rights, benefits, and prerogatives to which citizens should (and should not) be entitled; (b) the obligations of citizens to society, the state, and one another; and (c) the principles on which governments and policies should be based.” taking all the above into account, we can assert that there are noteworthy differences between public and private organizations, which in terms, produce effects on the structure, functioning, performance and relation of these organizations with the users. the public sector could be characterized by the following (compared to the private one): • it deals with the collective interest, rather than individual one. the main purpose is to achieve common good. • it has a different relation with its “customers” (citizens) governed especially by equity and representation than by efficiency and profit. • decisions are taken collectively and usually have a greater impact. • it functions in an environment free of competition. • in the majority of cases public organizations offer services rather than products a different marketing strategy being necessary. • public organizations are usually more transparent and open towards public scrutiny compared to their private counterparts. • public organizations are subject to greater legal constraints contrasting with their private counterparts which benefit from a more relaxed legal framework; • authority is distributed and fragmented through the whole system. • public organizations are subject to more control and scrutiny both from inside and outside “actors” (higher authorities, citizens, ngo’s, press, private interest groups). 3. defining public marketing a recent study shows that between 1996 and 2006, us government spending was roughly around 35% of the us gross domestic product (gdp). the situation is the same in europe where more than 45% of the european union gdp (average of the gdp for 152 the eu member states) (serrat, 2010). regarding the eu countries, subsequent data have shown an average of 46% of gdp government expenditures (serrat, 2010). therefore, it may be reasonable to consider that the state and its permanent representation is an economic sector important enough to care about (serrat, 2010). like any important economic sector, public administration faces the increasing need for a sustained marketing activity. the reason why the public sector should extend its strategic goals on this area may be that “the market is an efficient and appropriate allocating mechanism for distributing public sector goods and services” (proctor, 2007). as we wrote in the previous section, marketing may be seen as a “systematic research process leading to the knowledge of the market” (nedelea, 2006). the knowledge of the market must be based on the market analysis which means, in the public marketing terminology, the knowledge of the factors that drive the needs and preferences of the citizens (nedelea, 2006). in other words, the market analysis must take into account the reality that the public sector becomes more and more confronted with the marketisation phenomenon. this term supposes that “certain aspects of public sector activities become akin to commercial marketing” (proctor, 2007). therefore, marketing may be instrumental in promoting key political objectives (proctor, 2007). thus, the concept of marketing may be defined, from the public sector point of view, as “the activity, set of institutions, and processes – always interconnected and interdependent – meant to identify, anticipate, create, communicate, deliver and exchange valuable offerings that satisfy clients, audiences, partners, and society at large” (serrat, 2010, p. 3). the fact that marketing is pivotal to a modern public administration is also underlined by kotler and lee (2007, p. 11) who state that: “marketing turns out to be the best planning platform for a public agency that wants to meet citizens’ needs and deliver real value. marketing’s central concern is producing outcomes that the target market values. in the private sector, marketing’s mantra is customer value and satisfaction. in the public sector, marketing’s mantra is citizen value and satisfaction”. 4. particular aspects of public marketing if the general marketing is mainly concerned with identifying consumers’ needs and then trying to satisfy them, in the view of the public sector, public marketing could be seen as the management process responsible for identifying, anticipating and satisfying stakeholder requirements and in doing so serving to facilitate the achievement of the organizations objectives (proctor, 2007, p. 2). putting under the same umbrella public services and marketing has been a big challenge due to the differences between public and private. as we already stated, public organizations are largely concerned with providing mainly services. this leads to differences in the approach. proctor argues “services 153 may require special understanding and special marketing efforts. for example, the personnel providing the service are just as important as the service itself and the interaction between service provider and service receiver is of paramount importance” (proctor, 2007, p. 3). on the same note, comparatively with the private sector, public administration may sometimes make decisions that are binding for all citizens but are not agreed by all (banning smoking from public places is one of the many examples where although not all citizens agree with such a decision they have to live with it). hence, public administration uses marketing not only for services, but also for promoting certain “desired” behaviors or ideas – social marketing – which can be described as the design, implementation and control of programs calculated to influence the acceptability of social ideas and involving considerations of product, planning, pricing, communication, distribution and marketing research (kotler and zaltman, 1971). another important aspect which differentiates public from private is purpose. purpose in the public sector is not seen as creating profit, but rather generating citizens’ satisfaction and pursuing the greater good. if most private organizations use marketing to promote their self interest, public institutions are aimed at being supported by the market and the society to secure their existence. this leads to all kinds of differences. first of all, the target-group of any public organization consists of all the citizens that organization represents3. therefore, the largest part of the marketing related activity is concerned with the satisfaction of customers-citizens and that happens despite the lack of any direct or indirect form of competition (proctor, 2007). furthermore, the idea that “the customer is always right” may be compromised in the public sector (proctor, 2007). the public sector does not lose customers because it functions without any competition, sometimes leading to less attention given to citizens’ input when creating and delivering services. additionally, the services provided by public organizations are “free” which does mean that the customer is often forced to accept that “something is better than nothing” (proctor, 2007). accountability is another aspect to be considered in public marketing. public organizations are subject to higher levels of public scrutiny and their activities can be investigated by political representatives of the citizens. this actually leads to the fact that public organizations have two major types of “customers” (kaplan and haenlin, 2009): 1. citizens in general, on the one hand, which are heterogeneous (ranging from private individuals to international corporations or ngo’s), but need to be treated basically the same. 2. political representatives who are the ones that have the political responsibility and thus a substantial amount of control over the activities of the public administration. 3 here we can clearly see how the principle of equal treatment is applied, as in almost all cases in private organization the target group is very specific and limited. 154 last but not least, the perceived image of marketing is different. in many cases marketing is seen by high level bureaucrats as a non-productive and resource consuming activity. this leads to weariness and difficulty in adopting marketing in the public sector. failure to take into account the differences in purposes, conditions and tasks that distinguish them from the private sector will likely lead to inappropriate and ill conceived marketing programs (serrat, 2010, pp. 3-4). 5. challenges for marketing in the public sector motto: “next to doing the right thing, the most important thing is to let people know you are doing the right thing” john d. rockefeller as public administration all over the western world has moved toward managerialism at the beginning of the ‘80s, marketing has also increased in importance. along with the new public management movement a change in the relationship between the administration and the citizens has become evident, public sector in various european countries started perceiving citizens as customers, leading to applying marketing tools and strategic marketing planning (cousins, 1990) in order to satisfy needs. proctor (2007) describes the main two reasons for which the use of marketing in the public sector is inevitable: 1. scarcity of resources, especially financial ones – this has been a constant problem starting from the ‘80s due to, on the one hand, constant increase of demand for better and more diverse public services and, on the other hand, by higher dissatisfaction with the performance of the administration and thus a reduced willingness to contribute financially and socially. 2. increased competition from the private sector – in the last 25 years, one of the most common aspects of any reform movement in the public sector has been the introduction of competition in the public sector, irrespectively if we are referring to new public management or the recent approach called governance. the public sector has long had elements of marketing, but they have usually been marginal to the provision of core public goods and services (serrat, 2010, p. 3) – take for example activities done in promoting tourism or certain products of state owned companies. the first step is to accept marketing as something fundamental for any public organization. moreover, integrating marketing as part of the whole organization strategy is something that is in the line of new reforms where citizens’ input is seen as more and more important for development and delivery of services. another advantage is that it helps to achieve specified revenues or cost-recovery targets (serrat, 2010, p. 4). public managers have an array of marketing tools at their disposal, from which we will present two classifications that we feel are relevant for our topic. one classification regarding types of marketing tools available to the public organizations is put forward by proctor (2007, p. 6): 155 • “marketisation” – certain aspects of public sector activities become akin to commercial marketing in the private sector by subjecting products and services to the competitive forces of the market trying to increase quality and lower the costs; • promoting the organizations interest – public organizations use stakeholder marketing to secure their continued existence by support from the market and society (burton, 1999); • city marketing – specific to local authorities used to promote the image and services to the people they represent; • political marketing – used for promoting key political objectives. madill (1998) also sees 4 major forms of public marketing, but from a functional perspective: • marketing of products and services – the public sector is mainly concerned with services, thus marketing plays an important role especially when these services are offered on a cost-recovery method or even for profit; • social marketing – involves mainly campaigns to change certain behaviors and attitudes; • policy marketing – activities aimed at creating acceptance of certain policies and legislation; • demarketing – marketing activities aimed at convincing the target group not to use a certain program/service. based on the above mentioned classification we can see that there is a lot of need for marketing in the public sector, as public organizations are forced more and more not only to take into account effectiveness of their services, but also efficiency4. commitment to a marketing strategy enables public organizations to more easily set priorities and include citizens’ needs in their organizational objectives, in a customer oriented fashion. this can be done if public organizations manage to find the right way to approach their “clients” (“stakeholders”) by improving their positioning and segmentation (kaplan and haelin, 2009): • a right segmentation may consist in a clear analysis of stakeholders’ interests (needs and wants). • a right positioning means that the service should create the kind of value that stakeholders want. the marketing mix, a term originally used by borden (1965), which is composed of the 4ps (product, price, promotion and place), is seen by some authors as out of date, especially in the service provision field and an alternative has been offered based on 4 by this we refer to the reforms that have taken place in europe and us in the last 20 years where public organizations tried to adopt certain aspects from private ones in order to be able to cope with the increasing demands, but lower resources – see reinventing government in u.s. and next steps program in u.k. 156 a more client-oriented approach, which is also specific to the managerialism reforms in the public sector. the 4cs – customer needs and wants, cost to the customer, convenience, communication – developed by lauterborn (1990) are a reflection of this clientorientation philosophy describing the marketing mix as the set of tools and activities available to an organization to shape the nature of its offer to customers (gilmore, 2003). product customer needs and wants price cost to the customer place convenience promotion consumer figure 1: the relation between the 4 p’s and the 4 c’s this does not mean that the classic 4ps approach is irrelevant, but that in present times a customer, or, in this case, a citizen orientation is more appropriate for the public sector, the main concern remaining increasing the end value of services for the user. therefore, with the right segmentation and positioning, public institutions may “transfer” many private management activities and lead them to fulfill the general interest. according to kotler and lee (2007), there are six private sector practices which may be successfully used in shaping the marketing of public services: total quality management, customer driven strategy, creating selfmanagement teams, visionary leadership, outsourcing, e-government or e-information. all those practices, procedures and operations specific to the private sector, but which may be “borrowed” or “adopted” by the public service in the marketing activity, must be adapted to the “restrictions” often faced by the public administration. all of them should be seen as “challenges” instead of “fateful problems” impossible to be solved by an advanced public manager. therefore, any public institution, while conceiving a public marketing strategy, must take into account at least one of the following constraints (bean and hussey, 1997): 1. legislative restrictions – the responsibilities of a public institution are legally stipulated, which restricts managerial autonomy and leaves fewer places for innovation. legislative constraints often contract manager’s decision power and blocks reorganizing initiatives. 2. political philosophies – the design of new public services is the monopoly of the political decision. therefore, public administration range of services is directly influenced by the current political power having its own orientation and ideology. 3. lack of physical resources – many times the human resource is limited quantitatively and qualitatively. regarding its quantitative limits, public administration is constraint by diagrams stipulating the maximum number of employees working for an institution. therefore, if an institution is involved in carrying out large projects, public servants are often overcharged which may influence the quality of their work. regarding its qualitatively limits, public 157 administration often tends to enlarge its services, but keeping the same human resource maybe not be enough qualified to carry out all those responsibilities. 4. lack of financial resources – limited financial possibilities are a traditional problem of the public sector. public institutions are facing a constant increase of responsibilities, social issues and expectations from the community unlike the limited resources they need to manage. therefore, prioritizing is one of the most important words used in the public servant’s vocabulary. also, an important reason why the four “ps” should be replaced with “cs” in public marketing operations (above mentioned distinction) may be the one that product, pricing, placing and promoting issues tend to suffer some limits due to the features of public administration not always compatible with private company practices (kaplan and haelin, 2009): 1. regarding the product: efficient product development and improvement requires some form of performance evaluation to quantify the success of the new product. 2. regarding the price: public administration is a non-profit “business”, so many public services do not have any direct competition. also, the concept of “willingness to pay” may not be within the free choice of the customer, which may raise the potential problem of “perceived price unfairness”. 3. regarding the promotion: public institutions are challenged to promote services “needed” instead of “wanted”. that may occur when public servants are obliged to “advertise” some services by explaining why tax money should be used to support them. 4. regarding the place: we may consider that “maintaining an appropriate distribution network is crucial” (kaplan and haelin, 2009). placing public services may be done through public channels or, more likely, by using publicprivate partnerships. therefore, to improve its distribution efficiency, public administration must extend its horizons to the private sector. 6. pilot study – public marketing in local public institutions from cluj county, romania the romanian public sector has gone through extensive changes after 1989 in order to pass from an ultra-centralized and wasteful pre-bureaucratic system to a modern post-bureaucratic administration. the problem faced was quite difficult: reforming the state while still performing everyday functions, continuing to provide public goods and services and deal with the economic and social problems of transition (mora and ţiclău, 2008, p. 91). the major changes in the public sector started at the beginning of the 2000 with the 2001 governmental strategy on public administration reform which had 3 main pylons: the reform of civil service, the reform of local public administration and improving the policy process. after almost 10 years, the current government still has as a major objective the reform of the civil service and the improvement of policy process (national program 158 of reform, 2007-2010), which is an indicator that the public sector is still far from what it should be. the major improvements have been made at the legal framework level, especially because of external pressures, and at structural level – downsizing the central administration starting with 2009. but, in respect to our subject of interest (public marketing), there are few things that can be mentioned, especially that most public institutions struggle to improve their perceived public image. a true reform process will include marketing as a strategic component. probably the first step in introducing a new paradigm is acknowledging it and creating the necessary structures at the organizational level. this is the premise of our pilot study. we wanted to examine whether public marketing is present at the local level in both autonomous local public institutions and local institutions representatives of the central administration. the main argument for not investigating even further was that if local public institutions do not have at least a person or a special department in the field of marketing than, based on the current legislation, no resources can be allocated for activities in this field and there is little or no chance at all to use public marketing as a strategic component in public management. 6.1. methodology this was a qualitative pilot study; we mainly used document analysis as our central method of gathering data. our aim was to find whether marketing is recognized as an important aspect of both daily and also strategic activities of any public institutions; we tried to determine whether local public institutions met a minimum set of conditions. thus, we constructed a set of criteria thought to be relevant for the analysis. we wanted to identify if each public institution analyzed have: 1. at least one person that has specific competencies in the field of public marketing; 2. a department/bureau or any kind of organizational structure which has responsibilities regarding the public marketing activity of the organization; 3. financial resources allocated for specific marketing activities (budget)5. we have included in our analysis the budgets from 2008 and 2009; 4. marketing plan for year 2009 with activities put into practice; 5. marketing plan for year 2010 with activities meant to be put into practice during this period; based on the main purpose and on the 5 indicators listed above we opted for a twofold method of gathering the necessary data: • the first approach was based on the provisions of law no. 544/2001 regarding the free access to public information. we sent via e-mail a formal request for 5 the budget indicator is directly connected to the one before it – separate organizational structure with public marketing responsibilities. no distinct structure disables the possibility to have a financial provision. 159 information to all public institutions included in the study and we requested all the necessary information regarding our 5 mentioned indicators. • the second approach consisted on a qualitative analysis of the available information relevant to our study that we could find on the websites of all the analyzed public institutions. this would give the possibility to compare the information gathered with both methods and see if there are any discrepancies and also get additional information if the formal request would not offer sufficient. the study was conducted between 1st of july 2010 and 20th of august 2010. the sample was constructed starting from the population of autonomous public institutions (town halls in this case) and the deconcentrated public institutions of the central administration at local level from cluj county. we used a filter criterion for the first category (autonomous public institutions), namely to analyze only municipalities. regarding the second type of institutions – deconcentrated public institutions of the central administration at local level – from a total population of 31 institutions – we selected from each ministry at least one institution representative at local level. for ministries which had between 1-3 institutions at local level we selected randomly one; between 4-6 we selected 2 randomly; between 6-8 we selected 3. at the end we ended up with a number of 17 institutions (see table 1 bellow). table 1: list of institutions included in the sample6 autonomous local public institutions – municipality town halls cluj-napoca turda campia turzii dej gherla decentralized6 public institutions ministries representatives at county level ministry of finance general direction of public finances cluj ministry of economy and commerce regional commissariat for consumer protection – cluj ministry of labor • county agency for employment – cluj • county pension house – cluj ministry of agriculture • department for agriculture and rural development – cluj • agency for payment and intervention in agriculture – cluj ministry of health department for public health cluj ministry of environment north – western regional agency for environmental protection cluj-napoca ministry of culture county department for culture, cults and national patrimony cluj ministry of education county school inspectorate cluj government the prefecture of cluj general secretariat of the government regional department of statistics cluj 6 by decentralized we refer to public institutions that are deconcentrated at local level, meaning they are representing the government locally 160 6.2. findings the results that we obtained based on the responses to the formal information request are presented bellow. table 2: responses to the formal request of public information from autonomous public institutions institution response to the formal request in max. 30 days existence of a person/dep. with specifi c marketing respons. budget allocated to marketing for 2008-2009 budget allocated to marketing for 2010 activities 2009 activities 2010 cluj-napoca town hall no no not the case not the case not the case not the case turda town hall no no not the case not the case not the case not the case câmpia turzii town hall no no not the case not the case not the case not the case gherla town hall yes no not the case not the case not the case not the case dej town hall no no not the case not the case not the case not the case the above information is speaking for itself. the most significant issue is lack of response. from the 5 institutions included in the sample, only one responded within the 30 day legal term. although the other 4 institutions did not respond, we were able to find their organizational chart on their website; with one exception – turda town hall, which did not respond and did not have any kind of information/document relating to its organizational structure (although public institutions are bounded legally to have such information on the website). based mainly on the information from their public websites we can conclude that none of the analyzed public institutions have a department/bureau having specific responsibilities on public marketing. in light of this, we tried to identify some structures that are not specifically created for marketing, but can perform such activities. the closest organizational structure we found was the “public relations department”. • cluj-napoca – direction for communication, public relations and tourism (60 people) which includes some substructures relevant to our interest – the citizen information center (21 employees), bureau for public events (12 employees), bureau for local development and project management (6 employees). the analysis of the budget execution does not offer almost any information regarding spending in activities related to public marketing. an analysis of the website offers information about the institution but only for 2009. however, this institution has a strategy for 2009-2012 which has a reasonable amount of information regarding the vision and goals of the institution for the next years. • turda is a small town of cluj county located about 30 km from cluj-napoca and having a population of around 60,000 inhabitants. like in cluj-napoca town halls case, we did not receive any response to our formal request for information, thus we analyzed only the information available on the website. as mentioned earlier, turda town hall was the only institution that did not provide any information regarding its organizational structure. thus we cannot confirm that it has any employees or a special department with responsibilities 161 regarding public marketing. however, the fact that it did not even respond to our formal request and has little information on the website indicates that informing citizens is not a priority – this being a basic condition for a strong marketing component. on the website there are some useful information regarding the institutions activity that cover only the last year (6 major projects). also, no information regarding the current or past year budget was found. • câmpia turzii town hall was another institution that did not respond to our formal request of information. according to the organizational chart of the institution, there are 292 public servants working for the campia turzii town hall, but only 8 of them are serving into a public marketing structure called “the public relations and communication service”. the local authorities do not provide any information regarding their budgetary evolution despite their legal constraint to proceed in this way. the public relation and communication service displays the weekly schedule and the necessary documents that citizens need in order to access certain public services. also there’s no activity report of the mayor or any other department subordinated to him. • gherla town hall was the only institution that responded to our formal request of public information. unfortunately, as with the other institutions, the town hall does not have a distinct department on marketing, nor a person who has specific responsibilities in this area. by consulting their website, this information was confirmed as they do not have any kind of department that could resemble or have some marketing activities (no public relations or information center exists). however, there is a description of 6 major areas of concern for the institution (education, waste management, public lighting, water supply network, urban development, day-care center). also there is short description of different socio-cultural events that took place. • dej town hall was again one of the institutions that did not respond at all to our formal request although it is required by law no. 544/2001 regarding the free access to public information. based on information we found on the website, according to the organizational chart there is no specific department for marketing, but there is a department of mass-media and international relations that could involve certain marketing activities. no information regarding past or future projects of the institution exist (we did not include here posting the legal acts adopted by the city council). to sum up, we can conclude the following: • the basic conditions (as we have defined them) that we consider are vital in order to develop a public marketing approach in a public organization do not exist. • none of the 5 analyzed institutions have a specific department responsible for public marketing or employees with clear and explicit marketing competencies and responsibilities. 162 • some of the institutions – cluj-napoca, câmpia turzii and dej town halls – have an organizational structure that has certain responsibilities regarding marketing activities – especially promoting the image of the institution and communication/relation with citizens. • although it was not our main focus, transparency was found to be at a very low level, as only one from 5 institutions responded in the legal time span although the law regarding the free access to public information has been around for more than 9 years. this confirms our previous statement that marketing is not a significant component in the activity of the public institutions (if it were the relation with citizens, in this case offering access to public information would have been better). 6.3. public institutions representatives of the central government at local level as mentioned earlier, besides the decentralized institutions we selected a number of 12 institutions representing the central government at local level. the procedure we followed was the same as in the case of the autonomous local institutions: sending a formal request of information to the official e-mail address of the institution. table 2 shows the responses we received: table 2: responses to a formal request for public information regarding public marketing from representatives of the central government at local level institution response to the formal request in max. 30 days existence of a person/dep. with specifi c marketing responsibilities budget allocated to marketing for 2008-2009 budget allocated to marketing for 2010 activities 2009 activities 2010 general direction of public finances cluj yes no not the case not the case little information little information regional commissariat for consumer protection – cluj yes no not the case not the case provided detailed information provided detailed information county agency for employment – cluj no no not the case not the case no information no information county pension house – cluj yes no not the case not the case little information little information department for agriculture and rural development – cluj yes no not the case not the case little information little information agency for payment and intervention in agriculture – cluj no no not the case not the case no information no information department for public health cluj yes no not the case not the case provided detailed information provided detailed information 163 north – western regional agency for environmental protection cluj-napoca yes no not the case not the case provided detailed information provided detailed information county department for culture, cults and national patrimony cluj yes no not the case not the case no information no information county school inspectorate cluj no no not the case not the case no information no information regional department of statistics cluj yes no not the case not the case little information little information prefecture of cluj yes no not the case not the case no information no information the most noticeable difference compared to the other lot of public institutions is that from the 12 institutions 9 of them replied to our formal request for public information. this is somehow intriguing as we expected the autonomous local public institutions to be more responsive as the leaders are directly elected by the citizens compared to the local representatives of central administration which are appointed by the respective minister. the three institutions that did not respond to our formal request are – county agency for employment, agency for payment and intervention in agriculture – cluj and the county school inspectorate cluj. the least amount of information we received from the county agency for employment; this institution did not respond to our formal request and it has no website what so ever. the county school inspectorate, although did not respond to our request, has a functional website with decent amount of information. we could not identify any specific marketing department or a department with some responsibilities in this area based on the organizational chart that we found on the website. they also featured press releases, but the newest ones were from april 2008, and information relating to 5 major areas of activity. the last institution that did not respond to our formal request was agency for payment and intervention in agriculture – cluj. analyzing the website of this institution, we found out that they have a communication and promotion service that is in charge of managing the public image of the institution. the department has 4 employees. other useful information that can be seen as part of marketing is the presentation of the press-releases and the image strategy of the institution. based on the responses that we received from the other 9 institutions and on the analysis of the websites we can state the following conclusions: • four institutions (general direction of public finances cluj, county department for culture, cults and national patrimony cluj, department for agriculture and rural development – cluj, prefecture of cluj) did not meet any of the 5 criteria mentioned in the methodology – more specific they had no department or at least one person with public marketing responsibilities, no budget for any marketing 164 activities and, by consequence, they did not have any marketing activity in the last 2 years. • none of the 12 institutions had a specific department for marketing, thus no budget could be requested specifically for public marketing. • five institutions met some of the criteria more specifically they provided a decent amount of information regarding activities that relate to marketing in the last 2 years. all of those were either updating the web page, press-releases and in the best case public information campaigns regarding the responsibilities of the institution. from these only 2 out of the 5 had a special department for public relations and communication (general direction of public finances cluj, county pension house cluj). • two institutions provided sufficient amount of information in order to have a general picture regarding the marketing component. • the department for public health although not having a specific department for marketing has a service for communication and public relations (1 employee) who informed us that, in 2009, they had 7 information-awareness campaigns, more than 10 partnership projects with other public institutions at local level. for year 2010 the schedule, according to their response, will remain the same but with a few partnership projects underway. besides this, the department for public health has frequent and constant press releases to the media regarding public health threats. • the north – western regional agency for environmental protection clujnapoca had 6 information awareness campaigns according to a schedule set by the central ministry. however, for 2010 they did not give specific information regarding informational and promotional activities, just that they will continue the same activities. • the regional commiserate for consumer protection – cluj mentioned a number of 3 informational awareness campaigns that took place in 2009. besides this, they also opened an information center where citizens can easily access relevant information regarding their rights as consumers. for 2010 they have a total of 5 informational-awareness campaigns focused on the legal framework modifications, citizens’ rights as consumers and legal obligations for private producers. • all 3 institutions had a specific department for public relations and communication. 7. conclusions and further discussions based on the information we gathered through our study we can assert that the basic conditions necessary for implementing marketing as a significant component of the public administration’s activity are lacking. probably the most important indicator for this is the fact that neither one of the 17 institutions had a marketing department, although almost half (8) had a department 165 for public relations and communication that had some activities related to marketing – mostly concerned with informing and maintaining good relations with the citizens. the direct implication of this is the fact that no institution had financial provisions for marketing activities included in the annual budget. secondly, although some institutions had some kind of activities, these were all related to information-awareness campaigns. this shows that leaders in these public institutions associate marketing with advertising and nothing more. this indirectly leads to reticence and low interest level in developing a true marketing strategy inside the organization. thirdly, an indirect argument that public marketing is not present in public institutions is the fact that especially the local autonomous public institutions did not respond to our formal request of information. the first two principles of marketing7 set out by kotler (1972) concern the relation between the social units; in order to talk about marketing we must first have a relationship, or by not answering a formal request of public information, although legally bounded to do so, such a relationship is basically inexistent. there are still signs of optimism. some institutions have had significant activities relating to promoting their public image and raising awareness of citizens. although this is not enough, it is a start to build upon. in order for a marketing approach to grow, two basic conditions must be met: 1. awareness of the leadership – by this we refer to public leaders acknowledging the importance of marketing as a strategic component of their organization and implementing such a component at all organizational levels. 2. creating the structure – because we are talking about public administration, for a successful 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(ed.), to profit or not to profit: the commercial transformation of the nonprofit sector, cambridge, u.k.: cambridge university press, 1998. 36. weisbrod, b.a., ‘the future of the nonprofit sector: its entwining with private enterprise and government’, 1997, journal of policy analysis and management, vol. 16, no. 4, pp. 541-555. acknowledgement the contribution brought by tudor ţiclău to this article was possible due to phd scholarship obtained in the project “investing in people!” co-financed by the sectoral operational program for human resources development 2007-2013, priority axis 1. “education and training in support for growth and development of a knowledge based society”, key area of intervention 1.5: doctoral and post-doctoral programs in support of research, contract no. posdru/88/1.5/s/60185 – “innovative doctoral studies in a knowledge based society” babeş-bolyai university, cluj-napoca, romania. 25 transylvanian review of administrative sciences, 16 e/2006, pp. 25-39 roger e. hamlin professor of public administration and urban planning, michigan state university, east lansing, michigan bianca cobârzan assistant professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca how to prevent corruption without affecting efficiency? an overview of safeguard measures for contracting out public services the paper addresses the issue of finding the right balance between regulatory oversight, decision-making flexibility and reliance on market forces to safeguard the contracting-out process from corruption. the paper analyses the corrupt practices associated with contracting out local public services and the causes and consequences of this behavior. taking into consideration new anticorruption strategies, we make recommendations for attaining equilibrium between flexible safeguard measures and accountable and transparent practices aimed at verifying whether regulations and standards are met. the strategy also emphasizes the training of public officials, to provide them with appropriate skills and professional capacity to identify and manage corruption risks. the last part of the paper recommends future research to identify best practices among different communities and states attempting to control corruption practices when contracting out public services. introduction the public entrepreneurial movement is more than 30 years old. starting in the 1970s in the us, fiscal constraints forced local governments to find alternative ways to provide public services (borins 2002). over that three-decade period nation states all over the world have been inclining toward decentralized public sectors, market-oriented private sectors and greater partnerships among sectors (kettl 1998) (perlmutter and cnaan 1995) (hamlin and lyons 1993). europe greatly intensified its swing in this direction in the last ten years and the european commission issued a green paper to assist member states and sub-state governments to deal with this trend (commission des communautés européennes 2004). aspects of this transformation have been called “new public administration” (kettl 1998) or “reinventing government” (osborne and gaebler 1992). the general term, “public-private partnerships” is often applied to many activities (hamlin and lyons 1995). 26 some examples of new approaches to government include: 1) the privatization of government owned properties; 2) governmental use of incentives to promote public goals through the success of privately owned businesses (hamlin and lyons 1996); 3) public choice in the consumption of government services through fees instead of taxation; 4) performance or results-oriented allocation of resources to public organizations (ostrom and ostrom 1971); 5) joint ventures between private businesses and public organizations; 6) greater use of third sector organizations to deliver public services (lyons and hamlin 2001); 7) greater use of fourth sector individuals (citizens groups and voluntary associations) to deliver and evaluate public services (hagiwara 1996) (roubon 1999); 8) contribution of public resources to private capital formation of private businesses (hamlin and duma 1999) (hamlin and neamtu 2005); 9) use of public powers such as eminent domain and police powers to accomplish public goals by promoting the success of private organizations; and, 10) the contracting out of public services (osborne and gaebler 1992); to name a few. various factors explain the increased recourse to public-private partnerships. in view of the budget constraints confronting local governments, public-private partnerships meet a need for private funding for public sector activities. governments also wish to benefit more from the expertise of the private sector in areas like marketing and supply chain management (cobarzan and hamlin 2005). the development of public-private partnership is part of the more general change in the role of the government in the economy, moving from direct operator and provider of public services to organizer, regulator and controller (commission des communautés européennes 2004). the present paper will center its analysis on one form of public-private partnership, the contracting out of public services. in its simplest form, contracting out public services means that the municipality chooses a private company to provide a service normally provided by government and pays the company a contract fee for providing the service. more generally, a wide variety of effective methods exist for inducing the private sector to provide public services. they include management contracts, operating contracts, exclusive franchises and flexible franchises. these forms of contracting out will be discussed later in the paper. on the surface, the advantages of contracting out seem straightforward. in the case of the service contract, if the fee that the city would pay the private company for this service were less than what it would cost for city employees to do the job, then municipal taxpayers would save money that could be used on other activities or to reduce taxes. and, good reasons exist for why a private company might be able to do the job for less. some reasons include lower labor costs, better management, greater experience from providing the same service in other communities, better equipment, and better technology. a private company that is in competition with other companies might have more incentive to be innovative, seek lower cost labor, and develop better technology (cobarzan and hamlin 2005). yet, even this simple process of contracting out government services raises a multitude of issues and problems. the contracting-out process is vulnerable to many corrupt deals. this process usually involves a large expenditure of funds and has a major impact on the government budget. as this paper discusses, the process creates several reasons to pay off public officials. a firm may pay to be in the pre-qualified bidders, to get inside information, to structure the bidding specifications so that the corrupt firm is the only qualified company, to be selected as the winning contractor, or to skimp on quality, to name a few. other reasons and forms of corruption related to contracting out public services will be presented later in the paper. corruption in contracting-out is widespread around the world; it is not limited to developing nations. it takes many forms and can impose large costs upon communities. no strict relation exists between the size of public sector and level of corruption (e.g., scandinavian countries do not conform the rule) (della porta and vannucci 1999). the size of this phenomenon can go beyond our limited understanding. 27 without strict supervision of the quality of the works or of the services delivered, corruption can affect people’s safety. corruption can become systemic, affecting all levels of an institution. those bureaucrats, who might have found out about corruption, can be gradually brought into the precise system of corruption that provides each person a certain percentage of the take (della porta and vannucci 1999). the gravitation towards public-private partnership, and particularly increased contracting out public services to promote efficiency, challenges and sometimes strains some of the most basic values of any public system, such as equity, transparency and ethical behavior. how, for example, does a government of the people, engage in various forms of private negotiations and interactions with private businesses and citizens? how does the public sector ensure that the views of the general public are properly included? how does government maintain objectivity in selection, oversight and compensation of the private partners? when public-private partnership is used, how are disadvantaged groups and areas served if private contractors find it difficult to make a profit serving them, or, what if the resulting price for a public service is so high that the less fortunate are financially excluded (cobarzan and hamlin 2005). some forms of public-private partnership can increase transparency, but many forms of publicprivate partnership complicate governmental control and oversight as they put greater trust in decisions made in the private realm, outside of public view. the less transparent these interactions become the greater the chance for and temptation for corrupt practices to be inserted. this fact often leads to calls for greater regulation of those private decisions. on the one hand, pursuing a more entrepreneurial approach to government in combination with increased governmental regulations might increase governmental efficiency in the narrow sense of the word. on the other had, over regulating contracting out can destroy the benefits of flexibility, innovation and responsiveness of the entrepreneurial spirit (blendermann et al. 2004). achieving a balance is difficult, and that balance varies with changes in technology and from culture to culture. the question that this paper raises is how to design safeguard measures that prevent corruption while not hindering the efficiency of the contracting-out practices. in other words, what is the right balance? the number of studies that analyze corruption related to public-private partnerships and consequently contracting out is limited. the major emphasis of these studies is on procurement and privatization, and, in this context, some of the discussions can be transferred also to the contracting-out process. the previous research concentrates on analyzing the mechanisms, causes and consequences of corruption. the strategies for solving this problem are designed to address the broader problems grounded in the administrative and political system. the paper will concentrate in the first part on presenting the debate over the desired level of regulations with regard to the general activity of a public institution. this debate can be transferred also to the contracting-out process of public services. the second part will briefly present the mechanisms, the advantages and some issues raised by the contracting-out process. the third part will present some corruption problems that can occur during this process and after the contract is awarded. the fourth part analyzes causes and consequences of corruption. the fifth part will bring into discussion new approaches in designing anticorruption strategies. the sixth part will present general recommendations to prevent corruption. the last part will propose a design for a future research program. we intend to compare how contracting-out processes are regulated in different countries with different cultural values, find examples of successful practices and learn how these practices can be transferred to a different cultural contexts to solve a similar problem. level of regulation from the perspective of anti-corruption strategies, the goal of regulations is to limit the opportunities to extract bribes. but, an endless debate continues regarding the optimum level of regulation to prevent 28 corruption. on one side, neoliberals claim that excessive regulations are responsible for the explosion of corruption. other authors argue that deregulation increases the number of corrupt opportunities substituting a corrupt public official with a corrupt private one (susan rose-ackerman 1978). the conditions that generate corruption in the absence of intervention are the same as many of the market failures that justify government intervention (susan rose-ackerman 1978). a third group of authors argue that the amount of regulation is not important. corruption is present in any state, whether it is laissez-faire or interventionist (della porta and vannucci 1999). corruption originates in state apparatus characterized by both an excess or a lack of regulation (susan rose-ackerman 1999). the desired goal of the rules regulating the activity of public institutions should be to achieve the general public interest and to increase citizen trust that taxes are being used wisely (1993 national performance review commission in us). but how is the level of regulations actually set? what forces drive this process? two major theories try to explain how regulations are adopted: rent-seeking theory and state capture theory. rent-seeking theory argues that politicians use regulation to create opportunities to extract rents (bribes). they intentionally create inefficient and unclear rules only to generate rents for the public officials. they create excessive regulations that give more opportunities for corruption. in this context, private companies might pay to get a favorable interpretation of the rules (della porta and vannucci 1997; varese 2000, lambsdorff 2002). state capture theory argues that firms shape the regulations through payments and favors to public officials. the problem of state capture is particularly prevalent when firms face insecure property rights and firms pay bribes to obtain certainty. according to this theory, firms that benefit from payoffs will resist efforts to improve the clarity of rules and laws (hellman et al. 2000). they want to preserve the advantages that they have over the public officials and to extract benefits for their own interest. this brief analysis raised some issues regarding how to design appropriate contracting out regulations. how much should this process be regulated? how does one prevent the interference of interest groups and of politicians in this process? how does one prevent corruption without hindering efficiency? to attempt to answer these questions we need to explain the mechanisms of contracting out and the corruption cases related to the process. defining contracting-out process one area of public-private partnership is the privatization or contracting out of government services. in the u.s. the term “privatization” often refers to this contracting-out process. in europe the term “privatization” usually refers to the selling of state-owned enterprises, which is not the subject of this paper. therefore the term “privatization” will be avoided in this paper. examples include contracting out of such services as garbage and refuse collection, snow removal, merchant patrol, public housing, and parking. as we mentioned before, a wide variety of methods exist for inducing the private sector to provide public services, like management contracts, operating contracts, exclusive franchise and flexible franchise. one approach is to utilize government employees and equipment, but to contract out management services. in the case of snow removal, for example, a management company may specialize in or have particular experience managing this kind of service. they may know best how to allocate human resources for particular sized storms, as an example, to minimize personnel costs. the second approach, service contract, means to hire a company to take care of the job using its own equipment and employees. this might reduce costs for some of the same reasons mentioned above. also, the private company might be able to acquire labor more cheaply since they are able 29 to access the labor market in a more flexible way than can a government. in both of these cases, the government would pay a private firm a fee specified in the contract. alternatively, in a service like garbage collection, a fee might be collectable from the citizen-customer at the point of the service. in some communities a bag that can hold a certain volume of garbage can be sold to residents, extracting a fee for removal of that amount. in a case such as this where a revenue stream can be generated, the government need not collect the fee. an exclusive franchise can be “sold” to a private company. this means a reputable company will be given the exclusive right to make the collections and also sell the bags. the exclusive franchise means that the private company would have no competition, but the price of the bag would be fixed. the company might have to pay the government a fixed franchise fee for the right to the franchise, or a percentage of the company’s revenues. also, the quality of service should be closely regulated by the government. if the company’s service does not live up to expectations, the franchise could be withdrawn and given to another company. a flexible franchise is where multiple companies might be given a franchise for the same area and allowed to compete. for something like garbage collection, two companies might be given overlapping areas. the price of the bag might be fixed, or set within a range, but residents could choose the company that provides the best service. if one of the companies provides poor service, they will be out of the business quickly. as we mentioned in the introduction, this simple process of contracting out government services raises a multitude of issues. what type of bid is used to chose the company? is the selection process objective? what companies have the right to bid? what is the quality of the work done? who decides the specifications of the contract? is the process of bidding transparent? how is the conflict of interest prevented? who decides which companies are to be invited to bid? how are the selection criteria set? how does the municipality oversee quality and performance? is the oversight process objective? what happens if low quality or non-compliance is detected? how does the municipality implement controls? can people submit complaints? (cobarzan and hamlin 2005) problems related to contracting out public services in this section we will analyze the opportunities for corruption related to the contracting-out process. we will show why it is important to answer the questions raised above, and probably many others. we will analyze these problems by referring to the phases of the contracting-out process. during the initial phase of determining the need for a service to be contracted out, different methods favor one company over another. the public officials in charge of determining need can justify a level of service that is unnecessary or disproportionate to actual needs. for example, public officials can justify the preference for expensive services when the community needs only the basics. according to tanzi and davoodi (1998), in countries facing extreme corruption, public officials prefer to undertake new infrastructure projects while the existing infrastructure is left to deteriorate. the public officials intentionally neglect “the operation and maintenance of the physical infrastructure, so that some infrastructure will need to be rebuilt” (tanzi and davoodi 1998, pg. 3). these projects mean more funds invested and allow corrupt officials to extract additional bribes from new investment projects. the authors concluded that how public officials define the works or services to be contracted out is proportionally related to cost of the bribes that they can receive. they argue that the politicians and public officials tend to increase the size and the cost of the projects in order to receive a larger “commission” for helping a company to win a bid. the public officials can commission unjustified studies. jean-pierre bueb and nicola ehlermanncache (oecd 2005) explain how this mechanism works. the decision-makers can decide to contract out a study that will never be delivered, even though the money has been paid. alternatively, they 30 contract out a study that could be done by the public institution but argue that internal results would be biased. before starting to negotiate a contract, one must define the type of bid to be used to negotiate the contract that is awarded. among different types of bids, direct negotiation is subject to many corrupt opportunities. decision-makers can be bribed to award a contract without organizing an open competition arguing the extreme urgency of the situation. defining when direct negotiation is acceptable and what type of contracts can be awarded without competitive bid is extremely important (ti 2000; tina søreide 2002). according to ti (2000, pg. 3), cases when direct negotiation is acceptable are: 1) during extreme urgency because of disasters, 2) where national security is at risk, 3) when additional needs arise during an existing contract, 4) when only a single supplier is in position to meet a particular need. setting the criteria for negotiating the contract can offer new corruption opportunities. public officials can set pre-qualification criteria to limit the number of companies that are qualified to bid and or be included on a short list (strombom 1998, rose-ackerman 1999). the inclusion on a short list may depend on bribes, instead of price, quality or experience. unnecessary requirements can be established to disqualify potential companies and favor the company that paid the bribe. the bid requirements can be designed in such a way that can be met only by the bribing company. for example, public officials might decide, arguing budgetary reasons, that the collection of garbage and the cleaning of the streets must be done by same company. but, only one company is able to provide both services, so this company is guaranteed to win the contract. a contract can be deliberately under or over estimated. underestimation is used to facilitate the initial awarding of the project. a company winning the contract will then add cost by justifying new events or conditions found after the contract is awarded (tanzi and davoodi 1998). the company decides to proceed in this way because the supplementary work is rarely negotiated. on the other hand, public services will be overestimated when the company is certain that it will receive the contract and the decision maker is certain that they will receive a percentage of the cost of the project. even though the actual cost of delivering a service is lower, the company that wins the contract will return a part of the surplus money to the decision maker as a way of paying back for receiving the contract (tanzi and davoodi 1998). a contract can contain excessive specifications. by imposing specifications that are much more rigorous than general standards, the public officials can create new opportunities for asking for bribes. the excessive specifications can be negotiated and overlooked if the company pays the bribe. or, the contract can be negotiated on the terms set by the public institution, but the maintenance is latter carried out under conditions imposed by the supplier. the maintenance services can be performed at a higher cost than other companies would perform. the public officials can be bribed to ignore work that is left out of the promised project activities yet is necessary for the successful implementation of the project. in this way, after the contract is awarded, the company that paid the bribe can renegotiate the contract. those officials who define what is counted as supplementary work may be corrupted. advertising a contract can be done in many ways. the process of notifying potential bidders offers a good opportunity for public officials to limit the companies invited to bid and therefore to advantage the company that paid a bribe. the institution can invite all the qualified companies to bid for the contract or decide to invite only the pre-qualified bidders. but in the case of pre-qualified bids, who decides to which companies to send the invitation? the tender invitation can be sent to companies with a completely different area of specialization or without any experience in the relevant field. in this case, the public institution can claim that 31 bidding was organized and a large number of companies were invited. yet, companies invited were not real competitors and only the company paying the bribe meets the pre-qualification requirements to negotiate the contract. even if rules require the announcement of the contract to be made public, the public officials may decide to keep the process secret from the public as long as possible. in this way, they can control which companies actually tender by providing friends with advanced warning. usually these companies are those that the public officials want to pay back a previous service or those companies that have the reputation for being willing to pay bribes. if the regulations give only general recommendations that the contract should be advertise, public officials can decide to make just a minimum effort to advertise it. the notification of bidding opportunities can be made in the smallest, most obscure circulation source that satisfies the advertising requirements (søreide 2002). reduced publicity can be falsely justified claiming that the urgency of the situation required a shorter advertising period (bueb and ehlermann-cache 2005). public officials might even decide to eliminate publicity entirely by using as justification legal grounds such as “state secrecy, exclusive rights, research or experimental work or additional supplies” (bueb and ehlermann-cache 2005, pp. 165). offering accurate information about the contract is a basic and simple requirement for the public institution. but by offering intentionally incomplete and inaccurate information to all the companies interested in the contract, one can argue that it was just a mistake. then, the favored firm is quietly told about incomplete or inaccurate information. in this way the company can discount the inaccurate condition in its proposal and win the contract by making a bid that is lower or better than other bids (bueb and ehlermann-cache 2005, pp. 164). providing confidential information can rig the decision-making procedure or other decisions influencing the process (rose-ackerman 1999). when a company knows in advance the criteria that are important for evaluating a contract, it can obtain the contract formally without any irregularity. according to donatella della porta and alberto vanucci (1999), the value of confidential information is inversely proportional to the number of people who posses it. this method is the easiest way to steer a contract to a “friendly bidder”, and it is the most difficult to demonstrate that corruption took place. information that a preferred company can obtain, might be related to aspects of the contracting process that are important to remain secret in order to ensure fair competition, such as: minimum and maximum pre-qualified bid price or the price that competing companies bid, or which criteria are the most important for evaluating the projects (della porta and vannucci 1997). during the phase of proposal evaluation, different methods can be used to make sure that the favored company wins the contract. the selection criteria can put more weight on one criteria met by only one company. members of the awarding commission might revise the criteria after the bids are opened. they can create or modify weightings allocated to each criterion or they can add further criteria. in this way, they can favor the company that bribed the commission. for example, when it seems obvious that several competitors had a better offer, the commission may change the evaluation criteria by arguing the extreme importance of one particular evaluation element met only by the bribing company. when only one of the pre-qualified companies has bribed the tender board, and the other companies have better bids, justification of the awarding contract may be difficult. in this situation, the evaluation commission can use ethical or political reasons (such as trade with countries or groups in conflict with the government) to disqualify the unwanted companies. also, the bid may be delayed or recalled on grounds of changed priorities, shortage of finance or a larger/smaller scope of work. 32 most serious and costly forms of corruption may take place after the contracts has been awarded. as we mentioned before, the company may pay a bribe to get supplementary funds for work that was not included in the contract specifications and for under evaluation of the project costs. also, the company may pay a bribe to contract supervisors to induce them to overlook the quality of the work done or the services delivered (tanzi and davoodi 1998). the contractor may falsify the quantities and the quality of the services. also, the company can pay bribes to get a time extension for the implementation of the program (della porta and vannucci 1999, rose-ackerman 1999). “winners” have every intention of recovering their bribing cost. the methods they can use are to inflate their bid price, to reduce the quality of materials used for construction or to deliver poor quality services (strombom 1998). with respect to contracted-out services, an example might be to promise in the proposal to maintain a customer service office for citizens complaints and support, but after the contract is secured, open the office for very few hours per week. causes and the consequences of corruption related to contracting out public services why does corruption take place in contracting out public services? what mechanisms support corrupt behavior? what are the consequences for communities? we do not attempt to give comprehensive answers to these questions, but merely to bring a better understanding of the phenomenon. sometimes, it seems that public officials select projects and make decisions regarding contracting out services with little or no economic rationale and the argument that they give does not resemble the general public interest. the question that this scenario raises is why do they behave in this way? did they pursue other private interests? many researchers tried to explain why companies pay bribes to win a contract for delivering a public service or for performing a public work. one of the reasons private companies most often suggest is that they want to be sure that their company obtains the contract. preparing for a bid is costly and time consuming. in countries with high levels of corruption, the firm may not trust its chances of winning the contract only on a legal basis. therefore, the bribe becomes necessary to justify the large and constant cost of bid preparation. (søreide 2004). in 2004 tina søreide performed a study on 82 norwegian private companies regarding the corruption in international business transactions. the respondents were asked to suggest the motivation behind bribery. the rationale that was most often suggested for giving bribes was the fear of losing contracts because someone else has bribed the decision-makers. the same study showed that 31% of companies that have anti-corruption codes of conduct say that they would adjust their strategies to the local business culture if they were losing contracts because of corruption. in some countries, it is apparently impossible to win a government contract without first paying a bribe (søreide 2002; tanzi and davoodi 1998). other authors (tanzi and davoodi 1998) explain that the private companies are willing to bribe politicians because the projects that they can obtain to execute can be very profitable. usually public works, like building roads, public buildings or damns have a big budget. a private company is even more willing to bribe public officials if it can secure the monopoly over delivering a service. many times it is important how politicians define the public interest that they want to achieve through a project. private companies can bribe politicians to define the public interest in the way they want. sometimes, they can intentionally present facts to justify projects that they want to implement and that are not necessarily justified by people’s needs. public services can be contracted out at a price lower than the market price. public officials can argue that it was in the interest of a minority group that otherwise wouldn’t have access to that service. or, they can create the demand for a new service or work that otherwise would not have been purchased. having stricter regulations does not limit corruption. della porta and vannucci (1999) analyzed how, in italy, in the context of strict regulations, bureaucrats create new opportunities to extract 33 bribes from private companies. these authors explain that even though they have limited capacity of initiative, bureaucrats still hold a strong veto power, which enables them to delay processes or to make omissions in resolving requests. the bureaucrats can refuge themselves in legalism and delay the request for an approval as much as is legally possible. in this context, the companies will be willing to pay bribes proportional to the time saved. the companies can pay bribe for other reasons such as: to reduce political risk, to attain special modification of laws, to obtain financial incentives (like tax reductions), to obtain secret information about a bid, to directly negotiate a contract, to define the evaluation criteria of a bid, to counterbalance poor quality of a service or work or the high price, to name a few. in cases of endemic corruption, the firms can just pay bribe to induce government employees to perform their jobs. the bribe does not always involve money. it can be in the form of other resources, which have particular value for the corrupt politicians. when offering a bribe, the firm that wins is the one offering the higher utility to the government official. the public officials want to achieve public sector welfare and in this way to gain the public support in order to survive politically. but at the same time, they may wish to obtain personal benefit from contracting out a public service. the successful firm is the one that offers the preferred combination between price and quality and the higher utility for the public official (søreide 2002). the personal benefit for politicians can take such forms as money, personal relations, publicity, vacations, and tuition fees for children. the main premise of involving the private sector in delivering services is that competition among potential contractors will drive down the cost of production and ensure that the service will be of high quality. but corruption can make the benefits of contracting out illusory. it can lead to decrease in government revenues, increase in public investments, deterioration of infrastructure, and poor quality of services delivered. one of the most severe consequences of corruption is that it is associated with low government revenues. tanzi and davoodi (1998) argue that corruption can reduce government revenues by creating many loopholes for tax exemptions. according to strombom (1998), where corruption is systemic, it probably adds at least 20 to 25% to the costs of government procurement. bardhan (1997), bjorvatn and søreide (2005) argue that the acquisition price is likely to be higher when government official are highly corrupt. when corruption plays a role in the selection of a project, public officials will be more willing to contract out investment contracts in infrastructure and will intentionally let the existing public infrastructure to deteriorate. high spending on investment projects will reduce the resources available to other projects. corruption can severely affect the quality of the work done. some projects of public infrastructure can be built but never used. others projects are so poorly built that they need continuous repair (tanzi and davoodi 1998). public inspectors can be bribed to overlook the poor quality of the work or of the service delivered. but, by overlooking the poor quality of the public works, life of the people can be put in danger. just think what happens if public housing does not respect safety measures. corruption can lead to more market concentration. if a firm bribes the public officials to acquire a monopoly over delivering a service, then other potential competitors are shut out of the market and may eventually die off. ultimately, only the people that collect the bribes change (bardhan 1997). if only one firm in the area is capable of providing the service, then contracting out may no longer be a good idea. competition stimulates improvements in the quality of the services delivered. but if the competition between contractors is weak, or existing companies engage in collusion, then the benefits of competition cannot be achieved. 34 recent discussions regarding how to design the regulations related to contracting out services to private sector in the last few years at international meetings, researchers and professionals have started to talk more about new strategies of preventing and combating corruption in procurement and contracting out. the new approach is formulated as a possible solution to the question of how to limit the opportunities for corrupt practices. this old question didn’t receive yet a response, and different solutions have been formulated having a limited applicability to a different cultural context. this new approach tries to give an answer to two questions concerning anticorruption strategies. one open issue is whether we should assume that public officials would apply the law impartially if the environment were right, or should we assume that personal interests would always affect some decisions? the other one is whether we should develop rules for every kind of situation that may arise or should we pay attention to objectives of each single process. these questions emphasize the new discussions that challenge the effectiveness of adopting new layers of regulations in eliminating corruption. as we mentioned in the introduction, the economic development challenges that the local government confronts, ask for flexibility and innovation in establishing public-private partnerships. in this context, the new trend in this field calls for designing safeguard measures that emphasize the aims of contracting-out processes that do not hinder the efficiency of the procedures (peter trepte in oecd 2004). this idea was formulated as one of the findings of the global forum conference on “fighting corruption and promoting integrity in public procurement” organized by oecd and hosted by the french ministry of economy, finance and industry1. the participants at the conference agreed that “additional regulations do not necessarily prevent corruption” because they can easily be bypassed. the recommendation that was formulated was to emphasis the training of the public officials responsible for the procurement process. in 2004, the european commission adopted the green paper2 that created a forum of debate about the need to clarify, complement or improve the current legal framework regarding procurement laws and how they apply to the different forms of public-private partnerships developing in the member states. the main idea that guided the discussions and resulted from the recommendations that were formulated was the need to provide the general guidelines to ensure competition for public-private partnerships without limiting the flexibility needed to design innovative and complex projects3. the limiting effect that the procurement regulations have on preventing corruption is supported by results of the research conducted in 2004 among 82 private firms with headquarters in norway (søreide 2004). among other objectives, the research explored also the efficiency of procurement rules in preventing corruption. it was assumed that the presence of procurement regulations would reduce the opportunity for awarding the contracts on corrupt criteria. the results showed that 55% of the respondents believed that public procurement regulations did not prevent corruption. only 6% of the respondents considered the rules to be efficient in preventing corruption. based on these results, the author concluded that corruption “takes place independently of such procedures” (søreide 2004). 1 the conference took place on 29 and 30 november 2004 in paris. participants at the conference were from the public and private sector, nongovernmental organizations, academic institutions, international organizations and trade unions. 2 livre vert sur les partenariats public-prive et le droit communautaire des marches publics et des concessions, com(2004) 327 final, bruxelles, 30.4.2004 3 communication from the commission to the european parliament, the council, the european economic and social committee of the regions on public-private partnerships and community law on public procurement and concessions, com(2005) 569 final, bruxelles, 15.11.2005, pag. 4 35 strategies for safeguarding contracting-out processes these recent discussions call for a new design of the regulations that give flexibility to public officials in contracting out public services and, at the same time, safeguard against corruption. good regulations are not sufficient conditions for efficiency, because laws might not be enforced or the participants might not act according to economic rationality. on the other side, it is not enough to have lax regulations and to presume the honesty of the public officials. we can adopt this strategy, but it will not lead to overall efficiency. beside flexible regulations, we need to verify whether the general regulations are being met. the accountability of the public officials and the transparency of the procedures are two critical measures that an anticorruption strategy should emphasize. tina søreide (2002) calls for a stronger emphasis on the execution part of the anti-corruption laws, and less on the designing process. in her opinion, it is critical that the implementation of these measures be guided by accountability and integrity rules. another critical element of the strategy should be to train public official to identify and manage the risks of corruption. a strategy that safeguards against corruption should perform four functions: to define, to expose, to correct and to prevent (witting 2005). to define the rules, to expose the contracting-out process and project implementation to strict scrutiny, to correct the deviations from the rule implementation and to prevent possible corrupt practices. define the rules. the rules safeguarding against possible corruption opportunities are not always included in a law applying specifically to the contracting-out process. but these rules are found in laws such as criminal law, public procurement law, government regulations and professional codes of ethics. also, in some cases, customs and previous practices play an important role. the majority of the authors argue for the simplification of the rules. as we stated before, the greater the number of regulations affecting contracting-out processes, the more opportunities exist to use these regulations to manipulate information. rules should require the transparency of procedures, by making public all the information pertaining to the bid and then implementation of the contract. these rules should define exactly when the terms of the contract could be altered by negotiations between the winner and the public institution, after the contract was awarded. otherwise, vague rules will lead to contracting something different from what was tendered. another issue that the regulations should address is when direct negotiation can be used and what rules are applied in negotiating the contract. the safeguard measures must be reviewed continuously because companies seek new ways to bypass the regulations in order to win contracts. regulations should evolve in order to catch up with the evolving techniques that actors develop to maximize their expectations (witting 2005). to encourage the most competitive and able suppliers to bid, procedures must be fair, nondiscriminatory, transparent and credible. the regulations should provide the incentives to encourage competition among companies. expose to strict scrutiny. the main mechanisms to expose the contracting-out process are through internal and external audits, whistle blowers, transparency of rules and procedures, disclosure of the financial interests and mechanism for protesting contract award. the mechanisms of control and audit should be independent from any influences. they are used to monitor whether the company respected the requirements included in the contract, and whether the service delivered met the quality requirements. whistle blowers should be encouraged to disclose information about unethical or corrupt practices regarding the decision-making process and contract implementation. the disclosed information should be checked first. if corrupt or unethical practices are found, appropriate measures should be taken. it is important to build confidence in this system by ensuring the confidentiality of the whistle 36 blowers and by taking appropriate measures to correct the deviations from the rules. if people feel that their effort and the risk that they took had a contribution to reveling corrupt practices, they will be encouraged to report other cases. at the same time, public officials will pay more attention to how they make the decisions and supervise the implementation of a contract. one of the most important measures is to ensure the transparency of the process, because corruption is most likely to occur in situation where public officials are at a low level of accountability. transparency requires the release of sufficient information to allow the average participant to know how the system is intended to work as well as how it is actually functioning (bertók 2005, pp. 86). the contracting-out opportunities should be made accessible to a wide range of potential suppliers. private companies should receive the information that they need for bidding at the right time and in the right form. the announcement of the bid should clearly describe the service or the work to be contracted out. so that changes that were not previously specified in the contract may not occur. the decision-making process should be explicitly stated in the announcement and should be based exclusively on objectively measurable factors. transparency and accountability can be achieved when the relevant stakeholders are actively engaged in the course of the contracting-out process (bertók 2005, pp.88). citizens should have the opportunity to follow the contracting-out process. transparency requires the release of information on successful bids and, equal important, informing the unsuccessful bidders about the reasons why they were not selected. disclosure of financial interests means that the public officials involved in the decision-making process should declare any private interests that might affect their decision with regard to contracting out a public service. some large public institutions established additional layers of supervision and control to prevent conflict of interest of public officials. for example, new york created a conflict of interest board that requires divulging personal finances of the contracting personnel and the department of investigation investigate city employees’ declarations (blendermann et al. 2004). also, before the contract is negotiated with the bidding companies, it is important to obtain information about the performance of the company under past contracts. some cities created additional procedures for checking the companies that apply for a contract. new york city created a vendor database that includes information such as past violations, indictments and convictions. also, the department of investigation checks if a contractor is eligible for a city contract. the regulations should guarantee the bidding companies and the public the right to administratively contest the decisions. if they are not satisfied with the answer they received, the regulations should offer them the right to judicially contest the decisions. correct the deviations from rules. the non-performance of the contracts should be penalized. if no penalties exist, or if the penalties are not applied, the opportunistic companies will maximize profits by executing only the easiest part of a contract. punishments and controls are the factors exerting the strongest effect on implementation of the rules. or better stated, the fear of punishment plays a key role in inducing the private companies and the public officials to respect the rules. a key condition is to build people’s confidence that the rules are respected. prevent further corruption cases. the recent call in this field is for strategies that emphasize the training of the public officials responsible for the contracting-out process. some authors (beth and trepte in oecd 2004) argue that these public officials should be provided with appropriate skills, professional capacity and incentives to identify and manage risks of corruption. enhance the professional independence of public officials and protect them from the influence of politicians. some countries took a proactive approach regarding this problem by asking public officials responsible for procurement or contracting out to go through special training sessions at 37 regular intervals of time. in the u.s., some public institutions even created institutions responsible only for training in this field (blendermann et. all 2004). strong rules should set what is acceptable and what is unacceptable. they can help safeguard the independence from political influence and other private interests. knowing that the government is strictly enforcing the rules can help discourage any request for favoritism. future research agenda as described in this paper, public-private mechanisms of governmental management have been popular in nearly every part of the world, and are expanding rapidly in europe. the contracting-out of government services to private companies is one common form of public-private partnerships. while some forms of public-private partnership promote citizen participation and responsiveness to citizen-customers, greater involvement of the private sector in governmental service delivery makes transparency more complicated and challenging. it sometimes leaves a door open for unethical behavior and corrupt practices. the political response to resolve corruption problems is often to add more levels of oversight and regulatory compliance. this sometimes destroys some of the efficiency and flexibility of a public-private partnership system and may even add to opportunities for public officials to extract rent. therefore, finding the right balance between regulatory oversight, decision-making flexibility and reliance on market forces is very important for the future of public administrations. and, this balance may vary among different cultural milieu. little research effort is currently focused on these issue related to the contracting out of public services. a research agenda is needed to answer the questions suggested in this paper. a first step in this research agenda will be to develop a complete list of the points in the publicprivate partnership process where corruption might creep into the system. this paper has tried to describe the contracting-out process and to list some of points of corruption vulnerability. a second step in the research agenda will be to investigate how different communities and states attempt to control corrupt practices at each of these vulnerable public-private partnership decision points. this investigation should be extended internationally so as to see how methods of corruption mitigation compare across cultures. in one society small but blatant bribes or “tips” might be a common practice, while a second culture might be dealing with more sophisticated, larger, in-kind favor trading. in a third society the more common practice might be collusion such as price fixing and bid rigging rather than bribing. a third level of this research will be to develop indicators and metric techniques that measure the effect on efficiency and effectiveness of various corruption control mechanisms in various societies using a combination of cross-national surveys and case studies. the ultimate goal of this research is to guide publics toward the most effective mechanisms for mitigating corruption while allowing democratic societies to reap the 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procurement: bridging information asymmetry’, fighting corruption and promoting integrity in public procurement, organization for economic co-operation and development, paris, 29-30 november 2004 51. varese, f 2000, ‘pervasive corruption’, in a.v. ledeneva & m. kurkchiyan (eds.), economic crime in russia, luwer law international, london 52. witting, w 2005, ‘linking islands of integrity to promote good governance in public procurement: issues for considerations’, fighting corruption and promoting integrity in public procurement, organization for economic co-operation and development, paris, 29-30 november 2004 49 abstract the growth pole strategy has proved to be one of the main tools that the eu is using in its idealistic pursuit of economic and social cohesion across europe. the objective behind this concept is reducing regional economic and social disparities by directing the investments towards a location presenting a growth pole potential, which will at its turn spread the development in the surrounding economical space. however, reducing the inter-regional disparities often claims an ironical, if not cynical, price to pay: the increase of intra-regional disparities, at least for a first stage. in romania’s case, this price seems to be paid in vain, as neither the government nor the metropolitan level appears to have correctly understood the purpose and the mechanism of the regional operational program. a major confusion has been made between the potential of a growth pole and the existence of a growth pole, and as a consequence, investments designed for underdeveloped areas are now addressing developed areas. in the case of the cluj-napoca metropolitan zone, the situation has worsened due to the contrasting economic and demographic profiles both within the rural part and as compared to the urban part. the spreading development potential is denied by the unfeasible and undemocratic associative structure of the cluj-napoca metropolitan zone, which is leaving the rural zone no tool at all to protect itself, let alone follow its interest. keywords: growth poles, regional operational program, regional disparities, cluj-napoca metropolitan zone, integrated plan for urban development. cluj-napoca metropolitan zone: between a growth pole and a deprived area daniel dranca daniel dranca cluj-napoca city hall, cluj-napoca, romania tel.: 0040-745-768.679 e-mail: daniel.dranca@gmail.com transylvanian review of administrative sciences, no. 40 e/2013, pp. 49-70 50 “the era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. in its place we are entering a period of consequences.” winston churchill part i. application of the growth pole concept in romania 1. introduction the inter-regional and intra-regional disparities have made the object of different types and waves of economic strategies from the very creation of the eu. the struggle for reducing the disparities is framed within the european commission’s efforts to create a europe with a level of social and economic cohesion as unitary as possible. the administrative level in which the eu cohesion policy is carrying out this engagement against the economic and social disparities is the region, acknowledged by the ever increasing role that the regions have been developing, not only at a national scale, but also within the global economy. the main tool that the european cohesion policy is using in its efforts to reduce the existing disparities among the eu regions is the growth pole. romania, as an eu member state, makes no exception from this rule, and the regional operational program (rop) allocates 30% of its total budget to rop priority axis 1, support to sustainable development of urban growth poles – major domain of intervention 1.1, integrated urban development plans (rop – mdi 1.1). the allocation within this priority axis is provided on the basis of an integrated development plan, which is elaborated and adopted at metropolitan level, and which should comprehend and guide all the development strategies within the geographic and economic area affected by the growth pole. 1.2. purpose and methodology while the importance that the eu is presently giving to the growth pole strategy might let us consider it efficient in any given situation, it is actually rather controversial. its contesters are claiming that not only it does not diminish the existing interregional disparities, but it also deepens the intra-regional ones, or in the best situation it does provide higher rates of national economic growth with the expense of increasing the disparities within the regions. derived from this controversy, the present article will try to prove that the romanian government has failed to establish the national growth poles according to the vision of the european cohesion policy and that this situation, together with the current institutional framework of the cluj-napoca metropolitan zone (cmz), makes it impossible for the development to spread from the urban core to the surrounding areas. in order to prove that, the article will present an analysis of the consistency between the vision of the regional operational program (rop) and the criteria that the romanian government used in order to select the national growth poles. a similar comparison will be carried out between the investments accessed so far by cmz and 51 the requirements of the rop – mdi 1.1. in a similar context, the second part of the article will present a case study about the spreading degree of the development within the cmz in the form of a detailed insight of the economic and demographic evolution since its creation. 2. framing the discussion: the growth pole concept and the rop 2.1. growth poles strategy – pros and cons francois perroux (1955) was the first to define the growth pole concept. according to his vision, “growth does not appear everywhere at the same time; it becomes manifest at points or growth poles with variable intensity; it spreads through different channels, with variable terminal effects, on the entire economy” (perroux, 1955, p. 309). although perroux insisted on the fact that the growth pole is a concept specific to an abstract economic space, some authors (boudeville, 1960; hirschman, 1950) rushed to provide a geographical projection to this theory, finding it a very appropriate strategy for the political efforts to reduce the regional disparities. it soon became a very popular point of view, up to such an extent that in the early 1970s the growth pole became ‘the dominant characteristic of operational regional planning in both developed and developing countries’ (richardson and richardson, 1974, p. 163). the theory, however, was not universally accepted as the perfect solution for reducing regional disparities. some authors (myrdal, 1953; gravier, 1972) claimed that the growth pole strategy can infer positive impact in the near-by regions and markets (the spread effect) while at the same time can produce side effects in the peripheries by attracting their labor force and economic activities. the term used by myrdal was back-wash effect, while gravier was even more expressive in denouncing the massive concentration of resources and opportunities in paris, as compared to the rest of the country: paris and the french desert. in response to that, j.g. williamson (1965) proved that disparities between regions are more emphatic at the early stage of national economic growth, while this regional dualism is softening at the mature stage. williamson imagined an inverted-u curve between a horizontal axis of income per capita and a vertical axis of inter-regional income disparities. williamson’s famous hypothesis, embraced as a pattern for regional development in the 1960s (miyoshi, 1997, p. 13), is that ‘rising income inequalities and increasing north-south1 dualism is typical of early development stages, while regional convergence and the disappearance of severe north-south problems are typical of more mature stages of national growth and development’ (williamson, 1965, p. 179 apud miyoshi, 1997, p. 13). beyond the discussions accusing or defending the growth pole principle, there rests the certitude that it is an essentially delicate concept. the practice has only strengthened this belief, as parr (1999) has latter shown. according to him, the first 30 years of the history of regional economic planning showed many examples around the world in which growth pole strategies either failed or were prematurely abandoned (parr, 1 the north represents the developing region and the south the deprived one. 52 1999, p. 1196). according to the same author, the explanation for the failure of these strategies is the fact that the planners misunderstood perroux’s original assertion that the growth pole in geographic space is not necessarily and in any given situation a projection of the growth pole in economic space. on the contrary, their purpose should be the foundation of their choice on empiric assertions and suppositions and by taking into consideration ‘the anticipated outcomes, in terms of inter-regional equity and balance’, and the existing constraints (parr, 1999, p. 1212). in short, growth pole strategy is not to be considered a panacea for the regional planning efforts, not necessarily due to its limits but more likely because of the difficulties to adapt it to a certain geographic, economic and social space. without a proper understanding of the concept beneath the strategy and the specificity of the target zone, an economic strategy based on the growth pole concept or on any other economic approach is designed to fail. before presenting the case study upon the application of the growth pole strategy in romania in general and in cmz in particular, a very brief presentation of the romanian operational program would be necessary. 2.2. regional operational program the strategic document which serves as a reference for programming the structural and cohesion funds in romania is the national strategic reference framework (nsrf), which is designed to create the links between the national development priorities, as set out in the national development plan 2007-2013, and the priorities at european level – the community strategic guidelines (csg) on cohesion 2007-2013 and the integrated guidelines for growth and jobs 2005-20082. the nsrf is implemented through operational programs under objectives ‘convergence’ and ‘european territorial cooperation’. the operational program in charge with the balanced territorial development strategy is the regional operational program. the romanian regional operational program (rop) was approved by the european commission decision no. 3470 from 12 july 2007. its annex contains a thorough analysis of the romanian economic situation and a justification of the selected strategy, based on this analysis. the strategic objective of the rop is the reducing of the social and economic development disparities between romania and other eu member states, by increasing the gdp with 15% to 20% before 2015. the rop will give priority to the regions lagging behind and at the same time, a special focus will be given to supporting urban growth poles, which can contribute to a polycentric development of the romanian territory. 2.3. priority axis 1, major domain of intervention 1.1, integrated urban development plans the main purpose of this priority axis is life quality increase and job creation by rehabilitating the urban infrastructure, improvement of urban services, including so2 http://ec.europa.eu/romania/documents/press_releases/10_07_sinteza_csnopdf 53 cial services, and also by developing the mechanisms of sustaining business and entrepreneurship activities. the financial allocations are to be distributed to the cities designated as urban growth poles, on the basis of an integrated urban development plan, elaborated at metropolitan level and networking all the investments within its area of influence. the total allocation for this major domain of intervention is 30% out of the total rop budget. the strategic objective of this priority axis and, at the same time, the starting point of the analysis within this article is the following statement: ‘in order to contribute to a balanced territorial development of the country and to avoid the increasing internal disparities, investments will be concentrated in those cities which act (emphasis added) as regional and/or local growth poles and spread the development into the surrounding areas, giving priority to growth poles located in regions and counties with lower level of development (emphasis added) in terms of gdp and unemployment.’ (romanian operational program, p. 122) 3. growth pole rationale: eu expectations and romania’s response 3.1. introduction the current section will try to provide an empirical insight into the way in which romania in general and cluj-napoca growth pole in particular applied so far the regional operational program and whether their action respected or not its requirements. thus, the first part will study the legal framework in which the romanian government established the seven growth poles and the thirteen urban development poles, while the second will analyze the impact of the projects accessed so far by cmz in terms of spreading development potential. as already mentioned in the regional policy section, the rop’s vision is addressing especially the regions that suffer from the most serious infrastructural deficits and require special public support. at the same time, a special focus was given to the strategy of supporting the urban growth poles, which can contribute to a polycentric development of the romanian territory, according to rop. the rationale for this approach is to be found in the annex of the european commission decision no. 3470 from 12 july 2007, through which the romanian regional operational program was approved. this act is the basis and the source of information for the case study from the current section. the vision of the rop is based upon a detailed ex-ante analysis, which addressed virtually all the domains of the daily life, conducted both at national and regional level. this analysis has revealed a strong and growing disparity level between bucharest-ilfov region and the other seven development regions on one hand, and between western and eastern region on the other hand. it has also pointed out the socio-economic decline of many regional urban centers and loss of urban functions of many small and medium towns, especially the mono-industrial ones. from a social point of view, a declining number of labor forces and an increasing phenomenon of population ageing was discovered, which triggered the increase of the dependency ratio. 54 within this frame, the general justification provided by the ec decision no. 3470/2007 for the rop – mdi 1.1 addresses the significant economic changes that occurred in romania after 1990, which have generated a deterioration of the urban life quality, especially in the case of small and medium sized cities. the situation was generally created by closing down one or more economic activities, which led to the emergence of social and economic disparities both at local and regional scale. according to the rop, the strategy is willing to redeem the important role of the cities as places to work and live in, by supporting the investment in the physical regeneration of cities and the improvement of entrepreneurship and social service sectors. the above mentioned objective should be achieved on the basis of the following key principles: ‘priority of growth poles located in regions with lower level of development in terms of gdp and unemployment; priority of cities which have intense connections with and influence the surrounding rural areas; and priority of cities which fulfill a diversity of advanced and complex functions.’ (romanian operational program, pp. 122-123) the ec decision no. 3470/2007 adopting the regional operational program was transposed in the romanian legislation by the government decision no. 998/2008. this decision also created a polycentric urban network aiming for a balanced territorial development and for the diminishment of inter-regional disparities. thus, the government decision no. 998/2008, modified and actualized by the government decision no. 1149/2008, nominates the national growth poles that would be eligible for the 695.58 million euro allocated for this rop 1.1 major intervention domain (30% from the rop total budget). the seven romanian growth poles (cluj-napoca, iaşi, constanţa, ploieşti, craiova, timişoara and braşov) were proposed by the ministry of tourism and regional development and approved by the national committee for coordination of structural funds. the decision no. 998/2008 was actualized by the decision no. 1149/2008, according to which, in order to counter-balance the expected increase of the inter-regional disparities and to defend the social and economic cohesion, thirteen urban development poles were to be set up (arad, baia-mare, bacău, brăila, galaţi, deva, oradea, piteşti, râmnicu-vâlcea, satu-mare, sibiu, suceava and târgu-mureş). they were supposed to attenuate and prevent the emergence of regional imbalances and to diminish the population flow towards the growth poles, contributing in this manner to the demographic, economic and spatial equilibrium of the region. at the same time, the urban development poles were designated to act as a linkage between the growth poles and a third category of towns, the urban centers (towns of 10,000 inhabitants and over, others than growth poles or development poles). the thirteen development urban poles were allocated 20% of the total allocation of the major domain of intervention 1.1 (or 6% out of rop). it should be reminded that the third layer of urban centers has 55 not been established so far and therefore no financial allocation from this priority axis was directed to them. 3.2. analysis of consistency between rop strategy and the choice of the seven national growth poles in order to establish whether the romanian government respected or not the rop vision in designating the seven national growth poles and the thirteen urban development poles, a comparison should be made between the government decision’s reasoning notes and the three rop key principles presented above. it must be said at this point that the reasoning note no. 1149/2008 is not to be found on the official romanian government website or on other websites covering a similar area of interest. thus, according to the government decision reasoning note no. 998/2008, the seven growth poles and the thirteen urban development poles were selected on the basis of the following criteria: – the level of functional specialization; – innovation capacity; – existing business infrastructure; – the level of diversity and intensity of the connections between regional and local actors; and – accessibility and public services. when looking back into the three rop requirements, we might be tempted to believe that the main principle of rop and priority axis 1, major domain of intervention 1, for growth poles located in regions with lower level of development in terms of gdp and unemployment, was respected. the romanian development regions and their ‘capitals’ are indeed placed on an inferior development level as compared to bucharest-ilfov region and bucharest. however, it is questionable that the capital city should have been chosen the reference point without defining the ‘lower level of development’ because, after all, all the cities in romania are less developed than bucharest. even more, the criteria laid out for choosing the seven growth poles, such as the existence of universities, excellence centers, technological parks, high-quality public services (government decision reasoning note no. 1149/2008, p. 2), are in high antithesis to measures concentrating the investment in the city’s physical regeneration and the improvement of entrepreneurship, environment and social service sectors (rop, pp. 122-123). at this point emerges a feeling that the ministry of tourism and regional development has failed to make the difference between development and potential of development. this affirmation will be further explained and argued in the following section, where we will see that the investments under the rop – mdi 1.1 are addressing a completely different city profile than the one claimed by the ministry of regional development. moreover, the financial allocation ratio of this major domain of intervention, 80% for the seven growth poles and 20% for the thirteen urban development poles, is against the principle of awarding priority to the areas lagging behind. rop makes no 56 reference to the way in which the government should split the investments between growth poles and development poles, and neither does the government decision no. 998/2008 or government decision no. 1149/2008. the fact that the third layer of urban centers was not yet established and therefore no financial distribution was directed towards them is as well against the lagging behind principle. the second principle, according to which priority should be given to cities which have deep connections and inter-dependencies with the surrounding rural areas, is again vague enough to be fit to any city from the country. there is no reference to indicators of these inter-dependencies, neither in the rop, nor in the government decisions and in the reasoning note. these connections or communications channels are elementary for the growth poles strategy, as no matter how high the irradiating capacity of a growth pole might be, it’s useless if it is located behind a bottleneck. the third principle seems to be the only one that respects up to one point the rop vision, but in a similar manner to the first objective. all the seven chosen cities are important centers of a wide range of functions. however, there is again no quantification about the extent of functional diversity (it is true that it is much more difficult to be quantified) that should or should not require this statute. however, such a clarification would have been necessary because, even at a lower rate, the thirteen urban development poles have as well a certain degree of multi-functional destinations. therefore, there seems to be a high degree of arbitrary in the decisions that the romanian government has made when establishing the national growth poles and the national development poles. up to a certain point, this situation was fed by the fact that the rop stipulations are often enough too general, but it is no excuse for the romanian government to take such vital decisions for the future of the country without any form of analysis or empirical evidence. the very low level of structural funds absorption for the first almost six years of the current budgetary cycle (21.10% for rop in october 2012), could reside in this false start. 3.3. analysis of the consistency between the projects accessed by cmz and the rationale of priority axis 1, major domain of intervention 1 the current section will confront the rationale and the principles of the mdi 1.1 integrated plans for urban development to the projects that cluj-napoca growth pole has implemented so far or is about to implement. the purpose of this comparison would be the consolidation of the argumentation presented in the previous section, where we could see that the growth pole concept was misunderstood and therefore misapplied. 3.3.1. comparison between rop justifications for major domain of intervention 1.1 objectives and general situation of cluj-napoca growth pole as previously shown, the tool for the application of rop mdi 1.1 is the integrated urban development plan. in order for cluj-napoca growth pole to become eligible, in 2008 cluj-napoca metropolitan association was created, while the integrated plan 57 for urban development (ipud) was approved by its 19 members (17 villages, clujnapoca municipality and cluj county) during the year 2009. this major domain of intervention is financing long term and medium term projects for city regeneration, based on the assumption that these integrated plans not only will directly contribute to the core city’s revival, but they will also accelerate the development of the surrounding urban and rural areas. financial allocations were to be granted for the following groups of projects: a. rehabilitation of the urban infrastructure and improvement of urban services, including urban transportation the rationale of this objective rests in the fact that a desolating physical shape creates low life conditions for its inhabitants and discourages the location of economic activities within the city. consequently, abandoned or heavily degraded buildings, deteriorated public spaces and/or poor condition of basic infrastructure (streets, public lighting, parks etc.) is further increasing the city’s repulsiveness for economic activities. as described before, the lack of any imposed limit for the ‘infrastructure poorness’ allows a very wide range of eligible cities under this objective. from this point of view, it is questionable whether cluj-napoca has achieved such a high degree of physical repulsiveness that the economic activities themselves are jeopardized. at the same time, the condition of the basic infrastructure (streets or public utilities) is at least decent; the best argument in this sense is that no project concerning this aspect was proposed. b. development of sustainable business environment this second objective is in deep connection with the first one. while the first objective is aiming at creating a physical frame for the city to become attractive, including economic activities, the second one is trying to directly stimulate the revival of existing activities or for locating new ones. more specific, the objective is to support the entrepreneurial activities and the competitiveness and diversity of local business. again, in the same context of lack of any concrete limitations, there arises a legitimate doubt about the opportunity of this measure in a town like cluj-napoca. for example, according to the national institute of statistics, in 2008 in cluj-napoca there were 25,794 economic actors, while, as a comparison, in the surrounding area (the rest of metropolitan zone) there were only 1,482. c. rehabilitation of social infrastructure, including social housing and the improvement of social services the justification of this objective is the poor condition and/or shortage of multifamily housing. according to rop, in romania, most of these houses were built during the 1970s and the 1980s and are currently in such a severe degradation that even the health of the inhabitants is affected. consequently, there is a clear need of intervention in this sector, and, according to the rop, this intervention should respect the stipulations of the commission regulation no. 1828/2006 (art. 47). this regulation 58 finally provides a clear vision about the issues that this major intervention domain was designed to address. art. 47 of commission regulation no. 1828/2006: ‘the areas selected for housing operations referred to in point (a) of article 7(2) of regulation (ec) no. 1080/2006 shall comply with at least three of the following criteria, two of which must fall within those listed under points (a) to (h) (emphasis added): (a) a high level of poverty and exclusion; (b) a high level of long-term unemployment; (c) precarious demographic trends; (d) a low level of education, significant skills deficiencies and high dropout rates from school; (e) a high level of criminality and delinquency; (f) a particularly rundown environment; (g) a low level of economic activity; (h) a high number of immigrants, ethnic and minority groups, or refugees; (i) a comparatively low level of housing value; (j) a low level of energy performance in buildings.’ the a-h criteria, two of which being compulsory, are offering us an essential view about the frame in which the european commission has conceived the growth pole strategy. we observe words like poverty, unemployment, precarious, low education level, low level economic activity, and at this point we remember about the universities, research centers, innovation centers and technological parks from the government decision reasoning note no. 998/2008. there has certainly been a misunderstanding, and not surprisingly, the similar confusion is to be found at metropolitan level. according to the integrated plan for urban development (ipud), the criteria that are entitling cmz to receive the local growth pole statute are very similar to the ones used by the government when establishing the seven national growth poles (ipud, pp. 220-221): – high level of economic diversity and functional specialization; – innovation and research capacity; – existing financial and business infrastructure; and – highly qualified labor force. 3.3.2. projects accessed so far by cluj-napoca metropolitan zone and their spreading development capacity the complete image of this confusion and consequently policy inefficiency is given by the analysis of the spreading potential of the ipud projects that north-west regional development agency has signed so far on the rop major domain of intervention 1.1. ‘integrated plans for urban development’. the projects are the following: 59 a. rehabilitation of urban infrastructure: – the rehabilitation of the tramway line; – the rehabilitation of the central park and casino building; – modernization and extension of public transport network in cmz – first phase cluj-napoca, apahida, baciu, chinteni, floreşti; and – self-service stations for bicycle renting (50 stations). b. development of sustainable business environment – the treasure city – promoting tourism in cluj-napoca; and – regional center for creative industries. c. rehabilitation of social infrastructure – quality social housing – albac 21 (24 social apartments); – integrated social houses for the community – iuliu coroianu street; and – multifunctional center for integrated social services ‘wonderland’. the above mentioned projects do not seem to overlap with their specific local importance, except maybe the modernization and extension of public transport in cmz, which seems at a first glance to have a metropolitan dimension. in reality, just like tramway line rehabilitation, it’s fundamentally an urban investment, as it targets the rehabilitation of 47 bus stations in cluj-napoca, with an obscure perspective of extension in the surrounding villages, again like in the tramway case. a similar situation is represented by the self-service stations for bicycle renting: out of the 50 proposed stations, 43 will be built in cluj-napoca and seven in other two villages. the other projects are solely and clearly addressing only the cluj-napoca municipality. the regional excellence centre for creative industries project remains the one that may have a metropolitan or maybe regional dimension. the target group for this investment consists in a group of 26 companies from cluj-napoca, with innovative potential, which will be provided a space where they will have the possibility to follow their activities. as a matter of fact, those four projects are the only from the ones selected on major domain of intervention 1.1 that at least have a small metropolitan dimension, even though obscure as a term and indefinite as strategy and results. the tramway line is supposed to be extended to floreşti and apahida (no sooner than 2015, as the previous cluj-napoca mayor has declared) (silea, 2012), while the other project, extension of public transport system, is as well supposed to reach apahida, floreşti, chinteni and baciu in an equally indefinite period of time. no ipud project with a clear target for the surrounding villages is proposed to be financed from the rop. in fact, all the objectives that address the rural part of cmz (ipud, pp. 242-302), except one project, are to be financed from national program for rural development, which is a clear indicator about the extent of the high heterogeneity that affects the cmz. in this respect, the accusations from the rural members of cmz that the metropolitan construction is in fact a political tool addressing mainly the urban interest seems more and more legitimate. for example, it is worth mentioning that feleacu village has initially chosen 60 to leave the association, arguing that only cluj-napoca obtains advantages from it. however, possibly also as a result of the cluj county prefect pressures, feleacu rejoined the association in september 2011 (ziua de cluj, 2009). 4. conclusions the current situation of the growth pole policy in romania is raising at least two important discussion points. the first one is related to the approach of the european commission concerning the way in which romania has chosen to implement the european regional policy. we all know that ec can be very restrictive and rigid in terms of legal constraints, when it considers so. it is obvious that, by choosing not to impose clear limits and indicators for romania to establish its own growth pole strategy, ec has tacitly empowered the romanian government to choose the solution that would best fit the local specificity. this is actually a noble and fair thing to do, as it respects the principles of decentralization and devolution. the question, however, that ec should have asked itself, is whether the romanian political class can choose the best solution. and if it can, does it want to? because the general impression created by the analysis above is that the growth pole policy was used in romania as a tool for the political class to attain and maintain the control upon the most important cities in the country, probably relied on the false assumption that the european funds are an infinite and unconditioned assistance. in this view, a completely different approach would be necessary, one that should aim at maximizing the effects of every investment from eu allocation, or in another way of saying, to perceive every euro received from the eu as the last one. as in the current international economic framework, this last euro gets closer every day. the second issue to be discussed is the spreading development concept, and this will be deeper addressed in the second part of this article, the case study upon cmz. the study will not take into consideration the fact that the ipud projects presented above do not have a real metropolitan or regional extent, rather it will try to find out which is the relationship between the economic, social and economic profile of the area under the influence of the growth pole and the capacity of the development to spread within it. this analysis will also help us discover why and where is the development more likely to spread and also to understand the negative effects of the growth pole upon the demographic, economic and spatial profile of the metropolitan zone. part ii. spreading the development within cmz 1. introduction and purposes as the spreading development concept is not defined by the rop, the current analysis will rely on the assumption that, in order to be possible, this phenomenon requires a certain degree of economic and social homogeneity between the core and the periphery, on one hand, and within the periphery, on the other hand. from this point of view, the analysis will try to create the economic and demographic profile of the cmz by comparing the urban zone, the ‘core’ of the growth pole 61 in our case, to the rest of the metropolitan zone. more specific, it will try to prove that there is a high degree of demographic heterogeneity between the urban zone and the rural zone, on one hand, and within the rural zone, on the other hand, which creates different necessities and therefore requires different approaches in terms of strategies for economic development/revival. 2. demographic profile cmz is covering a 30 kilometers radius around cluj-napoca and represents 23% of the surface and 55% of the population of cluj county. the total population of the cmz in the founding year, 2008, was of 379,705 inhabitants, of which 70,367 were living in the rural area. the urban-rural share of population was 81/19, while the rural zone was covering 88% of the total metropolitan surface. during the last 10 to 12 years, the population profile of the cmz is characterized by a significant population migration phenomenon (table 1) towards the layer of villages positioned in the proximity of the urban core. the interesting part is, as shown in table 2, that the total population within the cmz has remained more or less constant in the observed period, which takes us to the conclusion that the migration phenomenon has taken place inside the borders of the metropolitan zone. table 1: cmz evolution of population density, on rings locality evolution at 1.01.2008 compared to 2002 (%) evolution at 1.07.2010 compared to 2002 (%) evolution at 1.07.2010 compared to 2008 (%) cluj-napoca -2.71 -4.03 -1.21 fi rs t r in g apahida 8.65 13.94 6.49 baciu 4.18 12.03 8.35 bontida 7.03 8.11 1.65 florești 19.85 46.47 35.84 gilau 5.48 8.37 3.35 jucu 1.25 3.15 1.94 total 7.74 15.35 9.61 se co nd r in g chinteni -0.72 2.25 2.95 ciurila -3.84 -0.6 3.27 cojocna 1.71 -0.05 -1.76 feleacu -5.25 -4.64 0.85 total -2.02 -0.76 1.33 th ird r in g aiton -7.62 -15.74 -6.92 borsa -14.05 -24.09 -6.65 caianu -3.78 -5.59 -1.6 garbau -0.68 -1.92 -1.23 petrestii de jos -7.99 -14.26 -5.14 tureni -2.82 -4.78 -1.82 vultureni -8.29 -8.59 0.42 total -6.46 -10.71 -3.28 source: author’s own calculations, based on data from the national institute of statistics 62 table 2: cmz total population and urban/rural ratio total pop. 2002 % from total cmz pop. 2002 total pop. 2008 % from total cmz pop. 2008 total pop. 2010 % from total cmz pop. 2010 cluj-napoca 317,953 82 309,338 81 305,636 80 rural cmz 68,006 18 70,367 19 76,971 20 total cmz 385,959 379,705 382,607 source: author’s own calculations, based on data from the national institute of statistics this migration trend has major implications, especially in terms of spatial effects, as it will be detailed in the conclusive remarks. indeed, when we consult table 3, we observe that each of the three villages that have accommodated the largest parts of urban population present major differences between the percentages of active population and unemployed population. the most probable explanation for this fact is that the largest part of the urban population that migrated from the urban zone to the surrounding villages has maintained their activity in cluj-napoca. table 3: cmz comparison among employees, active population and unemployment rate 2010 total population active population employees (%) of active population unemployment rate floreşti 13,955 9,667 3,217 (33%) 4.38% apahida 10,208 6,635 1,831 (27%) 3.36% baciu 9,525 7,048 1,200 (17%) 2.57% source: author’s own calculations, based on data from the national institute of statistics at the same time, we observe in table 1 that floreşti, apahida and baciu are not the only villages within cmz that have experienced an increase of population density. bonţida, gilău and jucu have also increased their density, while there is a group of villages that have on the contrary decreased the number of population. in fact, based on the presented migration trends, it is possible to propose a new classification of the cmz villages, as shown in table 1. moreover, if compared to the cmz physical map, all the villages from the first ‘ring’ are placed on the east-west axis, corresponding to the european road 58, except baciu, which is similarly positioned within accessible location comparatively to cluj-napoca. on the contrary, the other two layers consist either in villages from the very nearby of cluj-napoca, but on less accessible roads (such as feleacu, ciurila and chinteni), or in villages positioned at the peripheries (such as gârbău, aiton, căianu). we can therefore make the assumption that the transportation system is facilitating the migration phenomenon. concerning the future trends of population migrations, table 4 is presenting an estimation of population for 2015 and 2020, created using the method of linear projection and based on the data provided by the national institute of statistics. the results are clearly showing that the massive migration phenomenon that took place between 2005 and 2010 is no longer expected to occur between 2010 and 2020. another important remark is that there is an obvious decrease of the total population, similar as pattern of evolution both within the three rural rings and the urban zone. 63 figure 1: evolution of population density – localization of villages table 4: cmz evolution of population size, on rings, between 2005 and 2020 2005 pop. 2010 pop. 2015 projected pop. 2020 projected pop. difference 20102005 difference 20152010 difference 20202010 difference 20202005 urban 310,194 305,636 304,521 299,055 -4,558 -1,115 -6,581 -11,139 ring 1 42,385 51,352 51,392 51,029 8967 40 -323 8,644 ring 2 12,370 12,365 11,672 10,970 -5 -693 -1,395 -1,400 ring 3 13,914 13,254 11,880 11,114 -660 -1,374 -2,140 -2,800 total cmz 378,863 382,607 379,465 372,168 3,744 -3,142 -10,439 -6,695 source: author’s own calculations, based on data from the national institute of statistics the complete view of the migration effects upon the spatial structure of the cmz is given by the data from table 5, presenting the population predictions on age groups. the population flow towards the first ring of the cmz is expected to create a varied range of difficulties in terms of accommodation of the new-comers and functionality of the hosting residential areas. as the first effects of this phenomenon are already noticeable, such as the pressure upon the traffic limits, the worse is yet to come. the population needs in terms of green spaces, leisure places and transportation are expected to increase as the population of 30 to 50 years will almost double in the following years. in a similar manner, the important percent of fertile population out of the total population will increase the demand for schools, public safety and other related services, while the elder people will need a more consistent system of healthcare, and so on. the second ring is presenting a similar profile, but on o lower scale, while on the contrary, the urban zone and the third ring are experiencing a different nature of demographic problem, having to deal with issues related to constant decreasing and aging of population. this situation is a clear indicator that the demographic profile of the cmz is highly heterogeneous, with poles apart problems and therefore requiring poles apart approaches. 64 table 5*: cmz first ring population projection. urban zone and first ring urban zone first ring 2005 2010 2015 2020 2005 2010 2015 2020 11,246 14,645 17,424 14,432 0-4 years 2,051 3,157 3,010 2,807 10645 11,037 14,614 17,387 5-9 years 2,339 2,367 3,150 3,004 13,518 10,434 11,020 14,592 10-14 years 2,429 2,655 2,363 3,146 27,723 16,373 10,416 11,002 15-19 years 3,239 2,953 2,650 2,359 34,587 29,300 16,312 10,378 20-24 years 2,977 4,118 2,942 2,641 28,360 27,298 29,154 16,231 25-29 years 3,588 4,832 4,097 2,927 24,465 28,219 27,153 28,999 30-34 years 3,683 5,096 4,806 4,076 24,872 24,036 28,007 26,950 35-39 years 3,434 4,537 5,058 4,770 19,475 24,217 23,748 27,671 40-44 years 2,320 3,894 4,483 4,997 24,761 18,860 23,708 23,249 45-49 years 2,595 2,618 3,812 4,388 23,810 23,529 18,130 22,791 50-54 years 2,780 2,866 2,517 3,665 17,417 22,381 22,094 17,024 55-59 years 2,616 2,958 2,691 2,363 13,365 16,179 20,443 20,180 60-64 years 2,179 2,628 2,702 2,458 12,771 12,116 14,291 18,057 65-69 years 2,022 2,060 2,321 2,387 9,853 11,024 10,157 11,980 70-74 years 1,784 1,828 1,727 1,946 7,162 7,954 8,529 7,858 75-79 years 1,306 1,465 1,414 1,336 4,161 5,010 5,433 5,826 80-84 years 755 872 1,001 966 2,003 3,024 3,887 4,447 85 years 288 448 647 793 310,194 305,636 304,521 299,055 42,385 51,352 51,392 51,029 * bright grey – decreasing trends; dark grey – increasing trends source: author’s own calculations, based on data from the national institute of statistics 3. economic profile this section presents a similar analysis addressing this time the economic profile of cmz. the purpose of this analysis is to determine whether the economy within the cmz presents or not a unitary profile and in this way to estimate the chances of the development to spread within its borders. this approach is based on the assumption that, in order for the development to spread, the levels of the development across the cmz should be similar, or at least to follow a descendent trend from the core towards the peripherals. to do that, the analysis was conducted on the structure of the three distinct ‘rings’ that have emerged from the density analysis. this proved to be a legitimate approach, as the analysis of the unemployment rate evolution has respected rather the same patterns (table 6). the urban zone and the first two rings have experienced a very similar evolution, with an abrupt decrease of unemployment rate from 2005 to 2007, when a peak was reached. as a disparity level, the unemployment rate in the periphery (third and second ring) has always been double as related to the inner side of cmz (first ring and urban zone). therefore, from this point of view the cmz can be split in only two distinct areas, with the outer one being twice as underdeveloped as the central one. 65 table 6: unemployment rate in cmz, on rings 2005 (%) 2007 (%) 2010 (%) cluj-napoca 1 0.8 1.97 fi rs t r in g apahida 2.5 1 3.36 baciu 2.1 0.9 2.57 bontida 6 2.5 3.49 florești 4.3 2.9 4.38 gilau 2.7 2.3 3.34 jucu 1 0.2 0.38 mean unemploy. 3.1 1.63 2.92 se co nd ri ng chinteni 2.6 3.1 3.36 ciurila 14.5 5 12.12 cojocna 5.5 3.1 5.61 feleacu 1.8 0.9 2.04 mean unemploy. 6.1 3.03 5.78 th ird ri ng aiton 4.5 0.9 5.76 borsa 1.6 1.2 1.2 caianu 3.1 2.7 5.12 garbau 3.7 2.9 6.25 petrestii de jos 12.2 7.4 9.9 tureni 7.6 1.9 6.36 vultureni 9.2 6.2 9.36 mean unemploy. 5.99 3.31 6.28 source: author’s own calculations, based on data from the national institute of statistics the second economic indicator used to establish the economic homogeneity within the cmz is the level of economic diversity, which was calculated using the location quotient of 19 economic activities, as classified by the national institute of statistics. the calculation presented in table 7 has also shown the development levels of the surveyed activities across the cmz, and the results were very interesting: only services are at similar rates across the cmz, from the 19 economic activities studied. none of the rest of 17 economic activities presents a linear evolution across the three rural rings. at the same time, the double unemployment rate of the second and third ring is explained by the bright grey zones from the upper part of the location quotient grill. however, this spreading phenomenon from core to peripheries is expected to be possible not only on similar levels of development, but also on decreasing levels, if started from the core. from this point of view, activities like construction, wholesale and retail, transport, hotels, information, finance and real estate could be addressed a metropolitan-sized strategy. this view is confirmed by the location quotient calculated at national reference, in which virtually the same activities present the same characteristics. even more, the fact that the agriculture, for example, presents lower values in the urban zone than in the surrounding rural zone does not mean that the development within cluj-napoca cannot spread in the agriculture field. on the contrary, the presence of a 300.000 person market in the immediate near-by is, or should be, a real 66 table 7: location quotients in cmz rural and urban zone, on rings economic activity employees’ nr. cluj county cluj-napoca lq ring 1 lq ring 2 lq ring 3 lq 1 agriculture, forestry and fishing 1,462 0.46 4.19 2.15 4.50 2 industry mining and quarrying 1,212 0.16 1.27 0.00 1.21 3 industry manufacturing 38,529 0.82 1.85 0.44 0.13 4 electricity, gas, steam and air conditioning production and supply 2,211 1.04 0.62 0.00 0.00 5 water supply, sewerage, waste management and decontamination activities 3,915 1.08 0.27 0.00 0.00 6 construction 13,038 0.94 0.80 0.84 0.30 7 wholesale and retail, repair of motor vehicles and motorcycles 33,976 1.12 0.96 1.01 0.66 8 transport and storage 10,961 0.91 1.06 1.24 0.80 9 hotels and restaurants 4,101 0.90 1.15 2.36 0.36 10 information and communication 6,590 1.29 0.82 0.56 0.00 11 financial facilities and insurance 4,690 1.26 0.26 0.06 0.21 12 real estate activities 1,335 1.10 0.51 1.18 0.00 13 professional scientifi c and technical activities 5,757 1.18 0.82 0.27 0.00 14 activities of administrative services and of support services 6,617 1.07 1.09 1.15 3.05 15 public administration and defense, social insurance of public sector 5,359 0.91 0.56 2.59 4.59 16 education 18,381 1.08 0.40 1.57 1.64 17 health and social systems 16,372 1.00 0.48 1.36 3.02 18 shows, culture and recreational activities 2,806 1.23 0.12 1.49 0.43 19 other service activities 1,337 1.10 0.48 5.10 2.37 total employees 178,649 123512 9777 684 736 scale: 0-0.25 0.25-0.75 0.75-1.00 1.00-> source: author’s own calculations, based on data from the national institute of statistics competitive advantage for the rural zone, when properly exploited. just the same, the low levels of manufacturing industry within the urban zone does not annihilate the overall advantage that cluj-napoca offers for the location of companies within the surrounding zone. as a consequence, we can affirm that, beyond the existing or predicted demographic and economic disparities, there still exists a real potential for spreading development from the cmz urban zone to the peripheries. the question is, then, why doesn’t it spread? a possible explanation will be provided in the final section of the article, which will analyze the legal framework in which the cmz, as a community association, is functioning. 2. cmz as an associative body 2.1. purpose the cmz is a voluntary based association consisting, as shown before, of clujnapoca municipality and 17 surrounding villages. the rules establishing the institutions and the system of governing are included in the statute of cmz association 67 (scmza). according to it, the association was created in order to stimulate the prosperity and the welfare of all the comprising inhabitants, by exploiting the advantages of cluj-napoca being a national growth pole. while the previous chapter has analyzed the current profile of the territorial and economic cohesion, the current will try to establish whether the current associative form makes it possible for regional interest group projects (scmza, p. 2) to be implemented, as these projects, according to the scmza, are the tool for achieving the sustainable development of the cmz. 2.2. decision-making system the cmz decision-making body is the general assembly of cmz (gacmz), representing the communities based on a proportional rule. each member corresponds to 10,000 inhabitants, excepting cluj county, which is entitled to four members. table 8: members of gacmz locality total population members 01.01.2008 1 aiton 1,236 1 2 apahida 9,545 1 3 baciu 8,479 1 4 bonșida 5,054 1 5 borşa 1,603 1 6 căianu 2,470 1 7 chinteni 2,766 1 8 ciurila 1,451 1 9 cojocna 4,451 1 10 feleacu 3,610 1 11 floreşti 8,953 1 12 gârbău 2,630 1 13 gilău 8,292 1 14 jucu 4,137 1 15 petreştii de jos 1,740 1 16 tureni 2,512 1 17 vultureni 1,438 1 18 cluj-napoca 309,338 30 19 cluj county 692,021 4 20 rural 70,367 17 21 total cmz 378,359 51 source: author’s own calculations, based on data from the national institute of statistics the first issue to be discussed is the proportional system used for representation. as shown before, the urban-rural ratio population was in 2008 81% to 19%, which at a first glance may legitimate the choice. but at the same time the total urban surface of cmz is 179.5 km2 out of 1.510 km2, which corresponds to an urban-rural ratio of 12% to 88%. this situation represents a discrimination of the rural zone, which is given no tool to protect itself from the eventual abuse from the spreading urban zone. 68 a second discussion point concerns the criteria used for the county council to be represented by four members, as this number does not respect the population proportion criteria used in the case of cluj-napoca and the rural members. a possible explanation could be provided by the analysis of the decision-making mechanism used by gacmz. according to the statute, the decisions, in order to be approved, must be accepted by 2/3 of the total members. the same ratio is required for the quorum as well. for a total number of 51 members, 2/3 corresponds to 34 members, required both for the meeting to be legal and for the decision to be approved. this means that the representatives of cluj-napoca needed exactly the four votes provided by the county council to meet and adopt decisions, with no legal tool for the rural zone to resist. the problem is that this mechanism is functioning only in the circumstances when cluj-napoca city council and cluj county council share the same political color or the same strategic vision. in other situations, the decision-making system would be blocked, as it is very unlikely that a village would dare to join cluj-napoca in a metropolitan coalition that would affect its relation to the county council. at the same time the rural zone and the cluj county cannot meet the quorum without cluj-napoca municipality, situation which will also give birth to an institutional blockage. it would not be, however, the first time when in romania the legal or even the constitutional framework is created to meet the existing political balance and to be feasible only for as long the latter is. while this eventual ‘urban conspiracy’ is rather an assumption, the disproportionate repartition of power is a vivid reality. one might say that the statute did provide the rural zone a tool for resisting the urban possible abuse, that is, the veto right. however, this tool can be used only in matters regarding exclusively the members’ territory, in other words no member can control a harmful decision made by a neighbor, if the ‘harm’ is located in the neighbor’s territory. this issue is closer to ‘the tragedy of the commons’ concept than to the cooperation and common interest principles stated in the scmza purpose and objectives. 2.3. financial contribution and distribution the romanian legal framework is assigning no specific funds to metropolitan or other types of community allocation, leaving this issue to their interest and capability. in the case of cmz association, the financial sources would be the initial contribution and the annual contributions of the members. the former, in amount of 600 lei, has remained the only one so far, as until now no member has provided even the mandatory 0.5 lei/inhabitant imposed by the smcza to cover the administrative purposes. the association may, however, attract extra-institutional funding, and we have seen in the first part of this article how many of the rop mdi 1.1 projects were in fact ‘regional interest group projects’. unless the expected regionalization act will not transfer or create concrete decision and fiscal attributions for the metropolitan associations, the efficiency of these community organizations would rest in the trust level among its members and in their ability to find a consensus. 69 final conclusions the lack of measurable limits set by the rop in choosing the national growth poles and urban development poles allowed the romanian government to make these choices arbitrarily, based on no empiric research. at metropolitan level, despite the cluj-napoca growth pole’s polarization potential, the level and the types of disparities between the urban and the rural zone, together with an unrealistic urban developed plan and unfeasible association statute, made the “spreading of the development” within the cmz impossible at this stage. however interesting, it is necessary to say that these results do not hold the ultimate truth concerning the growth pole application in romania so far. rather than that, the current article tried to show how vital decisions concerning the accession and allocation of one of the most important eu financial support were made on arbitrary basis, without the slightest effort to understand the tool’s mechanism or the target communities’ economic and demographic profile. unfortunately, these arbitrary decisions will soon turn back against us, during the negotiation for the next budget of the european union. it will only be then when some of the politicians will understand that we do not have to prove what benefits a certain rop mdi 1.1. project has brought to the growth pole per se, but to the metropolitan zone and to the region within its influence. even though it is still too soon to predict the results of these negotiations, the effect of this approach is certain: in the following budgetary period romania will have to do a lot more with a lot less. rerefences: 1. boudeville, j.r., problems of regional economic planning, edinburgh: edinburgh university press, 1966. 2. cluj institute of statistics, ‘fisa localităţii’, cluj county, april 2012. 3. cluj-napoca city hall, [online] available at http://www.primariaclujnapoca.ro/proiecte-europene.html, accessed on june 16, 2012. 4. cluj-napoca city hall, ‘integrated plan for urban development in cluj-napoca metropolitan area’, [online] available at 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7, pp. 1195-1215. 18. parr, j.b., ‘growth-pole strategies in regional economic planning: a retrospective view: part 2. implementation and outcome’, 1999, urban studies, vol. 36, no. 8, pp. 1247-1268. 19. perroux, f., ‘note sur la notion de pole de croissance’, 1955, economie appliquee, vol. 8, pp. 307-320. 20. richardson, h.w. and richardson, m., ‘the relevance of growth center strategies to latin america’, 1975, economic geography, vol. 51, no. 2, pp. 163-178. 21. silea, l., ‘tramvaiul ajunge până în floreşti cu peste 20 de milioane de euro’, 2012, ziua de cluj, [online] available at http://ziuadecj.realitatea.net/administratie/tramvaiul-ajunge-pana-in-floresti-cu-peste-20-de-milioane-de-euro--91817.html, accessed on june 19, 2012. 22. statute of cluj-napoca metropolitan zone association. 23. williamson, j.g., ‘regional inequality and the process of national development: a description of the patterns’, economic development and cultural change, 1965, in miyoshi, t., successes and failures associated with the growth pole strategies, manchester: university of manchester, 1997. 24. ziua de cluj, ‘zona metropolitană. prefectul stamatian îi cere primarului din feleacu să-şi revizuiască atitudinea’, 2009, [online] available at http://ziuadecj.realitatea.net/ administratie/zona-metropolitana-prefectul-stamatian-ii-cere-primarului-din-feleacusa-si-revizuiasca-atitudinea--17617.html, accessed on june 19, 2012. 5 a strategic partnership between michigan state university and babeş-bolyai university: building an international educational hub călin emilian hinţea călin emilian hinţea associated professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: hintea@fspac.ro transylvanian review of administrative sciences, special issue, pp. 5-10 abstract the cooperation between michigan state university and babeș bolyai university has started more than 17 years ago with traditional faculty members’ exchanges and since then has further grown into a strategic partnership. this partnership is now moving toward an important step namely the establishment of an educational hub in clujnapoca, romania. keywords: educational hub, university cooperation, babeș bolyai university, cluj-napoca, michigan state university. 6 the special issue of the transylvanian review of administrative sciences (tras) is dedicated to the papers presented during the 2012 bbu-msu annual conference entitled the university and local community development: critical but delicate relationship, which took place in cluj-napoca, romania between the 18th and 20th of may, 2012. nonetheless, the special issue represents also a tribute brought to an exceptional university relationship which has generated important innovations concerning the international cooperation between europe and us. the contemporary university world can no longer ignore the changes taking place within the society. increased mobility, broad access to technology, benchmarking practices which allow for the comparison of international practices and performances have generated a tremendous pressure upon universities worldwide. traditional teaching, research and financing methods at the university level are now complemented by new approaches. the requirements of the ‘clients’ and their profile are rapidly changing. cooperation between universities is no longer a mere appendix of their core activities. it is becoming a strategic element which can influence, either positively or negatively, the competitive profile of academic programs. internationalization, attraction of foreign students and faculty, international publications, involvement in multinational research programs have turned into basic requirements to be met by top universities. aside from the traditional approaches to internationalization (student and faculty exchanges, conferences etc.), universities need to look towards new ways of cooperation ranging from integrated research projects to granting double or joint degrees and outreach activities. in this context the cooperation between bbu and msu has a great relevance. starting more than 17 years ago, the activities undertaken as part of this cooperation have been varied – student and faculty exchanges, joint researches and publications, community outreach (the two cities which house the two cooperating universities became sister cities and are developing joint programs based on the university cooperation) etc. at this point in time the intention of the two partner universities is to take this 17 year relationship and to turn it into something innovative, based on an integrated view with regard to higher education – the establishment of an educational hub based on joint programs between us and europe, capable of offering a broad educational package (academic programs, training for public officials, applied research at the community level). why cluj-napoca? there are several reasons that indicate cluj-napoca as the ideal place for the establishment and the development of a strategic partnership between michigan state university, east lansing, us, and babeș-bolyai university, cluj-napoca, romania. geographic position – located in the heart of transylvania, one of the most important cultural and economic regions of romania, cluj-napoca can be regarded as an access gate toward both the eastern as well as the western side of europe’s education market. 7 from the east, there is tremendous interest expressed by students coming from the former soviet union and its satellite countries to study in eastern european universities which offer degree programs comparable in content and quality to those offered by universities in the countries of western europe but at a significantly lower cost. from the west, students are expressing interest in getting acquainted with the culture, traditions, as well as the educational system from the former communist countries – this is evident from the increasing number of erasmus students who apply for short term exchange studies. cluj-napoca is a well-known university town – cluj-napoca is the second university center in romania in terms of student population after bucharest, the capital city, having a number of six major public universities whose enrollment in 2011 accounted for more than 53,000 students. the six public universities are: the technical university (engineering school); the university for agricultural studies and veterinary medicine; babeș-bolyai university, medical school iuliu haţieganu, the music academy gheorghe dima, and the arts and design university. initially founded in 1581, babeș-bolyai university is currently among the top research universities in romania, with more than 35,000 students enrolled in all the degree and non-degree programs offered. a top public administration program at babeș-bolyai university – based on the national accreditation and ranking of all universities in romania that took place in 2011, the public administration department at babeș-bolyai university was ranked first in the country with respect to both its bachelor and master programs. the master program in english is also accredited by one of the most prestigious accreditation body in europe – eapaa, and it was the first program in romania to obtain this accreditation. both the national ranking and the european accreditation are guarantees with regard to the quality of the programs offered and with regard to the compatibility of the curriculum offered by the public administration department with what is being taught elsewhere at the international level. a 17 years old relationship between michigan state university and babeș-bolyai university – michigan state university has had a continuously active, 17-year relationship with babeș-bolyai university in cluj-napoca, romania. the relationship has been extensive, involving several units at both schools and encompassing activities across the missions of both universities. at least 100 faculty members from msu have been to bbu for university related endeavors during the 17 years including deans, center directors and an acting provost. at least 50 bbu faculty members have come to msu. three major conferences have been jointly sponsored and managed by the two universities. innumerable student exchanges have taken place, scholarly research completed and published, and joint research and exchange grants have been awarded involving the two universities. the university linkage has also fostered a formalized city-to-city relationship between the two universities’ home cities, cluj-napoca and east lansing. city officials have exchanged visits, compared information and ideas, and jointly sought the outreach assistance of the two universities. students from each university have interned in the city hall of the other home city. members of the bbu faculty have 8 earned degrees at msu and at least two msu faculty members are graduates of bbu. a wide variety of individuals from bbu and cluj-napoca have been visiting scholars at msu, often while serving as fulbright fellows, marie curie fellows, european union scholars, humphrey fellows or holding a variety of other distinguished positions. a tremendous practical administrative experience and political leadership originating at the public administration department level – in many countries in transition the educational sector (especially certain fields) can represent an important pool for selecting top executive public servants, advisers, political leaders etc. a fair number of faculty have had in the last years important positions in the government, thus having the possibility to influence the policy making process and to infuse it with the modern values of public administration education. such positions include a prime minister of romania, a minister of education, a deputy minister of the interior (secretary of state), a deputy minister of finance, a deputy minister of higher-education, a state secretary for strategic planning, chief of staff to the prime minister, several members of the prime minister’s internal staff, the director of the national chancellery, counselor to the minister of the interior, mayor of cluj-napoca, former president of the national ruling party, leaders of the parliament, chair of the national judiciary committee and romanian mp to the european union parliament. expertise in educational programs that link the west and the east – from a strategic point of view, there has been a growing interest in linking the education and various programs from the eastern countries to the realities of the west. at least in the field of public administration there are numerous institutional mechanisms – east/west joint conferences, exchange programs etc. through which a bridge is created between east and west. the public administration department at bbu has been involved in this type of cooperation mechanisms for the past 20 years. expertise in working with societies in transition – countries undergoing political and economic transition possess specific characteristics which sometimes pose challenges for the implementation of policies that have proven successful in other parts of the world. the educational sector is no exception. therefore, in order to be able to get access to the educational market and the resources available in the former soviet union and its satellite countries, as well as in the former communist countries a good understanding of how these countries work represents an advantage. individuals in leadership positions at the department and school level have been involved in various cooperation mechanisms at the level of the former communist countries, thus having a deep understanding of the problems these countries face and in terms of the specificity of the educational sector in these countries. main objective of the partnership the main goal of the partnership is the establishment and the development of an educational hub which will allow the two partner universities to have a wide access to a regional and/or international educational market characterized by a pool of significant resources available for investment in educational and training activities both on the medium and on the long run. 9 in line with the main goal of the partnership there are four main statements that characterize the establishment and the future development of the partnership. the creation of a new approach with regard to international cooperation between universities which goes beyond the traditional mechanisms for cooperation – student and faculty exchanges, conferences, joint publication of articles, and strives to build a strategic partnership by integrating the disparate objectives and mechanisms of traditional cooperation with the goal of obtaining a relevant position on the global educational market. the new strategic partnership will be developed by integrating the new communication technologies into the institutional framework of the partnership as well as into the training, teaching, and research activities undertaken and by transforming the advantages associated with the use of icts into a competitive edge on the global education market. the establishment and the development of an educational program which at its fullest will offer a us-eu degree which will attract a steady and growing number of international students as well as significant financial resources. the educational philosophy underlying the teaching, training, and research activities undertaken in the framework of the partnership strives to offer an integrated view of public and non-profit sector education. a first step in the development of a more formal partnership between msu-bbu is the creation of an institutional framework which will act as the umbrella for all the activities that will be jointly undertaken. the partners have agreed to establish a transatlantic institute for sustainable communities and public services management (interim name). four types of activities will be carried out at the institute: 1. education – the final goal in this area is to develop over time a graduate program whose students will receive a dual msu-bbu degree. there are three types of potential candidates for such a program – romanian students, american students, and international students (a significant share is expected to come from the former communist countries and the former soviet union). in a complex educational market universities have to acknowledge the fact that various students have different needs and that financial resources are available for both traditional, full degree programs as well as for other types of non-traditional programs – lifelong education, individual classes in specific concentration areas, training for midcareer people etc. therefore, we strive to offer the potential candidates with a more flexible structure with regard to the type of program/degree they want to pursue: full dual degree; minor/major from the partner university; transcriptable certificates; and individual classes. 2. research – it is important that faculty from the two partner universities get involved in common research projects. at this initial stage a first step in this direction is to create a data base with the faculty members and the researchers at each university so that people with similar research interest could easily identify their counterparts and start working together. another activity on the common research agenda is to have annually a local survey on a topic that is agreed in 10 advance between the two partner universities. such surveys provided they tackle issues of interest for the local community and the local decision-makers have the advantage of bringing more visibility and media coverage for the partnership between the two universities. a pilot study at the level of cluj-napoca will be conducted in the near future with help of experts from michigan state. the aim of the study is to create an index for measuring the quality of life in cluj-napoca and hopefully to create the tradition of conducting such a survey on a yearly basis. a final initiative in this area is represented by the publication of books containing case studies done either following a common methodology or conducted jointly. 3. training for public officials – in romania as well as in the neighboring countries there is a tremendous need for building expertise and know-how at the level of public sector institutions. very often individuals occupying key administrative positions do not have the proper training for the job. therefore there is a potential market for training. a first pilot training program will be launched in the near future targeting city managers. this is a position recently created by law in romania and numerous city managers have no experience in this field. this training program will be offered by msu, bbu and in partnership with icma. 4. community outreach – at least in romania but in other former communist countries as well universities are mainly seen as educational providers, without an active role in the communities they are located in. it is very rare for universities/ departments to lend their expertise to the local community. as of now there are three distinct types of community outreach activities. the first refers to the involvement of a team of msu experts in the strategic planning process currently underway at the level of the city of cluj-napoca. the city is currently updating its master plan and the expertise of the msu team will represent an invaluable input into the strategic planning process. second, both partner universities will have teams of people involved in the process of adopting a small local community located in the vicinity of cluj-napoca, namely beliș. the teams will work with the city hall toward identifying ways in which the community can develop in the future without negatively impacting the ecosystem it is located in – near an artificial lake, which provides the drinkable water for the city of clujnapoca; also in the middle of an important forest. third, it will design a set of best practices derived from work carried out in michigan that focuses on place making initiatives. realtors work with the local community for identifying and implementing incremental changes in their community. the msu-bbu relationship can represent in the near future a model for university development based on a complex international cooperation, focused on the needs of the university as well as of the community. it can represent a model of best practice in the new university environment. 33 abstract the paper presents the current state of the process of agencification in croatia, pointing out both the process and the institutional design. the agency model in croatia consists of several types of more or less autonomous administrative organizations, situated at different distances from the central government. the most evident pressures for agencification come from decentralization, managerial responses and europeanization. the reversal of the process in recent years has mostly happened because of the need for rationalization of the public administration system, which is also under pressure because of the economic crisis. the key problems of the agency model are over politicization on the one hand, and insufficient and inadequate control on the other. the adequate legal framework for agencies would enhance institutionalization of the agency model, ensuring effectiveness and legal certainty and maintaining a sufficient level of independence. keywords: croatia, national agencies, autonomy and control of agencies, agencification and de-agencification, agencification process. what kind of agencification in croatia? trends and future directions*1 anamarija musa ivan koprić anamarija musa assistant professor, department of administrative science, faculty of law, university of zagreb, zagreb, croatia tel.: 00385-014-895.632 e-mail: amusa@pravo.hr ivan koprić professor, department of administrative science, faculty of law, university of zagreb, zagreb, croatia tel.: 00385-014-895.628 e-mail: ikopric@pravo.hr * the authors would like to thank to the members of the cost action is0601 ‘comparative research into current trends in public sector organization (cripo)’ project for valuable comments and suggestions, especially gyorgy haynal, călin hinţea, adrian hudrea, vitalis nakrosis, tiina randma-liiv, külli sarapu, sandra van thiel and koen verhoest. this work has been funded by the ministry of science, education and sports of the republic of croatia, under the project ‘europeanization of croatian public administration: development and national identity’, 2005-2011. transylvanian review of administrative sciences, special issue, pp. 33-53 34 1. introduction over the last three decades the formation of agencies (agencification) has been emphasized as one of the most significant developments in public administrations worldwide, driven by the new public management administrative reforms and the regulatory state agenda, and strengthened through the activities and support of international organizations, such as oecd or the european union (pollitt and bouckaert, 2004; christensen and lægreid, 2006). agencies are defined as organizations that perform public tasks at arm’s length from the central government, based on specialization and expertise (pollitt and bouckaert, 2004). their important feature is a fragile relationship between sufficient autonomy with regard to their daily business (management, organization, financing and personnel) and decision making, on one hand, and specific ex ante and ex post control mechanisms which replace the hierarchical political oversight typical for central government on the other. in spite of the global trend of agency creation and, consequently, the transformation of the classical hierarchical and monolithic state administration, the translation of the concept into different institutional contexts has led to a different definition of agency, types of internal design and variety in agency relationship with its environment (politics, users, market) (pollitt and bouckaert, 2004). in transitional countries, agencification coincides with the parallel processes of institution building, administrative reform and europeanization of public administration. the speed and multiplicity of changes, the variety of environmental and internal pressures for reform and the need to achieve a position in the competitive environment may have led those countries to introduce new institutional forms or procedures, often without substantive transformation of values, priorities, or ways of doing things (goetz, 2005). the article focuses on the agencification phenomenon in croatia analyzing both the process and the structural dimension. the aim is to describe the incentives and phases of agencification, together with the characteristics of agencies. the main thesis is that the introduction and development of the agency model in croatia is defined by the existing institutional setting and the incomplete idea of agency. as shown previously by pollitt and bouckaert (2004), administrative reform and the introduction of new institutional forms depends on the concept transferred, the administrative tradition and the implementation process. in croatia, the idea of separate administrative organizations was not completely new but this fact also hindered the recognition of the agency as a completely new institutional form with its different subtypes and special features which seek for new types of control mechanisms and autonomy arrangements, which are different from those traditionally used. additionally, the public administration reform was slow, suffering from resistance of the administrators themselves, with no clear goals and mostly driven by pressures from the european union (eu). in that kind of environment, the agency model was simply transferred and used as an instrument for fulfilling the formal requirements of the eu membership, or as a means for solving the systemic problems of administration, such as low salaries, low professionalism and high degree of politicization. 35 the development of the croatian political and administrative system from the beginning of the 1990s can roughly be divided into two eras, with the year 2000 as a breaking point or critical juncture. the first phase, 1990-1999, was marked by a transition to democracy and the introduction of a free market economy, together with the process of independent state building, including the 1991-1995 war period. the unfavorable economic and social circumstances of war period (economic downturn, unemployment, refugees, war veterans and other social problems) together with the strong semi-presidential political regime with authoritarian features, led to retarded political development, reinforcing the negative side-effects of transition, such as corruption, extreme politicization and social inequalities. the second phase began in 2000 when a broad left-wing coalition came into power, changed the constitution and introduced the parliamentary system, initiating the processes of democratization, decentralization and eu accession. still, the political and administrative tradition based on the strong state and the collectivist culture is heavily influencing political and administrative development. some of the indicators are: slow administrative reform, unfinished process of decentralization, weak institutions and underdeveloped civil society. within this political context, public administration went through the phases of establishment (1990-1993), consolidation (1993-2001) and europeanization (after 2001), with prospects for modernization only after 2008 (details in koprić, 2009). the article analyzes the current state of the process of agencification in croatia, starting with a brief identification of the trends in the development of the croatian political and administrative system in recent decades. in part two, the current landscape of agencies is analyzed focusing particularly on semi-autonomous organizations and legally independent (statutory) bodies, which are usually considered to be the ideal type of agencies. in the third part of the paper, the process of agencification as institutionalization of the agency model is mapped, identifying key incentives for trends leading towards the creation or abolition of agencies. in the fourth part, the basic elements of institutional design are analyzed, in terms of autonomy and control, with special emphasis on legal control. finally, the fifth part elaborates on the main problems of the agency model in croatia, and the possibilities for improvement in the future. 2. the agency as a type of public sector organization in croatia: a semi-structured mess? as in many other countries, agencies and other types of more or less autonomous organizations have been extensively created in croatia as a response to the pressures for efficiency and effectiveness or, in other words, for stronger expertise and less politics. in the croatian case, the eu accession process has had a decisive influence on the agencification process. consequently, during the last two decades agencies have been created in every functional area, for different reasons, and without a strong legal framework or a strategic document which would introduce them as a particular institutional type. hence, the agencification picture is diverse, not always clear and, in some cases, gets out of the general framework, accommodating for different needs and interests. 36 until now, the only systematic research on agencies in croatia was conducted in 2009 when the first attempt to frame the picture of agencification in croatia was made (musa, 2009). legal analysis of regulations and documents and the questionnaires sent to agencies have served as sources of information on different types of public sector organizations and the agency’s features. similar to classifications developed for other european countries (see greve et al., 1999; pollitt and talbot, 2004; van thiel and cripo team, 2009), croatian public sector organizations are dispersed among different categories, including semi-autonomous organizational units within hierarchical governmental systems, autonomous organizations and public institutions1, voluntary sector organizations, private law organizations (companies), and the outsourcing of public tasks to private firms. applying van thiel & cripo team (2009) categorization, the research has revealed the existence of more than 20 agencies from category 1 (semi-autonomous agencies), 75 agencies from category 2, a significant number of voluntary sector organizations (22 chambers, 13 associations, 6 foundations)2 and about 60 state-owned companies (category 3)3. here we will briefly discuss type 1 and type 2 organizations, usually referred to as agencies4. 2.1. the special case of semi-autonomous organizations category 1 agencies are semi-autonomous organizations without legal personality. these include specialized organizations and organizational units within the government and state administration, performing public tasks at the central level. they have a certain level of decision-making autonomy, are staffed by professionals (experts), and 1 the legal type of public institution is regulated by the law on institutions (1993). the law determines, but in a very general manner, the functions and the structure of the organization, as well as the control mechanisms. they are primarily designed as organizational models for the provision of non-economic services of general interest, such as health, education, sports or culture services (in comparison to public enterprises which provide economic services of general interest). this institutional form is used both for the implementation of public policies (e.g. agency for regional development, croatian institute for public health), as well as for the provision of public services (schools, universities, health facilities, national television). they exhibit features of so-called more autonomous bodies (mabs) (pollitt, 2004). 2 voluntary sector organizations are based on membership (chambers and associations) or assets (foundations or trusts), and are regulated by special laws, often performing delegated public tasks, such as licensing or pricing. 3 companies as persons of private law include 20 public enterprises owned by the state, in the field of traffic, natural resources and finances. in addition, more than 40 other companies, often in partial public ownership, perform some kind of public authority. 4 collegiate bodies, such as councils, boards or committees which are founded by the parliament or by the government for expert support in policy formulation or evaluation, are excluded from the analysis. they lack organizational basis and are often served by the respective ministry. the trend of transforming regulatory councils or boards into regulatory agencies is noticed (e.g. for media, civil aviation, telecommunications), as a special case of quango drift (greve et al., 1999). 37 are organized as structurally distinctive units. not having legal personality, they are subjected to the legal framework of (central) state administration with regard to their internal organization, personnel (recruitment, salaries) and financial management. it follows that the autonomy of their heads to manage the organization and pay their staff is almost non-existent, since general rules on internal organization and the salaries for civil servants apply. moreover, they face strong political control, since their ceos are politically appointed and their position depends completely on the will of the incumbent. they lack collegiate bodies or other types of control or intermediary between the organizations and their political master, which are found in other (legally independent) agencies. among them, three groups can be distinguished: a. government services and offices. only two organizations have the status of government service without legal personality (information and technical support), with 12 offices engaged in policy-making and monitoring in different areas, such as offices for gender equality, social partnership, civil society, prevention of drug abuse or human rights. b. internal organizational units of ministries with special autonomy include several special administrative organizations, such as the tax administration and the customs within the ministry of finance, the police within the ministry of interior, or the directorate for prison system within the ministry of justice. hence, a sort of semiagencification might be observed in the core ministries. these units have special positions within the ministries (interior, finance, and justice), but their importance for the state has negative impact on the degree of autonomy. their structural distinctiveness and special position within the respective ministry is mirrored in the special legal framework of these units, and the special positions of their ceos. they are perceived as ‘ministries within ministries’, based on their function and number of employees, for example the case of the tax administration and customs, which together employ more than 7,500 civil servants, while the rest of the ministry of finance has slightly more than 500 civil servants. additionally, and in contrast to the separation of policy and administrative functions, this group of agencies also performs policy tasks, formulating policy proposals, monitoring and evaluating policies. consequently, there is no need to develop a special policy unit as long as the semi-autonomous organization stays within the ministry. c. central state administration bodies (excluding ministries) consist of eight administrative organizations and two central state offices. the former are bodies with significant specialization regarding the work method and function, which has been traditional in the state domain (e.g. state statistical bureau, state geodetic administration, state weather institute). the latter were introduced in 2003 mainly for the performance of new functions with horizontal implications and coordinating role (state office for e-croatia, state office for strategy and coordination of eu funds). their heads are appointed by the government. these bodies have experienced frequent changes, in terms of their number (ranging from five to fourteen), mergers and splitting-up, and changes in legal status. in 2010, with a total number of 4,000 civil servants, they made up for almost 9% of the central state administration. 38 in sum, the agencies from category 1 (the semi-autonomous organizations) are not perceived as agencies by experts or the general public, especially because of a high degree of integration into the state administration system leading to the restricted autonomy, as well as because of their political leadership. still, in functional terms and in terms of organizational distinctiveness, they behave like agencies, with some special traits – politically appointed individual executive and a combination of policy and implementation work. 2.2. the agencies with legal personality: the ‘regular’ type the legally independent type of agencies (category 2) exerts most of the characteristics identified in agencies (pollitt and talbot, 2004). out of 75 researched agencies in 2009, 63% of them were established by law enacted by the parliament, while others were established by the government. with regard to their legal status, three quarters of agencies have been established in the form of public institutions, and one quarter simply as ‘legal persons’ (or ‘legal persons with public authority’), a sort of a general category used by the legislator in order to avoid the application of a stricter legal framework for public institutions (especially with regard to personnel and ministerial control)5. the fact that a higher percentage of agencies is established by a law enacted by the parliament, and that a quarter of agencies escape government regulation with regard to internal organization and personnel might indicate that the government may not freely decide on life and death of agencies, as well as their internal design and resources. hence, the autonomy, at least formally, is granted to a certain extent. with regard to policy areas, agencies in the economic policy area significantly outweigh agencies in non-economic services, with 60% dealing with economic affairs (finance, economic, rural or regional development, agriculture, traffic and communications, environment, construction), and the rest in the area of non-economic or social services (health, science and education, culture). agencies’ functions include regulation of the specific sector, monitoring the execution of public policies, or executing a specific policy program. their tasks consist of issuing regulations or general rules, establishing standards, monitoring implementation, collecting data, issuing administrative acts (including licensing, certificates etc.), supervision and sanctioning, or executing and financing programs. consequently, with regard to the type of task, it is possible to distinguish between two main types of agencies – regulatory agencies and executive agencies, as well as a third type – expert agencies for policy support6. a. regulatory agencies are established by law (parliament) in the form of ‘legal person with public authority’, whose task is to regulate a specific sector. there are 5 only one half of all agencies are named ‘agency’, while the other half encompasses institutes, funds, centers, registers, offices or bureaus, indicating the type of their primary task. 6 koprić (2009a) in a similar vein distinguishes regulatory agencies, quality and standardization agencies, development agencies and executive agencies. 39 12 regulators, including the croatian competition agency, the croatian postal and telecommunications agency, the croatian agency for financial markets supervision or the agency for medications and medical products. they perform all the elements of regulation (making general rules, issuing individual decisions, supervision of market, sanctioning), but they cooperate with the respective ministry in order to develop authoritative rules (christiansen and lægreid, 2006; gilardi, 2004). regulators’ specific functional features are mirrored in their organizational traits; they are headed by a collegiate body, comprised of professionals appointed by the parliament or by the government on the basis of a public announcement, and they are almost entirely exempted from the legal framework applicable to other agencies. as a consequence, their autonomy regarding internal organization, personnel and financing is higher than in other agencies. their legal, financial or political control is weaker – their decisions can be challenged only before the court, and the (formal) political control consists, apart from ex ante appointments, in annual reporting to the parliament, which is generally considered to be more a formal than a real threat to the agency’s autonomy. the main control mechanism might be found in the expertise of personnel and their professional ethics, and the objective effectiveness in regulating the respective market. consequently, they are indeed formally independent in performing their tasks. b. executive agencies encompass a broad group of agencies in both economic and non-economic sectors, with different tasks, ranging from individual decision-making, licensing, certifying, public registers, financing programs or projects, operational activities, and service provision. there are 41 executive agencies (55%), such as the agency for public-private partnership or the agency for regional development. they exercise a lower level of autonomy and are subjected to higher control, in order to ensure policy implementation7. several subtypes of executive agencies might be identified, such as supervisory agencies, which are created in order to ensure the enforcement of policies by issuing licenses (or certificates) to service providers and supervising them; administering agencies dealing with rights and duties of users on a routine basis without rule-making; and developmental agencies, established for fostering the development of a certain policy area, by financing programs or projects and by supervising policy implementation. c. expert agencies (policy support agencies) focus on policy preparation and monitoring, mostly in the social sphere (health, environment protection, education), such as the croatian public health institute and the croatian food agency. their primary tasks relate to proposing policy measures and planning, standard formulation, producing scientific or expert analyses for the development of a specific policy area or activity, information gathering and dissemination etc. some of them are created as monitoring centers, information centers or coordinating units for other agencies. 7 for example, their employees are often (but not in all cases) public servants, which affects their salaries. the respective ministry often has the power to overrule their individual decisions. 40 they are often given public authority to make decisions in individual cases, keep official registers and similar. they are created in the form of a public institution, which makes them relatively autonomous, but also exempts them from firm political control, which is perceived to be compensated by professionalism. the importance of agencies in the state apparatus has steadily grown during the last two decades, due to the intensified process of agencification. the increase in number was followed by the growth of employment in public agencies. in the mid 2010 there were approximately 12,360 employees in 67 category 2 agencies (184 employees on average), which is about 20 per cent of the whole state administration. however, these numbers are not evenly distributed. there are three large ministries (interior, defense and finance), but most ministries are much smaller. to illustrate the importance of agencies, we can also compare the relative size in terms of work positions in ministries and agencies in their field. for example, in 2010, the ministry of science, education and sports employed 300 civil servants, while ten agencies in the same policy area employed 466 public servants. the ministry of rural development, water management and forestry employed 707 civil servants, while five agencies in the same policy area had almost 1,000 employees. instead of big ministries surrounded by satellite agencies, in most policy sectors in croatia we find relatively small ministries and a number of medium sized agencies (cf. bouckaert and peters, 2004). in financial terms, agencies received €5 billion from the state budget in 2009 (which was in total €17 billion), out of which slightly less than €200 million were spent on salaries. 3. there and back again: the rise of agencies and their sudden fall 3.1. the antecedents of modern agencies the idea of creating organizations with a certain degree of autonomy from the government has a relatively long tradition in croatia. some agencies emerged in the 19th century or in the first half of the 20th century, such as the chamber of commerce (1857), the hydrographical institute (1860) or the employment service (1906). the legal type of relatively autonomous administrative organization was frequently employed during socialist yugoslavia (1945-1990). in that period, there were two main drivers for granting autonomy to public administrative organizations. one was state inclusion in and control of economic activities and the other was the idea of selfmanagement that spread throughout both the economic sphere and state organization8. until the 1950s, the state was the sole owner of the companies, exerting high influence on the management of companies. after 1950, the idea of self-management and subsequent ideas of decentralization, social ownership, connecting interested parties, participation and collective decision-making induced innovations in the public sector, with two of them innovations being particularly important. self-management 8 as yugoslavia was a federation, state authorities were divided between the federation and the six republics. the federation underwent gradual development from a more centralized to a more decentralized state, with dissolution as the final result. 41 was formally introduced in 1950. during the 1950s, councils (savjeti) had a very similar role and composition as their institutional successors, the self-management interest communities (samoupravne interesne zajednice). these ‘communities’ were public organizations for the protection of citizens’ interests with regard to public services (education, health, science, welfare, utilities, telecommunications, social housing, water and power supply, roads and traffic, transportation etc.). they were the forums in which the representatives of the three parties – users, public organizations and employees – decided on a broad range of issues connected to the management and operation of such public services. councils and self-management interest communities were public organizations with substantive real autonomy (ivanišević et al., 1979). a second novelty, especially after the administrative reform of 1971, was the introduction of various forms of administrative organizations with some degree of autonomy within the narrower state apparatus. the reasons for their establishment were specific work methods (inspections, ‘administrative institutions’), necessary autonomy and efficacy (administrations), coordination (commissions), collective decision-making (committees) or special emphasis on professional expertise (institutes). for example, between 1974 and 1990 there was a proliferation of ‘committees’ as a collegiate form of leadership, composed of the representatives of interested organizations appointed by the federal executive council. in 1982, there were 6 committees at the federal level and 14 committees in croatia. another prominent form of relatively autonomous public organizations was the institute, with nine institutes at the federal level and six institutes in croatia in 1982 (pusić et al., 1988, pp. 211-261). many of these institutions have been restructured into organizations that are listed as category 2 agencies (see above). 3.2. the steps in the process of agencification during 1990s, agencies were introduced into the administrative apparatus of the independent state, alongside changes in the political, economic and social systems. different legal forms and types of agencies existed during that time, some of which were inherited from previous times (e.g. institutes for retirement insurance or health insurance, a public health institute), while others were created as a response to the needs of the changed economic and political environment. for example, in the early 1990s three autonomous regulatory type bodies were created for the supervision of the financial market (and later merged into one large regulatory agency), and several executive type agencies for economic and regional development were set up. moreover, the new regulatory needs in the public service were institutionally embodied in boards and collegiate bodies, for example for the regulation of competition, telecommunications and postal services. finally, beside modest use of type 2 agencies, the form of the semi-autonomous organization was frequently applied for accomplishing specialized tasks of the state. after 2001, agencies emerged as a suitable solution for the performance of new tasks, often imposed by eu membership, and as an exit strategy for facing the problems 42 of a rigid administrative system. the data presented in table 1 show that out of 75 category 2 agencies existing in 20099, only 22 were created in the 1990s, while the majority (53 or 71%) were created (or established as agencies) in the period 2001-2009. in other words, while in the period 1992-1999 there were on average 2.75 agencies established per year, in the previous decade the average annual number of agencies amounted to 5.88 agencies (not counting the year 2000), which makes the intensity of agencification twice as high. the highest rate can be found in the period 2003-2009 with 6.28 agencies per year (44 agencies in total) and 2005-2009 with 6.4 agencies per year (32 in total). finally, a sudden shift occurred in the process of agencification in 2010, when only two new agencies were established and 15 agencies were abolished, leading to a decrease of 20%. in sum, the number of agencies changed in a year – from 75 agencies in mid-2009 to 63 agencies in 2011. table 1: the number of agencies created per year in the period 1992-2010 year number of agencies established total year number of agencies established total 1992 1 1 2002 5 31 1993 3 4 2003 7 38 1994 2 6 2004 5 43 1995 2 8 2005 5 48 1996 2 10 2006 6 54 1997 6 16 2007 8 63 1998 3 19 2008 9 71 1999 3 22 2009 4 75 2000 0 22 2010 2 77 (-15) 2001 4 26 2011 1 63 3.3. explaining the trends of agencification and de-agencification the trends of intense agencification in 2001-2009 and de-agencification in 2010 might be explained by the presence of new political and administrative values, represented by four processes: first, democratization and decentralization (since 2000), second, the plea for effectiveness resembling to the new public management agenda (since 2003), europeanization (since 2001, intensified in 2005) and rationalization of the public sector (since the end of 2009). as early as in 2000, the change of the social and political climate towards developed democracy principles, as well as the turn from centralism towards the concept of decentralization, gave room to agencification. the idea that the state apparatus does not have to be governed by the exertion of intense and immediate political control 9 the number of agencies created per year is determined by the analysis of legal acts. possible predecessors of agencies, such as boards, commissions etc., are not included, as well as inactive agencies, agencies in the area of national security and agencies which are not clear type 2 agencies. 43 gave impetus to stronger decentralization, not only by strengthening local and regional self-government, but also by creating decentralized bodies at the central level. hence, during the left-wing coalition rule in 2001-2003, sixteen new agencies were created. next, the ideas of public administration quality in the sense of efficiency and effectiveness and the citizen-centered approach inspired the reform agenda of the center-right government elected in 2003 and 2007. on the one hand, the rigidity of the system and the need for effectiveness and efficiency posed pressures for new public management structures (agencies) and processes (e-government, administrative simplification, and professionalization). on the other hand, european pressures caused the change in legal frameworks making the system, to some extent, more flexible and modern, and adapted to european standards. still, despite its popularity, especially with the 2003-2007 government, the new public management had no programmatic value and strategic framework which would be effectively implemented. the shift towards npm ideas resulted in various initiatives and legal changes, such as the administrative simplification project – administrative guillotine (2004), the civil service law (2003-2005), introduction of the concept of e-government (2005), and later, modernization of the administrative procedure (2008). agencies were established as a means of enhancing the effectiveness and efficiency by exempting new organizations from the legal framework of the general state administration and insulating them from direct political pressure, allowing managers to manage. the strongest normative underpinning for agency creation came from the eu accession process as the creation of autonomous agencies was a formal obligation in the eu-croatia stabilization and association agreement (signed in 2001), to which the political and administrative elites adhered almost religiously, and continued to do so after 2005 when the negotiations for membership started. as shown in table 2, more than two thirds of all category 2 agencies (53 agencies or 70%) were created in the 2001-2009 period, with 32 (43%) agencies established since 2005. moreover, an analysis of 2003-2009 measures which had to be undertaken in order to fulfill the accession requirements, as defined by the government program10, shows that more than one half of the agencies are a matter of preparatory activities for the eu accession (52 agencies or 56%). out of this number, 26 agencies (35%) had to be created in order to satisfy the accession criteria, while 16 agencies (22%) are mentioned in the context of strengthening their administrative capacities, broadening the scope of their activities or changing their internal structure. in sum, two thirds of the agencies were established under the influence of eu accession11. 10 the national program for the accession of the republic of croatia to the european union (npeu) is a strategic and operational plan for the accession of croatia, adopted annually by the government, since 2003. the document contains the measures taken as well as those planned for the following year, according to the functional area (negotiation chapter) and to the bodies involved. 11 however, the ‘europe made me do it’ excuse is often used even when there is no formal eu pressure for institutional change. this driver should therefore be interpreted with caution. 44 table 2: agencies by the time of creation time frame f % f % agencies by time of formation 1990-2000 9 12 22 29,33 inherited agencies (before 1990) 13 17.33 transition period agencies (1991-1999) 2000-2009 21 28 53 70,06 europeanization i agencies (saa 2000-2004) 32 42,66 europeanization ii agencies (negotiations 2005-2009) total 75 100 75 100 total the economic crisis that erupted in 2009 marked a new era in the agencification process leading to a reversal of the trend. the economic downturn and the general social and political crisis expressed through public dissatisfaction with governance at all levels and a chaotic public sector forced the government to rationalize and reorganize the public sector. a decrease of public spending was determined as a key indicator of success, which is also a very useful means of pleasing the angry voters. the economic recovery program of the croatian government adopted in june 2010 set the following goals as the priorities for rationalization of the public sector: the creation of a register of public employees; the decrease of the number of public employees by 5%; and the review of agencies, including the formulation of the criteria for agency creation and control, and redefining the functional scope for the existing bodies by concentrating similar tasks in one agency or ministry (by merging and augmentation). in july 2010, the government adopted the proposal for reorganization of agencies, institutes, funds and other legal persons with public authority, which accentuated an urgent need to abolish (by merger, incorporation or termination) fourteen agencies from different policy sectors, using three basic criteria: the size of an agency measured in the number of employees, their expenditures, the possible functional overlapping or similarities with other organizations12. the eu-induced obligation to create agencies for certain tasks or to enhance the administrative capacity of the existing agencies was set as a negative criterion for the abolition. an immediate consequence of the proposal and subsequent law amendments during the next two months was a 20% decrease in the number of agencies. still, further downsizing remained the target for the government in terms of the announced legislative changes related to the rationalization and modernization of state administration, and so did the proposal’s reluctance to tackle the agencies founded on the basis of obligations towards the eu, which are usually taken for granted. 12 those 14 agencies had 962 employees and their annual expenses went beyond €2 mil, with 20 per cent spent for ‘intellectual services’. this surprising evidence indicates that the agencies which were supposed to serve as specialized expert organizations frequently had to hire outside experts in order to accomplish their tasks. 45 4. matching autonomy with effective control the agency model rests upon the idea of balancing autonomy and control, leaving the agencies sufficient independence to perform their tasks, and simultaneously holding them accountable for their actions. there are different conceptualizations of autonomy and control (verhoest et al., 2010). in general, the autonomous functioning of an administrative organization relates to the relative freedom with regard to its internal management (organization, staffing, financing), as well as its independence in decision-making and, often, policy involvement. it is often balanced by different control mechanisms of legal, financial, as well as political and democratic type. in this section the main features of autonomy and control in croatian category 2 agencies are sketched, with the emphasis on the legal frameworks of particular mechanisms13. with regard to autonomy, croatian agencies have significant managerial autonomy, since they can decide on their internal organization, personnel and financing, escaping the general legal framework which applies to the state and public administration. hence, agencies are not only free to decide on their internal organization, but also only public establishments (if not excluded by law) employ public servants, while other agencies mostly employ regular workers. this means that the recruitment and salaries of the civil servants are determined by law, while other employees fall under the application of the general labor law. thus, the personnel policy in some agencies is closer to human resources management of the private sector, with freedom of the ceos to determine the salaries, and often without public announcement of the vacancies. additionally, when it comes to financial autonomy, most agencies are funded from the state budget. still, some generate a significant amount of revenues by their own activity (by charging fees) or in some cases are completely self-funded, as for example the croatian energy regulatory agency. moreover, four agencies are financed from special taxes or fees (the so-called non-budgetary funds), like the croatian waters. although the agencies decide on the spending of their budgetary revenues, agencies funded from the state budget have a lower degree of autonomy and higher control, especially when it comes to the application of the internal financial control mechanism, which has been obligatory for all public budget users since 2006. still, as most agencies receive funds from the state budget, the budgetary accounting and spending regime applies. when it comes to decision making in individual cases (policy autonomy), most agencies have the authority to decide on the rights and obligations, to license or give certificates, or make authoritative decisions in other ways. still, general rule making and standard setting is a prerogative of regulatory agencies only, as they 13 there is no relevant data on informal autonomy and control. several interviews conducted in different agencies in 2009 showed that some agencies were left on their own, with no interference of the ministry (for example the agency distributing funds for audio-visual arts; or the agency administering eu funds), while others closely cooperated not only with the ministry but also with local governments, which left them open to informal influence. 46 enjoy significantly higher autonomy than other types of agencies. executive agencies usually do not engage in policy making, although they have a say in formulating policy proposals in their area of expertise (in the form of opinion, expert support, or analysis). moreover, policy support agencies are primarily engaged in policy development (giving input in policy formulation, including monitoring and evaluation), but a formal decision remains the prerogative of the respective ministry. the agency model of administrative organization assumes that the need for autonomous functioning is counterbalanced with sufficient and effective control mechanisms. the pillars of agency control in croatia are based on the following mechanisms. first, legal control is exercised via hierarchical supervision by the ministries and/or judicial control. the success of the control mechanisms is related to the general shortcomings in the administrative appeal mechanism and the administrative justice system, which is often slow and ineffective. additionally, control is often in the hands of administrators and judges with no special technical knowledge in the respective area. second, as a political means of control, agencies have to report annually to their founder. however, there are no predefined sanctions for misbehavior, such as overspending, omission to accomplish the delegated tasks or for any other unacceptable behavior. third, participation as a form of political democratic control is prescribed formally in some agencies via participative governance boards, which may leave the agency vulnerable to the pressure (capture) of special interests, instead of citizens’ control. fourth, transparency is based on the (ineffective) law regulating public information, but without special provisions with regard to agencies. public access is ensured through the internet sites of the agencies. fifth, financial control is exercised via regular budgetary mechanisms and auditing, and the internal financial control system (for the agencies financed from the state budget), or external auditing (for the agencies with their own revenues); the sanctioning mechanism includes both criminal prosecution and political accountability to the principal. the analysis indicates a general lack of control over agencies, especially with regard to the ex post control. this relates to the absence of performance control in the public sector in general or other types of ex post control, such as contracts between ministries and agencies. ex ante mechanisms of control are still predominant, meaning that control is based on the legal framework for the particular agency, the procedural requirements and the professional governance structure or political appointments. at the same time, the ex post mechanisms are weaker, restricted mainly to reporting to the principal (in the form of annual reports) and judicial control of (individual) decisions, with both mechanisms having questionable effects. the reliance on ex ante controls is especially problematic in the case of regulatory agencies, in the area of telecommunications, financial markets, data protection or competition protection, where other types of control, beside professionalism14, are weaker in comparison to the executive agencies. 14 political independence based on expert leadership instead of political appointments is a feature only in a minority of agencies. professional boards are found in regulatory agencies; their members are appointed by the founder (parliament and/or government) based 47 for example, the only legal control is the control of the administrative court, which is a lengthy procedure with uncertain result, harming legitimate expectations of the market players. additionally, in other agencies of the executive type that possess legal entity high autonomy levels are not counterbalanced with the requirements of strong professionalism when it comes to governing structures or employment. hence, their control is based mainly on political and hierarchical control via the respective ministries. the result is that in regulatory agencies wide autonomy rests mainly upon the faith in professional standards, while in the executive agencies autonomy is restricted by political control. there are only modest and sporadic attempts to make particular agencies accountable for their results, mainly in financial terms. there is a widespread perception of insufficient or inadequate control of agencies, which creates a negative public opinion, as it has been expressed by the media and civil society. the agencies have become an infected term in the public discourse associated with uncontrolled spending, inactivity and secrecy. together with 576 local and regional self-government units and large public enterprises (some having 12,000 employees), agencies are blamed for being a generator of the economic (and social) crisis and a source of general dissatisfaction with the political elites and their policies. interestingly, only certain regulatory agencies are taken as examples of good governance, with the media headlines applauding their professionalism as well as their resistance to the government pressures, and praising them for keeping things in order in the privatized public sectors. the public attitude towards the agencies also points to a general lack of transparency in public administration. although the 2003 law on the access to public information was recently amended in line with the constitutional amendments of 2010, there is a possibility that the new law will not increase transparency as long as public administration as a whole does not incorporate the idea of transparency and openness as its guiding principles. until then, citizens seeking information will be perceived by administrators as annoying and malicious. 5. legislation as a first step in the institutionalization of the agency model in croatia: learning from experience the main problem of the agencies in croatia relates to the absence of an adequate legal framework which would promote the agency model as a new type of institutional form in the administrative, legal and political system (early warnings in koprić, 2003, p. 479). the sketching of autonomy and control in the present analysis has shown on their expertise, and they cannot be dismissed, except in cases prescribed by law. their independence is ensured by the incompatibility clause, which forbids them to exercise any other type of public authority or to engage in the activities which are related to the agency’s tasks. in executive agencies too, the individual ceo is usually appointed by the founder or by the management board (comprised of politically appointed members), based on expert knowledge and following a procedure of public announcement. still, the fact that professionalism is a prerequisite prescribed by law does not guarantee that the appointment of the executive director will be free from political influences. 48 variability, insufficient legal certainty but also the problem of possible political influences, all related to the inadequate counterbalancing of autonomy with effective control mechanisms. in sum, agencies are not perceived as new organizational forms that require special regulation of their structure and functions, in order to achieve the goals of the agency model. the main evidence is the choice of their legal status by the legislator, who has applied two exit strategies. the (inadequate) legal framework for public institutions (ustanove) (the so-called mabs, see pollitt, 2004) is applied on one group of the agencies, which in practice means that the same autonomy and control arrangements apply for the agency for civil aviation and for a local school. there is no special framework for the other group – they are simply called ‘legal persons’, and their legal framework is left to the legislator to enact each time when an agency is established, which in practice means that the ‘legal person’ is open for ad hoc design (and possible politicization). the absence of an adequate regulatory framework is even more dangerous in case of regulatory agencies. regulatory agencies have great formal autonomy, while their control is mostly based on ex ante control mechanisms for preventing external influences (governance board appointments, conflict of interest clause). however, no clear legal requirements for ex post control, except annual reporting, are included in the legal acts establishing regulatory agencies. in sum, the control mechanisms focused on quality and performance are missing for all types of agencies. negative implications of careless introduction of the agency model, without recognizing it as a new institution, in the country that suffers from all the illnesses related to transition countries, can serve to the other countries as an example of possible threats they should be aware of. a semi-agency model is a more accurate description of the concept, meaning the split of the agency model into two subtypes: one representing regulatory agencies with great autonomy but insufficient formal control; and the other representing executive agencies with lower level autonomy and strong political control (in certain cases, even political misuse). the explanation can be found in the legal, administrative and political environment. the transitional phase of political and administrative development in croatia strongly determines the agency model, with strong politicization, undeveloped control, and inefficiencies in the legal frameworks related to the establishment and design of agencies. however, there are opportunities for improvement in the institutionalization of the agency model in croatia. these improvements need to be made by the adequate legal framework in order to achieve optimal levels of autonomy and control. the existing legal arrangements of state administration have to be adjusted to the new model of administrative organization, and not the other way around. the present situation, when the agency model is simply inserted into the existing political and administrative surroundings proved to be ineffective, and the principals (parliament and often government, but also the public) seem not to have any effective mechanisms to hold the agencies accountable. the phrase ‘regulating the regulators’, with extension to all types of agencies, should be taken seriously. 49 first, a legal framework for the establishment, design, and abolition of agencies should be developed in the form of a systemic law enacted by the parliament. this legal framework should be a part of the policy of agencification reflecting the state’s vision of the public sector and a public administration, based on expert advice. the policy and legal framework for agencies should introduce the agency as a particular model of public administration organization, acknowledging its distinctiveness in relation to the state administration and their special balance of autonomy and control. in formal terms, this also implies the inclusion of special provisions on agencies in the croatian constitution. this step would have a constituting effect for the new institutional form in the croatian legalistic administrative culture (quod non est in actis, non est in mundo). this would also be a first step for ensuring the accomplishment of the new tasks of the regulatory and efficient state in the european and global environment. based on the constitutional provision, the legal framework should pay special attention to the precise legislation of various forms of agencies and their functioning. otherwise, there looms a wide space for politicization, capture and corruption, non-transparent functioning, and misuse of agencies. needless to say all these features have negative impact on the agencies’ efficiency, expertise, and result-orientation. agencies are a useful public management tool if their potentials and advantages are exploited and their deficiencies and weak sides are kept under control. second, in order to ensure professionalism and prevent politicization and nepotism, regulation of the status of employees should determine their status as a sub-type of public servants, including their rights and obligations. there is a constitutional provision granting equal access to public service employment to every citizen, with special regulation for the employees of state bodies and public services that exercise public authority. however, most agencies employ their staff without publicly announcing vacancies. their number and salaries are not made public either. a provision regarding the public servants’ status for all employees should enhance the transparency of employment, raise the professional expertise and ensure control. additionally, the salaries should be related to employees’ expertise and responsibilities, allowing a certain degree of flexibility in order to meet the needs of agencies. in addition to their legal status, special legislation ensuring the quality of staff as well as adherence to ethical standards is necessary. ethical standards can prevent all sorts of unethical behavior and conflicts of interest, lower the degree of capture, reduce and prevent corruption etc. special attention should be given to the incompatibility clauses as well as the formal requirements for appointing the members of agencies’ governance structures. for now, only a few regulatory agencies have such formal rules. the general mechanism of the conflict of interest should be made more effective, with adequate sanctioning of those breaching the regulations. third, extensive capacity building and depoliticisation of the independent regulatory agencies is necessary in order to achieve their independence. the provisions related to the appointments of governance boards and ceos should be clear in order to ensure independence. they should have efficient mechanisms of executing decisions. 50 having in mind the european policy towards the services of general economic interest, such agencies have and will continue to have an important role in ensuring competitiveness, development and consumer protection on the respective markets (telecommunications, water, gas and power supply etc.). fourth, ex post control mechanisms should be put in place, ensuring effectiveness and accountability of agencies. the first claim relates to an adequate mechanism of legal control, in order to ensure efficiency, speediness and quality of decisions. it relates to legal control of the decisions made by the respective ministries, and also, if not more importantly, by the administrative courts. the ongoing reform of the administrative justice system has failed to acknowledge the special character of the decisions made by regulatory agencies, and the legislator may have to change the newly enacted law in order to find a better solution for the legal control of their decisions (see also popović and maričić, 2011). the powers of the court to review their decisions should correspond to the agencies’ level of autonomy and expertise. the decisions of regulatory agencies in individual cases should be reviewed only with regard to the procedural requirements, having in mind that due to their expertise, the regulators should have the final say in the matter in their field. nevertheless, individual decisions of executive agencies might be subjected to the appellate procedure in the respective ministry, with the court exercising the final check of legality of their decisions. the second ex post control mechanism, based on clear financial management rules, relates to a more thorough financial control, including the state audit office, external audit and internal financial control. for that purpose, the legal framework of agencies should precisely prescribe their obligations. third, political control via annual reports can be strengthened by the inclusion of performance contracts which could give the principal clear criteria for measuring the success of an agency. the legal framework should regulate the contractual obligations of agencies in the form of concrete targets that should be met. performance contracts and similar instruments indicating the desirable level of agencies’ functioning, their effects and outputs, should be introduced and made obligatory in order to achieve the purpose for which the agency was created. this also requires special skills and knowledge on the side of the ‘parent ministries’, as well as an effective sanctioning system for underachievers. finally, the democratic control should be ensured via general regulations granting public access to documents and public information and the rules enhancing transparency, especially when it comes to financing and decision-making processes (such as reports on particular issues related to the agency – spending, employees, activities, results achieved). moreover, legal requirements regarding the participation in governance structures and in the consultation processes would prevent technocratic closeness and the culture of secrecy, which often characterizes the agencies and which might harm their reliability and respectfulness. finally, the proliferation of agencies creates pressures towards better coordination both in the public administration system as a whole and within particular policy sectors. at this point, lack of coordination is a hot issue in the croatian public administration. 51 it requires a strategic approach, where coordinating structures and instruments in the system are established and introduced through a legislative procedure. the central government is weak and lacks effective means for ensuring policy coherence and achieving the goals of the political system. this is visible in the frequent changes of policy goals and laws, as well as in the execution of administrative tasks. if the above recommendations were followed, the institutionalization of the agency model would result in greater effectiveness and control of agencies, and would ensure better functioning of the whole administrative system. 6. conclusions to sum up, the normative idea behind the process of agencification in croatia during the 2000s can be found in the new public management ideas of effectiveness and efficiency through specialization and expertise. also, to a lesser extent, it originates in the concepts of decentralization and depoliticisation with a very strong influence from the eu, which was perceived not only as a driving force of but also as an excuse for agency creation. the examples are regulatory agencies in the energy sector, telecom or traffic, whose establishment and/or design is a part of the acquis, and also a number of executive agencies for ensuring the performance of tasks related to european issues (e.g. the central agency for eu funds) or adherence to european sectoral legislation (in agriculture, work conditions etc.). the 20 per cent decrease in the number of agencies in 2010 might be only the beginning of the rationalization process. presumably, there will be no significant growth in the number of agencies in the coming years, but a sharp decrease is also not very likely. the eu factor is one of the reasons; the agencies related to the accession requirements are ‘untouchable’, although the pressure to create agencies ceased at the end of the accession negotiations. internal resistance and political negotiations are additional factors that diminish the likelihood of intensive de-agencification. since the idea of autonomy of agencies was advocated as a leading force behind intensive agencification, the corresponding concept of control was not sufficiently taken into account. as beblavý (2002) stated, the agencies in transitional countries, which were granted significant autonomy, ‘often become players in their own right that can resist changes they dislike’. still, the severity of the crisis forced the government to increase the effectiveness and efficiency of the public sector. the 2009 economic crisis resulted in re-examination of the chaotic situation and the problem of control, especially in terms of financial management and effectiveness. the creation of a general legal framework for agencies was announced as a form of ex ante control. the ex post control is still based on the administrative court review, which is currently under reform, and on annual reports to the founder. moreover, performance management and quality measurement indicators have not been extensively introduced. this is a consequence of the failure to acknowledge agencies as a distinctive phenomenon in the croatian public sector until 2010, by both the politicians and the civil servants. it is reasonable to expect that in the years to come the issues of effective control 52 over agencies as well as the problem of coordination will be placed high on the agenda of the croatian public administration, along with the rationalization of the public sector. for that matter, the adequate legal framework could be an instrument of institutionalization of the agency model, based on the appropriate regulation of autonomy and control arrangements. still, the agencies do not exist in a vacuum; they are a part of a broader political and administrative system and the success of the agency model rests upon other factors: the capabilities of ministries to design and monitor policies and coordinate them effectively; the overall transparency of both political and administrative behavior; and a high degree of professionalism in the public sector in general. there are some good examples of the functioning of agencies, but they are not attributable to the good legal design of the agency model, but to the leadership and environment particularities. references: 1. beblavý, m., ‘understanding the waves of agencification and the governance problems they have raised in central and eastern europe’, 2002, oecd journal on budgeting, vol. 2, no. 1, pp. 121-139. 2. bouckaert, g. and peters, g.b., ‘what is available and what is missing in the study of quangos’, in pollitt, c. and talbot, c. (eds.), unbundled government, london, new york: routledge, 2004, pp. 22-49. 3. christensen, t. and lægreid, p. (eds.), autonomy and regulation: coping with agencies in the modern state, cheltenham: edward elgar, 2006. 4. gilardi, f., ‘institutional change in regulatory policies: regulation through independent agencies and the three new institutionalisms’, in jordana, j. and levi-faur, d. (eds.), the politics of regulation, cheltenham: edward elgar, 2004, pp. 67-89. 5. goetz, k., ‘the new member states and the eu: responding to europe’, in bulmer, s. and lequesne, c. (eds.), the member states of the european union,oxford: oxford university press, 2005, pp. 254-258. 6. greve, c., flinders, m. and van thiel, s., ‘quangos – what’s in a name? defining quangos from a comparative perspective’, 1999, governance, vol. 12, no. 2, pp. 129-146. 7. ivanišević, s., pavić, ž. and ramljak, m., samoupravljanje, zagreb: školska knjiga, 1979. 8. koprić, i., ‘managing performance in the western balkan civil service structures’, regional centre for public administration reform, 2011, [online] available at http:// www.rcpar.org/contents_en.asp?id=471, accessed on june 16, 2011. 9. koprić, i., ‘contemporary croatian public administration on the reform waves’, paper presented at the ipsa xxi world congress of political science ‘global discontent? dilemmas of change’, santiago de chile, july 12-16, 2009. 10. koprić, i., ‘od javnih službi do službi od općeg interesa: nova europska regulacija i njezin odraz u modernim upravnim sustavima’, 2009a, in drugi skopsko-zagrebački pravni kolokvij, zbornik radova, skopje: pravni fakultet justinijan prvi, 2008, pp. 27-49. 11. koprić, i. ‘modernisation of the croatian public administration: issues, proposals and prospects’, in koprić, i., (ed.), modernisation of the croatian public administration, zagreb: faculty of law and konrad adenauer stiftung, 2003, pp. 477-491. 53 12. koprić, i., musa, a. and đulabić, v., ‘europski standardi regulacije službi od općeg interesa: (kvazi)nezavisna regulacijska tijela u izgradnji modernog kapitalizma’, 2008, hrvatska javna uprava, vol. 8, no. 3, pp. 647-688. 13. musa, a., ‘europeizacija i agencijski model javne uprave’, doctoral dissertation, faculty of law, university of zagreb, 2009. 14. pollitt, c. and talbot, c., (eds.), unbundled government. a critical analysis of the global trend to agencies, quangos and contractualisation, london/new york: routledge, 2004. 15. pollitt, c. and bouckaert, g., public management reform: a comparative analysis, 2nd edition, oxford: oxford university press, 2004. 16. pollitt, c., ‘castles built on sand? agencies in latvia’, in pollitt, c. and talbot, c., (eds.), unbundled government. a critical analysis of the global trend to agencies, quangos and contractualisation, london/new york: routledge, 2004, pp. 283-296. 17. popović, n. and maričić, d., ‘postupci pred nezavisnim regulatornim tijelima i novi zakon o upravnim sporovima’, in koprić, i. (ed.), europeizacija upravnog sudstva u hrvatskoj, zagreb: institut za javnu upravu, forthcoming. 18. pusić, e., ivanišević, s., pavić, ž. and ramljak, m., upravni sistemi, zagreb: narodne novine, 1988. 19. van thiel, s. and cripo team, ‘the rise of executive agencies: comparing the agencification of 25 tasks in 21 countries’, paper presented at egpa conference, malta, september 2-5, 2009. 20. verhoest, k., roness, p.g., verschuere, b., rubecksen, k. and maccarthaigh, m., autonomy and control of state agencies: comparing states and agencies, basingstoke: palgrave macmillan, 2010. 5 abstract the article refers to the problem of incompatibilities and conflicts of interests of public officials in the romanian society and its severe consequences upon the fulfillment of the conditions of the european commission verification and cooperation mechanism’s benchmarks by romania. the present study proposes a critical analysis of recent legislative changes of the rules of conduct for mps in romania, relatively to the regime of incompatibilities and conflicts of interests, emphasizing the manner in which the parliament constantly tries to limit the prerogatives of the national integrity agency (nia). special attention is paid to the analysis of incompatibilities applicable to the mps who are simultaneously government members. the study follows several steps: an introduction, a critical analysis of the new legislation, focusing on the new rules of conduct for mps, an analysis of the most important case studies and conclusions. the introduction describes the problem of incompatibilities and conflicts of interest of mps and members of government reflected in the recent cvm report and the position of the national integrity agency. the analysis of the legislation presents a critical evaluation of the new rules of conduct for mps, adopted in 2013 by the romanian parliament; then, analyzing the most important and recent case studies, general patterns in the field of procedures of incompatibilities and conflicts of interests emerge. conclusions propose legislative solutions in terms of raising the standards of public integrity. keywords: incompatibility, conflict of interests, public integrity, national integrity agency, romania. public integrity and new rules of conduct for romanian mps: a romanian case study cynthia carmen curt cynthia carmen curt assistant professor, phd, political sciences department, faculty of political, administrative and communication sciences, babeș-bolyai university, cluj-napoca, romania president of the national council of integrity, bucharest, romania tel.: 004-0264-431.505, extension 6226 e-mail: curt@fspac.ro transylvanian review of administrative sciences, special issue, pp. 5-25 6 1. introduction the effectiveness of anti-corruption reforms is directly related to the political will and political commitment to democratic reforms, in terms of good governance (johnston and doig, 1999; grindle, 2007). the development of integrity standards in public life is one of the key instruments in ensuring trust in public institutions and good governance (danileţ, 2009; oecd, 2011). according to lord nolan’s seven principles of public life (committee on standards in public life, 2005), ‘holders of public office should not place themselves under any financial or other obligation to outside individuals or organizations that might influence them in the performance of their official duties’. one of the main steps in maintaining integrity in public life is managing conflicts of interest and incompatibilities; further on, establishing the asset and interests declarations for public officials is an important mechanism to prevent conflicts of interest (oecd, 2011). according to some authors (nicholls et al., 2011, p. 404) conflicts of interest can be an indicator of corruption or lack of integrity. in recent years, the romanian national integrity agency (nia) imposed itself as a model of good practice in strengthening public integrity standards and was well appreciated in european commission’s cooperation and verification mechanism (cvm) reports. in the last cvm report (january 2013) worries were expressed related to the fact that ‘nia’s reports against ministries and senior officials did not lead to their resignations’ and the cvm report mentions it is important that ‘the parliament should build on new rules to adopt clear and objective procedures to suspend mps subject to negative integrity rulings or corruption convictions’. also, the cvm report emphasizes that it is important ‘to clarify that nia remains the sole authority tasked with the verification of potential incompatibilities of elected and appointed officials’. this article analyses the attempts of mps to politically limit the attributions of the national integrity agency by establishing new rules of procedure regulating incompatibilities and conflicts of interest. in the same way, the study analyses the most important cases of mps and members of government in situations of incompatibilities and conflicts of interest, concluding upon the quality of the new mps’ rules of conduct, the parliament and government’s response to the respect of the judicial decisions and the rules of law. in this respect, the study proposes de lege ferenda solutions. the new provisions of the law regarding the statute of deputies and senators constituted a recent and controversial legislative procedure. new texts were adopted first on january 22, 2013 by the two chambers of parliament. however, the legislative procedure was a tedious and sinuous enactment: the new texts have represented, consecutively, the request for review made by the president, respectively the objections of unconstitutionality to the constitutional court. during these procedures the parliament called into question the very concept of dissuasiveness of the sanctions deriving from the incompatibility regime for mps and tried to introduce new texts supposed to make inapplicable certain procedures before the national integrity agency and, also, tried to restrict nia’s special competencies related to mps’ incompatibilities. after six 7 months of parliamentary procedure, after two presidential requirements of revising the law and three constitutional court’s decisions amending the texts adopted by the parliament, the modification of law no. 96/2006 is definitive, being re-published in the official journal of romania on july 24, 2013. 2. analysis of legislation 2.1. incompatibilities regarding the parliamentary mandate incompatibilities are constitutional mechanisms to protect the independence of the parliamentary mandate and prohibit the overlapping of the mp mandate with another public position (constantinescu et al., 2004, p. 29), ensuring the protection of the parliament against the influence of the government or any private interest (constantinescu and muraru, 1999, p. 91). the mp is obliged to opt between the parliamentary mandate and the public or private position, rendered incompatible with the mandate (deleanu, 2006, p. 598). the institution of incompatibility is the public interest’s response to the need of preventing conflict of interests occurring during the exercise of public offices and functions, in compliance with the principles of neutrality, integrity, decisional transparency and public interest supremacy (a rt. 71 of law no. 161/2003; decision of the constitutional court no. 876 of 28 june 2011). the legislative nature of the incompatibilities of the parliamentary mandate is synthetically presented by the constitutional court in decision no. 972 of 21 november 2012, which emphasizes that the ‘incompatibility’ has a ‘relative nature as it circumscribes only to certain public offices or to the exercise of certain activities – articles 81 and 82 of law no. 161/2003, and has an imperative nature due to the fact that it is ‘public’ and is therefore mandatory for all public authorities’. general incompatibility, provided by the constitution (art. 71), implies that ‘no one can be simultaneously a deputy and a senator’, being instituted a type of incompatibility that entails compliance with the principles of bicameralism (deleanu, 2006, p. 598; art. 14 of law no. 96/2006). other types of incompatibilities with elected offices refer to the incompatibility of exercising the mandate of mp in romania and that of member of the european parliament (art. 16, paragraph 2 of law no. 96/2006) or with the office of president of romania (art. 84, paragraph 1, constitution of romania). moreover, the senators and deputies’ statute institutes the incompatibility of the parliamentary mandate with non-elected offices, more exactly ‘with the positions and the activities of the persons who, according to their statute, cannot be members of political parties’ (art. 16 paragraph 1 of law no. 96/2006). the deputy or the senator mandate is incompatible with any public office granted by a foreign state, except those offices provided by the law through the agreements and conventions to which romania is a party (art. 16 of law no. 96/2006). 8 2.2.1. members of parliament who simultaneously function as members of the government constitutional incompatibilities are the general incompatibilities of the parliamentary mandate that include the incompatibility between the parliamentary office and any other public office of authority, apart from that of member of the government: ‘the quality of deputy and senator is incompatible with any other public office of authority, except that of member of the government’. as an exception to the general regime of incompatibilities, art. 71 of the constitution specifies that ‘the members of parliament can also be members of the government’. criticised for being at odds with the principle of separation of powers (giquel, 1995, p. 678), it is nonetheless a feature that characterises the parliamentary political regimes (drăganu, 2000, p. 272; alder, 2011, p. 325). 2.2.2. european court of human rights jurisprudence the european court of human rights (echr) has established that the imposition of incompatibility for elective public office is not contrary to the convention for the protection of human rights and fundamental freedoms (case lykourezos vs. greece, 2006; case hirst vs. the united kingdom of great britain, 2005). in the case of lykourezos vs. greece (2006, §21-§37), the court classifies the incompatibilities of the parliamentary office starting from standards regarding compliance with the principle of separation of powers, the principle of the parliamentary mandate autonomy, the principles concerning prevention of the conflicts of interest, and the principle that a mp must commit himself or herself to the duty of meeting the terms of his or her parliamentary mandate, exercised in the general interest of the nation. characteristic of political regimes marked by a rigid separation of the executive from the legislative, in the presidential political regimes, and even in semi-presidential ones, the rule stipulates the incompatibility of the office of mp with any executive authority function (president of the state, prime minister or minister) (art. 23, constitution of france; art. 50, constitution of belgium; art. 57, constitution of netherlands; art. 62, constitution of norway; art. 6, chapter iv, constitution of sweden). despite having been criticized for the fact that it might represent an impediment to efficient collaboration between the executive and the legislative (muraru and tănăsescu, 2006, pp. 233-234), this system rests on arguments that refer to warranting the separation of the legislative from the executive, since members of the government could be mps too, this induces confusion between the two powers, namely the idea of subordination. france adopted it through the constitutional reform of 1958 with the firm specification that the members of the government cannot be simultaneously ‘controllers and controlled’ (giquel, 1995, pp. 628-629). it was stipulated that the members of the government who are at the same time mps belong simultaneously both to the legislative and the executive; in this respect, they are entitled to control and to oppose their parliamentary will to the prime minister’s projects, which would be an act of interference of the legislative in the executive. otherwise, they would sway parliament’s vote 9 in favor of the government’s projects (tofan, 2008, p. 175). from another perspective (muraru and tănăsescu, 2006, pp. 233-234), the concentration of power into the hands of the executive would render parliamentary control inefficient and turn it into ‘noncontrol’. similar provisions are found in the constitutions of finland (art. 63), austria (art. 56), holland (art. 57), and portugal (art. 154). instead, the parliamentary political regimes characterized by a flexible separation of powers and a functional cooperation between the executive and the legislative, rest on the compatibility between the office of mp and that of the member of the government, following the british model, where the ministers are all members of the house of commons, or (in fewer cases) of the house of lords (tofan, 2008, p. 175). countries such as germany, spain, italy, poland, and romania have adopted the british model and apply similar solutions (case lykourezos vs. greece, 2006). from this study’s perspective, integrity standards seem to be different for a mp who is at the same time a member of the government. the distinct constitutional nature of the two mandates – the representative, parliamentary mandate, and the appointed, ministerial mandate – is translated into different regimes of incompatibilities. in consequence we can witness situations when the minister declared incompatible resigns or is dismissed from the government, but continues exercising the parliamentary mandate. the main cause of this juridical and political paradox resides in the impossibility of coordinating the constitutional provisions at the infraconstitutional level and also in the interpretability and incoherence of the deputies and senators’ statute, respectively of the regulations regarding the organization and functioning of the two chambers of parliament. mps’ statute does not provide a unitary system of regulations, consistent with the substance of the incompatibilities of the parliamentary mandate, but, quite the reverse, it generates a procedure that runs in parallel to the other organic regulations that refer to the substance of the field of incompatibilities1. the legal infraconstitutional incompatibilities are those incompatibilities that are regulated by the organic laws. 2.2.3. the deputies and senators’ statute regulates incompatibilities in economy2 the cases of incompatibility in economy are stipulated by the deputies and senators’ statute; the statute mentions that other incompatibilities can be regulated by or1 the law of the enforcement of incompatibilities and conflicts of interest is regulated by arts. 20 – 26 of law no. 176/2010 on the integrity in the performance of public offices, for amending and supplementing law no. 144/2007 on the establishment, organization and functioning of the national integrity agency, as well as for amending and supplementing other regulations, book i, title iv, chap. iii of law no. 161/2003 on measures to ensure transparency in the exercise of public offices, public positions in the segment of business as well, corruption prevention and sanctioning. 2 ‘a) president, vice president, director, manager, administrator, board member or auditor of companies, including banks or other credit institutions, insurance companies, and financial and public institutions, b) president or secretary of general meetings of shareholders or 10 ganic law. the same incompatibilities are provided also by art. 82 of law no. 161/2003, except of an additional reference made to the ‘incompatibility of the parliamentary mandate with the offices of president, vice-president, secretary, and financial officer of trade union federation and confederation’ (art. 82.2.h). the deputies and senators’ statute also includes references to interdictions of advertising, showing in this respect that the use of a person’s name together with the quality of deputy or senator is prohibited in any activity that has commercial, financial, industrial, or any similarly lucrative purposes (art. 16, law no. 96/2006). even though incompatibilities refer principally to public authority offices, they are nonetheless compatible with the parliamentary mandate in the case of private positions. law no. 161/2003, art. 82^1 stipulates that freelancing in the legal profession entails certain limitations3. such cases of incompatibly seek to avoid the situations in which the exercise of the parliamentary mandate, could be in conflict with the elected member’s professional or private interests (ardant, 1996, p. 513). the office of deputy and senator is consistent with activities performed in didactic, literary and artistic domains, or in scientific research (art. 82.3, law no. 161/2003). the rules that refer to the incompatibilities of the parliamentary mandate also appear stipulated in the rules of organization and functioning of the two chambers of members in companies referred to in point a), c) state representative of the general meetings of the companies referred to in point a), d) manager or member of the board of autonomous administrations, companies and national corporations, e) individual trader, f) member of a group of economic interest as defined by law’(art. 15, deputies and senators’ statute); 3 ‘(1) the deputy or senator who, while exercising the parliamentary mandate, intends to exercise the profession of lawyer cannot plead in cases which are judged by judges or courts nor can they offer legal aid in offices subordinated to these courts. (2) the deputy or senator in the situation referred to in paragraph (1) cannot provide legal advice to accused or defendants but may assist the court in criminal cases: a) corruption offenses, offenses assimilated to corruption offenses, offenses directly related to corruption offenses and offenses against the european communities’ financial interests under law no. 78/2000 on preventing, discovering and sanctioning corruption, as amended and supplemented, b) offenses under law no. 143/2000 on combating illicit drug trafficking and consumption, as amended and supplemented, c) offenses of trafficking in persons and offenses related to human trafficking, under law no. 678/2001 on preventing and combating trafficking in persons, as amended and supplemented, d) money laundering offense provided for in law no. 656/2002 on preventing and sanctioning money laundering, as amended, e) offenses against state security, provided in art. 155-173 of the penal code, f) that prevents justice offenses provided for in art. 259-272 of the criminal code, g) crimes against peace and humanity, set out in articles 356-361 of the criminal code. (3) the deputy or senator in the situation referred to in paragraph (1) cannot advocate civil or commercial cases against state authorities or public institutions, national companies or the national societies in which they are parties. also, they cannot plead the romanian state lawsuits in international courts. (4) the provisions of paragraphs (1) – (3) do not apply in cases where the lawyer is party to the proceedings or assisting or representing the spouse or relatives up to the fourth degree.’ 11 parliament4. similar provisions of ‘economic incompatibilities’ are present in austria, france, greece, italy, and portugal (venice commission, 2012, pp. 19-21) also, in poland (art. 107-108, constitution), and latvia (art. 32, constitution). conform to the infraconstitutional legislation, the legal specialized competence of making decisions with respect to the incompatibility conditions that refer to the persons who fulfill public functions and hold public offices is rightfully specific to the national integrity agency (nia), reason for which this institution was created (art. 8, law no. 176/2010)5. 2.2. the conflicts of interests conflicts of interests are not regulated at constitutional level, but through infraconstitutional rules (decision of the constitutional court no. 81/2013), although, the explanation of stipulating incompatibilities at constitutional level resides in the public interest’s need to prevent conflicts of interests in performing public functions and offices. the conflict of interests in the administrative sphere, referring to mps as well, is established by organic law, respectively by law no. 161/2003 concerning transparency in public offices. ‘the conflict of interests refers to the situation in which the person who performs a public office or function has a private patrimonial interest, which could influence the carrying out in an objective way of his or her duties under the constitution or of any other normative activities’ (art. 70). the attempt to regulate the conflict of interest as a disciplinary violation within the deputies and senators’ statute has been pronounced non-constitutional, due to the nature of the penalty. the constitutional court interpreted the exclusion from the chamber for a period not exceeding six months, as a sanction for conflict of interests, being in discordance with the nature of the parliamentary mandate, which must be exercised continuously: ‘participation in the sessions (…) represents a duty specific to the parliamentary mandate’. in terms of the criminal law, the conflict of interests was regulated by law no. 278/2006.6 as a result of the examinations carried out by nia, a number of 22 mem4 the senate regulation, published in the official journal of romania no. 948 of 25 october 2005, regulates in articles 177 and 178: ‘conflict of interests, determination of incompatibilities and other prohibitions’, resuming the provisions stipulated in law no. 161/2003 on parliamentary incompatibilities. the chamber of deputies regulation, published in the official journal of romania no. 762 of 13 november 2012, at art. 198-200, section 2 ‘incompatibilities’, also regulates, by resuming the provisions stipulated in the constitution, some legal incompatibilities with the statute of deputies and senators, law no. 96/2006. 5 ‘the agency’s aim is to ensure integrity in the exercise of public functions and offices and to prevent institutional corruption by assigning responsibilities in the evaluation of the declarations of fortune, of the data and information about fortune as well as the patrimony modifications that have occurred, of potential incompatibilities and conflicts of interest that can affect the persons mentioned in art. 1 during their mandate in a public function and office’. 6 art. 253: ‘the public official’s undertaking who, in the exercise of his/her duties, fulfills a function or participates in the making of a decision that has brought a direct or indirect mate12 bers of parliament were found in conflicts of interest7 between the 2008-2013 legislatures. furthermore, nia completed a number of three evaluation reports against mps who, at that time, held ministerial offices, too8. moreover, one of the mps with evaluation report for conflict of interests (and incompatibility) issued by nia was appointed minister in 2012. the parliamentary mandate of mps found in conflicts of interest by nia cannot be terminated according to actual constitutional provisions. it is recommendable to take into consideration the stipulation of the conflicts of interest at constitutional level, similarly to incompatibilities; practically, incompatibilities are stipulated in order to avoid conflicts of interest. we have seen that the regulation of conflicts of interest by the law establishing the legal status of deputies and senators failed. the constitutional texts should provide the framework for dissuasive sanctions for infringements of norms related to the conflict of interests of mps. we can find similar provisions in the constitution of hungary (art. 4 (c), cap. ‘the parliament’). 2.3. incompatibilities regarding the members of the government art. 105 of the constitution stipulates: ‘the function of member of the government is incompatible with another public function of authority, except that of deputy or of senator. additionally, it is incompatible with any function of professional representation paid by a trading organisation’. hence, the incompatibilities regarding the ministerial office refer in principle to the public function of authority, as they appear in law no. 161/2003 on transparency in public offices, but also incompatibilities with professional representation positions remunerated by a trading organisation9. the incomrial benefit to that person, to their spouse or to a close or remote relative of theirs up to the second degree or to another person with whom they have been in business or trade relationships over the last 5 years, or who has benefited them with services or assistance of any kind, shall be punished with imprisonment from 6 months to 5 years and with the prohibition to hold any public office on maximum duration. the provisions of paragraph 1 shall not apply to the issuance, approval, and adoption laws’. 7 for details see www.integritate.eu. from all 22 cases of mps in conflicts of interests, the administrative conflicts of interest are still pending in courts, and the criminal conflicts of interest are pending prosecution. 8 in two of the cases, the prosecutor’s office decided not to prosecute (but one is also an administrative conflict of interest and pending courts of law), and one is still pending prosecution. 9 art. 85 of law no. 161/2003, on some measures to ensure transparency in the exercise of public offices, of public functions in the segment of business as well, on corruption prevention and sanctioning provides: ‘(1) the government membership is incompatible with: a) any other function of public authority, except that of deputy or senator or in the case of other circumstances stipulated by the constitution; b) a function of professional representation paid by a trading organization; c) the offices of president, vice president, director, manager, administrator, board member or auditor of trading companies, including banks and other credit institutions, insurance companies, and financial and public institutions; d) the function of president or secretary of general meetings of the shareholders or of the members of 13 patibility regime for the ministerial office is of a more restrictive nature and it refers to private positions inclusively. the romanian legal regime of incompatibilities with the professional representation functions has been inspired by the french model10 and seeks to avoid putting either private or professional pressure on the office of member of the government. the exceptions refer to didactic positions or activities, scientific research, and literary and artistic production.t he chamber of deputies’ regulation introduces in art. 198.2 a number of specific incompatibilities with managerial and representational positions within the internal bodies of the chamber of deputies and the function of member of the government: ‘the members of the government may not hold positions in the standing bureau, in the commission offices, in the european affairs committee, may not be members of parliamentary delegations, and may not be leaders of parliamentary groups’. 2.4. financial transparency in the parliamentary mandate. declarations of assets and interests the imperative conditions of integrity and transparency in exercising public functions and offices is conducive to necessity of financial transparency in exercising those public functions and offices. mps and the members of government are required to declare their assets and to submit statements of interest, at the beginning of their mandate, update these statements during their mandate, as well as at the end of the mandate. according to law no. 96/2006, the mps are required to submit declarations of assets and interests11. the control of the asset declarations aims at the identification of the situations in which the property has been acquired illegally, situation qualified by the legislation as incompatible with a public office or public function. incompatibility can also be incidental as a result of the application of the legislative provisions on asset control, representing the confirmation of a significant difference, following the evaluation of the property declaration12. the companies referred to in point c); e) the function of state representative in the general meetings of the companies referred to in point c); f) the position of manager or of member of the board of autonomous administrations, companies, and national companies; g) the quality of individual trader; h) a member of an economic interest group; i) a public office entrusted by a foreign state, except those functions specified in the agreements and conventions to which romania is a party.’ 10 for this purpose, art. 23 of the constitution of france. 11 law no. 96/2006 on the deputies and senators’ statute: ‘after the legal meeting of the chambers and before the validation of the mandate, each deputy and each senator shall submit his or her wealth statement as provided by the law’ (art. 4). furthermore, art. 19 stipulates the provision relating to the mandatory submission of the interests statement. ‘the deputies and senators are obliged within 15 days from validation to submit to the secretary general of the chamber whose members they are the affidavit of interests, in accordance with the law’. 12 art. 17, law no. 176/2010: ‘the person whose declaration of assets has been assessed and, as a result, significant differences have been identified, is found incompatible in the line of art. 14 moreover, the penalty of incompatibility applied to a person who occupied an eligible position represents the interdiction of the person in question to occupy that position for a period of three years after the termination of the mandate. if that person has been released or removed from his or her office as a consequence of determining the incompatibility, he or she is deprived of the right to fulfil any similar public function or office for a period of three years, with the exception of elective services. the sanctioning of the incompatibility also refers to the annulment of documents issued, adopted, or executed in violation of the law of incompatibilities. in consequence, the asset declaration control must be effective and independent of any pressure, political or of any other nature, or else it can ‘become a fake form of ‘morality’ and, more seriously, a certification of credibility’ (deleanu, 2006, p. 251). 3. case studies 3.1. incompatibility procedure for members of parliament the constitutional sanction for incompatibility of the parliamentary mandate is its termination. according to the new provisions of law on the legal status of deputies and senators, termination of parliamentary mandate occurs as follows: ‘(a) on the date stated for incompatibility resignation, submitted to the standing bureau of the chamber the member of which is the deputy or the senator; (b) on the date established for the resolution of the chamber the member of which is the deputy or the senator, and which determines the incompatibility; (c) on the date of the final and irrevocable decision of the court through which the appeal to the national integrity agency report that established the incompatibility is rejected; (d) at the expiry of the 15 days period from the date of acknowledgement of the national integrity agency’s evaluation report during which time the deputy or the senator may litigate in the administrative court. the acknowledgment is made by the deputy or the senator in question who addresses the report to the national integrity agency under signature of receipt or, if the receipt is declined, through plenary statement made by the chairman of the chamber of which the senator or the deputy is member’ (art. 7). the mp in incompatibility will have to choose, by law, between the parliamentary mandate and the function that makes him or her incompatible. otherwise, according to the constitution, the ex officio mandate termination intervenes. the parliamentary procedure of declaring the incompatibility of a mp is regulated by law no. 96/2006 regarding the mps statute (art. 18) and the provisions of the regulations of function and procedure of the two chambers of parliament. thus, two premises are stipulated: the situation of mp who is in incompatibility at the beginning of the mandate, and the situation when incompatibility occurred during the parliamentary mandate. 18’s provisions’. further on, related to the significant difference of asset on the duration of the public functions and offices mandate, and the revenues obtained in the same period is, according to art. 18 of the same law, ‘the difference that exceeds 10,000 eur, or the equivalent in ron of the same amount’. 15 3.1.1. the deputy or senator, who at the beginning of their mandate is in one of the situations of incompatibility provided by law, shall notify within 15 days the standing bureau of the chamber to which he or she belongs. after the expiry of this term, the deputy or senator will have to opt between the deputy or senator mandate and the function or functions which make him/her incompatible, within 30 days, resigning accordingly his or her option. after the expiry of 30 days, if the deputy or the senator has not communicated his or her option, he or she ‘remains in incompatibility’. the next step consists in a procedure made by the competent standing committee, through which the cases of incompatibility are analyzed: the committee will prepare a report within 15 days after its notification, requesting nia to state its position. the agency will respond within five days. the committee’s report is submitted to the permanent bureau, who will inform the deputy or the senator. subsequently, the chamber bureau submits for approval a draft resolution establishing the state of incompatibility and termination of the parliamentary mandate, in the first plenary meeting. so if the deputy’s or senator’s option for resignation is not expressed, according to this law, he or she will ‘remain in incompatibility’ until the chamber decides, by vote, the termination of the parliamentary mandate. because the decision is made by vote, the mp is not considered to have legally resigned ex officio at the end of the option term. the standing committee of the chamber drafting the report will request nia’s point of view, but the chamber decides upon the report by a convenience vote, which is, in the end, a political, an opportunity vote. the latency of the state of incompatibility is thus prolonged for a period of at least 60 days, if the vote quorum meets in the first plenary session, scheduled after the execution of the commission report. the previous regulation of the law of mps’ statute seemed more efficient, because the mp was considered to have legally resigned when he or she had failed to express his or her decision of resignation, within 30 days after the notification of the state of incompatibility. in that case the chamber only took act of the situation that entailed ex officio resignation and did not vote upon the existence of the state of incompatibility. the modification of the current procedure, even if now it requires nia’s point of view, which can be eventually passed by the plenum by way of a convenience vote, can only lead to a possible extension of the state of incompatibility13. 13 relevant in this respect is the case of senator mircea diaconu, who truthfully requested the judiciary committee of the senate to clarify the situation of his incompatibilities prior to the validation of his parliamentary mandate; the judiciary committee ‘considered’ that he was not involved in any case of incompatibility, a solution subsequently invalidated by nia and the court of law. the high court stated: ‘the senate was in error and found the appellant to have been in a state of incompatibility during all this period, without, of course, there being any fault on his name. mr. diaconu requested in all honesty the legal committee to release the notice on the overlapping of functions and the latter found at that time that there is no incompatibility, consequently validating his senator mandate’. 16 3.1.2. any incompatibility occurring during the exercise of parliamentary mandate must be notified to the standing bureau of the chamber, in writing, no later than 15 days from the date of its occurrence. if within 30 days from the notification, the mp does not resign from the office that makes him or her incompatible, the procedure described above is applied. the procedure is identical also when the mp addresses the standing bureau of the chamber to clarify a possible incompatibility. this is a case of impermissible overlapping of the chamber’s competencies with the specific prerogatives of nia (stefan, 2013)14. the statute does not specify what happens if the ‘clarification’ of the incompatibility involves different points of view expressed by nia and the parliamentary commission in its report. moreover, such a view may have adverse legal consequences to the holder of the parliamentary mandate, case in which nia or any court of law would conclude otherwise. the chambers’ regulations15 establish that the procedure of declaring the state of incompatibility requires referral from the judiciary, discipline and immunities commission, who issues a report examining the case and making proposals to the chamber. the chamber will approve the report by a majority vote. thus, in the parliamentary procedure of stating the incompatibility, the acknowledgement of the ex officio dismissal (as sanction intervened by force of constitutional texts) is subject to voting decision, the new provisions’ purpose being the chambers substitutiting nia’s specific prerogatives. thus, we are confronted with a form of ‘self-control’ which, mostly for political reasons, often turns into ‘non-control’, presumably intended to eliminate as much as possible nia’s legal competences. the statute of the mps mentions: ‘in case the national integrity agency has completed an evaluation report on a deputy’s or a senator’s incompatibility, the evaluation report shall be sent within five days after completion to the person concerned, as well as to the chamber whose member he or she is, in accordance with art. 21.4, law no. 176/2010. the chambers’ standing bureau promptly notifies its members, providing them with a copy of the report’ (art. 18.6). the new provisions of the statute of mps does not specify the legal solution for cases in which the procedure initiated by the standing bureau of the chamber overlaps with the procedure of nia (or when the two procedures have different results; or, the application of procedural terms; etc.). according to mps’ statute, the termination of the parliamentary mandate occurs on expiry of 15 days from the date the mp was notified with nia’s report, if within this period he/she does not litigate it in a court of law16. 14 from cvm report, january 2013: ‘it is also important to clarify that nia is the only authority in charge that can confirm the potential incompatibilities of elected and appointed officials’. 15 art. 204 of the chamber of deputies regulation and art. 183 of the senate regulation. 16 the initial 45 days term was declared unconstitutional by the constitutional court (decision no. 81 of 27 february 2013), on account of its discriminatory nature, as it applied a differ17 the modified version of the mps’ statute contains a new text regulating expressis verbis the principle of separation of powers and the rule of law fundament, by which definitive and irrevocable decisions of courts of law are mandatory. the new provision is a direct consequence of the decision of the constitutional court no. 972 of 21 november 2012 (to resolve a constitutional legal conflict between the legislature and the judiciary). in this way, it is provided the ex oficcio termination of the parliamentary mandate at the time the final and irrevocable decision of a court of law decides consequently17. under these new circumstances, the president of the chamber acknowledges the termination of the mp mandate and the chamber votes only upon the vacancy of the deputy or senator position. as a preliminary conclusion, the new texts on parliamentary procedures in case of incompatibility, regarding ascertaining the termination of the parliamentary mandate overlap nia’s competences. moreover, new attempts of regulating mps’ conflicts of interest, as well as of promoting a unified and coherent legislation, with effective dissuasive penalties, in the sense of ensuring the application of the principle of integrity of the parliamentary mandate failed. as the cvm report from june 2012 notes, the two houses flagrantly breached the constitution, failing to put into practice the statutory stipulations regarding the termination of the parliamentary mandate in case of incompatibilities: ‘nia’s existence was called back into question by representatives of all main political parties in parliament. in turn, the parliament failed to enforce decisions on cases of incompatibility and conflict of interests.’ the following examples are evocative. senator m. diaconu requested clarifications on his case of incompatibility from the judiciary committee of the senate before the validation of his parliamentary mandate on november 30, 2008. the judiciary committee decided the senator was not in a state of incompatibility and validated his mandate by senate decision no. 68/2008, of 19 december 2008. nia’s evaluation report (issued on january 26, 2011) found the senator had been in incompatibility since december 19, 2008, due to his simultaneously office of senator and director of nottara theatre (the latter being a leading office of a public institution). nia’s evaluation report was challenged in the competent courts of law. the final and irrevocable decision of high court of cassation and justice, rejecting m. diaconu appeal upon nia’s report, was issued on june 19, 2012. it means that nia’s evaluation report was definitive, by the force of law. having become minister of culture in the interim, the senator resigned from the ministerial position at the date of the final and irrevocable decision of the high court of cassation and justice. but things have evolved in a different manner with regard to his parliamentary office. on october 29, 2012, the senate debated the report of the judiciary committee, which proposed the ent procedural treatment to other categories of occupants of ‘public positions and offices’, according to law no. 176/2010 regarding the integrity in exercising public functions and offices. 17 in the litigations upon nia’s reports on stating incompatibilities of mps. 18 termination of the mandate, but the vote in the senate was postponed to the next day. with 23 votes ‘for’, 32 ‘against’ and 10 ‘abstentions’, the judiciary committee’s report (which stated the ex officio termination of the mandate) was rejected. the senate practically opposed the enforcement of a definitive and irrevocable court of law resolution, by means of a political vote, infringing in a preposterous manner the most elementary principles of the rule of law: the principle of separation and balance of powers in the state, the equality principle (‘nobody is above the law’, art. 16.2 of the constitution), the constitutional principles of justice administration. the president of the superior council of magistracy notified the constitutional court with a juridical constitutional conflict, upon the negative vote expressed by parliament. the constitutional court resolves the existence of a juridical constitutional conflict between the judiciary and the legislative, ‘conflict generated by the senate’s refusal to acknowledge the termination of mr. mircea diaconu’s senator status, by enforcing a final and irrevocable decision that confirms the senator’s incompatibility’ (decision no. 972 of 21 november, 2012, published on november 28, 2012). the termination of the parliamentary mandate occurred on december 13, 2012, when the senate’s resolution of making note of m. diaconu’s resignation was published in the official journal of romania. the solution adopted by the romanian senate for the enforcement of the constitutional court’s decision is at the limit of constitutionalism. since at the implementation of the court’s decision, the senate was obliged to take note of the ex officio termination of the mandate, the sanction for the ex officio termination was peremptorily regulated by the constitutional text. in this case, the resignation solution is, at the least, questionable. in the case of deputy s. andon, the incompatibility of the deputy mandate exercised concomitantly with the lawyer’s office in a case of corruption was presented by nia ascertaining act of june 1, 2009. the act remains definitive by the decision of the high court of cassation and justice no. 1807 dated april 3, 2012, final and irrevocable. through the resolution of the chamber of deputies no. 30 of 2012, published in official journal of romania no. 647 of 11 september 201218, the chamber of deputies noted the ex officio termination of the deputy mandate of mr. s. andon and declared his seat vacant. as for the case of deputy f. pâslaru, the assessment report of nia, dated november 7, 2011, notes that the deputy was in a situation of conflict of interests. nia’s report remained definitive by non-contestation. according to art. 25 of law 176/2010 on integrity in public office, ‘the person (…) who was established to be in conflict of interests or in incompatibility is deprived of the right to exercise any public function or office stipulated by the present law, except the electoral ones, for a period of three years from the date of release or dismissal from the office or public function or of the rightful termination of their mandate. if the person in question had an eligible office, 18 five months after the final and irrevocable decision of the high court of cassation and justice and as a consequence of cvm report of june 2012 mentioning the parliament had failed to enforce judgments concerning the cases of incompatibility and conflict interests. 19 he or she cannot occupy the same position for a period of three years after the termination of their mandate’. the chamber of deputies endorsed the new deputy mandate of mr. f. pâslaru after december 2012’s elections. as we have shown, the conflicts of interest regulation for the parliamentary mandate is not regulated at constitutional level. a future revision of the constitution should take into account the express regulation of conflict of interests, as a case of parliamentary mandate termination. in the period 2008-2013, nia found 25 cases of mps in a state of incompatibility ([online] www.integritate.eu). for five of these cases the evaluation reports or the ascertaining documents remained definitive; two cases were invalidated by the courts of law; as for the rest of the cases, they are pending in courts. in two of these cases, the persons in question fulfilled simultaneously the function of senator and that of minister. one’s mandate was terminated after the interventions of courts of law and of the constitutional court (see above mentioned example of m. diaconu). the second one was a senator appointed in a ministry position, after the disclosure of the evaluation report of nia for incompatibility; the appeal on the assessment report is still pending in court, but the senator is no longer occupying a ministry position. 3.2. incompatibility in the case of members of the government law no. 161/2003, regulating the incompatibility of members of government functions, states that for the offices of prime minister, minister, and deputy minister special corresponding legal provisions of law no. 90/2001 on the organization and functioning of the romanian government and ministries are applied. according to article 5, law no. 90/2001, ‘a member of the government office shall cease upon (...) a state of incompatibility (...)’. thus, if termination of government membership intervenes due to incompatibility, the president of romania takes note of this and declares the position of member of the government vacant, at the prime minister’s proposal. further on, the law says that, for the members of the government, once nia’s evaluation report is completed, the report regarding the prime minister will be submitted to parliament, and those regarding other members of government will be submitted to the prime minister who proposes the dismissal of the minister to the president of romania (according to the romanian constitution and law no. 90/2001 on the organization and functioning of the romanian government and ministries (art. 26 of law no. 176/2010). in this respect, when an evaluation report of nia finds one of the government members to be in incompatibility, the decision on dismissal is made by the president at the proposal of the prime minister. basically, the expression ‘the prime minister’s proposal’ should refer to the conclusions of the assessment made by nia. in accordance with the legal provisions, nia’s evaluation report may be appealed in the administrative contentious courts of law, within 15 days from the personal notification. therefore, the legal obligation of determining the termination of a ministerial function intervenes at the moment when the evaluation report is declared definitive, by non20 contestation, or when the court’s decision (on the rejection of the appeal regarding the evaluation report) is final and irrevocable. the subsequent question would be: should the prime minister request the dismissal of a minister at the moment of issuing nia’s evaluation report stating the incompatibility, or the conflict of interests of a member of the government or the prime minister is entitled to permit the maintenance of a member of the government, although his integrity is under ethical suspicion until the validation of nia’s solution by the court of law? in practice, several solutions were adopted: the resignation solution – the minister subject to the evaluation procedure resigned (e.g. i.n. botis, or b. cepoi), the revocation solution – the secretary general of the government was dismissed simultaneously with the request for an opinion from nia on the existence of certain premises in relation to the conflict of interests (e.g. d. andreescu), the adjunct secretary general of the government was revoked (e.g. d. mihalache), or, on the other hand, there are ministers who continued their mandates (e.g. o. silaghi, l. pop, e. hellvig), but were not appointed in the new government formula after the parliamentary elections in december 2012. they have become, however, members of parliament after the elections in december 2012, because the incompatibility evaluation reports have not yet remained definitive in front of courts of law. two mps were appointed ministers, although being under suspicion of incompatibility and engaged in courts of law trials against nia’s evaluation report (e.g. senator m. diaconu, appointed minister of culture in may 2012, and the minister of education, e. andronescu, in 2012). between 2008 and 2013, nia ascertained four cases of government members in incompatibility ([online] www.integritate.eu), in one of these cases the act of ascertainment of the incompatibility was annulled by a court of law, in another three cases files are currently pending before courts of law. in one particular case, the incompatibility resides in a significant discrepancy between the property acquired by a certain minister and his income. two ministers were appointed in office although against them was issued a report for incompatibility and conflict of interests. the european commission report on progress of romania under the cooperation and verification mechanism of january 30, 2013 notes: ‘the persons in public offices must demonstrate that they meet high standards of integrity.’ (…) ‘in november 2012, the reports submitted by nia on some ministers and senior officials did not lead to their dismissal. the new government has reiterated their objective of fighting corruption, yet three of the newly appointed ministers were investigated for corruption. in its recommendations formulated in july, the commission expressed the hope that the ministers will set an example of integrity compliance: the same is expected in cases regarding the allegations of corruption. for a government to preserve its credibility, it is essential that the ministers enjoy public confidence, namely, they should present their resignation if a nia report on integrity is emitted against them. the constitutional requirements, including suspension from the office of a minister on basis of court referral, will be applied in full.’ 21 regarding these standards of integrity relative to government members, they seem to be highly dissimilar when the same person is in the meantime mp, as well. although the member of government resigns or is removed from the ministerial office, for reasons of incompatibility or conflicts of interest, he or she carries on their parliamentary mandate, without any legal or moral restraints. thus, the ‘parliamentary ministers’ who are found either incompatible or in a state of conflict of interests, continue to exercise their parliamentary mandate until the date on which a final and irrevocable court of law decision will state their dismissal. or more, until the constitutional court will require the senate to respect the rule of law, and to respect the decisions of the courts of law. although these situations have constitutional explanations related to the differences between the elected mandate and the appointed mandate, the consequences upon the low public trust in the parliament will lead to questions about the legitimacy of the parliamentary mandate and of public decisions. 4. conclusions firstly, the unification of legislation is needed for a coherent and unitary regulation of incompatibilities and conflicts of interest for mps. it is an objective that can ensure the optimal application of the rule of law. currently, the legal framework of the regime of incompatibilities and conflicts of interest of the parliamentary mandate is composed of law no. 96/2006 on the deputies and senators’ statute, law no. 176/2010 on integrity in the exercise of public functions and offices, amended by law no. 144/2007 on the establishment, organization, and functioning of the national integrity agency, and for amendments and supplementations of other normative acts, law no. 161/2003 on measures to ensure transparency in the exercise of public offices and of public functions in the segment of business as well, in corruption prevention and sanctioning, and also of the regulations of the two houses of parliament. it is recommendable that the procedure of revision of the constitution takes into consideration a new regulation of the conflicts of interests for mps. if the reason for instituting incompatibilities includes the prevention of the conflict of interests, for promoting and respecting the principles of impartiality, integrity, transparency of public decision, and the supremacy of public interest, the constitutional text could provide the general framework for sanctions for infringements of norms related to the conflict of interests (see greco 2005, 2007; also, see above sections 2.2 and 2.3). secondly, the parliamentary procedures must comply with the distinctive and specific prerogatives of the national integrity agency, without instituting a procedure to overlap with that of the agency. also, any ambiguous and ineffective regulations, lax deadlines meant as subterfuge, provisions lacking clarity and predictability should be abrogated from the law regarding the legal status of deputies and senators. the new provisions of the statute of mps establish a procedure that overlaps with the nia procedure, denying the very significance of this institution. measures rendering the current procedure difficult to manage, requiring a nia point of view, over which the 22 plenum can pass by voting, represent the prerequisites for a status of non-control (see cvm report, january 2013; also, see above section 2.4 and section 3.1.1.). thirdly, clarification and transparency must characterize parliamentary procedures regarding the confirmation of the parliamentary mandate’s termination for the case of incompatibility. the european commission report to the european parliament and council, on the progress in romania under the cvm of january 31, 2013 notes: ‘parliament would enhance its credibility as a result of the application of clearer procedures for case management in the situation of mps who are subject to decision making on integrity aspects’. cvm emphasizes further the inability of the parliament to apply the principle of separation of powers and the constitutional principles relating to justice, and also, the inefficiency of the additional regulations on conflict of interests as a disciplinary offense for mps (see above section 3.1.2). finally, integrity standards should provide not only credibility but also legitimacy to the two chambers of the parliament; they should be effectively implemented in the legislation on the deputies and senators’ statute. for the same reasons, the compatibility of the government office with parliamentary membership must find its expression in the consistent way in which incompatibilities are sanctioned. the consecrated exception, at the constitutional level, related to the compatibility between exercising a parliamentary mandate simultaneously with a governmental mandate must be correlated – on both constitutional and infraconstitutional level – with the provisions on sanctions applied to incompatibilities and mandate termination procedures (see above section 3.2). the lack of transparency and consistency of parliamentary procedures on establishing the incompatibilities and conflicts of interest of the parliamentary mandate, in certain instances, is questioning the very existence and specialized competency of nia, whereas on other occasions, it allows the application of certain parliamentary solutions that are situated at the very limit or even beyond constitutional limits. references: 1. alder, j., constitutional and administrative law, 8th edition, hampshire: palgrave macmillan, 2011. 2. apostol tofan, d., drept administrativ (administrative law), vol. i, bucharest: c.h. beck, 2008. 3. chamber of deputies’ regulation, published in the official journal of romania no. 762 of november 13, 2012. 4. comittee on standards in public life, tenth report of the comittee on standards in public life, ‘getting the balance right. implementing standards of conduct in public life’, january 2005, [online] available at http://www.official-documents.gov.uk/document/cm64/6407/6407.pdf, accessed on september 15, 2013. 5. constitution of romania, adopted in 1991 and revised in 2003, published in the official journal of romania no. 767 of october 31, 2003. 6. constantinescu, m. and muraru, i., drept parlamentar (parlamentary law), bucharest: actami, 1999. 23 7. constantinescu, m., iorgovan, i., muraru, i. and tănăsescu, e.s., constituţia româniei revizuită, comentarii şi explicaţii (the constitution of romania revised, commented and explained), bucharest: all beck, 2004. 8. danileţ, c., corupţia şi anticorupţia în sistemul juridic (corruption and anti-corruption in the judicial system), bucharest: c.h. beck, 2009. 9. decision of the chamber of deputies case no. 30 of 2012, published in the official journal of romania no. 647 of september 11, 2012. 10. decision of the constitutional court no. 876 of june 28, 2011, published in official journal of romania no 632 of september 5, 2011. 11. decision of the constitutional court of romania no. 81 of february 27, 2013, published in the official journal of romania no. 136 of march 14, 2013. 12. decision of the constitutional court of romania no. 195 of april 3, 2013, published in the official journal of romania no. 223 of april 18, 2013. 13. decision of the constitutional court of romania no. 876 of june 28, 2011, published in the official journal of romania no. 632 of september 5, 2011. 14. decision of the constitutional court of romania no. 972 of november 21, 2012, published in the official journal of romania no. 800 of november 28, 2012. 15. decision of the european court of human rights in the case lykourezos vs. greece, 2006. 16. decision of the high court of cassation and justice no. 3104 of 21 june 2012. 17. deleanu, i., instituţii şi proceduri constituţionale, în dreptul român şi dreptul comparat (constitutional institutions and procedures in romanian and comparative law), bucharest: c.h. beck, 2006. 18. drăganu, t., drept constituţional şi instituţii politice, tratat elementar (constitutional law and political instututions), bucharest: lumina-lex, 2000. 19. european commission for democracy through law (venice commission), ‘report on democracy, limitation of mandates and incompatibility of political functions’, venice, december 14-15, 2012, [online] available at http://www.venice.coe.int/webforms/ documents/?pdf=cdl-ad%282012%29027rev-e, accessed on july 15, 2013. 20. european commission, ‘report from the commission to the european parliament and the council on progress in romania under the co-operation and verification mechanism’, january 30, 2013, [online] available at http://ec.europa.eu/cvm/docs/ com_2013_47_en.pdf, accessed on july 15, 2013. 21. gicquel, j., droit constitutionnel et institutions politiques, paris: montchrestien, 1995. 22. greco (group of states against corruption), ‘compliance report on romania’, adopted by greco at its 35th plenary meeting, strasbourg, 3-7 december 2007, [online] available at http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/grecorc2(2007)9_ romania_en.pdf, accessed on september 15, 2013. 23. greco (group of states against corruption), evaluation report on romania, adopted by greco at its 25th plenary meeting, strasbourg, october 10-14, 2005, [online] available at http://www.coe.int/t/dghl/monitoring/greco/evaluations/round2/greco eval2(2005)1_romania_en.pdf, accessed on september 15, 2013. 24. grindle, s.m., ‘good enough governance revisited’, 2007, development policy review, vol. 25, no. 5, pp. 553-574. 24 25. iorgovan, a., tratat de drept administrativ (administrative law treaty), vol. i, bucharest: all beck, 2005. 26. johnston, m. and doig, a., ‘different views on good government and sustainable anticorruption strategies’, in stapenhurst, r. and kpundeh, s.j., curbing corruption: toward a model for building national integrity, washington d.c.: world bank institute development studies, 1999. 27. law no. 161/2003 on ensuring transparency in the exercise of public offices, public functions, in the segment of business as well, in corruption prevention and sanctioning, published in the official journal of romania no. 279 of april 21, 2003, with subsequent amendments and supplementations. 28. law no. 176/2010 on integrity in the exercise of public functions and offices, for the amendment and supplementation of law no. 144/2007 on the establishment, organization and functioning of the national integrity agency as well as for the amendment and supplementation of other normative acts, published in the official journal of romania no. 621 of september 2, 2010. 29. law no. 278/2006 on amendments and the supplementations applied to the criminal code and to other laws, published in the official journal of romania no. 601 of july 12, 2012. 30. law no. 96/2006 regarding the deputies and senators’ statute, published in the official journal of romania no. 763 of november 12, 2008, with subsequent amendments and supplementations. 31. law on the organization and functioning of the government no. 90/2001, published in the official journal of romania no. 164 of april 2, 2012. 32. muraru i. and tănăsescu, s., drept constituţional şi instituţii politice (constitutional law and political instututions), bucharest: c.h. beck, 2006. 33. nicholls, qc.c., daniel, t., bacarese, a. and hatchard, j., corruption and misuse of public office, oxford: oxford university press, 2011. 34. oecd, asset declarations for public officials. a tool to prevent corruption, oecd publishing, 2011. 35. resolution adopted by the senate to make note of the senator’s resignation, published in the official journal of romania no. 845 of december 13, 2012. 36. senate’ regulation, published in the official journal of romania no. 948 of october 25, 2005. 37. ştefan, l., ‘statutul parlamentarilor: mai ușor să îngropi un dosar’ (the mps’ statute: easier to make a case dissapear), february 21, 2013, revista 22, [online] available at http://www.revista22.ro/statutul-parlamentarilor-mai-u537or-sa-ngropi-un-dosar21959.html, accessed on july 15, 2013. 38. ştefan, l., pârvu, s., podumlijak, m. and cozonac, c., conflicts of interests and incompatibilities in eastern europe. romania, croatia, moldova, bucharest, 2012, [online] available at http://expertforum.ro/wp-content/uploads/2013/03/conflicts-of-interest-andincompatibilities-in-eastern-europe.-romania-croatia-moldova.pdf, accessed on july 15, 2013. 39. transcripts of parliamentary debates, published in the official journal of romania no. 106 of november 7, 2012, part ii, and official journal of romania no. 107 of november 7, 2012, part ii. 25 internet sources: http://hudoc.echr.coe.int http://www.assemblee-nationale.fr http://www.senate.be http://www.wipo.int www.integritate.eu http://ec.europa.eu http://www.public-standards.gov.uk http://www.coe.int www.expertforum.ro 115 public administration reform reflects substantive changes in its major components, both at central government and local administrative level, and in the delivery of public services in general. on the other side, democratic consolidation requires the development of a new relationship between citizen and administration, a strengthened role of the authorities and the redefinition of the partnership with the civil society and the local elected officials. this article makes specific comments on the decentralization challenges based on the study in “public administration reform in the context of the european integration”1. the document is focused on the technical questions related to the decentralization. the angle from which problems are observed is the angle of the local governments. the first “conceptual framework” part aims to introduce the underlying principles on one hand, and the rules derived on these to be respected when designing decentralization policies. the next part “analysis and findings” is structured according the current conditions in romania. the final section will try to orient the readers’ attention to possible risks of the reform process. decentralization process in romania marius profiroiu associate professor, department of public administration, academy of economic studies, bucharest alina profiroiu senior lecturer, department of public administration, academy of economic studies, bucharest transylvanian review of administrative sciences, 16 e/2006, pp. 115-123 decentralization is the transfer of authority and responsibility for certain public functions from the level of the central government of a country to sub-national government levels or autonomous institutions2. depending on the transferred responsibilities, the decentralization falls under three categories: political, administrative and fiscal. political decentralisation means greater power for the citizens in the decision making process, guaranteed by the democratic processes. one argument supporting political decentralisation is: “decisions made with a greater participation from the citizens are better fundamented and more relevant, including more social interests than those decision made at the level of national political authorities. this concept implies that voters get to know their political representatives better and at the same time the elected officials know the needs and expectations of their voters better”3. 1 research study: profiroiu m, andrei t., “public administration reform in the context of the european integration”, financed by the european institute of romania, bucharest 2005 2 rondinelli, d.a., j.r. nellis, g.s. cheema, “decentralization in developing countries: a review of recent experience.” staff working papers number 581. washington, d.c.: world bank, 1983 116 this aspect also comes out of the answers given by the respondents interviewed for the current research. thus, approximately 50% of answers showed there is a high political influence in local public administration. administrative decentralization is, according to literature, the “transfer of responsibility on the planning, financing, and management of certain public functions from the central government and its agencies to subordinated units, semi-autonomous public authorities or regional or local authorities”4. the subcategories of administrative decentralisation are frequently defined according to the type of institution or agency receiving the transferred responsibility. 1. the conceptual framework the first conceptual element leading our research is the “lean public sector” that is achievable through the decrease of redistribution, the limitation of the use of control and regulation mechanisms and through the possible retreat of the public sector from all domains where its presence is not necessary. this proposed “retreat of the public sector” – can also be legitimized by the scarce resources and the requirement for creation of functional market economy. according to this concept the role of the public sector is restricted to the safeguarding of social justice, the supply of public goods and the correction of market failures. the second principle is the consistency in the allocation of rights and responsibilities to specific government units. effectiveness of the public sector can only be achieved when the allocation of responsibilities is coupled with adequate resources and decision-making power. the consistency of the allocations is also a necessary condition for redefining hierarchic relation of government units and establishing increased accountability of public bodies to the citizens. consequently, the consistency of the allocations is a means to democratization as well. the third principle is subsidiarity defined as the allocation of responsibilities for the public services to the lowest level of government compatible with the benefit area associated with those services and the allocation of resources to the lowest level capable to manage them. in our conceptual framework the implementation of the principle of subsidiarity is defined as a means to democratization and the increase of efficiency, accountability and transparency of the public sector. the acceptance of the principle of subsidiarity can lead to rational argumentation on the distinction between those services that should be kept de-concentrated and those where decentralization could be considered (i.e. the devolution of decision making power over management and financing of public services to popularly elected, autonomous local government units). as an alternative means for creating efficiency, we would recommend solutions promoting cooperation between local governments. the fourth principle is the desire for stable, transparent and rule-based coordination. for cherishing the innovative capacity, efficiency and effectiveness of all actors the possibility for individual strategies must be inherent in the system. for this the mechanisms of direct control have to be changed to a clear set of rules coupled with a posteriori control limited to the review of compliance with the rules. 1.2. the basic rules of decentralization policy design the above principles lead to the following rules to be applied in policy design. in the first phase of the policy process stakeholders should agree on the basic principles and rules leading the 3 rondinelli, d.a. “what is decentralization?” in litvack, j. and j. seddon (eds.). “decentralization briefing notes”, washington, d.c.: word bank institute, 1999 4 rondinelli, d.a. “what is decentralization?” in litvack, j. and j. seddon (eds.). “decentralization briefing notes”, washington, d.c.: word bank institute, 1999 117 process of decentralization. such one time agreements could have lasting influence in rationalizing and simplifying the public debates. 1.2.1. rules for responsibility transfer in accordance with the economic and redistribution policies of the central government, the definition of local government functions should be based on the following rules: use of professionally sound concepts that are accepted by the professional community apply the principle of subsidiarity as a means for transparent, accountable and efficient public service delivery; allocate consistently rights and responsibilities 1. define clearly the minimal service outputs and universal standards; 2. create clear and stable system regulations that encourage local strategies and cherish innovative solutions; 1.2.2. rules for revenue and financial management transfer in accordance with the macro economic and fiscal policies of the central government, local government finance should be based on the following rules: • revenue allocation should be adequate to decentralized responsibilities • financing of public functions should be based on the consideration of the public good character of the given function and on clearly defined universal rights (i.e. central government definition of guaranteed desired minimum levels of provision for certain public services at the local level), • transparency of the allocations should be secured by objective criteria and clear normative rules including task proportionate, revenue localizing and equalizing elements • subsidiarity in the allocation of revenue sources should lead to the transfer of the management of revenue sources by the lowest level that can implement it • predictability and stability of the system of allocations should allow for local planning • budgeting regulations should create transparent budget systems and procedures and facilitate local financial management • local autonomy in financial management should be coupled with hard budget constraints. 2. analysis and findings during the last fifteen years, romania has made important steps in the area of decentralisation. the process went through four stages. in the first stage (1991-1994)5 important changes were made in the structure and funding of local authorities, including the introduction of the local taxation system. in the second stage of the reform policy (1998-2000) administrative and financial decentralisation became a priority. based on the new legislation on financing of local public authorities6, the share of gdp going to local budgets increased (from 3.6% in 1998 to 6.5% in 2001), but also the share of local expenditure in total public expenditure increase (from 14.4% in 1998 to 26.6% in 2001). in the third stage (2001-2004) the new laws set new rules for certain functions of local authorities7, especially fro public services or utilities8. 5 law on local public administration no. 69/1991, government ordinance no.15/1992 on local taxes, and law no.27/1994 on local taxes 6 law no. 69/1991 and law no. 189/1998 on local public finance were amended 7 law no. 215/2001 on local public administration 8 example: law no. 326/2001 on public community services, government ordinance (go) no. 86/2001 on local passengers public transport services, go no. 84/2001 on the public service for people’s registration, go no. 88/2001 on the public services for emergency situations, go no. 202/2002 on the integrated management of the 118 the fourth stage (after 2004) started with the design and approval of the updated strategy for accelerating public administration reform (government decision no. 699/2004). one of the most important components of this strategy is the continuation of the decentralisation and deconcentration processes. for implementing this strategy, a legislative package was drafted to support the entire process (the framework law for decentralisation no. 339/2004, the law of the prefect no. 340/2004 and the government decision no. 2201/2004 on the inter-ministerial technical committee and working groups on decentralisation). yes 24.51% no 36.76% not enough information 33.60% no answer 5.14% figure 1. are there any public services in your community that would improve performance if decentralised from central to local level? the answers from local community mayors allow us to formulate the following conclusions: • there is a favourable opinion towards the decentralisation process and the advantages it may generate; • smaller communities, which do not benefit from public services provided by the central level, have a more negative opinion. according to surveys by foreign experts, there is a strong sense of frustration among local elected officials who think that the decentralisation defined by legal texts is insufficiently implemented and ultimately depend on their ability to negotiate with the state and to accept the corresponding political risk. moreover, according to these experts, the sense of frustration is stronger in the poorer communities that have fewer own resources. because transfers from the central government depend especially on the resources from income tax and vat collected from that territorial unit, a significant equalisation effort is needed for communities to be able to fund the basic, legally compulsory functions. it is almost impossible for these communities to generate resources for funding investments, although these are necessary. in turn, richer communities do not have the incentives to mobilise their fiscal potential and often prefer to give deductions or waivers and ask for central government support to finance the deficit. • an important number of respondents are not familiar with the topic of decentralisation. the interviewed local elected officials considered the possibility of privatising some local public services in order to make them more effective and reduce local budget expenditures. coastal area, go no. 21/2002 on the management of urban and rural communities, go no. 32/2002 concerning on the public services for water distribution and sewage, go no.71/2002 on setting up local public services for the management of public and private domains of local interest. 119 fiscal decentralisation relates to an enhanced control of local authorities over financial resources, whether it comes to distributing expenditures or generating revenues. much of the specialised literature on fiscal decentralisation focuses on the nature of inter-governmental transfers and on the differences between the revenue generating capacity of various types of institutions. a basic feature of fiscal decentralisation is the proper balance between the responsibilities and the financial resources needed to meet those responsibilities. over 60% of the interviewees believe that the steps taken so far in fiscal decentralisation are not sufficient and in some cases are inadequate to support a proper financing of the public services delivered to citizens. both foreign and romanian experts point out that “the decentralisation and deconcentration process has not been completed, meaning that the necessary financial resources have not been transferred and the competencies to be transferred and decentralisation levels have not been clearly established” (the par strategy, 2004). not at all, 7.5 to a little extent, 61.7 to a resonable extent, 28.1 to a great extent, 0.8 no answer, 2.0 figure 2. does the current system for financing local public services meet your needs? the national union of county councils and the association of economic directors from county councils undertook a detailed review of the current stage of financial decentralisation throughout romania and for the most important policy areas (education, health, social security, public order and safety, agriculture, local development services). besides the positive aspects, several weaknesses of the decentralisation process were identified: • the local public administrations do not have enough authority, which limits their capacity to organise the services efficiently (e.g. they do not have the right to set the price of services); • in some areas direct control mechanisms and discretionary decisions can still be found. this limits both the financial planning and forecast, and the possibility to introduce local innovative solutions for providing more effective services. indirectly, this limits the absorbtion capacity for eu funding; • local financial management autonomy is limited by the regulations on allocation of own revenues, by restricting the use of transfers; • the excessive use of fixed allocations is limiting the effective spending of money, because it prevents the coordination and integration of local services; 120 • the existing equalisation mechanisms do not ensure the equity of the system; • the incomplete ownership transfer is a limit on the effective management of local assets; • lack of specific legal and constitutional guarantees for local autonomy; • insufficiently fundamented and partially implemented public policies could not provide rational solutions for the existing issues; • the excessive use of emergency procedure ordinances and laws, instead of due process consultations; • public authorities have not always had specialised training on financial management and decentralised services management; • the gap between the decision-making authority transferred to local administrations and the resources allocated to fund these decisions (the allocated local resources do not match the increased responsibilities). a badly managed decentralisation process can produce a wide range of state failures, from “errors of omission”, when the state is unable to improve the economic or administrative performance, to “errors of action”, when the state’s actions lead to worse economic performance.9 not only do these errors prevent the development of a significant decentralisation policy aimed at improving the provision of local services, but also they have a negative impact on local authorities’ credibility. the 2004 regular report of the european commission states: “most importantly, the romanian authorities have made considerable efforts to develop the strategy guiding the decentralisation process in a transparent and stable way. the strategy was adopted in may 2004 and it identifies clear priorities for future reforms. it is notable that the strategy was prepared following an extended public debate (a national forum) with the main stakeholders. but the proposed reforms are still in a preparation phase and their implementation has to be ensured. the effective cooperation between the ministry of administration and interior and the ministry of public finance need to be considerably improved.”10 0% 20% 40% 60% 80% 100% management of local public assets and f unds provision of public services at local level prognosis and economic/social development organisational no answ er to a great extent to some extent to a little extent to a very little extent figure 3. in your opinion, considering the current stage of decentralisation, to what extent can the local administration fulfil the following functions? 9 krueger, ann, 1990. governance failures in the development process, journal of economic perspectives 4 (3): 9-23 10 2004, regular report on romania’s progress towards eu accession, page 17 121 from the answers of the interviewees, we can conclude that the decentralisation has not had consistent effects at local level. possible explanations can be: • so far only the legislative and institutional framework have been developed and the actual outcomes at local level will be evident in the years to come; • the process was not coherent, properly researched, the necessary resources were not released and the communication with the stakeholders has been flawed; • not all administrative territorial units have been involved in the process, because of their insufficient administrative and managerial capacity. this is also stated in the 2004 ec regular report: “most local authorities suffer from limited administrative capacity and have high civil servants turnover”11. yes, 19.8 no, 75.9 no answ er, 4.3 figure 4. during your time in office did you ever make proposals in support of the decentralisation process? the answers of the local elected mayors reveal, among other causes, a weak implementation of the local administration laws and the lack of transparency of the decentralisation process. 3. risks of the reform process the process of decentralization in romania has been a process with a stop-and-go cycle, not a gradual policy improvement process. decentralization often advanced more due to international pressures than driven by the convictions of local politicians or voluntary decisions of the central government. as a consequence, decentralization was implemented reactively, with little planning or analysis, and no previous training or financial empowerment given to local level. an important aspect of public administration reform is the management of the reform implementation process. the major risk is the overload with current routine task, leaving no time for designing new solutions to the problems encountered. in order for par to be successful, it is necessary that a large number of target groups (especially key people at the management and decision making levels) support and commit to the need for changes and their implementation. based on the integrated organisational development model, the negative influences on the implementation process can be identified: strategic factors (decision making complexity), structural factors (bureaucracy of the system, limited human and financial resources, size and complexity), cultural factors (risk aversion, inertia, mentality), and behavioural factors (lack of individual incentives, misunderstanding of overall objectives, frustration, expectation behaviour). 11 2004, regular report on romania’s progress towards eu accession, p. 17 122 public administration cannot be reformed in a few years. it is a long-term process, which probably can be implemented only by several consecutive governments in a difficult, highly competitive and rapidly changing external environment. for this reason, it is necessary to reach consensus on the following principles which will govern the whole reform process: • widely disseminating information on the reform and mobilising interest of citizens, professionals, political representatives and civil servants in making the reform happen and democratically exchanging opinions on its desirable and feasible course, • basing the reform on solid professional analyses of the present state and performance of public administration and on periodic evaluation of the consequences of completed reform steps, • using experience with public administration reform in other countries, particularly in eu member states and in the countries preparing for accession to the eu, while considering our own tradition and experience, • adopting a comprehensive approach to the reform: no isolated and partial changes should be implemented if not conceived as integral and organic parts of the total reform strategy and process, • viewing the reform as an open process: individual reform components will be continuously updated and adapted to the changes in the external environment of public administration and in other components of the reform, and will utilize experience acquired during implementation, • determining strategic priorities: a limited number of priority changes will have to be defined for every reform phase on which attention and funds will have to concentrate; these should be the changes that predetermine the overall progress of the reform and condition or influence all other changes, • assuring continuity of the operation of public administration, which must continue to function also in the course of reorganization, decentralization and other changes, reform initiatives of the government would be incomplete without an effective management tool to monitor the required actions of the government in moving forward the strategy and local government implementation of the decentralization reforms. a monitoring tool will help guide and manage the reform process at the central and local level and provide stakeholders with a tool to measure performance along the path to improvements in public administration focused on the principles of subsidiarity, accountability and transparency. an effective management tool for these purposes is a performance monitoring plan. (pmp). a performance-monitoring plan (pmp) is a tool organizations use for planning; managing, and documenting performance associated with mutually agreed expected results, actions and timeframes that implementers are willing to be held accountable for achieving. the essential features of a pmp must assure that comparable data will be collected on a regular and timely basis. pmps promote the collection of comparable data by documenting performance indicator definitions reflected of what to measure to accomplish an expected result, resources and methods, frequency and schedule of data collection. as part of the pmp process, it is advisable to plan for how the performance data will be analyzed, and how it will be reported, reviewed, and used to inform decisions. it is always helpful if the pmp includes procedures for data analysis, reporting, and review efforts as part of the pmp process. this enables responsible units to collect comparable data over time-even when key personnel change. pmps support timely collection of data by documenting the frequency and schedule of data collection as well as by assigning responsibilities. in the pmp development process a participatory approach. the final step in designing a pmp is to define the indicators that will be used to measure the performance of those responsible for achieving the agreed upon expected results. responsibility for monitoring 123 should be assigned to a party outside of the ministry, agency or local government unit responsible for moving the reform process forward. finally, the requirement of a pmp process should be institutionalized and included in proposed administrative and legislative reforms. references 1. research study: profiroiu m, andrei t., “public administration reform in the context of the european integration”, financed by the european institute of romania, bucharest 2005 2. rondinelli, d.a., j.r. nellis, g.s. cheema, “decentralization in developing countries: a review of recent experience.” staff working papers number 581. washington, d.c.: world bank, 1983 3. rondinelli, d.a. “what is decentralization?” in litvack, j. and j. seddon (eds.). “decentralization briefing notes”, washington, d.c.: word bank institute, 1999 4. rondinelli, d.a. “what is decentralization?” in litvack, j. and j. seddon (eds.). “decentralization briefing notes”, washington, d.c.: word bank institute, 1999 5. law on local public administration no. 69/1991, government ordinance no.15/1992 on local taxes, and law no.27/1994 on local taxes 6. law no. 69/1991 and law no. 189/1998 on local public finance were amended 7. law no. 215/2001 on local public administration 8. example: law no. 326/2001 on public community services, government ordinance (go) no. 86/2001 on local passengers public transport services, go no. 84/2001 on the public service for people’s registration, go no. 88/2001 on the public services for emergency situations, go no. 202/2002 on the integrated management of the coastal area, go no. 21/2002 on the management of urban and rural communities, go no. 32/2002 concerning on the public services for water distribution and sewage, go no.71/2002 on setting up local public services for the management of public and private domains of local interest 9. krueger, ann, 1990. governance failures in the development process, journal of economic perspectives 4 (3): 9-23 10. regular report on romania’s progress towards eu accession 5 public policy makers and administrators around the world recurrently face the question of whether to grant tax privileges to businesses in order to promote investment, jobs, or economic development in general. this article analyzes a very popular form of local incentive, the property tax abatement, and its ability to reduce capital cost. the research question is: by how much do property tax abatements reduce the capital cost of business and homes? results show that abatements can account for quite a large range of possible percentage reductions in the price of investment for firms. the findings provide public administrators and policy makers with data and a tool to assess the benefits that firms derive from abatements. this in turn can contribute to more informed abatement decisions and to an overall assessment concerning the suitability of this tool to promote economic development. asssesing the impact of local incentives on capital cost: the case of the indiana era program esteban g. dalehite assistant professor, school of public and urban affairs, florida international university transylvanian review of administrative sciences, 16 e/2006, pp. 5-11 public policy makers and administrators around the world recurrently face the question of whether to grant tax privileges to businesses in order to promote investment, jobs, or economic development in general. as long as taxes are used to finance public expenditures, one can rest assured that businesses will be standing in line in the halls of legislatures and agencies waiting to make the case, or even issue ultimatums for tax incentives or privileges of one sort or another. moreover, public policy makers and administrators may actually aggressively pursue an agenda of promoting economic development through tax incentives. the problem faced by decision makers can be reduced to the basic question of should or shouldn’t abatements be awarded, given public objectives and the effects that can reasonably be expected from abatements. researchers have spent the better of 70 years exploring different aspects of these questions without reaching definitive conclusions. readers interested in a summary of the different aspects of the debate are referred to bartik (1991), wasylenko (1997), fisher and peters (1997), and anderson & wassmer (2000). this article explores the relatively unresearched area of local incentives and their ability to influence inter-local location decisions. in particular, the analysis focuses on a very popular form of local incentive, the property tax abatement, and its ability to reduce capital cost. the research question is: by how much do property tax abatements reduce the capital cost of business and homes? this topic has received some minor attention in the work of other researchers. 6 wolkoff (1985), for example, estimated that a one-year full abatement reduces the price of capital by 4 percent the purpose here is to make a more general analysis of the topic and to provide a range of reduction rates for different levels of property taxes and asset types. this research provides decision makers with useful information to consider in their abatement decisions and, in addition, with a simple method that can be easily adapted to different programs and regulatory frameworks to determine the impact of abatements on cost. the abatement program in existence in the state of indiana is used as a benchmark for the analysis. first, background information on the economic revitalization area program in the state of indiana is provided. this includes information on how the program works in practice, using information from monroe county. second, the impact of abatements on capital cost is assessed. finally, results are discussed and conclusions are provided. background1 section 6-1.1-12.1 of the indiana code contains the statutory provisions governing indiana’s central property tax abatement program for property located in economic redevelopment areas (era). the program has been subjected to a number of major changes since its inception in 1977 (chang 2001). first, the scope of the abatement program has expanded over the years. under the original legislation, local entities could award abatements to real property only. however, in 1983 abatements were allowed for new manufacturing equipment, and the scope of the program was further expanded in 2000 to include new research and development equipment. second, restrictions on the duration of abatement benefits have been relaxed since the program began. in 1977 legislation required that the benefits from property tax abatements be spread over a 10-year period. in 1986, additional flexibility was granted allowing local entities to award abatements for 3, 6, or 10 years in duration. in 2002 this flexibility was extended even further by granting local entities the right to approve abatements with durations anywhere between 1 and 10 years. third, accountability checks, which were omitted in the 1977 legislation, were instituted in 1991. accountability was achieved by requiring applicants to file a “statement of benefits” which, once approved by local bodies, could be used to hold businesses accountable for investments offered in exchange for abatements. award and evaluation process indiana has a local, discretionary award process. the first step is for a local “designating body” to identify and designate an “economic revitalization area (era).” an era can also be designated specifically as a “residentially distressed area (rda).” the definition of “designating body” is contingent on the structure of local government in a county. in a county that does not contain a consolidated city, the fiscal body of the county, city, or town is the designating body. however, in a county that contains a consolidated city, the metropolitan development commission created by the city-county legislative body is the designating body. the resolution identifying and designating an era may limit the type of deductions, dollar amounts of the deductions, and the duration of the designation. the designating body then publicizes the proposed resolution and conducts a hearing. final action is taken after considering objections. an aggrieved person may appeal, but the only ground for an appeal is whether a project meets the qualifications of the economic revitalization law. the next step is for an individual or an entity to present an application and a “statement of benefits” before the designating body. the ex-parte application can be filed before the designation and actually 1 this section is taken from mikesell, zorn, and dalehite (2003) 7 functions as a driver of the designation, or it can be filed after the designation, as an application for a particular deduction. the statement of benefits must include a description of and estimated value or cost of the project, and the number and salaries of people to be employed or retained. the designating body judges whether the information provided by an applicant is reasonable and whether the benefits justify the deduction. if the answer is in the affirmative, the designating body either designates the area or, if the area already exists, it allows the deduction. at the end of every year, the designating body must publish a list of the authorized deductions, including name of beneficiary, amount and years of the deduction. a statement of benefits may not be approved after december 31, 2005 (indiana code 6-1.1-12.1-9). in order for abatements to be awarded after this date, legislative reauthorization will be required. certain provisions of the indiana code refer to implementation, oversight, and evaluation of abatement agreements. first, the property owner must provide information showing compliance with the statement of benefits each year before the abatement deduction is allowed. if the designating body finds that compliance with the statement of benefits has not been substantial, then it may terminate the tax abatement. the corresponding resolution may be appealed by the owner. additionally, if the voluntary claw-back clause established in the indiana code is included in the designating resolution, and if the owner ceased operations at the facility and provided false information regarding plans for continuing operations at the facility, the owner will also be assessed an amount equivalent to the benefits received plus a 10 percent penalty. second, relocation of abated personal property can only take place within an era, or to another era that lies within the jurisdiction of the designating body. if the designating body allows the relocation, the deduction continues uninterrupted. finally, a state level review of the effectiveness of the program must be conducted every four years. a central issue that must be considered in this evaluation is whether the program has been instrumental in creating new jobs or in increasing income or the tax base in the jurisdiction of the designating body. it may also include impacts on tax burdens borne by various classes of property owners. eligibility and scope of the abatement program the property owner is entitled to an abatement if the property has been rehabilitated or the property is located in an area, which has been redeveloped. redevelopment means the construction of new structures in eras, while rehabilitation refers to the remodeling, repair, or betterment of property in any manner, or any enlargement or extension of property. abatement on real property may be offered to industrial, commercial and residential property, subject to the following qualifications. land is explicitly excluded from the abatement programs, as are facilities such as retail premises, golf courses, country clubs, massage parlors, tennis clubs and the like. in a rda only residential property qualifies for a deduction. residential abatements are otherwise limited to rdas, to economic development target areas, or to multifamily facilities where at least 20 percent of occupancy is made available to low and moderate-income individuals. personal property abatements are limited to industrial property, specifically new manufacturing and new research and development equipment. inventory property may not be abated. the property tax abatement takes the form of a deduction from the assessed value of the property. the amounts and schedules depend on the nature of the property and the type of designated area. in the case of a rda, the abatement is granted for 1 to 5 years, and the deduction is for the full assessed value of the improvement, subject to dollar caps. these caps depend on type of dwelling (e.g. $36,000 for a one family dwelling, $51,000 for a two family dwelling etc.). in the case of designated property in other eras, the abatement may be granted for 1 to10 years. the 10-year deduction or abatement schedule for real and personal property is provided in appendix 1. 8 methodology the methodology for calculating the percentage reduction in capital cost (%∆k) is relatively straightforward. we divide total tax savings (ts) from the typical 10-year abatement in indiana by the assessed value of eligible investment (i). this can be formalized as follows: %∆k = ts (1) i this fraction can be interpreted as the percentage reduction in the market or assessed value of assets at the time of purchase or start of operations. total tax savings is calculated as the present value of tax savings for each year in the 10-year abatement period. this can be formalized with the following equation: ( )= + = 10 1t t ttt r1 ai ts (2) where δ t is the fraction of investment that has not been depreciated for tax purposes in year “t”, a t is the fraction of un-depreciated investment that is abated in a particular year, τ t the total property tax rate for a tax district in a given year, “a” is the after-tax fraction of tax savings and, lastly, “r” is the discount rate. the depreciation schedule δ t is applicable to personal property but not to real property. thus δ t = 1 for all years in the case of real property. both the depreciation and abatement schedules (δ t and a t ) are provided in appendix 1. the after tax fraction of tax savings “a” is equal to 1-.35-.085=.565 for business, where .35 and .085 are the federal and indiana corporate income tax rates. for homes, a=1. this is because property taxes are deductible from the federal income tax for business, but not for residential homes. given that the federal and state corporate income tax rates are .35 and .085, businesses recuperate 43.5 percent of their property tax liability via the deduction from the corporate and state income taxes. this means that property tax abatements awarded to firms only provide an additional or marginal benefit equivalent to 56.5 percent of tax savings, given that the remaining 43.5percent was already in their possession. to simplify the analysis we make the assumption that the tax rate for each year equals the average tax rate over the 10-year period (τ t = ). this allows us to focus on one number rather than ten numbers. the effect of this assumption on the results is negligible except for wide swings in the property tax rate in one direction over the 10-year abatement period. this would be a rare occurrence considering, on the one hand, the many tax and expenditure limitations in place and, on the other, and the importance of the property tax as a revenue source for local jurisdictions. with this simplifying assumption, substituting equation (2) into (1) and rearranging factors yields the following: ( ) ( ) ( )= == + = + = + =∆ 10 1t t tt 10 1t t tt 10 1t t tt r1 a i r1 ai i r1 ai k% (3) equation (3) shows that ultimately the percentage reduction in capital cost is not a function of the amount of eligible investment (i), but rather of the average tax rate, corporate income tax rates, depreciation and abatement schedules, discount rate, and number of years. equation (3) is used to calculate the percentage reductions in capital cost presented in the following section. the values used as average tax rates are the actual 2005 minimum, maximum, median, and mean total tax rates for indiana taxing districts; the remainder are simply hypothetical tax rates between the minimum and maximum, rounded to the nearest hundredth. the depreciation and abatement schedules used are 9 those found in appendix 1. finally, a discount rate of 5 percent is used given that it approximates long term borrowing costs for indiana cities. results table 1 presents the results of the calculations for different average tax rates and types of property. table 1: percentage reduction in capital cost for eligible property by average tax rate and type of asset % reduction in eligible capital cost average 10-year residential business tax rate ( ) real real personal min: 0.011 4.7% 2.6% 1.2% 0.020 8.3% 4.7% 2.2% median: 0.023 9.7% 5.5% 2.5% mean: 0.025 10.4% 5.8% 2.7% 0.030 12.5% 7.1% 3.3% 0.040 16.7% 9.4% 4.4% 0.050 20.9% 11.8% 5.5% 0.060 25.0% 14.1% 6.6% 0.070 29.2% 16.5% 7.7% 0.080 33.4% 18.9% 8.7% max: 0.083 34.7% 19.6% 9.1% as one can see, the effect of abatements on the price of eligible capital can vary considerably, depending on the 10-year average tax rate ( ) and the type of property. the reduction is greatest for residential property, followed by business real and personal property. business property receives a lower reduction because of the deductibility of property taxes from corporate income taxes. in fact, the difference between the reduction rates for residential and business real property can be considered a subsidy of local entities to state and federal governments. for the case of real property, the residential/real column can be seen as the revenue loss to local entities due to abatements, and the business/real column as the part of revenue losses that actually benefit firms (the actual magnitude of the incentive). the difference goes to the state and federal governments whose revenues increase because abated property tax liabilities are no longer deducted from the corporate income taxes. finally, the reduction rates for personal property are lowest because of the added effect of the depreciation schedule. the two business columns are most relevant to policy makers and public administrators, given that impact on firms is more important from the standpoint of promoting economic development. these columns show that the cost of business real property can be reduced by as little as 2.6 and as high as 19.6 percent, depending on the 10-year average tax rate ( ). however, for jurisdictions that are centrally located in the distribution of average tax rates, the reduction in eligible capital cost will be somewhere between 5 and 6 percent. the relative reductions in capital cost are lower for personal property because of depreciation schedules. here, the reduction can vary from a low of 1.2 percent to a high of 9.1 percent, although firms in centrally located districts (in terms of the average tax rate) experience a reduction between 2 and 3 percent. 10 discussion and conclusion the calculations presented in the previous section show that abatements can account for quite a large range of possible percentage reductions in the price of investment for firms. the results provide public administrators and policy makers involved in abatement decisions with useful information regarding the possible impact and overall suitability of this tool as an instrument to promote economic development. wolkoff (1985) and rubin & zorn (1985) have expressed the need for public administrators to make informed case-by-case decisions regarding whether and in what amount to award abatements. this is considered necessary to make sure that abatements are indeed required to influence firm decisions, and that benefits to the community ultimately exceed cost. this is the area in which the information and method provided herein can be put to practical use.2 however, the exercise presented here must be taken in context. first, the results consider the impact of abatements on one portion of firm costs (eligible investment) and not total costs. investment made by firms can include a mix of real and personal property, eligible and non-eligible assets, as well as capital and non-capital costs. it might be useful to think of a continuum for each average tax rate that goes from the largest possible reduction in total cost, to the smallest possible reduction. at one end of the spectrum one would find capital-intensive firms that invest mainly in real property, and specifically in improvements. these hypothetical firms would receive the greatest reduction in total cost, resembling the percentages contained in the business/real column of table 1. as the percentage of personal property, non-eligible, and non-capital cost increases, the effect of abatements on total cost will decrease. at the other end of the continuum one would find labor-intensive firms that invest mostly in ineligible personal property. the reduction in capital cost for these hypothetical firms may well be below those of the business/personal column. the method presented here can easily be extended or modified to calculate reductions in total costs considering a diverse mix of assets and costs. second, even if abatements can account for a relevant reduction in capital costs or even total cost, this does not necessarily imply that they influence the investment or location decisions of firms. at most, as expressed above, it provides additional information to decision makers that may contribute to sound abatement awards. some researchers have pointed out in the past that the effect of abatements on profits may be a more powerful indicator of the potential of abatements to influence investment and location decisions (oakland 1974). an avenue of future research would be to translate these cost reductions into profit margin increases under different scenarios. lastly, the calculations performed in this article consider the structure of the abatement program in the state of indiana. to extend these findings one would have to consider the differences between this program and those contained in other states or countries. references 1. anderson, john e., and robert w. wassmer, 2000, bidding for business: the efficacy of local economic development incentives in a metropolitan area. kalamazoo, michigan: w.e. upjohn institute for employment research 2. bartik, timothy j., 1991, who benefits from state and local economic development policies? kalamazoo, michigan: w. e. upjohn institute for employment research 3. chang, yu-che, 2001, evaluating the structural effects of property tax abatements on economic development across industries. phd dissertation, indiana university, bloomington 4. dalehite, esteban g., 2006, promoting economic development with tax incentives: a primer on property tax abatements. in handbook of public financial management, edited by h. frank. boca raton, fl: taylor & francis group 2 for literature on other factors to consider in the abatement decision, the reader is referred to dalehite (2006) 11 5. fisher, peter s., and alan h. peters, 1997, tax and spending incentives and enterprise zones. new england economic review (march/april): 109-130 6. mikesell, john l., c. kurt zorn, and esteban g. dalehite, 2005, effects of property tax abatement on tax rates and capital costs: the case of monroe county, indiana [working paper]. lincoln institute of land policy 2003 [cited march 2005]. available from http://www.lincolninst.edu/pubs 7. oakland, william h., 1974, local taxes and intraurban industrial location: a survey. in metropolitan financing and growth management policies, edited by g. f. break. madison, wi: the university of wisconsin press 8. rubin, barry m., and c. kurt zorn, 1985, sensible state and local economic development. public administration review 35 (2): 333-339 9. wasylenko, michael, 1997, taxation and economic development: the state of the economic literature. new england economic review (march/april): 37-52 10. wolkoff, michael jay, 1985, chasing a dream: the use of tax abatements to spur urban economic development. urban studies 22: 305-315 appendix schedule for real and personal property 10-year abatement year of abatement % eligible investment deducted real personal 1st 100% 100% 2nd 95% 90% 3rd 80% 80% 4th 65% 70% 5th 50% 60% 6th 40% 50% 7th 30% 40% 8th 20% 30% 9th 10% 20% 10th 5% 10% depreciation schedule for personal property (useful life=10 years) year of use taxable percentage of original cost 1st 40% 2nd 60% 3rd 55% 4th 45% 5th 37% 6th 30% 7th 25% 8th 20% 9th 16% 10th 12% 67 compared to other international economic zones, three main features characterize europe. first, even though europe is a multicultural territory, characterized by similarities and differences among the nations that compose it, “these nations have more commonalities rather than aspects that differentiate them”1. makridakis analyses the similarities and the differences among members of european union, and he demonstrates in his study that the cultural differences do not represent a major obstacle on the way to european integration. secondly, europe has a unique combination of a welleducated and trained work force that influences the characteristics of the labor market. “a high level of state intervention and rules similar with those that regulate the standard market economy”2 characterizes this market. but, the labor market is one of the least integrated markets of europe. there are different barriers that limit the integration process. “cultural and linguistic barriers cannot be very easily overpassed”3 and also, there are high differences between productivity levels and national regulations among eu countries. thirdly, europe has a large number of sophisticated consumers that have a high buying power. europe, and especially the european union, meets the judicial, cultural, institutional, the management of public institutions face to face with the europeization process felicia cornelia macarie lecturer, the faculty of political, administrative and communication science, branch campus at bistriţanăsăud, babeş-bolyai university, cluj napoca romania’s integration in the european union is a real challenge for romanian managers, especially for those working in the public administration field. it is vital that all romanian clerks be aware of the european realities in order to meet its possible demands. transylvanian review of administrative sciences, 15 e/2005, pp. 67-76 1 makridakis, s., single market europe, jassey, bass publischer, san francisco, oxford, 1991, p. 275 2 tsoukalis, l., noua economie europeana, ed. arc, chisinau, 2000, p. 118 3 tsoukalis, l. op. cit. p. 274 68 economic, scientific, technological and educational requirements to usefully use its strengths. the integration of eu countries represents the process of taking advantage of these strengths. “there is a current trend that national policies are driven by european values that involve changes in all fields (economic, administrative, social, scientific, educational and political) aimed to achieve a greater globalization of relationships among the european member states. this process maximizes the competitive strengths that characterize it”4. the europeization5 is based on cultural similarities and differences among european union member states and it is aimed to achieve a comprehensive european identity that will bring together cultural and other differences and similarities. the major parts of the european driven process are the european single market and the european single currency. europeization is a difficult, complex and long-term process and it represents the pillar of the european management development. the need for european management is explained by six factors: 1. the integration of the european economy through the foundation of the european single market and single currency influenced the development of a new social, political and economical environment for businesses. in this context, a new type of management is needed, which can be easily applied in making decisions and implementing european policies within all the institutions of the european member states. this new management should overcome physical, and the more important and complex cultural barriers among member states. the enhancement of the europeization process determines transnational relationships of labor, capital, and services, which leads to innovations in regard to managerial practices, new structures, methods and mechanisms. 2. the regulations and the political and economical premises of the european community represent the second factor that determines the creation of european management. in this context, the regulations and policies regarding the fiscal system, labor, environment and communications are extremely important. the management exerted on these organizations explains an important part of these regulations. 3. the experience and the efforts of the european managers represent the third factor that created the premises for european management. within the european union, there are common or similar managerial practices for the european union member states. the use of these practices proved to be efficient. furthermore, the business relationships between companies from different states are more facile and efficient when the managerial practices have many common elements. 4. the practice of the big transnational companies in developing european headquarters represents the fourth factor. the mission of these headquarters is to plan and coordinate the activity of the branches that operate in europe. in this context, the transnational companies are interested in shaping a unitary perspective of the management of european branches. 5. the establishment of european organizations in the context of european integration to promote a european identity that would motivate people represents the fifth factor. 6. the major changes in the competition field transfer competition between european countries to competition between european companies or competition between european union and the rest of the countries of the world. these transfers represent the sixth factor that created the need for european management. 4 nicolescu, o., management comparat, ed. economica, bucuresti, 2001, p. 168 69 a new type of management was developed as a result of the influences of the above-mentioned factors. the main reason why it is difficult to define european management stems from the fact that the european management cannot be located or analyzed in the context of a single culture, as in the case of the north american or japanese management. this aspect caused many conceptual and methodological difficulties. the european management is just in the embryonic stage of its development, when the content, the functions and the ways of applying to the real context are defined. even though we cannot argue that the european management will become dominant in europe, many european organizations are more orientated toward using european management, even if they are not aware of doing that. in conclusion, we can argue that the european management represents a combination of elements that are based on beliefs and values agreed on by european union member states. it includes abilities and specific competences needed to face the european union context. also, it represents the sum of national management styles from the european union and the synthesis of these styles that resulted after comparative studies were conducted. the european management will be applied in the managerial practice at the following levels: • at the level of the managers of the private multinational and national companies that are strongly integrated in european union economy through supplying, selling, financial and personal relationships. in order to achieve the positive financial goals, they have to know and to apply the principles of the european management, working and making decisions like european mangers. • at the level of the managers of the private corporations that are performing their activities within the national market, but that have to use some elements of european management because the economic activities that they perform are regulated by the european union strategies and regulations. • at the level of managers of small private organizations that perform their activities exclusively at local level within national boundaries • at the level of managers of national public organizations that have to apply and monitor the implementation of the white book6 provisions. the ideal profile of the european manager requires that she/he has certain specific characteristics that differentiate him from other managers: • the ability to understand the european environment and the specifics of its cultural, social, political and economic complexity; • the capacity to create, imagine and perform new activities that surpass the national cultures and barriers; • the ability to motivate the employee, despite his or her cultural values, in order to achieve the mission and the objectives of the organization; • the capacity to gain the support of national stakeholders, when they are doing business in other countries in order to perform the activities of the organization; 5 this is a concept that has gained acceptance in the last several years in different policy fields. similar terms include globalization and internationalization. 6 white book of european commission, which was published in june 1985, was included in the european union treaty when the single european act was signed when the luxemburg council met in december 1985. presently, there are implemented 300 regulations that were adopted and implemented according to the white book. these regulations are in the following fields: standards, testing, certifying, assemblage, labeling, transportation, health, procurement, services, capitals, organizational behavior, taxes and fees, national transit, interior commerce, labor and e.u. specialists movement. 70 • the ability to accept and use the international mobility in order to manage an international career; • the capacity to select and use information from the exterior environment of the organization; • good knowledge of the european union policies and regulations; • to have work experience in a context other than national; • to have personal and family mobility that would allow them to live in different cultural contexts. these characteristics are based on a combination of personal features and competences that the european managers should have: • a high level of education (master or phd); • confidence in the personal ability to achieve important objectives, based on managerial and technical competence; • the ability to have empathy for different cultures and people. this ability should be supported by the desire to discover and harmonize divergent issues. these features are based on knowledge of several foreign languages and on the capacity to communicate. • awareness of the personal values and cultural preference; • a strong desire to accept changes in the professional field throughout life, which implies flexibility and ability; • managerial experience in a national context; • the courage to take risks; • capacity and desire to learn and start from the beginning; • good intuition in regard to human relations. the literature7 discusses a possible european model of management. even if it is not adopted in a formal way, it will evolve, as integration continues through the extension to the east, and through the assimilation of new managerial practices and experiences, to be systemized in a way that will allow a greater accessibility throughout europe. the features of the european management model8, which is the development stage, can be: 1. new characteristics of the environment where the organizations are performing their activities. currently, the organizational environment is characterized by: o a broader perspective on the organizations, considering that europe has the biggest market on the world and the european union is the biggest trader in the world, performing over 50% of the international commerce; o capacity to manage organizations characterized by great cultural diversity and performing the activity in a very heterogenic cultural environment; o organizational flexibility and adaptability to the dynamic evolution of the environment; o a network of managerial relationships at the european level based on personal relations between managers, some of them having historical determinations, and others which were formed in schools, on vacations or participation in international organizations. 2. equilibrium between management and leadership. this is based on the fact that presently, in the european union an important emphasis is on a focused leadership and on human dimension of activities, which is the opposite of the situation in the u.s. the equilibrium between management and leadership has the following elements: 7 nicolescu, o., op. cit., p. 176; burduş, e., management comparat, ed. economica, bucuresti, 1998, p. 172 8 nicolescu, o., op. cit., p. 176-177. professor o. nicolescu takes this european model of management from the works of the belgian professor ph. de woot 71 • currently, leadership is more important than management because of the predominance of the turbulent situations that the managers have to face; • leadership should be based on the capacity to articulate a coherent conception that would reflect cultural differences and that would be able to take advantage of the european single market and the european single currency, and also of the other mechanisms created by the european union • the application of leadership through intense and efficient communication processes that are shaped according to the involved cultural similarities; 3. redefining the goal of the organization taking into consideration its multi-dimension and its cultural features. in this process we should consider two aspects: • in the european union the base of the managers’ power is larger than the power of the managers from the u.s. in the american context, the legitimacy of the general manager and the higher decision makers is represented, in the private companies, by the general assembly of the stakeholders.9 in the european union, it is not enough for the managers to be approved by the stakeholders. the employees, the union, and in certain situations the politicians, political parties and local public institutions should also approve the managers. this procedure is common also for the public institutions. so, the situation in european union is more complex than in the u.s. because it has a more predominantly political character. • the perception of the population, specialists and managers regarding the role of the market in the economic activity has certain characteristics. in the european union, where the majority of the population is christian and therefore animated by socialist ideas, the management has a predominantly social dimension. it is orientated, according to the specialists, toward a socalled “capitalist responsibility”10 and not toward pure capitalism. it is important to analyze each national context in order to understand the model of european management. the analysis should be conducted following the observations recommended by geert hofstede, who is the founder of the comparative management model, which is named for him11. this model has four cultural dimensions, each of them being influenced by the interaction between complementary and contradictory elements12: 1. individualism or collectivism? the intensity of the relations between people in a society is one of the cultural dimensions that generate differences between cultures. there are major differences between different cultures regarding the community life. it has been observed that wealthier is a country, more individualistic is the mentality of the citizens. also, it has been observed that the poorer a country is , more developed the community spirit is. 9 this concept defines the executive structure in the company formed as a joint-stock company where the stock holders decide the naming of the superior management (administration board) 10 the concept belongs to ph. de woot 11 geert hofstede, a dutch researcher, being preoccupied by the study of cultural differences and their impact on the management, has conducted a thorough research. this research includes the results of other previous researches conducted together with the french andre laurent who researched and studied the philosophical concepts and managerial behaviors of nine western countries, u.s. and two asian countries: indonesia and japan. hofstede studied first 40 countries, but later he enlarged this number to 72. also, he used a questionnaire to interview more than 116,000 people from oriental and western cultures. the study was conducted between 1967-1973 within an international industrial group (hermes) located in the u.s. like a. laurent, hofstede found differences in the behaviour and the attitude during the work of the managers and the employees that work in multinational companies. hofstede revealed that most of the differences in the values and the attitudes connected to work are explained by the national cultures rather than by one’s profession, sex or age. 12 hofstede, g., managementul structurilor multiculturale, ed. economica, 1996, p. 92-98 72 hofstede identified certain premises of individualism: • a high level of economic development • a great social mobility • a moderate or cold weather • the need for human intervention in the nature for survival • high level of industrial and urban development • families with few children • a strong tradition of classic capitalism the premises of collectivism identified by hofstede are: • a low level of economic development • low social mobility • tropical or subtropical weather • no need for a strong human intervention on the nature for survival • strong and developed agriculture combined with low level of industrial and urban development • families with many children • frequent social movements the implications for management in the cultures based on individualism are: • the relations between the members of an organization are based on interests; • the employees do not expect the organization to take care of them; • the existence in an organizations is based on personal initiatives; • promotion is from interior as well as from exterior; • the personal decisions are predominant; implications for the management in the collectivist cultures are: • the relations between the members of an organization are based more on moral values; • the employees expect that the organization they work for to take care of them; • the life in the organization is based on loyalty and sense of duty; • promotion is from interior, based on years of experience • the group/collective decisions are predominant; great britain, netherlands and germany are examples of european countries that have cultures based on individualism. ireland, portugal and greece are examples of countries with collectivist cultures. 2. is the distance from power small or great? the cultures are different among them according to the importance given to inequalities in economical and social functioning. a small distance toward power or a strong collaboration with the power characterizes the societies that tend to reduce the inequalities in power and wealth. the cultures that are characterized by great differences in power and wealth are considered having a great distance toward power or a small collaboration with the power. the premises that ensure the small distances from power identified by hofstede are: • countries with temperate and cold weather; • countries that need the human intervention on the nature; • countries with strong developed industries; • high social mobility; • national wealth; • a high percentage of middle class; • the political power is based on a representatives system; • the education is based on dialogue 73 the premises that ensure the great distance from power identified by hofstede are: • tropical or mediterranean weather; • a limited human intervention on nature for survival • traditional agriculture • low social mobility • not a very large middle class • reduced national wealth; • military political power or oligarchy; • education that lacks dialogue • the wealth is divided among a minority group; italy, france, belgium and spain are examples of countries that are characterized by great distance from power, while austria, denmark, ireland, sweden, norway and germany are examples of countries characterized by small distance from power. this dimension influences the management in the following way: in cultures characterized by small distance from power, we can distinguish the following characteristic features: • the organizational structure has a small number of hierarchical levels; • a small difference between wages; • high skilled workforce; • the workers have the same status as the clerks; in cultures characterized by a great distance from power, we can distinguish the following characteristic features: • the organizational structure has many hierarchical levels; • a high diversity of the wages; • low skilled workforce; • clerks have a privileged status comparatively with the workers; this dimension influences also the organization of unions. in the countries with a great hierarchical distance unions function in a centralized manner, while countries with a small hierarchical distance, unions have a more pragmatic orientation, being oriented more toward fighting for wages, working environment or the security of the working place. 3. is the control of uncertainty highly intense or reduced? the control of uncertainty is a cultural dimension that measures the level of tolerance toward anxiety generated by future events. the higher the tolerance, the lower the control of uncertainty. there are cultures where people consider that uncertainty is part of their life, and it cannot be influenced. these cultures have a low control of uncertainty. in other cultures, people consider that the future is challenging and they fight to influence it. a high control of uncertainty characterizes these cultures. conditions that allow an intense manifestation of control of uncertainty identified by hofstede are: • developing countries; • young democracies; • intolerant religions; conditions that allow a reduced manifestation of control of uncertainty identified by hofstede are: • developed countries; • traditional democracies; 74 • tolerant religions; • countries that have high density of population, but which are poor and countries with low density of population, but which are wealthy; greece, france, belgium, portugal, italy and austria are examples of cultures with a high control of uncertainty. denmark, sweden, great britain, ireland and finland are examples of cultures with a low control of uncertainty. cultures characterized by low control of uncertainty have a low nervous tension at the working place, a high mobility of employees, preference for small size organizations and more probability of taking individual risk. countries with high level of uncertainty control have conflicts at the working place, preference for big corporations and smaller probability of taking individual risk. the high control of uncertainty influences the organizational management in the following way: • preference for small size organizations; • no ambition for promotion and preference for managers with more experience; • preference for taking a more formal attitude in performing the prevision function; • tendency to avoid competition between employees; • resistance to change; • group decisions are the most common; • promotion from interior; the low control of uncertainty influences the organizational management in the following way: • people prefer small organizations; • ambition for promotion and preference to promote young people; • performing the prevision function is not very important; • stimulating the competition between employees; • high tolerance to change; • individual decisions are most common; • promotion is from interior and from exterior; countries with low control of uncertainty are characterized by having less stress and disagreement of aggressiveness, the emotions are hidden and the authorities are working for citizens. countries with high control of uncertainty are characterized by more stress, people believe that time means money, aggressiveness is accepted and values are important. 4. masculinity or femininity? the following premises characterize cultures dominated by masculinity: • emphasized differentiation of values; • success is the most important; • money and wealth are the most important; • people fight to achieve their goals and dreams; • admiration for successful people; • appreciation for the things that are important or have large sizes; the characteristics of cultures dominated by femininity are: • interchangeable roles are accepted; • importance for the quality of life; • the work is needed in order to live; • people and the environment are important; • the dream or the goal is to be useful for the others; 75 • understanding and compassion for less fortunate people; • appreciation for what is beautiful and have small sizes; austria, italy, switzerland, great britain, germany and greece are characterized by masculinity, while sweden, denmark, norway, france and spain are characterized by femininity. masculinity determines the following features in the organizational management: • women that hold leadership positions are aggressive; • high level of tension at the working place; • both women and men are dedicated to have a career; • reconfiguration of responsibilities favor personal achievement; femininity determines the following features in the organizational management: • decisions taken by one person are predominant; • women that hold leadership positions are not aggressive; • tension at the working place is reduced; • group decisions are predominant; • reconfiguration of responsibilities favor integration in the group of the employees; hofstede’s study concludes that the organizations and the management have a cultural determination that not only influences organizational behavior, but also has an impact on transferring the management from one country to another. this has explained that organizations and the management use symbols that come from what people learned in family, at school, in the community that they belong to, or at the work place. all these differences identified by hofstede’s study represent in the european integration practice as being major barriers. the experience of the european union member states proved that european integration is not a simple and linear process, not even for countries that have similar levels of development. the shock and the harmonizing difficulties for the romanian management will be extremely strong because our country has many important objectives to achieve in a very short period of time. the european union is asking romania to reform public management, but people working in the public system barely know what public management is. in this sense, we consider that managerial training of the romanian civil servants is needed in order for them to become more familiar with the requirements of the new european organizational environment. the first step in the europeization process of the romanian civil servants is to train them to become fully knowledgeable of the european regulations and their implementation. but the most difficult barrier to overcome still remains the cultural differences needed to harmonize the attitude and the behavior toward organization and job performance. as far as we know, there is no study of management completed of the romanian organizations. such a study is needed in order to identify the cultural dimensions that characterize them. if we analyze romania from the perspective of grouping european countries in “anglo-saxon, germanic, latin, northern and eastern, then we can characterize the country as being latin”13. the major arguments are: a medium to great coefficient of individualism, a great distance from power, a powerful control of uncertainty and a low coefficient of masculinity. but romania can also be characterized as an eastern country because of collectivism, high distance from power, a powerful control of uncertainty and a medium coefficient of masculinity. 14 13 burduş, e., op. cit., p. 167-168 14 these statements represent only estimation of the four cultural dimensions as they aren’t grounded on enough pieces of information. the lack of the comparative studies in the romanian organisations transform these estimations into mere assumptions. 76 in the context of the integration of romania in the european union, the process of europeization of the romanian public institutions is necessary and inevitable. the short history of european union has successes and failures. people have to know and avoid the failures and the errors of the european construction. romania will become completely integrated in european union only if the national cultural particularities will assimilate those european values that can enhance the performance of the organizational structures strongly eroded by the old mechanisms and communist behaviors. the central and local public institutions have to generate renewal and the management will play a decisive role. references: 1. adler, nancy, a tipology of management studies involving culture, journal of internatioanl business review, nr. 4, 1990 2. burduş, eugen, management comparat, ed. economică, bucureşti, 1998 3. coates, charles, managerul total, ed. teora, 1995 4. compagnon, a., seebacher, j., spiritul europei, vol. 1, 2, 3, editura polirom, 2002 5. defarges, philippe moreau, instituţiile europene, ed. amacord, timişoara, 2002 6. drucker, peter f., realităţile lumii de mâine, ed. teora, bucureşti, 1999 7. drucker, p., societatea postcapitalistă, ed. image, 1999 8. dăianu d., vrânceanu r., românia şi uniunea europeană, ed. polirom, iaşi, 2002 9. hofstede, geert, managementul structurilor multiculturale, ed. economică, bucureşti, 1996 10. ionescu, gh., gh., dimensiunile culturale ale managementului, ed. economică, bucureşti, 1996 11. kotarbinski, tadeus, tratat despre lucrul bine făcut, ed. politică, bucureşti, 1976 12. marga, andrei, filosofia unificării europene, ediţia a ii a, biblioteca apostrof, cluj-napoca, 1997 13. makridakis, s., single market europe, jassey, bass publischer, san francisco, oxford, 1991 14. nicolescu, ovidiu, management comparat, ed. economică, bucureşti, 2001 15. păun, nicolae, istoria construcţiei europene, ed. fundaţiei pentru studii europene, cluj-napoca, 1999 16. popa, i., filip, r., management internaţional, editura economică, bucureşti, 1999 17. pollitt, ch., bouckaert, g., reforma managementului public, ed. epigraf, 2004 18. pugh, d.s., hickson, d.j., contribuţii la studiul organizaţiilor, editura codecs, bucureşti, 1994 19. toffler, a., powershift, ed. antet, bucureşti, 1995 20. trompenaars, fons, riding the waves of culture: understanding cultural diversity in business, the economist 21. books, london, 1993 22. tsoukalis, loukas, noua economie europeană, ed. arc, 2000 22. zăpârţan, liviu petru, construcţia europeană, ed. imprimeriei de vest, oradea, 2000 163 this study critically analyzes how the theoretical concept of capital investments plan (cip) can be employed in order to better understand the financing decisions regarding various investment project undertaken by the cluj-napoca city hall. different financing scenarios are then analyzed. capital investments plan for 288 streets from cluj-napoca paul zai teaching assistant, department of public administration, faculty of political, administrative, and communication sciences, babeş-bolyai university, clujnapoca adrian mihai inceu senior lecturer, department of finances, faculty of economics, babeş-bolyai university, cluj-napoca dan tudor lazăr associate professor, department of public administration, faculty of political, administrative, and communication sciences, babeş-bolyai university, clujnapoca transylvanian review of administrative sciences, 16 e/2006, pp. 163-173 the theoretical framework regarding the concept of “capital investments plan” has already been addressed in depth in the literature1. therefore, this analysis 1 adrian mihai inceu, dan tudor lazăr, „managementul financiar al comunităţilor locale”, isbn 973-99690-3-8, ed. gewalt, cluj-napoca, 2000; ed. marineasa, timişoara, 2003, http://www.civitas.ro/docs/management_financiar. doc; dan tudor lazăr, adrian mihai inceu, “metodele bugetelor pe programe şi performanţă”, revista transilvană de ştiinţe administrative (issn 1454-1378), nr. 3(12) 2004, pp. 99-105; adrian mihai inceu, dan tudor lazăr, „programul de investiţii de capital”, revista transilvană de ştiinţe administrative (issn 1454-1378), nr.2(5) / 2000, pp. 190-199; dan tudor lazăr, adrian mihai inceu, paul zai, „elemente de fundamentare a cheltuielilor municipiului baia mare folosind metode moderne de elaborare a bugetului”, în vol. “lumea financiară – prezent şi perspective”, ed. casa cărţii de ştiinţă, cluj-napoca, 2004 (isbn 973-686-660-2), pp. 317-324; 164 focuses on a case study that illustrates how this concept could be employed in practice in order to analyze the financial decisions of local municipalities. in order to better understand the method of planning, programming and budgeting systems (ppbs), the concept of capital investment program (cip) was employed for a public works project involving 288 streets in cluj-napoca romania. in the case study the street rehabilitation program in cluj-napoca is briefly described and critically assessed in light of the aforementioned methods. the streets that are part of this program are located in the city’s most important neighborhoods: andrei mureşanu, aurel vlaicu, bulgaria, central-horea, dâmbu rotund, georgheni, grigorescu, gruia, iris-oaşului, manaştur, mărăşti, plopilor, someşeni, zorilor, n. titulescu, and cordoş. the analyzed program aims to rehabilitate the most important streets from each of these neighborhoods. the table below shows the number of streets in each neighborhood that are going to be rehabilitated in the near future. table 1 neighborhood name number of streets andrei mureşanu 30 aurel vlaicu 8 bulgaria 14 central-horea 14 cordoş 12 dâmbul rotund 46 gheorgheni 7 grigorescu 15 gruia 26 iris-oaşului 21 mănăştur 6 mărăşti 12 plopilor 7 someşeni 45 titulescu 8 zorilor 17 the indicators used in this analysis for each street are: the surface of the street, the length of the street, number of persons who reside on a certain street, tax value, and estimated value in euro and rol for the rehabilitation of the street. paul zai, adrian mihai inceu, dan tudor lazăr, „elaborarea programului de investiţii de capital la nivelul bugetului judeţului bistriţa – năsăud”, în vol. “lumea financiară – prezent şi perspective”, ed. casa cărţii de ştiinţă, cluj-napoca, 2004 (isbn 973-686-660-2), pp. 409-418. 165 table 2 no. crt. street name street surface length no persons/st. tax value estimated value euro estimated value thousands rol 1 lunetei 1710 297 37 83.899.835 97.165 3514652,38 2 malinului (partialy) 3580 510 103 194.748.665 203.421 7358144,412 3 alexandru d. xenopol 2400 240 29 517.834.335 136.372 4932847,984 4 ioan pop reteganu 1860 310 86 188.840.167 105.688 3822946,336 5 matei basarab 1336 100 39 29.424.417 75.913 2745925,036 6 victor hugo 1734 80 28 45.486.666 98.528 3563954,816 7 zaharia barsan 1948 204 41 38.690.333 110.688 4003806,336 8 silviu dragomir 2660 380 11 11.439.000 151.155 5467578,66 9 jozsef attila 3150 350 94 97.207.749 178.988 6474353,936 ……………………… 101 viorelelor 2300 258 11 9.453.000 181.668 6571294,896 102 timisului 4500 650 73 270.927.917 355.437 12856867,16 103 bobalna ii 5965 600 75 156.853.498 471.151 17042473,97 104 alesd 1440 150 51 50.841.333 413.740 14965803,28 ……………………… 283 morarilor 1750 250 23 26.330.667 149.454 5406050,088 284 orzului 1348 170 80 36.106.834 115.122 4164192,984 285 scolii 2170 310 119 96.992.999 185.323 6703503,556 286 oradiei 2164 340 6 2.116.000 184.810 6684947,32 287 triajului 2880 320 19 6.717.666 235.959 8535108,948 288 tribunu andreica 2700 300 114 94.919.417 230.586 8340756,792 the rehabilitation cost (in euro) was estimated taking into consideration the surface of the street, the length of the street, and the condition of the street. our costs are estimated in euro because the bonds were issued in euro with a value of 15.000.000. for financial calculation purposes the exchange rate of euro into rol is 35.705 rol/euro. this value will be used for different calculations in the scenarios presented in the last section of the paper. for simplicity, for each street was given a number starting from 101 to 388. the main reason for assigning these numbers was to avoid a possible confusion with the numbers assigned for the evaluation criteria. the following step in the proposed analysis was to establish a score based on 8 criteria. the criteria are: • intersection with the main streets, • the location of the street, • the volume of traffic on the street, • the number of persons who live on that street, • the amount of taxes collected paid on that street by the persons who live there, • the number of lanes on each street, • access to residence areas, • how many public transportation vehicles operate on a given road. in the following paragraphs an explanation of how scores for each criterion were assigned is provided. if the street is in fact a main street 20 points were assigned, 15 points if the street intersects with 2 or more main streets10, if it intersects with 1 main street 5, and 0 if it doesn’t intersect with any main street. 166 intersection with principal streets s core for in te rse cti on wi th pri n ci pal stre e tsmain st reet s; 20 int ersect 2 main st reet ; 15 int ersect 1 main st reet ; 10 int ersect 0 main st reet ; 0 0 5 10 15 20 25 sc or e b position of the street c traffic on the street d number of persons e tax f lines g street with access at populated zone h passed by ratuc vehicles note: all scores assigned were given by the technical departments, taking into consideration the specific features of cluj-napoca s core for posi ti on of th e stre e t cent er; 20 neighborhoo d; 10 periphery; 0 0 5 10 15 20 25 sc or e s core for traffi c vehicles above 1700; 20 1301 and 1700 vehicles; 15 851 and 1300 vehicles; 10 426 and 850 vehicles; 5 0 and 425 vehicles; 0 0 5 10 15 20 25 sc or e s core n u m be r of pe rson sover 1000 persons; 20 500-1000 persons; 15 100-500 persons; 10 10-100 persons; 5 0-10 persons; 0 0 5 10 15 20 25 sc or e s core for tax val u eover 500000; 20 50.000 – 500.000; 15 1.000 – 50.000; 10 0-1.000; 5 0; 0 0 5 10 15 20 25 sc or e the scores for the second criterion (the position of the street) were assigned as follows: 20 points if it is situated in the center of the town, 10 if it is situated in the center of one neighborhood, and 0 if it is located at the periphery. with regard to the traffic criterion the scores were assigned as follows: 0 points if the average number of vehicles on that street at peak hours is between 0 and 425 vehicles, 5 points if the average number of vehicles on that street at peak hours is between 426 and 850 vehicles, 10 points if the average number of vehicles on that street at peak hours is between 851 and 1300, 15 points if the average number of vehicles on that street at peak hours is between 1301 and 1700 vehicles on congestion hour, and 20 if the average number of vehicles on that street at peak hours is above 1700 vehicles. 167 score for no. of lines 4 lines; 20 2 lines; 10 1 line; 0 0 5 10 15 20 25 sco re s core for th e acce ss to re si de n ce are asst reet s wit h blocks; 20 st reet s wit h single family house and blocks; 10 st reet s wit h single family house; 0 0 5 10 15 20 25 sc or e s core for passe d by pu bl i c ve h i cl e s2 vehicles; 20 1 vehicle; 10 0 vehicle; 0 0 5 10 15 20 25 sc or e at the following criteria, number of persons, we used the following score: 20 for over 1000, 15 for 500-1000, 10 for 100-500, 5 for and 0 for 0-10. in regard to the tax value we gave 20 points for taxes over 500.000 thousands rol, 15 between 50.000 – 500.000 thousands rol, 10 between 1.000 – 50.000 thousands rol, 5 between 0-1.000 thousands rol and 0 for 0 rol. for the sixth criteria we gave the following points: 20 for 4 lanes in one direction, 10 for 2 lanes in one direction and 0 for one lane. regarding the following criterion (the access to residence areas) the following scores were assigned: 20 points for streets with blocks, 10 for streets with single family houses and blocks and 0 for streets with only single family houses. for the last criterion we gave 20 points for over 2 public transportation vehicles, 10 points for 1 and 0 for none. table 3 project objectives score criteria ..a.. ..b.. ..c.. ..d.. ..e.. ..f.. ..g.. ..h.. 101 lunetei 0 0 5 10 10 0 20 0 102 malinului (partially) 0 0 10 15 10 0 20 0 103 alexandru d. xenopol 0 0 5 20 10 0 20 0 104 ioan pop reteganu 0 0 5 15 10 0 20 0 105 matei basarab 0 0 5 10 10 0 20 0 106 victor hugo 0 0 5 10 10 0 20 0 107 zaharia barsan 10 0 5 10 10 0 20 0 108 silviu dragomir 10 0 5 10 10 0 10 0 109 jozsef attila 10 0 5 10 10 0 20 0 …………………. 144 viorelelor 10 0 5 5 10 0 20 0 145 timisului 10 10 5 15 10 10 20 0 146 bobalna tronson ii 10 0 5 15 10 0 20 0 147 alesd 0 0 5 10 10 0 20 0 ………………….. 383 morarilor 0 0 5 10 10 0 20 0 384 orzului 0 0 5 10 10 0 20 0 168 385 scolii 10 0 10 10 10 0 20 0 386 oradiei 0 0 0 1 10 0 0 0 387 triajului 10 0 5 5 10 0 20 0 388 tribunu andreica 0 0 10 10 10 10 20 0 although we wanted to have as criteria the parking spaces on the street we thought that this is not an appropriate criteria because in cluj-napoca the parking lanes are insufficient and so people are choosing to park even if they broke the law. after this step we have to calculate the total score of all 8 criterions. the maximum score that can be obtained is 8 criterions multiply with maximum score 20 equal 160 points. table 4 project estimated value euro total score cost/ impact 101 97.165 45 2159,4 102 203.421 55 3698,56 103 136.372 55 2479,49 104 105.688 50 2113,76 105 75.913 45 1686,96 106 98.528 45 2189,51 107 110.688 55 2012,51 108 151.155 45 3359,00 109 178.988 55 3254,33 …………… 144 181.668 50 3633,36 145 355.437 80 4442,96 146 471.151 60 7852,52 147 413.740 45 9194,4 …………….. 383 149.454 45 3321,20 384 115.122 45 2558,27 385 185.323 60 3088,72 386 184.810 11 16800,91 387 235.959 50 4719,18 388 230.586 60 3843,10 from all 288 streets we have the biggest scores for the following streets: 160 for 21 decembrie street, 140 for campina and unirii streets, 135 for eroilor and alexandru vaida voivod streets, 130 for republicii street. the lowest scores received are the following: scărilor alley (10 points), alexandru davila street, căruţaşilor street, and măgura steet (20 points), tufei street, pârâului street, and aramei street (30 points), sputnic street and barc iii street. using the cost-impact matrix a cost-impact indicator was calculated for all 288 streets. based on the data collected from the city hall a ranking of all projects was created by arranging in an ascending order the cost-impact column. based on this ranking the top priorities were selected. after we have made a top we will create different scenarios. from this top we can see that the most important street is general gheorghe pomut, and the following ones are matei milo, tufei, ion andreescu, ion neculce, rarău, virgil oniţiu and the less important are nod ira, trifoiului, oradiei, 21 decembrie boulevard, frunzişului, oaşului and nod n streets. table 5 objectiv estimated value euro total score cost/ impact top project 224 general gheoghe pomut 4.587 45 101,93 1 231 matei milo 6.452 55 117,31 2 225 tufei 3.652 31 117,81 3 227 ion andreescu 6.574 50 131,48 4 228 ion neculce 7.992 45 177,60 5 220 rarau 10.524 50 210,48 6 226 virgil onitiu ii 9.861 45 219,13 7 233 alexandru donici 6.848 30 228,27 8 230 macului 14.158 55 257,42 9 …………………… 344 paraşutiştilor 117.786 55 2141,56 144 101 lunetei 97.165 45 2159,4 145 …………………… 137 nod ira 827.743 61 13569,56 282 123 trifoiului 636.460 45 14143,56 283 169 386 oradiei 184.810 11 16800,91 284 160 b-dul 21 decembrie 3.397.017 160 21231,36 285 286 frunzisului 1.574.157 60 26235,95 286 281 oasului (ii) 1.321.014 50 26420,28 287 287 nod n 1.872.572 60 31209,53 288 financing scenario no. 1.under this scenario, the financing of street rehabilitation projects comes from the local budget. in 2005, 640,705,000 rol were appropriated to finance such projects. by adding together the costs of individual street rehabilitation projects, will be obvious that the appropriated money is enough for financing just a limited number of projects. based on the 2005 budget appropriation, the municipality can finance during the first year the rehabilitation of 201 streets, the first being the general gheorghe pomut street and the last being the tractoristilor street. after the tractoristilor street is fully financed, the remaining available money from the 2005 budget appropriation is 1.333.937 thousands rol. in 2006, the municipality will be able to finance a part of the remaining streets in need for rehabilitation. we can finance the following 66 streets starting with the silviu dragomir street and ending with the pastorului street. after the păstorului street is completely funded, enough money will be left over in order to finance also the rehabilitation of the câmpina street. in 2007, an additional 20 streets (from câmpina street to oaşului street) will be financed by the municipality. after the oasului street is fully financed, the municipality will still have available 60.191.287 thousands rol. from the available sum of 60.191.287 thousands rol the municipality could partially finance the street nod n in 2008. the sum available in 2008 is 7,543,388 thousands rol. by applying a simple calculation formula (dividing 1,929,658,388 thousand rol to 640.705.000 thousand rol) it can be easily noted that the entire number of rehabilitation street projects (288) can be financed in 3,01 years. table 6 objectiv top total score estimated value thousands rol cumulated financing available project 224 general gheoghe pomut 1 45 165,921 165,921 231 matei milo 2 55 233,382 399,303 225 tufei 3 31 132,100 531,403 227 ion andreescu 4 50 237,795 769,198 228 ion neculce 5 45 289,087 1,058,284 220 rarau 6 50 380,674 1,438,958 133 magura 199 21 2,523,757 625,438,043 178 graurilor 200 55 6,646,750 632,084,793 323 tractoristilor 201 60 7,286,271 639,371,063 640,705,000 1,333,937 108 silviu dragomir 202 45 5,467,579 4,133,642 113 dimitrie bolintineanu 203 65 7,995,314 12,128,956 342 prieteniei 265 35 7,995,748 607,828,587 210 vrancea 266 85 19,514,251 627,342,838 362 păstorului 267 45 10,398,220 637,741,059 640,705,000 2,963,941 152 campina 268 140 32,913,554 29,949,613 219 madach imre 269 55 13,019,533 42,969,145 286 frunzisului 286 60 56,940,407 532,729,995 281 oasului 287 50 47,783,718 580,513,713 640,705,000 60,191,287 287 nod n 288 60 67,734,674 7,543,388 1,929,658,388 3.01 170 financing scenario no. 2 under this scenario, the financing of street rehabilitation projects comes from both the local budget and a loan. the community can obtain a loan no higher than 20% of its general revenues. by employing a simple calculation formula (20% multiplied by 2.677.900.667 thousand rol), the maximum amount of a loan the municipality can get is 535.580.133 thousands rol. even tough the borrowing limit of the municipality was determined to be at 535.580.133 thousand rol, under this scenario it was decided to make merely a 300.000.000 thousands rol loan for the financing of street rehabilitation projects. the rationale for not using the entire borrowing capacity of the municipality towards the financing of street rehabilitation projects is simple: there may be other needs a city has despite roads and that need to be financed through municipal loans. we have cumulated the sums from different projects and when the sum was close to 940.705.000 thousands rol we financed the project in 2005. this sum of 940.705.000 thousands rol was obtained adding 640.705.000 thousands rol to 300.000.000 thousands rol. in this scenario the situation is different from the one in scenario no 1. in 2005 we can finance 237 projects from general gheorghe pomut street to predeal street. by making a comparison between scenario no 1 and scenario no 2 we can observe that if in the scenario no 1 all the projects can be financed in 3,01 years in scenario no 2 all the projects can be financed in 2,31 years. table 7 fin with loan project objective top total score estimated value thousands rol cumulated financing available 224 gen. gh. pomut 1 45 165,921 165,921 231 matei milo 2 55 233,382 399,303 225 tufei 3 31 132,100 531,403 227 ion andreescu 4 50 237,795 769,198 228 ion neculce 5 45 289,087 1,058,284 220 rarau 6 50 380,674 1,438,958 292 oituz 236 45 7,091,340 914,544,272 189 busuiocului 237 65 10,275,163 924,819,435 125 predeal 238 65 10,280,878 935,100,313 940,705,000 5,604,687 143 garoafelor 239 45 7,142,704 1,538,017 145 timisului 240 80 12,856,867 14,394,884 386 oradiei 284 11 6,684,947 693,617,689 160 b-dul 21 decembrie 285 160 122,876,899 816,494,588 286 frunzisului (varianta) 286 60 56,940,407 873,434,995 281 oasului (ii) 287 50 47,783,718 921,218,713 940,705,000 19,486,287 287 nod n 288 60 67,734,674 48,248,388 1,929,658,388 y 2.05 financing scenario no 3. under this scenario the situation is significantly different from the one portrayed under scenario number 2. in 2005 214 projects will be financed starting with general gheorghe pomut street and ending with grivitei street. the available sum that will remain from 2005 is 6.147.711 thousands rol. from this sum we can partially finance malinului project. the situation is different in 2006, when the projects starting with grivitei street and ending with 21 decembrie street will be fully financed. the remaining amount of money is 40.571.412 thousand rol. so in 2006 the municipality will be able to finance 71 streets. in 2007, 3 projects will remain to be financed. 171 table 8 expenditures thousands rol increase rate recalculation after rol dollar exchange rate recalculation after inflation years rol/ dollar expend. dollar increase rate inflation expend. price 2004 increase rate 2004 521248 1.963 32800 15,891,707 1.955 116 521248 1.693 2003 265492 1.349 32655 8,130,210 1.381 122.5 307,971 1.101 2002 196848 1.500 33440 5,886,603 1.417 117.8 279,721 1.273 2001 131248 1.266 31597 4,153,812 1.039 130.4 219,701 0.971 2000 103670 25926 3,998,689 140.7 226,292 average 1.519 1.447934319 1.25939462 general average 1.408932857 table 9 estimated expenditures expenditures thousands rol expenditures cumulated thousands rol 2004 521248 521,248 2005 734,403 1,255,651 2006 1,063,368 2,319,019 2007 1,539,687 3,858,706 2008 2,229,366 6,088,072 2009 3,227,975 9,316,047 2010 4,673,896 13,989,942 2011 6,767,494 20,757,436 the third scenario was created by using a well-known method namely the increase and decrease method. using data from the cluj-napoca budget, it is easy to notice that the 2000 budget was 103.607.581 thousands rol, in 2001, 131.247.500 thousands rol, in 2002, 196.847.954 thousands rol, in 2003, 265.491.536 thousands rol, and in 2004, 521.248.000 thousands rol. according to the budget department from cluj-napoca city hall the street expenditures will be 640.705.000 thousands rol in 2005 and 630.000.000 thousands rol in 2006. according to our method of estimation the values are different: 734.403.000 thousands rol in 2005 and 1.063.368.000 thousands rol in 2006. in the following paragraphs we will explain how we applied the method. first as we said we took the expenditures from 2000 to 2004. then we will calculate the increase rate taking into account the expenditures by dividing the expenditures in the current year to the next year; an average of the increase rate will be calculated by dividing the sum of the increase rate from all the years taken into consideration to the next years. to obtain a precise increase rate we take into consideration the rol – dollar exchange rates, and the inflation rate. so in order to calculate the increase rate we divided the expenditures from 2004 (521.248.000 thousands rol) at the expenditures from 2003 (265.492.000 thousands rol). we will continue this process by dividing the expenditure from 2003 (265.492.000 thousands rol) to the expenditures from 2002 (196.848.000 thousands rol), then we divide the expenditure from 2002 to the expenditures from 2001 (131.248.000 thousands rol) and then we will divide the expenditures from 2001 to the expenditure from 2000 (103.670.000 thousands rol). so we will obtain the followings rates of increase 1,266 in 2001, 1,500 in 2002, 1349 in 2003 and 1,963 in 2004. in order to make the re-calculation after the rol/dollar exchange rate we will use of course the expenditures from each year and the exchange rate from each year. if we multiply the expenditure of each year with the exchange rate from each year we will obtain the expenditures in dollars. the calculating method for increase and decrease rate is applied in the same way as it was at the first rate of increase. so if we divide the expenditures in dollars from 2004 at the expenditures from 2003 (8.130.210 dollars). after the calculations we will obtain a rate of increase in 2004 of 1,955, in 2003 1,381, in 2002 1,417 and in 2001 1,039. 172 as well as we applied the increase rate at the rol/dollar exchange rate we will apply at the inflation and we obtained the following increase rates: in 2004 1,693, in 2003 1,101, in 2002 1,273 and in 2001 0,971. after this we will calculate an average for each increase rate so we will obtain three rhythms of increase: 1,519 for the increase rate regarding the expenditures, 1,447 for the increase rate regarding the rol/dollar exchange rate and 1,259 regarding the inflation. by making an average from all this three rates of increase we will obtain an increase rate of 1,408. the estimation of the expenditures from 2005 will be obtained by multiplying the expenditures from 2004 with the increase rate. so if we multiply the expenditure from 2004 (521.248.000 thousands rol) with the increase rate we will obtain an estimated expenditure in 2005 of 734.403.000 thousands rol. all the other expenditures will be calculated the same way. table 10 forcasted increase rate project objective top total score estimated value thousands rol cumulated financing available 224 general gheoghe pomut 1 45 165,921 165,921 231 matei milo 2 55 233,382 399,303 225 tufei 3 31 132,100 531,403 227 ion andreescu 4 50 237,795 769,198 228 ion neculce 5 45 289,087 1,058,284 220 rarau 6 50 380,674 1,438,958 132 carutasilor 211 21 2,753,196 701,275,137 144 viorelelor 212 50 6,571,295 707,846,432 161 clinicilor 213 110 14,477,554 722,323,985 148 grivitei 214 45 5,931,304 728,255,289 734,403,000 6,147,711 102 malinului 215 55 7,358,144 1,210,433 265 alexandru sahia 216 45 6,091,980 7,302,413 137 nod ira 282 61 29,941,120 870,212,711 123 trifoiului 283 45 23,022,031 893,234,742 386 oradiei 284 11 6,684,947 899,919,689 160 b-dul 21 decembrie 285 160 122,876,899 1,022,796,588 1,063,368,000 40,571,412 286 frunzisului 286 60 56,940,407 16,368,995 281 oasului (ii) 287 50 47,783,718 64,152,713 287 nod n 288 60 67,734,674 131,887,388 1,929,658,388 2.12 it is very important to be decided that the politics of the cip process are well integrated in others politics and financial processes, like the current process of budgeting and politics of duty. these politics must to make the distinction between the types of activities or projects that should be included in pic and the types that should be included in the current budget. the period of time intended for the planning of the capital investments refers to the number of years that will be included in cip-on what further period cip will be unrolled. on a period of time longer than one or two years, it becomes more and more difficult to estimate the costs and the sources of financing. but we include in cip only the projects that will begin over one or two years, this would affect the analyzing of certain projects on long term that could be phased on a period of time longer than two years. the projects on long term engaged all those who are involved in the 173 process to concentrate on the further needs, instead of concentrating only on the current issues. in exchange, this contributes to creation of a concord regarding the priorities and the needs of capital. in their turn, the lenders wish a focusing on the projects on long term. in the majority of the cip process a period of three to five years represents a proper temporal environment. in the financing of the programs the following aspects should be taken into consideration: • the current expenditure and the expenditure of capital from the closed budgets; • forecast of the expenditure from 2004 to 2013; • grants: phare, ispa, sapard, world bank, berd; • private contributions like public private partnership, concessions, donations, sponsors; • contracting loans. we choose the method of increasing or of decreasing because the automatic method doesn’t allow to consider specific factors such as: • it is not known precisely which the evolution of the economy, especially the level of collected revenues will be; • the level of inflation until 2011 is hard to be accurately forecaste; • the method doesn’t allow for the completion of certain projects, this means that there aren’t necessary anymore founds for this kind of projects. however, this method has certain advantages: • it clearly shows whether the revenues are increasing; • it allows for a simpler approach with regard to the importance of the time factor and it also implies a relatively simple calculation. it would have been possible to make an econometrical forecasts; however this method would have implied a more complex and complicated approach. it demands more time, effort, and above all empirical data that are not available to researchers at this point in time (socio-demographic and economic indicators) of course, the finances of the future will be realized allowing for the modifications of the legislation and to the inflation rate in that period. although, every one of us is aware of the fact that there is a long time to wait until we dispose of the necessary resources for financing. the local authorities shouldn’t try to solve the issues by the identification of the capital investments. they should study and to check if there are more efficient ways to achieve the wanted results, that doesn’t require capital investments. even if the authorities reach the conclusion that an investment is necessary, they should analyze the alternatively solutions for the respective investment. 41 framework: public administration kept a low profile within reform efforts until recent years. issues related to efficiency and effectiveness in public institutions were visibly missing both in official policy documents and in electoral platforms of various political parties1 until in the second part of the 1990s. visible decisions were made only after the european commission country monitoring reports critiqued romania’s low administrative capacity2. interestingly enough, public administrative professional literature in romanian language was concerned only to a little extent3 to design and conduct in a systematic manner such analyses, especially for the case of local government or deconcentrated institutions. one of the risks resulted general issues concerning needs analysis in local public institutions veronica junjan lecturer, the department of public administration, the faculty of political, administrative and communication sciences, the “babeş-bolyai” university, cluj-napoca needs assessment in local public institutions was not very present so far in a systematic manner in romanian specialized literature on administrative reform. current study uses interviews with candidates for a public administration master program to investigate civil servants motivation of pursuing graduatelevel studies and their perception on current needs of the work in local public institutions. motivation for pursuing graduate studies is located mainly on the need to update and diversify their professional knowledge, and not as much on promotion-related reasons. the perceived needs are related to management of public institutions, structure of information system, legislation and european integration, human resource management and public relations. transylvanian review of administrative sciences, 15 e/2005, pp. 41-48 1 http://www.electoral2000.ro/platforme.php 2 european comission, regular reports from the commission on romania’s progress towards accession, 19982004. 3 dan sandor, cãlin hintea, “profesionalizarea funcţionarilor publici”, revista transilvanã de ştiinţe administrative, nr. 1(2)/1999, pp. 88-93; cãlin emilian hinţea, “probleme strategice ale reformei sistemului administrativ românesc”, revista transilvanã de stiinte administrative, nr. 1(2)/1999, pp.141-145; ion popescu slãniceanu, “pregãtirea si perfectionarea profesionalã a functionarilor publici”, revista transilvanã de stiinte administrative, 1(4)/2000, pp. 18-26; sorin dan sandor, cãlin ghioltan, “universitarii ca resursã pentru dezvoltarea unei capacitãti autohtone de consultantã in administratia publicã”, revista transilvanã de stiinte administrative, 1(6)/2001, pp.158-163. 42 from this situation is that the training of local level civil servants is realized according to criteria which do not reflect local needs, leading thus to waste of already scarce resources. current study provides the preliminary results of a two-years pilot study exploring the motivation of continuing studies at master level and other perceived needs ( broadly defined) in their institutions by civil servants in local government and de-concentrated institutions from counties in north-western part of transylvania. motivation of continuing studies was included as part of the need to preparation and training of the human resource in public institutions. these results could provide some guiding points in developing more extended studies in that regard. working hypotheses: a) the motivation of continuing studies at master level is determined by the wish to secure the work position for the top decision-makers4 b) the motivation of continuing studies at master level is determined by the wish to promote by the rank and-file civil servants. c) needs perceived at the civil servants level regarded the lack of funds and high level of fluctuation in legislation which render difficulties on current work. methods: the research method chosen to tackle the problem was the interview applied on the candidates for the executive master program in public administration offered by the department of public administration5. in september 2004 a sample of the civil servants was interviewed (as the selection for the top decision-makers was done at the national institute of administration), and in september 2005 all candidates (decision-makers and civil servants) were interviewed. the interview was chosen as research method because it allowed the investigator to look with more detail to the perception of the interviewees about the motivation and needs. two questions were asked to look into the “needs”: one about the subjects of study for which they were interested, and the other asked about the changes that would be considered useful for the daily work. the answers were recorded in writing using keywords. due to multiple answers the total number of answers is higher than the number of interviewees. keywords frequencies were counted and grouped into components/categories. in 2004 the interviews were done with a random sample 45 out of the 141 applicants from the “rank-and-file” civil servants and in the end answers from 39 candidates were included in the analysis. in 2005 all 175 candidates, both top decision-makers and “rank-and-file” civil servants, were interviewed. results and analysis: the three major topics followed were: 1. declared motivation for application to the master program; 2. subjects of interest for the study during the program; 3. changes that would be useful for the daily work. only the first topic is presented in the current paper, as it tries to describe the specifics of each cohort and to identify changes between them. 4 the law of the civil public service issued in 2003 requires a master level degree in public administration or a related field in order to occupy a management position. incumbent top decision makers who wanted to keep their position had to obtain a masterlevel degree within three years. 5 this is a 1 year program offered by the dpa for civil servants; in 2003 and 2004 it was offered in cooperation with the national institute of administration and in 2005 only by the babes-bolyai university. 43 1. motivation of application to the master program the answers to the question related to the motivation of application to the master program can be grouped in the following categories: instruction, career, and personal. a) component “instruction”: component "instruction", 2004 23% 22% 22% 14% 3% 3% 3% 5% 5% specialization prof essional improvement know ledge relationship w ith citizen completion of studies enlarging cultural horizon inf o pa avoid routinization diversif ication component "instruction" 2005 0.6 5.7 20.6 29.7 2.3 6.3 1.1 6.3 5.1 adapting to organization com pletion of studies profess ional knowledge profesional im provement routinization interes t challenge specialization information pa this category included the following items: specialization, professional improvement, knowledge, avoiding routine, completion of studies, diversification, enriching cultural horizon, more information about public administration. in 2004 there were 37 items included under this category, distributed as above. it suffered few changes in 2005, with new items such as “ new interest”, “challenge”, and “ adapting to organization” as follows: overall, the same items are predominant: specialization, professional improvement, and knowledge. the major item absent in 2005 is “the relationship with the citizen” which in 2004 was declared by the interviewees as a significant component of the motivation for which they needed a master degree. b) the component “career” the second category of items included elements such as: promotion, career, professional development, european integration. in 2004 they were distributed as follows: 44 again, in 2005 the differences were not too big in terms of the components; however, there were changes in terms of percentages: component "career", 2004 27% 28% 28% 17% eu integration promotion prof essional development career component "career", 2005 21.7 6.3 8.6 21.7 2.3 career eu integration promotion pa law securing position the item “promotion” strongly decreased from 28% to 8.6%, “european integration decreased spectacularly from 27% to 6.3%, and ”career” increased from 17% to 21%. the item generically named “professional development” which in 2004 occupied 28% now is replaced with an open admission that “pa law “ requires a further degree (21.7%) and another generic term named “professional consolidation”(2.3%). c) personal under the category named “personal” the following items were included: personal development, model for children, (mentioned twice by women), and phd. 8 such items were mentioned in 2004. component" personal", 2004 37% 38% 25% personal developm ent phd children in 2005 the cluster was restructured, as new types of personal motivations appeared, such as “being convinced by a spouse”, “children were old enough so that i could take the responsibility for a master degree”, “encouraged by a child” etc. among the motivations included here are also characteristics of the program (availability near the residence, classes scheduled at the end of the week, allowing thus for work) and, totally new, “reputation of the babes-bolyai university”. the latter was declared as a very important factor in choosing for this program, as opposed to other programs offered by other universities. 45 component " per sonal " , 2005 1.7 6.3 5.7 pr ogr am char acter i sti cs per sonal r easons r eputati on bbu there are interesting differences when looking at the structure of answers between the two years. thus, for 2004 the category named” instruction” included more items than “career” (37 items versus 18), which does not confirm initial hypothesis that rank-and-file civil servants are only interested in promotion. instruction through the master program can be, however, seen as a means to secure current position, faced with possible personnel cuts. however, the simple weight of the number of the items in a category can not be considered as a crucial criterion in making such a decision. it can be argued that the high number of items in the “instruction” category can also indicate: a) a socially desirable answer, especially considering the widespread suspicion today in public institutions towards employees who manifest wishes for promotion; b) instruction can be seen as an indirect way of securing workplace, and thus an indirect way of securing career, and c) can reflect an existent need for training and education for personnel in public institutions, acutely needed at the level of rank-and-file civil servants. the explanation from point c) is best supported by the available data for 2004, as the most frequent items are those reflecting professional preparation: specialization (9 times), professional improvement (8 times) and knowledge (8 times). in addition, many interviewees declared that they did do not participate in other professional training courses since graduation of university6, and that they acutely feel that need in the daily work. one of them declared “so far only the bosses participated to training sessions, and these courses are needed at lower levels in organizations as well”. one more argument favoring this explanation can be brought by the fact that most of the candidates were supporting themselves the tuition fees, or for the best case scenario their institution would support them in the second semester, due to unavailability of funds for this purpose in the budget. this argument can be used also for point b), as candidates could view this investment in time and money as useful for the future, and a graduate diploma could be taken as a selection criterion for future personnel cuts. an interesting aspect of the answers included in this category was given by the positive phrasing of the answers, focused on learning new knowledge, both general and specialized. however, practical skills were not at all mentioned as reasons for continuing studies. one possible explanation could be given by the general understanding about the difference between the “theory” loosely associated with scholarly education and “practice” which “happens in real life”. university is still seen as an “ivory tower”, totally separated from the community. one can also interpret that candidates expectations towards the education process is one related to uni-directional communication, with a low level of feedback from students. this piece of information is important for faculty members in structuring the class materials and interaction. one additional argument for this position is given by 6 given the average age of the candidates, they had graduated from university between 1989-1991. 46 the difficulties that the interviewees had to answer the question “ how do you see your contribution to the educational process?”. most of them were puzzled over the idea that they also have things to bring in class. the only answer that came after rephrasing the question, and even then in few situations, was that practical experience could be used in class discussions. avoiding routinization was another item with an interesting evolution between the two cohorts, as it got more often mentioned by the 2005 cohort. one can thus preliminary conclude that there is interest and willingness for effort directed towards the improvement of professional preparation. however, the answers brought by the 2005 cohort bring new interesting elements for the differences in the types of answers. due to the different size of the interviewed groups we can not compare them directly. however, breaking down main items of the “instruction” category by the position of the candidate, there are some interesting results: distribution frequencies of item “ professional improvement” by position civil servant 24 decision maker 22 other 2 distribution frequencies of item “professional knowledge” by position: civil servant 17 decision maker 14 other 2 the difference between civil servants and decision-makers are no longer as clear cut as they seemed from the previous cohort, and the wish for instruction seems rather marginal when considered only from the frequencies points of view. the comparison between cohorts is limited, indeed, and another limit is that the comparability of the meaning of the terms used could not be cross-checked. this is one aspect to be taken into account for future cohorts. the category “career” reflects a small range of answer, the most frequent items being “promotion”, “career” and “professional development” for the 2004 cohort and “ career”, “pa law” and “promotion” for the 2005 cohort. one can consider that the relatively small number of candidates who openly admitted that the reason for which they apply for master is to insure their future promotion is given by social desirability, as the contrary would attract negative images from co-workers and supervisors. additional questions aiming in that direction were answered in a defensive manner. again, there are differences between the two cohorts, which need further investigation. thus: distribution of frequencies for the item “career” by position: civil servant 17 decision maker 12 other 8 distribution of frequencies for the item “promotion” by position: civil servant 11 decision maker 3 distribution of frequencies for the item “pa law ” ( i.e. law requirement to obtain a graduate diploma in order to maintain job) by position: civil servant 10 decision maker 28 47 again, the striving towards developing a career and for promotion as well as plain constraint by the law for the top managers bring additional arguments to support the initial work hypotheses. the two types of aims come out with more nuances than they were initially envisaged, as promotion and career can be insured indirectly through instruction, by investing time and money into a graduate degree. peer pressure and colleagues examples also act as motivating factors, as resulted from data collected in 2005. the category titled “personal” although small for both cohorts, brings surprises, like the wish to provide a role model for children, to further pursue a phd out of personal desire, as it would not bring any advantage in the current job. being a role model for children, or being supported by the children in the decision to pursue a graduate degree were provided as motivation only by women, in both cohorts. this can indicate a diversification in the roles and relationships in families. on one hand, current models of success are not related to academic performance by persons at middle ages, but the example of a mother can be crucial for a teenager. one the other hand, a child who is student and encourages and supports his/her mother to pursue a graduate degree also contributes to the increase in self-esteem at parent level. other items such as “reputation of ubb” or “characteristics of the program” tend to sketch new conditions to be taken into account on the higher education market, by candidates in search of a program suited to their needs. conclusions current study presents a preliminary interpretation of a two-years pilot study on the needs existent at the level of public administration institutions, with focus on the human resource education and training. the preliminary results confirm the working hypothesis according to which decision makers motivation to pursue a graduate degree is mainly given by the law’s constraint, and also the second hypothesis according to which the motivation of the civil servants to pursue a graduate degree stems from the wish for promotion. that is however nuanced by the finding that for civil servants, instruction materialized through efforts put into obtaining a master degree is considered a means to secure their job when faced with potential personnel cuts, thus indirectly ensuring their career. the focus on instruction and on the need for improving the preparation of public institutions personnel (almost 2/3 of the items in the category titled “instruction”) underlines the need to improve the training programs for civil servants this project has some limits which impede upon the generalizability of its results, however, these results represent a first step for future research. references: 1. antoaneta dimitrova (ed.), driven to change: the european union’s enlargement viewed from the east. “administrative reform in romania and the european union”, calin hintea, sorin dan sandor,veronia junjan, manchester university press, 2004 2. david c. ringsmuth, “developing public policy in romania: focusing responsibility, authority and capacity”, revista transilvanã de stiinte administrative1(7)/2002 3. marius profiroiu, “accelerarea reformei administratiei publice”, revista transilvanã de stiinte administrative, 2(8)/2002, pp.13-23 4. sorin dan sandor, cãlin ghioltan, “universitarii ca resursã pentru dezvoltarea unei capacitãti autohtone de consultantã in administratia publicã”, revista transilvanã de stiinte administrative, 1(6)/2001 5. ion popescu slãniceanu, “pregãtirea si perfectionarea profesionalã a functionarilor publici”, revista transilvanã de stiinte administrative, 1(4)/2000 6. dan sandor, cãlin hintea, “profesionalizarea functionarilor publici”, revista transilvanã de stiinte administrative, nr. 1(2)/1999 48 7. cãlin emilian hintea, “probleme strategice ale reformei sistemului administrativ românesc”, revista transilvanã de stiinte administrative, nr. 1(2)/1999 8. european comission, regular reports from the commission on romania’s progress towards accession, 1998-2004 untitled 5 the negative impact of legislation pitfalls on meaningful public participation, efficient policy-making and effective governance oana almăşan zeno reinhardt oana almăşan assistant professor, college of communication and public relations, national university for political studies and public administration, bucharest, romania tel.: 0040-744-254759 e-mail: oana.almasan@comunicare.ro zeno reinhardt assistant professor, college of communication and public relations, national university for political studies and public administration, bucharest, romania tel.: 0040-753-084029 e-mail: zreinhardt@comunicare.ro abstract this article focuses on emphasizing how a variety of apparently irrelevant legislation imperfections may induce significant misunderstandings regarding the real spirit of democratic governance, corrupting the practice of active citizenship in the policy-making processes and depriving the romanian public administration of an important and valuable instrument for efficient governance and implementation of sustainable decisions. the authors chose to analyze aspects of the related legislation, as it represents a fundamental element needed for the development of active citizenship. this article is the result of a larger on-going research on the phenomena of public participation and policy dialogue that aims to provide a more accurate understanding of active citizenship mechanisms and to investigate the existence of a deliberative conscience at the level of the romanian society. transylvanian review of administrative sciences, 25e/2009 pp. 5-12 6 1. public administration system reforms and active citizenship at the european level, the need for active citizenship is more and more emphasized in promoting the institutional reforms and the local, regional, national and european sustainable development. as a result, in october 2005, the european commission launched the plan d for democracy, dialogue and debate, a plan updated in 2008 (e.u. commission, 2008). the plan aims to encourage the e.u. states to organize public debates regarding the future of the european union, in order to create momentum and find mechanisms for involving the citizens, the civil society, the social partners, the parliaments, the political parties etc., in the process of creating a better, more democratic and more cohesive european union. the same objectives are supported by the e.u. citizen’s agenda, a document launched by the european commission in may 2006, which proposes 12 policy initiatives to promote the european development by making the e.u. policies understandable and relevant to its citizens (e.u. commission, 2008). in this context, in january 2006, the romanian government (rg) assigned the ministry of interior and administrative reform (miar), by the governmental decision 128/2006 (rg, 2006), the managerial authority of the operational program for the development of administrative capacity (op dac) financed by the european social fund. an ample analysis of the romanian public administration was carried out, as part of this program – this underlined two major problems that the system was facing: (i) citizens’ distrust and (ii) failure to identify citizens’ needs (miar, 2007). this circular dilemma is not unique to the romanian public administration: to different degrees, it affects all public administration systems (u.n., 1997): no matter how high the democratic values and principles of the governance are, systems fail to identify and meet citizens’ needs, consequently, citizens loose their trust in the system and distance themselves from it, making it even more difficult for the public servants to have meaningful interactions with the people whom they are supposed to serve (meier, 1987; martin, 1988; mosher, 1982). over the last decades, in their attempt to improve the outcomes of public service and offer their citizens a more efficient, accountable, effective and transparent public administration (u.n., 2002), democratic governments have been engaged in ever more accelerated and intense reforms, reorganizations and restructurings of central and local administration (elsenhans, 2005; howarth, 2001; bryer, 2004), from the new public management model promoted in the uk, new zealand, australia, the united states and canada at the beginning of the 1980s (osborne and gaebler, 1993), to the model of the new public service (denhardt and denhardt, 2007) or the new governance (salamon, 2002; de burca and scott, 2006), advocated first in the united states in the second half of the 1990s, and that today is generating forms even more adapted to the needs of a computerized, interconnected society: the digital/online government, the e-governance or the m-governance (jain-palvia and sharma, 2006; atkinson and castro, 2008; kushchu and kuscu, 2003). with the rapid development of the information and communication technologies (ict), the increased computer literacy and easier access to the global communication network – the internet, more and more people are taking serious interest in better 7 understanding the functioning of governance and in having a say in the process of public policy making and implementation. ict has changed the way people perceive their status as citizens of democratic systems (bekkers, 2004; al-kodmany, 2000). not only more and more individuals are willing to get involved in the decision-making process and are, in fact, able to contribute with an informed opinion, but – and maybe most important – they have begun to see it as a fundamental citizens’ right in a democracy1 (illinois general assembly, 2007), as expressed by a participant in a public meeting: “i believe i have the right to provide input to decisions or actions that affect me, my children and my money!” (iap2, 2006). it has been argued (kirby, 2006) that the basis for transparent, responsible, accountable and sustainable governance is involving the publics at all levels of the decision-making process, by using tools from the fields of dispute resolution, mediation, and communication, and that individuals, businesses, ngos and communities affected by a decision should participate in identifying the problems and the opportunities, in developing alternatives, and in reaching the final decision. as a consequence, the practice of involving citizens in all levels of the policy process has become a valuable tool for both making sustainable decisions and giving legitimacy to the governance policies (smith and taylor, 2000; campbel, 2006; halvorsen, 2003); and there are numerous success stories and best practice examples to provide evidence of how meaningful community engagement set basis for a more effective and more efficient governance (christensen and rongerude, 2004; innes and booher, 2004). the romanian public administration has had its part of restructuring and reforms, as well, as the romanian government has proved eager to follow the wave of changes at the european and global level. as a result, new laws and regulations have been designed, based on the guidelines of the european union legislation (european council, 2003). nevertheless, despite clear political will and commitment, the romanian legislation on community participation is not able to truly serve its purpose – there are still several essential elements that hold it back; some pointed out and analyzed as follows. 2. confusing comprehension of the fundamental concepts and aspects of the public participation phenomenon a. meaningful public participation be it called community engagement, policy dialog, citizen participation, civil society involvement, or any combination of the above, public participation, as defined by the international association of public participation (iap2) (2006), is the process that involves the public in the course of problem solving and decision making, and 1 public act 095-0506 the citizen participation act-, enacted by the people of the state of illinois, on 8/28/2007, states: “pursuant to the fundamental philosophy of the american constitutional form of government, it is declared to be the public policy of the state of illinois that the constitutional rights of citizens and organizations to be involved and participate freely in the process of government must be encouraged and safeguarded with great diligence”. 8 effectively uses the public input in making the decision. according to cernea (cernea, 1985), citizen engagement means empowering people to mobilize their own capacities, be social actors rather than passive subjects, manage the resources, make decisions, and control the activities that affect their lives. jennings’ definition (jennings’, 2000) narrows the concept of public participation to the use of local knowledge in the design of public policies. gaunt (gaunt, 1998) sees in public participation an essential characteristic of democracy which allows for meaningful exchange and sharing of information, discussion, alternative development, and evaluation as basis of public policy development and governmental decision making. letting aside the differences in approaches, public participation refers to enabling all stakeholders (community members, entrepreneurs, leaders, media etc.) to meaningfully influence the decisions that could affect their lives. although the romanian law agrees with all these ideas and principles2, and supports wide citizen involvement in decision-making3, when it comes to the actual public debate, the same law states that “interested citizens’ participation to the public meetings is limited to the number of available seats in the conference room; priority is given in accordance with the degree of interest manifested by the different stakeholders and is established by the person in charge of the public meeting”4, that “the person in charge of the public meeting will offer the invited guests and the other participants the possibility to express their opinions about the problems on the meeting agenda”5, and that the public authority will decide the date and time of the public meeting, as well as the agenda, and will let the stakeholders know at least three days in advance6– thus creating several major contradictions between the letter and the spirit of the law: limiting the number of potential participants both by room capacity and by schedule availability, and limiting the input from the citizens to an agenda previously established by a public authority, that might very well differ from citizens’ agenda. b. the level of public involvement an effective public participation process does not mean that the public gets to make the final decision all the time. in fact, it rarely does. public administrators have no reason to dismiss public participation on this account. the actual outcome of an effective public participation may in reality encompass a wide range of results, from 2 law 52/2003 regarding transparency in decision-making in public administration, chapter 1, art.1, art.2, published in m.o. no. 70, february 3, 2003. 3 law 52/2003 regarding transparency in decision-making in public administration, chapter 1, art.1, paragraph 2, published in m.o. no. 70, february 3, 2003. 4 law 52/2003 regarding transparency in decision-making in public administration, chapter 2, art.7, paragraph 3, published in m.o. no. 70, february 3, 2003. 5 law 52/2003 regarding transparency in decision-making in public administration, chapter 2, art.8 published in m.o. no. 70, february 3, 2003. 6 law 52/2003 regarding transparency in decision-making in public administration, chapter 2, art.7, paragraph 1, published in m.o. no. 70, february 3, 2003. 9 gaining understanding of a problem and its proposed solution(s), to preparing the citizens for making a decision on their own – it all depends on the particularities and the requirements of the issue debated. the international association for public participation has synthesized this in a tool for public participation design called the spectrum (iap2, 2006). it covers five levels of public impact on the decision-making process: inform, consult, involve, collaborate and empower, and also identifies the type of promise perceived by the public for each of these levels, in relation to the public participation goal: at the inform level, the goal is to provide balanced and objective information so as to assist the public in understanding the issue, and the only promise made to the publics is to keep them informed; at the consult level, though, the goal is to obtain input from the publics, in order to understand their concerns and aspirations and the promise is to let them know how they influenced the decision made; the level of involvement implies working with the publics to understand their concerns and aspirations, in order to include them in the solution development – and that is exactly what the promise is, too: their input will indeed influence directly the final decision and they will be informed about it; at the collaborate level, the stakeholders and the representatives of the public administration act as partners, working together to clarify the issues, develop alternatives, and identify the preferred solution, at this level the public provides advice, and that advice is incorporated into the final decision to the maximum extent possible; and finally the empower level places the final decision in the hands of the stakeholders, and the promise made is to implement it as it is. of all these possibilities, the romanian law endorses only two: the ones implying the lowest public impact – informing and consulting –, and even those with deficiencies and with the least interaction possible: public information is generally limited to placing a notice on the agency’s site on the internet, displaying it in a space accessible to the public at the agency’s premises, and announcing it to mass-media7, arguably restrictive ways of reaching all the publics that might be interested in participating; moreover, consultation is only required when specifically applied for in writing8. as for the citizen active involvement, referred to in the same law9, it is in fact reduced to mere consultation, since there is no provision for the need of getting back to the people and letting them know how they influenced the final decision, while the law does say that whatever input is collected, it only functions as plain recommendations10, which might very well be disregarded when deciding on the final solution. furthermore, the topmost levels of participation – collaboration and empowerment – are rejected from 7 law 52/2003 regarding transparency in decision-making in public administration, art.6, paragraph 1, published in m.o. no. 70, february 3, 2003. 8 law 52/2003 regarding transparency in decision-making in public administration, art.6, paragraph 7, published in m.o. no. 70, february 3, 2003. 9 law 52/2003 regarding transparency in decision-making in public administration, art.2, published in m. o. no. 70, february 3, 2003. 10 law 52/2003 regarding transparency in decision-making in public administration, art.9, paragraph 2, published in m.o. no. 70, february 3, 2003. 10 the start, as the law clearly states that the administrative decisions are to be made exclusively by the public authorities11. c. responsibility and accountability although the romanian law speaks about active citizen involvement, responsibility and accountability, these concepts are often misinterpreted, sometimes at the highest level of public administration bodies, the ministries, the very institutions that are supposed to understand them best. a serious misapprehension of the concept of responsibility is showed by its use on the website of the romanian ministry of interior and administrative reform, where the webpage dedicated to the administrative reform states that “the success of the public administration reform is not possible without establishing a state-citizen relationship based on responsibility. the state offers the citizens opportunities and, in exchange, it demands responsibility” (miar, 2007). hence, the responsibility is seen an attribute and even an obligation not of the state and its institutions, but of the citizen. besides, the genuine meaning of the concept of the public administration being accountable (compact oxford dictionary, 2005) for its actions as the source of its legitimacy (arnull and wincott, 2003) was not fully transferred to the romanian legislation, since the romanian translation for both accountability and responsibility (compact oxford dictionary, 2005) is responsabilitate, which primarily stands for the obligation of carrying out tasks, and only secondarily implies the requirement or expectation to justify actions or decisions (dex, 1998). 3. conclusions although apparently insignificant, the legislation flaws pointed out add up and might eventually induce major errors in the comprehension of the true spirit of the democratic governance, corrupting the process of citizen participation in policy making and depriving the romanian public administration of a very powerful and valuable tool for effective governance. of course, legislation is only one aspect of this phenomenon and, thus, for a more accurate understanding, further study is needed, so as to identify romanian cultural values and their influence on citizen participation and, also, to investigate the existence of a deliberative conscience at the level of the romanian society. references 1. al-kodmany, k., ‘public participation: technology and democracy’, 2000, journal of architectural education, vol. 53, no. 4, p. 220–228. 2. arnull, a. and wincott, d., accountability and legitimacy in the european union, oxford: oxford university press, 2003. 11 law 52/2003 regarding transparency in decision-making in public administration, art.9, paragraph 1, published in m.o. no. 70, february 3, 2003. 11 3. atkinson, r.d. and castro, d.d., ‘digital quality of life: understanding the personal and social benefits of the information technology revolution’, 2008, paper presented at the information technology and innovation foundation forum in washington, dc, may 1st, 2008. 4. bekkers, v., ‘virtual policy communities and responsive governance: redesigning on-line debates’, 2004, information polity, no. 9 (3-4), p. 118-129. 5. bryer, t.a., ‘bureaucratization and active citizenship: approaches to administrative reform’, 2004, pi alpha, alpha online journal, vol. 5, [online] available at http://www. naspaa.org/initiatives/paa/journal/volume_5.asp, accessed on november 14, 2008. 6. campbel, c., comparative trends in public management: smart practices toward blending policy and administration, ottawa: canada school of public service, 2006. 7. cernea, m., putting people first: sociological variable in rural development, new york: oxford university press, 1985. 8. christensen, k. and rongerude, j., ‘the san diego dialogue: reshaping the san diego region’, 2004, working paper for the collaborative regional initiatives program, in escholarship repository, institute of urban and regional development, ucla at berkeley, [online] available at http://repositories.cdlib.org/cgi/viewcontent.cgi?article =1037&context =iurd, accessed on november 15, 2008. 9. compact oxford english dictionary of current english, 3rd edition, oxford: oxford university press, 2005. 10. communication from the commission to the european parliament, the council, the european economic and social committee and the committee of the regions – debate europe building on the experience of plan d for democracy, dialogue and debate, com(2008) 158/4, brussels, [online] available at http://ec.europa.eu/commission_barroso/wallstrom /pdf/com_2008_ 158-4_en.pdf, accessed on november 15, 2008. 11. de burca, g. and scott, j. (eds.), law and new governance in the eu and the us, oxford and portland, oregon: hart publishing, 2006. 12. denhardt, j.v. and denhardt, r.b., the new public service: serving, not steering, armonk, ny: me sharpe inc., 2007. 13. dicţionarul explicativ al limbii române (dex), bucureşti: editura univers enciclopedic, 1998. 14. directive 2003/35/ec of the european parliament and of the council of 26 may 2003, o.j. l 156/17, [online] available at http://www.berr.gov.uk/files/file34357.pdf, accessed on november 14, 2008. 15. elsenhans, h., kulke, r. and roschmann, c., ‘globalization and administrative reforms in germany’, in jain, r. b. (ed.), globalization and good governance: pressures for constructive reforms, new delhi: deep & deep, 2005, p. 61-102. 16. gaunt, t.p., ‘communication, social networks, and influence in citizen participation’, 1998, journal of the community development society, vol. 29, no. 2, p. 276-297. 17. government decision no. 128/2006 published in m. o. no. 90/january 31, 2006. 18. halvorsen, e.k., “assessing the effects of public participation”, 2003, public administration review, vol. 63, no. 5, p. 535-543. 19. howarth, d., ‘comparing public administrative reform in france and the uk’, 2001, public policy and administration, london, vol. 16, no. 4, pp. 1-8. 20. innes, j.e. and booher, d.e., ‘the impact of collaborative planning on governance capacity working paper for the collaborative regional initiatives program’, 2003, in escholarship repository, institute of urban and regional development, ucla at berkeley, [online] available at http://www-iurd.ced.berkeley.edu/pub/wp-2003-03.pdf, accessed on november 15, 2008. 12 21. international association for public participation (iap2), planning for effective public participation, student manual, denver, co: iap2, 2006. 22. jain-palvia, s.c. and sharma, s.s., ‘e-government and e-governance: definitions/domain framework and status around the world’, in agarwal, a. and venkata-ramana, v. (eds.), foundations of e-government, hyderabad, india: iceg, 2007, p. 1-12. 23. jennings, r., ‘participatory development as new paradigm: the transition of development professionalism’, 2000, [online] available at: http://www.usaid.gov/our_work/cross-cutting_ programs/transition_initiatives/pubs/ptdv1000.pdf, accessed on november 15, 2008. 24. kirby, j., ‘neighborhood policing: the story so far’, 2006, community safety journal, uk, vol. 5, no. 4, p. 24-30. 25. kushchu, i. and kuscu, m.h., ‘from e-government to m-government: facing the inevitable’, proceedings of european conference on e-government (eceg 2003), trinity college, dublin, july 3-4, reading, uk: academic conferences international, 2003, pp. 253-260. 26. law no.52/2003 regarding transparency in decision-making in public administration, published in m. o. no. 70, february 3, 2003. 27. martin, d., ‘the fading legacy of woodrow wilson’, 1988, public administration review, vol. 48, no. 2, p. 631-636. 28. meier, k.j., politics and the bureaucracy: policy making in the fourth branch of government, 2nd ed., monterey, ca: brooks-cole publishing, 1987. 29. mosher, f.c., democracy and the public service, 2nd ed., new york: oxford university press, 1982. 30. osborne, d. and gaebler, t., reinventing government: how the entrepreneurial spirit is transforming the public sector, new york: plume, 1993. 31. public act 095-0506, the citizen participation act, enacted by the people of the state of illinois, on 8/28/2007, [online] available at http://www.ilga.gov/legislation/publicacts/95/ pdf/095-0506.pdf, accessed on december 15, 2008. 32. romanian ministry of interior and administrative reform (miar), ‘the operational program for the development of the administrative capacity’, 2007, [online] available at http:// modernizare.mai.gov.ro/documente/podca_propunere%20oficiala_ro,%2026.09.2007. pdf, accessed on december 15, 2008. 33. salamon, l.m. (ed.), the tools of government: a guide to the new governance, usa: oxford university press, 2002. 34. smith, g.r. and taylor, j.r., ‘achieving sustainability: exploring links between sustainability indicators and public involvement for rural communities’, 2000, landscape journal, vol. 19, no. 1-2, pp. 179-190. 35. united nations, ‘resolution 57/277 of the general assembly on public administration and development’, december 20, 2002, [online] available at http://daccessdds.un.org/ doc/undoc/gen/n02/557/65/pdf/n0255765.pdf?openelement, accessed on december 15, 2008. 36. united nations, public administration and development: improving accountability, responsiveness and legal framework, iias working group, united nations, ny: ios press, 1997. 97 key words: local public services; citizen’s satisfaction; quality perception; servqual; pls. public sector organizations –and specifically those ones operating at local government level– are not immune to pressure in order to improve citizen’s service on a continuous basis. whereas some of these pressures arise from own local authorities (from a genuine desire by local public responsibles to improve the quality of those services provided to citizens’ position in service quality perception. an approach analysis in the case of spanish local administrations josé l. vázquez prof. dr, faculty of economic and entrepreneurial sciences, university of león (spain)1 pablo gutiérrez assistant professor, faculty of economic and entrepreneurial sciences, university of león (spain)2 maría p. garcía researcher scholar, faculty of labour sciences, university of león (spain)3 public sector organizations are not immune to pressure in order to improve their services to citizens. at this point, a major problem is that of “citizen-customer” satisfaction surveys being prone to focus on individuals’ perceptions on service delivery: what the individual think about the quality of delivered service. authors have usually considered tools like the servqual scale (useful at measuring service quality in a diverse number of organizations and situations, both in private and public sector spheres) as a prior reference when researching in the quality field, but as being the “source”, then changed (modified) into a more or less “new” proposal. following this research guideline, in this paper a new model for measuring perceived quality level in local government activities is presented. three dimensions are suggested for citizens to valuate service quality: technical, functional and overall features. transylvanian review of administrative sciences, 15 e/2005, pp. 97-106 1 facultad de cc. económicas y empresariales. campus de vegazana s/n 24071-león (spain). tel. (+34) 987291751. 2 facultad de cc. económicas y empresariales. campus de vegazana s/n 24071-león (spain). tel. (+34) 987291752. 3 facultad de ciencias del trabajo. campus de vegazana s/n 24071-león (spain). tel. (+34) 987295245. 98 citizens), others come “forced” either through public initiatives or through an increase in consumer activism. at this point, a major problem is that of “citizen-customer” satisfaction surveys – an increasing and expensive phenomenon in the public sector – being prone to focus on individuals’ perceptions on service delivery: what the individual thinks about the quality of delivered service. a well-known potential tool at this purpose is the servqual model originally developed by parasuraman, zeithaml and berry and subsequently refined as a general methodology for measuring service quality in a diverse number of organizations and situations, both in private and public sector spheres. the model identifies specific criteria for citizens to valuate service quality. the model also invites subjects to allocate weights to each one of five identified dimensions regarding service quality, expected to reflect their relative importance from the individual’s perspective. adding weights according to size of gaps identified in the other sections of questionnaire allows an assessment on the “focus” of the organization. authors have ususally considered this scale as a prior reference when researching in the quality field, but as being the “source”, then changed (modified) into a more or less “new” proposal. following this research guideline, in this paper a new model for measuring perceived quality level in local government activities is presented. three dimensions are suggested for citizens to valuate service quality: technical, functional and overall features. 1. introduction: public sector organizations, and so –and perhaps in particular– those operating at local level, are not inmune to pressure in order to improve customer service on a continuous rhythm and basis. whereas some of these pressures arise from own local authorities (that is, from a genuine desire by local public responsibles to improve the quality of those services provided to citizens by their institutions), others come “imposed” or “forced” either by means of public initiatives or through an increase in consumer activism. in the public sector context, it is recognized that elected authorities must face more troubles and difficulties –thus coming into a need of making a bigger effort– when trying to improve citizens’ service with respect to those other managers working in the private sector. even when private-service quality initiatives might have a very little deal to public/social services provision, they are mostly intended to enhance the public organization’s bottom line – its long term profitability–; then justifying all required investments (not only money, but also in terms of working hours, changing minds and rutines...) and getting funds on the basis of the desired purpose of finally getting a financial pay-back. however, real trouble comes when forgeting that in case of private sector organizations definition of target customers’ groups is usually to be quite an easy task (at least from a priori theoretical point of view), either real (existing) and/or potential. these expected consumers are those individuals determined to pay the prevailing market price to obtain the property or the right to use the concrete good or service. conversely, in a public context, financial costs of such customer-service initiatives often have to be supported through budget reallocation taking funds away from other activities, most public sector organizations having quite a number of diverse potential “customers” asking for their services. only in a few cases –once more in relative terms– the situation is similar to that above of private sector, “customer-citizens” paying directly or indirectly for provided and received goods and/or services. in some other cases, individuals are to be strictly public-services recipients or users –sometimes unwillingly–, but make little or not at all financial contribution towards their provision (even consciously, i.e. freeriding). even more, it could be also possible to find a concrete subject paying for a particular service from public administration, but not experiencing its benefits by direct or indirect use. 99 at this point, the real fact is that the concrete role of possible public stakeholders and/or elected representatives could be clearly ambiguous. summarily, a new concept on public marketing could and must be attempted to correctly categorize citizens (1). 2. some brief comments on quality, satisfaction and reputation concepts: even when (perceived) quality and (perceived) satisfaction are both terms widely used in the research literature on services, a clear distinction between the two concepts remains a challenge even nowadays (2). indeed, most researchers agree that they are two different constructs. moreover, it uses to be very easy to appreciate differences between these concepts in case of tangible products (goods). meanwhile if considering services, definition on quality uses to be stated a posteriori as the perceived difference between expected and obtained service (and thus e.g. a service being perceived as achieving a high quality standard by the only reason of prior expectations on it were exceeded). on the other hand, customer satisfaction or dissatisfaction are both well-known and established concepts not only in marketing literature but also in several other disciplines. when related to consumer research, customer satisfaction has been used in order to describe differences between concrete alternatives and/or brands (3). authors have also referred to this concept as a common denominator to describe differences between product groups and industries (4). clearly, an individual’s satisfaction cannot be directly assessed by using an objective measure tool (5). however, and even when being considered as an abstract and theoretical phenomenon, it can be measured as a weighted average of multiple indicators (6). measurement errors in the corresponding obtained index depend on quality and quantity of used variables (7). doing things in this way becomes a common denominator when trying to make it possible comparisons between industries, companies and individuals. customer satisfaction is also the accumulated experience of an individual’s purchase and consumption experiences. it is mainly influenced by two factors: expectations and experienced service performance (5). perceived performance is influenced by subjects’ perception on service quality, marketing-mix, brand name and image of the company/organization. as far as satisfied customers tend to maintain their consumption pattern or increase demand of a same good or service, not only customer orientation, but especially customer satisfaction has become an important indicator about product quality and future revenue. at this point, fornell (8) claims that individuals’ satisfaction clear and undoubtely influences purchasing behaviour: satisfied customers tend to be loyal customers, but loyal customers are not necessarily satisfied. according to yi (3), a customer’s satisfaction is conceived as a function on his/her perceived (service) quality and expectations. we propose that not only satisfaction, but also a second concept, that of reputation, are both influenced by quality. in marketing literature, major attention has been focused in the concept of brand (see e.g. 9, 10, 11). motivations for studying the importance of brands come from financial and strategic reasons. inside this context, brand awareness, image and reputation regarding a concrete product or supplier influences buyers’ purchasing decision (i.e. a good brand or reputation stimulates purchase by simplifying decision effort and rules). thus reputation and/or brand become an issue of attitudes and beliefs regarding either to brand awareness and image (12), and so increasing customer satisfaction and loyalty (8). keller (13) suggests that brand awareness “…relates to the likelihood that a brand name will come to mind and the eases with which it does”, whereas brand image is considered as “… [those] perceptions about a brand as reflected by the brand associations held in consumer memory”. attitudes and beliefs are influenced by previous experience: individuals with a previous experience background will base their attitudes and beliefs on an experienced good and/or service quality; meanwhile, subjects with little or no experience may base their attitudes and beliefs on reputation. moreover, even nations, regions, governments etc. enjoy a reputation. 100 as a direct consequence, reputation may be aggregated to a macro level extent by using the concept of country of origin. citizens living in a concrete region (usually) have previous experience on services offered by governments in such a region; thus –and among other factors–they base their valuation of satisfaction concerning government acts on perceived service quality. on the other hand, residents outside the concrete territory may (usually) have no experience with the policy offered by governments in that region; thus, their decision must be at least partly based on the country’s or region’s reputation and advice from people who may have a previous expertise about. based on their own and previous research on the country of origin topic, papadopoulos et al. (14) concluded that there is enough evidence to posit that: (i) a “country of origin” effect does exists; (ii) both final consumers and industrial buyers’ groups are affected by “made-in” images; and (iii) “made-in” stereotypes can be changed. thus, reputation becomes an important issue both from a marketing and a strategic point of view. we will propose that reputation is an important factor influencing citizens and companies’ satisfaction with local government’s policies. 3. quality in public services: increasing –and expensive– “citizen-customer” satisfaction surveys in public sector use to be prone to focus on every individuals’ perceptions on service delivery, i.e. what every individual thinks about the quality of delivered service. at this purpose, a well-known potential tool is the servqual. this model originally developed by parasuraman, zeithaml and berry (15) has been subsequently refined as a general methodology for measuring service quality in a diverse number of organizations and situations, both in private and public sector spheres (e.g. 16 by own authors; 17 and 18 for local governments). this model identifies specific criteria for citizens to valuate service quality. the servqual criteria are classified in five major dimensions: 1. tangibles: regarding the appearance of physical facilities, equipment, personnel, and communications materials. 2. reliability: the ability to perform the promised service dependably and accurately. 3. responsiveness: the willingness to help customers and provide them a prompt service. 4. assurance: the competence of the system and its credibility in providing a courteous and secure service. 5. empathy: the approachability, ease of access and effort taken to understand customers’ needs. as stated above, authors have used to use and/or refine the servqual scale when researching on quality issues, but it is also usual for them to go further, even changing or turning it into mostly really “new” ones. in this paper we have developed a new model for valuating quality in local government services, considering three different dimensions for criteria: 1. technical features: objetive items for quality valuation. 2. functional features: subjetive items for quality valuation. 3. overall features: general items about different features in local governments. 4. research methodology and results: partial least squares (pls), a structural equation modeling (sem) tool, was used to make analyses in this research. sem enables researchers to simultaneously examine the structural component (path model) and measurement component (factor model) in one same model (19). the use of pls has advantages over other sem tools, e.g. lisrel, as far as pls can be applied to explore the underlying theoretical model. furthermore, pls can be used when working with relatively smaller sample sizes because it does not require restrictive distributional assumptions about the underlying data (19). 101 mcardle (20) takes this distinction to make several statements contrasting components analysis and factor analysis. chin (21) suggests these statements should also be considered for pls and lisrel: – pls is a tool that tries primarily to estimate the variance of endogenous constructs and in turn their respective manifest variables (if reflective): the focus should be shifted from only assessing the significance of parameter estimates (i.e. loadings and structural paths) to that of predictive validity. – lisrel is superior to pls on mathematical grounds: this point refers to the fact that lisrel is a population based model for estimating loadings and structural path estimates. only under the joint condition of large sample size and large number of indicators per factor will the estimate of the factor loadings and structural path estimates approximate that of the lisrel estimate. otherwise, the loadings in a pls analysis tend to be overestimated and the structural paths, conversely, underestimated (22, 23). an examination of the component versus common factor distinctions will also suggest that communality represent yet another factor. thus, superiority of lisrel over pls refers to the ability to estimate the underlying population parameters. as noted in statement one, this becomes less of a concern if the objective is to account for multivariate variance in a predictive sense. – lisrel is superior to pls on statistical grounds: this statement is relatively contentious and depends on the perspective of the researcher (the reverse statement, suggesting that pls has better statistical sampling properties than lisrel, could equally be made). yet, due to the nature of the pls algorithm, the construct score estimates are biased and only consistent under the condition of high communality, appropriate number of indicators per construct, and increasing sample size. nonetheless, because pls is a limited information estimation procedure, an appropriate sample size tends to be much smaller than that needed for a full information procedure such as lisrel. even with distributional violation, the maximum likelihood estimation procedure for lisrel can be quite robust and may possibly, as mentioned above, produce better estimates of the population parameters. the generalizability issue for multiple group comparisons needs also be considered. lisrel provides a statistical basis using a chi-square test for multiple group comparison. the generalizability of pls scores for group comparisons has to be determined yet. predictive relevance, on the other hand, is a different issue that should be further explored. for example, the use of a mean loss function on the holdout data in a sample reuse procedure can be a viable means for choice selection of indicators. – finally, pls is superior lisrel on practical grounds: pls is computationally more efficient than lisrel in the same way that a components analysis is faster than a maximum likelihood factor analysis. in summary, an understanding of the issues related to choice of component versus common factor analysis can provide a basis for choosing pls or lisrel as an analysis technique. we think clearly articulated that the aim of lisrel is to estimate causal model parameters whereas pls is to maximize variance explained. for further understood on this issue, one only needs to have a look on the component/factor analytic distinctions. in our research the questionnaires for the survey were designed to measure five distinct latent constructs (see table 1): objective features (ξ 1 , subjective features (ξ 2 , overall features (ξ 3 , perceived quality (ξ 4  and reputation (ξ 5 . at designing the model, there was another element –or explicit variable– that was to be related with these latent variables: citizen satisfaction (ξ 6 . 102 table 1: measurement instruments of the quality of services provided by municipalities. latent variables: explicit variables: objective (technical) features (ξ 1 ) a) office setting in council. b) the forms of the town hall are foolproof. c) telephone (fax, internet) is a good communication with the town hall. d) notifications are interesting for someone. e) notifications use an easy language with citizen. f) employees are always prepared for helping citizens. g) locals are in a good condition. subjective (functional) features (ξ 2 ) a) if they promise something, they will carry out it in time. b) i can understand how things are running at my town hall. c) i know who received my complaints. d) employees are trained to do their job perfectly. e) employees inform about services. f) employees are kind and polite. g) employees take into account my personal situation. overall features (ξ 3) a) services have changed because our ideas/suggestions. b) our complaints are effectively processed. c) we trust in our town hall employees. d) town hall employees have resources enough for developing services. perceived quality (ξ 4 ) a) global quality is good. b) quality in this town hall is better than in any other one. reputation (ξ 5 ) a) public services must be developed for municipalities. b) our town hall reputation is very good. the local government citizen reputation index (lgcri) is an economic indicator developed in order to measure customer satisfaction with local public services and reputation of local administration. in our model, six interrelated variables –five latent and one explicit variable– were introduced. this was done based on well-established theories and approaches in customer behaviour, the result being applicable at a number of different public governments. the intended lgcri model is depicted in figure 1. it can be seen that a set of explicit variables is associated to each one of the latent variables. the model as a whole is important at determining the main goal variable. the structural model contains what follows: • a number i of exogenous latent constructs, represented as ξ i (or directly as xi i , depending on used dictionary). • a number j of endogenous latent constructs, represented as η j (eta). • paths connecting ξ i to η j , statistically represented as γ ji (gamma) coefficients. • paths connecting one concrete η m to another η n , represented as β nm (beta). • shared correlation matrix between one concrete ξ h and other ξ k , represented as ø kh (phi) • a shared correlation matrix among the error terms of the η j , called ψ (psi). • the error terms themselves, represented as ζ j (zeta). on the other hand, in figure 1 there is also a measurement model, composed of: • a number z of x z variables and a number c of y c variables, which represent observations or the actual data collected. x z and y c are the measures of the exogenous and endogenous constructs, respectively. each x z should load into one ξ i , meanwhile each y c should load into one η j . 103 • paths connecting any observed variable x z and its correspondant ξ i (i.e. the item loading on its latent variable), represented as λx z (lambda-x). • θδ (theta-delta) coefficients, representing the error variance associated with every xz variable (i.e. the variance not reflecting its latent variable ξ i ), showed as δ z . • paths connecting any observed variable y c and its correspondant η j (i.e. the item loading on its latent variable), represented as λy z (lambda-y). • θε (theta-epsilon) coefficients, representing the error variance associated with every yc variable (i.e. the variance not reflecting its latent variable η j ), showed as ε c . both these two models (structural and measurement) can be summarized in a new more simplified figure, showing those relationships found to be most important in the model (figure 2). the field research providing data for this study was done in 2004 and early 2005, finally obtaining up to 400 required questionnaires for the sample to be representative (at 95.5 % level, e = ± 5.0 %) according to the size of total population (number of town council demarcations). these questionnaires were directly fulfilled at 76 different town councils in castilla y león, a region in the north of spain. the 76 different locations were ramdomly selected in every one of nine provinces (spanish official intermediate geographical demarcation between those of municipality and region), with the only restriction of taking into consideration the weight of each province in the region, according to its population level (citizens older than 16), as it can be seen in table 2. the causality model of figure 3 summarizes the various structural regressions of our model. the path coefficients are the standardized regressions coefficients. the r2`s are also shown. the x 2 x 3 x 4 x 5 x 6 x 7 x 8 x 9 x 10 x 11 x 12 x 13 x 14 x 15 x 17 x 18 y 1 y 2 y 4 y 5 y 3 x 1 δ9 δ10 δ2 δ3 δ4 δ5 δ6 δ7 δ1 δ8 δ11 δ12 δ13 δ14 δ15 δ16 δ17 δ18 ξ1 ξ2 ξ3 η1 η3 η2 ε1 ε2 ε3 ε4 ε5 ζ2 ζ3ζ1 γ12 γ11 γ13 β31 β21 β32 φ23 φ13 φ12 λy1 λy 2 λy 4 λy 5 λy 3 λx1 λx 2 λx 3 λx 4 λx 5 λx 6 λx 7 λx 8 λx 9 λx 10 λx 11 λx 12 λx 13 λx 14 λx 16 λx 17 λx 18 figure 1: network including constructs and measures for lgcri model. 104 objetive features (ξ )1 subjetive features (ξ )2 general features (ξ )3 perceived quality (ξ )4 satisfaction (ξ )6≈y reputation (ξ )5 significance levels shown next to the path coefficients in parentheses are coming from pls-vb. all relations are significant values. table 2: universe and sample distributions (%) by province in the castilla y león region. province: citizens older than 16: universe (%): sample (%): avila 84,249 9.83 % 10.00 % burgos 101,344 11.83 % 11.50 % león 183,622 21.43 % 24.00 % palencia 66,613 7.78 % 7.75 % salamanca 121,676 14.20 % 14.00 % segovia 64,649 7.55 % 7.25 % soria 40,868 4.77 % 4.50 % valladolid 95,747 11.18 % 11.25 % zamora 97,916 11.43 % 9.75 % total: 856,684 100.00 % 100.00 % once data were analyzed, it was obtained that those variables in the intended model identified as objective features, subjective features and overall features were to have a significant impact on citizen’s perceived quality of local public services (0.369, 0.373 and 0.346, respectively, as shown in figure 3). perceived quality direct impact on reputation was not so important (0.232), meanwhile being a very important factor at influencing (explaining) citizen satisfaction (0.789). finally, quite a good relationship was found between citizen satisfaction and reputation (0.476). thus, it can be understood that perceived quality acts as an important indirect effect (through satisfaction) on reputation. obtained r2 values were 0.417 for reputation, and 0.570 for satisfaction, respectively. these values can be considered to be very satisfactory, taken into account the complexity of the model. figure 2: causality model describing causes and consequences. 105 objetive features (ξ )1 0.369 (0.000) 0.373 (0.000) 0.346 (0.000) 0.232 (0.000) 0.789 (0.000) 0.476 (0.000) r =0.450 2 r =0.417 2 r =0.570 2 subjetive features (ξ )2 general features (ξ )3 perceived quality (ξ )4 satisfaction (ξ )6≈y reputation (ξ )5 figure 3: final causality model. 5. conclusion: main intended objective was to ascertain whether or not we can suggest a model wherein perceived quality, satisfaction and reputation of local public services (at the level of municipalities) would be interacting and could be considered together by public authorities. obtained results points clearly at this possibility. what’s more, it has been found a strong and significant relationship between these three constructs. thus, if those elements and factors determining perceived quality are managed in the right way, either direct and indirect results could be obtained on reputation. a first finding at this point is the fact that direct relationship between perceived quality and reputation is far not so powerful as the indirect influence on it through satisfaction. however, we musn’t forget that perceived quality is understood as determined by three constructs including 23 items/variables acting as “basic” instruments at 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analyses”, multivariate behavioral research, vol. 25, nr. 1, 1990, pp. 81-87. 21. chin, w.w., pls-graph user’s guide version 3.0, 2001, (user’s manual provided by wynn chin together with pls-graph version 3.00 build 279 software). 22. dijkstra, t., “some comments on maximum likelihood and partial least squares methods”, journal of econometrics, vol. 22, 1983, pp. 67-90. 23. dijkstra, t., latent variables in linear stochastic models: reflections on maximum likelihood and partial least squares methods, 2nd ed., sociometric research foundation, amsterdam (the netherlands), 1985. 90 the paper concerns itself with the notion of smart growth in the united states, focusing on the states’ approaches involving this vision. american communities are facing many negative consequences of the current pattern of growth, namely urban sprawl. over the last decade, sustainable development has emerged worldwide not only as a viable solution to combat sprawl but also as a new pattern of development. one can argue that the american experience with regard to combating the negative effects the growth has on cities, communities and environment is relevant for other countries as well. the negative consequences of growth are similar everywhere, therefore an analysis of one nation efforts would provide useful tools for other countries. romania should understand that growth could have not only positive benefits but also negative effects on environment, economy, community life, and public health. the main question of the paper refers to the rationales for adopting smart growth principles. after an overview of the concept, several states’ efforts regarding smart growth in the u.s. are examined. based on these findings, and the smart growth literature, a framework of factors, and conditions will be developed in order to help interested nations understand better the smart growth phenomenon in the u.s. then, the validity of the elements of the framework for the romanian context will be analyzed in order to explore the likeness of adopting such a smart growth philosophy in romania. smart growth: applying the us experience to the romanian context cristina ramona leuca master student, department of urban and regional planning, michigan state university transylvanian review of administrative sciences, 16 e/2006, pp. 90-100 1. introduction the paper concerns itself with the notion of smart growth in the u.s., focusing on the states’ approaches involving this vision. across the u.s., land is being developed faster than in the last decades, and the demand for more suburban and exurban growth is still increasing. more and more american communities began facing many negative consequences of the current pattern of growth. that is urban sprawl, a form of scattered, low-density development that is argued by many studies to have many negative consequences on environment, local economy, public health and community’s life. as more and more people have begun to perceive the negative effects sprawl has on their lives, managing growth has become a significant theme in land use planning across the u.s. a series of solutions were proposed in order to combat sprawl. this planning philosophy has grown broader in scope over the last decade, worldwide countries are currently considering and/or implementing policy tools associated with smart growth such as: united states, united kingdom, australia, and new zeeland. the concept of sustainability is closely intertwined with smart growth/growth management. numerous european union programs emphasize sustainability as an important stage in the drafting/implementation of these programs. one can argue that the american experience with regard to combating the negative effects 91 growth has on cities, communities, and environment is relevant for other countries as well. the negative consequences of growth are similar everywhere, therefore an analysis of one nation efforts would provide useful tools for other countries. romania began to experience growth and it has implemented many strategies for attracting growth. in light of this focus on development, romania has to understand that growth could have not only positive benefits but also negative influences on the environment, economy, community life, and health. the main question of the paper refers to the rationales and factors that make a governmental entity adopt smart growth principles. the paper will focus on the state’s efforts to manage growth due to the importance of having a wider approach to growth-related issues. the paper consists of five sections. after the introduction and the overview of the concept, several states’ efforts regarding growth and smart growth in the u.s. are examined. based on these findings and smart growth literature, several rationales, and conditions for smart growth programs will be analyzed. the last section develops a framework of factors that make a state more likely to adopt smart growth goals. by examining the context and the factors that urge the adoption of smart growth principles in american communities and states, one can understand better the smart growth phenomenon in this nation. several of the elements of the framework will be analyzed for their applicability to the romanian context. because there is a growing worldwide awareness of the necessity of sustainable development, it is important to analyze the likeness of adopting/implementing such a philosophy in romania. 2. an overview of smart growth in the united states this section of the paper describes the concept of smart growth and several issues associated with this philosophy. the purpose of this section is to provide the reader with an understanding of the emergence of the smart growth concept, and with a brief overview of the main elements and goals of this new phenomenon. an overview of the concept of smart growth should start with a brief discussion on the concept of growth. for many decades an underlying philosophy dominated the approaches of american local planners: any development is good and desirable for a community. this belief made planners and citizens have a positive attitude for growth (cullingworth, 2003). then, in the 1960s, people begun questioning the benefits of uncontrolled growth, and therefore a new philosophy of growth emerged. while various localities with poor economic performances still seek any kind of economic growth, municipalities under certain growth pressures have rejected the former assumption, and have started arguing that growth affects quality of life. as a result, new approaches (growth management, growth controls and ‘no growth’ policies) emerged as solutions under this new growth philosophy. this philosophy has evolved today to encompass different nuances of growth that would lead to a rethinking of the growth approaches. one of these approaches is smart growth, whose debate encompasses localities and administrative units facing strong and rapid growth pressures. one debatable topic is the evolution of smart growth. it seems that there is no agreement on how the concept emerged. smart growth was defined as a new concept, a new way of thinking, as a new movement, while others scholars argue that the concept evolved mainly from the growth management movement employing tools already used for a number of years (weitz, 1999). burchell argues that smart growth is in effect the next step following the efforts to manage growth of the previous decades, as “smart growth “encompasses and extends the growth management efforts of the previous decades”(burchell at al., 2000). i would argue that it is quite impossible to envision smart growth as a unique phenomenon disconnected by the previous communities’ efforts to guide growth. the concept of growth evolves as the economic and environmental context changes. people’s perception of their problems, and needs changes and therefore approaches to growth change too. however, smart growth as a term appeared in the midto late 1990s. it is the initiative of various organizations: the american planning association, department of housing and urban development, the henry m. 92 jackson foundation, the natural resources defense council and the surface transportation policy project (burchell at al., 2000). one significant challenge in approaching smart growth is the difficulty of indicating a single definition or meaning of the concept. since the term was invented, the concept has received a lot of support from a variety of organizations across the u.s. numerous public, private and nonprofit organizations had developed their own definitions, hence the big number of definitions. this fact has created the image of a widespread and coherent movement that supports smart growth goals. it has been argued that the image of “a big umbrella” can be “deceiving” (cullingworth, 2003, gillham, 2002). analyzing a sample of definitions of smart growth, gilham (2002) indicates that there is a great variation in the meaning of the concept, varying from stronger regional government to simply maintaining the status quo, fact that depends on the nature of the institution that has defined smart growth. however, for many people and institutions smart growth means at least some sort of change in the current american pattern of development. gilham (2002) argues that the appearance of wide institutional support may be partly caused by the nature of the term itself. several scholars recognize the powerful effect the term “smart” has in attracting supporters, while the meaning of smart growth is still debatable (downs, 2005). however, there are many barriers to smart growth and the image of a large body of smart growth advocates cannot cover the large opposition smart growth supporters are facing when trying to implement its measures (downs, 2005) urban land institute defines smart growth as a means of “ensuring that neighborhoods, towns, and regions accommodate growth in ways that are economically sound, environmentally responsible, and supportive of community livability – growth that enhances the quality of life” (uli, 2000). as the american planning association defines it, smart growth is the planning, design, development and revitalization of communities in order to create and promote social equity, a sense of place and community, sustainable development, and to preserve natural as well as cultural resources (apa, 2002). the smart growth network suggests ten principles of smart growth that can be encountered in various forms in other definitions american scholars are given to smart growth (smart growth network sng): 1. mix land used, 2. take advantage of compact building design, 3. create range of housing opportunities and choices, 4. create walkable neighborhoods, 5. foster distinctive, attractive communities with a strong sense of place, 6. preserve open space, farmland, natural beauty and critical environmental areas, 7. strengthen and direct development toward existing communities, 8. provide a variety of transportation choices, 9. make development decisions predictable, fair and cost effective, 10. encourage community and stakeholder collaboration. an examination of the literature on smart growth indicates that most of the organizations and scholars focus more on broad definitions incorporating measures, goals or principles of smart growth that would be translated into concrete measures of action rather than on a distinct definition. the underlying principle of smart growth is the promotion of sensible growth, sustainability, and the avoidance of waste and damage on resources. the united nations and other international organizations are promoting sustainable development worldwide because of the current quality of the living environment. it can be argued that sustainability is the broader goal of smart growth that can be achieved though the implementation of several concurrent principles listed above. countries such as united kingdom, australia, and new zeeland have implemented measured very similar with the smart growth tools. 93 smart growth focuses on accommodating growth and on taking benefit from it. this is the main distinction between smart growth and growth management. it has been suggested that the former succeeds because it rejects the “pro growth versus no growth” debate in favor of a dialogue between citizens and grass roots community groups, private developers, elected officials and policy makers (sgn, 1998). one important issue with regard to smart growth is the applicability issue. first, there is no “onesize-fits-all” solution. as the literature on smart growth suggests, being such a broad concept, not all smart growth characteristics are applicable to all communities nor there is an order of importance. moreover, a smart growth program is a function of the context of the community. another issue refers to the scale of implementation or adequate level of government for smart growth policies. while it can be easily implemented as local level, smart growth movement advocates a regional approach integrating the principle of sustainable development. the underlying principle of sustainability is the recognition that people should plan at a broader level (regional, state) because one local decision can have negative consequences on adjacent jurisdictions. a logic question can be one regarding the differences between smart growth and growth management. gillham (2002) argues that sometimes these terms are used interchangeably because many growth management techniques are now tools of the smart growth movement. however, differences can be identified in terms of objectives and underlying assumptions of both movements. while displaying a variety of improved tools to guide growth, it can be argued that smart growth encompasses broader principles than the former movements it has evolved from. one difference between the two movements refers to the two smart growth’s underlying assumptions: ‘one can have growth in the same time with preserving environment’ and ‘growth is still desirable if controlled in certain conditions’ (burchell et al.2000). it can be noticed that smart growth advocates have a lot of enthusiasm. i would argue that smart growth pursues a positive approach to growth because its central philosophy is the confidence in the power of smart growth “to help the nation meet the needs of expansion without the kinds of negative impacts that have accompanied widespread suburbanization” (gilham, 2002). with regards to the applicability of such a philosophy in romania it can be argued that growth management can be difficult to be implemented because this approach seeks mainly to control growth while romanian municipalities seeks to attract the much-needed growth in their communities. therefore, in light of the romanian growing development, a smart growth will be feasible and valid. 3. the smart growth efforts of the u.s. states even though there are many american local governments that have implemented smart growth principles, it has been argued the appropriateness of having higher government level involvement in order to insure its success. therefore, the paper concerns itself with the state government’s efforts regarding the adoption of statewide smart growth strategies. there are several states that have already enacted smart growth programs and others are considering the possibility of adopting its principles. the main question of the paper is why to adopt a smart growth program. one can argue that the experience of the state of maryland represents the best example in this regard. maryland had adopted in 1997 the smart growth areas act that makes it the first state that used the term of “smart growth” in a statewide policy. it can’t be argued that maryland is the first state that has adopted smart growth principles due to difficulties in distinguishing between smart growth and growth management. in order to understand how maryland adopted the smart growth act, the examination of the context (philosophical influences, previous regulation adopted by the state, growth problems) is appropriate. the literature review on growth management indicates that maryland is one of the earliest adopter of statewide programs targeting urban sprawl. it has been indicated that maryland is one of the only few states whose legislation provides a statutory-based growth management policy (wilson, 2002). 94 over the 1950s and 1960s maryland began to face the negative effects of uncontrolled development. one would argue that the philosophy and values created in this interval were central for the state’s subsequent growth approaches. one fervent advocate against sprawl was james w. rouse who in the 1960s attracted political leaders, planners, environmentalists, and citizens in his efforts to implement “better environmental protection and land use planning” (maryland department of planning). since then, environmental protection has been a central concern for subsequent governors, and local, county, and state political leaders. each governor expanded the efforts of previous leaders toward a better management of state’s natural resources. along with environmental preservation, governors came to recognize the necessity of growth management to guide growth and development. thus, several important programs were created as a response to the growing problems, creating the guidelines for future smart growth approaches. first, in 1967 the maryland environmental trust was established to conserve and improve the natural and scenic aspects of the state environment. next, the open space program was created in 1969 to acquire outdoor recreation and open space for public use. the state engaged in the protection of costal areas and a shore erosion control program was established. in 1987, maryland joined other states and agencies by entering into an interstate chesapeake bay agreement to protect the water quality of the chesapeake bay. farmland preservation is another major focus for maryland and in 1977 the state began to protect farmland through the purchase of conservation easements under the provisions of the agricultural land preservation program. thus, over the decades, maryland has developed growth management practices to address several environmental concerns. examining maryland actions, it can be argued that maryland has a gradualist approach of growth management. even though there have been successes, several regions of maryland are still facing threatening urban development projects. however, maryland continued its efforts to pursue a growth management vision. this efforts and pressures culminated with the adoption of growth management legislation in 1992, namely the maryland economic growth, resource protection and planning act. the act amended maryland’s planning and zoning enabling legislation with the requirement that local comprehensive plans must be consistent with, and implement the state visions by january 1997. the 1992 act list seven goals that would guide state’s future (promotion of economic growth, chesapeake bay protection, concentrated development in suitable areas, directing growth to existing population centers, protect rural land resources, and sensitive areas). the local plans must establish sensitivearea elements, and streamline development regulations in areas suitable for growth. also, in the same year, consistency between state policies and local comprehensive plans has been addressed. the new act addresses consistency issues by providing incentives for local governments to implement it: the state may not fund a public works, transportation, or major capital improvements projects if it is not consistent with the state policy (noonan et al. 1996). the next act targeting sprawl and growth is the 1997 smart growth act. the maryland governor, paris n. glendening has been influential in the creation of this regulation (apa, 1999, b2002). the governor’s role has been highlighted in the literature; and his interest in smart growth is evident also by the fact that he made smart growth his top priority as chairman of the national governors association (sgn). thus, in 1996 the maryland governor announced his priority commitment to enact legislation to strengthen the state’s ability to direct growth and to preserve maryland’s quality of life for future generation. several of his strategies to gain broader population support were citizens’ consultation, public meetings, forums, and surveys. this act is considered smart growth act not just because of the title, but also because it adopts several smart growth principles. one of its central features is the incorporation of many incentives to encourage voluntary implementation of smart growth practices by local governments. the 1997 smart growth areas act aims at directing growth to “priority funding areas” by limiting state’s agencies to 95 direct funds to support projects in locally designated growth areas. in this way, maryland’s agencies are prohibited from funding “growth related projects” outside these areas, therefore protecting rural areas (apa, 1999). also, state funding for projects in rural areas are allowed if they maintain the character of the community, but do not increase the area’s growth capacity. then, a 1998 executive order (enacted to implement the smart growth areas act) provides other smart growth principles; state’s agencies are directed to give priority to central business districts, downtown core areas, to promote mass transit, and existing communities. there are several u.s. states that have already adopted smart growth goals. a brief examination of their experiences will provide more information about the necessary conditions to adopt smart growth. several relatively significant examples are pennsylvania, illinois, and colorado. in pennsylvania, the governor tom ridge has been the leading actor of the smart growth actions. he launched two initiatives “growing greener” in 1999 and “growing smarter” in 2000, and financed a land preservation program. several nonprofit environmental organizations were also very active in promoting land preservation and smart growth programs within the state. this fact created the opportunity for numerous land use reforms and smart growth regulations. several planning bills enacted in 2000 encourage the use of transferable development rights as a tool available for counties and municipalities to preserve farmland and open space, urban infill, and downtown revitalization (apa, b2002). an analysis of illinois’ efforts to adopt smart growth goals indicates an active executive activity for promoting smart growth principles coupled with little support by the legislative body. hence, many smart growth legislative proposals failed to be enacted. in colorado managing growth has generated a lot of debates but little legislation, too. there is a strong citizens support for managing growth, and there are many organizations promoting smart growth. however, many of the smart growth proposals initiated by gov. owen failed also to be adopted (apa, b2002). 4. an analysis of the rationales of smart growth in the u.s. this section addresses the complex web of factors and conditions that make a governmental unit adopt smart growth principles. basically, based on the case study of maryland and other states and on the literature on smart growth/growth management, the sections attempts to develop a framework for understanding why one needs to adopt smart growth principles and who are the main actors involved in this process. there is an extensive literature on growth management and a growing literature on smart growth too. as we mentioned above, smart growth is considered to be the most recent wave in the evolution of growth management, therefore an analysis of previous state growth management programs would provide relevant information about the triggers of the adoption of a growth-related statewide policy. as weitz (1999) argues, smart growth evolved from state growth management programs, suggesting that previous legislative efforts with regard to addressing growth might evolve into a smart growth policy. the cases study described above suggest that there is a complex web of intermingled factors that account for the creation of smart growth programs. rather than resulting from one single event, the majority of growth management programs indicate several decades of cumulative efforts in land use planning. it can be noticed that most smart growth programs build upon earlier growth management planning initiatives. sometimes, these new programs reinforce the growth controls of the earlier growth management legislation or address the limitations created by earlier growth management efforts (apa, b2002). the section two of the paper suggests that there is a strong correlation between the changing attitudes toward growth and the legislation adopted by local or state governments with regard to managing growth. along the decades, the understanding of the nature and effects of growth have become more 96 complex by including the negative effects of uncontrolled growth on environment, on the social ties within a community, on the residents health and on the municipal finance (cullingworth, 2003). it has been argued that growth management programs have been developed typically in areas that have experienced rapid growth and its associated problems (weitz, 1999). an extensive literature demonstrates that in many cases rapid growth was the main driving force to urge the adoption of a local growth management program (gillham, 2002, bollens, 1992). the reaction against rapid growth suggests that communities began to perceive growth no longer desirable as residents recognize the adverse impacts of current development patterns. they seek instead to preserve the existing “character” of the community either viewed from a social perspective or from an ecological standpoint. it has been suggested that the interaction of several conditions has created the demand or opportunity for smart growth: strong environmental ethics, increased fiscal concerns and responsibility as cities are seeking new ways to accommodate growth, and more nuanced views of growth due to changing economic and social context (sgn, 1998). scholars have analyzed the rationales for addressing growth problems at a higher level (i.e. state level) and suggested that the unwillingness and inability of local governments to deal adequately with issues that transcend local boundaries represent significant factors. while local government is responsible for land use planning in the u.s., past experiences in managing growth have suggested that local approaches are not enough and sometimes do not produce the desired results. it has been indicated that there are considerable mismatches between local growth benefits and regional impacts and costs (bollens, 1992). therefore, a regional/state approach was strongly required by various growth management advocates. several states have implemented growth management policies because certain regional growth issues are beyond local jurisdiction (gillham, 2002; cullingworth, 2003). the actors involved in the adoption of a smart growth program and the nature of their relationship are relevant for this analysis. a study about the adoption of smart growth principles by local governments concludes that most of the case studies were the result of collaboration and/or more formal public/ private partnerships (uli, 2000). political leadership within the executive and legislative branches of government is central for the success of this kind of initiative. it has been suggested in the literature that the chances for adoption of a growth management program depend on some public official support, namely the governor (wilson, 2002). degrove (1996) emphasizes the supportive roles of governors in hawaii, vermont, rhode island, florida, oregon, georgia, and maryland. the author concludes that active support from the governor is “absolutely essential” to achieve state land use reform. however, an examination of current planning efforts across the nation suggests that governors are strong advocates of smart growth too and a main topic of their agenda is managing growth in their jurisdiction (apa, 2002). more important, due to the growing citizens’ participation in land use planning, strong grassroots support increases the chances of successful adoption of a smart growth program (wilson, 2002). the cases described above prove to be extremely useful in understanding the phenomenon. maryland communities begun to experience rapid growth and its negative effects back in the 1960s and this is the common rationale for adopting this kind of regulation in all these states. at the moment of the adoption of smart growth act, maryland has already had a long experience in managing growth and has already adopted a series of growth management programs. it can be seen that along with pragmatic motives for adopting smart growth, also philosophical and emotional factors are relevant in this regard. in maryland there is a strong cultural association with agriculture and open space. due to the fact that maryland has had high quality soils and agriculture was once the economic mainstay, farmland is still considered an important element of their communities; therefore supporting agricultural land in the face of mounting urban growth pressure is a common rationale for the program adoption. ongoing public awareness about farmland accounts for increasing sophistication in the tools used to protect agricultural land. 97 therefore, it can be argued that previous efforts to manage and guide growth in one state are a factor for smart growth initiatives. maryland attempted to combat sprawl for more than four decades, and its continuous efforts in this regard had culminated with a smart growth initiative. as many scholars suggested, the role of a public figure, the governor in maryland case, is vital in the adoption of a smart growth policy. several governors were instrumental in the adoption of various growth management programs (i.e. gov. glendening) because they were able to gain the support of different stakeholders. the other three states suggest several similar findings. rapid growth and its negative effects urged communities and executive leaders to promote smart growth. in each state the governors were the main political actors that have supported/initiated smart growth actions. also, multiple organizations supported land preservation policies and advocated strongly for smart growth. however, not very apparent in the case of maryland is the need for political collaboration and cooperation between all stakeholders. illinois and colorado cases indicates that even though the governor is active in promoting smart growth the legislative body might be against it. 5. conclusions this section provides a framework consisting of the factors that make a us state more likely to adopt a smart growth initiative. then, the paper seeks to examine whether the elements can be identified in romania. therefore, this document addresses whether romanian national and local governments are likely to adopt such a philosophy. when examining the factors that make a state adopt smart growth goals, difficulties may appear with regard to the reference point. there are two reasons that make this attempt challenging, one refers to the number of the smart growth definitions and the second refers to the elements of smart growth. it has been mentioned in section two of the paper that smart growth is a big umbrella term incorporating several definitions developed by different organizations. however, the paper shows that there are several elements shared by all definitions. then, how many principles a state should adopt in order to be considered a smart growth state? based on states experiences i would argue that no state has adopted only one because all smart growth goals are interrelated and have many positive benefits. therefore, based on the analysis of the case studies and the literature on smart growth, a framework can be developed with regard to the conditions that make a state to adopt a smart growth program. the model has several elements, but it is difficult to classify them in terms of significance because some may be more relevant in a community than in another one. also, one can argue that these factors are intermingled and interrelated to each other, making difficult to assess the impact of one trigger alone without considering other factors involved in. thus, these are the elements of the framework: – rapid growth and pressures of growth are the main driving force for any state’s efforts to guide growth. location is central to any discussion on growth because the proximity to any metropolitan areas would lead to growth in the adjacent areas too. conversely, areas experiencing little growth pressures are unlikely to implement smart growth. – it can be argued that the states that have already undertaken growth management programs are more likely to adopt smart growth initiatives under their ongoing efforts to combat sprawl. therefore, previous state growth management programs or special programs in different areas are a key element of this framework and a trigger for further reforms for managing growth. – underlying state’s values explain the nature and content of their growth–related policies. maryland’s residents take great pride in their farmland economy, and agriculture is considered an important activity in the state’s economy and community’s life. one may consider maryland as a progressive state due to their ecological approach and orientation to agricultural land. this factor is important 98 because when community believes that growth has more negative effects than benefits, it would be more likely that it would try to address its consequences. also, this element provides researchers with an understanding of possible obstacles to smart growth. – as many studies indicate, leadership is central to any smart growth efforts. the scholars have highlighted the governor role both for the adoption of growth management and smart growth programs. while it is not very obvious, their success is caused by a general agreement among executive and legislative branches, interest groups and citizens on the necessity of adopting growth-related policies. therefore, i would argue that it is not enough to have a strong governor, because collaboration should be central to any smart growth efforts. partnerships between governor and state legislature, between public officials and community or environmental organizations should be the central element of any model that explains state efforts for smart growth. also local governments should be attracted in any decision making process with regard to smart growth because they are the main entities that are to implement smart growth programs along with the state agencies. this is also an important barrier when it is not achieved. illinois case is the best example of this issue because even though the governor had multiple smart growth initiatives they all failed to be enacted by the state legislature. with regard to the citizens’ support, the case of colorado suggests that even though there was strong community support they failed to influence legislators to adopt many smart growth initiatives. this fact supports the idea presented above, for a statewide cooperation should be in place in order to adopt smart growth. – smart growth is a new movement that advocates for a new definition of growth. this new definition seems appealing to many legislators because it incorporates current needs for both economic growth and environment protection. – it can be argued that there is a strong correlation between the adoption of smart growth and land use and planning reforms undertaken by the states. sometimes smart growth is an element of a broad land use reform, or land use and planning reforms were necessary in order to effectively implement smart growth programs. these are the elements of a framework that seeks to explain why a state is more likely to adopt smart growth than others. this model is not comprehensive because it is possible that other factors may influence the adoption of a smart growth initiative. however, this framework is extremely relevant for states that consider the adoption of a smart growth initiative. it outlines the elements that support this kind of approach but more important it suggests possible barriers to the adoption of this kind of program. further research on the applicability of this model should be developed and the experience of other states can be extremely valuable for improving the model. the factors of this framework can be examined for their applicability to a different context, namely the romanian context. while the two countries display many differences, it can be argued that the american approaches for addressing the negative consequences of growth can provide useful lessons to romanian municipalities. over the past 5 years romania has been experiencing growth especially in the big cities and in the adjacent communities. while many small and medium-sized municipalities are still struggling with stagnant economic development and high unemployment rates, there are large cities that are facing tremendous pressures for growth in terms of new commercial and residential development. cities such as bucharest, timişoara, cluj-napoca, and constanţa display rapid growth of their core and of their adjacent communities. several negative effects of growth are already visible in these cities: the rapid diminishing of open space, traffic congestion, air pollution, and aesthetics. therefore, these municipalities must adopt smart growth principles in order to prevent the further generation of negative consequences of growth that the u.s. has been experiencing under the urban sprawl designation. 99 international organizations (i.e. european union and the united nations) have begun promoting sustainability as an overarching goal of the growth of developing countries. experiencing just recently development, romania has the opportunity to growth in a more sustainable manner than to address later the negative consequences of unplanned growth as the u.s. is currently doing. romania has been a predominantly rural nation until the 1980s. the development of the country after 1989 features a growing split of the community from the land and nature. while maryland’s smart growth programs were drawn on the residents’ values of environment protection, romania lacks the awareness of the central role nature and environment plays in the present and future life of the romanian communities. in light of this widespread phenomenon, nongovernmental organizations, and the academia should educate the public about the importance of sustainable development, and the negative effects of an unplanned development. as the case studies clearly indicate, the role of leaders and officials is central to the adoption of smart growth/sustainability principles. in light of the political leaders’ focus on attracting more and more growth, it is unlikely that these local government officials would promote sustainable development, the protection of the environment, or smart growth. instead, it is the role of the academia to advocate for a more rational and “smart” growth of the romanian communities. researchers and professors must educate both the public, and the local and national legislators with regard to the necessity of such an approach, and the adequate tools for achieving smart growth goals. moreover, the completion of the reform of the romanian public administration will include educated civil servants, and new techniques and tools that would help public employees to plan better the growth of the communities. these are some of the lessons romania may learn from the u.s. experience. while this is not a comprehensive analysis on the likeliness of adopting a smart growth program in romanian municipalities, it can be argued that under the current circumstances it is difficult to implement most of the principles. however, several large cities show small steps in this regard taken as a reaction to the experienced negative effects of growth. therefore, on the short term, it is necessary to educate more the public and the civil servants. the public employees must use the legal instruments already in place to plan better communities. some of the smart growth principles do not assume a different approach (the development of mass-transit, mix uses, or walkable communities) that is already in place in romania. it is, however, necessary to make sure that these characteristics of romanian cities remain unaltered. on medium term, strategies based on the smart growth principles and sustainable development should be developed and implemented by every municipality. municipalities must ensure that the new developments follow the same principles displayed above. local official must promote the creation of a range of housing opportunities, and of a sense of place of the new developments. on the long term, a growing awareness of the residents and of national legislators would result in the development of regional/national programs that would promote sustainability, environment protection, and the “smart” growth of romania communities. the paper indicates the extent of the efforts for combating sprawl and the negative effects of uncontrolled growth on american communities, providing useful information and tools that can be used by other countries as well in their approaches regarding growth-related issues. it suggests that smart growth is an ongoing process of redefining priorities and tools, with numerous supporters for and against growth, and increasing concerns for the quality of life and environment. 100 references 1. american planning association, 1999, planning communities for the 21st century, accessed on november 15, 2005 at http://www.planning.org/growingsmart/ 2. american planning association, 2002, planning for smart growth: 2002 state of the states, accessed on november 15, 2005 at http://www.planning.org/growingsmart/ 3. american planning association, b2002, policy guide on smart growth, viewed at http:// www.planning. org/policyguides/smartgrowth.htm, accessed on november 20, 2005 4. bollens, scott a., state growth management: intergovernmental frameworks and policy objectives, journal of the american planning association, no.454 (autumn 1992) 5. burchell robert w., listoken david, c. galley catherine; 2000; smart growth: more than a ghost of urban policy past, less than a bold new horizon, fannie mae foundation, housing policy debate, vol 11, issue 4 6. cullingworth barry; caves roger w; 2003; planning in the usa: policies, issues, and processes, new york; routledge, 2003 7. degrove, john m., 1996, the role of the governor in state land-use reform, in modernizing state planning statutes: the growing smart working papers. vol. 1. planning advisory service report no. 462/463. chicago: american planning association in weitz, 1999 8. downs, anthony, 2005, smart growth. why we discuss it more than we do it, journal of the american planning association, vol. 71, no.4 (autumn 2005) 9. gillham, oliver; 2002; the limitless city: a primer on the urban sprawl debate, washington, dc: island press, c2002 10. noonan, james t., gail moran, 1996. implementation of maryland’s economic growth, resource protection, and planning act. environmental and urban issues 23, 4: 9-14 11. pennsylvania governor web page, edward g. rendell, accessed on november 28, 2005 at http://www. governor.state.pa.us/governor/cwp/return_adv.asp 12. smart growth and neighborhood conservation initiatives, maryland – department of planning, available on http://www.mdp.state.md.us/fundingact.htm, on november 29, 2005, 10:30 pm. 13. smart growth network (sgn) web site, news for maryland, pennsylvania, new hampshire, illinois, http:// www.smartgrowth.org/news/default.asp accessed on november 25, 2005 14. smart growth network, 1998, progress report – moving smart growth from theory to policy and practice, urban land institute, washington d.c. 15. smart growth network, principles of smart growth, viewed on november 23, 2005 at http:// www.smartgrowth. org/about/principles/default.asp 16. urban land institute, 2000; the smart growth tool kit: communities profiles and case studies to advance smart growth practices, urban land institute, washington 17. weitz, jerry; 1999; from quiet revolution to smart growth: state growth management programs, 1960 to 1999, journal of planning literature, vol.14, no.2 (november 1999) 18. wilson, robert h., paterson robert. 2002. state growth management and open space preservation policies; policy research project report, austin, tx, lyndon b. johnson school of public affairs, university of texas untitled 178 abstract the paper discuses an important process related to urbanization – the granting of town status for village-type communities from northern hungary and assesses the implication of this process for local economic development. the paper presents several mini case studies of different communities which have applied for town status and discusses the steps taken by those communities. the conclusion of the study is that despite nonquestionable benefits for those communities and the entire region which is under-urbanized, the situation is far from simple. the entire process is highly political and future developments are not completely predictable. opportunities of new towns – the effects of gaining town status on the settlement – system in northern hungary marianna zsebe assistant professor, department of political science, eszterházy károly college, eger, hungary tel.: 0036-36-520.435 e-mail: domar@ektf.hu transylvanian review of administrative sciences, no. 29e/2010 pp. 178-187 179 1. introduction when analyzing the situation of the settlement-system of hungary, the most obvious change can be seen in the field of towns. according to 1995 data, 62.8% of the population lived in settlements that had the rank of a town (beluszky, 1999, p. 310). it meant 6.43 million people at that time. the changing of the ratio of urban inhabitants has been continuously noticeable since the xx century, it has started for several reasons at the beginning of the century. in the end of the 1940s, forced urbanization commenced by means of socialism that resulted in a significant growth of the number of towns. there was no overall urbanization, according to pál beluszky after the system changed; hungary was moderately urbanized compared to the rest of the eastern europe (beluszky, 1999, p. 311). for the authorities it had always been a strategically important issue to form towns, at the same time competitions started among settlements to gain the rank of a town. in 1945 there were only 52 towns in hungary, in 1984 there were 109, and in january 1990 there were 166. 1950 1960 1970 1980 1988 1990 1995 2000 2007 1945 1955 1965 1975 1985 1995 2005 54 63 73 96 125 166 194 222 296 y ea r number of towns changing of the number of towns between 1950 and 2007 figure 1: the change in the number of towns in hungary between 1950 and 2007 source: based on szigeti (1997, pp. 69-70) the process of granting town status has been reformed after the system change. according to the xli law of 1999 on the methods of location planning, the representative council of a large village can initiate granting town status, and it has to assume the tasks of an urban local government. for that, the council makes an “application” to present the development and regional role of the settlement in different aspects: the role of the settlement in the region, cultural and historical traditions possessed. furthermore the society, the economic state of development and the institutions must be examined too. then the settlement presents the application directly to the competent minister. the ministry commonly analyzes the criteria of the regional role and the development of the area. it is very important to illustrate the support of the 180 local society. in several occasions the process of granting town status resulted in a controversy of the local society, for a long time (often 5-6 years) the mayor and the council of representatives, who initiated the process, had the to reach overall support and convince the inhabitants. the struggle to get the rank of a town was justified in light of the benefits the settlement could gain: urban institutions, administration and a certain level of decisionmaking. in the socialist era assigning the rank of a town to a community had strict requirements. at that time the number of settlements with the rank of a town was lower, than the ones with the role of a town, because several villages possessed urban functions, some of them were district centers. in the middle of the 80s, the number of settlements with the rank of and the role of a town was nearly equal. however after the system changed with the high number of donating town status the balance had disappeared. nowadays several settlements with the rank of a town hardly have urban functions. pál beluszky calls these settlements “village-towns” (beluszky, 2006, p. 65). according to pál beluszky and róbert győri (2006, p. 68) the town-system is remarkably stable in hungary. on the basis of their surveys we can say that the number of towns in the different hierarchical levels has hardly changed. winning town status was an important step in the life of a settlement. it was a gauge of development, and the settlement got new opportunities to develop. the aim of my study is to analyze the regional role of those settlements, which have won town status since 1990 in northern hungary, particularly their effects on settlement-system and on local (settlement, district and region) society. main fields of analysis: a) the process of granting the town status in northern hungary. town status: acknowledgement of development so far, or a new period of development? b) granting the town status: was it catalyzing and/or multiplying for the economy and the society of the settlement? has the life of people and communities, and organization of society changed? c) has the relationship of the (new) town and its periphery changed? (faragó, 2006, p. 83). has the earlier presented (in an application) regional role of the town really strengthened? a) the process of granting the town status in northern hungary. town status: acknowledgement of development so far, or a new period of development? the area of northern hungary is 13430 m2; it makes 14.4% of the country (based on ksh data, ksh, 2007). on january 1, 2007, 39 of 605 settlements had the rank of town. in 2007 this number increased with one more, so now the region has 40 towns. it is a special fact that among the regions of hungary the ratio of urban population is the lowest in northern hungary, only 51%. grantings of town status have concerned several settlements with low population. at the beginning of 2006 more than half of the towns had less than 10.000 inhabitants on one hand because of granting town status to settlements with low population and on the other hand due to the decrease of population of settlements already possessing town status. 181 in northern hungary from 1990 to 2007, 15 settlements had been granted town status. eleven in borsod-abaúj-zemplén county, three in heves county, one in nógrád county (table 1). as in the other regions of the country, in northern hungary it is a tendency that in the first year of an electoral term only a small number of settlements won town status, while in the last years this number is much higher. in 1991, 1992 and 1993 only one town was “made” in each year, so was in 1996 and 1997. in the region the number of communities which received town status has increased after 2001, but particularly after 2003. while during the time of the orbán-cabinet only 3 new towns appeared (in the end of the term), during the time of mszp-szdsz cabinet(s) there were 7. analyzing only the data does not make a clear point, but it is sure that the decision of the president of the republic was made only after the proposal of the minister and the opinion of the counties. (note: the last mentioned is more or less symbolic, and makes formal opinions.) on the data and the implementation of law we can draw the conclusion that winning town status still needs the grace of the central power (trócsányi, pirisi, and malatyinszki, 2007, p. 18). in fact the opinion of the professional committee (supported, worth considering, not supported) does not constrain the minister. this procedure generated numerous debates in the region. researchers have found out that granting of the status must be unique. but it makes it subjective (and suggestible). further research is needed to found out how much the application was supported by interest-influence and lobbying of mps, famous people who were born there, known patrons etc. this study does not cover it. table 1: new towns of northern hungary borsod county year of granting town status abaújszántó 2004 alsózsolca 2007 borsodnádasd 2001 cigánd 2004 emőd 2001 felsőzsolca 1997 gönc 2001 mezőcsát 1991 nyékládháza 2003 pálháza 2005 szendrő 1996 heves county year of granting town status bélapátfalva 2004 kisköre 2005 lőrinci 1992 nógrád county year of granting town status rétság 1993 the granting of town status was initiated in much more settlements. studies revealing urbanization processes considered several settlements to be a probable 182 winner of town status in the region. this prognosis was not the same order in the three counties. while in borsod-abaúj-zemplén and heves counties there were (are) numerous aspirants to town status, in nógrád county it is almost impossible to grant town status for a settlement. not only the difference of population causes it, so we cannot say that the cause of the difference of granting’s town status is that the settlements in nógrád county could not became large villages, because pálháza (borsod-abaúj-zemplén county), which is a town since 2005, hardly exceeded the number of 1000 inhabitants (1114 people). in the case of this settlement the regional role and central functions were the main reasons for winning town status. based on a 1996 survey (beluszky, 1999, p. 310) granting town status was recommended to more settlements in the region. in the heves county, in the case of parád, they were referring to its central role for traveling, in the cases of recsk and kál due to their central roles. the peculiarity of the situation is that recsk and kál are neighboring settlements. it was the earlier practice on a national level that if two or more settlements depend on a similar level in a given area, and supplies the central lines divided, the commission recommended to declare both settlements to a town. from among these based on the ministry’s proposal and the decision of the president of the republic only one may have been town finally. this developed some other way in the case of parád and recsk, neither of them finally obtained the town status. earlier kál had a common large village council with kápolna and kompolt, which were totally been built into kál. the three settlements separated after 1990, and this onto long years yielded the multitude of the lawsuits of property distribution. in the other county of the region – in borsod-abaúj-zemplén county – already in 1996 more towns were found probable winner of town status. most of them obtained the rank, but tállya, rudabánya and tolcsva. these three settlements according to pál beluszky belong to the so-called other type (beluszky, 1999, p. 311). specific of the situation is that near the settlements, other settlements with agglomeration and configuration character (abaújszántó, gönc, szendrő) were granted the status. in 1996, in nógrád county no (large) villages were found to be proposed for town status. the settlements that obtained town status between 1990 and 2007 emphasized their development turning up already in their applications. it was emphasized that their settlement picture is town-like, the standard of their services and their institution supply are good. additional developments were wished to be started with the gaining of town status, newer service areas would be possible to be accomplished. from the text analyses and to the databases attached to them, on one hand the development and on the other hand the areas which can be developed and development intentions should be highlighted. in this sense the town status is rather a springboard and a possibility to strengthen their centre situation in their area. that is why their wish was to be developed already as a town. the regional central role, which promoted the settlements turning into a town, is not simply a tool, but an existing contact area. nowadays it is less and less possible to create an objective town concept, in which they become a town for the surrounding settlements. 183 b) granting the town status: was it catalyzing or multiplying for the economy and the society of the settlement? has the life of people and communities, and organization of society changed? the motivation for initiating the process of granting town status was often the aim of creating additional development possibilities. a study (trócsányi, pirisi and malatyinszki, 2007) argues that the aim is more important than the beaten path, indicating whether the settlement was granted town status or not, during the process transformations were done, that are achievements themselves and they can be catalysts of additional developments. the experience indicates that real results appear after winning the town status. i would like to illustrate the image of the settlements that changes itself and affects the society. for bélapátfalva, which was a market town already before 1761 the real development has come with its mills, and paper factories. you can feel the influence of the industrial character from that time on the settlement. since 1910 a cement-factory worked here, and since 1980 a new cement-factory (closed in 2001) provided job opportunities for the residents. csr activity of the factory was considerable. from 2001 the future of the closed factory (and the area) was uncertain. after winning town status in 2004 the bélkő regional development pc came into existence, and the industrial park was opened in 2005. three proprietary groups appeared there: local government of bélapátfalva, another 7 local government of the district and the bélkő pc. the local government developed an entrepreneur-friendly face with its numerous orders, for example: collects trade tax exclusively, and provides a charge free investment area for those new undertakings, that provide jobs. beside these it provides a good infrastructure to the undertakings. so in the settlement several producers and service provider units appeared with different industrial activities: food industry, metallurgy, wood processing, or printing industry. the closed cement-factory meant a serious problem for the local society; the chances of employment were very low. the struggle for town status got a general support hoping that a town can lure additional investors much more easily into the area. the new undertakings made new workplaces, and they contributed to the reduction of the high unemployment rate. there were no big transformations experienced in the society of the town after 2004, but the inhabitants claim that their stirring from the deadlock was the grant of town status. there is a primary school in the settlement, since 2007 an affiliated department of foundation high school of eger. there are foundations, associations according to the hungarian actualities, educational, traditionalist and sports clubs. the situation of another settlement in heves county, kisköre, differs from the previous. lake kisköre was made a town by lake tisza in fact. the peculiarity of granting town status was that another settlement at lake tisza raced for town status: abádszalók. these two settlements are considered as rivals for a long time, and it was questionable which one will be the capital of the lake, and with it the capital of local tourism. finally both of them became towns. kisköre is the most visited at lake tisza due to its campsite, and its free beach is always kept in order. winning town status 184 did not contribute to the increase in the number of the services significantly; we may experience the earlier tendency then. most undertakings are food and catering trade investments, 82% of them work as an individual undertaking (publication of ksh directory of miskolc, 2006). however, there is no doubt that the inhabitants are proud of on the fact that their settlement won the town status; the developments would have been achieved anyway. the summer cultural and free-time events (angler competition, bicycle competition, international triathlon, motorcyclist meeting, folk-festival etc.) are related with the geographical position of the settlement, not with the town status. the town status was rather a matter of prestige. its school provides educational opportunity not only for local children, but for ones from neighboring settlements. apart from this there is an active organization of civil society: 15 organizations have worked already on the settlement according to 2004 data, the town status did not bring growth. alsózsolca (borsod-abaúj-zemplén county) is the youngest town of the region. nearness to miskolc always affected the settlement significantly. the nearby settlement, felsőzsolca has already been granted town status in 1997, it happened with alsózsolca 10 years later. the privatization of firms also happened here after the change system. in the factories, which were workplaces as well, had been closed: the house factory erdért, just like the concrete element manufacturer company as well. so unemployment was moderate until the end of the 90s. the change has come in 1999, the foundation of the miskolc-alsózsolca industrial park ltd. forecasted the town status. primarily middle and big companies settled down here. the reason for granting town status was the perceptible claim from the local population for additional development of the services (ksh, directory of miskolc, 2007). an important aim was to have an own determining image. the local society felt the benefits deriving from the town status an increased number of workplaces and services. the smallest town of the region is pálháza since 2005. the population always felt that the settlement possesses a central role. despite the fact that there are only 1100 residents, the number of primary school students moves around 270, of course with those who arrive from the surrounding settlements. the infrastructure developed significantly after winning town status. currently several indicators are higher than the district and county average. for example: number of cars, number of telephones. the real development has come with the growing number of undertakings. ninetyfour (!) undertakings can be found in pálháza (ksh, directory of miskolc, 2005); the majority of them are not individual undertakings, there are 7 which employ less than 10 people, and there are 7 firms that employ more than 10 workers. the different services of the settlement are developed. there are 26 retail businesses, a petrol station, a restaurant, and a commercial accommodation with more than 100 beds. all of these helped the settlement to strengthen its earlier regional position and to legitimate its decisions on the behalf of the society. c) has the relationship of the (new) town and its periphery changed? (faragó, 2006, p. 83) has the earlier presented (in an application) regional role of the town really strengthened? 185 town status affects the direct and indirect environment on several areas. lászló faragó mentions in another concern of the urbanization, that: „towns concentrate and use development sources in an increasing measure, at the same time to the content of the country changes” (faragó, 2006, p. 83). it can be found in the transformed relationship between the town and the country. a rustic town character is more and more perceptible in new towns, so is in the related rural settlements and the manifoldness of the relationship with the surrounding villages. most of the new towns in northern hungary were regional centers. rétság (nógrád county) was a traffic, commercial, administrative, cultural and medical centre for its surrounding settlements. lőrinci (heves county) was in central situation in the field of employment and vocational training. the special situation of bélapátfalva (heves county) had come with cementfactory existing since 1910. several commercial firms were in connection with the factory through decades, so the central character of the settlements was expressed in both the producer and service sectors. the regional central role was quasi-necessary for borsod-abaúj-zemplén county for town status. one of the most typical examples is pálháza, in which hardly more than 1000 residents live, while it gives educational opportunity for 270 children. before 2005 the attraction of this settlement expanded on 17(!) settlements with its industrial, commercial, traffic, travel, educational, medical and social services. the development of settlements near miskolc (emőd that was a market town until 1871 -, nyékládháza, alsózsolca, felsőzsolca) was determined by the largest city of the region in a positive and in a negative sense as well. the city, as centre of the industrialized area hardly gave room for the new endeavors, at the same time the existing industrial centers of the city had significant effects on the urbanization of the settlements: the number of the population grew significantly in these settlements in the 90s. it is necessary to examine the industrial activity of borsodnádasd, mezőcsát, abaújszántó and cigánd. borsodnádasd as quasi the only industrial centre of its district, with its metal-sheet factory and mines, provides work for not only the inhabitants but for the ones living in the settlements nearby. mezőcsát was earlier a traditional agricultural settlement the milling centre of the district. it became a large village by its steam mill and book press. abaújszántó had already had town status until 1902, beside kassa it was the second largest settlement of northern hungary at that time. its district central economic role had remained significant after the treaty of trianon. cigánd, as the only town of bodrogköz, unambiguously possesses the central role. it is the commercial and industrial centre of several settlements. in this relationship not the traditional town-village contact is meant, the exchange of industrial and agricultural products is not going on between two (or more) settlements any longer. that is why it is important to treat settlementand regional development together: so not only a settlement (town) must be developed, but its neighborhood as well. micro-region co-operations must be accomplished according to that. it does not mean a one-way relationship in northern hungary, the town and its neighborhood have always shared interests’, common developments, common applications and undertakings. 186 a good example is the cooperation of the district of bélapátfalva, on the area of the former cement-factory several undertakings (registered not only in the town) appeared. the area’s sustaining force increases by this contact, production becomes more economical, sustainable development not only lives in thoughts. it would be optimal if the new town would be able to provide workplaces for the residents of the surrounding villages. it has come less true on the analyzed areas, the increasing unemployment in the 90s often made it difficult to provide workplaces for its own inhabitants. creation of new towns not only modified the life of the settlement, but the life of the surrounding settlements as well. so the country and its town are going to live in a special symbiosis. additional development of the town is in the interest of the country, so services appear that had not been available before town status. moreover in the villages these services (e.g.: day nursery) could not be provided for the inhabitants. villages often change functions, they produce less agricultural product for the town, but they serve as a residence for the inhabitants of the town. this function change in the region of northern hungary is strongly perceptible: they often appear as a “sleeping settlement”, or they establish zones, of which urban acceptance would be low. in a 2006 study lászló faragó characterize the relationship of towns and their environment aptly (faragó, 2006, p. 84). the “future of settlements near towns is fundamentally influenced by their relationship. in fundamentally rural districts, where the town is primarily the administrative, service provider centre of its country claims of rural area dominate, towns develop according to the needs of its country”. regional relationships presented in the application were real and strong. this relationship could improve on those settlements where the town was able to provide new services for villages to increase its integrating power. they could start newer developments. pálháza, which has the lowest population among newer towns, (after winning town status in 2005) could provide higher level industrial, commercial, traffic, medical and social services for its 17 neighboring settlements, thanks to its infrastructural developments. 2. conclusions the change of the rank of the settlement is an essential step but the determination is also important, because of planning and over thinking of the development of the settlement (and its environment). the application makes this reckoning and the acquisition of social support compulsory. it is necessary to form future – this was the recurrent motto of the applications. it is interesting to examine the question that how and on which cleavages does the interest of becoming town aggregates and articulates. but the analyzis of planning processes was not an aim of this study. the examined settlements of northern hungary regions emphasized the importance of their central role in different documents (town status applications, term programs), later it was found out that with the change in the rank of the settlement they wish to strengthen it. but in the case of centre settlements and the surroundings, which was earlier called town or village lifestyle the difference could not be experienced. 187 the urban and rural differences disappear mostly because of granting town statuses after 2003 and the spreading rustic towns. lászló faragó (2006, p. 86) considered the definition of the development potentials important. in his opinion those settlements that have additional role in the area, which functions are expandable and their multiplier or catalyst effects are perceptible in different number of settlements, can be selected consciously from a political resolution. conscious development builds upon the existing conditions, but concentrates on the elimination of the deficiencies, on the solution of problems and on the formation of things not existing yet. of course, central developments affect the society the society of the settlement can be transformed, so can the relationship with the neighboring settlements. urbanization in northern hungary is under the national average. granting of town status is beneficial for local governments and for the central power. local governments are strongly motivated, but the central power uses the development of the rank of the settlement for the development of clientele. in 2008 in the region a new town was born rudabánya, in 2009 mezőkeresztes and sajóbábony: town production from the villages continues. references: 1. a területszervezési eljárásról szóló 1999. évi xli. törvény (law xli regarding the land managing procedure). 2. beluszky, p., magyarország településföldrajza (hungary’s settlement geography), dialóg campus kiadó, 1999. 3. borsod-abaúj-zemplén megye új városa: alsózsolca (borsod-abaúj-zemplén county new city: alsózsolca), ksh miskolci igazgatósága, 2007. 4. borsod-abaúj-zemplén megye új városa: pálháza (borsod-abaúj-zemplén county new city: pálháza), ksh miskolci igazgatósága, 2005. 5. faragó, l., a jövőalkotás társadalomtechnikája (the society technique of the future creation), dialóg campus kiadó, 2005. 6. faragó l., a városokra alapozott területpolitika koncepcionális megalapozása tér és társadalom (the conceptional foundation of laid area politics regains the cities and society), xx. class 2006. 83-102.o. 7. heves megye új városa: kisköre (heves county new city: kisköre). ksh miskolci igazgatósága, 2005. 8. trócsányi, a., pirisi, g., and malatyinszi, s., a célnál fontosabb a bejárt út. falu, város, régió (the aim is more important than to follow the road. village, city, region), no. 3, 2007. 9. várossá nyilvánítási pályázatok: abaújszántó, alsózsolca, borsodnádasd, cigánd, emőd, felsőzsolca, gönc, mezőcsát, nyékládháza, pálháza, szendrő, rétság, kisköre, lőrinci, bélapátfalva (city manifestation applications: abaújszántó, alsózsolca, borsodnádasd, cigánd, emőd, felsőzsolca, gönc, mezőcsát, nyékládháza, pálháza, szendrő, rétság, kisköre, lőrinci, bélapátfalva). untitled 133 abstract the present paper aims at analyzing the development level of the management capacity within the local public institutions from romania. the purpose and the objectives of the paper are to emphasize the general picture of the management capacity of the local public institutions, respectively to highlight not only the main characteristics of the management capacity but also the major factors that influence the development level of this capacity. the results of the research presented in the paper show that at least the management capacity from the local public institutions is influenced by a number of factors. an exploratory analysis of the management capacity within the local public administration from romania horia mihai raboca ioan lazăr paul sorin lazăr diana zagan-zelter horia mihai raboca research assistant, institute of social researches, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: hraboca@apubb.ro ioan lazăr professor, department of management, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania tel.: 0040-740-021.236 e-mail: ioan.lazar@econ.ubbcluj.ro paul sorin lazăr lecturer, department of management and economics, faculty of economics, bogdan vodă university, cluj-napoca, romania tel.: 0040-0264-591.830 diana zagan-zelter assistant professor, department of modern languages and business communication, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania tel.: 0040-740-021.236 e-mail: diana.zelter@lingua.ubbcluj.ro transylvanian review of administrative sciences, no. 31e/2010 pp. 133-146 134 1. introduction the way in which public authorities (local and central) transform the resources they have into services for the citizens has been and will always be a permanent and significant preoccupation both for public administration and for the field of public policies analysis or worldwide politics. the pressures made by various interest groups for the increase of efficiency and performances have determined the public administration to move from a serviceproviding approach to a more important one where the way services are provided is more important. thus, the main aim of institutions, whether private or public, is not only to “sell” or provide products or services to citizens, but also to meet the high degree of requirements and needs of consumers, users or citizens (raboca, lazăr and solomon, 2009). the development of romanian public administration required the completion of a diagnostic analysis of civil service (andrei et al., 2010). in this context, in order to realize the performances, the effectiveness and the efficiency of the public institutions, of their programs, respectively the level of the results and the impact on the community or on different categories of citizens, there must be permanent different evaluations and analyses of different aspects these institutions present. most analyses concentrate on the continental influences that different factors have upon the quality of the service or upon the way in which it is delivered: the economic development level of the region or of the country, how different interest groups (public clerks, unions, political parties, citizens, business communities or minorities) influence how the organizations are structured at local and central level, the degree of hierarchical subordination and the freedom of decision. this article intends to be an exploratory research which aims at examining another aspect that influences the performances and the results of the local public organizations: the management capacity of the local public institutions. in fact, the purposes and the objectives of the paper are to outline a general picture of the “state of fact” and the development level of the management capacity of the local public institutions from romania. based on the results of our research, the present paper will to emphasize both the main dimensions which compose and characterize the managerial capacity of a public institution, and the main factors which influence and explain the level or the development degree of this capacity. this research also intends to identify a way of defining the management capacity concept from the perspective of the public clerks (those who are in leading position or who fulfill the necessary requirements for these positions). last, but not least, this paper will try to identify why a postgraduate course would be useful for the development of the management capacity and which abilities should be acquired through such a course. 2. the management capacity it is more appropriate to talk about a managerial approach to public administration than public management inside public administration. the real challenge of the 135 public sector in the 21st century is to have a completely new understanding of public administration and, consequently, a new approach in managing public organizations (mora and ţiclău, 2008). generally speaking, we can say that there is no precise definition of the management capacity concept which would help us identify certain levels of this capacity in the organization. as it is a concept difficult to explain, we understand what it means when we identify it in a specific context. this concept may often designate something specific related to time, space, behavior or organization, or it may express at the same time certain challenges that a manager must face. according to kelly and rivenbark (2003), the management capacity can be best defined through three managerial aspects: the managerial policies, the resources management and the project management. in this respect, they consider that the management capacity is the ability to fulfill the objectives of the management policies, the management of the resources and the project management. in their opinion, the management capacity is deeply connected to the existence of the organizational capacity (figure 1), because the organizational capacity provides the environment in which the management capacity finds the answer to the question: “what must be done in order to achieve the objectives and the performance results?”. figure 1: organizational capacity and managerial capacity. adapted from kelly and rivenbark, 2003, p. 226 in their study about the perspectives of building the managerial capacity in organizations, walter honadle and howitt (1986) define the managerial capacity as the ability to identify problems, develop policies which will lead to solving these problems, conceive programs for the implementation of the policies, attract and absorb financial, human, material and informational resources necessary for the programs to function, manage all these resources, guide and coordinate the activities of the 136 programs and last, but not least, assess and measure the results and the performance of the policies and the programs implemented in the organization. also, ingramham and kneedler donahue (2000), consider that the managerial capacity can be defined as the inner ability to manage, develop and coordinate the financial/material, human, informational or any other kind of capital in order to implement the policies and the programs. in their opinion, the managerial capacity refers to the allocation of resources in the right place and at the right time and generally resides in management subsystems: internal processes and administrative structures meant to support the demands and the needs concerning the financial, material, human or informational capital of the public organizations. at the same time, starting from the model about measuring the government’s managerial capacity, developed in their studies by kneedler donahue, colman selden and ingramham (2000), we can argue that the managerial capacity of a public organization may become a major factor that influences the efficiency of the results and the performance of the organizations from the public sector, which is due mainly to the fact that this capacity has the role to design and sustain the processes and the operational capacities of the organization. at the same time, based on the same model mentioned above, we can assert that the managerial capacities of a public organization can be characterized through three major aspects (figure 2): • the managerial capacities depend fundamentally on the configuration, the processes and the activities connected to the managerial subsystems, to the link between them. • the managerial capacities do not depend only on the quality of the different managerial subsystems, but also on the way these systems are integrated. • last, but not least, the managerial capacity depends a lot on the existence or the absence of a result-oriented managerial system. consequently, we consider that the presence in public organizations of a resultoriented management system, which will ensure a high degree of integration for different managerial subsystems, represents the fundamental element for the increase of the managerial capacity and the achievement of the objectives in an effective and efficient manner. 137 figure 2: the connection between the managerial system and the managerial capacity. adapted from kneedler donahue, colman selden and ingramham, 2000, p. 386 from another perspective, we consider that the “managerial capacity” concept for a public organization can be defined through the “management” concept as follows: 1. from the point of view of the general definition of management – the act of leading; 2. from the point of view of the management functions – the management processes; 3. from the point of view of the decision act – the final product of management. in this respect, from the point of view of the general definition of the management concept (leading actions and activities or administering an organization efficiently and effectively), the managerial capacity may designate “those competencies, skills, aptitudes possessed by the leading factors in an institution and which are necessary for managing the activities and the internal processes from the institution successfully”. from the point of view of the management functions (the processes and the activities which are specific to executive positions) the management capacity may designate: “all processes, knowledge, skills and abilities that are necessary to executives in order to forecast, organize, command and motivate, coordinate, control the activities and the internal processes in organizations”. if we look at management from the process perspective, it is obvious that the final products of management are the decisions, which can be defined as the result of the chaining of an operational ensemble of informational collection and evaluation through thinking (the rational process of thinking) – the approximate definition of management from the process perspective (lazăr, mortan, vereş and lazăr, 2004). 138 from this perspective, we consider that the management capacity represents “the aggregate of the decisional processes in an institution”. another definition from the same perspective would be “the aggregate of the operational, tactical and strategic decisions made by the leading or management factors”. we believe that management capacity varies by context. management needs are not static. they depend on the social, economic, technical and political demands that government faces at a particular time and in a particular place. to build management capacity, therefore, is not to install a standard package of administrative tools or rearrange organizational units into an ideal configuration. it is to develop competence to perform the tasks that a state or local government must be able to accomplish, given the expectations placed upon it by citizens and other levels of government. management capacity needs also vary by type of government function, as kettl points out (1986). in the past, state and local governments had to concern themselves mainly with the direct management of service delivery, with relatively little attention to regulatory activity and contract management. today the latter two functions have become vastly more significant, requiring executives in state and local government to adopt new strategies for dealing with them effectively. as walter honadle and howitt (1986) argue, the capacity building is intimately entwined with politics. they argue that judgments about what constitutes an adequate amount of management capacity are subjective and thus, in practice, are politically defined. one’s perspective on this matter is likely to depend critically on one’s advantage point. communities are frequently content with a level of management capacity (at least as that is represented by professionalism, expertise and formal procedure) that many external observers regard as insufficient. to a substantial degree, these differences of perspective arise because some parties see values at stake other than instrumental effectiveness or efficiency. thus, “what some may label parochialism, others may perceive as an expression of liberty” (walter honadle and howitt, 1986, p. 340). 3. research methodology in order to realize this exploratory analysis related to the way in which the management capacity is visible in the local public administration from romania we conducted a survey among the civil servants who are in leading positions in local institutions from the north-west region of romania (that includes 6 counties), as well as among the civil servants from those public institutions who fulfill the conditions for occupying the leading positions within a public institution. the survey used a structured questionnaire which we sent to the following types of public institutions: 1. mayor’s halls from the county capitals of the 6 counties which compose the north-west region of romania (6 institutions); 2. mayor’s halls of the towns which are second in size after the county capitals in the 6 counties which compose the north-west region of romania; 3. general directions of public finances corresponding to the 6 counties (6 institutions); 139 4. labor and social welfare directions corresponding to the 6 counties (6 institutions); 5. prefect’s offices corresponding to the 6 counties (6 institutions); 6. county councils corresponding to the 6 counties (6 institutions); 7. village mayor’s halls corresponding to the 6 counties which compose the northwest region of romania (a probable sample of 132 village mayor’s halls chosen at random). we also have to mention that for each public institution selected for our research, the number of questionnaires that were sent varied according to the size of the institution and the number of departments from the organizational chart and the number of employees. the questionnaire that we used was built on the basis of sets of assertions related to different aspects of the management capacity from the local public institutions, the questioned people having to give their opinion about these assertions (the scale used is from 1 to 10, (1 = totally absent, 10 = existing in a very high degree). we have to mention that the present analysis is part of a larger research project which aimed at the development of post-graduate programs in public administration (a project financed by eu through structural funds). setting the number of questionnaires was made in the following way: number of departments from the organizational chart * 2 = number of questionnaires. thus, we sent 2 questionnaires for each department from an institution. we required that for each department, one questionnaire to be completed by the head of the department, and the other one by an employee who fulfills the conditions of seniority and studies which are necessary for occupying a leading position and whose date of birth is closest to 1st of may. the total number of public institutions from local level and the deconcentrated public institutions of the central government to county level included in the sample was 168. the number of questionnaires sent to these institutions was 1,800 out of which a number of 1,300 valid questionnaires participated in the analysis (approximately 72.2% from the total number of questionnaires). at the same time, in order to analyze the data and emphasize the aspects connected to the management capacity we used an uni-variable statistical data processing analysis, as well as a multivariable one (the statistical analysis of the regression equations), with the help of the spss program. 4. data analysis and interpretation as we mentioned above, the analysis of the management capacity from the local public institutions from romania refers to the following aspects: 1. the way public civil servants occupying leading positions or willing to occupy such positions define the management capacity concept; 2. emphasizing the development level of the management capacity within an institution from the perspective of civil servants occupying leading positions or willing to occupy such positions; 140 3. emphasizing the main dimensions which compose and characterize the management capacity of a local public institution, as well as the main factors which influence and explain the level or the development degree of this capacity; 4. the utility of developing a post-graduate program for increasing or developing the managerial capacity. 4.1. defining the management capacity concept regarding the definition of the management capacity concept, the answers of those who were questioned were very diverse, grasping however the essence of this concept. we expected anyway the answers to be extremely varied given the large number of interviewed people and their field of professional specialization (economics, law, sociology, public administration etc.). because of the extremely diversified number of answers, we decided to encode and group these answers. the result of grouping these answers is presented in the table below (table 1). the percent of those who defined the management capacity is 75%, 25% not being willing or able to answer this question. table 1: defining the management capacity concept no. defi ning the management capacity concept percentage% 1 the ability, capacity and aptitude to exercise the management functions (effi ciently and effectively): to plan, to organize, to command, to control and to evaluate 25 2 the ability, capacity and aptitude to lead (effi ciently and effectively) an institution 20 3 the ability, capacity and aptitude to administer and manage (effi ciently and effectively) certain situations or the resources of an institution (fi nancial, material, human) 15 4 the ability, the capacity and the aptitude to make and assume decisions 5 5 the ability, capacity and aptitude to solve (effi ciently and effectively) the problems and to fi nd and implement solutions for problems 5 6 the professional capacities and abilities of the leaders 5 7 did not offer any defi nition 25 after grouping the answers regarding the definition of the management capacity, we can conclude the following. firstly, a great part of those who were interviewed (25%) define the management capacity of an institution in close connection with the management functions: organization, planning, command, coordination, control and evaluation. secondly, a high percentage (20%) of the questioned people defines the management capacity from an institution in close connection with the leading activity. in this respect, generally speaking, this group believes that this capacity consists of “all the abilities, capacities and aptitudes to lead an institution”. also, 15% of the questioned people consider the management capacity as being “the ability, capacity and aptitude to administer and manage (efficiently and effectively) certain situations or the resources of an institution (financial, material, human, etc.)”. at the same time, a relatively low percentage of the respondents (5%) correlates the management capacity concept 141 with the decision making process of the public institutions leaders, respectively with the abilities, the capacities and aptitudes of these leaders in solving problems and implementing optimal solutions. last, but not least, 5% of the total number of civil servants the questioned associate the management capacity with the level of knowledge and the professional preparation of the executives from public institutions. 4.2. the development level of the management capacity from local public institutions related to the development degree of the management capacity from the public institutions, the majority of those questioned consider that in their institutions this capacity is developed. in this respect, the data of the survey show (figure 3) a percentage of 58.67% that consider that in their institutions the management capacity is “developed” or “highly developed” while in opposition only 6.4% of the questioned people consider that in their institutions the management capacity is inexistent or underdeveloped. figure 3: the development degree of the management capacity in public institutions 4.3. the main dimensions which compose and characterize the management capacity, as well as the main factors which influence the level or the development degree of this capacity the set of questions used for emphasizing the dimensions which may characterize the management capacity is made of 29 assertions, the civil servants had the possibility to express their opinion about the assertions regarding the management capacity in 142 the public institution where they work. the measurement scale used for this set of questions is 1-10 (where 1 = totally absent, and 10 = existent (in a high degree). after computing the data, we can assert that the main aspects that characterize the management capacity within the public institutions from romania from local and county level are those linked to: the communication capacity, the capacity and the way of making decisions, ensuring the team spirit, motivating the staff and not last ensuring equity among the employees (table 2). table 2: the main 8 dimensions which can define and characterize the management capacity rank dimension averagescore 1 communication capacity 8 2 capacity to make right decisions at the right moment 7,91 3 capacity to monitor activities 7,90 4 capacity to coordinate 7,85 5 team spirit 7 6 self-confi dence 7 7 staff motivation 6,71 8 ensuring equity according to effort and remuneration 6,4 consequently, the data of the survey show that, generally speaking, when trying to characterize the management capacity of a public institution from local and county level from romania the best way to do it is from the perspective of the capacity and the communication manner that exist in the institution, the decision-making way, as well as from the perspective of the coordination and the control of the activities, and less from the human resources perspective (staff motivation, creating the team spirit, ensuring equity among employees). also, when trying to refer to the management capacity within a public institution we should refer to a maximum of 8 dimensions (those mentioned above) and not to other dimensions which anyway do not exist or are poorly developed. we mean that when we speak about the management capacity we should refer to the communication capacity and less to how to measure performance – which does not really exist as a concern to local public institutions in romania. in connection with the main dimensions or factors that influence and explain the development degree of the management capacity within the public institutions we used a multivariable statistical processing of the regression equation type (table 3). 143 table 3: the main factors which influence the level of the management capacity within local public institutions (the analysis of the regression equation) unstandardized coeffi cients standardized coeffi cients t sig.b std. error beta (constant) 1.594 .082 19.34 .000 coordination capacity .049 .020 .131 2.39 .017 activity organization capacity .063 .022 .170 2.84 .005 communication capacity .060 .019 .182 3.19 .001 capacity to forecast the problems which the institution will be confronted with in the future .062 .016 .178 3.76 .000 team spirit .033 .017 .106 1.92 .055 r r square adjusted r square std. error of the estimate change statistics r square change f change df1 df2 sig. f change .693 .481 .477 .53573 .481 136.168 5 736 .000 the results of analyzing the data emphasize that the development level of the management capacity from the public institutions is influenced or can be best explained from the perspective of the following activities which are specific to management: coordination, organization, communication, forecasting and ensuring the team spirit. we can notice anyway that the dimensions which have a significant impact on the development level of the management capacity are partly found as main dimensions which can characterize this type of capacity. consequently, according to the analysis of the regression equation of the data, we can assert that the relatively high development level of the management capacity in public institutions can be explained by the level of the coordination and organization of activities, the level and the system of communication existing in the institutions, the forecasting activities and the creation of the team spirit. 4.4. the utility of a post-graduate program for developing the management capacity of executive civil servants the survey shows that the majority of the interviewed people agreed upon the usefulness of developing a post-graduate program for increasing the management capacity of civil servants occupying leading positions within public institutions from local and county level, or those who want to occupy this type of positions in the future. thus, 64.6% “agree” or “totally agree” with the fact that a post-graduate course about developing the management capacity is useful (figure 4). only an extremely small percentage of those who were interviewed consider that such a course has no utility or importance (6%). 144 figure 4: the importance of a post-graduate program focused on the development of management capacity the survey data show that the main study fields which should be approached in this post-graduate program should be from finance, management, accounting, public policy and ethics (table 4). table 4: the main study fields for a post-graduate course focused on increasing the management capacity no. study fi eld average score 1. local budgets 9.5196 2. leadership in public organizations 9.3264 3. the analysis of public policies 9.0947 4. ethics in public administration 8.7906 5. financial management 8.7690 6. project management 8.7375 7. human resources management 8.7301 8. economics and public fi nance 8.6976 5. conclusions from several points of view, the increase or development of the management capacity in public institutions should be a vital preoccupation for the leading factors of these institutions. in this respect, we can assert that both for local and central public institutions the management capacity plays a critical and vital role in their 145 attempts to increase efficiency and effectiveness, to improve the quality of their services and products, to reduce expenses and to increase the citizens’ satisfaction regarding services delivered by public institutions. after analyzing the specialized literature, we can assert that the majority of specialists agree that a public institution with a high management capacity has both abilities of working better (efficiently and effectively) and better results and performance than a public institution with a lower management capacity. certain studies also emphasize the fact that the management capacity depends fundamentally on the configuration, tasks and activities of the organizational subsystems, mainly the managerial subsystem, on the type and the orientation of the management methods that are used, on the impact of the environment upon the organization. from the conceptual point of view, we can assert that the management capacity is a complex, multidimensional and difficult to define concept. in this respect, the management capacity shows in the specialized literature as too little defined, and we often realize what it is and what it means involuntarily from the context where it is used. however, the exploratory research we made shows clearly that a great part of the civil servants questioned (those who are in leading positions or fulfill the conditions for occupying leading positions) define the management capacity concept in close connection with the management functions (the ability, capacity and aptitude to exercise the activities which are specific to executives: leading, planning, organizing, commanding, coordinating, controlling and evaluating) and too little in connection with the professional side or other organizational dimensions. from the practical point of view, the results of our exploratory research at the level of local public institutions show the following aspects: • firstly, we can assert that the development level of the management capacity in local public institutions from the perspective of civil servants occupying leading positions or with such perspectives is very high. • secondly, we can say that at least for the local and county public institutions the management capacity must be emphasized and analyzed from the multidimensional perspective, the most important dimensions being linked to the communication capacity, decision-making and those concerning the management functions. • thirdly, the results of the regression analysis of the survey data show the fact that the relatively high development level of the management capacity within the local public institutions can be explained and based on the management functions, respectively the coordination and organization of the activities, the level and the system of communication in the institution, the forecasting activities and last, but not least the creation of the team spirit. • fourthly, based on the survey data, we can assert that a post-graduate course focused on developing the management capacity in public institutions would 146 be useful and important, the main study fields being those related to finance, management and accounting. we consider it necessary to acknowledge the limitations of our research. the biggest limitation of this study comes from the civil servants who participated in the research. the results of the study show only the opinion of the civil servants occupying leading position or who fulfill the conditions for such a position, an opinion which can be considered biased (we cannot exclude totally the possibility that some civil servants in executive positions tried to present a misleading situation). references: 1. andrei, t., profiroiu, m., profiroiu, a. and nedelcu, m., ‘aspects of professional training at local and central public administration institutions from romania’, 2010, transylvanian review of administrative sciences, vol. 29e, pp. 5-21. 2. kelly, j.m. and rivenbark, w.c., performance budgeting for state and local government, new york: m.e. sharpe inc., 2003. 3. kettl, d.f., ‘managing the burdens of modern government’, in walter honadle, b. and howitt, a.m. (eds.), perspectives on management capacity building, new york: m. e. sharpe inc., 2003, pp. 49-65. 4. kneedler donahue, a. and ingramham, p.w., ‘dissecting the black box: characterizing government management capacity’, in heinrich, c.j. and lynn, l.l. (eds.), governance and performance: new perspectives, washington, d.c.: georgetown university press, 2000, pp. 292-311. 5. kneedler donahue, a., coleman selden, s. and ingramham, p.w., ‘measuring government management capacity: a comparative analysis of city human resources management systems’, 2000, journal of public administration research and theory, vol. 10, no. 2, pp. 381-411. 6. lazăr, i., mortan, m., vereş, v. and lazăr, p.s., management general, cluj-napoca: risoprint, 2004. 7. mora, c.m. and ţiclău, t., ‘managerial approach to public administration’, 2008, transylvanian review of administrative sciences, vol. 24e, pp. 87-97. 8. raboca, h., lazăr, i. and solomon a., ‘exploratory analysis of customer satisfaction in case of cluj-napoca city hall social canteen’, 2009, transylvanian review of administrative sciences, vol. 25e, pp. 110-131. 9. walter honadle, b. and howitt, a.m. (eds.), perspectives on management capacity building, albany: suny press, 1986. untitled 109 abstract this research aims to investigate the extent to which the legislation aimed to improve and support the labor reinsertion of persons with disabilities is implemented by public institutions. the results suggest that the law provisions concerning labor reinsertion of persons with disabilities are followed to a lower extent than might be expected. approximately 7% of the organizations that answered this survey and have more than 50 employees do not implement any of the provisions of the law, therefore having no employed persons with disabilities, not paying the contributions to the state budget, and without contracting of services from the protected workplaces. the other institutions employ fewer persons with disabilities than they should do (about 1% comparing to the 4% required by the law). almost half of the public institutions prefer to use the second option provided by the law, namely to pay the contribution to the state budget instead of hiring persons with disabilities. additional research is needed to extend this exploratory investigation. labor integration of persons with disabilities in public institutions in romania*1 veronica junjan mugur ciumăgeanu ioana micluţia ioana crăciun veronica junjan (corresponding author) assistant professor, school of management & governance, department of social risks and safety studies, university of twente, the netherlands tel.: 0031-53-489.2616 email: v.junjan@utwente.nl mugur ciumăgeanu phd, romanian association of behavior and cognitive therapy, bucharest, romania ioana micluţia professor, university of medicine and pharmacy iuliu haţieganu, cluj-napoca, romania ioana crăciun md, phd, second psychiatry clinic, cluj-napoca, romania * this research was conducted as part of the project “labor integration of persons with disabilities” implemented by activewatch – media monitoring agency together with motivation foundation, romanian center for community psychiatry (centrul din românia pentru psihiatrie comunitară), national centre for combating discrimination (consiliul naţional pentru combaterea discriminării) and academia caţavencu, with the financial support of eu through the european social fund. dr. ciumăgeanu, prof. dr. micluţia and dr. crăciun were supported through the grant pc 91056 accesegal. transylvanian review of administrative sciences, no. 33 e/2011, pp. 109-123 110 1. background situation concerning facilitating labor integration of persons with disabilities the national authority for persons with handicap registered as of september 30, 2007 a number of 482,924 persons with disabilities, (686,798 at march 31, 2010) number that suggests that romania is below the average percentage of 10% in europe and in the world, according to oecd and who data. after 1990, the number of protected workplaces decreased, which affected unfortunately primarily the persons with disabilities. the legislation adopted in 2006 was aimed to correct this situation, and includes extended provisions which stimulate the participation of persons with disabilities on the labor market. the objective of this research is to conduct an exploratory national study concerning the way in which the employers in the public sector apply the provisions of the law no. 448/2006 concerning the protection and promotion of persons with disabilities. 2. literature review as part of the eu accession process, romania had to follow a quite intensive route of adjusting its functioning framework to the eu standards. this process focused on a long-term institutional change, which was focused on political, administrative, social, and cultural rules and norms. all these were operationalized in the forms of legal provisions, or, to be specific, the famous approximately 80,000 pages of the acquis communautaire, which had to be included in the national legislation framework. this process was investigated in the literature from different perspectives: from “modernization” on the one side to “europeanization” on the other side (goetz, 2001), with policy transfer as a third angle of analysis. modernization has seen the reform of public sector as a part of the reconstruction of the east european societies after the fall of the communism which was seen as a factor which delayed the development of the cee countries, and focused primarily on the rebuilding of the political institutions (linz and stepan, 1996; carothers, 2002). within the europeanization perspective, conditionality played an important role. the research focused upon issues varying from the impact and functioning of eu conditionality upon reform (grabbe, 2006; schimmelfennig et al. 2003; schimmelfennig and sedelmeier, 2004), transposition of eu directives (toshkov, 2007; leiber, 2007). the policy transfer approach looked at the way that information and know-how about political and administrative arrangements were transferred from one socio-institutional context to another (dolowitz and marsh, 2002; radaelli, 2000). in this article, the issue of implementation of eu provisions concerning improving the access of persons with disabilities to public institutions is being analyzed from the europeanization perspective. the starting assumption is that in order to be member of the eu, the state institutions need to be rebuilt in order to be able to function properly within the network of the institutions and to implement the acquis communautaire (dimitrova, 2002). in this sense, we start by looking at the requirements that eu documents set concerning labor integration of persons with 111 disabilities and explore the extent to which romanian legislation addressing the issue is being followed by public institutions. why is the issue of equal access of persons with disability so important? there are two reasons, namely, equity issues and economic ones. research results show that people with disabilities are to a large extent excluded from the labor market (kidd et al., 2000; kruse and schur, 2003), that within the target group women are more often excluded (bound and waidmann, 2002), and that persons with intellectual or learning disabilities are more often discriminated than persons with physical disabilities (cook, 2003; 13. micluţia et al., 2005). in terms of the economic situation, aging and the increasing need of using all possibilities existent on the labor market are important. equal opportunity and open access can make for one person the difference between being active on the labor market and being dependent from the welfare. within the tendency to reform the welfare state through cost control, limiting the patronizing tendencies of social welfare, and encouraging labor participation, people with disability were identified as target group for immediate action. in this direction we can note two policy developments. first1, 2003 was declared by the european commission as the european year of persons with disabilities, and, consequently, a set of resolutions were adopted towards supporting the access of persons with disabilities to a life as regular as possible. access to education and training (2003/c 134/04), access to electronic facilities and knowledge society, (eaccessibility (2003/c 39/03)), and access to work and social integration (2003/c 175/01) is encouraged through the resolutions that were adopted during that year. member states were encouraged to take appropriate measures addressing the issue of equal opportunity of persons with disabilities. second, in 2007 the un convention on the rights of persons with disability was signed by the eu. this ultimately implied that disability is defined as an issue of human rights and therefore in need of regulation via the law. in order to monitor the situation, clear objectives concerning equal access of persons with disability were set in the eu disability action plan (dap) 2003-2010. consequently, disability issues were channeled into eu policies and monitored in two-year phases (sec(2007)1548). during the process of accession negotiations in romania, efforts were conducted towards fulfilling the eu standards addressing the issue of equal access of persons with disabilities. the central piece of legislation developed was the law no. 448/2006 concerning protection and promotion of rights of persons with disabilities. in terms of labor integration of persons with disabilities, this law provided that an employer (be it either public or private organization) fulfills his social obligations towards persons with disabilities when choosing for one of the following options: 1. if the organization has more than 50 employees, 4% of personnel will consist of persons with disabilities. 1 concerns on the issue and policy were present before in the eu policies, we focus here on the developments since 2000. 112 2. pay to the state budget a fee equal to 50% of minimum salary per economy multiplied with the number of workplaces for which no persons with disabilities were hired. 3. purchase products or services in value of the fee mentioned at point 2) from companies which are authorized and provide protected workplaces. the central point of this investigation focuses on investigating to what extent the provisions of the corresponding romanian legislation (law no. 448/2006) are being implemented by the public institutions. the article will continue with a presentation of the way in which the research was conducted. the following section will show a summary of the results, and then the last paragraph will discuss the conclusions. 3. methodology between june and august 2009, activewatch – the agency for press monitoring has sent a number of 200 public sector institutions in romania a standard survey concerning the implementation of law no. 448/2006 in those institutions in the period 2007-2008. the primary goal of investigation was oriented towards finding information concerning the situation of employment of persons with disabilities in those institutions, payment of the contributions to the state budget, and purchasing of services from protected companies. the survey requested also an estimate of the investments and investment plans for 2009 dedicated to developing the access of persons with disabilities to the buildings. the institutions were selected following the criteria of territorial distribution and type of institution. institutions in all eight development regions were contacted. all types of institutions that could provide an example in terms of inclusive policies were contacted: ministries, prefectures, townand city-halls, and commerce chambers. the analysis of the response rate gives some interesting results. out of a total 200 addresses, 21 institutions did not offer any answer, even though the information was requested using the provisions of the freedom of information act. further details concerning the response rate are provided in the results section. 4. results 4.1. response rate it is interesting to note that approximately 10% (21 institutions) did not offer any answer. the freedom of information act (foia) provides that this information should be openly available when the information is officially requested therefore by not answering the request foia is breached. in terms of territorial distribution of the answers, one can detect a particular pattern. namely, the institutions in the west and north-west regions have answered promptly in comparison with bucuresti-ilfov and center regions, which have not (see figure 1– response rate per development regions). these response trends can be interpreted from different perspectives. among the explanation one can include 113 a) general responsiveness of the decision-makers on requests based upon the foia, or b) a different level of interest (higher or lower) for issues of social and vocational inclusion of persons with disabilities. from the current data one can not exactly determine an explanation for this different pattern of answers among different regions, but it would be interesting to conduct extra research on the issue. 86,36 100 96,42 77,27 84,61 92,85 71,79 83,33 13,63 3,57 22,72 15,38 7,14 28,2 16,66 0 20 40 60 80 100 120 north-east region west region north-west region center region south-east region south region bucharest region south west region have not answer have answer figure 1: response rate per development region 4.2. quantitative data concerning the employment situation of persons with disabilities and access to buildings there are differences in the pattern of answers offered depending on the type of the institution. the following categories of institutions have answered in a higher degree to the survey: local councils, prefectures, national agencies, and county agencies for work (ajofm). a partial, low or no answer was obtained from town-halls, county councils, and especially the agencies for regional development (coded “eu reg.” in figure 2), and the agencies responsible for the management of structural funds associated to the different ministries (coded eu national – institutions such as management authority pos). given that in the sample only one chamber of commerce was contacted and no answer was received, it is recommended that the results concerning chambers of commerce should be interpreted with care. 114 100 72,72 85,29 14,28 100 100 87,5 83,33 100 100 27,27 14,7 85,71 100 12,5 16,66 0 20 40 60 80 100 120 counties agencies for employment agencies for regional development counties departments of social welfare national agencies ministries national management agencies for structural fonds chambers of commerce county councils city halls prefectures local councils have not answer have answer figure 2: response rate per type of institution2 4.2.1. employment of persons with disabilities current analysis starts from the premise that public institutions have an illustrative public role in supporting the issue of social insertions, access and work of persons with disabilities. out of the 181 institutions that have answered the questionnaire, 136 have above 50 employees and were included in the current analysis as relevant for the provisions of law no. 448/2006. out of these institutions, 58.6% have employees as persons with disabilities, according to the data included in table 1. table 1: institutions with more than 50 employees that have employed persons with disabilities type of institution have employees persons with disabilities yes no counties agencies for employment number 4 1 % 80.0% 20.0% agencies for regional development number 1 4 % 20.0% 80.0% county departments of social welfare number 24 1 % 96.0% 4.0% national agencies number 0 1 % .0% 100.0% 2 the variable “national agencies” included national agencies pos-dru operating in different fields, such as for environment, employment etc. 115 type of institution have employees persons with disabilities yes no ministries number 6 5 % 54.5% 45.5% national management agencies for structural funds number 2 0 % 100.0% .0% county councils number 16 11 % 59.3% 40.7% town/city halls number 21 6 % 77.8% 22.2% prefectures number 3 26 % 10.3% 89.7% local councils number 1 0 % 100.0% .0% from the analysis of the table results that county agencies for employment and work and to a certain extent town/city halls have a higher number of persons with disabilities as employees, whereas prefectures do that to a lower extent. there can be multiple explanations for this result, political as well as pragmatic ones. on the one hand, it can reflect a situation where the social inclusion of persons with disabilities is not a priority of the central government (prefectures being institutions that represent the cabinet at local level). on the other hand, it can reflect an issue of opportunity, as county agencies for employment and work and town and city halls have more contact and work experience with the target group. regardless of which justification is being used, the end result reflects a difference in involvement of public institutions in the issue of social inclusion of persons with disabilities and there are measures to be taken in that respect. if we analyze the regional distribution of the answers per euro-region, we can note that the region sw-oltenia has a higher number of institutions which did not employ persons with disabilities in comparison with the other regions (see figure 3). it must be mentioned, as a limit to the study, that the results should be interpreted with caution, as the regions bucureşti-ilfov and muntenia were over-represented. moreover, in the region bucureşti-ilfov also central institutions were included (as, for instance, the ministries, together with the euro-regional and local ones. in addition, euro-regions sw oltenia and west were under-represented in the sample, with 11 institutions each, comparing with 24 institutions which have answered, for instance, in the region south –muntenia. 116 9 7 10 8 13 14 14 4 6 4 10 8 5 8 9 7 0 2 4 6 8 10 12 14 16 north-east region west region north-west region center region south-east region south region bucharest region south west region don't have employees with disabilities have employees with disabilities figure 3: employment of persons with disabilities, in institutions, per euro-regions the number of institutions who have employed persons with disabilities is a first criterion for analysis. equally important is also whether the institutions fulfill the second provision of the law, namely that whether they have minimum 4% of employees persons with disabilities when the organization has more than 50 employees. the data is presented in table 2. table 2: average percentage of employed persons with disabilities in public institutions, reported per 100 employees type of institution average percentage employees persons with disabilities number of institutions counties agencies for employment 1.80 5 agencies for regional development 0.33 5 counties departments of social welfare 1.15 25 national management agencies for structural funds 0.00 1 ministries 0.25 11 national agencies 1.46 2 county councils 0.79 27 town/city halls 0.82 27 prefectures 0.28 29 local councils 0.82 1 117 table 2 includes averages of numbers of persons with disabilities employed in public sector institutions that have more than 50 employees. at the level of the whole sample one can note an average of 0.7% persons with disabilities, almost six times lower than the 4% that law 448/2006 provides for. county agencies for employment and work and county agencies for social protection have on average the highest percentages of employees persons with disabilities (1.8 respectively 1.15%). the lowest percentages of employed persons with disabilities are to be found in ministries and prefectures, the latter registering the lowest numbers. table 3: total number of employees reported per number of persons with disabilities, per type of institution type of institution number of employees without disabilities per employed person with disabilities number of institutions counties agencies for employment 52.26 4 agencies for regional development 60.00 1 counties departments of social welfare 134.21 24 ministries 1646.10 6 national agencies 68.33 2 county councils 119.27 16 town/city halls 247.74 21 prefectures 46.83 3 local councils 121.00 1 to conclude, in the institutions that have reported the number of employees, out of a total of 314,978 employees, only 637.5 (0.5 representing half fte) are persons with disabilities. 4.2.2. payment of the contributions according to the law no. 448/2006 most of the institutions that have answered to this survey prefer the second option offered by the law, namely the payment of compensation to the state budget for the positions where they did not employ a person with disability. due to the way the questions of the survey were answered (monthly amounts or annual or multi-annual amounts) we cannot centralize the results for all institutions. table 4 summarizes the average amounts paid by the institutions to the state budget, pending on the type of institution. in table 5 are included the average amount paid to the state budget by the institutions that have been included in the study per development region. 118 table 4: average amounts paid by the institutions to the state budget per type of institution (ron) [n=138] type of institution average paid number of institutions counties agencies for employment 2,073.42 7 agencies for regional development 944.57 14 counties departments of social welfare 40,565.50 26 ministries 31,065.45 11 national agencies 8,700.00 2 county councils 13,284.65 23 town/city halls 19,851.29 24 prefectures 4,264.50 30 local councils 15,291.00 1 total 17,150.47 138 table 5: average amounts paid by the institutions to the state (ron) [n=141] region average paid number of institutions northeast region 34,133.80 15 west region 10,803.64 14 north-west region 10,026.72 22 center region 13,778.50 14 south-east region 18,505.76 17 south-muntenia region 17,809.90 21 bucharest-ilfov region 29,959.20 24 south-west-oltenia region 5,410.21 14 total 18,156.84 141 from the table 4 above one can note an increased contribution coming from the county departments of social welfare and ministries. the former institutions register a large number of employees; therefore they should contribute with a large amount of money to the state budget if they choose for option 2 of the law. on the other hand, the latter institutions (ministries) some have a rather small number of employees, therefore it is logical to expect a smaller contribution to the budget, as well as fewer employees persons with disabilities. interestingly enough, at the prefecture level one can note both a relatively low number of employees’ persons with disabilities, as well as the lowest level of contribution to the state budget for option 2. 4.2.3. contracting of services a third alternative offered by the law no. 448/2006 consists of contracting services from social and protected workplaces. this option is to a relatively low extent used by the public institutions, being preferred usually by county agency for social protection and county agencies for employment and work. out of 138 institutions, most of 119 those that purchase services use also option 2, namely paying a certain amount to the state budget. only eight institutions (5.8%) from those that have answered do use this option. figure 4 presents the situation of the institutions that have answered to this study. the most striking result comes from the situation concerning the regional and national agencies that administer eu funds and the prefectures, all these institutions do not use option 3 of the law. 75 100 53,57 100 76,92 100 89,28 84,375 87,87 100 81,36 25 46,42 23,07 10,71 15,62 12,12 18,63 0 20 40 60 80 100 120 counties agencies for employment agencies for regional development counties departments of social welfare national agencies ministries national management agencies for structural fonds chambers of commerce county councils city halls prefectures local councils buy services don't buy services figure 4: percentage of institutions which purchase services from social and protected workplaces 4.3. investments towards improving the access to the public buildings one of the first steps conducted in the recent years in order to improve the social integration of persons with disabilities consists of improving the access to public buildings. it is worthy to note that improving access refers only to the physical access to the buildings, giving thus preference to persons with physical disabilities (through access ramps, toilets for persons with physical disabilities, platforms etc.). the institutions were requested to present the situation concerning the investments made in the recent years in order to improve the access to the public buildings, as well as a forecast for the investment level for the current year. it is interesting to note that in this respect, prefectures, national management agencies for structural funds, ministries, and national agencies that have participated in the study have answered negatively to the question concerning investments (figure 5). 120 12,5 6,66 17,85 7,14 25 21,21 14,9 87,5 93,33 82,14 100 100 100 92,85 75 78,78 100 85,09 0 20 40 60 80 100 120 counties agencies for employment agencies for regional development counties departments of social welfare national agencies ministries national management agencies for structural fonds chambers of commerce county councils city halls prefectures local councils no yes figure 5: intention to, or existence of investments to improve the access to buildings, per type of institutions 0 2 7 0 1 0 2 7 6 0 25 8 13 21 1 12 2 26 25 27 1 136 0 20 40 60 80 100 120 140 160 counties agencies for employment agencies for regional development counties departments of social welfare national agencies ministries national management agencies for structural fonds chambers of commerce county councils city halls prefectures local councils no yes figure 6: intention to invest in 2009 121 if we analyze the situation of investments for the last two years (2007-2008) in comparison to expected investments for 2009 for the 133 institutions that have answered to our request, we obtain the following situation: (figure 6): • in 2007-2008 the value of the investments is higher than 2.5 million euros, in a context of economic growth and post eu accession. • in 2009, fewer institutions anticipate investments on this area. for instance, only four institutions that in 2007-2008 did not have a plan for investments on improving access to the building have developed such a plan for 2009, however with a higher volume of investments. the institutions are uniformly distributed per euro-regions. this slowdown of the intention to invest could possibly be explained as an “eu accession effect”. that is, there is no need to continue with investments because they were done before the accession. but it should be further checked whether this is indeed so. the investments aimed to improve the access to buildings planned for 2009 are decreasing, primarily within the context of the economic crisis. this decrease manifests both in terms of volume, and of number of institutions that address the issue of improving the access to buildings of persons with disabilities. such a lack of continuity in investments can represent a problem for the future, and measures should be taken to attend to. one such possibility would be, for instance, that the money that are collected under the option 2 of the law should be included in a special fund aimed to finance the investments needed to improve the access to public buildings. 5. conclusions this research aimed to investigate the extent to which the legislation aimed to improve and support the labor reinsertion of persons with disabilities is implemented by public institutions. a survey was conducted in the summer of 2009 concerning the implementation of law no. 448/2006 in 200 public institutions during the period 2007-2008. when looking at the findings, one can conclude that the most significant trend detected is that the law provisions concerning labor reinsertion of persons with disabilities are followed to a lower extent than might be expected. this is alarming considering that a relatively large percentage of the institutions initially addressed by this survey do not follow the law, not only by not answering to a request that they ought to (10%), but also because the information they provided leaves little room for a different interpretation. approximately 7% of the organizations that answered this survey and have more than 50 employees do not implement any of the provisions of the law, therefore having no employed persons with disabilities, not paying the contributions to the state budget, and without contracting of services from the protected workplaces. from the institutions which do follow the law, they employ systematically fewer persons with disabilities than they should do (about 1% comparing to the 4% required by the law. as far as the preference for the options provided by the law is concerned, it is interesting to note that almost half of the public institutions prefer to use the 122 second option provided by the law, namely to pay the contribution to the state budget instead of hiring persons with disabilities. this could be explained on the one hand due to direct or indirect discrimination towards persons with disabilities (issue which requires further research), or, on the other hand, as a pragmatic approach. namely, in times of crisis organizations prefer to invest scarce resources into something else than in making workplaces accessible or support for persons with disabilities. option three, which is contracting services from the protected workplaces, is also used to a rather reduced extent. these results are even more disquieting considering that the subjects of this inquiry are public institutions, which should provide (at least in theory) an example for the society. moreover, the fact that those public institutions involved in administering european funds score lower than the other is even more worrisome and summons questions concerning the implementation of the legal provisions. there is not sufficient data obtained though the questionnaire to analyze either the profile of the employees’ persons with disabilities in public institutions, nor the type of work they do. the literature (cook, 2006) suggests that we can expect that there should be more persons with physical disabilities employed. then, the persons with sensorial disabilities follow, and that persons with mental health or psychological disabilities should be under-represented. the data obtained in a different part of the research project where interviews were conducted seems to confirm this premise, but this issue will be addressed elsewhere. the picture drawn by these results suggests that the implementation of the legislative provisions concerning the labor reinsertion of the persons with disabilities in the romanian public institutions is rather limited. according to the conditionality thesis, specific for the europeanization perspective, we could expect that once the candidate country becomes an eu member state, the motivation to implement the provisions of the acquis communautaire decreases. the findings of this study confirm this expectation. however, one can argue that this was an exploratory research, that the research was conducted in a relatively short period (two years) and that a relative de-motivation for reform immediately after eu accession can be explained through the “reform tiredness”. nevertheless, further research is needed in order to investigate these results at national level and on a longer time-span. references: 1. bound, j. and waidmann, t., ‘accounting for recent declines in employment rates among working-aged men and women with disabilities’, 2002, the journal of human resources, vol. 17, no. 2, pp. 231-250. 2. carothers, t., ‘the end of the transition paradigm’, 2002, journal of democracy, vol. 13, no. 1, pp. 5-21. 3. cook, j.a., ‘employment barriers for persons with psychiatric disabilities: update of a report for the president’s commission’, 2006, psychiatric services, vol. 57, no. 10, pp. 1391-1405. 4. dimitrova, a., ‘enlargement, institution-building and the eu’s administrative capacity requirement’, 2002, west european politics, vol. 25, no. 4, pp. 171-190. 123 5. goetz, k.h., ‘making sense of post-communist central administration: modernization, europeanization or latinization?’, 2001, journal of european public policy, vol. 8, no. 6, pp. 1032-1051. 6. grabbe, h., the eu’s transformative power: europeanization through conditionality in central and eastern europe, basingstoke: palgrave macmillan, 2006. 7. grabbe, h., ‘how does europeanization affect cee governance? conditionality, diffusion and diversity’, 2001, journal of european public policy, vol. 8, no. 6, pp. 1013-1031. 8. kidd, m.p., sloane, p.j. and ferko, i., ‘disability and the labor market: an analysis of british males’, 2000, journal of health economics, vol. 19, no. 6, pp. 961-981. 9. kruse, d. and schur, l., ‘employment of people with disabilities following the ada’, 2003, industrial relations, vol. 42, no. 1, pp. 31-66. 10. leiber, s., ‘transposition of eu social policy in poland: are there different `worlds of compliance in east and west?’ 2007, journal of european social policy, vol. 17, no. 4, pp. 349-360. 11. linz, j.j. and stepan, a.c, problems of democratic transition and consolidation, baltimore: johns hopkins university press, 1996. 12. lipsky, m., street-level bureaucracy: dilemmas of the individual in public services, new york: russell sage foundation, 1981. 13. micluţia, i., junjan, v. and popescu, c.a., ‘social stigma and its impact on working acceptance of persons with mental illness’, 2004, revista transilvană de ştiinţe administrative, vol. 3(12), pp. 121-127. 14. schimmelfennig, f., engert, s. and knobel, h., ‘costs, commitment and compliance: the impact of eu democratic conditionality on latvia, slovakia and turkey’, 2003, journal of common market studies, vol. 41, no. 3, pp. 495–518. 15. schimmelfennig, f., ‘the community trap: liberal norms, rhetorical action, and the eastern enlargement of the european union’, 2001, international organization, vol. 55, no. 1, pp. 47-80.0 16. schimmelfennig, f. and sedelmeier, u., ‘governance by conditionality: eu rule transfer to the candidate countries of central and eastern europe’, 2004, journal of european public policy, vol. 11, no. 4, pp. 661-679. 17. toshkov, d., ‘transposition of eu social policy in the new member states’, 2007, journal of european social policy, vol. 17, no. 4, pp. 335-348. 54 abstract this paper introduces aspects related to the relation between evaluation on the one side and research methods and statistics on the other side. because of the interdisciplinary profile of program evaluation as a theoretical and practical field, sometimes the importance of using the appropriate research methods and the adequate statistical methods is regarded as having a secondary importance. based on our own observations and on some other assessments, we are able to state that the use of research methods and of statistical methods should be at the core of program evaluation. concepts of research methods and statistics used in program evaluation raluca (antonie) gârboan raluca (antonie) gârboan assistant professor, public administration department, faculty of political, administrative and communications sciences, babes-bolyai university, cluj-napoca, romania tel.: 0040-264-431361 email: ralucagarboan@apubb.ro transylvanian review of administrative sciences, 26e/2009 pp. 54-61 55 1. introduction according to the european union commission, program evaluation can be defined as “a judgment of interventions according to the results, impacts and needs they aim to satisfy” (eu commission). we also refer to program evaluation as to “the process of assessing the extent to which project, program or policy objectives have been achieved and how economically and efficiently” (mulreany, 1999). more than that, the uk treasury defines evaluation as “a critical and detached look at the objectives and how they are being met” (uk treasury). even if generically it is named “program evaluation”, it applies to policies, programs, projects and other types of interventions. program evaluation usually involves judgement on basis of criteria based on data collected with the help of research methods and techniques. when numeric data are involved, the judgments relay on statistical arguments. the link between evaluation and research methods evaluation models are usually used to define the objectives of an evaluation, what variables and indicators to study, and the methods needed to collect and interpret the data. at the beginning of each evaluation study a model should be structured in order to carry out a program evaluation systematically and easily. there are numerous models that are being used. synthetically, the majority use the following steps: (1) identifying the evaluation objectives/initial questions, (2) establishing the indicator system, (3) collecting the data, (4) analyzing the data, and (5) reporting the results. an interesting five step model used by community action resources for inuit, métis and first nations is presented in figure 1. figure 1. evaluation model. source: community action resources for inuit, métis and first nations, http://www.hc-sc.gc.ca 56 the diagram presents a dynamic version of the activities that take place during an evaluation. the activities involved are: setting the context of the evaluation, preparing an evaluation plan, gathering the information, making sense of the information and using the results. at the core of evaluation process is the idea of data or information. information is supposed to be used in order to improve the program, project or policy evaluated. evaluation is one of the most important steps in program cycle management, beside programming, identification, formulation and implementation. its purpose is to learn through systematic data collection and analysis how to improve programs’ and projects’ design, how to properly implement interventions, the way we should address accountability concerns, how to make the best decisions concerning the allocation of resources. as the result of an evaluation several types of decision could be taken: the continuation of the program according to the original design, the continuation of the program with more or less significant changes in the original design, the termination of the program or the changing of future programs or projects according to the lessons learned. any of these decisions is based on data collected with the help of social research methods and interpreted either qualitatively or statistically, according to the type of the data. research methods are involved in every stage of the evaluation cycle as well. we collect and interpret data before the program is implemented (ex-ante evaluation), in order to improve allocation of resources and program design, during the implementation (interim evaluation), in order to analyze weather the program is reaching its objectives and the possibilities to improve the design and the management of the program or project. data is needed to assess the project or the program after the implementation stage as well (ex-post evaluation) when we can see what the results of the program are, quantitatively and qualitatively. research methods in program evaluation we have already established that research methods are extremely useful in every model and in every stage of the evaluation cycle. now we have to establish what the most useful research methods are, and when do we use them in the evaluation cycle? both qualitative and quantitative methods are used in program evaluation. the accent is placed upon the complementary use of the two research paradigms and of their subsequent methods. therefore program evaluation uses the multi-method research model and the preponderance of qualitative or quantitative is decided by several criteria such as: program implementation area, program dimension, number of beneficiaries etc. quantitative methods are used especially for the large-scale programs, when there are numerous beneficiaries and when the objectives of the evaluation involve finding out the perspective of the target group. the aim of using quantitative methods is to reach statistically significant results. qualitative methods are used mainly in medium and small-scale programs and sometimes in complex programs in order to refine instruments and to find out as many 57 details as possible on different aspects of the program. qualitative research methods such as individual interview, focus-group, qualitative observation and document analysis are frequently used as well in assessing the programs with a significant social component. differences between evaluation and research even if a strong relation between evaluation and research can easily be perceived, as shown above, several differences must be stressed. as palumbo had shown (palumbo, 1987), carole weiss illustrated a series of criteria that help distinguishing between the two (table 1). some of the most important criteria are the aim, the area of interest, the priorities, the audience, the autonomy, the possibility to generalize the findings etc. according to these criteria, evaluation is oriented especially to practical problemsolving, while research aims mostly at knowledge development. their target is different even if they may use a common methodological toolkit. the area of interest of evaluation is decided either by the decision maker, by specific actors that might ask for the evaluation, such as the financing entity or the implementing unit. table 1. differences between evaluation and research criteria evaluation research aim practical solving of problems knowledge development area of interest established by the decision maker established by the researcher assessment comparison between what it is and what it should be usually focused on what it is priorities the program, not the evaluation itself research methodology, not the object of the research possible conflicts between the evaluators and the team implementing the program eventually between the researcher and the sponsor publishing generally no, but the findings are transmitted to the decision-makers crucial motivation improvement of the situation theory development and increased understanding audience (small in both cases) decision makers other researchers autonomy limited relatively high possibility to generalize the findings oriented to specific situations interest in generalization in time, space and different situations assessment criteria is it relevant for the decision makers? are the results credible? does it have any influence upon the program? did we test our research hypothesis? do we have internal and external validity? does the research open the way to other research problem? source: weiss, c., ‘where politics and evaluation research meet’, in d. palumbo (ed.), the politics of program evaluation, newbury park: sage publications, 1987, p.167. 58 selecting appropriate statistics when quantitative analysis is used, several criteria must be considered to ensure selecting the most appropriate data analysis technique in the case of a specific program evaluation. the most frequently used criteria refer to questions, measurement and audience. question criteria refer mainly to the evaluation questions and stress whether they are about a casual relationship between a specific cause and effect, or they rely on quantitative variables. measurement criteria are concerned with the level of measurement of the variable used, and the level of precision of the measurements etc. audience criteria are related to the type of audience of the evaluation. elements like the expectances of the audience regarding the presentation of data, the precision requested etc. are very important. a target group of the evaluation that is not highly qualified in statistics will expect to see graphs or simple frequency tables, while a statistics qualified target group will definitely expect to see more sophisticated statistical analysis. selecting a statistical technique to be used in evaluation when evaluators collect numerical data to address the evaluation questions, they may have to use statistical techniques to analyze the data and to reach reliable conclusions regarding the program. with the help of statistical techniques, evaluators can find information about the relationship between the program, as a cause, and an alleged effect (e.g. by using association). evaluators may also find out whether and to what extent a group of beneficiaries has been reached by the program (e.g. by using frequency tables). or, they may find out whether the results of the program are mainly due to one or another characteristics of the program (e.g. by using regression). still, the manner in which the variables (characteristics) are measured limits the number of statistics available to evaluators. for instance, in order to analyze a relationship between two variables, when the variables are measured at nominal and ordinal level, evaluators can use association tables (cross tabulation) and as a test for statistical significance, they can use chi-square test with the computation of lambda or gamma coefficients respectively. but, in the same situation, when the variables are measured on a scale more complex then the ordinal one, on an interval scale, for example, beside the chi-square test evaluators can use the t-test. in order to assess a program impact, evaluators may use regression, but only with variables measured on a more complex scale then the ordinal one (e.g. interval). in this situation, the appropriate measure of magnitude of the relationships will be shown by r-square and beta weights. 2. evaluation, research methods and statistics expertise in the romanian public administration when talking about the relationship between evaluation and research methods and statistics, we would like to take a look at the way these fields relate in practice. we have measured evaluation capacity in romanian public institutions at regional and local 59 level (gârboan, 2007) and, among other aspects we tried to find out real data about the existence of personnel trained in evaluation, research methods and statistics. what is more, we tried to see the perceived need for the personnel trained in the three fields. the existence of personnel trained in evaluation 63% 35% 2% no yes na the need for personnel trained in evaluation 20% 76% 4% no yes na figure 2. the existence of personnel trained in evaluation figure 3. the need for personnel trained in evaluation the fact that 63% of the public institutions which were questioned don’t have in their structures specialized personnel in evaluation field (figure 2) and 76% are aware of the existence of this need (figure 3), shows the tendency to develop the capacity of evaluation in romanian public institutions. and because the capacity of evaluation doesn’t require only human resources specialized in evaluation, but also personnel which is specialized in social sciences research methods and in statistics we measured the existence of specialists in these fields in the romanian public institutions. the existence of personnel specialized in research 79% 19% 2% no yes na the need for personnel specialized in research 30% 67% 3% no yes na figure 4. the existence in the institutions of the personnel trained in research figure 5. the need for personnel trained in research regarding research, 79% declared that they don’t have employees trained in research methodology (figure 4), but only 67% are aware of the need for this type of personnel (figure 5), fact which reveals that program evaluation field is not known in his essence. programs which have the role to inform the institutions that there is no possibility to make evaluation unless they have personnel trained in research methods are very 60 welcomed, this aspect being even more important in the public sector where the social impact must be considered a reference point. the existence of the personnel trained in statistics 81% 15% 3% no yes na aware of the need of personnel trained in statistics 30.9% 66.0% 3.1% no yes na figure 6. the existence of the personnel trained in statistics figure 7. aware of the need for personnel trained in statistics this situation is even more visible in the case of statistics. about 81% of the institutions realize the lack of trained personnel (figure 6), but only 66% are aware of the real need for this type of personnel (figure 7). or it is known that evaluation of programs cannot be done without statistics, especially when we talk about complex programs. 3. conclusions based on our own observations and on some other assessments, we are able to state that the use of research methods and of statistical methods should be at the core of program evaluation. the existing evaluation capacity cannot be improved without real commitment towards learning from evaluation. and in order to learn from evaluation and to see all its benefit we must fundament our evaluations on arguments that relay on real data collected with the help of research methods and analyzed, when numbers are involved, with the help of statistical methods. without it our evaluation reports will stick to the “educated guess level or even at the common sense level which is not always quite convincing. references 1. behn, r.d., ‘why measure performance? different purposes require different measures’, 2003, public administration review, vol. 63, no. 5. 2. bickman, l. and rog, d.j., (eds.), handbook of applied social research methods, new york: sage publications, 1998. 3. box, r.c., ‘an examination of the debate over research in public administration’, 1992, public administration review, vol. 52, no. 1. 4. caplow, t., l’enquête sociologique, paris: armand colin, 1970. 5. chelcea, s., metodologia cercetării sociologice. metode cantitative şi calitative, bucharest: editura economică, 2001. 6. chen, h. and rossi, p., ‘issues in the theory-driven perspective’, 1989, evaluation and program planning, vol. 12, no. 4. 61 7. cook, t.d. and campbell, d.t., quasi-experimentation: design and analysis issues for field settings, chicago: rand mcnally, 1979. 8. gârboan, r., ‘evaluation culture and capacity in romanian public institutions at regional and local level’, 2007, transylvanian review of administrative sciences, vol. 21, pp. 47-60. 9. palumbo, d. (ed.), the politics of program evaluation, newbury park: sage publications, 1987. 10. patton, m.q., how to use qualitative methods in evaluation, new york: sage publications, 1987. 11. patton, m.q., qualitative research and evaluation methods, new york: sage publications, 2002. 12. patton, m.q., utilization-focused evaluation, new york: sage publications, 1997. 13. rotariu, t. and iluţ, p., ancheta sociologică şi sondajul de opinie: teorie şi practică, iaşi: polirom, 1997. 14. scriven, m., evaluation thesaurus, 4th edition, newbury park: sage publications, 1991. 15. shadish, w.r. jr., cook t.d. and leviton, l.c., fundamentele evaluării programelor: teorii ale practicii, bucharest: fiman, 1997. 16. shadish, w.r. jr., cook, t.d. and leviton, l.c., foundation of program evaluation: theories and practice, newbury park: sage publications, 1991. 17. silverman, d., interpreting qualitative data: methods for analyzing talk, text and interaction, 2nd edition, new york: sage publications, 2001. 18. stake, r.e., (ed.), evaluating the arts in education: a responsive approach, columbus: merrill, 1975. 19. stake, r.e., standards-based and responsive evaluation, new york: sage publications, 2003. 20. wholey, j.s., hatry, h.p. and newcomer, k.e., (ed.), handbook of practical program evaluation, 1st edition, san francisco: jossey-bass, 1994. 21. witkin, b.r and altschuld, j.w., planning and conducting needs assessments. a practical guide, new york: sage publications, 1995. 22. http://www.evalsed.info 23. http://www.evalrom.ro 24. http://www.worldbank.org 25. http://www.hc-sc.gc.ca 5 preface the contributions in this special issue reflect upon the results of the european union’s cost action is0601 (2007-2011) called cripo (comparative research into current trends in public sector organization), which was led by the prominent public administration scholars geert bouckaert, per lægreid and koen verhoest. the main objective of the cripo project was to increase knowledge about current trends in public sector organization in europe in order to contribute to theoretical knowledge and optimize methodologies, and thus to inspire sound and policy-relevant research conclusions. the cripo project brought together scholars on a european platform for comparative and longitudinal research, which led to empirical, theoretical and methodological advancements in the field. ultimately 23 european countries and 95 individual researchers cooperated in a research network organized around several topics, such as population and proliferation of public sector organizations, autonomy, steering and control, performance, accountability and coordination of public sector agencies. from central and eastern europe (cee), croatia, estonia, hungary, lithuania, romania and slovakia participated actively in the project. while the agencification process in western democracies has attracted enormous scholarly interest in the last two decades, similar trends in cee countries have received very little attention so far. in addition, an overwhelming majority of existing public administration research in cee consists of single-country case studies only. it can even be said that a tradition of comparative studies is missing in public administration scholarship in cee. in this general context, the international network of researchers has provided a much needed framework for, first of all, starting systematic studies of agencification and, secondly, for carrying out empirical studies based on a common methodology, thus enabling comparisons both within cee and beyond this region. the cripo network was international in its membership, dynamic in its search for comparability and pro-active in searching for combined methods of research, which allowed comparisons across countries, policy fields and time. the contributions in this special issue are based on various methods used within the cripo project. whereas a few cee countries (lithuania and romania) can rely on the results of the so-called cobra questionnaire (“comparative public organization data base for research and analysis”) initiated at the katholieke universiteit leuven, the other country studies have built their empirical research on joint protocols for dynamic, longitudinal mapping of state administrations or on case studies developed within the cripo network. 6 since in the majority of cee states research on public sector organizations is less advanced than in most western european countries, the contributions in this issue involve a strong descriptive element outlining the agency landscape and its evolution in each particular country. in addition, the authors were able to choose specific subthemes that have influenced the design of public sector organization and reforms in their respective countries. on one hand, the novelty of such research in cee has led to a replication of methodologies that have been used in western countries within the past decades, by that allowing for cross-country comparisons. on the other hand, the cee country studies have contributed to the existing knowledge of the field, for example, in studying the impact of the european union and of the economic crisis on the (de)agencification process. this special issue features nine original articles. the introductory paper is written by b. guy peters of the university of pittsburgh, who, in addition to being one of the co-founders of the cobra network, has demonstrated keen interest in public administration reforms in cee for more than a decade. sandra van thiel of the erasmus university rotterdam offers an important contribution by placing the agencification process in cee countries in a broader international context, which allows it to identify “a cee trajectory” of agencification. this is followed by six country studies on (semi-) autonomous agencies and other public sector organizations discussing developments in croatia, estonia, hungary, lithuania, romania and slovakia, and a summary article by the guest editors of this special issue focusing on the similarities and differences in the agencification process among the cee countries. the aim of this special issue is not only to contribute to the academic studies of public sector organization but also to be relevant for policy-makers and agency practitioners. as most cee countries are going through reforms in their public sector organizations, we hope that empirical evidence as well as the approaches, analytical frameworks and conclusions presented in this issue will be useful in designing, implementing and understanding public sector reforms. guest editors of the special issue, tiina randma-liiv, vitalis nakrošis and hajnal györgy untitled 233 abstract the presence and management of abandoned industrial sites (brownfields), which cover large areas of land in the crişul repede valley territorial planning unit, is a great challenge. of the many abandoned industrial sites, the glass factory of pădurea neagră was selected in order to highlight the peculiarities of a certain typology of territorial occupation and use, which is representative for the studied area. the whole abandoned area was reserved entirely for the glass factory, which now finds itself in an advanced stage of degradation. as a peculiarity, one remarks that it is surrounded by the neighboring secondary homes, an area in full expansion. the industrial zone covers a significant part of the built-up area of the village (21%), preventing the development of the territory in question, while at the same time it creates an aesthetic disability for the small community which has only the perspective of tourism development. the revitalization of the community can be achieved through the rehabilitation/conversion of the industrial area, as a valid alternative to the inevitable urban expansion, as it will have a positive impact on the development of tourism. there are many uses which could be gained as a result of the rehabilitation, but the most appropriate use would be a multifunctional center of creation, accompanied by a small glass museum and a workshop that would produce small-scale traditional glasswork, for tourism purposes. the brownfield of pădurea neagră (crişul repede valley)*1 rodica petrea dănuţ petrea valentin nemeş rodica petrea professor, department of geography, tourism and territorial planning, faculty of history, geography and international relations, university of oradea, romania tel.: 0040-259-408.442 email: rpetrea@uoradea.ro dănuţ petrea professor, department of physical and technical geography, faculty of geography, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-591.622 email: dpetrea@geografie.ubbcluj.ro valentin nemeş ph.d. candidate, department of geography, tourism and territorial planning, faculty of history, geography and international relations, university of oradea, romania tel.: 0040-259-408.442 email: nemes_vali@yahoo.com * this contribution presents results from the following research projects: pnii, pce id 450, no.404/2007. the authors acknowledge the anonymous reviewers for their thoughtful suggestions and comments. transylvanian review of administrative sciences, no. 33 e/2011, pp. 233-243 234 1. introduction the expansion of built-up areas represents an unavoidable ubiquitous trend and the management of space designed for present or potential consumption represents a priority problem, no matter the size of the settlement. in these conditions, the rehabilitation/ revitalization of brownfields covering important areas becomes a necessity. space was and is a cultural, historical and social product which cannot be dispossessed of significations, ideologies, inherent mythologies, no matter how we try to “abstract” it in order to manage it more wisely (minea, 2007, p. 69). the presence and management of brownfields has become a major issue all over the world. in the european union, it is considered that their rehabilitation/conversion may play an important part in the revitalization of certain urban districts and areas, as a viable alternative to the unavoidable urban extension, because it has an impact on the social, economic, ecological and cultural development. the issue of revitalization of decommissioned urban areas which is included in the urbact ii program / priority axis 2 – subject “environmental issues” and/or “integrated development of disadvantaged areas and poverty risk areas”. urbact ii, a european territorial cooperation program, ensures non-refundable financing for projects concerning sustainable urban development. urban local governments, universities and research centers are among the eligible applicants. financing is granted to projects which propose sustainable and efficient solutions for: urban development, land use management and urban regeneration and spatial planning (the urban development network programme urbact ii, 2007). the common european initiatives concerning the reconversion of decommissioned industrial sites and their reuse based on the community strategic orientations, within the subject entitled “the territorial dimension of the european policy on cohesion”, are grouped into five fields: (1) the exchange of good practices regarding the innovating approaches for the physical rehabilitation of decommissioned industrial sites and the higher attraction of urban areas; • the exchange of good practices in techniques of rehabilitation of decommissioned industrial sites, and strategies, including instruments and technologies, for the assessment of the effective costs for their decontamination; • economic and social incentives for the rehabilitation of decommissioned industrial sites; and • sustainable social, ecological and economic solutions for projects aiming at the integration of regenerated decommissioned industrial sites in the urban environment. (2) the coordination of the eu land use policies and funds and the avoidance of “greenfield” sites; (3) the development of partnerships between the actors involved, including the public participation within the integrated and coherent approach to urban development (governance); 235 • the strategies of communication for the rehabilitation of decommissioned industrial sites and instruments for the improvement in this sense and to fight against the loss of greenfields. (4) the creation and development of urban planning long-term development plans and instruments for all the actors involved in the promotion of sustainable economic development and creation of new jobs, including monitoring and assessment systems; • instruments for the identification of decommissioned industrial sites and priority given for their rehabilitation; and • information and monitoring systems. (5) waste deposits, including historical waste deposits; • instruments and techniques of stock assessment; and • the rehabilitation of these sites (politica de coeziune a uniunii europene, 2007). since 1990, industry underwent a large restructuring process at the level of the entire country. a number of industrial branches experienced a generalized decline or even collapsed. industrial decline in romania was determined by a series of socio-economic mutations which occurred as a result of the restructuring started after 1990, as a consequence of the different manner of approaching the economy that was characteristic for the central and eastern european countries, part of the former communist bloc (earle, 1997). the inherent result was the closing down of many factories, mining sites, and industrial platforms. the process was doubled by their abandonment and implicitly the loss of their intrinsic useful values, as well as the ones belonging to the lands they covered. the analyzed area crişul repede valley territorial planning unit (tpu) is one of the 11 tpus in bihor county, and aleşd town is designed as its development center (figure 2). at european level, the associations between local territorial communities (either rural or urban) created inter-community structures, the so-called “project territories” or “intercommunities”, in order to support mutual development projects. in romania, this new types of territorial cooperation are still in an incipient stage. the setting up of tpus by the regional development agencies together with the county councils is an example of optimal territorial development (petrea, 2008). following the research on the crişul repede valley tpu, one could remark an amplification of the phenomenon of industrial abandonment. the setting up of the disadvantaged zone of aleşd – popeşti – derna has been ineffective (figure 1). between 1999 and 2008, the town of aleşd was part of aleşd-popeşti-derna disadvantaged area (government emergency ordinance no. 24/1998, modified by law no. 20/1999). during this period, the area benefited from a series of advantages to attract investors, so as to ensure economic revitalization. investors were given a package of substantial long-term fiscal facilities (exemption from the payment of the customs taxes and the value-added tax for the machines, tools, installations, equipment, means of transport, other imported redeemable goods, in order to make 236 investments in the area; exemption from the payment of customs taxes for the imported raw materials necessary for the materialization of their own production in the area; exemption from the payment of the profit tax during the period of existence of the “disadvantaged area”; exemption from the payment of the taxes collected for the change of destination or the removal from agricultural use of those lands needed for achieving the investment). the setting up of the aleşd-popeşti-derna disadvantaged area did not bring about the anticipated results because the facilities were gradually removed during the last years, and so the majority of trading companies postponed their investments in new production capacities and therefore in the creation of new jobs. the new industrial objectives or the new buildings are made on new spaces, most of the times agricultural or forest lands, which leads to a high consumption of lands with other destination and consequently to the decrease of green areas. that is why the rehabilitation has a big ecological, social and economic importance (ofev, 2009). 2. objectives and methodology within the analyzed area, there are many brownfields and among them there is also the one belonging to the glass factory of pădurea neagră, a village located in the administrative unit of aleşd town. the majority is concentrated in the communes of suncuiuş, vadu crişului, borod, aştileu, which compose the former disadvantaged zones in the analyzed area (figure 1). pădurea neagră village was selected to highlight the peculiarities of a certain typology of territorial occupation and use, which is representative for crişul repede valley. consequently, the major objectives of this study are: (1) the quantification of the manner of using the habitat potential in correlation with the abandoned industrial sites; and (2) the setting up of alternative solutions, which are identified according to the optimal perspectives of evolution. the study was based on field research, analysis of topographical maps and satellite imagery, bibliographical documentation and data collected from aleşd town hall. the elements composing the urban landscape have been analyzed, stress being laid on the functional, statistical, cartographical, diagnostic and prognostic analysis. the comparative method has been used to highlight the original aspects. 3. pădurea neagră – traditional center of the glass industry. background the town of aleşd is the urban center whose economic evolution is illustrative for the tpu space polarized by it. the town has a large administrative area (7,195 ha) because the villages of tinăud, peştiş and pădurea neagră are also included within it. located at 20 km north of aleşd, pădurea neagră has a privileged position within the administrative territory because it is located in an attractive mountainous range, plopiş mountains. its emergence is related to the setting up of the glass factory in the first half of the 19th century (petrea, 2009a). 237 figure 1: the disadvantaged areas of crişul repede valley tpu, bihor county. the craft of glass processing at pădurea neagră is the result of the cooperation of two factors: on the one hand, the need to get additional income by capitalizing the labor force existing on the lands of the noble families, and on the other hand, the presence of some important local resources (quartzite sand collected from the stream bed of bistra river and the wood used in the heating process, gathered from the steep slopes of the valley). another advantage was the hydrodynamic power of bistra river, on which water mills were built to grind the quartzite. according to archive documents, the origins of this activity date back to around 1770, when a glassblowing machine is recorded. it was needed to raise the temperature for the processing of quartzite, as wood has a low calorific value. the setting up 238 of the glass factory at pădurea neagră seems to date back to 1798, as justified by a founding act. the year 1820 has a major importance in the history of glass making, because it was characterized by measures aiming at developing the activity. glass craftsmen were brought in and buildings were raised, including residential homes. the glass craftsmen were brought from slovakia by baron banfy (siracky, 1980). another important stage in the development of glass production was the period between 1860 and 1890. the coal-based (more precisely lignite-based) gasogene ovens are introduced, with coal from budoi mine, and the connecting road to aleşd is finished. until around 1886, the village of pădurea neagră did not exist from an administrative point of view. the glass production was affected throughout the time by the numerous fires which emerged at the glass factory of pădurea neagră. a good period was the one between 1910 and 1917, when the value of production reached 700,000 crowns. one may remark the following products: glass sets, lighting equipments, opal glass, glass for pharmacies, chemistry laboratories etc. a part of these products were exported to many countries in europe and even asia (rozin, 2008). figure 2: pădurea neagră. geographical location 239 the 1922-1937 period represents another important stage when the glass production was diversified and increased, despite the economic crisis (1929-1933). a possible explanation is the production of lamps. during the communist regime, the factory embraces the process of planned production, reaching a number of more than 1,000 workers. after 1989, the high production costs due to the exhaustion of local resources and the need to bring them from long distances demanded its privatization. the quartzite was brought from south-eastern romania, dobrudja, the commune of turcoaia (seghedi, 1988). the problems emerged on the one hand due to the weak management of the factory, and on the other hand due to the increased competition, which eventually led to the closing of the factory gates in 1996 (pinţa, 1991). 4. demographic and economic aspects the closing of the factory in 1996 has had important consequences for the population. two thirds of the population is not active, and almost half is made up of retired people. only 21% of the population is employed (ins, 2008). the high emigration rates are determined by the departure of the slovak population. the slovaks of pădurea neagră now represent only 16% of the population because the majority of them left for slovakia or hungary to get a job suitable to their skills (petrea, 2009a). there is also an internal migration of some people to the communes located in the basin (filimon, 2009). the migration balance, defined as the difference between entries and exits from the system in reference to the number of inhabitants of the area provides a clearer image of the population mobility. its analysis reveals the fact that there is a negative value of -44.2‰, as a result of internal and external emigration (filimon, 2009). this situation has both demographic and social-economic repercussions. the town of aleşd concentrates 36.3% of the 950 economic units that are active within the tpu. the active economic units of aleşd (25.8% in industry, 72.8% in services and 1.7% in agriculture) attract most of the workers from pădurea neagră (ins, 2008). in the economy of the village, the weight of agriculture was insignificant, and industry is the dominant activity (ins 1992, 2008). after 1990, there was stagnation in the development of the area, before the emergence of “lohn”-type light industry. the economic reinvigoration, due to the development of the lohn industry, emerged in 1999, once aleşd was included in a disadvantaged area; it was not however felt in pădurea neagră. between 2000 and 2008, two lohn-type industrial units with foreign (italian) capital were set up in pădurea neagră. they were specialized in footwear production, but only functioned for a few months (petrea, 2009a). the workers from pădurea neagră are employed in small industrial units within the tpu, involved in the capitalization of mineral resources, or in the processing industry: food, footwear and furniture (filimon, 2010). 240 5. planning aspects from an urban planning perspective, the settlement has some characteristics which are not defining for the rural space including it. it may be classified rather as a small urban settlement with a linear structure, dominated by a monofunctional industrial activity. thus, one remarks many differences at the level of the street network, the functional zoning (the presence of a large industrial district) and housing. the simple street network, adapted to the morphology of the site, generally consists of the thoroughfares which ensure the access to the settlement. the inner streets are poorly represented and they are in fact alleys to access the residential blocks of flats. a new street is about to emerge on the right bank of bistra river, giving access to the lands where secondary homes (holiday homes) have been built recently. the functional zoning of the settlement is characterized by simplicity: the first rtu (reference territorial unit), on the upper stream of bistra valley, has a residential function, while the second one (rtu 2) has two, industrial and residential functions (figure 3a). figure 3: pădurea neagră (a) functional zoning, (b) aerial photogram (ancpi, 2006) the main compositional axis is the valley of bistra. along it, one remarks the tendency of territorial extension due to the ever-growing number of holiday homes built at both ends of the built-up area. the industrial zone belonged exclusively to the glass factory. the buildings meant for production on the left bank of the bistra valley, together with the office buildings on the right bank, used almost entirely a small enlargement of bistra valley, where the second body of the built-up area of the settlement lies. 241 after passing through diverse types of property, the factory is now in an advanced state of degradation. as a peculiarity, one remarks that it is surrounded by the neighboring secondary homes, an area in full expansion. most of these dwellings are the property of retired people and inhabitants of marghita town. 6. conclusions the industrial zone covers an important part (21%) of the built-up area. it hinders the spatial development and at the same time it represents an aesthetic disability for the small community which no longer has other perspective than tourism development. the narrow morphological environment where the settlement developed does not have enough reserves for spatial expansion. at present, the new buildings concentrate at the two ends, leading to the lengthening of the built-up area at the expense of new lands. in these conditions, the development strategy of the settlement should take into account these aspects with major social, economic and planning effects. the revitalization of the community can be achieved through the rehabilitation/ conversion of the industrial area, as a valid alternative to the inevitable urban expansion, as it will have a positive impact on the social, economic, ecological and cultural development. there are many destinations which could be acquired as a result of the rehabilitation: an art creation center, museum, club, recovery center, multifunctional center etc. at present, tourism is characterized by the presence of a significant number of holiday homes (44), a school camp, sporting (motocross and atvs), educational and rural tourism (petrea, 2009b). the trend towards the tourism development of the village would be therefore supported by such a center where tourists would experiment a traditional craft for themselves. the presence of a glass museum would increase its attractiveness and encourage especially the development of school-based and rural tourism (petrea, 2004). in europe, there are many success stories. the architect patrick bouchain, who considers that industrial architecture has a great social value, transformed industrial sites into “cultural factories”. there are no such examples yet in the area of study. the most appropriate destination would be a multifunctional center, accompanied by a small glass museum and a workshop that would produce small-scale traditional glasswork, for tourism purposes. it is proved that unusual, original destinations, which can provide a unique experience for the tourists, meet the greatest success. rehabilitation involves large investments and high costs. it is therefore necessary to attract investors or to access european funds. the development strategy of aleşd town (local council decision no. 31 / 2008) outlined the major directions to achieve the sustainable development objectives. regarding pădurea neagră and the issues approached in this paper, stress should be laid on the available structural funds in the rural development operational 242 programme. for the rehabilitation of the glass factory, it is possible to access the funds provided through the regional operational programme, axis 4: support for the development of regional and local business environment, field of intervention 4.2 – “the rehabilitation of polluted and unused industrial sites and preparation of new activities” (pndr, 2009). references: 1. earle, s.j., ‘industrial decline and labor reallocation in romania’, 1997, paper presented at the conference on labor market in transition economies, davidson institute in ann arbor, michigan, pp. 1-31. 2. filimon, l., chiriac, c., petrea, r. and filimon, c., ‘population mobility and its implications in territorial reconversion. a case study: the crişul repede valley tpu (territorial planning unit)’, 2009, analele universităţii din oradea, seria geografie, vol. xix, pp. 163-170. 3. filimon, c., depresiunea oradea-bratca. studiu de populaţie şi aşezări, phd thesis, universitatea din oradea, 2010. 4. minea, e.m., ‘planificarea urbană între coerenţa unităţii şi gestionarea diferenţelor’, 2007, revista transilvană de ştiinţe administrative, vol. 20(2), pp. 68-84. 5. petrea, r., turism rural în munţii apuseni, oradea: editura universităţii din oradea, 2004. 6. petrea, r., maruşca, a. and filimon, l., ‘contemporary rural tourism on the example of crişul repede valley territorial planning unit (tpu)’, 2008, romanian review of regional studies, journal of the center for regional geography, cluj-napoca, no. 2, pp. 77-86. 7. petrea, r., filimon, l. and maruşca, a., ‘rural tourism and durable development in the tpu crişul repede valley in the apuseni mountains’, 2009, studii şi cercetări (geologie-geografie), no. 14, bistriţa, pp. 97-106. 8. petrea, r., olău, e.p., blaga, l. and nemeş, v., ‘pădurea neagră. aspecte geografice cu implicaţii în amenajare’, 2009, revista română de geografie politică, year xi, no. 2, pp. 157-165. 9. pinţa, g., ‘din istoricul fabricării sticlei în judeţul bihor. fabrica de sticlă de la pădurea neagră’, 1991, crisia xxi, muzeul ţării crişurilor, oradea. 10. rozin, e., a torzulas szépsége, oradea: europrint, 2008. 11. seghedi, a., mirăuţă, e., seghedi, i., szakacs, a., ghenea c. and ghenea, a., harta geologică a româniei sc.1: 1.500.000, foaia priopcea, 1988. 12. siracky, j., slováci vo svete, martin, matica slovenská, 1981. 13. ancpi, ortofotoplanuri, resolution 0,5 m, 2006. 14. ins, direcţia judeţeană de statistică bihor, recensământul populaţiei şi locuinţelor, 2002. 15. ins, direcţia judeţeană de statistică bihor, fişele comunelor, oradea (1990-2008). 16. ofev (office fédéral de l’environnement, division déchets et matières premières), réhabilitation des friches industrielles, projet no. i241-1663, 2009. 17. politica de coeziune a uniunii europene, instrumentele structurale – oportunităţi de dezvoltare pentru românia, 2007. 243 18. pndr – programul naţional de dezvoltare rurală, approved by european commission, 2009. 19. project bihor, actualizare plan urbanistic general, aleşd city, 2005. 20. strategia de dezvoltare a orasului aleşd, local council decision no. 31/19.08.2008. 21. the urban development network programme urbact ii, 2007, an exchange and learning programme for cities contributing to the european commission initiative “regions for economic change”, adopted by the eu commission on october 02, 2007. 5 abstract the disclosure of financial documents can be extremely significant for improving information transparency as part of the management of financial resources to render public sector services. therefore, this research focuses on the role played by new technologies in this respect, particularly in promoting the transparency of financial information documents and on the key determinants to make financial documents available on the world wide web. to achieve this aim, an empirical test is made of models we propose, to discover whether the national websites of ocde countries are using the internet to provide citizens with governmental budgetary transparency and whether this disclosure is influenced by socio-economic factors. the results of the study confirm that factors previously found to be important in paper-based reporting, such as education level, population, internet access or fiscal pressure seem to have no influence on the public financial information disclosed on the internet. only debt seems to be a relevant factor in the degree of information transparency achieved via the internet for accountability documents. keywords: financial documents, transparency, e-government, incentives. the determinants of government financial reports online* maría del carmen caba pérez manuel pedro rodríguez bolívar antonio m. lópez hernández maría del carmen caba perez assistant professor, department of business management, faculty of economics and business studies, university of almería, cañada de san urbano, almería, spain tel.: 0034-950-015.175 e-mail: ccaba@ual.es manuel pedro rodríguez bolívar assistant professor, department of accounting and finance, faculty of economics and business studies, university of granada, campus universitario de cartuja, granada, spain tel.: 0034-958-242.342 e-mail: manuelp@ugr.es antonio m. lópez hernández professor, department of accounting and finance, faculty of economics and business studies, university of granada, campus universitario de cartuja, granada, spain tel.: 0034-958-243.709 e-mail: alopezh@ugr.es * acknowledgement: this research was carried out with fi nancial support from the regional government of andalusia (spain), department of innovation, science and enterprise (research projects p10-sej-06628 and p11sej-7700). transylvanian review of administrative sciences, no. 42 e/2014, pp. 5-31 6 1. introduction modern economic budgets are very complex, thus allowing the implementation of practices aimed both at concealing the real budget balance – which is connected to the bureaucratic behavior model (niskanen, 1974) – and at avoiding expenditure reforms (reviglio, 2001), a question related to the fiscal illusion theory (niskanen, 1974). in this context, budget transparency is a key element for better governance in public sector agencies (oecd, 2001a), improves decision making (bastida and benito, 2007) and enhances the incentive for people to vote (benito and bastida, 2009). also, improvements in budget transparency and expenditure management and control can effectively preclude practices such as budgetary gimmicks to bypass fiscal constraints (reviglio, 2001). following premchand (1993), budget transparency is defined as the public availability of information regarding governments’ decision-making procedures and transactions. this implies the full disclosure of all relevant fiscal information in a timely and systematic manner, an effective role for the legislature and an effective role for civil society through the media and non-governmental organizations (blöndal, 2003). to make budgetary information more transparent, it is necessary to make use of tools that enhance budget disclosure. today, oecd member countries recognize new information and communication technologies (icts) as powerful tools for enhancing citizen engagement in public policy-making (oecd, 2003a) and for building trust and enhancing government-citizen relations via the identification, assessment and satisfaction of public needs (king and stivers, 1998). accordingly, since june 2001, ministers of oecd countries have endorsed the importance of the e-government process to achieve better government (oecd, 2003a) because it provides a major tool to help meet the challenge of responding to public demand for more responsive, efficient, effective and participatory government (oecd, 2003b). as we enter the realm of e-democracy and e-governance (brown, 2005), all this leads to increased efficiency, transparency and accountability in the use of public resources (united nations, 2003a), to a stronger democracy (oecd, 2001b) and to the greater legitimacy of the state and its relationship with citizens and the rule of law. in view of the foregoing comments, this research focuses on the role that new icts can play in achieving the transparency of government information and on the key determinants in making financial documents available on the web. in particular, the objective of this paper is to determine whether the central governments of oecd member countries use the world wide web as a means of making financial budgetary disclosures and to analyze the key determinants of this process. our contribution in this article to the literature on governmental financial documents disclosure is twofold: firstly, we propose a model for scoring online governmental budgetary financial reporting under oecd ‘best practices for budget transparency’ (obpbt) recommendations. secondly, the proposed model is applied to the central governments of the countries examined, so as to compare the achievements of initiatives taken to promote online financial budgetary disclosures in terms of obpbt fulfilment, in the different approaches analyzed. 7 this analysis is carried out on the belief that conformance to generally accepted procedures for budgetary disclosures could be considered as the base for developing quality evaluation on such disclosures. this assumption is according to prior researches related to the particular case of public sector financial information (ingram and copeland, 1981). in addition, this comparison may highlight the utility of different websites, thus contributing to promoting a benchmarking process among different public administration approaches, and to identifying and disseminating best practices. thirdly, we analyze the question of whether key variables in government financial disclosure in paper-based reporting may also play a key role in government financial disclosure on the internet. 2. oecd best practices for budget transparency the lack of transparency is one of the critical factors which have increased the difficulty of enforcing fiscal discipline, particularly as regards expenditure control (alesina, mare and protti, 1995). thus, governments and international bodies have increasingly valued the role of fiscal and budget transparency to enhance trust in economic policies and, therefore, to improve fiscal performance (von hagen and harden, 1995) and the outlook for economic growth. these concerns have given rise to the publication of international benchmarks with respect to fiscal and budget transparency (imf, 1999). these developments are based on the firm belief that transparent fiscal management and budget transparency promote accountability and increase the political risk involved in continuing non-sustainable political actions (imf, 1999). as a traditional way of responding to the need for public accountability, the disclosure of public sector financial documents has helped to inform about public sector activities and their contribution to social and economic development. in may 2001, the oecd issued a document entitled ‘oecd best practices for budget transparency’ (obpbt), intended as a practical reference tool for oecd member and non-member countries in order to increase their degree of budget transparency. although this document is not meant to constitute a formal standard, its compliance could be understood as a key element for disclosing quality budgetary information. indeed, the oecd emphasizes that all fiscal reports referred to in these ‘best practices’ should be made publicly available, including making all reports accessible free of charge on the internet (oecd, 2001a). thus, the disclosure of fiscal reports on the internet is highly significant for budget transparency and for improving democratic governance. obpbt is organized in three parts (oecd, 2001a): part i lists the principal budget reports that governments should produce and their general content; part ii describes specific disclosures to be contained in the reports, including both financial and nonfinancial performance information, while part iii highlights practices for ensuring the quality and integrity of the reports. the principal budget reports included in part i can be separated into two groups: policy documents – ex-ante reports – and accountability documents – ex-post reports – (see figure 1). the first group of documents comprises the pre-budget report, the 8 budget report and the long-term report. these documents contain descriptions of policies and the government’s economic and fiscal policy intentions for all government revenue and expenditure programs, with a detailed commentary on each one. these documents should explicitly state the government’s long-term economic and fiscal policy objectives and include long and medium-term outlooks illustrating how revenue and expenditure are expected to develop. in addition, an assessment of the long-term sustainability of current government policies is made. the long-term reports should be published at least every five years, or when major changes are made in substantive revenue or expenditure programs. the monthly, mid-year, year-end and pre-election reports are the so-called ‘accountability documents’. these provide a comprehensive update on the implementation of the budget, including an updated forecast of the budget outcome for the current fiscal year and, at least, the following two fiscal years. their main purpose is to show the progress made in implementing the budget. these, and in particular the year-end report, are the government’s key documents concerning accountability. these publications should also provide comparative information on the level of revenue and expenditure during the preceding year. additional information main information ex ante inf ormation ex post information budget reports monthly reports pre -budget reports year end reports mid-year reports long term reports pre -election reports policy documents accountability documents figure 1: budget reports in oecd best practices for budget transparency source: author’s own elaboration the disclosure of budgetary reports according to the obpbt guidelines has to be structured into policy and accountability information. however, two documents are highlighted as key aspects to be issued and disseminated by oecd countries. in particular, the budget report (ex-ante report) and the year-end report (ex-post report). therefore, the communication of these documents and the content of each of these budgetary reports could be a measure of the quality in budgetary information disclosure, as it is acknowledged that full disclosure of preferred data could also be considered as an indicator of excellent quality (copeland and ingram, 1983). 9 in brief, best practices are based on different member countries’ experiences and, as it is mentioned above, are not meant to constitute a formal ‘standard’ for budget transparency. therefore, we aim to analyze the quality and quantity of online budget transparency, in terms of obpbt compliance, analyzing the performance of oecd central governments. 3. background and incentives for online disclosure of government financial reports an overview of the literature on empirical studies regarding the diffusion of public financial information in the last decade reveals that numerous studies have concentrated on describing the reality; in other words, revealing the characteristics and specific criteria adopted by each public accounting system under study; see, for example christensen (1998). however, although this information has been compiled, the difficulty experienced by citizens in accessing it has been made apparent on many occasions (oecd, 2003b). in this milieu, the disclosure of financial information on the internet could be a new tool to improve its diffusion to different users. on reviewing the research done in this respect, in the public sector, and particularly, in the field of public financial information disclosure via the internet, professional guidelines have not yet been developed for orientating organizations on the most appropriate form and content for information provided via the internet. however, some papers have recently been published that set out to measure the public financial information disclosure level, and suggest how this information should be structured (gandía and archidona, 2008). taking the above comments into account, our first research question is: question 1: have oecd central governments taken into account the advantages that the internet offers for the disclosure of public sector financial information, in terms of obpbt compliance? as regards incentives for the disclosure of public financial information, since the mid-1970s, various studies have been published, examining the causes and factors leading to more and better disclosure of public financial information. those studies are mainly based on the agency and incentive theory, and analyze the socio-political and administrative environment in a country and its impact on the government accounting reform process (zimmerman, 1976; baber and sen, 1984; evans and patton, 1987). thus, examination of these factors helps explain why certain reforms take place in some countries and not in others. the variables examined in these studies differ widely, but may be classified, following ingram (1984) into four groups: (a) coalitions of voters; (b) administrative factors; (c) management incentives; and (d) alternative information source. the main factors included in the ‘coalitions of voters’ group are political competition (zimmerman, 1976; baber and sen, 1984; evans and patton, 1987), socio-economic level (chan and rubin, 1987), voters’ educational level (ingram, 1984) and population (baber and sen, 1984; evans and patton, 1987). on the other hand, the variables selection process (ingram, 1984), size of government (baber and sen, 1984; evans and 10 patton, 1987) and complexity or form of government (zimmerman, 1976) could be included in the ‘administrative factors’ group. ‘management incentives’ group includes variables such as professionalism (christiaens, 1999), cost of debt (laswad, fisher and oyelere, 2005), state/federal funds transfers to other administrations (ingram, 1984) and state/municipal wealth or fiscal pressure (ingram, 1984). finally, ‘alternative information source’ group refers to the variable strength of the press (zimmerman; 1976; ingram, 1984), i.e. whether the press affects the principals’ monitoring behavior (interest groups: voters) and the agents’ actions (political public sector managers). the studies listed above are based on a search for reasons leading government to better disclose public financial information, and not focusing specifically on the reasons or causes for variation in the quantity and quality of the public financial information published on websites. nevertheless, research has recently been conducted on the causes and factors that may have influenced the voluntary disclosure of more and better public financial information on the internet (laswad, fisher and oyelere, 2005; gandía and archidona, 2008), as was widely studied before in the field of private companies (debreceny, gray and rahman, 2002; oyelere, laswad and fisher, 2003). taking the above comments into account, the next research question that arises is: question 2: what are the potential factors which might lead to differentiate the digital government financial documents disclosure between countries? 4. empirical research 4.1. description of the research methodology 4.1.1. methodology for the analysis of research question 1 in order to determine whether there are differences in the online disclosure of budget transparency in terms of obpbt compliance among countries that belong to the oecd, we established a coincidence index, implementing the cooke index methodology (1989). the data used in the coincidence index were obtained by means of a scoring sheet, and its components were chosen on the basis of the oecd ‘best practices for budget transparency’ (oecd, 2001). this coincidence index has two levels. level one: this level examines whether there are differences among countries, in terms of availability of budget reports on the internet, irrespective of their content. this first level highlights 7 items (r), which coincide with each of the reports to be published as recommended in the obpbt. however, as the latter includes, for the improvement of budget transparency, both ex-ante and ex-post budgetary information, we believe it is useful to distinguish these two elements within the first level. thus, in level one we examine whether ex-ante budgetary information (a) and ex-post budgetary information (p) are published on the web, or by the contrary the key documents (k) or the additional documents (ad), irrespective of the level of detail presented in these reports. in the category of ex-ante budgetary information, we consider whether the following reports are included: budget reports (b), pre-budget reports (p-b) and long-term reports (l). on the other hand, in analyzing the ex-post budgetary information published on the web, we take into account the existence of monthly reports 11 (m), mid-year reports (mi), year-end reports (y) and pre-election reports (p-p). the key documents (k) embrace budgetary reports (b), the year-end reports (y) and the additional documents (ad) include the rest of the information aforementioned. level two: here, we concentrate on the content of each of the budgetary reports presented (rc). in the second level, the obpbt distinguishes 75 elements, distributed among the reports as shown in table 2. it should be borne in mind, however, that as two sections were distinguished in the first level, the same scheme will be adopted in the second. among the alternatives presented for the scoring of these items (r, rc), we opted for a dichotomous procedure in which an item scores 1 if the information recommended in the obpbt is disclosed on the web and 0 if it is not. once all the items have been scored, a coincidence index (tc) is created for each country to measure the level of consistency with the requisites of online budgetary information to be provided by each country of budget transparency, in accordance with oecd recommendations. taking into account the existence of two levels, and the fact that each contains two sections, the maximum number of items that could coincide is different in each case. thus, we determine a first level coincidence index (tc1), which could produce a maximum score of 7 points, of which 3 would correspond to the ex-ante budgetary information and 4 to ex-post budgetary information; it could be also scored by 2 that would correspond to the key budgetary information and 5 to the additional budgetary information. therefore, the tc1 index is defined as: tc1 = tc1a + tc1p = tc1k + tc1ad= rb + rp-b + rl + rm + rmi + ry + rp-e where: rx is the online report scores obtained by each central government, irrespective of their content (1 or 0). the second level coincidence index (tc2) could produce a maximum score of 7, of which 3 would correspond to the ex-ante section, 4 to the ex-post section, 2 to the key section and 5 to the additional section (see table 2). partial indexes for each of the following reports could be labelled as follows (see table 2): tc2b for budget reports – the maximum score is 1 if the content has the 22 recommended items; tc2p-b for pre-budget reports – the maximum score is 1 if the content has the 5 recommended items; tc2l for long-term reports; tc2m for the monthly reports; tc2mi for the mid-year reports; tc2y for the year-end reports; tc2p-e for the pre-election reports. thus, the tc2 index is defined as: 6191382522 6 1 19 1 13 1 8 1 2 1 5 1 22 1 2 222222222222 = − ===== − = −− ++++++= ++++++=+=+= i ep i y i mi i m i i i bp i p epymimlbppadkpa rcrcrcrcrcrcrc tc tctctctctctctctctctctctc where: rcx is the online budgetary information content scores for this item recommended by the obpbt and obtained by each government (1 or 0). 12 on the other hand, copeland and ingram (1983) noted that the extent of the disclosure does not represent the quality of the information published. this conclusion is in line with prior researches from different fields of knowledge like environmental information disclosures (wiseman, 1982), or particularly government budgetary information (oecd, 2003a). in this regard, while all oecd member countries provide an increasing amount of government information online, however, the quality of the information available varies considerably in terms of its accessibility, relevance and utility to those citizens that expect to be informed or participate in policy-making processes (oecd, 2003a). disclosure of excellent quality is very useful in the decision-making process and it should be measured by the information provided to users for decision-making purposes (copeland and ingram, 1983). under this framework, budget report disclosure is considered to be a relevant aspect because when city officials release this information, the nature of the data published and the timing of its dissemination can influence citizens’ perceptions of the budget process (ebdon and franklin, 2006). likewise, the dissemination of this information fosters an effective citizen’s participation in the budget (ebdon and franklin, 2004). moreover, the year-end report is considered to be necessary for transparent budgetary practices (petrie, 2003). this information is a key accountability document for the government (oecd, 2001a) and it serves to accomplish the government’s moral obligation to their citizens, which implies to be transparent about their handling of taxpayers’ money. this moral obligation has been described as a ‘basic right’ (fölscher, krafchik and shapiro, 2000). therefore, a compound measure of disclosure quality, including both importance and extent of disclosure, may be useful for studying disclosure in governmental financial reports (copeland and ingram, 1983). thus, in this paper, we also analyze the level of disclosure of the key budgetary reports in all sample countries as a measure of their quality disclosures regarding budgetary information. this research has been performed, firstly, through a descriptive analysis (research question 1) and, secondly, through an exploratory analysis of determining factors in budgetary transparency (research question 2). 4.1.2. methodology for the analysis of research question 2 and hypothesis formulation although prior research has differed widely in the analysis of incentives for disseminating public financial information, the main variables analyzed have been focused on the political incentives or coalitions of voters, such as political competition (baber and sen, 1984), on the administrative incentives, such as the complexity or form of local government (ingram and de jong, 1987), on the management incentives, like fiscal pressure (ingram, 1984), and on the alternative information sources, such as the press and public media (zimmerman, 1977). in our research we focus on variables that belong to the group of coalition of voters, administrative incentives and management incentives. thus, within the category of ‘coalitions of voters’ we analyze political competition, educational level, population and the number of households with computers and internet access in the country, 13 in the ‘administrative factors’ group we analyze the form of government (complexity), and in the ‘management incentives’ group we study debt, fiscal pressure and economic wealth. therefore, we consider a total of eight independent variables. although, the former variables have been analyzed mainly on the local government context our research is focused on national governments because, generally, national governments have both financial resources and technical expertise. hence, they are able to continuously move toward more sophisticated e-government (gil-garcía and martínez-moyano, 2007). disclosure incentives 1: political competition (pol-comp). strong party competition provides an incentive for national authorities to exercise influence over bureaucracy (dye and robey, 1980) and plays a key role in the decision of politicians to devolve institutional power to citizens (smith and fridkin, 2008). thus, the impact of political competition is made apparent in pressures on political structures to disclose accounting information. in this regard, zimmerman (1977) found a positive link between political competition and public financial information disclosure, arguing that political leaders, seeking to obtain more votes, try to meet voters’ needs as much as possible; therefore, the more competition exists, the more incentives are for asserting that a good management is carried out. this is especially relevant in the particular case of budgetary information published by national governments because an adequate transparency in such information improves the decision-making process and also, it encourages citizens to vote (bastida and benito, 2007). also, prior research demonstrates that a high degree of political rivalry can create a favorable environment for technological reforms (tolbert, mossberger and mcneal, 2008). the website has been considered as a cost-effective mechanism for online dissemination of information to voters and for discharging political agents’ incremental monitoring obligations (laswad, fisher and oyelere, 2005). taking into account the previous comments made, the same incentives are to be expected for the website dissemination of governmental budgetary information. thus hypothesis h1 can be stated as: h1: there is a positive association between the governmental budgetary information provided via the website and the amount of political competition. disclosure incentives 2: debt (debt). government managers have incentives to lower debt because this leads to lower property taxes, which are reflected as more votes (gore, sachs and trzcinka, 2004), and to lower borrowing costs, which may increase the politician’s welfare (zimmerman, 1977). thus, managers are motivated to minimize borrowing costs and to provide information in order to facilitate the monitoring of their actions (laswad, fisher and oyelere, 2005). in keeping with this, internet is likely to be an efficient means to disclose information as it helps creditors to monitor government activities in an easy and regular way (debreceny, gray and rahman, 2002). in fact, laswad, fisher and oyelere (2005), 14 among others, reported a positive association between public debt and the voluntary disclosure of public financial information. therefore, the following hypothesis may be proposed: h2: there is a positive association between the governmental financial information reported on the website and the amount of debt. disclosure incentives 3: fiscal pressure (fisc-press). citizens seek to obtain the maximum amount of services while paying the lowest possible amount of taxes (gasb, 1987). in this context, they have a clear incentive to assess government financial conditions in comparison to those of other governments, as a means of evaluating both current levels of taxes and services and the likelihood of changes in taxes or services (lin and raman, 1998). ingram (1984) found that the greater the fiscal pressure, the more important is the disclosure of public sector financial information. in addition, in a context of fiscal pressure, national governments see computers as a measure to cut down costs, increase efficiency and contribute to the rationalization of the public administration (gupta and panzardi, 2008). to this respect, fiscal pressure could encourage national governments to disclose budgetary information on the web with the aim at meeting citizenry demands for financial information and, as a means at disclosing this information in a more efficiently and less costly way. therefore, the following hypothesis is proposed: h3: there is a positive association between the governmental financial information reported on the website and the fiscal pressure imposed. disclosure incentives 4: education level (educ-lev). chan and rubin (1987) studied whether the higher educational level of voters might lead to voters requiring a greater amount of information from government bodies. some previous studies have observed a significant positive effect of educational level on information disclosure (chaudhuria, flamma and horrigan, 2005), although others have found no significant association. furthermore, mcneal, schmeida and hale (2007) and khalil (2011) evidence that education is the most powerful single predictor for the use of and attitudes towards e-government information and services and also, for e-disclosure policy. according to this, a well-educated and trained population will demand a higher volume of information from public administration (mcneal, schmeida and hale, 2007; tolbert, mossberger and mcneal, 2008). in particular, tertiary education may influence it and e-government diffusion (kiiski and pohjola, 2002). this is especially relevant at the national level of government, because it has been demonstrated that a higher education level is associated with a greater political activism through the internet (norris, 2005). therefore, in the present study, we propose the hypothesis that education level is positively related to the governmental disclosure of financial information via the internet. thus: h4: there is a positive association between governmental financial information reported on the website and the overall education level. 15 disclosure incentives 5: population (populat). the literature identifies population size as one of the main catalysts for adopting e-government (moon, 2002). according to the agency theory, larger governments are expected to face higher voter demands to disclose information as a way to reduce information asymmetry between politicians and citizens and to allow the latter to evaluate incumbents’ performance (zimmerman, 1977). according to evans and patton (1987) the greater the population, the greater the pressure that is exerted on those in government responsible for making financial information publicly available. however, other authors, such as robbins and austin (1986), have included the population factor in their study variables and found no significant relationship between this and the quality of financial reporting. on the other hand, cappel (2005) found a significant correlation between population and e-government involvement. indeed, prior researches indicate that population size is one of the factors most associated with a greater governmental innovation (brudney and selden, 1995; moon, 2002) and, particularly, in the disclosure of information through the internet (moon, 2002). thus, based on the hypothesis that as the population grows the information disclosed is probably better, hypothesis h5 is stated as: h5: there is a positive association between governmental financial information reported on the website and the level of population. disclosure incentives 6: internet access in the household (access-hh). although the level of internet usage has been rarely discussed in the literature, it is considered an important determinant factor of e-government performance. the more people with internet access the more people could access the government websites and demand an efficient and responsible digital government (kim, 2007). in this line, debreceny, gray and rahman (2002) noted that internet take-up is an environmental variable that from a user’s perspective creates demand for financial information and, from the supplier’s perspective, creates a conduit for the more efficient dissemination of information. when the level of internet penetration is high, citizens will expect from their local governments the same service access that they receive from the private sector, including financial information (pina, torres and royo, 2010). thus, in societies where there is heavy internet usage, the availability of public financial information is likely to be greater. for this reason, we expected the degree of internet penetration in the household to favor governments’ deciding to disclose more financial information on the net, as more potential real users exist. on these premises, our sixth hypothesis is as follows: h6: there is a positive association between governmental financial information reported on the website and levels of internet access in the household. disclosure incentives 7: form of government (form). several studies have reported a significant relationship between the form of local government and monitoring incentives (e.g., zimmerman, 1977; evans and patton, 1987; ingram and dejong, 1987; giroux, 1989). the global world consists of two main government forms: republics 16 and monarchies. monarchy is a form of government in which sovereignty is actually or nominally embodied in a single individual (the monarch) (flexner and hauck, 1993). forms of monarchy differ widely based on (a) the level of legal autonomy the monarch holds in governance; (b) the method of selection of the monarch and, (c) any predetermined limits on the length of their tenure. parliamentary monarchies are usually constitutional monarchies, in which the monarch retains a unique legal and ceremonial role, but exercises a limited or no political power depending on the written or unwritten constitution, however, others monarchs have authority to govern. on the other hand, a republic is a form of government in which affairs of state are a ‘public matter’, not the private concern of the rulers, in which public offices are consequently appointed or elected rather than privately accommodated. in keeping with this, prior research indicates that democracies are really republics, in which people elect representatives, who are responsible for making and enforcing the laws (kroplinski, 2012). the principles and overall objectives of governments to sustain a republican form of government are associated with values such as equity, participation and publicness or openness. the existence and guarantee of civil liberties will contribute to interactions between citizens and governments (kim, 2007). therefore, the following hypothesis is derived: h7: there is an association between governmental financial information reported on the website and the form of government. disclosure incentives 8: economic wealth (gdp). the economic wealth is directly related to the ability to purchase computers and internet access. hargittai (1999) noted that the best predictor of internet penetration was economic wealth measured by gross domestic product per capita. in this sense, a positive association between the level of wealth and the use of e-government has been found in prior studies (e.g., laswad, fisher and oyelere, 2005; kim, 2007; tolbert, mossberger and mcneal, 2008). from a governmental perspective, a highly developed ict infrastructure requires a high level of economic development (nour, abdelrahman and fadlalla, 2008). singh, das and joseph (2007) stated that the major positive influence of gdp on egovernment maturity occurs through ict infrastructure. in this milieu, west (2004) demonstrates that rich countries tend to have more electronic services on their government websites, showing a significant association between the number of online services and the gross domestic product per capita. in addition, countries with a high economic wealth are more transparent in relation with their budgetary information (piotrowski and van ryzin, 2007). in fact, better economic performance can be considered essential for e-government development and for implementing on-line budget disclosure practices (siau and long, 2006; kim, 2007). based on these precedents, the eighth hypothesis is the following: h8: there is a positive association between governmental financial information reported on the website and economic wealth. 17 on the basis of the methodology proposed for the analysis of the first question, we note that the disclosure index is divided into two sections: quantity and quality of the budgetary disclosures. with respect to the quantity of budgetary information disclosed, the two dependent variables defined are: ex-ante information provided (exante-inform) and ex-post information disclosed (expost-info). by performing a regression analysis, we can determine to what extent each of the dependent variables depends on the above mentioned independent variables. thus: model 1: exante-inform= i i ijj μχβα ++ = 8 1 model 2: expost-info = i i ijj μχβα ++ = 8 1 in which: dependent factor = α +β1 political competition + β2 population + β3 fiscal pressure + β4 debt + β5 level of education + β6 internet access in the household + β7 form of government + β8 economic wealth + μi and where α is the constant term, xij represents the variables that influence budgetary information disclosure on the net, βj is a coefficient vector to be calculated, and μi is the random error term, presumably with identical and independent distribution, with an average of 0. on the other hand, regarding the quality of budgetary information disclosed, as aforementioned, the budget report and the year-end report have been called by the obpbt as the key budgetary documents (oecd, 2001a). the first one is the key policy document and the second one is considered to be the key accountability document (oecd, 2001a). therefore, an interesting analysis to be performed is to investigate whether the disclosure incentives mentioned previously also influence the quality of budgetary disclosures. in this regard, the two dependent variables defined here are: key documents (keyinform) and additional documents (additional-info). by performing a regression analysis, we can determine to what extent each of the dependent variables depends on the above mentioned independent variables. thus: model 3: key-inform= i i ijj μχβα ++ = 8 1 model 4: additional-info = i i ijj μχβα ++ = 8 1 in which: dependent factor = α +β1 political competition + β2 population + β3 fiscal pressure + β4 debt + β5 level of education + β6 internet access in the household + β7 form of government + β8 economic wealth + μi and where α is the constant term xij represents the variables that influence budgetary information disclosure on the net, βj is a coefficient vector to be calculated and μi is the random error term, presumably with identical and independent distribution, with an average of 0. 18 4.2. setting and data collection from an original membership of twenty countries in 1960, there have been successive enlargements of the oecd, and it currently has 34 member countries. the study sample was composed of 30 oecd member countries. to gather this research data, we visited the department of finance websites of the respective bodies of each central government analyzed in the present study. the websites of these agencies were analyzed during october and november 2013. the data for the independent variables were obtained from the sources listed in table 1. table 1: explanatory factors variable source description relation population (populat) oecd database (stats.oecd.org) natural logarithm number of inhabitants in the municipality + fiscal pressure (fisc-press) oecd database (stats.oecd.org) natural logarithm income per capita + debt (debt). oecd database (stats.oecd.org) central government debt per capita + education level (educ-lev). oecd database (stats.oecd.org) percentage of population with university studies + internet access in the household (access-hh) oecd database (stats.oecd.org) percentage of households with internet + political competition (pol-comp) each country general election results representatives elected for the party in power/total number of seats + economic wealth (gdp) world bank database data.worldbank.org natural logarithm number of gdp per capita + form of government (form) central intelligence agency 2010, the world factbook 2010 systems of government by country 0=monarchy, 1=republican +/source: author’s own elaboration 4.3. results analysis 4.3.1. first research question the first level coincidence index (tc1) shows that four anglo-saxon countries (australia, canada, new zealand and united kingdom) and one continental european country (portugal) scored highest, publishing on the internet 71.40% of the reports proposed by the oecd. this means that not all the budgetary reports set out in obpbt are currently uploaded on the websites of the central governments of the oecd countries (figure 2). examination of each of the sections within level 1 (figure 2) shows that the website of the united kingdom central government attaches greatest importance to ex-ante budgetary information, providing all the policy information reports recommended by the ocde. however, the central governments which prefer to publish the highest number of ex-post documents are australia, canada, japan, new zealand, portugal and poland, disclosing 75% of the accountability reports recommended by the ocde. 19 figure 2: first level coincidence index source: author’s own elaboration a more detailed analysis of the reports included on the web shows that for the whole sample, the most significant ex-ante budgetary information disclosed on the internet is the budget report, which illustrates how revenue and expenditure will develop during the forthcoming fiscal year. a less prominent position is occupied 20 by the key accountability document, the year-end report, which is most commonly published on the internet by oecd countries (90%). all of them consider it important to complement the main information, and 60% provide, in addition to the year-end budget report, monthly reports that highlight the progress made in implementing the budget. on the other hand, the mid-year report, which provides a comprehensive update on the implementation of the budget during the mid-year period, is considered necessary only by 36.6% of the oecd central governments. finally, new zealand is the only central government that discloses online information about the general state of government finances immediately before an election. taking into account that some of the first level reports are not disclosed by some countries, such as korea and belgium, the results for the second level of coincidence indicate that the contents of the online policy documents provided score more highly than those of the accountability documents, at 28.98% versus 24.04%. furthermore, more detailed information is given for the main documents than for the additional ones, 46.02% versus 18.22% (see table 2). analysis of the reports comprising the ex-ante section reveals that these governments are willing to provide detailed information of the budget report on the internet (50.24%). as regards the pre-budget report content, compliance levels among the oecd countries are 20% of the recommended items. the item most frequently present in this report is the total level of revenue, expenditure, deficit or surplus; debt and all key economic assumptions are disclosed explicitly on the web. on the other hand, the item least complied with is the disclosure of a sensitivity analysis of the impact that changes in key economic assumptions would have on the budget. with regard to the items related to the long-term report, the compliance level is 6.67%, but we should bear in mind that this report is only presented in austria, hungary, united kingdom and new zealand. furthermore, the relative relevance of this report is low because it is awarded the lowest weighting in the oecd guidelines, with only two items. analysis of the content of the accountability documents reveals the importance of obtaining budgetary information more frequently than annually, namely monthly and mid-year information. to prevent this information from becoming outdated, the oecd proposes that the monthly report should be released on the web within four weeks from the end of each month, and the mid-year report within six weeks from the end of the mid-year period. nevertheless, in practice, the full potential of the internet is not employed for improving the timeliness of budgetary information because only 60% of oecd countries offer monthly information on their web pages within the recommended period. this score is even lower in the case of the mid-year information (36.6%). let us also note that the monthly report disclosed on the web includes 32.91% of the items recommended for these reports; these values are lower in the case of the mid-year report (18.20% of the recommended items). 21 ta bl e 2: s ec on d le ve l it em s of b ud ge t r ep or ts : d es cr ip tiv e st at ist ics de sc ri pt iv e st at is ti cs nu m be r e le m en ts to b e an al yz ed m ax im um m in im um el em en t m ea n st . de sv ia t. % m ea n tc 2x 1. bu dg et re po rts (b ) 22 22 .0 00 0. 00 0 11 .0 66 4. 24 2 50 .2 4 (1 ) t he b ud ge t i s co m pr eh en siv e, e nc om pa ss in g al l g ov er nm en t r ev en ue a nd e xp en di tu re ; ( 2) t he b ud ge t, or re la te d do cu m en ts , i nc lu de s a de ta ile d co m m en ta ry o n ea ch re ve nu e an d ex pe nd itu re p ro gr am ; ( 3) n on -fi na nc ia l p er fo rm an ce d at a ar e pr es en te d fo r e xp en di tu re p ro gr am s; (4 ) c om pa ra tiv e in fo rm at io n on a ct ua l r ev en ue a nd e xp en di tu re d ur in g th e pa st y ea r a nd a n up da te d fo re ca st is p ro vid ed fo r e ac h pr og ra m ; ( 5) co m pa ra tiv e in fo rm at io n on a ct ua l n on -fi na nc ia l p er fo rm an ce d at a du rin g th e pa st y ea r a nd a n up da te d fo re ca st fo r t he c ur re nt y ea r i s pr ov id ed ; (6 ) e xp en di tu re is c la ss ifi e d by a dm in ist ra tiv e un it; (7 ) e xp en di tu re is c la ss ifi e d by e co no m ic ca te go ry (8 ) e xp en di tu re is c la ss ifi e d by fu nc tio na l ca te go ry ; ( 9) a m ed iu m -te rm p er sp ec tiv e illu st ra tin g ho w re ve nu e an d ex pe nd itu re w ill de ve lo p du rin g tw o ye ar s b ey on d th e ne xt fi s ca l y ea r; (1 0) a ll ke y e co no m ic as su m pt io ns (t he ra te o f e m pl oy m en t a nd u ne m pl oy m en t, in fl a tio n an d in te re st ra te s, so o n) ; ( 11 ) a se ns itiv ity a na lys is is di sc lo se d of wh at im pa ct c ha ng es in th e ke y ec on om ic as su m pt io ns w ou ld h av e on th e bu dg et ; ( 12 ) t he e st im at ed c os t o f k ey ta x ex pe nd itu re s is di sc lo se d as su pp le m en ta ry in fo rm at io n; (1 3) a ll fi n an cia l li ab ilit ie s; (1 4) a ll fi n an cia l a ss et s a re d isc lo se d; (1 5) b or ro wi ng s a re cl as sifi e d by th e cu rre nc y d en om ina tio n of th e de bt , t he m at ur ity p ro fi le o f t he d eb t, wh et he r t he d eb t c ar rie s a fi x ed o r v ar ia bl e ra te o f in te re st , a nd w he th er it is ca lla bl e; (1 6) f in an cia l as se ts a re cl as sifi e d by m aj or ty pe , in clu di ng ca sh , in ve st m en ts in e nt er pr ise s a nd lo an s a dv an ce d to o th er e nt itie s; (1 7) a se ns itiv ity b ud ge t a na lysis is m ad e sh ow in g wh at im pa ct c ha ng es in in te re st ra te s an d fo re ig n ex ch an ge ra te s wo ul d ha ve o n fi n an cin g co st s; (1 8) n on -fi na nc ia l a ss et s, in clu di ng re al p ro pe rty a nd e qu ip m en t; (1 9) e m pl oy ee p en sio n ob lig at io ns a re d isc lo se d; (2 0) k ey a ct ua ria l a ss um pt io ns u nd er lyi ng th e ca lcu la tio n of e m pl oy ee p en sio n ob lig at io ns ; ( 21 ) a ll s ig ni fi c an t c on tin ge nt lia bi liti es ; ( 22 ) a s um m ar y of re le va nt a cc ou nt in g po lic ie s ac co m pa ny th e re po rt. 2. pr ebu dg et re po rts (p -p ) 5 5. 00 0 0. 00 0 1. 00 0 1. 52 7 20 .0 0 (1 ) t he re po rt st at es e xp lic itly th e go ve rn m en t’s lo ng -te rm e co no m ic an d fi s ca l p ol icy o bj ec tiv es ; ( 2) t he re po rt st at es th e go ve rn m en t’s e co no m ic an d fi s ca l p ol icy in te nt io ns fo r t he fo rth co m in g bu dg et a nd , a t l ea st , t he fo llo wi ng tw o fi s ca l y ea rs ; ( 3) t he to ta l le ve l o f r ev en ue , e xp en di tu re , d efi ci t or s ur pl us , a nd d eb t i s hi gh lig ht ed ; ( 4) a ll k ey e co no m ic as su m pt io ns a re d isc lo se d ex pl ici tly (t he ra te o f e m pl oy m en t a nd u ne m pl oy m en t, in fl a tio n an d in te re st ra te s, so o n) ; ( 5) a se ns itiv ity a na lys is is di sc lo se d of w ha t im pa ct ch an ge s i n th e ke y e co no m ic as su m pt io ns w ou ld h av e on th e bu dg et . 3. lo ng te rm re po rts (l ) 2 2. 00 0 0. 00 0 0. 13 3 0. 74 5 6. 67 (1 ) i t s ho ul d be re le as ed a t le as t e ve ry fi v e ye ar s; (2 ) t he re po rt sh ou ld a ss es s t he b ud ge ta ry im pl ica tio ns o f d em og ra ph ic ch an ge , s uc h as p op ul atio n ag ei ng o ve r t he lo ng te rm (1 040 y ea rs ). 4. m on th ly r ep or ts (m ) 8 8. 00 0 0. 00 0 2. 63 3 2. 77 4 32 .9 1 (1 ) t he y ar e re le as ed w ith in fo ur w ee ks fr om th e en d of e ac h m on th ; ( 2) t he a m ou nt o f r ev en ue a nd e xp en di tu re in e ac h m on th a nd y ea r-t oda te ; (3 ) a c om pa ris on s ho ul d be m ad e wi th th e fo re ca st a m ou nt s of m on th ly re ve nu e an d ex pe nd itu re fo r t he s am e pe rio d; (4 ) a b rie f c om m en ta ry sh ou ld a cc om pa ny th e nu m er ica l d at a; (5 ) e xp en di tu re is c la ss ifi e d by a dm in ist ra tiv e un it; (6 ) e xp en di tu re is c la ss ifi e d by e co no m ic ca te go ry ; ( 7) ex pe nd itu re is c la ss ifi e d by fu nc tio na l c at eg or y; (8 ) m on th ly bo rro wi ng a ct ivi ty. 5. m id -y ea r r ep or t ( m i) 13 12 .0 00 0. 00 0 2. 36 6 3. 99 5 18 .2 0 (1 ) a n up da te d fo re ca st o f t he b ud ge t o ut co m e fo r t he c ur re nt fi sc al y ea r; (2 ) a n up da te d fo re ca st o f t he b ud ge t o ut co m e fo r t he fo llo wi ng tw o fi s ca l y ea rs ; ( 3) t he re po rt sh ou ld b e re le as ed w ith in s ix we ek s fro m th e en d of th e m id -y ea r p er io d; (4 ) t he e co no m ic as su m pt io ns u nd er lyi ng th e bu dg et s ho ul d be re vie we d an d th e im pa ct o f a ny c ha ng es o n th e bu dg et d isc lo se d; (5 ) a ll fi n an cia l li ab ilit ie s; (6 ) a ll fi n an cia l a ss et s ar e di sc lo se d; (7 ) b or ro wi ng s ar e cla ss ifi e d by th e cu rre nc y de no m in at io n of th e de bt , t he m at ur ity p ro fi le o f t he d eb t, wh et he r t he d eb t c ar rie s a fi x ed o r v ar ia bl e ra te o f i nt er es t, an d wh et he r i t i s ca lla bl e; (8 ) f in an cia l a ss et s ar e cla ss ifi e d by m aj or ty pe , i nc lu di ng c as h, in ve st m en ts in e nt er pr ise s an d lo an s ad va nc ed to o th er e nt itie s. ; ( 9) n on -fi na nc ia l a ss et s, in clu di ng re al p ro pe rty a nd e qu ip m en t; (1 0) e m pl oy ee p en sio n ob lig at io ns ; ( 11 ) k ey a ct ua ria l as su m pt io ns u nd er lyi ng th e ca lcu la tio n of e m pl oy ee p en sio n ob lig at io ns a re d isc lo se d; (1 2) a ll s ig ni fi c an t c on tin ge nt lia bi liti es ; ( 13 ) a s um m ar y of re le va nt a cc ou nt in g po lic ie s. 22 de sc ri pt iv e st at is ti cs nu m be r e le m en ts to b e an al yz ed m ax im um m in im um el em en t m ea n st . de sv ia t. % m ea n tc 2x 6. ye ar -e nd r ep or t ( y) 19 17 .0 00 0. 00 0 7. 93 3 4. 57 4 41 .7 5 (1 ) i t i s au di te d by th e su pr em e au di t i ns tit ut io n; (2 ) i t i s re le as ed w ith in s ix m on th s fro m th e en d of th e fi s ca l y ea r; (3 ) t he y ea r-e nd re po rt sh ow s co m pl ia nc e wi th th e le ve l o f r ev en ue a nd e xp en di tu re s au th or ize d by p ar lia m en t i n th e bu dg et ; a ny in -y ea r a dj us tm en ts to th e or ig in al b ud ge t a re sh ow n se pa ra te ly; (4 ) i t s ho ul d in clu de n on -fi na nc ia l p er fo rm an ce in fo rm at io n; (5 ) c om pa ra tiv e in fo rm at io n on th e le ve l o f r ev en ue a nd e xp en di tu re du rin g th e pr ec ed in g ye ar s ho ul d al so b e pr ov id ed ; ( 6) s im ila r c om pa ra tiv e in fo rm at io n sh ou ld b e sh ow n fo r a ny n on fi n an cia l p er fo rm an ce d at a; (7 ) e xp en di tu re is c la ss ifi e d by a dm in ist ra tiv e un it; (8 ) e xp en di tu re is c la ss ifi e d by e co no m ic ca te go ry ; ( 9) e xp en di tu re is c la ss ifi e d by fu nc tio na l ca te go ry ; ( 10 ) a ll fi n an cia l li ab ilit ie s; (1 1) a ll fi n an cia l a ss et s; (1 2) b or ro wi ng s ar e cla ss ifi e d by th e cu rre nc y de no m in at io n of th e de bt , t he m at ur ity pr ofi le o f t he d eb t, fi x ed o r v ar ia bl e ra te o f i nt er es t; (1 3) f in an cia l a ss et s ar e cla ss ifi e d by m aj or ty pe , i nc lu di ng c as h, in ve st m en ts in e nt er pr ise s an d lo an s ad va nc ed to o th er e nt itie s; (1 4) n on -fi na nc ia l a ss et s, in clu di ng re al p ro pe rty a nd e qu ip m en t; (1 5) e m pl oy ee p en sio n ob lig at io ns ; ( 16 ) ke y ac tu ar ia l a ss um pt io ns u nd er lyi ng th e ca lcu la tio n of e m pl oy ee p en sio n ob lig at io ns ; ( 18 ) a ll s ig ni fi c an t c on tin ge nt lia bi liti es ; ( 19 ) a s um m ar y of re le va nt a cc ou nt in g po lic ie s. 7. pr eel ec tio n re po rt (p -e ) 6 6. 00 0 0. 00 0 0. 20 0 1. 07 7 3. 33 (1 ) t he g en er al st at e of g ov er nm en t fi n an ce s i m m ed ia te ly be fo re a n el ec tio n is di sc lo se d; (2 ) c om pr eh en siv e di sc us sio n of th e go ve rn m en t’s fi n an cia l a ss et s; (3 ) c om pr eh en siv e di sc us sio n of th e go ve rn m en t’s lia bi liti es ; ( 4) c om pr eh en siv e di sc us sio n of th e go ve rn m en t’s n on -fi na nc ia l a ss et s; (5 ) c om pr eh en siv e di sc us sio n of th e go ve rn m en t’s e m pl oy ee p en sio n ob lig at io ns ; ( 6) c om pr eh en siv e di sc us sio n of th e go ve rn m en t’s c on tin ge nt lia bi liti es . ex a nt e bu dg et ar y in fo rm at io n (a ) ( 1+ 2+ 3) 2 9 2. 54 5 0. 00 0 0. 86 9 0. 63 0 28 .9 8 ex p o st b ud g et ar y in fo rm at io n (p ) ( 4+ 5+ 6+ 8) 4 6 2. 71 2 0. 00 0 0. 96 2 0. 60 6 24 .0 5 ke y bu dg et ar y in fo rm at io n (k ) ( 1+ 7) 41 1. 89 4 0. 00 0 0. 92 0 0, 37 9 46 .0 2 ad di ti o na l bu dg et ar y in fo rm at io n (a d) (2 +3 +4 +5 +6 ) 3 4 2. 92 3 0. 00 0 0. 91 1 0. 82 3 18 .2 2 to ta l (1 +2 +3 +4 +5 +6 +7 ) 75 4. 50 0 0. 00 0 1. 86 5 1. 03 1 26 .1 6 23 in the monthly report, noteworthy is the low score of items such as expenditure classified by administrative unit (26%). in the mid-year report, in practically no case is disclosure made of the actuarial assumptions underlying the calculation of employees’ pension obligations (6%) nor does any summary of relevant accounting policies accompany the report (3%). with regard to the content of the key accountability report, the year-end report, 41.75 % of the oecd-recommended items are disclosed on the internet, with special emphasis on the comparative information of the level of revenue and expenditure during the preceding year, showing all financial liabilities, all financial assets and expenditure classified by financial category. meanwhile, the in-year adjustments to the original budget and the actuarial assumptions underlying the calculation of employee pension obligations are the items least commonly disclosed. taking into account that the pre-election report is only presented in new zealand, the content presented by this report on the internet is the lowest of all the reports, with only 3.33% of the items recommended by the oecd. 4.3.2. second research question firstly, the spearman correlation is used to examine the degree of association between each of the pairs of variables considered to be independent (laswad, fisher and oyelere, 2005). thus, table 3 presents the spearman correlation coefficients for all the independent variables included in the models. the highest correlations reported are between education level and internet access in the household (0.76), gdp and internet access (0.75), and education level and gdp (0.37). table 3: spearman correlation matrix of independent variables, n= 30 1 2 3 4 5 6 7 8 1. access-hh 1.0000 2. educ-lev 0.7650 1.0000 3. debt 0.1276 0.2749 1.0000 4. pol-comp -0.2871 -0.1185 -0.0106 1.0000 5. fiscal-pres 0.3782 0.3029 0.1261 -0.3409 1.0000 6. populat -0.2301 -0.0025 0.2397 0.5033 -0.3082 1.0000 7. gdp 0.7561 0.6904 0.2492 -0.3079 0.4520 -0.3431 1.0000 8. form -0.4114 -0.5625 -0.1697 0.1261 -0.3960 0.1096 -0.5378 1.0000 when each of these variables was omitted from the analysis the results tended to be fairly similar. thus, the conclusions offered below with respect to the effects of these variables are subject to this qualification. after considering the correlation between the independent variables, multivariable linear regression was used to test the association between dependent and independent variables (laswad, fisher and oyelere, 2005). the results obtained are shown in table 4, where column ‘2’ presents the predicted signs for each variable according 24 to the analyses in section 4.1.2. as described earlier, the models generate the same expected sign for all the variables included. let us start with the analysis of the variables affecting the ex-ante public financial information provided (model 1). the results reported in table 4, columns a, show that only two variables are statistically significant (p<0.05), one of which presents the expected sign and the other, the unexpected sign. there are exceptions, with three variables presenting an unexpected sign, but this is statistically insignificant (p>0.40), and another three variables have the expected sign but are not statistically significant (p>0.30). table 4: multivariable linear regression results: quantitative models 1 and 2 expected sign (a) model 1: ex-ante (b) model 2: ex-post 2 β t-statistic t β t-statistic t 1. populat + -0.0065 0.0232 -0.28 .03203 .0227 1.41 2. fisc-press + 0.0006 0.0047 0.15 .0038 .0046 0.83 3. debt + -0.0018 0.0025 -0.73 -.0062 .0025 -2.47** 4. educ-lev + -0.0027 0.0054 -0.51 .0034 .0053 0.65 5. access-hh + 0.0003 0.0022 0.17 -.0038 .0022 -1.70 6. pol-comp + 0.8141 0.3062 2.66** .4862 .3029 1.60* 7. gdp + 0.0946 0.0786 1.20 .0788 .0787 1.00 8. form + -0.15611 0.0703 -2.22** -.0202 .0690 -0.29 *p<0.10; **p<0.05; ***p<0.01 beginning with a detailed analysis of each of the variables, regarding the population variable, the governments of countries with larger populations were predicted to disclose better policy document reporting, because more resources were at stake; however, as shown in studies by ingram (1984) and ingram and dejong (1987), no such statistical association is obtained (p>0.3). thus, it is not always the case that those responsible for the management of the larger governments, even though they have a larger budget and often a formal, well-established it department, decide to include all the policy documents recommended by the oecd and with the detail recommended on the internet. the variable debt, on the other hand, does seem not to be statistically significant (p>0.2), and the sign is not the one expected. similar results were obtained by baber (1983), ingram (1984), christiaens (1999), robbins and austin (1986), and evan and patton (1987), who found that this variable does not show a significant relation with public financial information disclosure. in our study, the overall level of education does not present the expected sign, but neither does it appear to have a significant influence (p>0.1). thus, although a certain degree of education is necessary to acquire computer skills, the results obtained suggest that this factor does not impel governmental managers to provide a greater amount of ex-ante information on the internet. 25 as regards fiscal pressure, it has been reported (ingram, 1984) that this could be an important determinant of financial information disclosure. however, the results obtained in the present study do not agree with those of the above-cited author, but rather with those of christiaens (1999), who concluded that net revenue as a percentage of total revenue was not significantly related to public financial disclosure (p>0.4). a contrary result was obtained for the independent variable internet access in the household: the sign was the expected one, but the relation was statistically insignificant (p>0.4). we had hypothesized that in countries with a high rate of internet usage the governments could have introduced more on-line policy information, but in fact no such relation was found. with respect to gdp, prior research had led us to expect that the richest countries would disclose a larger proportion of policy documents (piotrowski and van ryzin, 2007). however, the results obtained failed to reflect any such relation, although the sign was the expected one. finally, let us note that the coefficient for political competition presents a positive sign, as in the initial hypothesis. according to earlier studies (baber, 1983; baber and sen, 1984; ingram, 1984), political competition was predicted to have a positive, statistically significant relation. thus, the results obtained were as expected, and the sign was as predicted (p=0.02). overall, this result suggests that incentives exist for government managers to improve the quantity of on-line policy information when the party in power has more political competition. regarding the form of government, as observed in prior research, ‘democracies are really republics, in which the people elect representatives, who are responsible for making and enforcing the laws’ (kroplinski, 2012). therefore, it was expected that countries whose form of government is that of a republic would be more likely to disclose online policy information. nevertheless, although this variable is significant, it does not present the expected sign, as it is the case of countries established as monarchies which are more likely to disclose the information in question (p=0.03). thus, the only two variables that seem to be relevant to the greater or lesser fulfilment of obpbt required under the disclosure of online policy documents are the greater political competition and the form of government. with regard to the independent variables comprising model 2 (table 4, column b), two variables are statistically significant, but their sign is not as expected. four variables (population, gdp, fiscal pressure, internet access) had the expected sign but were not statistically significant (p>0.40) and another two variables (education level and form of government) were not significant, either, and in addition, did not present the expected sign. thus, the two variables that seem to be relevant to the greater or lesser compliance with the accountability documents content required under the obpbt are the strength of political competition and the level of debt. in countries with a low rate of debt per capita, many managers have introduced on-line accountability reports to disclose the good situation regarding indebtedness. in other words, countries with a good economic situation tend to provide more ex26 post budgetary information than those with more debts. overall, this result suggests that incentives exist for governments to improve the quantity of on-line ex-post information when there is less outstanding debt (p=0.06). on the other hand, as indicated earlier, the level of political competition was predicted to have a positive and statistically significant relation. in our case, the results show that strong inter-party competition provides an incentive for national authorities to exercise influence over bureaucracy to disclose accountability information on the internet (p=0.09). this positive link between political competition and public expost information disclosure could be accounted for by political leaders seeking to obtain more votes when they believe good management is being applied. with respect to the main information, as can be seen in table 5, with the exception of gdp, the variables do not present any statistically significant relation. in the case of gdp, and corroborating the opinions of siau and long (2006) and kim (2007), it is the countries that achieve better economic performance which best implement on-line main budget disclosure practices. table 5: multivariable linear regression results: models 3 and 4 expected sign (c) model 3: main (d) model 4: additional β t-statistic t β t-statistic t 1. populat + 0.0287 0.0323 0.89 .0064 .0226 0.28 2. fisc-press + -0.0039 0.0065 -0.60 .0068 .0050 1.36 3. debt + -0.0039 0.0035 -1.09 -.0065 .0028 -2.27** 4. educ-lev + 0.0046 0.0076 0.61 -.0017 .0055 -0.32 5. access-hh + -0.0025 0.0031 -0.82 -.0026 .0024 -1.09 6. pol-comp + 0.5346 0.4258 1.26 .8532 .3235 2.64*** 7. gdp + 0.1992 0.1097 1.82* .0630 .0813 0.78 8. form + -0.0725 0.0980 -0.74 -.0799 .0745 -1.07 *p<0.10; **p<0.05; ***p<0.01 finally, it can be seen that the additional information (model 4) is influenced by the same independent variables as are identified in model 2, i.e. debt per capita and the level of political competition, with the same signs as for accountability information. the remaining variables present no significant relation. therefore, in countries with a low rate of debt per capita and with strong inter-party competition, government managers have introduced on-line additional information to disclose the favorable situation regarding indebtedness. 5. discussion and conclusions in the trend towards e-government, the disclosure of financial documents can be an extremely significant element in improving information transparency, as part of the management of financial resources in rendering public sector services. in our research, focused on compliance with the obpbt using the internet as a channel for financial budgetary disclosures by the central governments of oecd 27 member countries, the results obtained confirm that there are differences among the countries analyzed. all oecd countries take into consideration the need to present online a document illustrating how revenue and expenditure will develop during the next fiscal year, i.e. the budget. nonetheless, although these countries consider the budget to be the key online policy document, there is little agreement about its content. furthermore, the oecd countries recorded the lowest content rate of online disclosure of policy and accountability documents. only one of the oecd countries discloses online information about the pre-election report, and only for the long term report. therefore, on the whole, these results indicate that new technologies such as the internet are still not an important means for oecd countries to disclose their budgetary information. in our opinion, the need to meet people’s expectations – public accountability means that administrations should be more aware of the importance of including budgetary information on their websites. such an attitude requires oecd countries to consider, first, elaborating the reports recommended by the obpbt with all the parameters addressed in this guideline and second, making it available on their websites. for this purpose, a benchmarking process should be implemented among national oecd administrations in order to intensify the sharing of knowledge regarding real practices in this field. as regards the analysis of potential determinants of the disclosure of public financial documents by oecd countries on their websites, we discovered that factors previously found to be important in paper-based reporting, such as education level, population, internet access or fiscal pressure seem to have no influence on the public financial information disclosed on the internet. only debt seems to be a relevant factor in the degree of information transparency achieved via the internet for accountability and additional documents. this could be due to the perceived importance of disseminating information on public debt, as a means of evaluating the responsibility and effectiveness of government bodies, especially when debt levels are low. such a policy of transparency by public entities could be thought to favor greater involvement by the general public in the management of public resources, this being one of the main features of e-democracy. another aspect of interest is that of political competition; this seems to exert a great deal of influence, according to the results reported in the empirical section of our article. thus, our study suggests 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organizational culture adrian hudrea teaching assistant, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca transylvanian review of administrative sciences, 16 e/2006, pp. 47-56 the literature on organizational culture is as relevant to public science management as it is to the management of private sector business organizations. given a rapidly changing environment and continuing insights into organizational effectiveness, science organizations, as most other organizations, are seriously rethinking what they do and how they can best define and accomplish their goals and objectives. once goals are defined, it is necessary to address the type of culture that is needed, to advance these goals and objectives and ensure the successful implementation of the changes. in addition, the organizational effectiveness literature has been increasingly emphasizing the importance of culture in motivating and maximizing the value of its intellectual assets, particularly its human capital. an important challenge for managers is to determine what the most effective culture is for their organization and, when necessary, how to change the organizational culture effectively. organizational culture became a business phenomenon in the early 1980s, triggered by four seminal books: • ouchi (1981) – theory z: how american business can meet the japanese challenge • pascale and athos (1982) – the art of japanese management: applications for american executives • deal and kennedy (1982) – corporate cultures: the rites and rituals of corporate life • peters and waterman (1982) – in search of excellence: lessons from america’s best run companies. 48 the first two books suggested that japanese business success could be attributed in large part to japanese corporate culture. all four books suggested that corporate culture was the key to organizational performance and that corporate culture could be managed to improve a company’s competitive advantage. they provided pragmatic prescriptions to american business leaders desperate for answers to help them remain successful in the face of increasing japanese competition. these books were bestsellers; the last out sold all other non-fiction books for the year. the concept of organizational culture also appealed to organizational scientists and practitioners who had grown disillusioned with the prevailing formalistic, quantitative organizational research. the emphasis on organizational culture shifted attention away from the functional and technical aspects (the so-called hard side) of management that could be more readily quantified and empirically analyzed to the interpersonal and symbolic aspects (the soft side) of management that required indepth, qualitative studies of organizational life. this focus on the qualitative, symbolic aspects of organizations and management stimulated a large literature on leadership. in addition, specialized literatures emerged around particular variants of organizational culture considered increasingly important for success in the modern business world, such as change-oriented culture, learning culture, innovating culture, team – and project-oriented cultures. more recently, attention has turned to identifying and creating an organizational culture that facilitates agility, promotes alliances, partnerships and networks, encourages knowledge management, fosters corporate responsibility and/or moral integrity and embraces diversity. history although the concept of organizational culture was popularized in the early 1980s, its roots can be traced back to the early human relations view of organizations that originated in the 1940s. human relations theorists viewed the informal, nonmaterial, interpersonal, and moral bases of cooperation and commitment as perhaps more important than the formal, material, and instrumental controls stressed by the rational system theorists. the human relations perspective drew its inspiration from even earlier anthropological and sociological work on culture associated with groups and societies (geertz 1973; mead 1934; durkheim 1964; weber 1947, 1958). attention to organizational culture lost ground as organizational science, and social science in general, became increasingly quantitative. to the extent that research on organizational culture survived, its focus shifted to its more measurable aspects, particularly employee attitudes and perceptions and/or observable organizational conditions thought to correspond to employee perceptions (the level of individual involvement, the degree of delegation and the extent of social distance as implied by status differences and the amount of coordination across units). this research, referred to as organizational climate studies, was prominent during the 1960s and 1970s (denison 1990). the renewed interest in organizational culture that emerged in the late 1970s and resulted in the four books mentioned above suggested that a deeper, more complex anthropological approach was necessary to understand crucial but largely invisible aspects of organizational life. this renewed interest in organizational culture represented a return to the early organizational literature but it went far beyond this literature in contributing important new insights and ways of thinking about the role, importance, and characteristics of organizational culture. also, research on the effect of culture on organizational performance and investigations into how organizational cultures are created, maintained, and changed received greater attention. the main difference was that organizational culture was now viewed less as a natural, organically emergent phenomenon and more as a manipulable and manageable competitive asset. 49 what is organizational culture? definitions of organizational culture initially focused on distinguishing levels of organizational culture and strong cultures versus weak cultures. levels of organizational culture many definitions of culture give primacy to the cognitive components, such as assumptions, beliefs, and values. others expand the concept to include behaviors and artifacts, leading to a common distinction between the visible and the hidden levels of organizational culture – a distinction basically corresponding to the climate/culture distinction noted above (kotter and heskett 1992). in contrast to the distinction between the visible and hidden levels, some theorists distinguished multiple levels. schein (1985), one of the foremost experts in the area, identifies the following levels, as shown in figure 1: figure 1. levels of organizational culture (adapted from schein) in schein’s view, fundamental assumptions constitute the core and most important aspect of organizational culture. accordingly, he offers the following formal definition of organizational culture: a pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems (schein 1992:12). while the deeper levels may have been somewhat invisible in the past, this may no longer be the case. as a result of greater attention being directed at managing culture, organizations are recognizing the importance of articulating and stressing their fundamental assumptions. this is similar to what later happens with knowledge management – greater attention becomes directed at making the tacit knowledge within an organization more explicit and accessible. this suggests a general trend toward more explicitly managing what previously was considered largely unmanageable. 50 strong culture versus weak culture although all organizations have cultures, some appear to have stronger, more deeply rooted cultures than others. initially, a strong culture was conceptualized as a coherent set of beliefs, values, assumptions, and practices embraced by most members of the organization. the emphasis was on (1) the degree of consistency of beliefs, values, assumptions, and practice across organizational members; and (2) the pervasiveness (number) of consistent beliefs, values, assumptions, and practices. many early proponents of organizational culture tended to assume that a strong, pervasive culture was beneficial to all organizations because it fostered motivation, commitment, identity, and solidarity, which, in turn, facilitated internal integration and coordination. some, however, noted that a strong culture might be more important for some types of organizations than others. for example, volunteer organizations may need to stress culture more than business organizations. still others noted potential dysfunctions of a strong culture, to the point of suggesting that a strong culture may not always be desirable. for example, a strong culture and the internalized controls associated with it could result in individuals placing unconstrained demands on themselves, as well as acting as a barrier to adaptation and change. a strong culture could also be a means of manipulation and co-optation (perrow, 1979). it could further contribute to a displacement of goals or subgoal formation, meaning that behavioral norms and ways of doing things become so important that they begin to overshadow the original purpose of the organization. culture was initially seen as a means of enhancing internal integration and coordination, but the open system view of organizations recognized that culture is also important in mediating adaptation to the environment. the traditional view of a strong culture could be contrary to the ability of organizations to adapt and change. seeing culture as important for facilitating organizational innovation, the acceptance of new ideas and perspectives, and needed organizational change may require a different, or more nuanced, view of organizational culture. schein (2004) notes that, indeed, a strong organizational culture has generally been viewed as a conservative force. however, in contrast to the view that a strong organizational culture may be dysfunctional for contemporary business organizations that need to be change-oriented, he argues that just because a strong organizational culture is fairly stable does not mean that the organization will be resistant to change. it is possible for the content of a strong culture to be change-oriented, even if strong organizational cultures in the past typically were not. he suggests that the culture of modern organizations should be strong but limited, differentiating fundamental assumptions that are pivotal (vital to organizational survival and success) from everything else that is merely relevant (desirable but not mandatory). today’s organizations, characterized by rapidly changing environments and internal workforce diversity, need a strong organizational culture but one that is less pervasive in terms of prescribing particular norms and behavioral patterns than may have existed in the past. theories of organizational culture just as there are differing perspectives on what organizational culture is, there are differing perspectives regarding how it functions. denison (1990) identifies four basic views of organizational culture that can be translated into four distinct hypotheses: • the consistency hypothesis – the idea that a common perspective, shared beliefs and communal values among the organizational participants will enhance internal coordination and promote meaning and a sense of identification on the part of its members. • the mission hypothesis – the idea that a shared sense of purpose, direction, and strategy can coordinate and galvanize organizational members toward collective goals. 51 • the involvement/participation hypothesis – the idea that involvement and participation will contribute to a sense of responsibility and ownership and, hence, organizational commitment and loyalty. • the adaptability hypothesis – the idea that norms and beliefs that enhance an organization’s ability to receive, interpret, and translate signals from the environment into internal organizational and behavioral changes will promote its survival, growth, and development. these hypotheses focus on different aspects of culture but more importantly, they stress different functions of culture. the first two hypotheses tend to encourage/promote stability; the second two allow for change and adaptability. the first and third hypotheses see culture as focusing on internal organizational dynamics; the second and fourth see culture as addressing the relation of the organization to its external environment. stability/control change/flexibility internal consistency involvement/participation external mission adaptability these hypotheses about organizational culture correspond closely to cameron and quinn’s (1999) categorization of organizational effectiveness perspectives and associated types of organizations, as shown below. stability/control flexibility/discretion internal focus/integration hierarchy clan external focus/differentiation market adhocracy handy (1995), well-known for his characterization of four dominant types of leaders, as corresponding to gods of greek mythology, also distinguishes key types of organizational cultures that correspond to different organizational forms. he asserts that clearly distinguishable organizational cultures give rise to four types of leaders, which he characterizes as: zeus, apollo, athena, and dionysus. these distinct cultures (just as clan-based, hierarchy-oriented, market based, and adhocracybased cultures) are associated with organizations that have congruent attributes across multiple technical/functional dimensions. in contrast to identifying distinct types of organizational cultures, there has been a growing tendency to recognize and emphasize cultural complexity (denison, 1995). one approach to incorporating greater cultural complexity is to recognize that most organizations today will have some aspects of all of these cultures. this view of culture focuses on the need to balance and manage the mix. the problem with this view is that culture tends to lose any sense of coherency. it is difficult to see culture, in this sense, as providing meaning or motivating/inspiring organizational members to behave in particular ways. there is an alternative approach to cultural complexity that avoids the problem that culture will fail to provide meaning and a sense of corporate identify. this approach moves beyond differentiating cultures in terms of technical/functional orientations (external versus internal orientation, stable versus change orientation, control versus individual discretion, directive versus participative, autocratic versus democratic, task-oriented versus relationship-oriented, integrative versus adaptive, sameness versus differentiation, transactional versus transformational). rather than seeing the role of organizational culture as balancing competing technical needs and, thus, becoming a complicated mix of cultural types, organizations are viewed as consisting of multiple, differentiated cultural orientations directed at critical ways of thinking and behaving as a member 52 of the organization. these cultural orientations can include ways of thinking and behaving with respect to change, diversity, conflict, innovation, organizational learning, knowledge management, partnership or alliance building, relationship formation, and corporate responsibility. this cultural differentiation perspective sees cultures being developed around various critical organizational aspects rather than based on competing orientations. the key is to identify and effectively manage key cultural orientations, develop synergies between them where possible, and prevent them from conflicting with one another. although, in many cases, these various orientations can be highly interrelated and mutually reinforcing, there is not necessarily a need for a single overarching culture that incorporates everything. perhaps, at most, there may be a coherent set of shared basic assumptions and values. this notion of cultural differentiation is similar to but not the same as the notion of subcultures. increasing importance of organizational culture schein (2004) suggests that organizational culture is even more important today than it was in the past. increased competition, globalization, mergers, acquisitions, alliances, and various workforce developments have created a greater need for: • coordination and integration across organizational units in order to improve efficiency, quality, and speed of designing, manufacturing, and delivering products and services • product innovation • strategy innovation • process innovation and the ability to successfully introduce new technologies, such as information technology • effective management of dispersed work units and increasing workforce diversity • cross-cultural management of global enterprises and/or multi-national partnerships • construction of metaor hybridcultures that merge aspects of cultures from what were distinct organizations prior to an acquisition or merger • management of workforce diversity • facilitation and support of teamwork. in addition to a greater need to adapt to these external and internal changes, organizational culture has become more important because, for an increasing number of corporations, intellectual as opposed to material assets now constitute the main source of value. maximizing the value of employees as intellectual assets requires a culture that promotes their intellectual participation and facilitates both individual and organizational learning, new knowledge creation and application, and the willingness to share knowledge with others. culture today must play a key role in promoting: • knowledge management • creativity • participative management • leadership effects of organizational culture there has been a great deal of anecdotal evidence and some empirical evidence regarding the performance effects of organizational culture. anecdotal evidence begins peters and waterman’s in search of excellence (1982). this book basically stimulated the now familiar business school case study approach. more recent anecdotal evidence regarding the most successful companies in the last several decades has also been proffered. according to cameron and quinn (1999), many of the most successful companies, including southwest airlines, wal-mart, tyson foods, circuit city and plenum publishing score low on wellestablished critical success factors (entry barriers that prevent organizations from competing for the 53 same market, non-substitutable products, low levels of bargaining power on the part of buyers due to customer dependence, low levels of bargaining power for suppliers because they have no alternative customers, a large market share that promotes economies of scale, and rivalry among the competition that deflects head-to-head competition with a potential dominator). these unlikely winners have strong leadership that promotes unique strategies and a strong culture to help them realize these strategies. there is also strong anecdotal support indicating that the primary cause of failure of most major change efforts (such as tqm and reengineering) has been the failure to successfully change the organizational culture ( kotter and heskett 1992). kotter and heskett (1992) have attempted to make this intriguing, but admittedly inconclusive, anecdotal evidence more systematic and empirical. they had financial analysts identify the firms they considered most successful and then describe the key factors discriminating these firms from those that were less successful. seventy-four of the seventy-five analysts indicated that organizational culture was a key factor. in addition, denison (1990) found empirical support for the participation/involvement view of culture – higher levels of employee participation were correlated with better organizational performance. in contrast to this supporting anecdotal and empirical evidence, it has become well known, and a point of great contention, that the exemplary companies identified by peter and waterman (1982) did not remain exemplary. the general explanation for this is that these companies failed to change with the times – perhaps the very strength of their culture and their past success prevented them from quickly and successfully adapting to new environmental requirements. this paradox suggested the need for more longitudinal investigations of the effects of organizational culture. growing evidence that excellent companies do not remain excellent for long also suggests that the traditional notion of a strong culture may need to be replaced with a more discerning understanding of the types and role of culture and the need to change culture over the life cycle of the organization. for example, perhaps a strong consistent culture is useful in the beginning start-up phase of an organization but a mature organization may need to become more differentiated as well as more oriented to change and learning. what is important for long-term organizational success may not be a particular type of organizational culture per se but the ability to effectively manage and change the culture over time to adjust to changes in the situation and needs of the organization. this understanding has pointed to the need for a more dynamic understanding of culture and the role of organizational leaders in ensuring that the culture contributes both to the organization’s current and future success. schein (1992) argues that leadership today is essentially the creation, the management, and at times the destruction and reconstruction of culture. in fact, he says, “the only thing of importance that leaders do is create and manage culture” and “the unique talent of leaders is their ability to understand and work within culture”. leaders must be able to assess how well the culture is performing and when and how it needs to be changed. assessing and improving organizational culture as well as determining when major cultural transformations are necessary is critical to long-term organizational success. managing differentiated cultures and creating synergies across these cultures is also a critical leadership challenge. effective culture management is also necessary to ensure that major strategic and organizational changes will succeed. basically, culture management is a key leadership and management competency. critical instrumental mechanisms for changing and managing culture include: • strategic planning and the identification of necessarily cultural requisites • ensuring consistency of culture with mission, goals, strategies, structures and processes 54 • creating formal statements of organizational philosophy and values • establishing consistent incentives, recognition systems, and performance measurement • maintaining appropriate error-detection and accountability systems (schein 1999) • coaching, mentoring, informal and formal training, and identifying role models (schein 1999) • embracing appropriate rites, rituals, symbols, and narratives (schein 1999) • taking advantage of the growth of subcultures (schein 1999) • managing and promoting strong communities of practice (wenger and snyder 2000). emerging cultural mandates schein (1992) notes several requisites for organizational success that organizational culture must now take into account: • the organization must be proactive, not just reactive. • the organization must influence and manage the environment, not just adapt. • the organization must be pragmatic, not idealistic. • the organization must be future-oriented, not predominantly present/past oriented. • the organization must embrace diversity, not uniformity. • the organization must be relationship-oriented, not just task-oriented. • the organization must embrace external connectivity, as well as promote internal integration. these fundamental assumptions are key to eliminating obstacles that will inhibit the kinds of internal and external organizational adaptations necessary for future success. they are not, however, sufficient. they must be reinforced by values, behavioral norms and patterns, artifacts and symbols, as well as accompanied by a particular mission, set of goals, and strategies. others emphasize more specific cultural mandates, such as that the modern organizational culture must be: • team-oriented (sherriton and stern 1997) • knowledge and learning oriented • alliance and partnership oriented. another emerging mandate is to: • know when to emphasize and how to balance cultural maintenance and cultural innovation (trice and beyer 1991; collins and porras 1994). managers must actively work to keep the existing organization culture relevant to the present and future while maintaining some sense of continuity with the past. collins and porras (1994) found that companies with long-term success had a limited but strong set of timeless core values that did not prevent organizational change over time. these companies were able to preserve the core while stimulating progress. cultural change cultural change typically refers to radical versus limited change. there are three basic types of cultural change (trice and beyer 1991): • revolutionary and comprehensive efforts to change the culture of the entire organization • efforts that are gradual and incremental but nevertheless are designed to cumulate so as to produce a comprehensive reshaping of the entire organizational culture • efforts confined to radically change specific subcultures or cultural components of the overall differentiated culture. 55 strategies for effecting cultural change include (schein 1999): • unfreezing the old culture and creating motivation to change • capitalizing on propitious moments—problems, opportunities, changed circumstances, and/or accumulated excesses or deficiencies of the past • making the change target concrete and clear • maintaining some continuity with the past • creating psychological safety through a compelling positive vision, formal training, informal training of relevant groups and teams, providing coaches and positive role models, employee involvement and opportunities for input and feedback, support groups, and addressing fears and losses head on • selecting, modifying, and creating appropriate cultural forms, behaviors, artifacts, and socialization tactics • cultivating charismatic leaders • having a realistic and solid transition plan • exercising risk management by understanding and addressing the risks and the benefits as well as the potential inequitable distribution of these risks and benefits. the application of organizational culture to public science management in understanding the role of organizational culture in achieving the desired changes in public science management, the various public science organizations will need to understand not only their internal culture but the cultural attributes best suited to promoting desired behaviors on the part of the science system as a whole. an important role for public science management is to help define and bring about the cultural orientations that will provide the context and promote the behaviors, values, and relationships that foster effective science, including scientific collaborations. the literature suggests it would be worthwhile to (1) identify how science funding and directing organizations could promote appropriate cultural orientations and a favorable cultural environment for publicly funded science organizations (laboratories, universities etc) and (2) determine the cultural orientations and cultural environment needed within the funding and directing organizations to make this happen. organizational culture is highly important for a manager. the organization’s success depends very much on it. the managerial authority has to be based not only on coercive aspects (the power to give orders and establish rewards) but also on cultural aspects (capacity to inspire and to lead). an organization that cannot define a minimum set of common values, beliefs, attitudes and behaviors for all its members will not be capable to act coherently and to reach positive results. the managerial success can be the capacity of the manager to stimulate the creation of an organizational culture that would support the development of the organization. references 1. cameron, kim s., and robert e. quinn. 1999. diagnosing and changing organizational culture: based on the competing values framework. reading, ma: addison-wesley publishing co. 2. denison, daniel r., robert hooijberg, and robert e. quinn. 1995. paradox and performance: toward a theory of behavioral complexity in managerial leadership. organizational science (p. 524-540) 3. denison, daniel r. 1990. corporate culture and organizational effectiveness. new york: john wiley & sons 4. durkheim, emile. 1964. suicide. new york: free press 5. geertz, clifford. 1973. the interpretation of cultures. new york: basic books 6. handy, charles. 1995. gods of management: the changing work of organizations. new york: oxford university press 56 7. kotter, john, and james l. heskett. 1992. corporate culture and performance. new york: the free press 8. mead, george h. 1934. mind, self, and society. chicago: university of chicago press. merton, robert k. 1957. social theory and social structure. glencoe, il: free press 9. perrow, charles. 1979. complex organizations: a critical essay. second edition. glencoe, il: scott, foresman 10. peters, tom, and robert waterman. 1982. in search of excellence: lessons from america’s best run companies. new york: harper and row 11. schein, edgar h. 1985. organizational culture and leadership: a dynamic view. san francisco: jossey-bass publishers 12. schein, edgar h. 1999. the corporate culture survival guide: sense and nonsense about cultural change. san francisco: jossey-bass publishers 13. schein, edgar h. 2004. organizational culture and leadership. san francisco: jossey-bass publishers 14. sherriton, jacalyn and james stern. 1997. corporate culture/team culture: removing the hidden barriers to team success. new york: american management association 15. trice, harrison and janice beyer. 1993. the cultures of work organizations. englewood cliffs, new jersey: prentice hall 16. weber, max. 1958. the protestant ethic and the spirit of capitalism. new york: scribner’s 15 assessment of the reform of the romanian health care system cătălin ovidiu baba alexandra brînzaniuc răzvan m. cherecheş diana rus cătălin ovidiu baba associate professor, communication department, faculty of political, administrative and communication sciences, babeşbolyai univesity, cluj-napoca, romania tel/fax: 0040-264-431361 email: baba@polito.ubbcluj.ro alexandra brînzaniuc junior research assistant, center for health policy and public health,faculty of political, administrative and communication sciences, institute for social research, babeş-bolyai university cluj tel/fax: 0040-745.773.697 email: alexandra_brinzaniuc@yahoo.com răzvan m. cherecheş researcher, center for health policy and public health, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel/fax: 0040-752.123.673 email: razvan_chereches@healthpolicy diana rus junior research assistant, center for health policy and public health, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel/fax: 0040-742.020.689 email: diana_rus_dia@yahoo.com abstract the purpose of this introductory paper is to offer a brief description of the public health care system in romania, and to examine how it evolved, after the fall of the communist regime, from a semashko health care system to a social health insurance system. we will explore how the regime influenced this evolution and whether we can talk about a distinct management component. it is not an exhaustive study, but rather an overview of some issues/problems that romania has faced in the effort to modernize its health care system. we will start by defining public health and by outlining the major characteristics of a public health system, followed by a list of objectives recommended for use by the world health organization, to which the paper refers in examining the current issues in romania. after this, the major reforms will be described and analyzed trying to identify how this affected the outcomes. transylvanian review of administrative sciences, 24e/2008 pp. 15-25 16 what is public health? definitions of the concept can be found as early as the 1920s. c.e.a. winslow (professor of public health at the yale school of medicine from 1915 to 1945) defined public health as “the science and art of preventing disease, prolonging life and promoting health through the organized efforts and informed choices of society, organizations, public and private, communities and individuals”. “public health is what we, as a society, do collectively to assure the conditions in which people can be healthy” (institute of medicine, 1988, p. 7). public health is “the approach to medicine that is concerned with the health of the community as a whole. public health is community health. it has been said that: health care is vital to all of us some of the time, but public health is vital to all of us all of the time” (http://www. medterms.com/script/ main/art.asp?articlekey=5120). the romanian government defined public health as the health status of the population taking into consideration health determinants: socio-economic, biological, environmental, life-style, insurance to health services and accessibility and quality of health services provided (law nr. 95/2006). while the first definitions highlight the importance of prevention and promotion, the romanian government emphasizes more the importance of certain social determinants of health. this shows that public health is a very broad field and there are different views regarding what can or cannot be included under the umbrella of public health, but also that the desired outcome is always the same: improvement of the health status of population. the way in which a government defines public health influences the structure, organization and functioning of the whole system, and thus has a major impact on the actual outcomes. in our opinion, focusing only on a single aspect, such as the social determinants of health or prevention and promotion, is not enough. public health should be as comprehensive as it can be and definitely should include, besides the above mentioned elements, a strong evaluation component of governmental health policies in terms of their cost effectiveness and, most of all, in terms of their efficiency. assessments need to be conducted in order to identify in what way policies and programs achieve their goals and objectives, and to what extent they meet communities’ needs. health care systems deal with public health world health organization (who) defines health systems as comprising of all organizations, institutions and resources devoted to producing actions that aim to improve health (http://www.who.int/topics/health_systems/en/). health systems are concerned with public health. although there are general guiding principles, such as universal and equal access to health care, better health status or achieving certain standards of quality of the services delivered, each country government has a specific point of view on how public health and health care system should be organized, leading to an abundance of approaches in the structure, organization, objectives and functions of the health care system. some limit health care at the basic functions of the health services; others have a broader view of the concept adding along the delivery of the health services other services such as transportation or education, for example. 17 consensus is usually found only at the theoretical level. however, when those objectives have to be translated into policy, every government has a unique approach to the policy process. there are a multitude of approaches all shaped by different factors like culture, tradition, political-administrative structure and economic development. all this diversity raises a series of questions regarding the best way to organize and manage a health care system in order to get the best results. who identifies four major functions of any health care system (who europe, 2005, p. 7-9): 1. stewardship although related to regulation, stewardship is a broader concept that includes strategic planning, regulation, implementation of policy and capacity of evaluation to ensure accountability and transparency. 2. resource generation includes both short and long term approach to resource use. the system can only use the resources that rest at its disposal but it can influence this through strategic investments in human resource development or adoption of modern technology that will surely have a significant impact on performance. 3. service delivery – production and delivery of health services using the inputs. often governments identify health systems with this function alone. 4. financing includes a large number of activities starting with revenue collection up to the distribution of financial resources to health care providers in order to produce the necessary health services. but most important, health care systems are run by, and address services to people. consequently, humans are probably the most important but also the most complex resource that a health system has. “an effective infrastructure is the right people in the right places. health systems lack people who have and use the managerial competencies to match their responsibilities” (filerman, 2003, p. 1). most health care systems put clinical status and medical preparation before management competencies as priorities (filerman 2003, p. 1). this often results in poor use of the available resources, under-motivation and general lack of efficiency of the systems. outside the system, it affects the quality of services delivered and the health status of the population. “weak management is the enemy of fundamental public health values” (filerman 2003, p. 1). if we have the resources on one side, on the other we have the structure. the structure of the system represents the basic framework in which all the resources need to operate in order to produce the desired outcomes. in this sense, the most common discussion revolves around centralized vs. decentralized systems. centralized health systems are characterized by a hierarchical structure, “vertical” health programs, planning is undergone only by the central authorities, hierarchical control, rule driven management, monopoly of power and weak management capacity. the weak points of such a structure are: decision-making takes place only at the top level of the system, the communication process is weak and mostly linear (top-bottom), a low touch with reality (in most cases top level managers do not come into interaction with the day by day situations and they base most of their decisions on theory; this has a negative result on the actual impact of the services delivered by the system), 18 lack of creativity and initiative of the lower levels of the organization which finally translates into lack of motivation. this is a typical bureaucratic way of organization and functioning and we can talk more about administration than management. on the other hand, decentralized health systems are characterized by health programs designed horizontally, share of power, community orientation, importance of information, knowledge, accountability of results, strong management capacity and strong leadership. consequently, the advantages of a decentralized structure are an increased efficiency, more acute sense of reality leading to a better and more prompt response to community needs, better communication, better use of information, more accountability for the actions taken. decentralization can be seen as a managerial tool that can be used to increase the efficiency and to achieve the proposed results. romanian health care system the romanian health care system shifted from a centralized, closed system to a social health insurance one. during the communist regime the system was strongly centralized in terms of planning and financing (who, 1996). with regard to health services, primary health care was provided through dispensaries (schneider m et all., 2000). secondary and tertiary care was provided exclusively by state health units. as a result of the nationalized economy and the absence of the private sector, health professionals were trained in state universities and technical schools, and after graduation they were assigned to work in specific locations where they were employed as salaried civil servants (bara, van den heuvel, and maarse, 2002, p. 1). since the 1989 revolution, romania has gone through a slow process of transition to a liberal-democracy, which meant a lot of changes in the structure and functioning of the public sector. changes took place in the health care system as well. between 1990 and 1995, the government issued a series of regulations in the field of public health, but none of them made any reference to the basic right of citizens to health care because this right was stated in the romanian constitution (european observatory on health care systems, 2000). the goals of the health care reform were a better health status of the population, increased efficiency (with regard to the use of resources and to the structure of the system) and a better patient-physician relationship. starting with 1995, important laws concerning the structure and organization of the romanian health care system were passed. the new regulations (law no. 74/1995 regarding the organization of the college of physicians, law no. 145/1997 regarding the social health insurance, law no. 100/1998 on public health assistance, law no. 146/1999 on hospital organization) started to transform the system from a state owned, centralized system to a more decentralized social insurance type, with “contractual relationships between health insurance funds as purchasers and health care providers” (european observatory on health care systems, 2000, p. 5). the adoption of the law on social health insurance in 1997 was a major step toward the transformation of the romanian health care system. key provisions of the law regulate health sector financing – revenue generation, redistribution process, and also allocation of funds. it made insurance membership mandatory and linked 19 it with employment, with both the employer and the employee having to pay a certain percentage of the salary for health insurance (european observatory on health care systems, 2000, p. 17). another notable aspect was the status change of the health professionals, who switched their status from state employees to independent practitioners that run their activity based on contracts with the national or county insurance house (us dept. of commerce, 2001). since 1999, the main stakeholders involved in the health care system are: the ministry of public health and the county authorities for public health, the national and the county health insurance houses, the national and the county colleges of physicians and the colleges of nurses and midwives, and the health care providers. the ministry of public health and its local representatives, the authorities for public health, are responsible for developing the national health policy and for dealing with public health issues. the ministry’s activity focuses now on policy formulation and implementation, and planning and coordination of decisions regarding the achievement of medium and long-term goals. thus it has responsibilities regarding: budgetary allocations for health, accountability for the programs it decides to implement, managing public health programs, regulation of both the public and the private health sectors, conducting health policy research and planning, defining and improving the legal and regulatory framework for the health care system, developing a coherent human resources policy and building capacity for policy analysis and management of the health care system (european observatory on health care systems, 2000, p. 10). in the reforming process, the responsibilities mentioned above were not doubled by consistent changes in the human resources management. the authority that regulates the medical profession is the college of physicians (cph), which has local semi-independent organizations at county level. the cph is run by a board elected every four years. membership in the cph is mandatory for al physicians (european observatory on health care systems, 2000, p. 9). starting with 1999, the financing of the system is done through county health insurance houses (chihs), which are responsible for the revenues collection and for the reimbursement of provider within their respective counties. at the central level there is a national health insurance house (nhih) that sets the rules and regulations for the chihs and that has the right to reallocate up to 25% of the collected funds toward under-financed counties (observatory on health care systems, 2000, p. 5). the relationships between nhih and the cph are based on a framework contract, which sets up the benefit package to which the persons insured are entitled, and the resources allotted for different types of care. the major problem in all these years was the low governmental expenditures on health. between 1990 and 1998 the funds allocated for health care varied between 2,4% and 4% of gdp. from 2000 there was a steady growth in absolute figures, but still they varied only between 3,6% and 4,2% of the national gdp. below some figures regarding expenditures for health care in romania are presented comparatively with two western countries, as well as another former communist country. 20 table 1: total expenditures on health in romania compared to uk and us country total expenditure on health as % of gross domestic product (a) general government expenditure on health as % of total government expenditure (a) per capita total expenditure on health at average exchange rate (usd) (a) romania 5.1 11.1 178 the united states of america 15.4 18.9 6096 the united kingdom 8.1 15.9 2900 national health accounts: country information. geneva, world health organization, 2007. (also available at http://www.who.int/nha/country) table 2: total health expenditures as % of gross domestic product (gdp) country 1998 1999 2000 2001 2002 2003 2004 romania 4.1 3.9 3.9 4.2 3.8 3.8 3.9 the united kingdom 6.9 7.1 7.3 7.5 7.7 7.8 8.1 hungary 7.1 7.2 6.9 7.2 7.6 8.3 8.1 source: european health for all database (hfa-db) world health organization regional office for europe updated: november 2007– http://data.euro.who.int/hfadb/ table 3: total health expenditures, ppp$ per capita, who estimates country 1998 1999 2000 2001 2002 2003 2004 romania 331$ 368$ 386$ 429$ 491$ 540$ 433$ uk 1586$ 1700$ 1840$ 2044$ 2231$ 2389$ 2560$ hungary 774$ 819$ 857$ 975$ 1115$ 1269$ 1308$ source: european health for all database (hfa-db) world health organization regional office for europe updated: november 2007– http://data.euro.who.int/hfadb/ table 4: public sector expenditures on health as % of total government expenditures, who estimates country 1998 1999 2000 2001 2002 2003 2004 romania 8.1 9.6 9.9 10.3 10.5 10.9 11.1 uk 13.7 14.5 14.8 15.3 15.4 15.8 15.9 hungary 10.1 10.7 10.6 10.5 10.4 12.1 11.6 source: european health for all database (hfa-db) world health organization regional office for europe updated: november 2007– http://data.euro.who.int/hfadb/ the figures presented above illustrate a pretty grim picture regarding the financial resources allocated for health. health expenditures are almost double in hungary comparatively with romania. when looking at the expenditures per capita, the situation is even worse, with uk spending around 5 or 6 times more than romania on health care, while hungary 2 or 3 times. 21 we have to mention that besides the governmental funds, considerable external financial resources were received from international organizations such as the world bank, eu (phare funds), unicef and usaid. because the reform of the health care system was more a catchword to increase the political capital rather than a true objective, there was a constant under funding of the programs in this field, which conducted to slow changes in the system and to a low motivation of the physicians. all these changes were accompanied by a process of decentralization in the public sector. in 1991 the public administration law was passed and the public institutions from county level belonging to ministries were moved under the authority of a prefect (the representative of the government at county level). consequently, the county authorities for public health were created to apply the policies of the ministry at local level. the heads of these institutions are directors (always physicians) appointed by the ministry of health with the agreement of the prefect of that county. after the introduction of the health insurance law, these structures were changed into the county public health directorates (which later became public health authorities). “after the introduction of the health insurance regulations, delegation and privatization played a more important role in the process of decentralization. the health insurance funds took over the responsibilities for revenue generation, allocation of resources for geographical areas, levels of care and provider institutions” (european observatory on health care systems, 2000, p. 14-15) the last important change took place after the 2004 elections, more precisely in 2005, when a package of laws was passed having the generic title “public health reform” (law no. 95/2006). the key changes that were addressed in this law regarded the following specific areas of the health care system: structure, national health programs, primary health care, hospital management, hospital financing, the organization and functioning of the national school of public health and health management. the health care reform further aimed, in the process of decentralization, to give more autonomy to the local authorities, leaving the ministry of public health to deal more with the strategic decisions. however, the ministry kept hierarchical control over the local institutions. the county authorities for public health became local public health authorities subordinated to the ministry of public health. their role is not only to implement the health policies and the national health programs developed by the ministry, but also to address the major issues in the field of public health at local level (article 17 of law no. 95/2006 regarding the public health reform). one of the major improvements was the introduction of the national health programs (nhp) that are a set of different governmental policies with the purpose of evaluation, prevention, treatment and control of diseases with a major impact on the health status of the population. these programs include: evaluation programs and prophylactic programs. the ministry of public health is responsible for developing, coordinating and implementing these national health programs. these programs are meant to give a larger picture regarding the possible health threats at national level and to assist public institutions in preventing possible diseases, activity which was almost inexistent before 2005. 22 the programs are implemented through the representatives of the ministry at local level in collaboration with the national insurance house, which has a role in monitoring and evaluation. it reports on the level of implementation to the national agency of health programs, which is a part of the ministry of public health (articles 50, 52, 54 of law no. 95/2006). another major change regarded the primary health. the primary health assistance is provided through the family health cabinet, which is defined as a specialized cabinet in delivering medical services in primary health assistance, organized under the provisions of the law (article 60 of law no. 95/2006). the cabinet is run by a family physician specialized in primary health care. the cabinet is basically the first point of contact for the citizens with the public health system. every person needs to be enrolled to a family physician (in order to get health services). starting with 2005 family physicians need to have their residency program complete, in order to be allowed to practice. they can perform their practical stage in so called cabinets – either individual or through different forms of association between two or more family physicians. the services offered through these cabinets include: health prevention services, curative health services, home care services, palliative care, counseling, scientific research in health. the family physicians can earn the majority of their revenues through different contracts: contracts with the county insurance houses based on the frameworkcontract (a standard contract from the ministry of public health, which contains rules regarding financing); contracts with other local health care authorities for specific services like family planning, special counseling services, homecare for terminally ill patients; contracts with private health insurance companies; contracts with health care authorities for services included in the national health programs (articles 80, 81 of law no. 95/2006). the major change brought by this law is the way in which hospitals are run. before the introduction of the law the vast majority of hospitals were run by physicians who had no special training in health management or health economics. in order to become a manager, a person has to have at least a bachelor degree and some kind of training or special education in management or health management that is established and recognized by the ministry of public health. the manager signs a 3 year contract with the ministry of public health. the contract can be extended or canceled depending on the results of the annual evaluation conducted based on a series of performance criteria defined by the ministry of public health. the manager is appointed after passing a public exam. after appointment, the manager signs a 3 year contract with all the head physicians. this contract can be also extended or canceled based on the results of the annual performance evaluations. the contract includes performance indicators and standards that have to be met (articles 178, 179, 184 of law no. 95/2006). the legislators aimed to promote the measurement of the hospital management performance in order to have a clearer picture of the performance of the manager and of the hospital medical staff. the major source of revenue for the public hospitals is the contract with the national health insurance house. the contract is negotiated between the manager of 23 the hospital and the director of the national health insurance house based on a set of indicators included in the framework-contract. public hospitals can also receive funds from the ministry of public health but only for certain activities clearly stated by the ministry (for example: national health programs, investments in infrastructure). hospitals have another possibility for earning revenues: through sponsorships or donations, contracts with private insurance agents for delivering medical services or research grants. another provision is that all the scientific research activities and the salaries of the personnel involved in research had to be paid by the hospital from its own funds. only starting with january 2008, these activities are financed from the state budget (articles 189, 190, 191 of law no. 95/2006). last but not least, the new law introduces provisions regarding the establishment, organization and functioning of the national school of public health and health management (nsphhm). the main objectives of the nsphhm are: to organize and teach courses in the field of health administration and management for the personnel involved in the health system in order to have a more professional human resource especially at the upper levels; to develop research activities in the field of public health and health management; to provide technical assistance in public health and health management; other activities in the field of public health, such as promoting public health, evaluation of the health system, analysis of the reform process and so on. the nsphhm should also develop and teach courses in the field of public health and health management, and administration for the personnel working in the public health system. although the name suggests a stand-alone educational institution, nsphhm is only a department of the ministry of public health, covering the continuous education of the already existing management staff. this department has no accreditation whatsoever from the ministry of education and research, and is not able to offer undergraduate or postgraduate programs. most of the courses offered are through collaborations with different ngo’s or universities. in 2008, romania still does not have an actual school of public health, educating public health specialists (not physicians), and able to design and implement programs. conclusions and recommendations a steady evolution of the romanian health system can be observed, from a centralized to a decentralized insurance based system. is it enough? surely not. the latest provisions are in our opinion just the starting point for a modern health system that can handle in an efficient way all the health issues of the population. one important step forward is the introduction of certain provisions like those regarding the hospital management or the establishment of the national school of public health and health management, which surely try to give a more important role to the management component and to introduce new management principles like efficiency, value for money or resource rationalizing. creating the national school of public health and health management is the first step toward creating a special category of public health professionals who will manage the system – hospital managers and managers of other public health authorities. until 24 now the only solution for those willing to follow a career in health management was to study abroad. this is reflected in the education of the majority of hospital managers who are in the best case economists the majority being physicians. a health manager is a person who has to work in a changing context, with scarce resources – most of the times – and to be able to motivate other people to share his vision and to feel the need to follow him. such skills and abilities can be acquired trough special training courses, but only up recently managers across romania have this possibility. the national health programs are another important change in the health care system, aiming to give a broader and clearer view with regard to the population health status and the major health threats. starting with september 2007 the national program for the evaluation of the population health status is underway, and it is due to finish in september 2008. its purpose is to identify the major health concerns among the population and to take action accordingly. for 2008 there are a series of other national health programs scheduled to be implemented that include: national prophylactic program, national mental health program, national program regarding diabetes and other nutritional diseases. another strong aspect of the management of the health system is the introduction of performance indicators for the managers and for the medical staff. without performance based measurement indicators, it is difficult, if not impossible, to evaluate the activity of a hospital. we have to take into account that hospitals are public institutions and they do not work for profit. this situation led to a rigid and outdated system in which things were done more by inertia than by motivation. at this moment, the first evaluation process for the 2007 activity is underway and there are signs that some managers could lose their jobs and be replaced with more qualified people, because of lack of performance. one approach to get better managers is the action learning approach (kerrigan and luke, 1987). the action learning approach combines formal training with on the job problem solving (kerrigan and luke, 1987). action learning is an approach to the development of people within organizations that use real-life tasks as the vehicle for learning. it is based on the premise that there is no learning without action and no sober and deliberate action without learning. it is the most complex approach and it is best used for acquiring knowledge, understanding concepts, understanding techniques, acquiring skills in use of techniques, skills in analysis of organization problem, and skills in developing and implementing action plans. but such an approach needs a strong commitment from the political heads of the ministry of public health in order to be introduced in the national school of public health and health management curricula. nevertheless, the latest changes brought a new approach to health care delivery by introducing a stronger management component. references 1. bara, a.c., van den heuvel, w.j.a, maarse, j.a.m, ‘reforms of health care system in romania’ in schneider, m., cerniauskas, g. and murauskiene, l., health systems of central and eastern europe [in german], augsburg: basys; 2000. 25 2. european observatory on health care systems, ‘health care systems in transition – romania’, 2000, [online] available at http://www.euro.who.int/document/e71423.pdf. 3. fillerman, gl., 2003, ‘closing the management competence gap’, 2003, human resources for health, i: 7, p. 1-3, [online] available at http://www.human-resources-health.com/content/ pdf/1478-4491-17.pdf. 4. institute of medicine (u.s.), committee for the study of the future public health, division of health care services, ‘the future of public health’, washington, d.c.: national academy press, 1988, [online] available at http://books.nap.edu/catalog.php?record_id=1091. 5. kerrigan, j.e. and luke, j.s., ‘management training strategies for developing countries’, colorado, usa, lynne rienner, 1987. 6. law no. 74/1995 regarding the organization of the college of physicians, official monitor of romania no. 149 of 14 july 1995. 7. law no. 95/2006 regarding the public health reform, official monitor of romania no. 372 of 28 april 2006. 8. law no. 145/1997 regarding social health insurance, official monitor of romania no.178 of 31 july 1997. 9. law no.100/1998 regarding public health assistance, official monitor of romania no.204 of 1 june 1998. 10. law 146/1999 regarding hospital organization, official monitor of romania no. 370 of 3 august 1999. 11. schneider, m et all, ‘health systems of central and eastern europe’ [in german], augsburg: basys, 2000. 12. us department of commerce, ‘romania country commercial guide fy2001health care services’ [online] available at http://www.factbook.net/countryreports/ro/ro_healthservices. htm. 13. world health organization regional office for europe, ‘european health for all database (hfa-db)’, 2007 [online] available at http://data.euro.who.int/hfadb/. 14. world health organization, regional office for europe, ‘health care systems in transition’, copenhagen: who, 1996. 15. world health organization europe, ‘strengthened health systems save more lives – an insight into european health systems strategy’, 2005, [online] available at http://www.euro. who.int/document/hsm/healthsys_savelives.pdf. 16. http://www.medterms.com/script/main/art.asp?articlekey=5120. 198 abstract the performance of economic systems depends both on using resources with maximum efficiency and on society’s income redistribution. any socio-economic decision has to ensure pareto efficiency or, according to the kaldor-hicks principle, to provide net benefit after the compensation of the involved social costs. health and education are main development vectors of all nations and funds oriented in these fields are major capital investments, for which recent utilities are ignored in favor of future ones that are much more important due to their major effects on the ostensible growth of society’s capabilities. the constant insufficiency of financing the health system requires the search of new resources and their much more responsible and efficient management. the clawback tax, which theoretically withdraws a surplus part from the sales value of pharmaceutical companies, given the fact that the paying availability is estimated according to the involved opportunity costs, is a fiscal instrument practiced by many countries with beneficial consequences on the social surplus. the three attempts (three normative acts in three years) of the romanian national authorities to introduce the clawback tax may be considered failures, due to the absence of studies and tests that allow the implementation of accurate, sustainable and non-discriminatory rules and the highlight of compensatory measures. keywords: cost-benefit analysis, clawback, social surplus, consumer’s surplus, producer’s surplus, deadweight loss. inconsistency of legal provisions: failure in introducing the clawback tax on the romanian medicines market monica petcu iulia david sobolevschi ovidiu constantin bunget monica petcu associated professor, accounting, audit and economic analysis department, faculty of accounting and management information systems, academy of economic studies, bucharest, romania tel.: 0040-723-435.925 e-mail: petcu_mona_a@yahoo.com iulia david sobolevschi associated professor, accounting, audit and economic analysis department, faculty of accounting and management information systems, academy of economic studies, bucharest, romania tel.: 0040-0751-112.004 e-mail: iulia.david@kgaudit.ro ovidiu constantin bunget associated professor, accounting and audit department, faculty of economics and business administration, west university of timisoara, timisoara, romania tel.: 0040-740-250.934 e-mail: ovidiu.bunget@feaa.uvt.ro transylvanian review of administrative sciences, no. 43 e/2014, pp. 198-215 199 1. introduction the dynamic of major changes as well as the synergies of minor changes cause significant disturbances in economic systems, potentiated in a global environment by the preeminence of the mega-system which holistically wires extremely diversified components. while trying to find suitable models, interdependences and rules, in order to explain the changes, economists use more and more frequently concepts that are characteristic for other systems such as the social or biological one. blaug quotes marshal’s statement, made almost a century ago, according to which ‘the mecca of the economist lies not in comparative statics, nor even in dynamic analysis, but rather in economic biology, which means that the economic system is a mechanism that develops in time’ (blaug, 1992, p. 454). the interventions in any field propagate and may occasionally induce severe mutations with repercussions on the ensemble. in the construction of economic models, the systemic theory interferes with the chaotic systems theory and the synergies. in such a dynamic, complex and contradictory environment, economies are guided through state intervention, which has the responsibility to emphasize the goals that reach society’s unanimous consensus and to establish those economic policies that finish up in growing welfare on the whole, ‘...welfare in the sense that all members of the collectivity must have a decent, common minimum stock of economic goods ...the optimal economic system is the one that provides the maximum of what people need’ (galbraith, 1982, p. 11). the performance of a state depends on the economic results and on the policies of income redistribution as well, on their allocation according to the development capabilities, the real needs and targets of a society. society’s possibilities to provide and people’s needs are in a relation of mutual stimulation. including the axioms of human rights and access of all society members to a decent standard of living, facilitates the examination of the field and the separation of heteronomous elements and dysfunctionalities in any hypothesis of undertakings with socio-economic finality. policies should not be implemented unless a pareto optimum is obtained, defined as ‘the point that allows the improvement of a certain individual welfare, meaning his movement to a preferred position by adjusting goods or services through production or exchange without affecting someone else’s welfare’ (blaug, 1992, p. 626.). hicks states that ‘a policy should be adopted if and only if those who would gain are capable of fully compensating those who would lose and yet remain better off’ (boardman et al., 2004), which means getting a positive net benefit as the difference between necessary social costs and social benefits to come. irrespective of the expression of these principles, the conclusion is that getting positive net benefits, namely the pareto efficiency, is the only thing that could make possible the maximization of welfare on the whole. the argument for certain socio-economic policies that maximize welfare implies a cost-benefit analysis, which takes into consideration these principles and is based on concepts such as paying availability and opportunity costs, the main indicators for 200 measuring costs and benefits. the limits of this method refer to the difficulties of monetary evaluation of benefits and the compensation of utility loss of some by the utility benefits of the others. as boardman et al. (2004) argue ‘while analysts evaluate the consequences of applying policies through the availability of the affected ones to pay and the resources necessary to its implementation through opportunity costs, the net benefit will indicate if those who pay might be adequately compensated and remain better off’. any applied policy involves resource consumption, the opportunity cost, as a resource value in its best version, being a distinctive mark both for those who pay and for those who take measures. in general, the main beneficiaries of redistributing society’s income are the public services, given that their organization and finalities most adequately express the efficiency of the policies adopted by the authorities. 2. research methodology the purpose of this article is the analysis of the clawback tax impact within the policies of growth of the resources for medicines consumption support, in terms of anticipated net benefits, seen as positive evolution of the social surplus (consumer’s surplus + producer’s surplus), evaluated through monetary and non-monetary indicators. the aim is to indicate dysfunctionalities, inadvertences and errors generated by the implementation of regulations, as well as certain specific details that should illustrate the decisions of authorities together with the general principles of realism, and ensure the issuance of adequate regulations. 2.1. definition of scope and used concepts in order to avoid additional processing, useless for the purpose and objectives of this study, and to define the used terms, the following clarifications are provided: – the evaluation of the clawback tax impact is made only for the segment in which the final beneficiaries purchase medicines directly from wholesale suppliers (hospitals, dialysis centers); the issued arguments are also valid for the field on the whole (including pharmacies that have not been included in order to reduce calculations); – the producer’s margin (pm) is the result of the operating profit, which can be substantially affected by the financial and extraordinary result, as well as by the income tax; – the distributor’s margin (dm) is also the result of the operating profit, as part of the trade markup to which he is entitled under regulations, and affected by the same factors; – the consumer’s surplus (cs) is graphically defined by the area between the demand curve and the price curve, being determined as the difference between the gross benefit (placed on the demand line) and the effectuated payments, represented by price. the fluctuation of the consumer’s surplus is calculated according to the formula: δcs = (δp)q0 + ½(δq)( δp), where: p = price; q= quantity; 201 – the producer’s surplus (ps), graphically defined by the area between the price line and the supply curve, is calculated as the difference between the revenues obtained by selling a quantity of the product and the costs necessary for the making of this quantity; in this undertaking we will consider the producer’s surplus as a sum of the two components, even though the data presentation mentions the producer and the distributor separately: ps = pm + dm and δps = psf psi, where psi is the surplus before the implementation of the clawback tax and psf is the surplus after the implementation. the total producer’s surplus (tps) is the difference between income (i) and the total expenses (e) or the sum of the results from the operating (noted pm), financial (rf) and extraordinary activities (rex): tps = i e = pm + [rf+ rex]; – the social surplus (ss) is the sum of the consumer’s surplus and the producer’s surplus: ss = cs + ps; – the clawback tax (ct) is generally defined as a deduction from a paid price or a market income, or from the distributed sums of money and benefits achieved in certain circumstances. the formulas used for the calculation of ct will be presented in the chapter related to it, as stipulated in the regulations; – the deadweight loss (dl) is an effective cost for society or the negative net result defined as the producer’s surplus decrease without any compensatory increase for the consumer’s surplus. in this undertaking, the producer’s surplus decrease is represented by the clawback tax and this relation may be written as follows: dl = ct – δcs. dl results from the competitive market distortion and it may represent the loss of medicines suppliers who lost their ability to act on the market or other ‘leaks’, as they are called in the trade literature; and – the conditions that the producers’ surplus should fulfil in order for them to be able to commercialize medicines on the romanian market are: * psf = (psi ct) > [ie + σ (eri1-eri0)vai + np], for eri1> eri0, ie >0, where: ie are the interest expenses for both (producer and distributor), eri0 and eri1 are the exchange rates at the time of the acquisitions and, respectively, of their payment, at the level of the producer and distributor, vai is the volume of acquisitions, i is the type of medicine, np is the net operating result; * (2) fnt1 > [fne0+ fnf0 + fni0], where: fnt = total cash flows, fne = cash flows from operating activities, fnf = cash flows from financing activities, fni, cash flows from investment activities. as a result of the lack of fulfillment of these conditions, the pharmaceutical companies that provide medicines declare insolvency. these conditions are applicable for all the three versions of calculation for the clawback tax, issued by the authorities. 2.2. research methodology the research methodology is based on the cost-benefit analysis commonly used to evaluate the costs and benefits generated by the interventions of authorities, in some countries being brought by normative acts in the quantification of consequences and 202 adoption of social decisions that ensure the realization of a pareto optimum, meaning the increase of general welfare. moreover, we also used methods specific to the investigative process, phenomenologically oriented, comprehensively oriented (the study of normative documents, trade literature, participative observation, case study etc.), methods of intersection such as the combined quantitative and qualitative approach (document analysis), methods of data interpretation (deductive and comparative). 3. considerations on medicines market and prices ‘generally, the medicines and health services market is not a free competitive market given that it only happens on very limited segments. the market entry restrictions and the reduced mobility of the production factors, the heterogeneity of the services, the strong asymmetry of information, the drastic limitation of the capacity of evaluating their own needs and the rational consumer behavior, the consideration of health as a worthy good, the unequal distribution of income and the inverse proportionality between these and needs lead to the market failure etc.’ (vlădescu, 2000). the medicines market is strictly brought under regulation in that segment in which the medicines’ cost is totally or partially paid by the national health insurance fund (cnass) or by the ministry of health (ms). this segment refers to ‘the medicines included in the national healthcare programs, and for the medicines with or without personal contribution, used in ambulatory treatments based on medical prescription, via open circuit pharmacies, in hospital treatment and for medicines used in medical services provided in dialysis centers’ (geo no. 110/2011). the maximum price of these medicines is stipulated in the national catalogue of prices for medicines of human use authorized to be put on the market in romania (canamed in short; national health insurance house, undated) approved, revised and corrected by order of the minister of health. the value added tax for medicines is established at 9% by the romanian fiscal code. in the presented examples, the producer’s expenses (tables 1 and 2) for the medicines with regulated price were grouped in three categories: research expenses (with a very large weight on the original products’ price, even above 80%); direct expenses and other expenses (in which all the other indirect and management expenses were included). the price paid by the health network is based on the producer’s price, accepted at the smallest level by comparison with the ones practiced in other 10-12 european countries, to which the trade markup is added according to types of commercialization and tranches. the markup for distributors varies between 14% (for the medicines that cost between 0 and 50 lei), 12% (>50-100 lei) and 10% (>100-300 lei), while for the medicines that cost more than 300 lei there is a fixed markup of 30 lei. for example, table 1 presents a medicine that has been commercialized at first as original (commercialized only by the producer that has patents for the product, substance, technology etc.) and subsequently as generic (produced by several producers, when taken out from under the protection of the patents of the original). generally, the price of medicines is decreased during biddings, the only source being the producer’s margin, given that the distribution markup is limited. 203 table 1: price structure price structure original price generic price bidding price lei % lei % lei % research expenses 200 57.14 0 0.00 0 0.00 direct expenses 25 7.14 25 16.67 25 20.83 other expenses 25 7.14 35 23.33 35 29.17 total expenses 250 71.43 60 40.00 60 50.00 producer’s margin 70 20.00 76.35 50.90 49.09 40.91 producer’s price 320 91.43 136.35 90.90 109.09 90.91 distribution 30 8.57 13.65 9.10 10.91 9.09 wholesale medicine price 350 100.00 150.00 100.00 120.00 100.00 pharmacy markup 35 18 14.4 pharmacy medicine price 385 168.00 134.40 source: data gathered and processed by the authors in table 1 we can see the increased weight of the research expenses and the rather small weight of the other types of costs. moreover, figure 1 shows a large producer’s margin. figure 1: medicine price structure source: the authors normally, after the recovery of the research expenses, if prices remain the same, their quantum changes into producer’s profit and they become a significant fund for a future price decrease. at the same time, the loss from this accumulation that could be reinvested in research may affect the development of the sector. the failure of the medicine market does not allow any thorough view on the subject, thus the interest discrepancies are more or less harmonized through negotiations and regulations. it should be mentioned that, for the generic medicine in other expenses category there are certain expenses related to the bioequivalence with the original studies and promotion in competitive conditions, which increases them. in the case of medicines, examinations and market authorizations impose very large costs. for the generic medicines with the main weight in the total sales, which are produced on a large scale by many operators, the price and producer’s margin (table 2) are much smaller, especially because of the competition. 204 table 2: price structure for a generic medicine price structure 10 lei % research expenses 0 0 direct expenses 3 30 other expenses 4 40 total expenses 7 70 producer’s margin 1.77 17.7 producer’s price 8.77 87.7 distribution 1.23 12.3 medicine price 10 100 pharmacy markup 2.4 pharmacy price 12.4 source: the authors it is also necessary that we mention the significant impact of the transportation expenses on the final price, since this sometimes happens under special conditions (cold, anti-break packages etc.). the constant increase of the transportation cost is an additional constraint in the evaluation of the redistribution policies of a part of the medicine producer’s surplus. the non-convergence between the authorities’ interests that have to sustain the uncovered part of the medicines demand of fnuass1 and the state budget, and the producers’ interests on one hand and the generics market competition on the other hand, determines the search for collateral solutions, including the decrease of producers’ profits which frequently surpasses the average of other sectors. the contracts between producers and distributors usually include substantial discounts after a certain sales limit considered as much as necessary to sustain the margin loss, through additional rollovers. 4. the clawback tax generally, the clawback tax represents the withdrawal of something distributed/ paid in excess or, more explicitly, clawback is a rule that allows the withdrawal of that part from a payment, which covers a performance that is not accurate or rightful. one of the most recent applications of the clawback tax is found in the case of the administrations of banks and other financial institutions responsible with the financial crisis, in order to prevent the phenomenon’s recurrence. the motivation of introducing this type of tax is presented in the normative acts and consists in: (a) exceeding the limit settled for medicines within fnuass and the budget of the ministry of health; (b) ensuring the uninterrupted access to medicines for the population, with or without 1 short form for fondul național unic al asigurărilor sociale de sănătate (en: sole national fund of social health insurance). 205 personal contribution, used in ambulatory treatments within the national health programs and in the sanitary units with beds; and (c) the necessity of the implementation of a sustainable contribution system for the continuous supplementation of the financing sources of the health public system, under emergency regime. in other words, without the contribution of the pharmaceutical sector, the authorities find themselves in the impossibility of providing the necessary medicines to the population. at the same time, this contribution is solicited as recognition of the benefits in excess of this sector in comparison to others, but also of the fact that the state is the prevailing client, without which the whole medicine market would collapse. the increased producers’ margins, as well as the accumulations made in time, may represent significant reserves, a part from which may be withdrawn for financing the chronic deficits of resources, on condition of reasonability and compensation of these losses. the constraint of obtaining a positive net social benefit by compensating the producers’ losses, given that the consumer’s surplus obviously grows by increasing the medicine acquisition resources, implies the correlated evaluation of paying availability of the holders of marketing authorizations, with the involved opportunity costs. the paying availability is conditioned by the request of maintaining the status quo of the holders of marketing authorizations. from an economic point of view, it may be assumed that a holder of marketing authorizations is inclined to pay if the total value of the margin realized until the introduction of the clawback tax remains relatively constant through the compensatory effect of the increase of the acquired quantities. in the evaluation of the paying availability there should be taken into account the opportunity costs involved by the medicines sale on other markets: the costs of withdrawal from the romanian market and the costs of entrance on other markets. at the same time, the lawmaker should also take into consideration the potential own losses generated by the migration of some medicine suppliers, with severe incidences on population health and subsequent additional expenses. the three attempts of instituting the clawback tax are presented in the following sections. 4.1. government emergency ordinance no. 104/2009 in this first version, the clawback tax was a percentage tranche withdrawal from the sales income of the holders of marketing authorizations for medicines, according to the following table: table 3: clawback tax according to geo2 no.104/2009 quarterly receipts – thousands lei >75000 50,001-75000 25001-50000 12501-25000 6251-12500 1251-6250 < 1250 clawback tax % 11 10 9 8 7 6 5 source: geo no.104/2009 2 geo stands for government emergency ordinance. 206 an example of the application of this taxation method and its effects is presented in table 4. in order to evaluate the impact of this tax on the producer’s surplus (ps): δps = psf psi, sales volumes from a single medicine were taken into consideration, framed in all the intervals mentioned in table 3. the analysis was made for each of the prices detailed in tables 1 and 2, keeping the producer’s margin calculated in the structure of the price. the distributor’s margin, as a result from exploitation, was set to 5% of its trade markup, being the same in all versions. table 4: calculation of the evolution of producer’s surplus % clawback tax 5.0 6.0 7.0 8.0 9.0 10.0 11.0 sales volume thousands lei 600.0 1,251.0 6,251.0 12,501.0 25,001.0 50,001.0 75,001.0 clawback tax thousands lei 30.0 75.0 437.5 1,000.0 2,250.0 5,000.0 8,250.0 acquisition price 8.77 lei, wholesale price 10 lei quantity – thousands pieces 60.0 125.1 625.1 1,250.1 2,500.1 5,000.1 7,500.1 acquisition value 526.2 1,097.1 5,482.1 10,963.4 21,925.9 43,850.9 65,775.9 sales value 600.0 1,251.0 6,251.0 12,501.0 25,001.0 50,001.0 75,001.0 pm 17,7% 93.1 194.2 970.3 1,940.5 3,880.9 7,761.6 11,642.3 dm 5% 3.7 7.7 38.4 76.9 153.8 307.5 461.3 psi – sum 96.8 201.9 1008.8 2017.4 4034.6 8069.1 12103.6 % 16.1 16.1 16.1 16.1 16.1 16.1 16.1 psf sum 66.8 126.8 571.2 1017.3 1784.5 3069 3853.5 % 11.1 10.1 9.1 8.1 7.1 6.1 5.1 acquisition price 51 lei, wholesale price 57.1 lei quantity – thousands pieces 10.5 21.9 109.4 218.8 437.7 875.4 1.313.0 acquisition value 535.7 1,117.0 5,581.3 11,161.6 22,322.3 44,643.8 66,965.2 pm 20% 107.1 223.4 1,116.3 2,232.3 4,464.5 8,928.8 13,393.0 dm 5% 3.2 6.7 33.5 67.0 133.9 267.9 401.8 psi – sum 110.4 230.1 1,149.7 2,299.3 4,598.4 9,196.6 13,794.8 % 18.4 18.4 18.4 18.4 18.4 18.4 18.4 psf sum 80.4 155.0 712.2 1,299.2 2,348.3 4,196.5 5,544.7 % 13.4 12.4 11.4 10.4 9.4 8.4 7.4 acquisition price 109.1 lei, wholesale price 120 lei quantity – thousands pieces 5.0 10.4 52.1 104.2 208.3 416.7 625.0 acquisition value 545.5 1,137.3 5,682.7 11,364.5 22,728.0 45,455.1 68,182.2 pm 49,09 267.8 558.3 2,789.6 5,578.8 11,157.2 22,313.9 33,470.6 dm 5% 2.7 5.7 28.4 56.8 113.7 227.3 340.9 psi – sum 270.5 564.0 2,818.0 5,635.6 11,270.8 22,541.2 33,811.6 % 45.1 45.1 45.1 45.1 45.1 45.1 45.1 psf sum 240.5 488.9 2,380.5 4,635.6 9,020.7 17,541.1 25,561.5 % 40.1 39.1 38.1 37.1 36.1 35.1 34.1 acquisition price 320 lei, wholesale price 350 lei quantity – thousands pieces 1.7 3.6 17.9 35.7 71.4 142.9 214.3 acquisition value 548.6 1143.8 5715.2 11429.5 22858.1 45714.8 68572.3 pm 20% 109.7 228.8 1143.0 2285.9 4571.6 9143.0 13714.5 dm 0,05*30 lei 2.6 5.4 26.8 53.6 107.1 214.3 321.4 psi – sum 112.3 234.1 1169.8 2339.5 4678.8 9357.3 14035.9 % 18.7 18.7 18.7 18.7 18.7 18.7 18.7 psf sum 82.3 159.1 732.3 1339.4 2428.7 4357.2 5785.8 % 13.7 12.7 11.7 10.7 9.7 8.7 7.7 207 acquisition price 320 lei, wholesale price 350 lei pm 84% 460.8 960.8 4800.8 9600.8 19200.8 38400.4 57600.8 dm 0,05*30 2.6 5.4 26.8 53.6 107.1 214.3 321.4 psi – sum 463.4 966.1 4827.6 9654.3 19307.9 38614.7 57922.2 % 77.2 77.2 77.2 77.2 77.2 77.2 77.2 psf sum 433.4 891.1 4390.0 8654.3 17057.8 33614.6 49672.1 % 72.2 71.2 70.2 69.2 68.2 67.2 66.2 source: data gathered and processed by the authors we should mention that the sales value is kept in all the used price versions in order to emphasize the evolutions of the surplus for different price structures, according to the legal provisions. from the analysis of the data in table 4, it results that: – while the psi sales rate is constant, the psf rate decreases; the sale of increasing medicine quantities (at the same average price) becomes proportionally less profitable; – firms with less significant sales are encouraged, which is beneficial for maintaining the competition level on the market; – firms from the inferior limit of the interval are disadvantaged and they will be in the scope of a larger calculation percentage, at a level close to the previous one; if there is a limited number or just a supplier for certain medicines necessary in a volume from the interval limit, they will restrict the delivery; – the deferred reimbursement of deliveries and the abrupt purchase payment for several semesters will disadvantage most of the suppliers who will try to minimize their losses; – the expenses of firms that supply new state-of-the-art medicines (original and generic, in the first phase of life) are accepted, as long as they are commercialized in well-positioned volumes; and – the commercialization of generic products (almost all of which come under the first approached group) becomes forbidden because of the unobserved conditions (1) and (2), presented above: (eri1 > eri0, ie > 0), when the firms have unfavorable exchange rate differences and significant interest expenses, therefore a common producer’s and distributor’s surplus of under 10% is not sufficient to support them. it is known that sanitary units pay their acquisitions every 200 300 days and even after more than a year since their reception. this phenomenon creates conditions for unfavorable exchange rate differences and significant interest expenses (mainly small distributors tick in order to support their activity), while the producers’ cash flow is permanently reduced. 4.2. government emergency ordinance no. 77/2011 in the second version, the half-year contribution is calculated by applying a ‘p’ percentage on the medicine consumption (sales of each holder of marketing authorizations or their legal representatives) supported by fnuass and the ministry of health budget. the percentage is calculated as follows: p = [(tcq-bat)/tcq] x 100, where: tcq = total quarterly medicine consumption, bat = ¼ of the annual approved budget. 208 we do not offer any examples as this calculation method cannot be viable. the client asks the supplier to finance all the consumption that exceeds the budget approved level, given the fact that this is constantly a great deal under the needs of the population. 4.3. government emergency ordinance no. 110/2011 the last version establishes the calculation of the clawback tax as a quarterly contribution (oqc) of the medicines suppliers, according to the following formula: [(2/3) (siq/stq) + (1/3)(siq-siqr)] (stq-stqr), with the following explanations: – ‘(1) siq = value of the quarterly individual medicine sales of each contribution payer, supported by the sole national fund of social health insurances and the ministry of health budget; siqr = value of the reference quarterly individual medicine sales of each contribution payer, supported by the sole national fund of social health insurances and the ministry of health budget; stq = value of the quarterly total medicine sales supported by the sole national fund of social health insurances and the ministry of health budget; stqr = value of the reference quarterly total medicine sales supported by the sole national fund of social health insurances and the ministry of health budget. – (2) the value of the reference quarterly total medicine sales supported by the sole national fund of social health insurances and the ministry of health budget is of 1.425 billion lei. this value may be increased by the annual budget laws. – (3) the value of the reference quarterly individual medicine sales of each contribution payer, supported by the sole national fund of social health insurances and the ministry of health budget is established by the national health insurance fund for each contribution payer. this value is calculated by relating the medicine sales of each contribution payer for the year 2011 to the total medicine sales, supported by the sole national fund of social health insurances and the ministry of health budget, associated with the same year, and by multiplying the result by the value of the reference quarterly total sales of 1.425 billion lei. – (4) the value stipulated at paragraph (3) is reported by the national health insurance fund to each contribution payer until march 15, 2012. for the contribution payers who did not have medicine sales supported by the sole national fund of social health insurances and the ministry of health budget until december 31, 2011, the value of the reference quarterly individual sales is zero. – (5) according to paragraphs (1) (3), the value of sales is, by law, the value of medicines supported by the sole national fund of social health insurances and the ministry of health budget, which also includes the value added tax.’ (geo no. 110/2011) as an example, we calculated the contribution owed by six pharmaceutical companies (table 5). evaluating the turnovers presented in the ‘report on the useful investigation regarding the study of the romanian medicines wholesale market 2007-2009’, drawn up by the romanian competition council (2010), we assessed the reference quarterly sales and chosen the cases that represent the range of possible positions. 209 calculations were made for two levels of the producers’ margins, namely of 40% and 20%, and for three levels of distributors’ markups. in order to remove any interpretations on the distributor’s margin (frequently increased by the discounts subsequently given by the medicine producers), this was considered equal to the entire trade markup allowed by regulations. we should mention that the obligation to pay a tax applied to another tax (according to this ordinance, the clawback tax is calculated on sales, including vat) is not constitutional, as stated by the constitutional court, and that the 9% vat institution was meant to increase the accessibility to medicines. table 5: examples of calculation of the contribution for a number of firms indicators firm 1 firm 2 firm 3 firm 4 firm 5 firm 6 % individual annual sales within the annual total sales 0.04 0.01 0.21 0.07 0.10 reference total quarterly sales stqr 1,425,000 1,425,000 1,425,000 1,425,000 1,425,000 0 reference individual quarterly sales siqr 59,375 11,875 296,875 95,000 136,563 0 total quarterly sales stq 1,852,500 1,852,500 1,852,500 1,852,500 1,852,500 1,852,500 individual quarterly sales siq 83,125 10,688 237,500 190,000 136,563 5,600 total weight of individual quarterly sales siq/stq 0.04 0.01 0.13 0.10 0.07 0.00 ref. total weight of ind. ref. quarterly sales siqr/stqr 0.04 0.01 0.21 0.07 0.10 0.00 diff. ind. quart. sales and ref. ind. quart. sales siq-siqr 23,750 -1,188 -59,375 95,000 0 5,600 diff. quart. total sales and ref. total sales stq-stqr 427,500 427,500 427,500 427,500 427,500 427,500 owed quarterly contribution oqc 20,705 1,248 16,747 60,897 21,010 2,728 % in sales 24.91 11.68 7.05 32.05 15.38 48.72 vat ( 9%) – sum 6,864 882 19,610 15,688 11,276 462 owed taxes % (oqc + vat) 33.91 20.68 16.05 41.05 24.38 57.72 average pm % in sales 40 40 40 40 40 40 % maximal trade markup in sales case a 12.28 12.28 12.28 12.28 12.28 12.28 % average trade markup in sales case b 10.71 10.71 10.71 10.71 10.71 10.71 % minimum trade markup in sales case c 9.09 9.09 9.09 9.09 9.09 9.09 producer’s surplus % case a 18.37 31.60 36.23 11.23 27.90 -5.44 producer’s surplus % case b 16.80 30.03 34.66 9.66 26.33 -7.01 producer’s surplus % case c 15.18 28.41 33.04 8.04 24.71 -8.63 average prod margin % in sales 20.00 20.00 20.00 20.00 20.00 20.00 % maximal trade markup in sales case a 12.28 12.28 12.28 12.28 12.28 12.28 % average trade markup in sales case b 10.71 10.71 10.71 10.71 10.71 10.71 % minimum trade markup in sales case c 9.09 9.09 9.09 9.09 9.09 9.09 producer’s surplus % case a -1.63 11.60 16.23 -8.77 7.90 -25.44 producer’s surplus % case b -3.20 10.03 14.66 -10.34 6.33 -27.01 producer’s surplus % case c -4.82 8.41 13.04 -11.96 4.71 -28.63 source: data gathered and processed by the authors as for the table data, only the largest noticeable discrepancies are mentioned, regarding the proportionality between the sales volume and the calculated contribution, according to regulations: on a sale of 237,500 thousand lei the owed contribution is 16,747 thousand lei (7.05%), while on a sale of 83,125 thousand lei the calculated contribution is 20,705 thousand lei (24.91%), which reveals an extremely large penalty for surpassing the reference limit; on a sale 20% smaller (firm 4 in relation to firm 3) 210 the contribution owed is 3.64 times larger, especially because of the sales weight increase; according to the law, the last one (firm 6) owes almost half of the sales volume. if we continue the analysis of the situations in which the pharmaceutical companies can be found, we notice that in the case of the producer’s margin of 40% only the new firm is at loss, while in the case of the 20% margin, even though the margin is supplemented by the whole distributor’s markup, half of the firms are at loss, distributors have no other markup to support their operational expenses, and producers use a negative margin. if these firms also have a negative financial result (from interest expenses and unfavorable exchange rate differences), the suppliers will certainly declare insolvency, given that the delivery payment is usually delayed by several months. moreover, there is an obvious and unprofitable lack of correlation between the owed contribution and medicine sales. in order to support this affirmation the following data are presented: table 6: evolution of the contribution when modifying certain involved variables siqr siq stqr stq oqc comment siq=siqr on a sale equal to the reference one, the fi rm may owe 0 lei or 22 lei or 7.41 lei owed to it, according to what happens within the sector; stq=stqr 100 100 10,000 10,000 0.00 stq>stqr 100 100 10,000 15,000 22.22 stq<stqr 100 100 10,000 9,000 -7.41 siq>siqr on a sale larger than the reference one, the fi rm may not owe anything, owe 50 lei (2.25 more than at the time of the merge) or only 5.56 lei; stq=stqr 100 150 10,000 10,000 0.00 stq>stqr 100 150 10,000 15,000 50.00 stq<stqr 100 150 10,000 9,000 5.56 siq<siqr on a sale smaller than the reference one, the fi rm may not owe anything, owe 16.67 lei or 10 lei owed to it. stq=stqr 100 90 10,000 10,000 0.00 stq>stqr 100 90 10,000 15,000 16.67 stq<stqr 100 90 10,000 9,000 -10.00 source: the authors the unpredictability of the debts to the state and their random amount discourages the suppliers and determines them not to pay. in default of the impact studies and because of the superficial justification of regulations, there are delays in gathering resources in order to support the necessary medicine consumption, and the entire undertaking may even be compromised. the random establishment of certain parameters may generate entirely different situations for the same payer condition. 5. evolution of social surplus when introducing the clawback tax and the deadweight losses while evaluating the impact of governmental interventions (in this case justified by the failure of the health services market, including the pharmaceutical market) which affect private interests, the cost-benefit analysis allows the estimation of the benefits and social costs generated by the adopted social decision. in all the examples above, the evolution of the producer’s surplus was examined as part of the social surplus (ss) that should increase by applying certain policies meant to enhance the 211 general welfare, observing the pareto optimum. the producer’s surplus expressed in monetary units is always diminished, sometimes even substantially, until their existence is put in jeopardy (it can’t be admitted that in those cases where contribution is negative, the medicine suppliers will receive supplementations for the medicine payment, associated with those amounts). in order to evaluate the tax impact on the social surplus an example is presented, taken from table 5 (firm 1) and completed with information from table 7. for this undertaking, the particularization of sales as σpiqi (i = types of sold medicines) is not necessary, given that the tax is laid on sales in general and the particularization at the level of the medicine, according to the regulation principles, could create a situation that is not valid (see table 6). table 7: evolution of prices and sold quantities3 price p quantity – q sales -s before introducing canamed pi = 11.4 qi = 9,000 102,600 after introducing canamed pk = 9.5 qk = 8,750 83,125 owed quarterly contribution (oqc) 20,705 receipts after the tax deduction p’ = 7.13 qk = 8,750 62,420 confi guration of variables on the supply curve, after the tax deduction p’ = 7.13 q’ = 8,438 60,195 source: the authors it is thought that firm 1 sold quarterly, before the issuance of the national catalogue of prices for medicines, 9,000 thousand units of medicine x, at the price of 11.4 lei (table 7), and afterwards it only sold 8,750 thousand units quarterly, at the established price of 9.5 lei, with a total value of 83,125 thousand lei. a contribution of 20,705 thousand lei (the clawback tax) (table 5) was calculated for this sale (including vat), according to the law. on a rough estimate, we could conclude that the social surplus remains constant. the producer’s surplus is diminished by 20,705 thousand lei, while the consumer’s surplus increases by the same amount: δcs = (δp)qk + ½(δq)( δp) = 2.37 x 8750 = 20,705 thousand lei, where (δp) = pk p’ = 9.5 – 7.13; qk = 8,750 and δq = 0 δss = δcs + δps = 20,705 – 20,705 = 0; therefore, ss = constant. given that sales are known before and after introducing the canamed prices, based on the data from table 7, we could write the equation of the supply curve, considered linear: y = a + bx or p = a + bq 3 the hypothesis of the quantity decrease on the terms of price drop off is based on the principles of the law of supply. an extension of the theoretical analysis would involve alternatives of the supply curve movement, which we did not consider being appropriate for this undertaking and might be the subject of a diff erent research. 212 by solving the equation system: na +bσxi= σ yi aσxi + b σ xi 2 =σ xiyi ; replacing data from table 7: 2a + 17750 b = 20.9 17750a + 157562500b = 185725 we find the values: a = -57 and b = 0.0076, the equation of the curve being: p = -57 + 0.0076q. in the following figure the supply curve is drawn for firm 1 (for the generic products with mature markets, the supply curve laps over the marginal cost curve), which crosses over the demand curve in the equilibrium point ‘c’. conventionally, both curves were considered linear in order to simplify calculations. according to the definitions of the terms previously mentioned and the graphic notations, it can be written that: – the initial total surplus (psti) and the producer’s final total surplus (pstf) can be written as: psti = [opkcqk oacqk] = apkc; where: opkcqk = sales/revenue and oacqk = expenses. pstf = [opkcqk oacqk] p’pkce = [opkcqk oacqk] ced] p’pkcd; and – the clawback tax (ct) is represented by the quadrilateral p’pkce and it can be written as: ct = p’pkce = p’pkcd + ced = 20,705 thousand lei. e’ c’ qk 2.37 q’ p’ d c e pi pk o a b supply curve demand-curve figure 2: supply, demand and equilibrium source: the authors 213 if the mentioned equation of the supply curve is used, the coordinates of point d are found, for which: p’= 7.13 and from the equation 7.13 = -57+ 0.0076q’ it results that q’ = 8,438 thousand units and the surface of triangle ced will be calculated as ce = pk-p’= 9.5 – 7.13 = 2.37 and de = oqk-oq’ = 8,750 thousand – 8,438 thousand = 312 and the area ced = (2.37 x 312)/2 = 369 thousand lei, and p’pkcd = p’pkce – ced = 20,705 thousand – 369 thousand = 20,336 thousand lei. hence, it can be written: δps = pstf psti = ced – p’pkcd = 369 thousand – 20,336 thousand lei= -20,705 thousand lei. however, it is noticed that ced is not deducted directly from psti but from oacqk and it is re-projected inside ap’d, from where triangle c’e’d is literally lost. consumer’s surplus (cs) before and after the implementation of the clawback tax, is represented on the axis as follows: csi = pkbc csf = p’bcd = pkbc + p’pkcd, hence: δcs = csf csi = p’pkcd = 20,336 thousand lei. applying the formula of the surplus difference in point d we will get: δcs = (δp) q’ + ½(δq)( δp) = (2.37 x 8438) + (2.37 x 312) = 19967 + 369 = 20,336 thousand lei, verifying the earlier calculations, according to the supply curve previously described. the variation of the social surplus, as algebric sum of the variation of the two components becomes: δss = δcs + δps = 20,336 thousand – 20,705 thousand = 369 thousand lei, because the area of triangle c’e’d is lost from the triangle abc, which corresponds to the social surplus. this value that has an effect on the producer’s surplus is not found in the consumer’s surplus and, therefore, neither in the social surplus, thus representing a deadweight loss. the deadweight loss (dl = ced) is a cost for society because it is not found in the social surplus (boardman et al., 2004). the authority takes over the clawback tax, but this is not entirely found in the final consumers’ surplus (in the given example represented by hospitals and dialysis centers). starting from the definition of the deadweight loss as integral of the difference between benefits and social costs (boardman et al., 2004), which can be written as: x1 dl = ∫ (msb – msc) dx if x0 <x1 (in this case: x=p and p’< pk) x0, where: msb = marginal social benefit; msc = marginal social cost, the variation of the deadweight loss when changing the price can be calculated according to the formula: δdl = ½ [pkqk (δp/pk)2 ε ] where ε = the demand flexibility. for: ε = 1 → δdl = -1/2 [60,195 (2.37/7.13)2 1] = 3,311.6 thousand lei ε = 0.5 → δdl = 1,655.8 thousand lei ε = 0.0001 → δdl = 0.33116 thousand lei. 214 therefore, the more flexible demand is, the larger deadweight loss is. in conclusion, the clawback tax, as any other tax that distorts the market, is not always beneficial for the social surplus, given that there are deadweight losses, which represent net social costs. an evaluation of the two components of the social surplus, ps and cs, in non-monetary or monetarily unexpressed units, without considering that these unit increases are finished, emphasizes the following from table 8. table 8: consumer and producer surplus consumer surplus producer surplus increase of the medicines quantities purchased in the health system; increase of the number of those who have access to treatments increase of the average price of medicines by requiring best quality medicines permanent provision of medicine treatment, without disruptions reduction of the reimbursement period for the sums owed to the medicines suppliers provision of a larger range of medicines increase of the required drug quantities, both due to additional resources, and to the more accelerated capital rotation, with benefi cial repercussions on the use of the production capacities reduction of the treatment periods, due to the use of more effi cient medicines decrease of the costs per product, by allocating the fi xed costs on a larger amount increase of the last generation medicines weight, which are more effective in treating diseases certainty of receiving the appropriate sums for deliveries saving human lives in so far as the drug suppliers are inclined to pay to that effect. source: the authors 6. conclusions the clawback tax is beneficial if it triggers the increase of social surplus and the minimization of the deadweight loss. in all methodologies issued by now there is an acceptable part, but the discrepancies it has induced partially inhibit the medicine supply. the introduction of the clawback tax should be based on cost-benefit studies that underline the whole methodology, on elaborate simulations that validate all the parameters and all the included variables. the studies should be based on the medicine demand, according to the registered morbidity, the disease incidence, and the health programs supported by the state budget towards offer orientation and accurate evaluation of the demand. furthermore, a cost-benefit study should take into consideration medicines for children, rare goods etc., which are exceptions from the general argument. the success of the implementation also depends on the common analysis authorities – medicine suppliers. the fundamentation and the implementation of the clawback tax should circumscribe certain conditions: maintaining of the competition level through concentration barriers meant to encourage small suppliers, under satisfactory limits for the actual market structure; nondiscriminatory conditions for all market operators; determining the tax quantum, firstly according to the importance and necessity of those medicines, to the volume of individual deliveries, the type and prices of medicines and, as a sub215 ordinate factor only, to the conditions observed throughout the system; the payment of the medicines’ counter value in reasonable terms; the withdrawal of the tax only from the payments that the system makes to the medicine suppliers; the removal of the discretionary involvement for promotion of physicians in the programs of firms; all specialists in the field should be involved and this should occur systematically, transparently and non-discriminatory; and by implementing penalties for not paying the medicine deliveries in time. references: 1. blaug, m., teoria economică în retrospectivă, bucharest: editura didactică şi pedagogică, 1992. 2. boardman, a.e., greenberg, d.h., vining, a.r. and weimer, d.l. analiza cost beneficiu: concept și practică, chişinău: editura arc, 2000. 3. galbraith, j.k., ştiinţa economică şi interesul public, bucharest: editura politică, 1982. 4. government emergency ordinance no. 104/2009 for the amendment of law no. 95/2006 on healthcare reform, published in the official journal of romania no. 669 of october 7, 2009. 5. government emergency ordinance no. 77/2011 on establishing contributions for financing some expenses in the healthcare field. the clawback tax, published in the official journal of romania no. 680 of september 26, 2011. 6. government emergency ordinance no. 110/2011 on amendments and completions of certain normative acts in the health and social protection fields, published in the official journal of romania no. 860 of december 7, 2011. 7. law no. 95/2006 on healthcare reform, published in the official journal of romania no. 372 of april 28, 2006. 8. ministry of health, ‘strategic plan for the years 2008-2010’, [online] available at http:// www.ms.ro/?pag=16, accessed on october 22, 2013. 9. ministry of health order no. 75/2009 on the approval of the norms regarding the calculation method of prices for medicines of human use, published in the official journal of romania no. 62 of february 2, 2009. 10. national health insurance house, ‘the national catalogue of prices for medicines of human use authorized to be put on the market in romania (canamed)’, (undated), [online] available at http://www.cnas.ro/medication, accessed on october 22, 2013. 11. romanian competition council, ‘report on the useful investigation regarding the study of the romanian medicines wholesale market 2007-2009’, 2010, [online] available at http://www.consiliulconcurentei.ro/uploads/docs/items/id6495/raport_total. pdf, accessed on october 22, 2013. 12. vlădescu, c. (coord.), managementul serviciilor de sănătate, bucharest: editura expert, 2000. 15 the purpose of this paper is to analyze the mechanisms used by some interests groups1 in order to influence the executive and legislative branches in romania. we focused our attention only on the activity of some interests groups, meaning ngos and trade unions. we analyzed only the mechanisms most used by these interests groups in order to influence the decisions of the above mentioned public institutions. the paper has more a descriptive character, but in the final part we will analyze this aspect from the perspective of different models and theories of interest groups presented in the first part. on our opinion, this paper represents only an outline of future research that should be conducted in this field of activity. the first part presents an overview of the literature regarding the interaction between the interests groups and the public institutions. the second part presents briefly the methodology that we used in order to analyze the mechanisms used by some of the romanian interest groups to influence the decisions of the government and the parliament. on the third part we made a brief the paper focuses on two specific interest groups, ngos and trade unions, and on their influence upon the government and parliament. our paper is based on an analyze of the activity of several interest groups during the period 2002-2004 and on the results of several researches and reports published on the last years. the analyze identifies petitioning for rule making, public meetings and debates, monitoring the activity of the public institutions and participating in advisory or regulatory committees as being the most common used mechanisms to influence the government and the parliament in romania. also, the analyze shows that administrative procedures affect the degree of bureaucratic autonomy. overall, the results of this brief research show some pluralist forms of the interaction between the interest groups and the public institutions. the influence of some romanian interest groups upon the activity of government and parliament bianca cobârzan assistant professor, the department of public administration, the faculty of political, administrative and communication sciences, the “babeş-bolyai” university, cluj-napoca transylvanian review of administrative sciences, 15 e/2005, pp. 15-30 1 on this paper, when we are referring to the activity of the interest groups analyzed we are referring only at the ngos and trade unions. in order to have a complete view over the mechanisms that the romanian interest groups use to influence the government and the parliament, we should include other categories of interest groups, like business organizations. also, for better results, a larger number of organizations should be included in the analysis. 16 presentation the interest groups in romanian, referring to their number, fields of activity, the citizens’ involvement in the their activities. then, the forth and the fifth parts provide more information about the context of the development of the type of interest groups we refer to and of the legal framework that bounds their activity. on the sixth part we presente the results of our analyze, meaning the nine mechanisms that the interest groups we analyzed use most in their activities to influence the government and parliament. the final section provides a summary and draws preliminary conclusions. literature overview the literature discusses about the interest groups in the context of defining the relationship of bureaucracy with other institutions within the society. the enhancement of the interest group influence was facilitated by the recognition of the government as being one significant actor among the others and of the importance of other actors in the policy making process (hill, 1991). the main models that were drafted regarding the interest group influence rang from agency capture model to corporatism, interest-group liberalism, subsystem, iron triangles, issue networks to advocacy coalitions. on our opinion is important to shortly present these theories because we will refer to them in order to analyze the relation between the ngos and trade unions, on one side, and government and parliament, on the other side, in romania. agency capture model (berstein 1955) argues that the agencies are captive to the clientele they serve. some theorists posit that the government appoints people who are in favor of the interests of those who are being regulated. other theorists explain the bureaucracy capture theory by referring to the life cycle of agencies, which may need expertise to sustain their reforms and they hire employees from industry being regulated, so the regulators and the regulatees have the same vision upon solving different problems. in the end, the groups they supposed to regulate capture the regulators. a large part of the interest group literature regards the distinction between the interest group corporatism and pluralism. according to this distinction the countries were classified according to the level of interest group pluralism or corporatism in the relation with the government (lijphart 1999, siaroff 1998). in the corporatism model (williamson 1989), policy is made through negotiation among the most powerful legitimate and organized forces within the society. groups are organized into national, specialized, hierarchical peak organizations representing major forces as unions and businesses, employers, which are incorporated in the process of policy formulation. instead, the pluralism theory (lowi, 1979) refers to competition between the interest groups and the government. the interest groups have a high degree of power over a policy area, and the competition defines the relation with the governmental agencies. the iron triangles and issue network models refer to the relations between the bureaucracy, legislatures and the interest groups. the iron triangles theory argues that the triangles between the above mentioned institutions are characterized by consensus, a limited number of partners and policy expansion. in addition to the iron-triangles members, other actors as social science researchers, journalists, specialists, and congressional staffers may also be members, forming in this respect issue networks based on expertise. the mark of issue networks is conflict and competition among the large number of participants. thus, issue networks are “shared knowledge group that tie together large number of participants with common technical expertise” (heclo, 1978). the subsystem theory (griffith 1939, cater 1964, freeman 1955) argues that the policy process comprises a series of centers of activity focusing on particular problems. the leaders of various groups of public and private institutions and other activists within a policy sector communicate with each other, bargain and reach decisions with some degree of independence from the officials and other actors. proponents of this theory argue that these outsider subsystems have great difficulty in penetrating the government and having an important effect on outcomes. the advocacy coalition theory (sabatier 1988) emphasizes the ideological base within the coalition over time and introduced imagine of advocacy coalitions for various policy areas. both the coalition 17 and the network theories assume that individuals who work in bureaucracies are prominent members of the network or coalition. beside these models of interaction between the interest groups and bureaucracy, further theories where developed. the administrative procedures theory (potoski and woods, 2001) describes how the administrative procedures influence agency autonomy and the political influence of various governmental (governors and legislators) and nongovernmental (interest group) actors. this theory concluded that the administrative procedures make agencies more accountable to democratically elected officials in the executive and legislative braches. further more, interest group participation can enhance democratic responsiveness by empowering those who have an interest in policy decision and by improving the politicians’ capacity to control agencies’ decisions. the fire alarm theory (mccubbins and schwartz, 1984) refers to establishment of rules, procedures and informal practices that allow interest groups to monitor administrative decisions. fire alarm oversight provides targeted interest groups with greater influence over agency policy choices while it reduces agency autonomy. another theory related to the administrative procedures theory is the hardwiring theory, which suggest that administrative procedures reduce agency autonomy while they enhance the policy influence of the coalition enacting the procedure. methodology the main question of this paper regards the mechanism used by the interest groups in order to influence the government and the parliament in romania. in this respect, we will try to answer to the following questions. which is the influence of the historical context in the development of interest groups in romania? what type of relation is between the government and the interest groups, corporatism or pluralist? do rules and procedures enhance the level of influence the interest groups have over the agency policy choices? do the procedures reduce the autonomy of the bureaucracy/ legislatures? there are few researches regarding the relation between the interest groups and the state in romania (trif 2004, saulean and epure 1998, epure, tiganescu and vamesu 2001). these researches analyze the dimension of the non-profit sector in romania: the number of active ngos, their geographical distribution, the main areas of activity and the factors that influenced their development. also the researches refer to the characteristics of the people that are activating in nonprofit organizations and to their will to participate in these types of activities (epure, tiganescu and vamesu 2001). the information about the type of the relation between the ngos and the state are limited to people’s expectations about the role that state should assume in relation with ngos (saulean and epure 1998). our research is based on an analysis of the activity of 7 nonprofit organizations and of 2 trade unions2 in the period 2002-2004. the nonprofit organizations that we analyze are activating in social services, health, human rights, citizens’ participation, and environment3. we chose well-known organizations that are running their activities for more than 5 years in romania. we considered that would be relevant for the topic of the paper to analyze the activity of these organizations in 2002, 2003 and 2004 because in these years romanian government adopted important laws, which influenced 2 the trade unions analyzed are national trade union confederation cartel alfa (represents 16,4% of all trade union members) and national trade union block (20,6%). 3 the nonprofit organizations that were analyzed are: pro democracy association (citizens’ participation), apador-ch (human rights), media monitoring agency monitoring (human rights – freedom of expression), open society foundation (minorities’ rights), association “alburnus maior” (environment), save childrenromania (child protection), consens (the federation of the nonprofit organizations active on the social service area). 18 their activities. but some researches from the previous period also will be used in order to compare with what happened before 2000 (saulean and epure 1998, epure, ţiganescu and vameşu 2001). also, we analyzed the activities that these interest groups undertook in the relation with the government and parliament by analyzing the reports and the press releases from this period that they published. for example, we counted how many times these organizations sent petitions, or held public meetings or debates. also, we counted how many times they participated in advisory or regulatory committees or sent recommendations to project proposals or started a legal action against a public institution. also, we wanted to find out if the organizations have a person responsible for public relation. furthermore, we completed this information with others reports that were published by european commission (from the period 2000 to 2004), usaid (1998 to 2003) and john hopkins foundation, maryland university. in order to have a more comprehensive image about relation between the interest groups and the government and parliament, further research should be accomplished. the information that we gathered through analyzing the activities of the above-mentioned interest groups is helpful to describe the most common mechanisms that we used by interest groups. as we mentioned in the introduction part of the paper, when we refer to interest groups analyzed in this paper, we include in this category only the non-profit organizations and the trade unions. in this respect, further researches on this topic should enlarge the number and types of interest groups analyzed in order to give a more rigorous and scientific character to the research. this represents the weak point of the analysis that we conducted. also, it takes a large base of analysis and more rigorous research methods. for the purpose of this paper, it was important also to find the impact of the activities of these organizations. but little information was available on this aspect. most of the information we found in the annual reports or in the press releases of these organizations, but we can subject the impartiality of these information. we other information in the reports published by the eu and usaid. in order to have a better estimation of their impact, further questionnaires should be addressed to the representatives of the interest groups and of the government and parliament. furthermore, the influence of other factors upon the activity of the interest groups should be analyzed. we refer to the influence of the political color of the government in the relation with the interest groups. is a liberal government more open to collaboration and the social-democrat government more conservative and limited in the collaboration? we are also concerned about the influence of the international donors upon this relation, because some donors conditioned receiving of a grant to working in collaboration with public institutions or other interest groups. due to the lack of available information, we could not control the influence of these factors upon the relation we are analyzing. taking into consideration all the aspects presented above, the paper has more a descriptive character and is limited in its findings. brief description of the interest groups in romania when we are talking about the interest groups in romania, we are referring to nonprofit organizations, employers’ confederations or associations and trade unions. in order to better understand the way the interest groups influence the policymaking process, we consider that a brief presentation of the three types of the interest groups that we will refer in this paper is necessary. according to data provided by the ministry of public finance, 17,373 nonprofit organizations submitted an annual balance sheet for 2002, although approximately 10,000 of these are inactive. these numbers does not include trade unions and employers’ confederations. also, the chambers of commerce and private universities are registered as nonprofit organizations. less than 1% of romanian employees work in the nonprofit sector. only 7% of romanians are members of a nonprofit 19 organization, compared to 41% who belong to condominium associations or 36% to labor unions. most of the active organizations are located in transylvania (northwest) (47.7%), followed by southern romania (29.9%) and moldova (16.7%). 5.3% are based in bucharest and its surroundings. in 20014, 86% were located in urban areas (out of which 52% were in the county capital). the approximately 7,000 active organizations offer a wide array of services in the following areas: 20% social services, 25% culture and sports, 15% education, 8% health, 8% human rights, 6% development, 5% business, 5% environment, with the rest active in philanthropy, international cooperation and religion. beside the nonprofit organizations, there were twelve representative employers’ associations in 2003. they are very fragmented because confederations compete for members, as they have members in similar sectors. only eight of them are members in the economic social council (which is the dialogue committee between the government, trade unions and employer’s confederations) and only seven participated in the negotiation of the collective agreement in 2003. the number of representative employers’ confederations increased from five in 2001 to twelve in 2003. despite formal recognition, there are still people that are contesting the representativeness of certain employers’ associations. in march 2004, eight of the twelve nationally representative employers organizations merged into two new organizations the two mergers indicate that employers have started to gather their forces in order to be able to provide an articulated view to government and trade unions. the third category of interest groups that we are analyzing in this paper is represented by the trade unions. at the top level, there are more than twenty national confederations, but only five of them met the representativeness criteria in 2003. trade union membership counted for around 90% of the total industrial labor force in 1991 to 77% in 1995 and to 58% in 2000 (centrul de resurse pentru sindicate, 2000). another source indicates that trade union density in 2002 was 40-46% of the labor force (clarke et al., 2003). the reasons for the decline is the emergence of private small and medium-sized enterprises with virtually no trade union representation, the restructuring of all sectors that had over-employment and the shutting down of many large enterprises. additionally, there has been an expansion of employment in services and sectors where unions are not well represented. despite the decline in trade union membership during the 1990s, romanian unions still have higher membership than in many other central and east european countries. even tough the legal provisions state that unions should not be involved in politics the confederations have political affiliations. two of them support the social democrat party while the third one supports the christian-democrats. initially, one of them had a liberal ideology promoting ‘shock-therapy’ but it has supported the left-wing party since 2000. as a result of this political affiliation, its representatives gained two seats in parliament, beside the three members of parliament coming from another trade union. the leader of national democratic trade union confederation of romania was appointed prime minister between 1996-1998, when a coalition including the christian-democrats was in power. also, in 2004, it was a debate whether or not the trade unions’ leaders should candidate for a public position. beside the negative public opinion, several members of trade unions candidated for local and county council and for parliament, on the lists proposed by different parties. furthermore, before elections, trade unions’ leaders encouraged their members to vote with a certain party. also, in 2004 general elections, the political wing of national trade union block entered the parliament on the lists proposed by great romania party. after the elections, the former members of this trade union supported tariceanu cabinet. these developments indicate that trade unions are strongly involved in politics5. trade unions are not subordinated to the political parties but there is still no clear boundary between the trade union movement and the political parties. 4 epure, carmen, ţiganescu, oana, vameşu, ancuţa, 2001. romanian civil society: an agenda for progress, civil society development foundation, 5 trif, aurora, 2004. overview of industrial relations in romania, south-east europe review 2: 43-64 20 the context of the interest groups development we can talk about truly active interest groups in romania only after the collapse of the communist regime. in order to understand the emergence and the development of the interest groups in romania we consider that a brief analyze of the factors that influenced them would be helpful. in this respect, we analyze the influence of the communist regime on the activity of interest groups and socio-cultural norms that it developed. historical context. civil society in romania had made substantial progresses by the end of the 19th century, and the interwar period of the 20th century witnessed a further blossoming of a large variety of nonprofit organizations. at the end of the 19th century and the beginning of the 20th century, citizens’ right to organize in trade unions and co-operatives was recognized, and as a consequence, the number of these organizations increased rapidly. however, these promising developments stopped after the imposition of soviet-style communism on eastern europe after the second world war. in romania, the communist state annihilated all possible competitors to its power, ranging from households to businesses and trade unions, churches, newspapers, and voluntary associations. although the state aimed for the total destruction of civil society, some moderate forms of a civil society remained alive, particularly in the decaying stages of the authoritarian and ideological state and certain organizations were tolerated by the communist authorities, especially during the “liberal” period of the regime, which began in august 1968 with romania’s opposition to the military intervention in czechoslovakia and lasted until the mid-1970s6. for the most part, these organizations provided an opening to associate around certain special interests (such as philately or numismatics) or interests related to traditional crafts (such as bee keeping or animal breeding). some of these organizations have a long history and others had an international affiliation. other organizations had as target-groups people with disabilities (such as the deaf-mute associations or the association of the blind). also aid houses and tenants mutual associations were tolerated. however, these organizations did not constitute a truly independent nonprofit sector in romania. many of them only enjoyed formal autonomy, even if they were not literally subordinated to the state institutions. in practice, they were subject to severe limitations on their freedom to initiate and implement projects and the ideological compliance of organization activities was strictly controlled. moreover, the state’s monopoly on welfare barred all formally autonomous organizations from engaging in the provision of social services – often seen as a core function of a fully developed nonprofit sector. beyond this, cases of individual dissidence or the initiation of minor dissident movements (such as the attempt to set up a free trade union in 1977) were perceived as attempts to undermine the system and provoked immediate repressive responses. by large, forms of collective opposition were rather isolated and did not have any chance of success. even if the right to strike was formalized until the 1990s, there were few strikes during the communist regime. those, which did occur, were vigorously suppressed and led to more severe control by the security forces at the enterprise level. even if the state officially recognized employees’ right to join trade unions, the role of the trade unions was strongly influenced by the ideological belief that there were no divergent interests between the state, leadership and employees. the trade unions were part of the political apparatus in romania. they could only deal with complaints and other individual issues arising in the work place, but they did not negotiate collective agreements and they had no right to strike. 6 the database of the centre for the development of non-governmental organizations at civil society development foundation contains information on 30 non-governmental organizations that functioned during the communist period in romania. 21 the communist regime developed a high degree of dependence of the citizens upon the state. also, the communist regime destroyed the citizens’ trust in any hierarchical form of organization. moreover, these institutions fear the danger of losing power by organizing them in umbrella organizations in order to promote common interests. in this respect, short-term partnerships within projects are alternative solutions to the establishment of institutionalized long-term umbrella organizations. civil society played an important role in the democratization process in romania. at the beginning of the 1991, non-profit organizations played different roles from monitoring the elections to social services and civic education. although, the non-profit organizations are steel financial supported by the international donors, their role and presence is growing. socio-cultural norms regarding the associative life were affected by the communist regime. a research made in 1998 among the members of the nonprofit organizations showed the perception that the government does not encourage the activities of civil society organizations. this expectation was perceived as an orientation of the citizens towards a paternalist state, which is to promote a supportive public policy towards nonprofit organizations. also, the same research showed that the romanian nonprofit organizations are expected to be primary service providers, filling the gaps left by the government. also, the communist regime destroyed the concept of voluntarism, which led to low involvement of the citizens in the community life through voluntary activities. the legal framework on our opinion, an overview of the legal framework that regulates the activity of the interest groups would be helpful in order to understand the way these organizations are acting. cooperatives and trade unions are regulated through a separate law and the romanian legislation created a common framework for associations, foundations and federations. ordinance 26/2000 regarding associations and foundations, with small changes, embraced the text proposed by the nongovernmental sector. until 2000, all the nonprofit organizations were created under the provisions of the law 21/1924, which was the oldest law that regulated the activity of the associations. according to the ordinance, the nonprofit organizations may establish commercial companies and the profit obtained from these activities will be reinvested for achieving the purposes of the associations. the same ordinance grants the status of “public utility”, especially for the nonprofit organizations that perform activities in the social service area. the government can contract out to these organizations public services without commercial character and these organizations can receive funds from central and local government in order to perform the contracted services. the law of free information act has a special importance for the interest groups because it regards the relation between the nonprofit organizations and the government. it enhances the power of the interest groups upon the public institutions. it was drafted by a coalition of nonprofit organizations that worked closely with the legislatures and it was adopted in 2001. these organizations used the law to enhance the transparency of the public institutions by monitoring its implementation. furthermore, the nonprofit organizations sued some public institutions, which did not respect the law, and they won the cases. in this way, the public institutions were forced to carefully implement the law and to be more open and transparent in the relation with the citizens. also, in 2003, the parliament adopted the law regarding the transparency of the policymaking process (sunshine law), which strengthens the role of the citizens through the consultation and public hearing process. but, the nonprofit organizations are still controlled in a certain degree by the government through regulations that burden their activities7. an ordinance from 2003 actually took the nonprofit organization 7 usaid, report on the nonprofit sector in romania. 2003 22 movement a step back-wards. the ordinance includes provisions such as one requiring the ministry responsible for overseeing activities related to the proposed mission of an nonprofit organization to authorize the nonprofit organization’s registration, which is considered a restriction of rights guaranteed under the romanian constitution. new ordinance also makes more difficult to obtain “public utility” status and restricts nonprofit organizations’ access to budgetary resources from local and central government funds for activities that are recognized as being in the “public interest.” on 2004, the parliament voted this ordinance, and through this procedures it became law. the other laws and ordinances adopted in 2003 also negatively affect the operational environment for nonprofit organizations. the new labor code increases the bureaucratic burden related to labor contracts. the law on political party financing allows political parties to receive financial support from nonprofit organizations. this provision creates an incentive for the establishment of sham nonprofit organizations whose sole purpose is to absorb funds for political activities. the trade unions activities is regulated by the law on trade unions (law no. 54/1991), which says that the trade unions are aimed to defend and promote the professional, social and economic interests of their members. also, the law on collective labor agreements (law no. 54/1991) gives representative trade unions the right to negotiate collective agreements at the national, branch and company level. the law on employers associations (law no. 356/2001) guarantee the right of the employees to get organize in associations, and these associations should defend the interests of their members in the relation with the state and trade unions. mechanism used by the interest groups to influence the activity of government and the parliament8 the findings of the research revealed that the most common mechanisms used by the interest groups to influence the policy making process are: petitioning for a rule making, public meetings and debates, monitoring the activity of public institutions, participating in advisory or regulatory committees, sending recommendations to project proposals, legal action against the public institutions, public relation campaign, demonstrations and strikes, direct collaboration with the government. 1. petitioning for rule making the most used mechanism of influencing the policy making process is petitioning for rule making. all the nonprofit organizations and trade unions analyzed sent petitions to the rule-makers. they sent petitions to different institutions in order to protest against a proposal, a decision or a declaration. for example, petitioning is the most common mechanism used by the pro democracy association and usually other interests groups signed the petitions that it sent. not all the times the proposals were taken into consideration, but sometimes they had effect. for example, the president decided not to promulgate the law regarding the organizations of the political parties until the law was changed according to some of the interest groups’ proposals. also, the president did not want to promulgate the law that stipulated jail punishment for reporters, until this provision was excluded from the law. also, the trade unions sent petitions to the members of the parliament, to the prime minister and to the president in order to present their position. 2. public meetings and debates five out seven nonprofit organizations that were investigated organized public meetings or participated to such meetings organized by other organizations. so, another very common mechanisms used to influence the government or the parliament is organizing public debates and meetings in order to raise the awareness of the decision-making actors. for example, in 2003 and 2004 pro democracy 8 we mention again that we refer to the activity of the ngos and trade unions. 23 association organized at the national level 40 public meeting where members of the parliament and of the government were invited to participate. the number would be much greater if we take into consideration the public meetings that were organized at the local level9. also, the nonprofit organizations activating on the social service and environmental areas organized public debates in order to draft proposals and send them to the decision-making actors. this mechanism is used not only to raise the awareness regarding a public problem and to bring it into institutional agenda, but also to involve a much larger number of interest groups in drafting a proposal. 3. monitoring the activity of the public institutions five out of seven organizations were involved in monitoring the public institutions activity and writing reports about how the public institutions are respecting laws. usually, coalitions of nonprofit organizations and employers’ confederations are involved in such activities. during the period that we are referring to, the greater efforts were toward monitoring the implementation of the law regarding the free access to public information. the importance of this law for the interest groups explained these efforts10. the law represents one of the most powerful instruments that can be used against the discretionary power of the public institutions. also, a coalition of three nonprofit organizations was involved in monitoring the law regarding corruption, human and minorities’ rights. other organizations were involved in monitoring the activity of the justice courts and prisons, or analyzing new regulations in order to evaluate if they are respecting human rights provisions. monitoring the elections is another very powerful mechanism through which the nonprofit organizations monitor if the public institutions respect the citizens’ rights. the organizations are not involved just in monitoring the activities that are taking place in the election day, but also, monitoring all the preparation activities and how political parties respect the law regarding the financing electoral campaigns11. 4. participating in advisory or regulatory committees five out of seven nonprofit organizations and both trade unions participated in advisory and committees during the period 2002-2004. if we take into consideration the involvement of the interest groups in the advisory and regulatory committees, we can conclude that the government was more open to cooperate with the representatives of the interest group. a person responsible for the cooperation with the nonprofit sector was named within each public institution. furthermore, at the government level and at the level of each ministry an office for the relation with nonprofit organizations was created in order to facilitate the communication between the government representatives and those of the nonprofit organizations. also, with funds from the european union, a number of citizens advice bureaus have been established as partnerships between local authorities and nonprofit organizations, providing legal advices to citizens on various issues. the nonprofit organizations that are implementing activities related to the human rights field are members in several advisory committees or were invited to present their recommendations in front of regulatory commissions. three of them are members in the central group for analyzing and coordinating the prevention of corruption activities, which is formed by experts from institutions 9 pro democracy association has 29 local branches al around the country. many of these branches implement projects aimed to enhance the citizens’ participation in the policy-making process and, in this respect, further local public meetings are organized. 10 starting with 2002, one year after the law was adopted, pro democracy association, romanian academic society, institute for public policies and transparency international romania monitored the activity of public institutions that were responsible for the implementation of this law and identified several problems. 11 in 2004, pro democracy association published 4 reports about how political parties spent money during the political campaign, for local and national elections. 24 that have attributions in combating corruption and representatives of the nonprofit organizations. the role of this organization is to participate in drafting and monitoring the anti-corruption program. many representatives of the member organizations have contested the efficiency of the group because the government did not take into consideration their proposals to the anti-corruption law12. another consultative mechanism established by the parliament was constitutional forum. in 2002, one year before the romanian constitution was revised, the deputy chamber of the parliament together with pro democracy association created a consultative forum, named constitutional forum, and the representatives of the interest groups were invited to make recommendations regarding the constitution. some of the recommendations were included in the constitutional proposal. even if the number of consultations with the representatives of the nonprofit organizations increased, these consultations were inconsistent. the european commission country report.2004 recognizes that “consultation procedures were launched with civil society on a number of legislative initiatives (e.g. judicial reform), although participants’ consultation remained procedural and not substantial”. regarding the participation of the trade unions and employers’ confederation in advisory and consultative committees, this process started earlier. between the 1996 and 2000, the centre-right government, which was in power, promoted tripartite dialogue between the trade unions, employers’ confederations and government. in this period a number of tripartite institutions were formally established, such as the economic and social council (esc), the tripartite commission of social dialogue, the national agency for employment and vocational training and the employment tribunal. the new tripartite institutions gave legal rights to trade unions and employers associations to be consulted on economic, social and labor policies (e.g. via esc) and also with regard to the implementation of legislation (e.g. the employment tribunal). also, even though the government established the economic and social council13 as a dialogue committee the government and parliament did not take its recommendations into consideration. in 2004, the parliament approved only 25% of proposals made by the esc and the government 45%. even though the role of esc is to draft comments and recommendations, in 2004 31,4% of its recommendations were adopted in the way proposed by the esc. in this respect, the members of esc are extremely dissatisfied because of low attention that the government and the parliament pay to its work. also, starting from 2001, the government negotiates each year with the representatives of trade unions and employees’ confederations the social stability pact. this pact refers to the wage policies, employment policies and social assistance policies, which the government is going to implement in the following year. also, the trade unions are involved in a number of joint committees with the government and with the representatives from employers’ confederations. this tripartite co-operation mainly focuses on labor conditions and on the improvement of the business environment. at the level of bipartite co-operation, trade unions and employers organizations participate in the social dialogue commission, which was responsible for the collective labor agreement for 2004-2005. at the same time, the effectiveness of the bipartite co-operation is severely limited by the fragmentation of the trade unions (5) and the employers’ confederations (12)14. according to the european commission country report from 2004, the bipartite and tripartite consultative bodies are, in general, if operational, far from efficient. concerns of the eu regard the 12 finally, the member organizations protested against the inefficiency of this group by refusing to participate at its meetings. 13 www.ces.ro 14 european commission, 2004 regular report on romania’s progress towards accession 25 method of consulting the social partners at tripartite level and regarding the very low number of bipartite collective agreements. 5. sending recommendations to project proposals sending recommendations to the parliament and the government is one of the most used mechanisms to influence the policy-making process. four out of seven organizations sent proposals. the nonprofit organizations use different ways to send proposals. before the adoption of the law regarding the transparency in the public administration, there was no legal requirements for public institutions to consult the interest groups during the policy making process and no period to give interested organizations time to make recommendations. the nonprofit organizations sent their proposals during the entire process, in general after they found out about a new proposal. there are also some organizations that tried to promote project proposals into the parliament by raising required number of signatures15. their effort was not successful. another organization aimed at protecting the human rights (apador-ch) sends recommendations on law proposals regarding human rights. unfortunately, a evaluation of the result of its activity can not be made, but, fore example, in 2003, when the criminal code was revised 4 out 18 recommendations were adopted in the form that they were proposed. in order to enhance the chances that a recommendation will be taken into consideration, coalitions of nonprofit organizations and employers’ confederation were created. in this respect, such coalitions were created in order to protest against the law regarding political parties and the law regarding the activity of the associations and foundations. in the first case, the proposals of the nonprofit organizations were taken into consideration, but in the second case, the law passed and their recommendations were not included in the final text. in other cases, the government invites the interest groups to send recommendations to a proposal. in this case, for example, the interest groups were asked to send proposals to the anti-corruption law. also, on the social service area the nonprofit organizations were invited to contribute to the elaboration of the national strategy for preventing drug consumption and governmental strategy for youth over 18 that cannot live in public assistance institutions. 6. legal action against the public institutions three out of seven nonprofit organizations sued the agencies that did not respect the laws. after the adoption of the law regarding the free access to public information, the number of cases against the public institutions that did not respect the law increased. for example, in 2003 institute for public policies won 4 cases against public institutions that refused to give it public information according to the law. other organizations went to the court for legal redress when other means of influence fail. such an option is available to the romanian interest groups through the administrative courts. apador-ch sued the government because did not respect the previous laws when it adopted a decision. it is not a very common used mechanism, because the legal process is too slow and too expensive, but as i said before after the law regarding the free access to information was adopted, the number of cases against the public institutions that do not respect the law increased, especially due to the action of the nonprofit organizations. 7. public relation campaign the public relation campaign is getting more important in the last years, while the projects of nonprofit organizations are getting more visible. all the organizations analyzed have a person 15 the constitution states that 250.000 signatures are required in order to promote a citizens’ proposal into the parliament in order to be discussed by the members of parliament. a coalition of nonprofit organizations tried 3 times to promote a citizens’ proposal in order to change the electoral system in romania and to reduce the number of members of parliament. 26 responsible with public relations. it is important for these organizations to establish good relations with public institutions, international donors, other nonprofit organizations and mass media. being known by many people and having a good reputation represent strength in their relation with public institution. the interest groups seek to mobilize public support through propaganda or public relations drives to win support. they attempt to persuade elected officials by trying to impress them with their electoral strength. in this respect, public campaigns of raising signatures for citizens’ legislative initiative became more used in order to demonstrate the public support. furthermore, the coalitions of nonprofit organizations supporting a common issue captured the media attention and made more easily others to hear their voice. also, well-known international organizations were included in these coalitions. for example, association “alburnus maior” gained the support of greenpeace and european council; also, the romanian academy supported their protest against the exploitation of a gold mine using cyanide. in this context, the association succeeded to stop the exploitation. 8. demonstrations, strikes and noncompliance four out of seven organizations that were analyzed used demonstration as an influence technique. for example, a coalition of nonprofit organizations and trade unions created a human chain around the parliament building, successfully protesting government’s attempts to block public access to the files kept by the former secret police. another form of protest used by the nonprofit organizations is the march. the environmental organization that we analyzed marched for 4 days from in order to attract the attention of the public opinion toward a public issue that they fight against16. the strike is a mechanism used by the trade unions in order to protest against the government’s decisions and to strengthen their demands. the number of strikes was high especially during the privatization period, when many state owned companies were restructured, sold to private enterprises or closed and a great number of employees became unemployed workers. but, according to the european commission report, the number of strike decreased significantly during 2004. since 2001 government has signed the social stability pact with the representatives of the trade unions and employers’ confederations in order all to agree the most debating issues regarding the employment’s problems. even though the tripartite social dialogue was negotiated, several strikes were organized in 2004. the policy sabotage or noncompliance is rarely and resumed for extreme cases, when important law provision are not respected. nonprofit organizations members of the central group for analyzing and coordinating the prevention of corruption activities refused to participate at the meetings of the commission because their proposals were not taken into consideration. also, in november 2004, a nonprofit organization refused to monitor the elections if important measures were not taken in order to prevent future abuses of the political parties. 9. direct collaboration with the government the nonprofit organizations cooperate with the government on delivering services, like education, social and health services, and even economic development, culture and recreation and housing. in this respect, a nonprofit organization can operate as an organization of “public utility” and can receive money from the central and local government in order to perform its activities. for example, foundation “save children” romania collaborates with the ministry of education in delivering educational courses for children and training teachers in order to teach courses on children rights. 16 the members of the association “alburnus maior” and members of other organizations (romanian institute for peace, greenpeace cee and mindbomb) marched for four days 137 km from cluj-napoca to roşia montana in order to protest. 27 also, in collaboration with the ministry of interior and ministry of justice, the foundation wrote a handbook about child protection against domestic abuse. even if this is not a direct form of influencing the government during the policy making process, it can action indirectly, by gradually raising the government awareness regarding public issues. working directly with the government, can help to develop tight relations based on trust and competence and, in the future, these relations can transform in consultation and partnership relations. conclusions corporatism or pluralism of interest groups? we argue that the interest groups analyzed tend to act more accordingly to the pluralist theories of interest groups. but, the interest groups are still weak and their independence from the political parties and government influence is still fragile and it is weakened by the legacies of the communist regime that discouraged for fifty years any form of organization of protest against the policy decisions. moreover, the organizations that activated during the communist regime were subordinated to interest of the political parties and they were considered another means of achieving the communist goals. there are statutory institutions to accommodate direct contacts between government officials and representatives of the authorized interest groups. these institutions assure the obligatory involvement of the interest groups in the decision-making process. but their influence is limited and consultation process is just a formal one, because most of the recommendations are not taken into consideration. so, even most of the consultative committees are corporatist in form, they are inefficient. the collaboration process between the government, parliament and interest groups is rather on project-based collaboration, especially in the education, social services, health and housing areas. the organizations activating on these area are more often consulted in order to establish common projects. in the last years, the government started to consult more often interest groups, but the collaboration is not very closed and constant. even if the number of strikes and demonstrations decreased significantly during the last years, interest groups leaders appeal to the public at the large to mobilize the public opinion or elected forces. they consider that having a large support for their initiative will strengthen their proposals and will force the policy decision makers to take their proposals into consideration through political pressure. the involvement of the interest groups in the administrative or implementing stages of policymaking is limited. usually, the nonprofit organizations activating in the education, social services, health, culture, recreation, economic development and housing cooperate more closely with the public institutions in order to implement common projects or to fill the gaps left by the government. instead, the interest groups aimed at protecting the human rights are more involved in monitoring if the public institutions respect the laws. the number of legal actions that these groups took after 2001 (when the low regarding the free access to public information was adopted) increased. also, the involvement of citizens in the regulatory activities increased after the adoption of the “sunshine law” (the law regarding the decisional transparency in the public institutions. how the administrative procedures influenced the autonomy of the public institutions? the fire alarm procedures that were adopted through the law regarding the free access to public information and the law regarding the decisional transparency in public institutions decreased the autonomy of the public institutions and increased the influence of the interest groups upon them. after the adoption of these laws, the interest groups closely monitored public institutions in implementing of the laws. their efforts were concentrating towards evaluating if the public institutions named a person to be responsible with the implementation of these laws, if the citizens have access to all 28 information that are considered to be public under the law, if all the information according to the law are publicly, if the citizens and interest groups can make recommendations for policy proposals. the nonprofit organizations wrote reports about the findings of their research and made public the information that they obtained. also, many interest groups took advantage of the provisions of these laws in order to obtain information that they needed or to use these information to evaluate other activities of the public institutions17. in this way, the public institutions became more aware about the burdens that the law imposed on their activity. as we mentioned before in this paper, several organizations took legal action against those public institutions that did not respect the laws. issue networks or iron triangles? on our opinion, we can identify an evolution of the issue networks in the activity of the interest groups, especially during the last years. the consultation between the government, legislatures and interest groups are based more on issues. groups that tie together people with common technical expertise are formed. moreover, international and well-known nonprofit organizations and trade unions brought their expertise in drafting proposals. but we should not super estimate the strength of these issue networks. these tripartite relations are still weak. the coalitions of interest groups were created and they operated only on a project base. small efforts are directed toward creating umbrella organizations, especially because the interest groups are afraid of loosing power. this is a legacy of the communist regime, which destroyed the trust in any hierarchical form of organization. analyzing the activity of the interest groups shows clearly the progresses that were made after the fall of the communist regime. even though the social norms that ground the activity of the interest groups are influenced by the legacies of the communist ideology, the romanian civil society is stronger and more dedicated to fight for the citizens’ rights. although the interest groups became more active and more involved in influencing the government and the parliament in the policy-making process, their power is still limited by the willingness of the decision makers to take into consideration their proposals. but, in the last years the autonomy of the public institutions decreased due to the adoption of sunshine laws that increased the influence of the interest groups. in this respect, the interest group participation will enhance the democratic responsiveness of the public institutions by empowering those who have an interest in policy decision. references: 1. epure, carmen, ţigănescu, oana, vameşu, ancuţa, 2001. “romanian civil society: an agenda for progress”. civil society development foundation 2. european commission. 2000-2004. “regular report on romania’s progress towards accession” 3. fundaţia pentru dezvoltarea societăţii civile 2001. “distribuţia geografică a ong-urilor în românia” 4. furlog, scott. r. 1998. “political influence on the bureaucracy: the bureaucracy speaks”. journal of public administration research and theory 8: 39-65 5. golden, marissa m. 1998. “interest groups in the rule-making process: who participates? whose voices get heard?” journal of public administration research and theory 8: 245-270 6. hill, larry b. 1991. “who governs the american administrative state? a bureaucratic-centered imagine of governance”. journal of public administration research and theory 8: 261-294 7. mcfarland, andrew s. 1987. “interest groups and theories of power in america” british journal of political science 17: 129-147 8. potoski, matthew, woods, neal. 2001. “designing state clean air agencies: administrative procedures and bureaucratic autonomy”. journal of public administration research and theory 11: 203 – 221 17 pro democracy association completed in 2003 a research about the way public institutions implement the law regarding the free access to public information. next year, it used the provision of this law in order to obtain the necessary information for another report regarding the integrity of public institutions and of the elected officials. 29 9. sabatier, paul, and hank jenkins-smith, ed. 1993. policy change and learning: an advocacy coalition approach. boulder, co: westview press 10. saulean, daniel and epure, carmen, 1998. “defining the nonprofit sector: romania”. working papers of the john hopkins comparative nonprofit sector project, civil society development foundation 11. trif, aurora, 2004. “overview of industrial relations in romania”, south-east europe review 2, 43-64 12. usaid. 1998-2003. report on the nonprofit sector in romania 13. wilson, frank. 1983. “french interest group politics: pluralist or neocorporatist?” the american political science review 4: 895 – 909 14. www.apador.org 15. www.apd.ro 16. www.ces.ro 17. www.mma.ro 18. www.osf.ro 19. ww.rosiamontana.ro 20. www.salvaticopiii.ro 5 10 years of public administration at babes-bolyai university, cluj-napoca transylvanian review of administrative sciences, 18 e/2006, pp. 5-10 fall 2006: the public administration department, faculty of political sciences, public administration, and communication celebrates 10 years of existence. the department will organize an international conference called “the contribution of higher education in the field of public administration to the reform of public administration”. thus, from october 6th to october 11th the foreign partners who have contributed over the years to the development of the department will attend the conference. professors from various universities in the us are expected to attend this conference: michigan state university, state university of new york, university of delaware, florida international university, san diego university, eastern michigan university, smithsonian institute, national academy for public administration (washington, dc), and naspaa (national association of schools of public affairs and administration, washington, dc). the interest showed by the public administration department with regard to common research programs and collaboration generate an important presence from the european universities as well: leiden university, birghmingam university, national academy for public administration viena, budapest university, bruxelles university, genoa university, national academy for public administration kiev, leuven university, nispacee (network of institutes and schools of public administration in central and eastern europe), egpa (european group for public administration), epan (european public administration network), asiap (association of schools and institutes in public administration in romania). for the first time professors from sydney, australia, will attend the conference hosted by the public administration department. 6 the contribution of public administration higher education to the reform of public administration international conference 6-10 october 2006 babes-bolyai university, cluj-napoca, romania panels: 1. public administration reform a. public administration reforms b. the changing landscape of public administration education, research and practice 2. public administration education and the society c. the relationship between education institutions and different levels of society d. ways and means towards a greater involvement schedule: thursday, october 5: arrival of participants friday, october 6: 20.00 welcome cocktail party, marco polo restaurant, city plaza hotel saturday, october 7: 9.00 official opening (faculty of political, administrative, and communication sciences) 11.00 departure to baia-mare 14.00 lunch in baia-mare 16.00 departure to şuior (maramureş, northern part of transylvania) 17-20.00 proceedings (core presentations: 1. reform of the romanian public administration; 2. reform of universities under the bologna process) sunday, october 8: 9-12.00 panel 1 public administration reform (moderators: roger hamlin and laszlo varadi) 12-14.00 lunch 14-18.00 panel 2 public administration education and the society (moderators: arno loessner and carole neves) 18.00 maramureş traditional dinner monday, october, 9: conclusions; trips to various tourist attractions in the area: happy cemetery, barsana monastery tuesday, october 10: 10.00 departure to cluj 20.00 pm dinner offered by the mayor of cluj-napoca wednesday, october 11: departure of participants * participants may present a paper or just participate at discussions * every panel will have a presentation paper that will be the base for the discussions * all the papers presented at the conference or received after the conference will be published in a special issue of the transylvanian review of public administration (www.rtsa.ro) * the address of the hotel accommodation in cluj is: nicolae cristea street (former borzesti), no. 28, cluj-napoca. 7 list of participants andy asquith, professor department of management and international business, massey university – auckland, new zealand gulyas gyula, professor department of public policy and management, faculty of economics, corvinus university of budapest shun hagiwara, professor school of social policy and administration, hosei university, japan hajnal györgy, phd hungarian institute of public administration, budapest, hungary roger hamlin, professor, department of urban and regional planning, michigan state university, us rolf hunink, phd vng expert jan ipland, phd, ldgk expert arno loessner, professor graduate school of urban affairs and public policy, center for community research & service, university of delaware, us edmund mcgarrel, professor, chair, criminal justice department, michigan state university, us cristina neesham, professor department of management, faculty of business and economics, monash university, australia barbara nelson, phd, executive director, the u.s. fulbright commission in romania carole neves, director smithsonian institute, washington, dc, us david ringsmuth, professor california state university, northridge, and public administration department, babeş-bolyai university allan rosenbaum, professor, school of policy and management, florida international university, us, and president, international association of schools and institutes of administration, brussels eric strauss, professor, department of urban and regional planning, michigan state university, us julian teicher, professor, director, graduate school of business and head, department of management, faculty of business and economics, monash university, australia bernadine van gramberg, professor, head, school of management business, victoria university, australia 8 jim van ravensway, director director of planning and community development, city of east lansing, michigan us laszlo varadi, professor department of public policy and management, faculty of economics, corvinus university of budapest jose vasquez, professor faculty of economic and entrepreneurial sciences, leon university, spain mark wilson, professor chair, department of urban and regional planning, michigan state university, us george poede, professor, department of political sciences, alexandru ioan cuza university, iasi, romania alina profiroiu, professor public administration department, academy of economic sciences, bucharest marius profiroiu, professor chair, public administration department, academy of economic sciences, bucharest cristian anghel, mayor city of baia mare cătălin baba, professor dean, faculty of political, administrative, and communication sciences marton balogh, professor public administration department, babeş-bolyai university gabriel bădescu, professor chair, political sciences department, babeş-bolyai university ovidiu boldor, administrative director faculty of political, administrative, and communication sciences, babeş-bolyai university daniel buda, professor public administration department, babeş-bolyai university congressman, democratic party alina cherecheş, professor public administration department, babeş-bolyai university christian chereji, professor communication department, babeş-bolyai university cynthia curt, professor political sciences department, babeş-bolyai university vice-prefect, cluj county dacian dragoş, professor public administration department, babeş-bolyai university advisor, ministry of public administration and internal affairs marius dodu, professor public administration department, babeş-bolyai university raluca gârboan, professor public administration department, babeş-bolyai university elena ghete, director baia mare city hall 9 călin ghiolţan, professor public administration department, babeş-bolyai university ionel goian, professor public administration department, babeş-bolyai university călin hinţea, professor chair, public administration department, babeş-bolyai university ioan hosu, professor communication department, babeş-bolyai university adrian hudrea, professor public administration department, babeş-bolyai university cosmin irimieş, professor communication department, babeş-bolyai university dan lazar, professor public administration department, babeş-bolyai university decebal lohan, vicepresident national agency for youth programs cornelia macarie, professor public administration department, branch campus bistriţa, babeş-bolyai university laura marusca, ministry of education and research elena minea, professor public administration department, babeş-bolyai university mircea minea, professor law faculty, babeş-bolyai university cristina mora, professor public administration department, babeş-bolyai university alexandru muresan, police department, cluj-napoca ioana muresan public information office, cluj-napoca bogdana neamţu, professor public administration department, babeş-bolyai university natalia negrea, professor public administration department, babeş-bolyai university carmen pop, director baia mare city hall liviu radu, professor public administration department, babeş-bolyai university secretary of state, ministry of public administration and internal affairs sorin radu, director sapard program, north vest regional development agency ana ranta, professor public administration department, babeş-bolyai university 10 călin rus, professor chair, communication department, babeş-bolyai university viorel stănică, professor public administration department, babeş-bolyai university director, regional center for long life education for local public administration marius stuparu, police department, cluj-napoca dan şandor, professor public administration department, babeş-bolyai university ştefan şuta, professor public administration department, branch campus satu-mare, babeş-bolyai university ciprian tripon, professor public administration department, branch campus bistriţa, babeş-bolyai university raluca velişcu, professor public administration department, babeş-bolyai university nicolae urs, professor public administration department, babeş-bolyai university paul zai, professor public administration department, babeş-bolyai university advisor of secretary of state, ministry of public administration and internal affairs untitled 255 abstract the city of iaşi with a population of over 300,000 people is the biggest european union city at the border with the former-soviet space. the article, part of an extended study on territorial development of iaşi and its peri-urban area, focuses on the role of the city to trigger regional growth and to enhance cross border cooperation. recent processes at work generating economic cohesion and integration are explored drawing on the catalytic factors of development and the specialization of local economies. the paper discusses also the externalities of urban growth such as the urban sprawl that causes land use conflicts at the rural-urban fringe. it argues that human capital and higher birth rates than the national average are the strengths, and low connectivity and accessibility are the weaknesses for regional growth. the regional polarization of the city is based on the supply of high level services over the entire north-east region and opportunities to cross border cooperation through the expansion of an agro-alimentary supply-chain are highlighted. building on the main capabilities and assets of the agglomeration economies of iaşi, the paper finally identifies some of the mechanisms and structures that foster urban and regional growth. the economy of a regional metropolis. case-study: iaşi, romania*1 claudia popescu claudia popescu professor, faculty of international economics and business, academy of economic studies, bucharest, romania tel.: 0040-213-319.1900/378 e-mail: cldpopescu@yahoo.com * the paper is part of the research conducted between 2009 and 2010 in the view of drafting the master plan of the iaşi municipality, romania. transylvanian review of administrative sciences, no. 33 e/2011, pp. 255-276 256 1. introduction beginning with 2007 when romania acceded to eu membership, the city of iaşi became the biggest city at the furthermost eastern border of the european union. due to its geographical location, iaşi displays a significant potential to bridge the western europe and the former-soviet space. its role is enhanced by its position of a european metropolis included in the continental urban network, according to recent espon (european spatial planning observation network) studies. iaşi is placed within the most underdeveloped region of romania, the north-east development region, continuously lagging behind during the last decade as against the other romanian regions. within this context of declining regional economy, iaşi stands as the engine of economic growth for the county of iaşi and entire north-east region as well. iaşi exercises its metropolitan function over an extended but less urbanized area in comparison with the national average, thus unbiased by competitive relations with other urban poles. the dichotomy between rising metropolitan economy and declining regional economy stays at the root of major socio-economic disparities. urban and regional disparities are now more important than ever due to the increasing interconnectedness of places (amin and thrift, 1994; dunford and perrons, 1994), so it is vital to understand the processes causing local economic growth and why some regions keep on lagging behind, while others are able to accelerate their economic growth. this scientific inquiry gains more significance in central and eastern europe where the process of metropolization continues at a faster pace than in the western europe. the scientific literature places an emphasis on the specific characteristics of particular cities and regions as european integration is expected to increase the specialization of european regions (sunley, 2000). a widely accepted fact is that urban poles play a fundamental role in generating innovation and economic growth (hall, 1985). as a result of urbanization economies quaternary services agglomerate in the core metropolis and high technology industries are attracted to growing urban environments as well. low level services and laborintensive industries search for peripheral areas inducing job-creation and triggering economic growth. counter-urbanization contributes to the emergence of new rural economies based on non-agricultural activities. nevertheless, the urban growth is strongly influenced by the regional context. the relation between the urban core and its area of influence depends mainly on the urbanization level and the level of economic development, in general. building upon this theoretical framework, the case study of iaşi aims to identify: (a) the socio-economic factors that trigger urban growth; (b) the disparities between urban and rural; (c) the drivers for economic cooperation between the city and its influence area; and (d) the ways in which the agglomeration economies of iaşi would contribute to the economic growth of the entire region. the study summarizes the main findings of the research devoted to territorial planning of iaşi. it highlights the development opportunities of a transboundary metropolitan region in connection with the polycentric territorial development. the paper is structured in several parts. the 257 first part is searching to identify the comparative and competitive advantages of the urban economy of iaşi. after a long urban decline associated with deindustrialization, there are signs of urban revival, mainly due to reindustrialization and tertiarisation. beside “common” factors related to agglomeration economies, increasing returns are due to human capital, entrepreneurship and innovative milieu of the city. the next part considers that economic specialization (industry and services in the city and agriculture in the peri-urban area) generates clear-cut regional disparities. the assessment of socio-economic disparities using the global development index shows that there is a distance-decay effect in inducing growth over the rural area. the result confirms the assumption that geographical proximity reinforces interchanges and mobility and reignites the value of factor and demand conditions, and thus provides a major push to continuous improvement and innovation. on the other hand, the economic specialization is the main source for stimulating rural-urban cooperation through the functional complementarities and dependencies it creates. the last part focuses on how the economy of the city and its peri-urban area can get benefits from productivity and innovation externalities. these may be realized by using a variety of inputs available locally, by raising external returns in human capital and by creating technological spill overs. the geographical scale of the study exceeds the metropolitan area, made up of the first ring of rural settlements and includes the second ring as well in order to assess the regional polarization of the city. from the methodological point of view, the study employs various statistical and spatial analysis techniques (hull score, swot analysis, cluster analysis, gis). 2. iaşi in the regional context iaşi is the second city in the country in terms of demographic size and the second university center in terms of number of students, the capital city of one of the most extended and populated romanian historical regions but also one of the most underdeveloped socio-economic region. although the regional development policy applied since 1998 was aimed to reduce the differences between the eight development regions of the country, the economic disparities increased. estimated by the gdp per capita, the regional economic performances are different, but they excel in the constancy of the extremes during the last ten years: the north east region and bucharest-ilfov region. the former is the less developed region of romania, while the latter represents the fastest-growing region at national scale. the most worrying is the fact that the development disparities between the two are not reducing but, on the contrary, they increase (the ratio between the gdp per capita in bucharest-ilfov region and the north east region increased from 1.96 in 1994 to 3.40 in 2006). despite the fact that it is a city located close to a frontier characterized for a long period of time of impermeability, and although it does not play the role of seat of the north east development region, iaşi kept its prestige of regional capital and university, cultural and scientific center (figure 1). more than that, iaşi had to overcome another 258 obstacle due to its relative position – that of not being able to fully exercise its urban functions within the regional urban system due to its location between two natural and predominantly rural regions: the jijia plain at north and the central moldavian plateau at south. the opportunity iaşi had was its opening to the west through channels of communication that created a secondary axis of segmentation of the moldavian territory (iaşi–târgu-frumos–paşcani–târgu-neamţ) perpendicular on the main one (focşani–adjud–bacău–roman–paşcani–suceava–siret). there is no doubt that, among all the moldavian towns, iaşi distinguishes itself as the only one able to stand on the same hierarchical position with the central cities from the other regional urban subsystems (cluj-napoca, timişoara, craiova, braşov, constanţa). figure 1: the location of iaşi iaşi is one of the bigest urban centers of the country that undertake an intense and positive trend of the tertiarization process. the peripheral geographical location of iaşi, close to the eastern frontier favors the setting of a development objective in services with cross-border significance: iaşi – a city of the interregional trade maximizing the advantage of the location at the eastern border of the european union. if in terms of numbers a considerable decrease of the work force from research and development can be noticed, in what concerns the capacity of innovation and the knowledgegenerating potential, there are remarkable development premises. the innovative business center from the technological park tehnopolis that houses in average 10 start-up companies from the field of it&c, of movie industry and product design, 259 biotechnologies and food industry, is just one example of the research-universityproduction networks based in iaşi. nevertheless, the city of iaşi and its peri-urban area are confronting with dysfunctionalities, part of them being “inherited” due to political errors before 1990 and some others being “accumulated” during the transition period mainly due to the legislative discontinuities and to the inconsistent development strategies. before 1990, the strategy of socio-economic and territorial development led to some problems regarding the traffic and transportation, the underdevelopment of the frontier zone, the existence of an unbalanced network of settlements and especially the conversion of the city into a manufacturing center based on heavy industry in total disregard to its regional vocation. to these dysfunctionalities some others are added related to: the marginal location, low accessibility across carpathians to the rest of the country and western europe; long-standing deprived regional role; slow growth of quaternary services; problematic functional zoning; and the neglect of inter-communal communication links. 3. economic specialization although iaşi county (nuts 3) is economically less developed than others, there is a favorable balance between the urban and the rural area. by its demographic dimension and the features of the local economy, iaşi is the main consumer as well as services supplier at a regional level. with its 300 thousands inhabitants, iaşi represents the most important foodstuff outlet not only at the county level, but also at a regional scale. concurrently, the urban economy of iaşi brings out industrial products and provides services for an area that surpasses the county boundaries. this correlation between the functional specialization of the rural area and that of the urban area represents an important trigger for the economic and social integration. the functionality and the dynamics of the economic activities within iaşi periurban area are characterized by the agricultural specialization in connection with its proximity to the urban market and to the rising suburbanization. iaşi is surrounded by a wide rural area dominated by agricultural activities whose proximity to the urban market determined the agricultural specialization in fresh foodstuff. taking into account the first 10 milk, vegetables and fruits producers, it can be noticed that most of them are located in the vicinity of iaşi. the spatial pattern is similar for all the three products, including the villages around iaşi and only few ones are more remote, especially in the north-western corner of the area under study. this particular location of the main milk, fruits and vegetables producers is not accidental, besides the natural potential (climatic, edaphic), an essential role being played by the destination of the agricultural production towards the urban market. only the villages of cotnari, belceşti, strunga, erbiceni and oţeleni are not making part of the first and second ring of rural localities, all the other agricultural producers being located very closely to the city (figure 2). 260 agricultural producers, 2003 vegetables (tons) fruits (tons) ** milk (hectoliters) * top ten producers by output ** 2002 agricultural producers, 2003 vegetables (tons) fruits (tons) ** milk (hectoliters) * top ten producers by output ** 2002 figure 2: spatial distribution of top ten agricultural producers suburbanization is a socio-economic process felt more intensely after 1990, especially by the big urban centers at the national level. it is the moment when both the population and the economic activities refocused toward the rural area in the proximity of the city for various reasons that are related to the urban economic restructuring, the land and real estate market, the quality of life and natural environment. on a regular basis, the largest cities surpass their administrative boundaries by extending the residential area in nearby villages or by placing the production and service activities outside the urban built-up area. iaşi makes no exception from the urban sprawl. the dense urban tissue, the urban traffic congestion, the burst of the prices in real estate and land market, the lack of spare areas for expansion and development, together with the predominant collective housing reduced significantly the attractiveness of the urban area for population and economic activities. as a result of the metropolitan decentralization, investments chose to locate in the villages around iaşi, such as the production of silk fabrics at bârnova, footwear manufacturing at erbiceni, paint production and wood cutting at leţcani, primary wood processing industry at miroslava, tea, coffee and vegetable oil processing at tomeşti, machinery and equipment manufacturing and carpentry and joinery of metal components at valea lupului. a second effect of the suburbanization process is the extension of the residential areas in nearby villages. it can be estimated through the increasing number of private housing in these villages. the number of private residential properties finished in the 261 rural area increased continuously from 745 in 1992 to 1116 in 1993, 1638 in 1994 and 1731 in 1995. the number of new dwellings evolves according to a gradient that reflects the distance from iaşi, suggesting the direct relation between the population decrease in iaşi and the population growth in the neighboring villages, as well as the positive evolution of the housing stock registered there. the first ring villages of iaşi registered the largest number of new dwellings – ciurea (62), miroslava (86), popricani (52). the number of new houses decreases as we move away from the city, for example: belceşti (7), movileni (6), sineşti (3). ten years later, in 2005, the same impact of the urban sprawl was registered, meaning the further extension of the residential areas. in 2005, there have been finished from private funds between 20 and 50 dwellings in bârnova, ciurea, miroslava, rediu, tomeşti, and valea lupului, all these being villages located in the metropolitan area of iaşi. the other villages registered in average a much smaller number of dwellings finished in 2005, reaching maximum 15. some villages, particularly those located close to the city, registered important increases of the private property fund. here are some examples: aroneanu (756 dwellings in 1995 and 979 in 2005), bârnova (1029 – 1669), ciurea (2217 – 3093), holboca (2154 – 3194), leţcani (1632 – 1935), miroslava (1769 – 2614), popricani (1562 – 2060), rediu (1632 – 2398), and tomeşti (2034 – 3589). the growth in the number of private dwellings correlated with the increasing evolution of the population after 1990 demonstrates the existence of an important urban to rural migration and the enhanced residential function of the villages around iaşi (figure 3). during january0 500 1000 1500 2000 2500 3000 3500 4000 a ro ne an u b al ta ti b ar no va b el ce st i b ra es ti c iu re a c om ar na c ot na ri d ob ro va t d um es ti e rb ic en i g ol ai es ti g ra jd ur i h ol bo ca h or le st i l et ca ni l un ga ni m ir os la va m og os es ti m ov ile ni o te le ni p op es ti p op ri ca ni r ed iu r om an es ti s ca nt ei a s ch ei a s ch it u du ca s in es ti s tr un ga t ig an as i t om es ti t ut or a u ng he ni v ic to ri a v oi ne st i 1995 2005 figure 3: the evolution of the private property fund, 1995 and 2005 (number of dwellings) 262 july 2009, in iaşi county the number of building permits released was with 14.2% smaller than the same period of the previous year (-201 permits), reflecting a certain tendency of decrease in the number of applications of starting off new buildings, due to the economic crisis resented that year. analyzing the level of socio-economic development represents an efficient method of identifying the favorable or restrictive factors for the development process, as well as the direction of action. the development disparities have been measured using the hull score resulted from the aggregation and the standardization of the primary indicators. the statistical data is available for 2002 (census year that contains data at the level of nuts 5) and makes reference to the following indicators relevant for the economic and social development of the villages from the peri-urban area of iaşi: the infant mortality rate, the net migration, the total number of employees, the number of doctors per 1,000 inhabitants, the number of teachers per 100 pupils from secondary and high school, the length of the sewerage system. the primary indicators have been standardized according to the maximum and minimum values, then aggregated according to the individual significance and counted in the guise of the global development index (according to the methodology used by the consultancy group rambøll in the study “regional disparities in romania 1990-1994”). iaşi peri-urban area is clearly differentiated by the variation of the global development indicator. the cities, especially iaşi, that would have modified the variation of most of the socio-economic indicators, or would have altered the interpretation of the values, have been excluded. the most developed villages are located around iaşi and along the potential urbanized axis of communication from iaşi to the west, towards podu iloaiei and târgu frumos. the highest values are recorded in the villages located in the proximity of iaşi: miroslava, rediu, holboca, grajduri and podu iloaiei, the latter having granted the township in 2004, as a reflection of its higher level of socio-economic development. three other villages differently placed in terms of relative position and distance make themselves remarked for the high development level – ciurea, scânteia and romaneşti – enjoying good prospects to become real engines of diffusing the economic growth and social welfare. the medium level of development is characteristic to the villages located in the north of iaşi (aroneanu, movileni, popricani, victoria) or to its south (tomeşti, comarna, bârnova, schitu duca) and also to those villages located between podu iloaiei and târgu-frumos, belceşti and bălţaţi. as for the rest, all the other villages located at bigger distance from iaşi, with a more reduced accessibility and economic profiles dominated by agriculture are distinguished by a low index of development. the spatial variation of the global development index helps to identify the villages that have an average to high development levels on one side and those with a low score on the other side. the latter should be the preferred targets of the measures and actions of the development strategy (figure 4). obviously, iaşi and the first ring of communes represent the driving force of social and economic development. in fact, these stand for the metropolitan area of iaşi, founded in 2004, and including iaşi and 13 neighboring communes (popescu, 2008). they play the most important role in 263 the business environment at the county level, accounting for 91.7% of the number of companies, 94.2% of employment and 93.9% of the total turnover in 2007 (integrated development plan for the growth pole of iaşi 2009-2015). the spectacular increase of technology-based sectors forecasts an above national average rate of growth and an outstanding potential to competitive clustering. a recent study (gea strategy and consulting, 2008) ranks iaşi on the 4th position of the national hierarchy of biggest cities in romania. in terms of population, accessibility, entrepreneurship, human capital and innovation, iaşi scores 19 points after bucharest (23), cluj napoca (22) and timişoara (21). on a scale from 1 to 5, iaşi holds the highest score in terms of human capital, 4 points in terms of innovation and entrepreneurship and the lowest score (3) in terms of population and accessibility. low (48.5 50) medium (50.01 51) high (51.01 – 52) very high (52.01 – 53.5) global development index, 2002 low (48.5 50) medium (50.01 51) high (51.01 – 52) very high (52.01 – 53.5) global development index, 2002 figure 4: global development index the economic features of the city and rural settlements studied together with the identification of the development advantages and disadvantages hinted some strategic actions for the future. these make reference to: • optimizing the tertiary functions of the urban and intensifying their influence on the rural areas; • obtaining economic performances that would promote iaşi urban and periurban area on a competitive market at the regional (especially integrated in the north east region) and national level; 264 • promoting an adequate management of the land-use pattern in the peri-urban area as a consequence of the suburbanization process that enhances the residential function of the rural; and • a well-balanced exploitation and preservation of the natural and human resources in the context of promoting a qualitative cultural and rural tourism. 4. economic zoning from the view point of the distribution of the most important economic activities, the area is characterized by an obvious functional complementariness (industry and services in the urban area, agriculture in the rural one) which can represent an important premise for the socio-economic integration and cohesion. the diverse structure of types of land use outlines the variety of the agricultural production with high potential both for the vegetable and animal output. the industrial sectors in rural environment are interconnected with local resources while those from iaşi reflect an urban center in full metropolization which strengthens its position of regional coordination and cross-border cooperation through a balanced mixture of industrial and tertiary activities. after the structural changes starting with 1990, iaşi managed to reach a regular economic structure for a big city with regional functions (figure 5). region border rivers national roads industries leather & footwear food textile wood processing machine building metallurgy energy chemical animal breeding cow pork poultry land use arable land vineyard orchard pasture forest swampy areas water bodies industrial wastes, dump sites built-in areas economic zoningeconomic zoning region border rivers national roads industries leather & footwear food textile wood processing machine building metallurgy energy chemical animal breeding cow pork poultry land use arable land vineyard orchard pasture forest swampy areas water bodies industrial wastes, dump sites built-in areas economic zoningeconomic zoning region border rivers national roads industries leather & footwear food textile wood processing machine building metallurgy energy chemical animal breeding cow pork poultry land use arable land vineyard orchard pasture forest swampy areas water bodies industrial wastes, dump sites built-in areas economic zoningeconomic zoning figure 5: economic zoning 265 5. the catalytic factors of development turning the local economy into a service-based one – the tertiary sector is well represented in iaşi and târgu-frumos, as well as in the villages advantaged by their geographical location in the vicinity of iaşi: aroneanu, ciurea, holboca, popricani, rediu and ungheni. emphasizing on the development of the tertiary sector in iaşi becomes obvious as 67% of the employed population of the city works in this sector. in 2002 the cities have been characterized by deindustrialization exercised through losing one third of the relative value registered in 1992 and through the service economy estimated by the increase with 40% of the employment in services. iaşi is characterized by an economy based on innovation and knowledge, in the same time consolidating its prestige as university and scientific research center. the diversified and competitive agriculture – agriculture is the main economic activity especially in the rural area, but also in the two small towns, târgu-frumos and podu iloaiei. every type of crops and livestock is highly developed. the level of performance registered by the agricultural activities, supported by the important potential, is also sustained by few elements such as: the existence of direct exporters represented by 2 agricultural firms from iaşi peri-urban area; the existence of the key companies able to stimulate the economic growth at the local and regional level, ranked on leading positions in the national top of private companies in 2008; the attractiveness and the capacity to absorb eu funds for rural development of iaşi periurban area measured in the number of projects. a variety of touristic resources – most of the sightseeing spots are concentrated in iaşi. at its turn, iaşi benefits from the neighborhoods quite rich in touristic attractions – particularly natural ones. the touristic activities that can be undertaken in iaşi and in its adjacent area are very diverse, from cultural, clerical and museum tourism, ethnographic, balneary and sport tourism, transit tourism, to the weekend and business tourism. anyway, the tourist flow is not important compared to other urban centers with regional significance and the tourism infrastructure is poorly developed in compliance with the standards of a european city. nevertheless, its potential to become a european cultural center is real. the sustainable socio-economic development strategy of iaşi, orizont 2020, comes up with three scenarios, each focused on a separate yet interconnected field of action: iaşi – city of services relying on an economy based on it&c and knowledge services; iaşi – city of interregional trade by maximizing the advantages of its location at the eastern border of the european union; iaşi – city of modern industry by extending the existing strengths and expertise in manufacturing to broader and highly integrated supply chains. the development of the tourism is a constant component of all the three scenarios due to the high potential of iaşi. the three scenarios have been subject of a public debate and, consequently, four strategic objectives came to the forefront: • firstly, iaşi detains industries and services based on knowledge and it&c activities. the study of the economic development underlined the role of the human capital to trigger it&c and new technologies growth. the significant 266 number of universities and students, as well as the experience already accumulated by some it&c companies are arguments supporting the further development of this sector. • secondly, iaşi uses its knowledge and talents for innovative and creative industries. worth mentioning in the favor of this objective are: the project of locating the it&c companies in the city center, the creation of a “center of excellence” with an active involvement of the universities, the extension of the innovative business center, the organization of fairs and exhibitions. thus, iaşi has the chance to improve the existing industries and to develop new creative ones. • thirdly, iaşi would be widely known as touristic and cultural capital city of moldavia. the city displays a diverse touristic potential (cultural, religious tourism, special events, business tourism or therapy). currently, a touristic development strategy is on the way to be worked out by the local authorities. • fourthly, iaşi becomes the major provider of services for the entire north-eastern region. for becoming so, iaşi enhances its regional function. this involves iaşi as a regional centre in delivering medical and educational services, financial and insurance services, commercial services, transportation and distribution services. 6. towards a strategy of economic development 6.1. agriculture it is a vital sector of the regional economy and, implicitly, a major determinant of the economic revival of the peri-urban area of iaşi in order to attenuate its still dominant rural character. the broader spatial context, in which the peri-urban area is subordinated to iaşi, must be taken into account. the agricultural production of the north-eastern region as well as of the iaşi county would have been higher if not impeded by various drawbacks: the differentiated soil quality and the alternation of the soil categories; their fragmentation compared with other similar plain units; its fragmentation in small private land parcels; the adverse weather conditions; the low level of fertilizers and technology in agricultural works. accomplishing the development goals aims to meet the consumption needs of the urban population as well as of the peri-urban producer; it also aims to ensure the raw materials for the light industry, correlated with penetrating on the european market with competitive products. the integrated development plan for the growth pole iaşi 2009-2015 identifies a potential agro-alimentary cluster in the metropolitan area of iaşi and proposes a program for development of the peri-urban agriculture. it also acknowledges as a main threat the change of land-use from agricultural purpose to residential and non-agricultural uses. a general objective would be the integration of the agricultural development into a strategy of rural sustainable development, in combination with other activities: cottage industry, furrier industry, wool fabrics and vegetal fibbers, objects of utility and wood handicraft, various services, rural tourism, and processing of the auxiliary products of the woods. this goal can be fulfilled by respecting some punctual objectives: 267 commercial agriculture by fusion of individual plots (average 20 hectares farms following the european model) through promoting different association forms (currently small plots of about one to three hectares represent approximately 90% of the total). even more competitive are the complex associations based on partnerships that would include the entire supply chain (from obtaining products by using modern agro-techniques until their commercialization), by specializing the partners on operational segments (improving the soil, mechanization, growing certain crops or livestock, micro industrialization, management, marketing), eliminating the abandoned areas due to lack of capital, a low level of mechanization and aging workforce by leasing in legal contractual conditions; the efficient management of human resources from agriculture as there is plenty of them; organizing a technical, sanitary and legislative assistance center in order to promote a competitive organic agriculture; creating an efficient distribution and sales network (showrooms, sales through commercial distributors) but in the same time taking into account the size of iasi marketplace – 300 thousands inhabitants and the existence of supermarkets such as billa, metro, gima, univers’all that can absorb a large amount of the agricultural potential over prut that in the conditions of trans-border cooperation can be processed, delivered and sold through romanian companies on the national and international market; integrating the agricultural production with its different stages of production, mainly traditional, by encouraging local entrepreneurships; diversifying the economic profile of the rural settlements by combining agricultural development with supporting the agro tourism and handicraft. cotnari brand creation. viticulture developed especially on the 1,100 hectares of vine from cotnari offers the peri-urban agriculture of iaşi a competitive advantage to national and international markets. through cotnari wines, the agriculture of iaşi holds a potential brand on the domestic market, having the possibility to become a real brand name for the local agriculture. the possibility for cotnari wines to become a country brand is big if we take into account that there is no country brand in the present, while neighboring countries, republic of moldova and hungary have. together with jidvei and murfatlar wines, those from cotnari are the most well-known wines abroad, winning the greatest number of golden medals at international contests. there is no wine festival as in moldova and as a matter of consequence, around 2,000 foreign tourists willing to undertake a wine tasting tour arrive in romania annually. an adequate promotion failed in 2002 when the ministry of tourism launched the program “romania – the country of wine” which included the project “wine road”. the program comprised wine cellars and vineyards from prahova, buzău and dâmboviţa counties but none of those known at international level. a certain degree of promotion comes from tourism agencies. one of them, antrec organizes thematic trips such as “wine road within iaşi regions”, including cotnari as the main attraction. there are other tourism agencies which promote a wine road in romania combined with wine cellars in moldova. romanian tour packages which address mainly french tourists include visiting jidvei, murfatlar and cotnari vineyards at the beginning of october in order to participate to the wine festival in the republic of moldova. 268 structure of agricultural crops and demand of the local urban market. generally speaking, there is an adequate geographic location of the most important agricultural producers in the proximity of the city. nevertheless, social surveys of the suppliers for iaşi agro-alimentary market could evaluate the balance between the two. an identification of surplus or deficient products could be possible in this case and future disequilibria may be solved either by directing certain products towards the regional area, or changing the structure of vegetable cropping in favor of deficient or even inexistent crops but with high ecological potential. it is also important to determine the general functional distribution which aims to a well-balanced development in iaşi peri-urban area through integration of agricultural exploitation in the structure of the area, in relation to other components, and avoidance of expansion of other categories of use on fertile agricultural lands (for example, expansion of the build-up area for residential development to the detriment of agricultural lands). the most adequate cropping systems for the peri-urban area refer to intensive green houses and solaria, and plantations. the peri-urban area should be well-defined as land specialized in vegetable gardening and fruit growing according to the environmental conditions (topoclimate, types of soil), delimiting the regions with high profitability for vegetables and fruits production. an efficient way to stimulate productivity is to use select seeds from the most productive plants, to create fruit, shrub and flower nurseries. organizing centers for distributing select and treated seeds is a mandatory condition in this case. raising livestock as main sector of the peri-urban agriculture. the structure of livestock is diversified representing an important starting point for converting raising livestock into a commercial economic activity of intensive type. raising horned cattle for milk in intensive system predominant in middle farms with 30-50 heads and using as model the horned cattle farm from popeşti can be a viable option especially in those villages which after 1990 registered important increases in the number of horned cattle from private households. as well, the intensive raising of swine following the example of belceşti farm, could become the premise for the future development of farms specialized in raising swine and of incorporated meat processing factories. to the farms specialized in raising cattle for milk, it can be associated or integrated small farms specialized in raising suckling pigs. poultry breeding farms with high productivity, for example the one from leţcani, can be multiplied and diversified in what concerns the number of species (ducks, geese, turkeys, ostriches). in this case, the complex processing of meat at local level would mean an important source for creating new jobs. raising horses in small farms in accordance with sustaining and developing rural tourism represents a viable alternative both for stimulating economic growth and for creating a balance between offer and demand on local workforce markets in rural environment. the existence of the textile firm which produces silk fabrics at bârnova can represent a stimulus for developing a small network of silkworm breeders who can provide raw material for the silk fabrics firm, being in the same time an additional source of revenue for individual households. 269 6.2. industry north east regional development plan states that the most important industrial units at regional level oprate in car, equipment and machine building industry, alimentary industry, wood processing industry, light industry (knitted garments, textile and footwear), and pharmaceutical industry. the same industries are also representative for iaşi county, fact which denotes the role of local industry in establishing the domains of excellence at regional level. after a difficult period of industrial restructuring, iaşi county makes itself noticed through some sectors with significant weight, which concerns national industrial production. in 2005, accordingly to the socio-economic development strategy of iaşi county – orizont 2020, these industrial sectors are: alimentary industry (21%), readymade industry (10%), metallurgy (9%), chemical products (9%), production and distribution of electricity (8%), machinery and equipment industry (6%), and textiles (5%). the integrated development plan for the growth pole of iaşi 2009-2015 identifies as increasing sectors the pharmaceutical and chemical industry, metallic constructions, furniture and editing. the contribution of iaşi county to national industrial production is also relevant from the view point of the position the region occupies in manufacturing and processing industrial products, such as: edible oils – 1st place, synthetic fibers – 3rd place, meat – 12th place, readymade industry – 18th place, wood – 26th place. in the county’s productive system, iaşi is the main industrial center. the economy, which was dominated by industry before 1990 (popescu, 2000), is still based on dynamical industrial activities, in full development, which give the city a stable specialization. from 1990 and up to 2008, industrial specialization remained the same, but the percentage of industrial sectors in the structure of workforce has changed. the hierarchy of industrial sectors which outlines the industrial specialization is represented by textile industry, machine building industry and chemical industry. in 2008, the top of firms from iaşi suggests a concentration of competitive companies in the primary products industry which also includes the chemical industry, readymade and textile industry, machinery and equipment industry. despite the major industrial restructuring and the dramatic reduction of workforce in industry, the domains of excellence remained and, even more, they enforced their position in the local productive structure (popescu, 2006). recent investments are directed towards pharmaceutical, textile, alimentary, furniture industry and metallurgy. some of the most recent and important foreign investments are made by lafarge, mittal steel and it embarcadero technologies. several studies pinpointed iaşi as a potential high-tech cluster. besides technopolis, the regional technological centre and iaşi business and technology campus are planned to create 150 new jobs and to host 10 start-ups (integrated development plan for the growth pole iaşi 2009-2015). former industrial inner-city areas are important space reserves enabling the reconversion of urban economy, mainly from manufacturing to services (stoleriu, 2005). commercial and service activities develop on former industrial areas (nicolina, terom, fortus). one of the objectives of the integrated development plan of the growth pole iaşi 2009-2015 is to draw an inventory of industrial brownfields 270 and a plan to regenerate them. the first step is done through the participation of the iaşi city hall at the south east europe project, retina, aiming to study the way the derelict industrial areas of iaşi could be regenerated. textile industry is regarded as being represented by the most powerful concentration of big companies (vastex vaslui, siretul paşcani, rifil săvineşti, romalfa câmpulung moldovenesc, bucovina rădăuţi and jatex botoşani) and tends to become the definitive element of the regional industrial specialization (popescu, 2005). the companies from iaşi have the opportunity to form together with the other textile companies from north east region a powerful textile cluster to address the national and international market. ten companies of textiles and clothing in the north-east of the country (rifil yarn factory – is the most important producer of threads for clothing in the eastern europe plus other 9 companies of knitting and clothing from knitted fabrics) together with the regional development agency north east, “gheorghe asachi” university – faculty of textiles and leather engineering iaşi (until 1990 the only one with this profile in the country), the research-development national institute for textile and leather and a consultancy company took the initiative of a partnership having as purpose “to assimilate new products with a greater added value”. the objectives of this cluster initiative are mentioned in detail in the regional development plan north east 2007-2013. they refer to internationalization by opening new marketplaces, reducing costs of transactions through a common marketing and a common trade policy, growing competitiveness through joint investments in technology, creating a common identity by commercializing products through a personal brand. the cluster member-companies have a total capacity of production of three million pieces of knitting fabrics per year (regional development plan north east 2007-2013). the textile cluster is known at national and european level, being mentioned by the project inovcluster 2009 (textile cluster in ne including the counties of: bacău, botoşani, iaşi, neamţ, suceava, vaslui) and by european cluster organization directory 2010. astrico north-east is one of the partners of the north-east regional laboratory for innovations made up by asviloc+ project (agencies supporting value of innovation systems in regional and local economies) that runs in the 2009-2012 period. it is a program financed by european funds (see program) in order to grow the role of north east regional development agency and of other development agencies in 12 countries to create regional systems for innovations and to form a transnational network for innovation. one of the asviloc+ objectives is to encourage new associative structures by creating a regional textile cluster. during the workshop “innovation phenomenon in the business environment from the north-east region of romania” (may 27, 2010) the intention to create a regional textile cluster formed by north east regional development agency, astrico north east, “gheorghe asachi” university iaşi – faculty of textiles, leather engineering and industrial management and inovcluster, was announced. this is the way through which, in fact, the textile cluster astrico north east accesses eu structural funds meant to finance the cluster activity on medium term. astrico north east is an evolutionary emergent cluster with an endogenous 271 potential for development, based on a specialized network of suppliers and producers with an evolving partnership with knowledge providers (university and research institute) and an active catalyst actor in promoting innovation (north east regional development agency) (popescu, 2010). the socio-economic development strategy of iaşi – orizont 2020 identifies three industrial domains with high potential for building the city as a creative center and a proper place for the “industries of knowledge”; technology of information and communication, light industry (textile and footwear) and alimentary industry. the latter was also mentioned by the development strategy of iaşi county for the role it possesses in what concerns economic growth and intensification of cross-border cooperation with republic of moldova. the main objective is developing a competitive industry, based on innovation, knowledge, in accordance with the principles of market economy. this objective can be accomplished through some punctual targets. redefining the specialization and consolidating the competitiveness of industry in iaşi. in iaşi, industry suffered an intense process of deindustrialization which led to the redefining of industrial specialization. the industrial sectors cover different trajectories: some are on the rise, others have development potential or they are at low ebb. the industry of iaşi county had a diversified structure, having a similar profile as the regional one. the differentiated evolutions of industrial sectors from the transition period made that only some industries existing at the beginning of the restructuring process last as dominant sectors and outline the regional industrial specialization. certain sectors stood out up to the present moment: light industry (textile, readymade industry), alimentary industry, furniture industry, pharmaceutical industry which have local and regional resources, tradition resources and specialization resources of the workforce. these industries can represent the premises of future industrial specialization if they are able to promote regional trade-names (e.g. cotnari wine), to innovate new products, and to invest in clean technologies. the industry’s competitiveness is demonstrated on one hand by the traditional industrial sectors and on the other hand by the top innovative industrial fields with major inputs of capital and knowledge sustained by the diverse network of centers for scientific research and universities. certain partnerships may be possible in key domains for industrial performance of iaşi; medicine-pharmacy-chemistry-medical equipmentmedical informatics (antibiotice iaşi, university of medicine and pharmacy gr. t. popa, iaşi, centers for scientific research) in order to build an innovative cluster in the eastern part of the country; information technology and applied information in different domains (it companies, centers for informatics in different fields, a cluster with high potential for becoming real in iaşi and which will contribute to define a clear vision regarding the future of the city and to consolidate its image as a center of innovation through counteraction of the “brains’ exodus”; agriculture-alimentary industry-research in alimentary chemistry (agricultural companies with diversified profile and economic performances, alimentary companies, university of agricultural 272 sciences and veterinary medicine “ion ionescu de la brad”, iaşi), taking into account that after the textile industry, the alimentary one occupies the second place as importance in the economy of iaşi. the alimentary industry is dominated by smes which have a more difficult start-up related to investments, capital, entrance on the market and the accession to european union has meant applying certain high quality standards which impose an efficient partnership for this domain; textile industrychemical industry (of paints and dyestuffs) – readymade industry-creation and art (textile companies, readymade companies, university al. i. cuza, iaşi, university of arts, iaşi, fashion houses) given the fact that iaşi has previous experience in this domain: it lodges fashion week and in the same time it represents the center of culture and art of moldavia. european funds and local entrepreneurs’ force from textile industry contributed to the complete rescaling of this sector by focusing on the niche specializations and investments in re-technologization. development of a regional coordination system. the starting point of this system is represented by the consolidation of the regional coordination capacity of iaşi (rey et al., 2000). this is a city with a long administrative experience which played a traditional polarizing role in the moldavian space (istrate, 2005) and in the same time a regional metropolis impeded to exercise its function after 1968. the peripheral position within the region is counteracted by the town’s symbolic value in local culture and by its remarkable image which entitles the town to play the role of a regional coordination center. the regional system coordinated by iaşi would not degenerate in a super-centralized strategy, the moldavian urban system being a bicephalous one where bacău plays a more and more important role, and suceava and piatra neamţ expand their influence within their counties’ areas. creation of functional complementarities within the county industrial system. most of the time, the relations of industrial cooperation are limited to the county’s area, rarely taking place in the regional space. the new industrial specializations in process of defining will connect the industrial centers between them, generating solidarity, partnerships and synergies. however, we have to take into account that not all of the industrial centers of the region will be able to maintain this functionality at the present intensity. industrial function will continue to be dominant or at least important for paşcani, for example, but the others will evolve towards services. this tendency is already manifested in the case of iaşi, but also in the case of other small towns with tertiary activities in full development (commercial activities). iaşi county and especially its peri-urban area should become a coherent industrial concentration but, in the same time to impose itself at national level through a particular industrial specialization. development of partnerships productive/services companies-universities-research centers. the economic performances of iaşi peri-urban area and of iaşi metropolis depend basically on their capacity to stimulate the location of both dynamic, innovative companies and companies focused on knowledge and information. these companies have their own location standards which include together with the classical factors, 273 the existence of a creative and rational economic environment. a strong relationship with universities and centers of research is vital for the development of a reliable economic activity. between 20012006, twelve centers of excellence were created within the universities of iaşi; university al. i.cuza, “gh. asachi” technical university, university of medicine and pharmacy gr. t. popa (popescu, 2008). in fact, iaşi belongs to a regional context where the activities for research-development are dynamic and well-defined. for example, in 2006, the north east region had 3,981 persons engaged in r&d activities, in full development after 2002, occupying second place after bucureşti-ilfov region. the north east region has also occupied second place after bucureşti-ilfov region in terms of number of r&d wage earners per 10,000 employed persons with a percentage of 31.9%, and the same place in what concerns the turnover of 414 billion lei. in this region operate 40 smes engaged in r&d activities occupying second place after bucureşti-ilfov. the r&d companies from iaşi were the most dynamic in terms of number and turnover, according to a statistical analysis made by the chamber of commerce and industry iaşi. 7. conclusions the study focuses on the case study of iaşi, the biggest city at the eastern border of the european union. divergent evolution trends displayed by the increasing urban economy (iaşi) and the declining regional economy (north-east region) stands at the root of socio-economic disparities. surrounded by a less urbanized and agrarian dominant rural area, the city of iaşi, unchallenged in terms of its polarization capacity at the regional level, shows a significant potential to trigger economic growth over an extended influence area and to enhance cross border cooperation with republic of moldova. the benign influence of iaşi over the peri-urban area contributed to the demographic stability and the location of secondary and tertiary activities. the functional complementarities between urban and rural are the engines of regional growth. also, the human capital and the absence of depopulation and ageing are the strengths of social and economic development. despite the low connectivity and accessibility of the city and its peri-urban area, iaşi is the regional supplier of social services, mainly educational and medical. the economic specialization of the city and its potential of trans-boundary cooperation could help the internationalization of the supply chain in agro-alimentary industry and finally the trade integration across the eastern border of the european union. in this way, iaşi would be a leading center of an integrated productive network capable of gaining access to wider national and international markets. commercial agriculture, cluster of related industries, innovative partnership, and branding contribute to the raising of productivity and innovation externalities and ultimately to urban and regional growth. iaşi as innovative city might, if political barriers would be lifted, help the emergence of a cross border metropolitan region at the final frontier of the european union. 274 references 1. amin, a. and 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(eds.), globalization, institutions, regional development in europe, oxford university press, 1994, pp. 1-22. 2. dunford, m. and perrons, d., ‘regional inequality, regimes of accumulation and economic development in contemporary europe’, 1994, transactions of the institute of british geographers, vol. 19, pp. 163-182. 3. hall, p., ‘the geography of the fifth kondratiev’, in hall, p. and markusen, a. (eds.), silicon landscapes, boston: allen & unwin, 1985, pp. 1-19. 4. istrate, m., ‘the structure of the moldavian urban population according to its geographical origin, expression of towns attractiveness’, 2005, analele ştiinţifice ale universităţii al. i. cuza iaşi, li, iic, geografie, pp. 89-107. 5. muntele, i., ‘românia la capătul tranziţiei demografice: disparităţi şi convergenţe regionale’, paper presented at sesiunea anuală de comunicări ştiinţifice a institutului de geografie, june 19, 2009. 6. popescu, c. 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(eds.), a companion to economic geography, oxford: blackwell, 2000, pp. 187-201. 16. ungureanu, a., groza, o. and muntele, i. (coord.), moldova. forţa de muncă şi aşezările în tranziţie, iaşi: corson, 2002. 275 statistical data and reports 1. buletine informative [informative bulletins], agenţia judeţeană pentru ocuparea forţei de muncă, 2009. 2. comunicate de presă [press releases], direcţia judeţeană de statistică iaşi, 2009. 3. conceptul strategic de dezvoltare teritorială a româniei 2007-2030 [strategic concept of territorial development of romania 2007-2030], 2008. 4. date statistice tempo on-line [statistical data tempo on line], institutul naţional de statistică, 1990-2009. 5. disparităţi regionale în românia 1990-1994 [regional disparities in romania 19901994], grupul de consultanţă ramboll, 1996. 6. planul de amenajare a teritoriului judeţean iaşi [master plan of iaşi county], consiliul judeţean iaşi, 2001. 7. planul integrat de dezvoltare pentru polul de creştere iaşi 2009-2015 [integrated plan of development for the growth pole iaşi 2009-2015], asociaţia zona metropolitană iaşi, 2009. 8. planul 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topul firmelor [top of firms], camera de comerţ şi industrie iaşi, 2008. acknowledgements: thanks are due to diana dogaru and paul şerban, researchers at the institute of geography, romanian academy, for drawing the maps (figures 1 and 2, 4 and 5, respectively). untitled 50 abstract this paper addresses the issues of concept, features and place of the administrative appeal in serbian administrative law. special attention is given to the relation between administrative appeal and judicial review of administrative acts. the paper is part of a wider analysis regarding the effectiveness of administrative appeals in the framework of administrative justice on european level, put forward at the egpa conference in toulouse in 2010. the paper is limited to scrutiny of normative aspects of administrative appeal, with the intention to be followed by an empirical research on its effectiveness. administrative appeal in serbian law vuk cucić vuk cucić assistant professor, faculty of law, university of belgrade, belgrade, serbia tel.: 00381-(0)11-3027.774 e-mail: vukcucic@ius.bg.ac.rs transylvanian review of administrative sciences, no. 32 e/2011, pp. 50-73 51 1. introduction 1.1. significance of administrative legal remedies despite being chronologically the first form of controlling activities of administration, administrative legal remedies did not lose their position and significance in the process of protection of rights and legal interests of private parties (natural persons and organizations) vis-à-vis administration. they are equally important means for the protection of legality and public interest. even after the work of administration was subjected to judicial control, as external, more objective type of legal control, administrative legal remedies, i.e. administrative control of administration, remained a vital ingredient in the proceeding for review of administrative acts. the compatibility of judicial and non-contentious, administrative legal protection has been recognized at a pan-european level by the council of europe. it has been affirmed that administrative legal remedies help developing greater respect for individuals’ rights and freedoms and building a climate of confidence between administration and citizens. “furthermore, the advantage of such remedies is that they keep judicial disputes to a minimum and relieve the workload on the courts” (themis project, 1997, p. 149). the council of europe gave noticeable weight to these remedies in its recommendations in the area of administrative law (coe rec(2007)7; coe r (80); coe, rec(2009)1). in spite of often mentioned “lack” of impartiality and objectiveness in relation to judicial review of administrative acts, administrative legal recourses have their advantages in this comparison. they enable wider, deeper and faster control of administrative acts, as well as broader authorizations of controlling authorities. before going in medias res, we need to briefly outline the notion of acts that can be rendered in administrative proceeding and legal remedies which can be used against them. this will enable us to describe, analyze and explain the concept and place of the administrative appeal in serbian law. 1.2. administrative acts in serbian law, only administrative acts can be rendered in administrative proceeding and only they can be challenged by administrative appeal. the administrative proceeding is regulated by general administrative proceeding act (gapa)1. gapa codifies general administrative proceeding and most of the state administration authorities use it when making their decisions. other authorities and organizations of public administration that perform their duties in special administrative areas (e.g. environment, taxes, competition, public procurement, data protection, home affairs, military etc.) use it as a set of subsidiary rules when deciding. laws regulating their respective administrative domains (gapa refers to them as “special laws”) add special procedural features to their decision-making process. 1 official gazette of the federal republic of yugoslavia, no. 33/1997 and 31/2001, official gazette of the republic of serbia, no. 30/2010, enacted on july 11, 1997. 52 the administrative act in serbian legal doctrine is defined as a legal (normative), individual, unilateral, binding act of administrative authority deciding on administrative matters (krbek, 1957, p. 16; milkov, 1983, p. 349). administrative matter is a legal, individual, non-contentious situation in which the administrative authority is entitled to and obliged by the law to decide on a right, duty or legal interest of an individual or an organization. administrative acts are individual in the sense that they refer to a particular case or cases and their application is limited to that case(s). gapa is not using this theoretical terminology. instead of administrative act, it uses the term resolution. resolution is the most common name for administrative acts, although special laws sometimes use other terms, such as, permit, consent, approval, decision etc. unlike gapa, administrative disputes act (ada)2, the law regulating judicial review proceeding, contains a definition of the administrative act. pursuant to its article 4, the administrative act is an individual legal act, by which the competent authority decides on certain right or duty of a natural or legal person, or another party in administrative matter, by direct application of regulations. there is a rich caselaw on whether certain sorts of acts are administrative acts or not (bačić and tomić, 1985, pp. 49-57). ada further defines the administrative matter as an individual non-contentious situation of public interest in which the need for authoritative legal determination of future party’s behavior derives directly from legal regulations (art. 5 ada). it can be seen that main elements of the administrative act and the administrative matter, identified in the theory of administrative law, via ada, found their place in legislation. general administrative acts, i.e. bylaws issued by administrative authorities, administrative contracts and factual acts of administration cannot be challenged by administrative appeal. serbian administrative law distinguishes three different features that an administrative act can have. the administrative act can be non-appealable, final3 and enforceable. these features are reached at different procedural moments. reaching them is connected with the usage of administrative legal remedies and challenging such acts before the administrative court. for this reason they must be explained. the administrative act becomes non-appealable when an administrative appeal cannot (or can no more) be filed against it4. therefore, if it was allowed, appeal was not (timely) used or was exhausted. 2 official gazette of the republic of serbia, no. 11/2009, enacted on december 29, 2009. 3 it must be explained that in serbian law an administrative act can reach different levels of finality, i.e. non-appealability. the problem arises when the terms used for these two different procedural stops are translated. in english, they both translate as final administrative act, even though there is a linguistic distinction in serbian language [konacan and pravosnazan]. in order not to unnecessarily complicate this matter, we used different terms for them in english, which in the best possible way describe their substance, even though this could be questionable from the linguistic standpoint. 4 at this procedural moment, an administrative act was either 1) rendered by a first instance administrative authority and appealed against to the second instance (higher) adminis53 when an administrative act cannot (or can no more) be challenged by both administrative appeal and by the suit to the administrative court, it becomes final5. the suit was either not (timely) used or was exhausted. only non-appealable administrative acts can be challenged before the administrative court. therefore, final administrative acts are always non-appealable, as well. final administrative acts can be challenged only by extraordinary legal remedies. the administrative act can also become enforceable. this means that its content can be enforced, i.e. realized by force, if necessary. as a rule, an administrative act becomes enforceable when it becomes non-appealable. however, it can become enforceable before that, if the administrative appeal, which can be submitted against it, does not delay its execution. 1.3. remedies against administrative acts administrative acts can be challenged by administrative legal remedies, which encompass administrative appeal, as a regular (ordinary) administrative legal remedy, and a set of extraordinary legal remedies, as well as before the administrative court. the right of appeal is a constitutionally recognized right. article 36, paragraph 2 of the constitution of the republic of serbia6, provides that everyone has the right to an appeal or other legal remedy against a decision determining his/her rights, duties or legally based interests. moreover, one of the fundamental principles of administrative proceeding is the principle of two-tier proceeding (principle of deciding in two instances) (art. 12 gapa), prescribing the right of a party to an administrative proceeding to appeal against an administrative act rendered by an administrative authority in the first instance. also, this principle explicitly excludes a three-tier proceeding, by excluding the possibility of filing an administrative appeal against the administrative act rendered by the second-instance (higher) administrative authority (appellate authority). the principle of two-tier proceeding is, however, not a universal one. it allows for the exclusion of the administrative appeal in certain administrative matters, provided that it is prescribed by a law (act of parliament), which offers another means for protection of rights and legal interests of parties and protection of legality. therefore, the possibility to file an administrative appeal is a rule, but both gapa and special laws can and do contain exceptions (infra 2.4.). there is only one administrative court in the republic of serbia. it is part of the judiciary, not part of the special administrative court system. it is one of the courts trative authority which rendered its own administrative act upholding (appeal was dismissed or rejected) or changing the first-instance administrative act; 2) rendered by an administrative authority whose acts cannot be appealed to a higher administrative authority; or 3) not appealed in the prescribed period of time. 5 at this procedural moment, the non-appealable administrative act was 1) challenged before the administrative court, which rendered its judgment upholding such an act (the suit was dismissed or rejected); or 2) not challenged before the administrative court in the prescribed period of time. 6 official gazette of the republic of serbia, no. 98/2006. 54 with special competence7. the administrative court is competent to adjudicate administrative disputes in the first instance for the entire territory of the republic of serbia8. administrative court proceeding (judicial review proceeding) is initiated by the suit to the administrative court (art. 17 ada). the suit can be submitted only against non-appealable administrative acts (art. 14 ada). administrative appeal is mandatory in the serbian legal system, given that, provided it is not excluded, it has to be exhausted prior to initiation of judicial review proceeding. as a rule, administrative court proceeding has only one instance, i.e. there is no regular legal remedy in it. therefore, after the administrative court decides on it, the administrative act becomes final (provided it was not annulled by the court). however, ada prescribes an extraordinary legal remedy, request for reassessment of decision of the court (arts. 49 – 55 ada)9. competent to decide on this legal remedy is the supreme court of cassation of the republic of serbia, as the highest court in the country (art. 9 ada). finally, gapa prescribes a set of six extraordinary10 legal remedies. these remedies can be invoked on different grounds, on the initiative of different subjects (parties’ request, ex officio, request of the public prosecutor) and before different authorities. some of them can be used against non-appealable administrative acts, i.e. after the administrative appeal has been exhausted, while others can be used against final administrative acts, i.e. even after the judicial review has been done. they are used for challenging administrative acts on the basis of strictly enumerated, more serious illegalities, within longer time periods or without time limitation. one of them can even be used for removal of perfectly legal, but “dangerous” for the public interest administrative acts. they will be mentioned only where necessary for explaining the effects of administrative appeal. deeper analysis thereof shall not be part of this paper. 2. administrative appeal 2.1. general besides the principle of two-tier proceeding, gapa contains a special chapter dedicated to administrative appeal (chapter xiv). it contains provisions dealing with who has the right to appeal, when, against which and whose (in)actions and to which extent, to whom, in what time, on what grounds, what should it contain, what are its effects, what are the powers of appellate authorities etc. 7 art. 11 of the courts’ organization act, official gazette of the republic of serbia, no. 116/2008 and 104/2009, also art. 8 ada. 8 art. 29 of the courts’ organization act and art. 8 ada. 9 ada contains another extraordinary legal remedy – repetition of (administrative-court) proceeding (arts. 56 65 ada). unlike request for reassessment of decision of the court, it has no link with administrative proceeding. it can be used only for repetition of administrative court proceeding for those reasons that appeared in that proceeding only. for this reason, it is not analyzed in this paper. 10 literal translation of serbian term [vanredni pravni lekovi]. 55 2.2. notion of administrative appeal administrative appeal, as prescribed by gapa, is a regular (ordinary) legal remedy in administrative proceeding. in order to file the suit to the court, a party first has to exhaust the administrative appeal (mandatory model). there are no exceptions to this rule – if administrative appeal is allowed against an administrative act, it has to be used prior to initiation of the judicial review. as mentioned before, when administrative appeal can no more (or cannot at all) be used, an administrative act becomes non-appealable. the “regularity” of administrative appeal derives from its main features. first, the administrative appeal does not allow for an administrative act to become nonappealable. the administrative act will not become non-appealable until the time period for filing administrative appeal has lapsed, and if an administrative appeal was filed within this time period, until a decision on it was rendered. second, administrative appeal is a regular legal remedy because it is, as a rule, permitted against all first-instance administrative acts (though exceptions exist). third, second instance administrative proceeding, i.e. regular administrative control proceeding, is being initiated by the submission of administrative appeal. forth, the administrative appeal is the only legal remedy, which can be used to challenge both legality and opportunity (merits) of administrative acts. therefore, it is regular in the sense that it is a remedy initiating regular administrative control of all administrative acts on all the possible grounds. 2.3. the right of appeal the administrative appeal can be submitted by a party11 that participated in the first instance proceeding, who is not satisfied with the administrative act issued in it (art. 213, para. 1 gapa). according to the case-law, the same applies to the persons or entities that did not participate in the first instance administrative proceeding as parties, even though they had the right to do so (tomić and bačić, 2007, p. 305). in addition, the administrative appeal can be submitted by the public prosecutor, the public defense attorney and other state authority if: 1) they are entitled by a law to do so; and 2) they believe that the law was breached by an administrative act, in favor of an individual or an organization and to the expense of the public interest (art. 213, para. 2 gapa). 11 the following can be parties to an administrative proceeding: 1) natural persons; 2) legal persons; 3) state authorities, organizations, inhabitants, groups of persons etc. not having legal capacity, if they can be holders of rights and duties decided on in the administrative proceeding; 4) trade unions, when proceeding relates to rights or duties of their members; and 5) the public prosecutor, the public defense attorney and other state authorities, when they are entitled by a law to defend public interest in the proceeding (art. 40-42 gapa). 56 2.4. exclusion of the right of appeal administrative appeal, being regular legal remedy, as a rule, can be submitted against all administrative acts issued in the first instance administrative proceeding. however, there are two types of exceptions. first, it is generally not allowed to appeal against administrative acts of certain state authorities when they are deciding in the first instance. these are the highest state authorities, such as the parliament, the president of the state and the government. administrative appeal is not allowed here for the simple reason that there is no higher state (administrative) authority in hierarchy12. if it is prescribed by the law, individual acts of these authorities can be challenged before judiciary or the constitutional court. furthermore, the administrative appeal cannot be submitted against first instance administrative acts of independent state administration authorities (art. 214, para. 1 gapa). there are three sorts of state administration authorities – ministries, administrative authorities within ministries, and special (administrative) organizations (art. 1 of the state administration act13 – saa )14. independent state administration authorities are ministries and special organizations which are not supervised by any ministry. nevertheless, there are exceptions to this rule. first instance administrative acts of ministries and non-supervised (independent) special administrative organizations can be appealed to the government (art. 59, para. 3 saa), only when this is stipulated by a special law (art. 214, para. 1 gapa)15. 12 there are other reasons for exclusion of the right to appeal their decisions. these are the highest state authorities, with high political reputation, making political decisions, which could not be subject to review or control of administrative authorities that are subordinated to them. in addition, they rarely decide in administrative matters (tomić, 2009, p. 309, fn. 296). 13 official gazette of the republic of serbia, no. 79/2005 and 101/2007. 14 ministries are independent state administration authorities, created to perform state administration tasks in one or more connected areas (art. 22 saa). ministries may have one or more administrative authorities within them, created for performing executive or inspection tasks, which by their nature or amount require more independence than that having the internal organizational units of a ministry (art. 28, para. 1 and 2 saa). special organizations (in literature, also referred to as administrative organizations) are created for performance of expert tasks, which by their nature require more independence than that having authorities within ministries (art. 33 saa), for example, republic geodesic directorate. special organizations can be under supervision of a certain ministry or can be subjected directly to the government (“independent” administrative organizations) (art. 50 saa). 15 the most recent changes to gapa (act on changes to the general administrative proceeding act, official gazette of the republic of serbia, no. 30/2010) were performed, mainly, with the aim of adjusting terminology. namely, gapa was enacted in 1997, as a law of the former federal republic of yugoslavia (fry), which later dissolved, leaving the republic of serbia as a unitary state. gapa, as well as all other federal laws, continued to be applied as the laws of the republic of serbia. however, their terminology was not adapted to the new circumstances and still mentioned non-existent division between federal 57 second type of exceptions had already been mentioned. right to administrative appeal can be excluded by a special law, offering another means for protection of rights and legal interests of parties and protection of legality (art. 12 gapa). this exception is often used when reasons of legal policy require public authorities or organizations to be independent from the executive. administrative acts of such authorities and organizations are non-appealable at the moment they are rendered and are subject only to judicial review, e.g. the national bank of serbia16 and independent regulatory agencies, such as, the commission for securities17, the commission for the protection of competition18, the republic radio-diffusion agency19 and the republic agency for telecommunications20. nevertheless, in many administrative areas, highest administrative authorities (ministries, non-supervised special administrative organization, independent regulatory agencies), given the nature of the request, position of the party submitting the request or for reasons of legal policy, are those deciding in the first instance proceeding. this impairs the principle of two-tier proceeding, leaving the party with the possibility to directly seek judicial protection. with the aim of ameliorating party’s position in such cases, and with the idea of integrality of administrative and judicial legal review of administrative acts, ada set down a possibility of filing an extraordinary legal remedy in the administrative court proceeding – request for reassessment of decision of the and republic (former federal entities) authorities and federal and republic regulations. therefore, the changes to gapa related mainly to erasing this terminology. nevertheless, whether intentionally or not, paragraph 1 of the article 214 was completely changed (art. 20 of the act on changes to the general administrative proceeding act). aside from words “federal” and “republic”, the word “independent” in front of “other state authorities” has been erased. this created the situation in which the administrative appeal cannot be submitted against administrative acts of lower state (administration) authorities, unless this is explicitly prescribed by a special law. this was not the case before the said changes. it is doubtful that the legislator had the intention to make such a substantial change (almost making the administrative appeal an extraordinary legal remedy with respect to the possibility of its submission against administrative acts), given that the entire law contains only technical (terminology) changes. due to the fact that the changes are so recent (may 5, 2010), we cannot predict the future position of administrative practice and case law on this issue. additionally, a working group for writing a draft of the new gapa was formed. it is likely that the new draft shall correct this, probably non-intentional, inconsistency. for these reasons, we presented this provision the way it was interpreted before the changes. 16 article 9 of the banks act, official gazette of the republic of serbia, no. 107/2005. 17 article 225 of the securities and other financial instruments market act, official gazette of the republic of serbia, no. 47/2006. 18 article 38 of the protection of competition act, official gazette of the republic of serbia, no. 51/2009. 19 article 54 of the radio-diffusion act, official gazette of the republic of serbia, no. 42/2002, 97/2004, 76/2005, 62/2006, 79/2005, 85/2006, 86/2006, 41/2009. 20 article 23 of the telecommunications act, official gazette of the republic of serbia, no. 44/2003. 58 court. this legal remedy can be used against judgments of the administrative court. amongst other reasons, it can be used when administrative appeal was excluded in the administrative proceeding (art. 49, para. 2, subpara. 3 ada). consequently, combined administrative and judicial control of administrative acts gets potential third instance (first instance administrative proceeding, proceeding before the administrative court upon submitted suit, and proceeding before the supreme court of cassation upon the request for reassessment of decision of the court), as it would normally have, had not the administrative appeal been excluded (first instance administrative proceeding, appellate proceeding, proceeding before the administrative court upon submitted suit). as a result “integral legal protection in administrative matters is more balanced and more complete” (tomić, 2010, p. 41). only when administrative appeal is excluded, and thus, an administrative act is non-appealable as of the moment it is rendered, a party may go straight to judicial review proceeding. 2.5. competence for deciding on administrative appeal competence to decide on administrative appeal has the authority determined by a law, i.e. by a special (material or organizational) law regulating certain administrative area (art. 215 gapa) (determination of the competence ratione materiae). if an administrative act in the first instance was rendered by a company or other organization entrusted with administrative powers, and the second instance authority is not determined by a law, then the appeal shall be decided on by the state authority competent for the pertinent administrative area (art. 219 gapa). if the first instance administrative act was a complex one, i.e. if it was a result of one authority issuing it and another one giving its consent, authorization or confirmation thereof, than somewhat different rules apply. the competent authority for deciding on the administrative appeal is the one determined by a law, except if this would be the authority that gave the consent, authorization or confirmation on the appealed act (art. 218 gapa). obviously, that authority is not allowed to both participate in the making of the first instance administrative act and to decide on the appeal. in such a case, the authority competent to decide on the administrative appeal would be the one determined by a law (usually the authority competent to decide on the administrative appeal to the decisions rendered by the authority giving consent, authorization or confirmation), and if such authority is not determined, such an act would be non-appealable. such an act could be directly challenged before the administrative court. the same authority cannot decide in both first instance and on the administrative appeal (art. 216 gapa), excluding also the possibility of different persons working within the same authority to do that. gapa foresees one exception to the mentioned rule. namely, if an administrative act was rendered by a dislocated unit of a state administration authority, that authority (its head) is then competent to decide on the administrative appeal against it (art. 217 gapa). this is the exception to the rule that administrative appeal has devolutionary effect, i.e. the effect of transferring competence to another authority (infra 2.7.). 59 2.6. subject of administrative appeal administrative appeal can be submitted against first instance administrative act (with the exceptions we mentioned previously) and against first instance silence of the administration. gapa mentions two kinds of acts rendered in administrative proceeding, resolutions and conclusions. resolution is the administrative act, which resolves the merits, the main issue, the subject of the administrative proceeding, i.e. the administrative matter (art. 192 gapa) (supra 1.2.). resolutions are rendered, as a rule, in the end of the proceeding and they are independent acts. as opposed to resolutions, as acts on the merits of the case, conclusions determine issues pertaining to administrative proceeding. conclusions are mainly procedural acts, i.e. acts determining procedural issues (all other issues except the main issue – administrative matter), such as admission of the evidence, holding a public hearing etc. these acts are rendered in the course of proceeding and their purpose is to facilitate conduct of proceeding and issuance of a resolution. they are accessorial in nature, meaning that, even though they are rendered in proceeding, a resolution still has to resolve the main issue21. distinction between these two acts is important with respect to the possibility of submitting appeal against them. resolutions are appealable as a rule. appeal against them is always allowed, except where it is explicitly excluded by a provision of a special law (art. 213, para. 1 gapa). on the contrary, conclusions are nonappealable as a rule. they cannot be appealed unless provisions of gapa or other laws provide so (art. 212 gapa). therefore, there are two kinds of conclusions with this regard, those against which special administrative appeal is allowed and those against which it is not. differentiation between them is important in the sense that the prior have to be in written form, justified (formally motivated, reasoned) and must contain recourse instruction, while the reasons (motivation) for the latter are given in the explanation (motivation) of the resolution rendered in the end of an administrative proceeding and they can be appealed only within administrative appeal against that resolution. 21 there are three special sorts of conclusions that are not accessorial, i.e. when they are rendered there is no need for issuance of a resolution. these are: conclusion suspending (ending) administrative proceeding, conclusion dismissing request for initiation of administrative proceeding and conclusion dismissing administrative appeal. administrative proceeding shall be suspended by a conclusion, mainly, when there is no possibility or need to resolve the administrative matter that is its subject. this can happen, for instance, when the party explicitly or implicitly (as prescribed by a law) withdraws its request, when a party dies, when it becomes impossible to execute the administrative act that should be rendered etc. conclusions dismissing party’s request or appeal are rendered for formal, procedural reasons. request or appeal shall be dismissed if it is not allowed, untimely (late or premature), not complete or submitted by an unauthorized person. however, in all of these cases, proceeding ends for procedural reason, without the resolution of its subject, i.e. administrative matter. 60 silence of the administration is a theoretical construction enabling parties to appeal to a higher authority when a first instance administrative authority obliged to render a decision on request of a party did not do so. this means that in certain cases an administrative authority is obliged to render an administrative act within a time period prescribed by the law. if it fails to deliver the act in such cases, a party may submit an administrative appeal as if its request was rejected, i.e. as if a negative administrative act was rendered (art. 236 gapa)22. 2.7. effects of the administrative appeal the administrative appeal has two legal effects: the devolutionary and the suspensive effect. having devolutionary effect means that it transfers jurisdiction for deciding on a certain matter from the first instance authority to the second instance (higher, appellate) authority. in other words, the same authority cannot be competent to decide both in the first instance and on the appeal (art. 216 gapa). the appellate authority is put in the position of the authority that rendered the appealed administrative act. it can re-analyze challenged administrative acts and has the authority to remove and change them. this is the main feature distinguishing administrative appeal from the objection, as a special kind of internal (administrative) recourse. objection is a remonstrative remedy, i.e. it does not transfer jurisdiction for deciding on a certain matter. instead, the same authority is called upon to decide on a certain matter for the second time. hence, the administrative appeal appears to be a more objective legal recourse than objection, not being means of self-control, but of a true control of one entity over another. objection, as a legal remedy, exists in special administrative domains, such as radio-diffusion law. this legal effect of administrative appeal endures serious exception. administrative acts rendered by a dislocated unit of a state administration authority, are being appealed before the head (chief) of that authority (art. 217 gapa). exception is serious due to the fact that, according to serbian administrative law, (central) state administration authorities are appellate instances in numerous cases. nevertheless, it has to be said that this kind of derogation of transferring effect is not complete. formally, the same authority appears twice in a row in the same case. still, substantively, different persons are deciding. first, we have “local” staff making the decision and then afterwards, the people from the “center” controlling their work. z. tomić calls this “quasi-two-tier proceeding”. he mentions another example of derogation from “real” two-instance 22 gapa as a general law attaches negative meaning to the silence of the administration. however, other laws may and do have a different solution. they consider silence to be positive, i.e. if the administrative authority obliged to render an administrative act does not do so in the prescribed period of time, it is considered that the party’s request was accepted. such a solution has, for example, article 26 of the registration of commercial enterprises act, official gazette of the republic of serbia, no. 55/2004, 61/2005. 61 proceeding. this is the competence of ministers to decide on appeals filed against first instance administrative acts of authorities within ministries (e.g. inspectorates and directorates) (art. 59, para. 2 saa). although ministries and authorities within ministries are different kinds of state administration authorities, although they are formally separate authorities, they are closely connected (tomić, 2007, p. 541). the second legal effect of administrative appeal is the suspensive effect. the time period for filing administrative appeal has the same effect. this is to say that the first instance resolution cannot be executed (enforced) before a time period for filing the administrative appeal, as prescribed by the law, has lapsed. if the appeal has been filed within this time period, then the resolution cannot be executed before decision on the appeal has been made (art. 221, para. 1 gapa). consequently, the rule is that the appeal suspends execution of the first instance resolution. this rule undergoes exceptions as well. administrative appeal, as well as the time period for its filing, shall not suspend, i.e. delay execution of first instance resolution provided that: 1) this is explicitly stipulated in a law; 2) the conditions for undertaking emergency measures, as provided in gapa, are met; or 3) delay of execution could result in party incurring damage that would be hard to repair (art. 221, para. 2 gapa). as for the first exception, it must be mentioned that ada has a provision enabling the appellant to request the administrative court to postpone execution of a resolution if the following conditions are met: 1) due to its execution, the appellant would incur damage that would be hard to repair; 2) execution is not opposed to public interest; and 3) the opposite party or third interested person would not incur bigger or nonrepairable damage due to the postponement (art. 23 ada). the administrative court has to decide on this issue within five days as of the day of filing of the request. this provision reinforced the suspensive effect of the administrative appeal. it also balanced positions of parties in multi-party administrative proceedings, by giving similar opportunities to both parties, i.e. the party whose interest is execution of a resolution can invoke exception made by gapa, while the other party, whose interest is opposite, can call upon the administrative court to decide otherwise23. therefore, the administrative appeal has de jure suspensive effect, which can be eliminated in certain cases, either by a law (gapa or a special law), or by an administrative authority, under the conditions set down by the law. however, when the administrative appeal does not have suspensive effect pursuant to a certain law, the administrative court can grant it such effect upon a request of the party submitting the appeal. 23 the old administrative disputes act did not contain such a provision. this was not in accordance with provisions of the council of europe’s recommendation no. r (89) 8 of the committee of ministers to member states on provisional court protection in administrative matters, adopted on september 13, 1989 (cucić, 2009, pp. 257-261). 62 if the administrative appeal (when allowed) is filed against a conclusion, then the rule is the other way around. as a rule, administrative appeal against a conclusion does not postpone its execution, unless a law or the conclusion itself provides to the otherwise (art. 212, para. 4 gapa). 2.8. time period for filing administrative appeal and deciding on it the general time period for filing an administrative appeal is 15 days as of the day of delivery of the first instance resolution (art. 220 gapa). other laws can set a different (shorter or longer) time period. if a potential appellant misses this time period, he/she is precluded from filing the appeal and the resolution becomes both non-appealable and final. the only thing left then to do, is to request a return (of the proceeding) in a previous state (restitutio in integrum), provided there is a justification for the failure to file administrative appeal in the prescribed period of time (art. 93-98 gapa), and then submit the appeal. the former provision applies if a first instance resolution was rendered. however, if there is no first instance resolution, but a silence of the administrative authority, whose decision, if rendered, could be appealed, than the time period is set differently. administrative appeal can be filed, as if party’s request was rejected, after the time period for rendering the first instance resolution has lapsed without issuance of an act. gapa prescribes that this period is one or two months as of the day when a party submitted its request or the day when an administrative authority initiated administrative proceeding ex officio in the interest of a party24, depending on whether the administrative authority could conduct a shortened administrative proceeding (conditions are set in art. 131 gapa) or it had to conduct a regular administrative proceeding (art. 208 gapa). gapa allows for another law to set a different time period, but unlike the time period for administrative appeal when first instance resolution was rendered, this time period can only be shorter than the one in gapa. administrative appeal filed before this period lapsed shall be dismissed as premature (art. 224, para. 2 gapa). once this period lapses, a party may submit the administrative appeal at any time, without limitation. if the administrative authority would render the resolution after this period lapsed, but before the party submitted an administrative appeal, then the regular time period of 15 days as of the day of delivery of such resolution (or a different period laid down in a special law) would apply. gapa, as well, sets a time period for rendering and delivering an act deciding on administrative appeal. this time period is two months as of the day of submission of the administrative appeal, or a shorter period prescribed by another law (art. 237 gapa). 24 such cases are rare, but they, nevertheless, exist. for example, article 125 of the family act (official gazette of the republic of serbia, no. 18/2005) prescribes that the administrative proceeding for appointment of a tutor to a minor is initiated ex officio by a competent administrative authority. this is in the interest of the minor. 63 time periods for submitting and deciding on the appeal, as well as the time periods for rendering first instance resolutions (i.e. for appealing against administrative silence) are set in such a way as to insure effectiveness of administrative work, and they do not impede party’s right to trial within a reasonable time, as prescribed by article 6 of the european convention for the protection of human rights and fundamental freedoms. the mentioned time periods also give a party sufficient time to prepare the case, especially given that the appellant is not obliged to legally justify the appeal, and it suffices if he/she only indicates in which way is unsatisfied with the issued administrative act (art. 222, para. 1 gapa). this is to say that this general time limit for the submission of administrative appeal does not hinder party’s right of access to court (given that the administrative appeal system in serbian law is mandatory) within the meaning of article 6 of the european convention. however, questions could be asked about administrative appeals in some of the special administrative areas, such as the time period of three days as of the day of delivery for filing administrative appeal against the resolution on disciplinary measure against a pupil (including expulsion from school)25. it would have to be seen in a particular case whether this time period precludes a party to exercise the right to access to court, as a part of the right to a fair trial (especially in this very sensitive area of pupils’ rights). 2.9. content of administrative appeal the administrative appeal must contain all the information necessary for the identification of the appellant (name, address, name of their representative, if there is one) and the challenged act (name and address of the administrative authority which rendered it, its number and date of issuance) (art. 222, para. 1 gapa). the appellant is not obliged to legally justify the appeal, and it suffices if he/she indicates in which way is unsatisfied with the issued act (art. 222, para. 1 gapa). the appellant is allowed to put forward new facts and new evidence in the administrative appeal, under the condition that justification is presented for not putting them forward in the first instance proceeding (art. 222, para. 2 gapa). new facts are those that existed at the time the appealed resolution was rendered, i.e. during the first instance proceeding, but, for a justified reason, the appellant was not able to put them forward in the first instance proceeding26. thus, this does not apply to the facts, which appeared after the first instance proceeding ended. they could potentially lead to a new administrative proceeding. if there was an opposite party in the first instance proceeding, this party has to be given the opportunity to pronounce on those new facts (art. 222, para. 3 gapa). 25 art. 115, para. 11 of the basis of the system of education and upbringing act, official gazette of the republic of serbia, no. 72/2009. 26 decision of the (former) supreme federal court no. uz. 6552/58 as of november 21, 1958. 64 2.10. work of the first instance authority on administrative appeal administrative appeal is formally, physically handed in to the first instance authority, i.e. the one that rendered the challenged act (art. 223, para. 1 gapa). even if a party would hand in the administrative appeal directly to the appellate authority, the latter would send it to the first instance authority (art. 223, para. 2 gapa). reason for doing this is the fact that the authority whose act is appealed has a role to play in the appellate proceeding as well. it has certain authorizations with regard to administrative appeal. in addition, the appellate authority shall deliver its resolution rendered on administrative appeal to the appellant through the first instance authority (art. 238 gapa). the aim of this provision, as well as of the previous one, is to facilitate the appellate proceeding for the appellant, because it is easier to communicate with the first instance authority, with which he/she had already communicated in the past and which might be closer to his/her place of residence, than with the appellate authority (especially in the case of administrative appeal to the head of the state administration authority, when its dislocated unit conducted the first instance proceeding). to begin with, first instance authority has to check whether the administrative appeal fulfils the necessary formal (procedural) conditions, i.e. whether it is allowed, timely and submitted by a person authorized to do that. if any of these conditions is not met, the first instance authority shall dismiss it by a conclusion (art. 224, para. 1-3 gapa). against a conclusion dismissing the administrative appeal, a special (procedural)27 appeal can be filed to the authority which would have the competence to decide on the dismissed administrative appeal. if this authority finds that the initial (substantial) administrative appeal was formally (procedurally) correct, it shall decide on the initial administrative appeal as well (art. 224, para. 4 gapa). in this way, the appellant is protected from arbitrariness of the first instance authority, which might try to cover up its mistakes in this way. further authorization of the first instance authority is to replace its resolution. this is the case in which the first instance authority, upon receiving an administrative appeal, realizes that the appeal is well-founded, i.e. that it made an error when it issued the appealed resolution. in that case, the first instance authority is authorized to replace its previous resolution with a new one, in order to correct itself (art. 225 gapa). first instance, authority can do this, under prescribed conditions, with or without prior completion of the conducted first instance proceeding (art. 226 and 227 gapa). in any case, a new appeal can be filed against new (replacing) resolution (art. 225-227 gapa). this is an additional guarantee, necessary because the first instance authority might repeat the previous mistake or make another one. these provisions 27 z. tomić makes a linguistic difference between initial administrative appeal, filed against first instance act, calling it substantial appeal, and this appeal, which he calls procedural, given that it protects the appellant’s right to appeal, as a special procedural right, distinguishable from the rights and/or duties which were decided on in the appealed act (tomić, 2009, pp. 312-313). 65 offer a self-control mechanism, which could benefit both the discontented party, as he/she can get the request satisfied sooner, and the first instance authority, which can safeguard its reputation by correcting its own erroneous work. this mechanism can be compared to objections, as remonstrative, self-controlling remedies. it can be said that their content is the same, i.e. that the authority is given a second chance. additionally, it can be said that this mechanism has a slight advantage over objection, given that the appellant does not have to wait for the same authority to pronounce on the same matter the second time before another form of (true, outer) control can be initiated, i.e. administrative appeal. this is another element encompassed by administrative appeal, as a complex legal remedy. it can be explained here that it is not possible to challenge the same administrative act by a legal remedy before the administrative authority that rendered it and afterwards, before a higher administrative authority by using administrative appeal. there are two reasons for this. the first is the one mentioned in the previous paragraph. administrative appeal enables the authority that rendered the appealed administrative act to replace it, and if it does not do so, it enables the second instance authority to review it. therefore, insertion of another legal remedy where administrative appeal is already allowed would be redundant. the second reason is linked with one of the fundamental principles of administrative proceeding – principle of finality of administrative acts. pursuant to this principle: “resolution which can neither be appealed, nor challenged in administrative dispute [before a court] (final resolution), and by which a party gained certain rights and/or by which a party was ordered certain obligations, can be annulled, canceled or changed only in the instances prescribed by this law” (art. 13 gapa). thus, only the so-called “positive” administrative acts, i.e. the administrative acts by which a party was recognized certain rights or ordered certain obligations, can become, what is in theory of administrative law called, materially (substantially) final. this is to say that the administrative matter, which was resolved by such an administrative act, cannot be decided upon again – ne bis in idem (except upon extraordinary legal remedies). of course, this can happen only once the administrative act became formally final, i.e. after administrative appeal and the suit to the court are exhausted. on the other hand, the so-called “negative” administrative acts, i.e. those rejecting party’s request, can become formally final, but never materially final. consequently, if such an administrative act is issued, even if administrative appeal and the suit to the administrative court were unsuccessfully used against it, it does not prevent the party to submit again a request for deciding upon the same administrative matter (same case). this has been confirmed both in theory (dimitrijević, 1963, pp. 303-305; marković, 2002, p. 314; tomić, 2009, pp. 255-256) and case-law28. according to the sentence of the judgment of the supreme 28 this stand has been maintained in the case-law for more than 50 years judgment of the federal supreme court uz, no. 4707/58 as of november 7, 1958, judgment of the supreme court of vojvodina p. no. u 682/77 as of december 12, 1977, judgment of the supreme court of serbia u-v 1252/06 as of april 23, 2008. 66 court of serbia, “[a]n administrative matter is finally resolved if a party gained certain right or was ordered certain obligation by a final resolution, and not when the request of a party was rejected”29. this means that, if party’s request was rejected by an administrative act, a party can file administrative appeal against it, but it can also submit a new request for the resolution of the very same administrative matter (same case) to the same authority. in this way, the party is not appealing the rendered administrative act, but is actually asking the authority to render a new administrative act differently resolving the same administrative matter. if the administrative authority does so, it revokes (even though not formally) its previous, negative administrative act. therefore, this possibility resembles optional remonstrative (self-control) legal remedies existing in administrative law of certain countries30. of course, even after this second attempt with the same authority, the party could file administrative appeal, or if it is excluded, the suit to the administrative court. if the first instance authority does not dismiss the administrative appeal, nor finds it necessary to replace its previous act, it shall send the appeal, along with the file of the case, to the second instance authority, within 15 days as of the day of receipt of the appeal (art. 228 gapa). 2.11. resolving of the second instance authority on administrative appeal different terminology used in gapa for tasks of the first instance authority (work on the appeal) and the second instance authority (resolving, deciding on the appeal) is not unintended. quite to the contrary, it indicates the different powers possessed by these two entities. the first has the authority to formally check the appeal, and potentially correct its own errors, which could be again appealed, while the other has the authority to make a decision on the content of the appeal and legality and opportunity (merits) of the challenged act. the appellate authority first checks the formal, procedural correctness of the administrative appeal (whether it is allowed, timely and submitted by an authorized person) once again. if it finds that the first instance authority failed to notice any of these procedural flaws, it shall dismiss the appeal itself (art. 229, para. 2 gapa). if the administrative appeal stands this test once again, second instance authority shall proceed to evaluate whether it is justified. the second instance authority can reject the appeal as unfounded, or it can accept it as founded and in whole or partially annul (quash, ex tunc, ab initio) the appealed act or change it (art. 229, para. 3). after annulment of the resolution, the appellate authority can, depending on the circumstances, resolve the administrative matter (which is the subject of the 29 judgment of the supreme court of serbia uvp. ii 50/04 as of january 26, 2006. 30 this kind of “gracious remedies” can be found in comparative law. for instance, institution of the so-called “non-organized” appeal exists in belgian law. as opposed to “organized” appeal, the authority to which this appeal is submitted to is not obliged to answer or give its opinion upon it (veny, carlens and verbeeck, 2009, pp. 151, 167). 67 administrative proceeding) itself or it can send the file back to the first instance authority to resolve it, giving it the necessary directions with respect to procedural flaws and misapplication of substantial law that must be rectified. the appeal shall be rejected if the second instance authority determines that: 1) both the appealed resolution and the proceeding that preceded it were in accordance with the law; 2) the first instance proceeding was faulty, but none of the faults could result in a different resolution in the end; or 3) the first instance resolution is in accordance with the law, but for other reasons than those indicated in it, in which case it shall make new motivation in the second instance resolution (art. 230 gapa). first instance resolution shall be annulled if the second instance authority determines that: 1) it was rendered by an authority not having the jurisdiction to do so (art. 231, para. 2 gapa); 2) the facts were not determined well or that the procedural rules were breached in the first instance proceeding, or that the ruling (decision) of the resolution is not clear or that it is in contradiction with its explanation, and after rectifying these procedural errors, the second instance authority finds that the administrative matter had to be resolved differently (art. 232 gapa); or 3) the evidence were evaluated incorrectly in the first instance proceeding, that the wrong factual conclusion was drawn from otherwise well determined facts, that a substantial law was misapplied, or that a different resolution should have been reached on the basis of application of discretionary power (art. 233, para. 1 gapa). it can be noticed that not only the legality of a resolution is being tested, but the opportunity, i.e. the proper application of discretionary powers (authorizations), as well, and that it can likewise lead to annulment. administrative appeal is the only legal remedy which can be used for testing opportunity of administrative acts. this is due to the fact that the appellate authority is an administrative entity itself, so that the discretionary powers can pass (devolve, be transferred) to it. this is the key element making administrative appeal the most comprehensive administrative legal remedy. due to the devolutionary effect of administrative appeal, the appellate authority can completely subrogate itself into the first instance authority’s legal position, i.e. it has all the powers of the first instance authority. this is neither the case with extraordinary legal remedies, nor with the suit to the administrative court. second instance authority shall change the appealed act when it finds that it was in accordance with the law and that the facts were well-determined, but that the aim for which it was rendered could have been achieved by other means, more favorable for the party (art. 233, para. 2 gapa). when an administrative act is appealed by a private person, the principle of non reformatio in peius applies. moreover, the law allows the second instance authority to change the appealed resolution to the benefit of the appellant, even outside the appeal request, but within the request made in the first instance proceeding, provided that this does not impair rights of third persons (art. 234, para. 1 gapa). hence, the second instance authority can put a party into a better position than the one it requested by the appeal, but not better than the one requested in the first instance proceeding. 68 there is an exception to this rule. pursuant to article 234, paragraph 2 of gapa, the second instance authority can, on the appeal, change the first instance administrative act to the detriment of the appellant, but only when there are grounds for using one of the extraordinary legal remedies regulated by gapa. these are the annulment or cancellation on the basis of official supervision, the extraordinary cancellation and declaring resolution null and void. nonetheless, this exception does not worsen the position of the appellant, given that the second instance authority is authorized to, on an ex officio basis, check whether these legal remedies can be used and apply them to the detriment of a party even if the appeal was not submitted. accordingly, the administrative appeal itself is no more than a means for the authority to discover that there is a reason for applying these legal remedies. there is also a question of possibility for the appellate authority to utilize this authorization. namely, the abovementioned extraordinary legal remedies enable the appellate authority, under the conditions prescribed in the provisions regulating them (arts. 253, 256, and 257 gapa) to annul, cancel or declare the administrative act to be null and void. on the other hand, this provision of the appeal proceeding enables the appellate authority to change the first instance resolution on the same grounds. however, it depends on the circumstances of the case whether the appellate authority shall be able to rectify the respective illegalities by only changing the administrative act, especially given that these are more serious breaches of legality. if not, the appellate authority would have to use aforementioned extraordinary legal remedies by initiating proceeding ex officio on the basis of the provisions regulating them. thus, the administrative authority would not be able to change the appealed act, but to annul, cancel or declare it to be null and void. if the administrative appeal is submitted by the public prosecutor (or another authorized state authority), then the situation is different. the public prosecutor defends general legality. it can, thus, submit administrative appeal if it considers that an administrative act is illegal and that the law has been breached to the benefit of a private party and to the expense of the public interest (art. 213, para. 2 gapa). obviously, the aim of this appeal is set towards aggravating private party’s legal position. appeal, as well, enables the second instance authority to declare the first instance administrative act to be null and void, provided it determines that there was an irregularity in the first instance proceeding, making the appealed act null and void. furthermore, part of the first instance proceeding, conducted after such an irregularity was made, shall be declared null and void as well (art. 231, para. 1 gapa). null and void administrative acts are those containing the most severe breaches of legality, strictly enumerated in the law and explicitly denoted as grounds for declaring an act to be null and void31. effects of annulment and declaring an act to be null and 31 illegal administrative acts in serbian law (and doctrine) are divided in two groups. first, the one that can be validated (made lawful, legalized) and those that cannot. the first are voidable [rusljivi], while the others are null and void [nistavi] (or only null). voidable 69 void are the same – the act is being removed as of its inception (ex tunc). however, null and void acts can be removed without time limitation. this authorization of the appellate authority is linked with the usage of the appropriate extraordinary legal remedy – declaring resolution null and void32. we will end appellate authorities’ powers with the possibility of granting compensations to aggrieved parties. administrative authorities have no such authorization under the general administrative legal regime. their powers are limited to examination of legality and opportunity of the first instance administrative act, and annulment, change or declaration of an act to be null and void. on the other hand, the administrative court has this power. provided it annuls or declares the challenged administrative act to be null and void, the administrative court is allowed to compensate the aggrieved party, either in kind, by ordering the return of the object taken away from the party, or by providing damages (art. 45 ada). the same provision leaves to the discretion of the administrative court to either do this itself or to direct the applicant to seek relief in civil litigation. there is no reported case-law indicating that the administrative court ever did this itself. therefore, an aggrieved party is forced to deal with the disputed administrative act in one proceeding (appeal and/or administrative court proceeding) and with the compensation for the damage it caused in another (civil litigation). this practice of the administrative court is not necessarily a bad one. specifically, as the only first instance administrative court for the entire territory of serbia, it does not have enough judges33 to deal with all the challenged administrative acts, and this would additionally slow down its work. moreover, given that the administrative judges are specialized in administrative and not civil law, compensation requests would be better decided in civil litigations. 3. relation between administrative appeal and judicial review the relation between administrative appeal and judicial review of administrative acts can be examined in four different aspects. the first aspect concerns conditionality between administrative appeal and the suit to the administrative court. administrative appeal in serbian law is mandatory. administrative acts contain breaches of law for which they can be removed from the legal system by the usage of prescribed legal remedies – the administrative appeal, extraordinary legal remedies and the suit to the court. however, all of these legal remedies can be used in a prescribed period of time. if the time period passes without them being used, then these acts are validated (legalized), i.e. they can attain legal force by the lapse of time. this means that, for the reason of legal certainty, their illegality shall be disregarded, and they will be considered to be in accordance with the law. on the other hand, null (and void) administrative acts contain the most severe breaches of the law. for this reason, they cannot be validated. they can be removed from the legal system at any time. 32 this has been confirmed in case-law, e.g. judgments of the supreme court of serbia, u. 1595/2004 as of july 6, 2006; u. 8159/2005 as of august 17, 2006; u. 1838/2007 as of march 12, 2009; judgment of the administrative court u. 4384/2010 (2008) as of april 29, 2010. 33 it has only 38 judges (art. 6 of the decision on the number of judges in courts, official gazette of the republic of serbia, no. 43/2009, 91/2009, 35/2010). 70 unless administrative appeal is excluded in a certain administrative domain, it has to be utilized against a first instance administrative act before such an act, as nonappealable, can be challenged by the suit to the administrative court. as for the conditionality between the two, it exists when it comes to the scope of challenging an act, while the legal reasoning can be changed. namely, if an administrative act is not challenged by administrative appeal (when it is not excluded) within the prescribed time period, it becomes non-appealable and final at the same moment. if, in such a case, a party would submit a suit, without submitting administrative appeal first, the suit would be dismissed by the court (art. 26, para. 1, subpara. 6 ada). if a first instance resolution would be only partially appealed (e.g. only one of the requests resolved by the administrative authority is appealed), the part that was not appealed would become non-appealable and final, i.e. only the appealed part could be challenged by the suit after the end of the appellate proceeding. hence, the scope of the suit cannot be wider than that of the administrative appeal that preceded it. as for the legal reasoning, the regulation is set differently. the appellant is not obliged to legally reason the administrative appeal, and it suffices if he/she indicates in which way is unsatisfied with the issued act (art. 222, para. 1 gapa). consequently, the appellant could change the legal argumentation once he/she gets to court. furthermore, even the court itself is bound only by the request contained in the suit. it must examine the legality of the challenged act within the limits of that request, but it is not bound by the legal reasons set down in the suit (art. 41, para. 1 ada). this is to say that the court can find an act disputed, for instance, on the basis of misapplication of substantial law to be illegal for other reason than that put forward in the suit (e.g. that it breaches another substantial law, and not the one mentioned in the suit). additionally, both the appellate authority on the appeal and the administrative court on the suit, must ex officio, even without the request of a party, examine whether the challenged act is null and void, and if it is, to declare it as such (art. 231, para. 1 gapa; art. 41, para. 2 ada). the second connection in this relationship relates to the application of one extraordinary legal remedy in administrative court proceeding. as we explained, the request for reassessment of decision of the court, as an extraordinary judicial legal remedy, can be used against judgments of the administrative court. amongst other reasons, it can be used when administrative appeal was excluded in the administrative proceeding (art. 49, para. 2, subpara. 3 ada). therefore, the legal protection mechanism gains another instance in administrative court proceeding, in the place of the one lost in the administrative proceeding (excluded administrative appeal). the third link is the impact of an action of the appellate authority undertaken after the initiation of the judicial review proceeding to that proceeding. there are two different situations here. first, when the appellate authority issued the second instance resolution, which was later challenged before the administrative court. in such an instance, the appellate authority can use the change and annulment of the resolution in relations to administrative dispute, as an extraordinary legal remedy, 71 to fulfill the party’s requests put forward in the suit, by changing or annulling the challenged resolution. second, if the suit was submitted against the silence of the administrative authority, then the authority can issue the requested administrative act during the judicial proceeding. both actions should be considered as attempts of amiable resolution of the administrative dispute. should any of these happen, the court shall call the applicant to declare whether is satisfied with the defendant’s action, in which case the judicial proceeding shall end, or not, in which case the court proceeding shall continue and the suit shall be extended to the new act as well (art. 29 ada). the fourth link concerns the relation between time periods for submitting and deciding on administrative appeal and right to access to the court. time limit for submitting the suit to the administrative court is 30 days as of the day of delivery of the non-appealable administrative act to the party or the public authority authorized to submit the suit against it. a shorter time limit may be prescribed by another law (art. 18, para. 1 and 2 ada). if an act was not delivered to a public authority or a third interested person, who can submit the suit, the time limit is 60 days as of the day of delivery of the act to the party (art. 18, para. 3 ada). if the suit is submitted against the silence of the administrative authority that should have rendered a non-appealable act, the suit can be submitted after the lapse of two consecutive time periods. the first time period is 60 days as of the day of the submission of the administrative appeal to the appellate authority, or, if the suit is submitted against a first instance non-appealable administrative act, then it is the time period for issuance of the resolution prescribed by gapa (supra 2.8.). after this time period lapses, the party has to submit another, so called ‘hurrying notice’, requesting once again the administrative authority to render a resolution. when seven days lapse as of the day of submission of this subsequent request, a party may submit the suit to the court (art. 19 ada). these time limits do not prevent party’s access to the court in the sense that they allow appropriate preparation of the case. on the other side, given the conditionality between administrative appeal and the suit, time limits for filing an administrative appeal could preclude party’s access to the court if they are too short. while this is not the case with the general time limit under gapa, there are those prescribed by a special law which might be troublesome (supra 2.8.). finally, administrative appeal and the suit have one similar function. while administrative appeal makes the practice of first instance authorities more constant and equal, the suit does the same to the practice of both first instance and appellate authorities. probably even more so, given that there is only one administrative court. 4. concluding remarks in the end, based on what has been said, it must be concluded that the administrative appeal is the most comprehensive administrative legal remedy. first, this is the only legal (administrative or judicial) remedy that allows control of opportunity (merits, usage of discretionary powers) of administrative acts. all other remedies 72 can be used for challenging only legality thereof. second, by administrative appeal, an administrative act can be challenged for any alleged illegality (unlawfulness), including incompetence for its issuance, procedural mistakes, breach of substantial law or mistakes in determination of the facts or in drawing conclusions on the facts of the case34. extraordinary legal remedies can be invoked only for certain (more serious) illegalities. third, administrative appeal enables first instance authority to conduct self-control (work of the first instance authority on administrative appeal). fourth, it contains additional, procedural appeal, safeguarding appellants’ right to appeal, in a case of dismissal of initial, substantive appeal by the first instance authority. fifth, appellate authority has both cassation and merits authorizations (marković, 2002, p. 475). this is to say that appellate authority can both annul administrative acts if it finds them to be irregular (illegal and/or not opportune) and change them. it has completely the same powers as the authority that rendered the appealed administrative act, i.e. it can subrogate itself into its position. sixth, submission of administrative appeal also enables appellate authority to declare an administrative act to be null and void. finally, exhaustion of administrative appeal is a prerequisite for initiation of judicial review of administrative acts. besides conditionality, there are other legal ties connecting administrative appeal and the suit to the administrative court. references: 1. bačić, v. and tomić, z., komentar zakona o upravnim sporovima (commentary of the administrative disputes act), belgrade: sluzbeni list sfrj, 1985. 2. council of europe, recommendation no. r (80) concerning the exercise of discretionary powers by administrative authorities, adopted by the committee of ministers on march 11, 1980. 3. council of europe, recommendation rec(2001) 9 of the committee of ministers to member states on alternatives to litigation between administrative authorities and private parties, adopted by the committee of ministers on september 5, 2001. 4. council of europe, recommendation cm/rec(2007)7 of the committee of ministers to member states on good administration, adopted by the committee of ministers on june 20, 2007. 5. cucić, v., ‘strazburski standardi u domacem upravnom sporu’ (strasbourg standards in domestic administrative dispute), 2009, anali pravnog fakulteta (belgrade law review), no. 2, pp. 247-272. 6. dimitrijević, p., pravosnaznost upravnih akata (finality of administrative acts), belgrade: savremena administracija, 1963. 7. krbek, i., upravni akt (administative act), zagreb: jugoslavenska akademija znanosti i umetnosti, 1957. 8. marković, r., upravno pravo, opšti deo (administrative law, general part), 2nd edition, belgrade: pravni fakultet u beogradu, 2002. 34 the same goes for the suit to the administrative court. it can be used for challenging any alleged illegality, but, on the other hand, opportunity of the administrative acts cannot be challenged by the suit. 73 9. milkov, d., pojam upravnog akta (notion of administrative act), doctoral dissertation, pravni fakultet u beogradu, novi sad, 1983. 10. themis project, judicial control of administrative acts, demo-droit programme, multilateral seminar organized by the council of europe with collaboration of the general council of judicial power in madrid, 13-15 november 1996, strasbourg: council of europe publishing, 1997. 11. tomić, z. and bačić, v., komentar zakona o opstem upravnom postupku (commentary of the general administrative proceeding act), 6th edition, belgrade: sluzbeni list srj, 2007. 12. tomić, z., ‘sukcesivnost upravne i upravno-sudske zastite’ (successiveness of administrative and administrative-court protection), 2007, pravni zivot, no. 10, pp. 535-546. 13. tomić, z., opste upravno pravo (general administrative law), 5th edition, pravni fakultet u beogradu, belgrade: sluzbeni glasnik, 2009. 14. tomić, z., zakon o upravnim sporovima sa predgovorom z. tomića (administrative disputes act with forward by z. tomić), belgrade: sluzbeni glasnik, 2010. 15. veny, l., carlens, i. and verbeeck, b., ‘between a rock and a hard place: the ombudsman between administrative and judicial appeal procedures’, 2009, transylvanian review of administrative sciences, no. 28e, pp. 147-171. untitled 5 from the editors the 2009 special issue of the transylvanian review of administrative sciences is dedicated to “law and public administration” as a tribute to the efforts of the 10th permanent study group of the european group of public administration to foster interdisciplinary approach of the relation between (public) law and public administration. the group is a permanent meeting place for scholars and practitioners from different fields: social scientists, jurists and economists working in academia and public institutions, as well as civil servants working in national and supranational institutions. its aim is to combine external and internal perspectives on law in a public administration context. internal perspectives on law relate to juridical analysis and efforts to improve legal (sub) systems from the perspectives of rules & legal history, jurisprudence and comments. the external perspectives can be of different kinds, as they confront (administrative) law with motives (issues) that are often external to law, such as efficiency and timeliness of administration, the accountability of public agencies, transparency of government and citizen’s participation in decision-making. the “law and public administration” group has been established by the distinguished professor jacques ziller and is now chaired by well-established public law scholars as professor philip langbroek, professor francois lafarge and professor helene pauliat. the group meets every year at the egpa’s annual conferences. articles for this special issue have been selected from papers presented at the egpa conference in malta, between 2 and 6 of september 2009. the papers have been reviewed by administrative and public law scholars from the united kingdom, france, denmark, the netherlands, hungary and romania. the three sections of the special issue correspond to the existing research interests within the group. the first two represent research themes on which members of the study group have already embarked upon – justice administration and ombudsman studies, while the third one gives room to other subject areas, not confined to the first two themes. the first section is devoted to justice administration studies, a topic that has drawn much attention in recent legal studies. it is also a major subject for – european legal scholars in their effort to have a common frame of reference for academic programs that deal with judicial studies (see, for instance, the justmen erasmus network initiative). in “the challenge of collaboration”, florian henning and gar yein ng focus on a case study of videoconferencing between courtrooms and detention centres in the 6 netherlands. collaboration is a challenge in joint e-justice services and in their analysis they find that mediation and what they term ‘protocols’ are particularly significant. in a paper that links technology with criminal justice, philip m. langbroek highlights the importance of information-exchange between the police, the public prosecutions office, the courts and the penitentiary institutions and, moreover, of the computerization of these streams of information, for effective criminal law enforcement and especially for execution of sentences (“organizing data exchange in the dutch criminal justice chain”). the final paper dealing with law and technology, is by polona kovač and mitja dečman who have investigated the possibilities of implementing web 2.0 solutions for public administration bodies which are applying legislation which is itself being changed; their case study is the slovenian general administrative procedure act in the period 2006-8. gavin drewry’s paper traces the development of administrative tribunals in the uk, from their origins to the radical reforms of the tribunal system in the last few years and poses questions about whether the increasing formalisation is beneficial to users. the reform of the judiciary involves, in many cases, reconsidering the role and functions of the public prosecutors, or the manner in which the office is managed. two papers deal with developments in this area. in the first , bruno broucker, caroline vervaet and roger depré discuss the mandate system for the belgian public prosecution, while in the second one mihaela carausan analyses the problematic role and position of the romanian public prosecutor office in relation to the executive and the judiciary. the classical paradigm of separation of powers is analysed in the context of the dutch legislation allowing, under certain circumstances, administrative courts to settle the case without jeopardizing the separation of powers doctrine. the research conducted for the paper “final dispute settlement in numbers” by paulien willemsen, rick busscher, niels groot , philip langbroek and linnea langerak looks at how often administrative courts use the powers they currently have for final settlement of disputes and whether they make optimal use of these powers. in the second section, assigned to ombudsman studies, the papers look at the ombudsman type institutions and their role in fostering good governance principles, in relation with other public powers and the citizens. ludo m. veny, ivo carlens and bengt verbeeck open the section by examining the relationship of the supposed exclusive remedies for citizens provided by the ombudsman through complaints and judicial or administrative appeals in belgium. (“between a rock and a hard place: the ombudsman between administrative and judicial appeal procedures”). michael gotze critically examines the reluctance of the danish parliamentary ombudsman to make full use of its powers, in his position of unrivalled specialist protector of good administration. by limiting his review to the compliance by authorities 7 of national law and in particular of general procedural requirements, european union rights of citizens are left unidentified and unprotected (“the danish ombudsman’s protection of citizens – a strategy of selected preferences”). finally, a valuable contribution to the study of the ombudsman institution is given by montesh moses in a critical examination of the role and independence of the south african public protector. in the third section, the papers cover a greater diversity of topics which include globalization and law, european community law in practice and the relation between public management, law and political reforms. ignazio maria marino and giovanni fabio licata in their paper “the law of integration”, propose another path for the analysis of the relationship between law and globalization, suggesting that the most important feature of law in the age of globalization remains what it is for rather than how it presents itself, and claiming that the development of (global) law should focus on people and their needs and interests. in a paper examining the influence of the european court of justice on the convergence among the administrative laws of the eu member states and the progressive forming of a “common administrative law” in europe (“the european “nomofilachia” and the principle of proportionality”), antonio barone and gaetano alessandro ansaldi empha size the new kind of relations among the court of justice, national “lower” courts and national administrations, and the impact of the general principles of the european community legal system on the activities of national administrations. finally, calogero marino analyses from a legal perspective the reform of the italian public administration on the basis of the “new public management” principles, focusing on the relations between political authorities and public managers. the editors would like to thank the chairs of the egpa group for their support and assistance in the editorial work, and colleagues from the public law field who have agreed to review articles and make comments. we hope that this special issue is only the first in a series of publications that will present the interesting developments taking place within the “law and public administration” group of egpa, fostering cooperation among members of the group and drawing in other interested researchers. 27 abstract montenegro and the eu signed the stabilization and association agreement committing the country to harmonize its legislation with the eu acquis communautaire. in reference to public administration, the agreement’s provisions emphasize the development of an efficient and accountable public administration with the goal of modernizing the montenegrin administration in line with standards and principles of the european administrative space. in 2003, montenegro adopted the parim public administration reform strategy 2003-2009 with two priorities: institutional and legal consolidation of the administrative system and the harmonization of the existing legislation with european and international standards (eu, coe, un, osce). however, the parim project met resistance and was not fully realized. the following administrative reform strategy, called agenda of administrative reforms in montenegro 2011-2016 (aurum), states that montenegro is determined to become part of the european system of values and that public authorities should fully harmonize the national legal framework with the acquis communautaire. in the 2016-2020 public administration strategy, it was noted that aurum had achieved limited effects and that the eu candidate countries need to establish an effective and efficient public administration. with all the drawbacks and obstacles that the public administration reform in montenegro faced and is facing, the adoption and implementation of the new law on administrative procedure (2014-2017) opened up prospects that public administration reform to be achieved on montenegro’s road to full eu membership. keywords: public administration reform, law on administrative procedure, candidate country, eu accession, montenegro. the thorny road to public administration reform in montenegro dražen cerović gordana gasmi dragan prlja dražen cerović (corresponding author) associate professor, faculty of law, university of montenegro, podgorica, montenegro tel.: 00382-20-238.604 e-mail: drazen.cerovic@protonmail.ch gordana gasmi professor, university ‘dositej’, belgrade, serbia senior research fellow, institute of comparative law, belgrade, serbia tel.: 00381-11.32.33.213 e-mail: gordana.gasmi@gmail.com dragan prlja research fellow, institute of comparative law, belgrade, serbia tel.: 00381-11-32.33.213 e-mail: dprlja@gmail.com doi:10.24193/tras.si2018.2 published first online: 2018/12/28 transylvanian review of administrative sciences, special issue 2018, pp. 27-43 28 1. introduction montenegro is an independent post-yugoslav multi-ethnic state in the western balkan region of southeastern europe, with a coast on the adriatic sea and bordering croatia, bosnia and herzegovina, serbia, kosovo and albania. podgorica is the capital and the largest city, while cetinje has the status of the old royal capital. classified by the world bank as an upper middle-income country, montenegro is a member of the united nations (un), the world trade organization (wto), the organization for security and co-operation in europe (osce), the council of europe (coe) and the central european free trade agreement (cefta), the union for the mediterranean (ufm) and nato. on the basis of an independence referendum, montenegro declared independence in 2006, and after adopting a new constitution in 2007 it became ‘montenegro – an independent and sovereign state, with the republican form of rule; a civil, democratic, ecological and state of social justice, based on the rule of law’ (constitution of montenegro, 2007). 2. european integration and public administration reform from the perspective of analytical methodology, the issue of administrative reform in montenegro and its relevance to montenegro’s eu accession process needs to be viewed in the context of a general theoretical and conceptual framework. there is an abundance of literature and scientific sources on administrative reform in general and, in particular, on administrative reform in european countries. a short overview of recent publications on such topic(s) shows a variety of approaches and recommendations on this issue, including implications of the administrative reform process for central and east european countries, shortcomings and successful implementation of reform strategies and action plans, policy ‘lessons learned’, etc.1 the following quote illustrates the dilemmas regarding the general theoretical and conceptual framework of administrative reform: ‘since much of the literature on administrative reform has been devoted to public administration, most examples and illustrations are drawn from the public sector. in contrast to many other areas of administrative theory, where analysis is based almost exclusively on business practices, the general analysis of administrative reform is more applicable on public administrative reform. (…) successful reform in the administrative system may set in motion a whole series of chain events that lead to other kinds of reform, and those reforms in turn may indicate the need for further administrative reforms’ (caiden, 2011, p. 11). 1 see also other sources on administrative reform in general and in european countries (selection): caiden, 2011; nemec and peters, 2010; koprić and kovač, 2017; nemec, 2016; kuhlmann and wollmann, 2014; hammerschmid et al., 2016; nemec, 2007; kattel, mikulowski and peters, 2011. 29 on the other hand, the following quote illustrates the issues regarding administrative reform in the context of eu integration: ‘european administrative space (eas) has been recognised as a unique concept in the late nineties to meet the needs of eu enlargement as a complement to the acquis communautaire in the field of public administration and the improvement of national administrative law and administrative capacity. (…) today, eas represents more than that, since it incorporates fundamental principles to be followed by all administrators globally. eas is an important tool in the absence of a formal eu acquis in the field of public administration, but leads to a necessary integration of eu values, goals, activities and methods to enable effective and equitable implementation of eu legal order. (…) the essence of the eas is hence not the unification in terms of identical national standards for administrative organisations and procedures, but harmonisation of administrative bodies in relation to public services users’ (koprić and kovač, 2017, pp. 9-11). at the european union (eu) – western balkans summit ‘moving towards european integration’, held in thessaloniki in 2003, montenegro joined other countries of the region in ‘sharing the objectives of the economic and political union in looking forward to joining the eu’. pursuant to the conclusions of the thessaloniki summit, a special mechanism called the stabilization and association process (sap) was established as the framework for the european course of the western balkan countries. the process and the prospects sap offers serve as an anchor for the reform in the western balkans, in the same way the accession process has done in central and eastern europe. progress of each country towards the eu will depend on its own merits in meeting the sap conditions which are reviewed by the european commission in the periodic ‘country progress reports’. due to the ‘slow pace’ of the enlargement process that ‘stems not only from the internal situation in the balkan states, but also from the activities of the eu itself (…) which have caused its neighbourhood policy (including towards the balkans) to lose a great deal of importance’ (szpala, 2018, p. 2), with only croatia becoming an eu member, despite these countries’ formal progress to accession, the follow-up eu – western balkans accession summit took place some 15 years later (in sofia, in 2018). in the mean time, in 2014, germany initiated the ‘berlin process’ as an intergovernmental platform for cooperation with the countries of the western balkans, in which austria, france, germany, the united kingdom, italy, croatia, slovenia, albania, bosnia and herzegovina, montenegro, kosovo, macedonia and serbia participated. as part of this process, annual summits attended by eu representatives and heads of state and government of the western balkans counties were subsequently held in the 2014-2018 period. in this context, the european commission presented a document titled ‘a credible enlargement perspective for an enhanced eu engagement with the western balkans’ in which, inter alia, the issue of administrative reform was emphasized as 30 a relevant factor for future eu membership of the western balkans counties, which concluded that: ‘the rule of law must be strengthened significantly. today, the countries show clear elements of state capture, including links with organised crime and corruption at all levels of government and administration, as well as a strong entanglement of public and private interests. (…) a visibly empowered and independent judiciary and accountable governments and administrations are essential for bringing about the lasting societal change that is needed’ (european commission, 2018, p. 3). montenegro and the eu signed the stabilization and association agreement (saa), committing the country to harmonize its legislation with the eu acquis communautaire (2007). the aims of the association between the eu and montenegro, inter alia, include: support to the efforts of montenegro to strengthen democracy and the rule of law; to contribute to political, economic and institutional stability in montenegro; to support the efforts of montenegro in the approximation of its legislation to that of the eu; to support the efforts of montenegro to complete the transition into a functioning market economy; to foster regional cooperation in all the fields covered by the agreement (art. 11, saa, 2010). in reference to public administration, the saa contains a special provision emphasizing that cooperation shall aim at ensuring the development of an efficient and accountable public administration in montenegro, notably to support rule of law, the proper functioning of the state institutions for the benefit of the entire population of montenegro and the smooth development of the relations between the eu and montenegro. cooperation in this area shall mainly focus on institution building, including the development and implementation of transparent and impartial recruitment procedures, continued training and the promotion of ethics within the public administration, and shall cover all levels of public administration, including local administration (art. 114, saa, 2010). in the context of the signed saa, the government of montenegro adopted the national program for integration (npi) of montenegro into the eu (2008), which contained detailed activities necessary for eu membership, represented ‘a strategic frame of democratic and economic reforms in the country’ (npi, 2008, p. 19). in the same year, montenegro applied for eu membership and completed the european commission questionnaire (2009). reviewing montenegro’s application, in its opinion, the european commission concluded favorably, and recommended montenegro as candidate country in 2010. the european council granted montenegro eu candidate-country status in 2011, and accession negotiations with montenegro began in 2012, with thirty one chapters opened (european commission, 2010a, p. 11).2 2 furthermore, montenegro enjoys widespread support among eu member states’ officials, and accession of the country to the eu is considered possible by 2025. in its 2016 assessment of the 31 however, in its opinion the european commission indicated that montenegro had to prove its strong commitment to seven key priorities (in the field of political criteria for eu membership) and in particular to ‘complete essential steps in public administration reform including amendments to the law on general administrative procedure and the law on civil servants and state employees and the strengthening of the human resources management authority and the state audit institution, with a view to enhancing professionalism and de-politicization of public administration and to strengthening a transparent, merit-based approach to appointments and promotions’ (european commission, 2010a, p. 11). as emphasized in regional studies on public administration reforms: ‘as any complex system, pa is evolving over time. the contemporary society requires good administration in the sense of implementation of the eas principles, but beyond the formal adoption of par strategies and new laws. the latter problem is present especially in eastern europe, with gaps due to the ongoing post-socialist transition, the lack of administrative capacity, and gradual but inconsistent reforms.’ (kovač and jukić, 2017, p. 140). 3. institutional and political context early administrative reforms in montenegro during the 1990s were conditioned by specific political and economic factors. politically, montenegro was faced with challenges that came with the introduction of the post-communist multi-party system (1990), the consequences of the dissolution of the former yugoslavia and the establishment of the federal republic of yugoslavia with serbia and montenegro as the only two federal member states (1992)3. however, significant change in the political and economic orientation of montenegro followed the 1998 parliamentary election when the country’s political establishment pursued a new political agenda of restoring the country’s independence with the aim of joining the ‘euro-atlantic’ integration process, including eu and nato memberships. in this volatile context, general institutional, political and economic reforms began in montenegro (kavran, 1999, p. 2)4. in regard to the administrative reforms the goal accession progress, the european commission identified montenegro as having the highest level of preparation for membership among the negotiating states. 3 of the six former federal yugoslav republics only slovenia and croatia subsequently obtained eu membership (see also, kovač and jukić, 2017, pp. 127-145). 4 the turbulence caused with transition, ethnic tensions in south-eastern europe and the reaction of the international community created in montenegro a heightened awareness of the need for accelerated political, economic and institutional change. at the recent elections (march 1998), the program of the reform oriented, ethnically tolerant coalition won convincingly over its opponent. the new government of montenegro almost immediately has embarked on a new course. (...) there are serious frictions between the federal government in belgrade and montenegro. cooperation and communications with the federal government in belgrade are almost entirely blocked. in this situation, the government of montenegro has accelerated its reform agenda (kavran, 1999, p. 2). 32 was modernization of the montenegrin administration in line with standards and principles of the european administrative space. however, due to the inherited economic and political situation, pro-active administrative reform started several years later, in 2003 (marković, 2007, p. 37). the public administration system in montenegro in the 1992-2003 period was highly centralized and cumbersome, with the high number of civil servants and more ministries and agencies than it was really needed (e.g. in the 1998-2001 period montenegro had 18 ministries and 19 additional government agencies with a permanent growth rate of 25% of number of employees) (esi, 2001, pp. 10-13). the strongest administrative decision-making centers were ministries, while local administrations had limited autonomy in decision-making (institut alternativa, 2012, p. 14). 4. administrative reform strategy 2003-2009 (parim) in march 2003 the ministry of justice of the government of montenegro adopted the first comprehensive public administration reform strategy 2003-2009 (parim), with two priorities and basic reform goals: (a) institutional and legal consolidation of the administrative system; (b) the harmonization of the existing legislation with widely recognized standards and principles of the most important international institutions i.e. eu, coe, un, osce, etc. (blažić and dujić, 2004, p. 84). a particular reason for the improvement and restructuring of the montenegrin administrative system, as well as all other subsystems, comes from the ‘unreserved and clear determination and devotion of this government to join the european union’ and to become a part of other international integration processes (ministry of justice, 2003, p. 13, p. 18). as emphasized: ‘public administration has always been a domestic affair for eu member states. at the same time, national public administrations have to implement eu directives and recommendations in such a way that european citizens are able to enjoy the rights granted to them by the eu treaties, irrespective of the country in which they live; a fact which on its own could well justify the interest of the eu in ensuring that each national administration has comparable quality and professionalism and, therefore, in the administrative capacities of their member states’ (cardona, 2009, p. 3). the first administrative reform strategy in montenegro incorporated three areas of the administrative system: a) state administration, b) local self-government, and c) public services: public enterprises, public institutions, regulatory agencies (respa, 2013, pp. 215-217). a key principle set by this strategy is that ministries are administrative bodies with rights to develop internal and foreign policies (working on the preparation of legislation, strategies, projects, programs and international documents), while other administrative bodies primarily perform duties of enforcement and implementation of the legislation. this represented a significant change compared to the earlier concept that the ministries had the right to create and implement policy. 33 during this period, the following laws were adopted: on public administration (2003), on inspection control (2003), on general administrative procedures (2003), on local self-government (2003), on ombudsman (2003), on civil servants (2004, 2008), on salaries of public servants and employees (2004) (dujić, 2004, p. 18). also, a systematic adjustment of the regulations on public administration to the constitution of montenegro, the code of ethics for civil servants and employees was adopted in 2005, accompanied by seventeen by-laws necessary for the implementation of the aforementioned laws (government of montenegro, 2007, p. 3). in accordance with the new legislation, a number of new institutions were established: the ombudsman, the administrative court and the court of appeals, the state audit institution. in order to improve human resources management in the civil service, in 2004 the human resources management agency was established (blažić, 2006, p. 19). during the period of the first administrative reform in montenegro, coordination of the activities was headed by the prime minister, and the government regularly discussed analytical materials and operative issues5. however, the quality of the reporting and analytical material was inappropriate, as the materials considered mostly referred to legislative changes. these materials, inter alia, lacked relevant data and impact analysis reports on the adopted legislation. the absence of quality analysis on administrative reform activities proved to be a factor which impeded the drafting of the new reform strategy (institut alternativa, 2012, p. 23). additionally, a council on administrative reform was established and chaired by the minister of justice. however, with the parim project the thorny road of administrative reform in montenegro took off with resistance at several levels (korać, 2016, p. 7). the government itself admitted that the implementation of this strategy met resistance on several levels: by the heads of institutions – because of the fear that the merit-based system would deprive them of their privileges – and by public servants and employees because they did not know what changes the strategy would bring. another problem was the lack of highly-qualified staff, as well as a lack of institutions which could analyze the process (pajović, 2013, p. 217). following the independence and the formation of a new government after the parliamentary elections of 2006, public administration affairs were transferred from the ministry of justice to the newly established ministry of internal affairs and state administration. as a consequence, the administrative reform council set up by the ministry of justice was abolished and a similar body was not set up by the new ministry, thus weakening the existing monitoring and implementation capacities and slow5 these materials include: analysis of reformed legislation in the field of public administration (january 2005); information on the activities of the ministry of justice in the reform process of the judiciary, state administration and local self-government (april 2005); report on activities to create conditions for the implementation of new administrative legislation in montenegro (september 2005); report on the status of administrative matters in 2005 (june 2006); analysis of the realization of the public administration reform (may 2007). 34 ing down the work on the new administrative reform strategy for the coming period. in this context, the drafting of the new administrative reform strategy in montenegro began in early 2010. in 2010 montenegro obtained the status of candidate country for eu membership following the positive evaluation in the opinion of the european commission on montenegro’s application for membership. the opinion was accompanied by an analytical report (european commission, 2010b). in its analytical report, the european commission referred to several critical issues regarding the public administration situation in montenegro (e.g. a merit system for recruitment and promotion is neither clearly enshrined in the legislation, nor applied in practice; there is no comprehensive, regulatory framework to monitor corruption and conflict of interest through consistent internal controls) and concluded: ‘overall, the public administration remains weak and highly politicized. the general administrative framework, including the law on general administrative procedure and the law on civil servants and state employees needs to be reviewed and adapted to european standards and principles. administrative procedures are cumbersome and time-consuming and must be simplified. significant efforts are still necessary by montenegro to establish a sound and accountable public administration free of politicization. the quality of legislation and of decisions and acts produced by the public administration needs to be considerably improved. further considerable efforts to strengthen administrative capacity to deal with future eu accession obligations are needed’ (european commission, 2010b, pp. 14-16). 5. administrative reform strategy 2011-2016 (aurum) the second administrative reform strategy in montenegro was called agenda of administrative reforms in montenegro (aurum)6. the first version of aurum was a draft for the 2010-2014 period. this draft version received very critical remarks and comments (notably sigma and the eu). therefore, this draft was significantly revised and subsequently the government adopted a revised version of aurum for 2011-2016 (government of montenegro, 2011a). the aurum 2011-2016 document states that montenegro is determined to become part of the european system of values. therefore, public authorities should be trained to fully develop and harmonize the national legal framework with the acquis communautaire and, based on its full implementation and capacity for application, of its own regulations to be eligible to effectively work within the european administrative space. as for the administrative reform objectives, the document states that the goal of the strategy is efficient, professional, and service oriented public administration, serving the needs of the citizens and other social and business entities with identified specific objectives: (a) strengthening the rule of law by strengthening le6 aurum is the montenegrin acronym for ‘agenda upravnih reformi u crnoj gori’. 35 gality and predictability of administrative procedures and decisions; (b) improving efficiency and cost-effectiveness of public administration; (c) improving the business environment while improving the quality of public services and reducing the administrative burden; (d) raising the level of ethics in public administration; (e) improving transparency and accountability of public administration; and (f) integrating montenegro’s public administration into the european administrative space (government of montenegro, 2011a, pp. 2-3). the aurum strategy specifies several factors which have negative effects to achieve the set objectives: (a) resistance of the administration system to change in the initial stages of the reform process; (b) global economic crisis, resulting in the destabilization of public finances and the budget deficit; (c) absence of adequate mechanisms to improve the financial status of civil servants and motivate them for their work; (d) insufficient number of creative young staff with required professional qualifications; (e) perception of a high level of corruption in certain sectors and at positions susceptible to corruption; (f) insufficient promotion of reform activities and their significance; and (g) absence of an organized and competent institution which would monitor the reform process from the professional and methodological viewpoint and act as logistics support (government of montenegro, 2011a, p. 9). the thorny road to administrative reform in montenegro continued in the aurum period. in its assessment on montenegro, sigma stated that: ‘the development of this strategy was largely driven by the perception that it was requested by donors and primarily by the eu integration process. the government council for public administration reform had weak substantive capacities and did not succeed in producing a convincing and coherent reform agenda. the drafting of the aurum was thus heavily dependent on input from outside sources and had limited inter-ministerial co-ordination. this generates doubts and concerns on the will and capacity to implement it and on its sustainability’ (sigma, 2011, p. 3). in another report sigma concluded that the ‘public administration reform process suffers from a lack of effective implementation mechanisms (...) not very promising preconditions for achieving results’ (sigma, 2012, p. 4). similar considerations were put by the european commission, which in this period continuously repeated nearly identical assessments of the public administration reform in montenegro. in the 2011 progress report for montenegro, the commission referred to the state of public administration as ‘the overall capacity of ministries to produce high-quality legislation and impact assessments remains limited. the administrative capacity involved in coordination of european integration, including financial assistance, remains weak and needs to be substantially strengthened’ (european commission, 2011, p. 8). in the 2012 progress report the commission states that ‘the administrative capacity for the coordination of european integration, including financial assistance, needs to be further strengthened to meet the requirements of the accession negotiations’ (european commission, 2012, p. 8). in the 2013 progress 36 report the commission concludes that the ‘overall capacity of ministries to prepare high-quality legislation and impact assessments needs to be enhanced. as regards the local government, further efforts are needed to establish a transparent, efficient and accountable administration’ (european commission, 2013, p. 7). the management and monitoring processes of the administrative reform at the central and local level in montenegro was confused and uncoordinated (respa, 2013, pp. 215-217). neither the draft aurum 2010-2014 strategy nor the revised and adopted version of aurum 2011-2016 resolved the issues of coordinating administrative reform activities at the state and local level. at local level, a special coordination committee for local reform chaired by the minister of interior was responsible for the monitoring and managing the administrative reform activities of the local self-government units. the management and monitoring processes of the administrative reform at the national level was more complicated. the aurum 2010-2014 draft proposed the establishment of a council for public administration reform as a high-level advisory body, commissioned to provide advice and strategic directions to the government for the implementation of the aurum strategy, which is to be composed of government officials, prominent experts and representatives of the civil society and the donors. in addition, an operational team and an office for coordination were proposed (government of montenegro, 2010, p. 43). however, the adopted version of aurum 2011-2016 strategy provided for a significantly different management and monitoring model (government of montenegro, 2011b, pp. 52-53). the adopted aurum 2011-2016 strategy provided that the monitoring and management of the administrative reform efforts are to be entrusted to the existing council for regulatory reform and improving business environment (central administration) and to the coordination committee for local government reform (local level). the council and the coordination committee in their respective areas are to: (a) monitor and coordinate activities of administrative bodies and other relevant institutions to follow the implementation; (b) encourage cooperation among state authorities, municipalities, non-governmental organizations, international organizations and other parties to the process; (c) assess the progress and give proposals for specific further actions to be taken; (d) set guidelines and directions for decentralization of the public administration system; (e) assess the impacts of laws and other legislation relevant to administrative reform, identify obstacles and render proposals to overcome them; and (f) consider other administrative reform issues of improving the efficiency of implementation. the strategy prescribed that the progress reports to be submitted every six months to the council and the coordination committee by the authorities carrying out tasks for them, as well as that the progress reports to be submitted every six months by the council and the coordination to the government of montenegro. it is important to point out that the council’s tasks do not specifically include par competences, although it is an integral part of the reform efforts as the council 37 predominantly deals with the business sector and financial aspects of governing the business relations (decision on establishing the council for regulatory reform and improving the business environment, 2010). the council is a sixteen-members body, which includes the prime minister and six ministers (e.g. justice, interior, finance, economy, sustainable development, tourism), as well as members from the chamber of commerce, employers’ association, business alliance, union of municipalities, and the commercial court. within the government, operational management of the implementation of the strategy is not clear and ‘rests somewhere between the ministry of interior (having lost, meanwhile, the ‘public administration’ nomination) and the ministry of finance, which is not a good solution, since it leads to the division of responsibilities and unclear shared responsibility’ (institut alternativa, 2012, p. 44). 6. public administration reform strategy 2016-2020 the public administration reform strategy of montenegro 2016-2020 was adopted by the government of montenegro in july 2016. the drafting of the public administration reform strategy of montenegro 2016-2020 began at the end of 2014 in cooperation with sigma/oecd experts and through consultations with responsible government and non-government institutions. the 2016-2020 strategy takes into account assessments of the state of the public administration presented in the analysis of the effects of the implementation of aurum adopted by the government in june 2015. by analyzing the available data, it was generally noted that significant activities in achieving the objectives defined by the aurum have been realized, but also that limited effects have been achieved. as stated in the strategy: ‘additional efforts should be invested in order to improve public administration at all levels. national strategies represent crucial documents with the task to recognize key challenges the eu candidate countries are faced with, while trying to establish an effective and efficient public administration’ (government of montenegro, 2016). the structure of the 2016-2020 strategy follows the logic of reform areas as they are laid down in the ‘principles of public administration’, developed by sigma. these principles represent the standards of the so-called soft acquis and serve as a framework for the assessment of the present state and the progress made in the area of public administration. ‘the priority of the public administration reform will be to improve competitiveness of the economy and to raise the quality of the montenegrin citizens’ lives, and also to meet the requirements for the eu membership’ (government of montenegro, 2016, p. 5). with this mission in mind, montenegro prepared and adopted a new law on administrative procedure (lap) in line with the standards of the rule of law and principles of good governance common to the member states of the eu (ivanović, 2014, p. 24). with the new lap, the administrative procedure was reformed in compliance with the standards of the european administrative space. in the period until june 38 2016 the texts of the strategy and action plan were aligned in accordance with the european commission proposals. in its 2016 report on montenegro, the european commission addressing the public administration reform stated that: ‘montenegro is moderately prepared with the reform of its public administration. some progress has been made, notably with the adoption of the public administration reform strategy 2016-2020. (...) by means of a consultative and transparent process. there is a political support for the reform, which was also declared as a priority in the government’s structural reform plan. consistent political support will be needed to implement the strategy, e.g. for measures to rationalize the administration, while ensuring capacity for european integration’ (european commission, 2016, pp. 9-12). in the report, a specific reference was made to the administrative procedures: ‘simplification of administrative procedures is ongoing. sectoral laws containing over hundred and fifty special procedures are being gradually brought into line with the law on administrative procedures, but a substantial workload remains. so far, amendments to eighty laws have been drafted, and they are in various stages of adoption (european commission, 2016, pp. 9-12). 7. administrative procedure in the context of an administrative reform in montenegro a new chapter of administrative procedure in montenegro was opened in late 2014, when the national parliament adopted the new law on administrative procedure. the public administration reform strategy indicates that the new lap is ‘service-oriented towards the users of administrative services harmonized with the best comparative practices in this area through a large number of novelties’ (government of montenegro, 2016, p. 13). successful implementation of new legal solutions will depend on meeting certain preconditions, including the training of civil servants who conduct administrative procedures and the harmonization of the rules of procedures in specific laws: this is an on-going process. the basis for adopting a new law on administrative procedure rests on a completely redefined role of the public administration in accordance with the principles and standards of the european administrative space, underlining its gradual but decisive transformation from the ‘administration as an instrument of government’ model to the ‘administration as public service to citizens’ model, based on issues of public interest in administrative procedures and the stability of institutions that guarantee democracy, the rule of law and human rights’ (lilić, 2017, p. 29). the fundamental innovation in the new lap was the redefinition of the existing ‘general administrative procedure’, which produced a voluminous, inefficient and often contradictory body of ‘special administrative procedures’, into a more functional and simple ‘administrative procedure’ (ivanović, 2015, p. 37). 39 due to the numerous innovations introduced by the new lap (administrative contacts, guarantee acts, providing public services, objection as new legal remedy, etc), its entry into force was set for january 1, 2016 (law on administrative procedure, 2014). however, this timeline was first prolonged to july 1, 2016, and subsequently to july 2017, as preliminary analysis indicated that around 367 laws containing special administrative procedures had to be harmonized with the new lap (parliament of montenegro, 2014)7. the previous lap showed serious limitations in administrative procedures regarding the interests of the citizens. certain aspects of the special administrative procedures needlessly differed from the general standards having as consequence more complicated and expensive situations and reduced legal certainty for the interested parties (lilić and cerović, 2013, p. 82; lilić, 2012, pp. 221-222; dimitrijević and blažić, 2008, p. 34; sekulić, 2004, p. 46). the new lap was adopted with the goal of achieving standards of ‘good governance’ and ‘good administration’ serving the citizens with public services rendered by the public administration (council of europe, undated). in this context, the main motives for adopting a new lap were a new concept of ‘administrative matter’ (lilić, 2006, p. 54), simplification and expediency of the procedure, reducing expenses for all parities, upgrading procedural mechanisms, introducing e-government solutions and efficient protection of public interest and the concerned parties. apart from being quality legislation fulfilling the harmonization goal to the eu membership, the most important aspect of the new lap still remains to be met, inter alia, the alignment of special administrative procedures which will enable the full realization of the new lap in the everyday practice (cerović, 2016, p. 39). furthermore, many changes in the administrative procedure, introduced by the new lap, have a common goal in combating abuses and potential corruption, including: – the affirmation of good governance standards in administrative procedure applied in the eu, meaning that the public administration is a service-oriented authority providing public service to the citizens as clients. the administrative public services are now rendered by ‘public authorities’ and not by ‘state organs’; – the procedure is conceived on efficiency, speed and low expenses within the framework of protecting public interest and the interests of the concerned parties. – the new lap definitely departs from the previous theoretical model and practical concept that the state administration has the exclusive possession of ‘monopoly on physical force’. the resistance to the model of the administration as a public service is a relict of the doctrine of ‘state and law’ as two sides of the same coin (lilić, 2010, p. 87). the burden of this concept that for many years had prevailed in the western balkans was the main obstacle to the modernization of the 7 e.g. ‘annulment’ of administrative acts had to be revised in 138 laws; ‘rejection’ in 32 laws; ‘conclusion’ in 31 laws; ‘finality’ in 25 laws; ‘special appeal’ in 4 laws; ‘vital impairment of procedure’ in 6 laws, etc). 40 administrative system and conditioned numerous abuses, corruptive activities and collateral damage to the public and private interests. – the new lap gives a definition of an ‘administrative matter’ which refers not only to the traditional issue of deciding on the rights and obligations of the parties, but also refers to the additional administrative activities (e.g. administrative contracts, guarantee acts, providing public services, etc). – the new lap stipulates that the second instance authority may decide only once on a particular matter, avoiding a wide-spread ‘ping-pong’ practice of referring the matter back to the first instance. – a particular feature of the new lap is the introduction of the ‘positive option’ in case the administrative authority fails to act. if the public administrative authority does not decide on a submission in due time, the presumption is that the request was fulfilled. the previous opposite practice (i.e. that in the case of failing to act, the presumption was that the request was denied) was the cancer-cell of many administrative procedures, in direct violation of the rights and legitimate expectation of the citizens. – electronic communication between the public authority and the party in an administrative procedure is a significant innovation in the new lap. – the new lap has significantly reduced the provisions on hearings and presenting evidence in administrative procedures, with a simple and efficient analogy clause, which stipulates the use of the detailed provisions on this matter in the law on civil procedure. 8. conclusions from the initial parim activities in the 2003-2009 period, the thorny road of public administration reform in montenegro steered through meager results of the 20112016 auram sequence and is proceeding on the action plans of the current 20162020 public administration reform strategy. the cumbersome system of public administration in montenegro, the large number of public servants and staff, resistance to reform and change, insufficient information technology ability, the interference of politics in administrative affairs and political instability in the 1997-2000 period, followed by the 2000-2006 period of social and economic uncertainty 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service and administrative law, 2012. 51. szpala, m., ‘a new opening in relations between the eu and the western balkans’, centre for eastern studies, no. 267, 2018, [online] available at https://www.osw.waw. pl/sites/default/files/commentary_267_0.pdf, accessed on may 5, 2018. 52. stabilization and association agreement between the european communities and their member states, of the one part, and the republic of montenegro, of the other part, published in the official journal of the european union, no. ojl108/1 of april 29, 2010. 60 abstract shortly after the brexit referendum, it became clear that the eu 27 needs structural reforms. the main discourses on the eu’s reform usually incorporate political and administrative approaches, reflecting ideological and strategic orientations but also public policy options and governance criteria. one of the most important and debated topics in this process is the permanent structured cooperation (pesco) in the field of defense, which was constantly rejected by the uk until june 2016. the aim of this article is to identify, explore and compare the main perspectives with regard to the reform of the european union, with a focus on pesco. we take into consideration the views expressed by european political leaders as well as high ranking officials from central administration in the eu member states but also at nato level. based on a qualitative comparative research of the major discourses and projects in the field, this analysis indicates possible directions in which pesco could advance in the coming years, but also some vulnerabilities, limitations and risks related to european defense and security as a public policy. keywords: european union, reform, pesco, nato, security. administrative and political perspectives of the eu’s reform: focus on permanent structured cooperation valentin naumescu valentin naumescu associate professor, phd habil., department of international relations, faculty of european studies, ‘babeș-bolyai’ university, cluj-napoca, romania e-mail: valentin.naumescu@ubbcluj.ro doi:10.24193/tras.si2018.4 published first online: 2018/12/28 transylvanian review of administrative sciences, special issue 2018, pp. 60-74 61 1. introduction: why does the eu need reforms? in the weeks and months following the shocking result of the brexit referendum, a number of significant proposals coming from prominent european politicians gave the first indication that the eu 27 is ready to assume essential reforms of its strategy and policies. it was still in the summer and autumn of 2016, before the crucial electoral year 2017 brought encouraging victories for the pro-european candidates in france, germany and the netherlands. facing the perspective of its own disintegration, after the first exit of a member state, the union had to act decisively to strengthen its attractiveness and effectiveness among the remaining 27 member states. even though we can presume that those documents were conceptualized and prepared before the brexit referendum, their impact, symbolism and political added-value were very much augmented in the context of the surprising uk decision to leave the european union. the first major proposal belonged to the eu high representative federica mogherini who presented in june 2016 the eu’s global strategy on foreign policy and security, called ‘shared vision, common action: a stronger europe’. later on, in october 2016, the council adopted its first conclusions on the global strategy and decided five priority areas for the next year: ‘resilience building and integrated approach to conflicts and crises; security and defense; strengthening the nexus between internal and external policies; updating existing or preparing new regional and thematic strategies; stepping up public diplomacy efforts’ (council of the european union, 2016). it was a clear indication that the eu was already intending to improve its external action, based on a mix of political and public management approaches. the second reforming project was co-authored by the french and german defense ministers. ursula von der leyen and jean yves le drian sent in september 2016 a common letter to brussels for establishing a defense union to ‘reinforce our solidarity and european defense capabilities in order to more effectively protect the citizens and borders of europe’ (von der leyen and le drian apud rettman, 2016). based on the mechanism of permanent structured cooperation (pesco) between a certain group of eu member states, stipulated in the articles 42(6) and 46 of the eu treaty, any possible development in this sense was repeatedly blocked by the uk until 2016, on the reason of a possible nato’s weakening. brexit was therefore opening the gates in brussels for the establishment of pesco in the field of defense. the question of the european union’s reform, both in its internal and external dimensions, dominated the post-british referendum era. moreover, the election of donald trump as president of the united states in november 2016 augmented the perception of an urgent need of action in order to save the european project from the temptations of populism. several political and public management/administrative approaches focused on the idea of reform and the interests of the citizens, even though in the field of strategic policies such as common foreign and security policy (cfsp) it is difficult to identify and speak on behalf of the ‘interests of the citizens’. polls are not of a great help, taking into consideration the sophistication of the topics, 62 the incomplete information available at public level and the difficulty to ‘translate’ technical aspects of defense and security into basic public questions. the purpose of this paper is to identify, explore and compare the main political and administrative perspectives regarding the european union’s reform, with a special focus on the permanent structured cooperation. the research question is what possible directions can take the existing approaches in the field of defense policy and what consequences might have on the future of the european union. the chosen methodology consists of a qualitative comparative analysis of official documents, political statements and administrative options related to the topic. the structure of the article comprises four sections: an introduction meant to present the defining aspects with regard to this research, a theoretical framework reviewing the literature of the eu reforms, an empirical research on pesco as it is profiling nowadays, and finally the concluding remarks. 2. theoretical framework a vast literature covers the never-ending debate of the european union’s reform. in fact, the eu was from the moment of its foundation in search of the right direction for the next ‘reform’, in order to respond more and more adequately to permanently renewing challenges and opportunities. the reforming approaches usually pivoted between (neo)functionalism (haas, 1958), liberal intergovernmentalism (moravcsik, 1998), and historic institutionalism (pierson, 1996). it was therefore not the british referendum of 2016 the event that ‘invented’ the topic of the eu reform, but definitely brexit poured oil on fire. that is why we consider that the so-called ‘refoundation’ suggested by the french president emmanuel macron (reuters, 2017) is just a different, spectacular denomination within this long series of reforms. politicians and high ranking bureaucrats, policy experts and academics but also journalists and civil society contribute to this intense debate of reform. to give an example of typical academic assertion on the eu crisis and the need of political and administrative reforms, which was also valid in 2010, just after the ‘new’ treaty of lisbon (2009) entered into force, the public was informed that: ‘today, the eu sits at a difficult crossroads. its dramatic increase in policy capacity has yet to be matched with mechanisms of democratic representation or streamlined decision-making, leaving it less than effective and often unloved’ (mcnamara, 2010). needless to say this wording could be easily applied for the 1970s or the 1980s as well as for the present context. it does not mean that nothing happened in the european union since then. the idea that we are heading towards a finality of the european union, where the organization will eventually meet the perfect shape, functions and structure is obviously a chimera of all political epochs. eight years before the quake of brexit, in his book explaining ‘what’s wrong with the european union and how to fix it’, simon hix made a premonitory remark: ‘referendums are a crude and ineffectual mechanism for expressing citizens’ preferences on eu policy issues. what is missing is a more open debate about the emerging pol63 itics inside the brussels beltway and clearer connections between this politics and citizens’ view’ (hix, 2008, p. 5). hix was right in the sense that he anticipated the risk that a popular consultation on eu policy issues could be distorted by the political interests of the competitors, using a wide arsenal of manipulation, fake news, hiding half of the necessary information etc., so that the ordinary voters do not know in the end what exactly they are voting for or against. in a book whose title almost tells the essence, ‘reforming the european union: realizing the impossible’, the authors speak about the sisyphean effort of trying to reform the european union; according to daniel finke and thomas könig, ‘every three to four years, the eu has tried to assess and reform its institutions, since the mid-1980s to the beginning of the twenty-first century, but with little success. […] the reason for the slow rate of change was the opposition to far-reaching institutional reform from a minority of political leaders. as expected, the enlargement of 20042007 increased the number of political leaders opposed to reform’ (finke et al., 2012, p. 1). the authors do not specify whether the increased number of political leaders opposing the reform refers necessarily to the ones from the new member states or to western politicians who criticized the extension to the east or to both categories, but the thesis associates the failure of the reform with some of the political leaders from the union. four years before the brexit referendum, the authors were analyzing the lack of political accountability regarding the significances of the failed referendums for the eu treaties’ ratification in france, netherlands and ireland. in 2014, at the end of the euro zone crisis and just when greece was about to be saved for the second time from bankruptcy, the economists john peet and anton la guardia published their version of ‘how the euro crisis and europe can be fixed’, under the influence of the paradigm ‘if the euro fails, europe fails’: ‘the euro has been saved, at least for a while. but even as economic output begins slowly to recover, the euro zone remains vulnerable and the wider european projects remain under acute strain’ (peet and la guardia, 2014, p. 6). the economic approach will remain however one of the main directions of the eu reforms, especially focused on the eurozone. as for the administrative perspective, the first observation is that eu member states have their own national administrative systems, while the idea of european integration in public administration made just a few timid steps. there is no ‘administrative pillar’ of the european union, as it happens for instance with the economic and monetary union. isolated projects such as the support for improvement in governance and management (sigma) tried in the past 25 years to develop a european dimension in reforming the public administration. sigma is a joint initiative of the european union and oecd whose aim is ‘to strengthen the foundations for improved public governance, and hence support socio-economic development through building the capacities of the public sector, enhancing horizontal governance and improving the design and implementation of public administration reforms, including proper prioritisation, sequencing and budgeting’ (sigma, undated). based on the so-called sigma ‘principles of good public administration’, bovaird identifies six horizontal systems of governance, which worked in the past with some 64 results in the process of the east central european countries’ integration in the european union: ‘policy making and coordination, civil service and administrative law, public expenditure management, internal financial control systems, public procurement, external audit and public integrity systems’ (bovaird, 2016, pp. 14-15). nevertheless, the europeanisation of the public administration is rather a theoretical approach than a real process while the convergence of administrative systems made modest progress. the above mentioned core of european standards is not fully reflected in political decisions neither in old member states nor in the new ones: ‘given this common administrative law tradition, one could assume that these countries would be able to quickly adapt to the common principles of the [european administrative space]. however, it seems that this is not necessarily the case, as administrations and governments often show little willingness to accept the need for real reform and actively promote it’ (cardona and freibert, 2007, p. 58). the issue of politicization of the public interests and the relation between politics and the eu policy issues is treated at length in the academic literature. it is one of the arguments saying in its essence that administrative and political approaches of the eu reform cannot be separated. on one hand, ‘the articulation of public interests [is seen] as an ingredient of the relationship between the elites and the european citizens and as a tool for policy elites to signal to citizens that their voices are heard or disregarded’ (de bruycker, 2017, p. 615). on the other hand, there are several researches that demonstrate the idea that the eu policy and administrative process is susceptible to be influenced by party pressures, reflected in political and electoral interests (bølstad, 2015; toshkov, 2011; alexandrova, rasmussen and toshkov, 2015). this observation is somehow contradicting the old thesis of an alleged eu democratic deficit that used to claim the existence of a detached, isolated ‘eurocracy’ making regulations beyond any public interest. in fact, the lesson of brexit reveals that the risk of insufficiently prepared popular consultations (referendums), when political manipulation and populism are distorting the meanings of a real debate, is even higher than the risk of the traditional eu ‘democratic deficit’. the administrative reforms in the european union took different directions and shapes in the past decade. one of the interesting attempts to revitalize the policy output was the so-called kinnock reform(s), regarding the inner functioning of the european commission and the increasing role of the middle management, represented by the heads of unit (hou). based on an empirical research consisting in a survey of more than 100 hous, bauer concluded that, despite of a comprehensive redefinition of the role of the hou, ‘their resource base to focus on policy drafting has been hugely reduced. negative consequences for the organization’s potential to deliver policy draft of high quality are therefore very likely’ (bauer, 2009, p. 459). the idea of transferring more competences to middle management in order to have more administrative input in the european commission and less political orientation was also approached in a series of researches (balint, bauer and knill, 2008; kassim et al., 2010; spence, 2006; kassim, 2008; etc.). 65 more recently, the reform of the european commission was analyzed in comparative perspective with the reforms of the public sector at national level. as edoardo ongaro concluded, ‘the ‘unique’ politico-administrative context of the european union affected the trajectory of reform of the commission, compared with trajectories of reform of the public sector at the national level’ (ongaro, 2013, p. 346). this study explains to a large extent why the administrative reforms of the european union/ european commission went always much more difficult than any national administrative reform. the ‘administrative direction’ seems somewhat abandoned after the brexit referendum, once the political approaches returned as the main leading forces of the eu reforms. looking to the so-called ‘macron’s plan’ of the eu reform, launched with the occasion of the sorbonne speech of september 2017, we find a reference to the reform of the european commission in the sense of a proposed shrink of the college of the commissioners, from 28 to 15 after the uk’s exit. it is however difficult to believe that 12 member states will accept to remain without a commissioner so that the way from the post-brexit projected reforms to political decisions and implementation will be again quite long. 3. permanent structured cooperation (pesco) in the field of defense under the large umbrella of the reform of the european union, pesco in the field of defense seems to be one of the most important envisaged changes. based on a functionalist perspective, as its own name suggests, pesco offers a framework for enhanced cooperation of a group of states in the field of defense, with a focus on investment and collaboration in developing european military technologies. the legal basis of pesco resides in articles 42(6) and 46 as well as protocol 10 of the eu treaty. the idea of a common european defense is not new as its roots date back to the beginning of the cold war. following the april 1949 washington treaty of establishing the north atlantic alliance, the united states and its western european allies began to take into consideration the necessity of rearmament of the federal republic of germany, which at that time was not part of nato. a certain european form of defense collaboration with west germany appeared to be the most indicated measure as a first step. in 1950, the european defense community was proposed by the french prime minister rené pleven, and the six founding member states of the european coal and steel community seemed to embark on that direction, signing the paris treaty of 1952. the ratification of the treaty was surprisingly rejected in august 1954 by the french national assembly, based on an ad-hoc coalition of the gaullist and communist forces in order to oppose germany’s rearmament. it was the first failure of the idea of a common european defense. the gradual extension and the success of nato as a provider of guarantees for the western europe’s security made useless for decades any discussion with regard to an integrated european form of defense, distinct from the north atlantic alliance. 66 west germany joined nato in 1955, and the question of european security seemed somehow resolved. lord ismay, nato’s first secretary general, explained the reason of the alliance expressively: ‘to keep the russians out, the americans in and the germans down’ (nato, undated). after the uk accession in 1973, the european economic communities (eec) followed by the renamed european union in 1993 became even more unwilling or incapable to forge a european army. the british decision to leave the eu reopened the old discussion on a certain form of defense collaboration/union. the process is however difficult and complex, both strategically and politically, not to mention financial, military and administrative aspects. the issue is thorny not only because the overwhelming majority of the eu member states are also nato members, but because they have begun to express different strategic views in the field of defense and security, different levels of relations/partnerships with the united states and different positions with regard to the future architecture of the european union. there are highly ranking officials, especially among the us’ closest allies on the eastern flank of nato, who do not give too much credit to the military perspectives of the defense union. in romania, ambassador bogdan aurescu, presidential aid for foreign policy and former foreign minister, believes that ‘we will never see a european army replacing nato … pesco will just intensify cooperation between eu and nato. romania is interested in 10 of the pesco projects’ (mănoiu, 2017). poland was even more exigent when it officially joined pesco, mentioning that warsaw: ‘will participate in pesco, only under the following conditions: pesco activities will be implemented on an equal principles with respect to all challenges, including defense of the eastern flank. the development of national defense industries will be supported to ensure their competitiveness, innovation and sustainability; within the pesco, will not be created any parallel structures, competitive to nato. furthermore, all undertaken initiatives will be complement to the capabilities of the alliance’ (ministry of national defense of poland, 2017) for at least two main reasons the progress and consolidation of pesco will be difficult, as mentioned before, and these reasons imply the security guarantees – offered by the united states (through nato’s famous article 5) – which pesco does not mention, and the significant differences of views with regard to the reforms of the european union. but there are other reasons also. firstly, not all eu member states take part to this initiative. more preciously, in november 2017, 23 member states signed a joint notification on pesco and handed it over to the council and the high representative. the diplomatic demarche marked a massive affiliation to the initiative from its nascent phase, with the exception of four countries (denmark, ireland, portugal and malta) out of the eu 27. republic of ireland and portugal joined a little bit later, at the dedicated european council held on december 11, 2017. the irish legislature (dáil éireann), for instance, adopted in december 2017 a motion in favor of joining pesco with a majority of 75 to 42 votes. the 67 prime minister (taoiseach) leo varadkar declared with the occasion of the debate: ‘my view is that a europe that is worth building is a europe that is worth defending. for a very long time, all of europe has relied on the united states to provide for its defense. there are real threats to european security and, over time, rather than relying on the united states to defend europe and pay for european defense, europe should provide and pay for its own defense and not be dependent on the united states in the way it has been since 1945.’ (finn, 2017) secondly, as the official pesco notification stipulates, the principles of the permanent structured cooperation combine political commitments (‘level of ambition’) with governance criteria; pesco is therefore about strategy and policy at the same time. essentially, the objectives refer to ‘an ambitious, binding and inclusive european legal framework for investments in the security and defense of the eu’s territory and its citizens […] the list of ‘ambitious and more binding common commitments’ the member states have agreed to undertake, including ‘regularly increasing defense budgets in real terms in order to reach agreed objectives’ [and] proposals on pesco governance, with an overarching level maintaining the coherence and the ambition of the pesco, complemented by specific governance procedures at projects level’ (council of the european union, 2017). referring to the new european initiative’s strategic dimension, nato’s secretary general jens stoltenberg formulated in diplomatic terms: ‘i welcome pesco because i believe that can strengthen european defense which is good for europe but also good for nato. stronger european defense has the potential to help us increase defense spending, provide new capabilities and also to improve burden-sharing within the alliance. so this is a way to strengthen the european pillar within nato. i also welcome the fact that so many european leaders have highlighted or underlined the importance that european defense has to be developed in a way that it’s not competing with nato, but which is complementary to nato. we don’t need duplication, we don’t need competition, but what we need is cooperation and a european defense which is complementing nato’. (stoltenberg, 2017) in fact, the nato official was subtly introducing the main concern related to the relation between pesco and nato, behind his encouraging and positive remarks. with regard to its structure and governance, pesco has ‘a two-layer structure: [1] council level, responsible for the overall policy direction and assessment mechanism to determine if member states are fulfilling their commitments. only pesco members are voting, decisions are taken by unanimity (except decisions regarding the suspension of membership and entry of new members which are taken by qualified majority). [2] projects level: pesco’s effectiveness will be measured by the projects it will develop. each project will be managed by those member states that contribute to it’ (european union external action, 2017). the launch of pesco in 2017 was seen quite differently: as a success or as a semi-failure. those who saw the large number of eu member states joining the initia68 tive as a good sign believe that the more interest in pesco show the member states, the better is for this new policy. on the contrary, those who believe that the massive formal affiliation is not necessarily a good perspective think that the dilution of pesco in an almost all-in eu policy will eventually weaken the effectiveness of the program. the idea that pesco decisions will be taken on a unanimity basis by 25 member states makes in fact the permanent structured cooperation to look more and more like any other eu policy. rather skeptical, nick witney, the first chief executive of the european defense agency, currently senior analyst at the think tank european council on foreign relations is wondering ‘how often can the eu fail to deliver on its defense ambitions before the whole notion of an eu ‘defense project’ becomes terminally discredited? […] the concept of the advance-guard has been replaced with that of the convoy; and the poles, who oppose the whole idea of european defense, are not even troubling to conceal that their purpose in joining the convoy is to slow it down. […] the commitments have simply been watered down so as to become virtually meaningless’ (witney, 2017). the idea that the reluctant eu member states joined pesco in order to keep it under control – because of the unanimity rule of decision – and to limit its expansion is also emphasized by other authors and analysts. a number of european allies are indeed much more interested in nato and their special relations with the us for ensuring national security than to invest in a still confuse pesco. the strategic dilemma could become a perfect one because ‘there are a number of states, including romania and poland, to mention just the most important ones on the eastern flank, that have strategic partnerships with the us and probably they would not renounce to the primordial role of their transatlantic relations for ensuring own security. […] but the reform of the european union and pesco could one day oblige all member states to military procurements from the eu sources, based on a kind of buy european act, and such a measure would clearly disengage the us from europe and weaken nato’ (naumescu apud manea, 2017, pp. iv-v). the same cautious approach is assumed by ulrike esther franke: ‘pesco is a project that the german government welcomed as ‘a big step towards [european] self-reliance’ (foreign minister sigmar gabriel), and ‘another step in the direction of the army of europeans’ (defense minister von der leyen). […] the disparity in perception is alarming. germans are proud of how far they have come. but european allies are starting to roll their eyes when they hear this narrative’ (franke, 2017). two main types of political approaches have been developed so far. taking into consideration all positions mentioned before, the support for pesco is either enthusiastic/radical, as it is in brussels, in france and germany (especially in the social democratic party of germany) and in the hard core of the eu, or moderate/cautious, like in poland, baltic states and romania and at nato level. the choir of the enthusiasts is opened obviously by jean claude juncker, the president of the european commission: ‘she is awake, the sleeping beauty of the lisbon treaty: permanent structured cooperation is happening. i welcome the operational steps taken today by 69 member states to lay the foundations of a european defense union. europe cannot and should not outsource our security and defense’ (deutsche welle, 2017). in this entire fluid international context, it is rather interesting to observe that even the repudiated turkey has some hopes regarding pesco. asking whether pesco could help revive turkey-eu relationship, anadolu agency believes that ‘joint defense cooperation among eu states might eliminate ongoing challenges that led to serious ruptures between turkey and the eu’ (noi, 2017). so far there are no indications that candidate states such as turkey or others could be accepted in pesco, as full members or with a special status. with regard to the projects and the administrative dimension, 17 joint defense projects were earmarked as eligible under the pesco framework. germany will be most probably leading four projects: the creation of a pan-european medical unit, a logistics hub, a center for training missions and an initiative to build up faster crisis response forces (deutsche welle, 2017). the final projects are expected to be officially adopted in the first months of 2018, with participating countries also invited to propose additional programs. the scarcity of information and the lack of details on the governance and administrative aspects of pesco is an indication that things are still under discussion and nothing is clear. the only two points formulated at the council in december concern ‘the pesco governance, with an overarching level maintaining the coherence and the ambition of the pesco, complemented by specific governance procedures at projects level and the administrative arrangements, including the secretariat functions for pesco at project level and financing’ (the european council, 2017). it is self-evident that pesco is theoretically consistent with the logic of european integration and ‘more europe’. what is somehow surprising is that pesco was approved and launched although the founding principle of ‘ever closer union’ was heavily contested in the past years in some eu member states, even in the founding states such as france, germany and the netherlands, not to mention the four members of the visegrad group. in spite of this reluctance, 25 out of the 27 remaining countries have just decided to join this (‘revolutionary’?) initiative. having in mind the recent positioning of the eu countries in relation to brussels and eu policies, we can presume two possible explanations for this massive affiliation. the first reason is related to the idea of the beginning of the eu reform and the formation of a ‘hard core’, so that nobody knows what comes next and does not take the risk to stay out of the process. the second possible explanation refers to the strategy of some eurosceptic countries such as poland to be ‘in’ in order to keep control on further developments within the european union, reserving their right to veto any future measure of european military integration. in fact, none of these two possible explanations of the massive start of pesco is fully encouraging when it comes to its perspectives. 4. conclusion: incremental scenario vs. ‘much ado about nothing’ the permanent structured cooperation in the field of defense, both as a concept and as a policy/practice, is clearly related to the idea of the reform of the europe70 an union. unlike other waves of the eu reforms, already mentioned in the article, the current one is related to an existential crisis of the union and therefore seems/ is much more politicized and identity-oriented. for the moment, the administrative and governance dimensions of pesco do not disclose enough details to understand the real direction where this process goes. most probably 2018 and early 2019, before the elections for the european parliament, will bring clarifications regarding the management and the limits of the defense union. the long and difficult negotiations for the formation of the new german government and the political uncertainty in berlin postponed in the fall of 2017 the implementation of substantial steps towards the edification of the common european defense. pesco is indeed an ‘evolving concept’, as it was explained by the eu leaders from the beginning, but the dynamic character cannot be accepted as the only reason for the vagueness of this initiative. different authors and experts already signal this concerning aspect: ‘the key question revolves around how to define those states which are willing and able. yet many provisions of pesco are vague when it comes to actual cooperation […] ‘inclusivity’ and ‘modularity’ have emerged as guiding principles.’ […] the implementation of pesco depends therefore on the translation of these two concepts into concrete terms’ (de france, major and sartori, 2017, p. 5). from one treaty to another and from one integration project to the next one, the european union became more and more preoccupied to develop its specific identity and to emphasize self-defining characteristics. the political will of brussels for identity consolidation and strategic autonomy grew significantly from the maastricht treaty to the lisbon treaty then to its pesco’s launch in 2017, despite a parallel process of a rising euroscepticism. both visions have thus radicalized their proposals and ‘solutions’. elena korosteleva believes that ‘rhetorical projections have considerable intensified, from 2011 entering into a competitive mode for a ‘grand vision’ for europe. […] consequently, the projects have become incompatible for the third parties imposing a choice of allegiances and the need of subscription for one of the established regimes’ (korosteleva, 2017, p. 7). according to this perspective of radicalization, pesco could act in the near future as a differentiator between the pro-eu and the pro-us member states, even though we speak about countries that are simultaneously eu and nato member states. the growing level of strategic ambition of the eu’s hard core to build the defense union could act in the future both as an asset and vulnerability for pesco. it could be an asset, because it is fully connected with the idea of deepening european integration and saving the european project amidst the present crisis. it could be also a form of vulnerability, because it is interfering with the most sensitive aspect regarding the strategies of the sovereign states, namely the national security and defense. depending on historic, geopolitical and even cultural considerations, the eu member states have deeply different perspectives on their national security. two main scenarios emerge with regard to pesco. the optimistic view could be described as ‘the incremental scenario’, in which the eu will make gradual progress 71 and achieve its strategic aim in a step-by-step approach. this view is shared especially in france, germany, in other states of the hard core of the european union and obviously in brussels. the election of emmanuel macron as president of france and the reconfirmation of angela merkel as chancellor of germany in 2018 are seen as the most powerful guarantees for the advance of pesco. on the contrary, the ‘much ado for nothing’ scenario is shared in the outgoing united kingdom but also in poland, the biggest country of the post-communist central europe. nick witney puts it in the terms of an old chinese say: ‘big noise on stairs, nobody coming down’ (witney, 2017). the former british defense secretary michael fallon affirms without equivoque that ‘defense is for nato not for eu’ (fallon, 2017). the polish foreign minister is also clear: ‘europe already has an alliance, it is called nato. the question is whether we really need to have a second defense structure in the eu, especially when nato’s calls to spend 2% of gdp on defense systems are only fulfilled by five countries and only a few european countries, such as poland’ (waszczykowski, 2017). between the enthusiast and the reluctant eu member states there is also a third category of moderate countries, cautiously supporting pesco but vigilantly reiterating their full commitment to nato and to the strategic partnership with the united states. romania and the baltic states are the most representative countries for this category, not as noisy as poland but actually much closer to a pro-us doctrine of security. pesco and the new reform of the european union come in a critical moment of the european project, when the first eu member is to leave the union, following a popular vote. more than just a theoretical approach of a deepening european integration but less than an effective, clearly explained and feasible policy, the defense union is still struggling between the ‘wishful thinking’ of the hard core and the limits of political will and military capabilities of the eu member states. references: 1. alexandrova, p., rasmussen, a. and toshkov, d., ‘agenda responsiveness in the european council: public priorities, policy problems and political attention’, 2015, west european politics, vol. 39, no. 4, pp. 605-627. 2. balint, t., bauer, m.w. and knill, c., ‘bureaucratic change in the european administrative space: the case of the european commission’, 2008, west european politics, vol. 31, no. 4, pp. 677-700. 3. bauer, m.w., ‘impact of administrative reform of the european commission: results from a survey of heads of unit in policy-making directorates’, 2009, international review of administrative sciences, vol. 75, no. 3, pp. 459-472. 4. bølstad, j., ‘dynamics of european integration: public opinion in the core and periphery’, 2015, european union politics, vol. 16, no. 1, pp. 23-44. 5. bovaird, t., ‘researching europeanisation in public administration and policy: conceptual issues in integration and differentiation’, in nemec, j. 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(eds.), the european commission, london: john harper publishing, 2006, pp. 128-155. 74 36. stoltenberg, j., ‘doorstep by nato secretary general jens stoltenberg at the start of the european union foreign affairs council in defense format’, nato newsroom, november 13, 2017, [online] available at https://www.nato.int/cps/en/natohq/opini ons_148840.htm, accessed on december 12, 2017. 37. the european council and council of the european union, ‘defense cooperation: council establishes permanent structured cooperation (pesco), with 25 member states participating’, december 11, 2017, [online] available at http://www.consilium. europa.eu/en/press/press-releases/2017/12/11/defence-cooperation-pesco-25-mem ber-states-participating/, accessed on december 12, 2017. 38. toshkov, d., ‘public opinion and policy output in the european union: a lost relationship’, 2011, european union politics, vol. 12, no. 2, pp. 169-191. 39. waszczykowski, w., ‘we joined pesco but with doubts’, ministry of foreign affairs of the republic of poland, november 13, 2017, [online] available at http://www. msz.gov.pl/en/news/they_wrote_about_us/minister_witold_waszczykowski__we_ joined_pesco_but_with_doubts__pap_dispatch_from_13_november_2017_;jsession id=8e5e3f9c275ce0f5b1e044205177209a.cmsap1p, accessed on december 12, 2017. 40. witney, n., ‘eu defense efforts miss the open goal again’, european council on foreign relations, november 15, 2017, [online] available at http://www.ecfr.eu/article/ commentary_eu_defence_efforts_miss_the_open_goal_again, accesses on december 12, 2017. 136 transylvanian review of administrative sciences, 16 e/2006, pp. 136-153 eric j. strauss professor, director urban and regional planning program, michigan state university, u.s bogdana neamţu assistant professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca policy tools for addressing urban sprawl: urban growth boundaries (ii1) the analysis herein explores the topic of urban growth boundaries and how local governments in romania could use this growth management tool in order to address unplanned, haphazard growth that is taking place at the fringe of cities and in the villages/ farming communities that surround them. the structure of the paper is threefold. the first section focuses on a brief socio-economic profile of cluj-napoca, romania. the aim is to provide a better context and facilitate the reader’s understanding of the nature of urban growth and suburbanization in romania. cluj-napoca is currently in the process of adopting a master plan for the city and specific policy recommendations on how to address urban sprawl may prove useful. the authors hope to stir a debate among scholars, practitioners, and residents with regard to how the city of cluj will further develop and whether future development should occur in the same manner it occurred during the last 10 years. the second section of the paper is meant to introduce the concepts of growth management and urban growth boundaries. the former is described in terms of a planning philosophy while the latter is portrayed as a specific policy tool that growth management advocates suggest it could be used in order to fight sprawl. a case study on urban growth boundaries is presented in order to underscore specific advantages and disadvantages associated with establishing a growth boundary. the last section comprises several preliminary policy recommendations for the city of cluj-napoca. because of the incomplete data the authors currently have on critical issues some of the recommendations are general in scope and need to be further detailed. 1 this article should be read as part two to the article by bogdana neamţu, urban sprawl from a comparative perspective: the case of romanian cities versus their american counterparts. is there any reason why we should worry? published in revista tranilvana de stiinte administrative, no 14/200, reprinted in revista tranilvana de stiinte administrative no15 e/2005 137 introduction urban sprawl is a recent phenomenon within the romanian cities. however, it is progressing at an alarming pace. in the american planning literature sprawl is defined as (1) essentially a suburban phenomenon – beyond a city’s limit, transitional or on the urban fringe, (2) generally characterized as low density, favoring automobiles, and (3) possibly scattered, unplanned, or ad-hoc in its pattern (gillham 2002). the somewhat increased economic growth currently taking place in romania is accompanied by uncontrolled and chaotic real estate developments. leapfrog developments, big-box retailers at the fringe of the city, increased traffic congestion, and pollution, are nowadays an intrinsic part of the daily urban life of many romanians. most of the municipalities have not been prepared to properly manage suburban growth and the outcomes associated with it. many cities and rural communities lack an updated comprehensive plan. because of a permissible legal framework, weak enforcement of existing regulations, and lack of expertise on the behalf of planners, urban growth is ad-hock, unplanned, and haphazard. the assumption underlying this analysis is that urban sprawl is bad and it negatively impacts the cities. why should municipalities be worried about sprawl? should the residents even care? the answer to both questions is “yes”. the immediate reason why municipalities should care about sprawl is increased infrastructure and utility provision costs. sprawling neighborhoods need to be serviced by sewage, water, electricity, and roads. however, they will eventually need parks, schools, and other amenities that are specific to urban areas. this means increased costs in the context of already under-funded local budgets. other reasons that should make both municipalities and residents worry are non-monetary. in the american planning literature sprawl is described as an unhealthy land use pattern because of the outcomes, both direct and indirect, associated with it. these outcomes include air pollution and traffic congestion, lack of physical activity, degradation of prime farmland, weak social ties and lack of community spirit, disinvestments in central cities and further segregation of minority and low-income groups etc. (gillham 2002; duany, plater-zyberk and speck 2000). while not all these outcomes can be found within the romanian context, the loss of farmland, soil pollution, and blurred boundaries between urban and rural spaces are reasons of concern. i. land use patterns and the built environment in cluj-napoca2 located in the northwestern part of romania, approximately 320 km northwest of bucharest (the capital city) the city of cluj-napoca is the seat for cluj county and one of the most important academic, cultural and industrial centers in romania. it is also known as the “heart” of transylvania, one of the historical provinces of the country. in the recent years, the city has experienced tremendous growth that manifests itself in the occurrence of suburban residential neighborhoods at the fringe of the city and within the adjoining villages and strip commercial along the major transportation corridors. current land uses the current comprehensive general plan for the city of cluj-napoca was drafted and adopted in 1999. however, the plan no longer reflects the current land uses within the city limits as several area and detail plans have been subsequently adopted. based on 2004 city data the total land surface was 69.31 square miles. out of the total surface 22.67% (15.71 square miles) represents urbanized or planned to be urbanized land while the rest of 77.33% (53.59 square miles) is not to be developed (see figure i.1). 2 all data in this section, unless otherwise specified, are compiled from proiect planificare strategica municipiul cluj napoca (analiza preliminara), available on line at http://www.primariaclujnapoca.ro/proiect_planificare. aspx, accessed march 15th, 2006 138 figure i.1. general land use classification the city can change the classification of land in order to meet its growth needs. recently the city has changed the designation of a large tract of land in the southern area of the city. the land was previously classified as non-buildable. as the city did not adopt more detailed zoning and design guidelines for development in this area, most construction occurred in a haphazard manner, jeopardizing the city’s goal to prevent leapfrogging growth that is not currently serviced by public infrastructure. the agricultural land (farmland, grazing land, orchards) accounts for 38.34 square miles while the non-agricultural land (including forests, wetlands, transportation corridors, brownfields, and residential/commercial/industrial buildings) accounts for 30.97 square miles. conversion of forests and open space to more intensive uses as the available urbanized or planned to be urbanized land within the city limits is vanishing, more pressure is put on the forests at the fringe of the city. these forests serve as an amenity for the city residents and are mostly used for weekend trips on foot or bike and outdoor cooking/picnics. the faget forest was until very recently classified as non-buildable, open space land. confronted with numerous requests and complaints about the lack of available land for future developments, the city decided to expand the buildable land as to include areas located within the faget forest. as a result of this decision the total surface that is urbanized or can be developed in the future increased by more than 53.2% (4.38 square miles were added). though the area plan clearly delimitated the zones within the forest limits that can be developed, growth is taking place outside of these areas as well. there are ways in which legal requirements can be avoided. one way is for landowners to apply for a temporary building permit with the county and then to build a permanent residence instead. many of the problems the city faces with regard to sprawl are exacerbated by a weak enforcement of the land use regulations that are already in place. another negative impact refers to an increased use by the city residents of the nearby forests that are more pristine in character than faget forest. another forest within the city limits – manastur forest – is currently in danger of being eradicated by residential development. because of a very complicated situation regarding ownership of land within the limits of manastur forest the city is not undertaking any action to enforce the existing regulations. growth has taken its toll on the amount of open space and public parks as well. even before suburbanization started, cluj-napoca did not have enough public parks. furthermore they are unevenly distributed throughout the city’s neighborhoods. currently there are 75.35 square feet of open space per resident available, a measure inferior to what’s considered healthy and acceptable – 182.99 to 279.86 square feet/capita, within cities bigger than 100,000 inhabitants (mediu: cluj-napoca 2005). vehicular traffic city official believe that vehicular traffic has increased in the city in the last years (no official traffic data currently available). during the 2000-2004 the number of city roads increased by only 139 1.46%. negative impacts of previous planning and construction are apparent. they include: (1) no functional connections between entrance and exist to the city. thus all the transit traffic (both westeast and south-north) goes on the main thoroughfare that bisects the downtown; (2) no connections between the downtown and the largest residential neighborhoods; (3) most streets are not wide enough. the intersections no longer support current levels of traffic; and (4) huge volumes of traffic on foot sometimes intertwine with vehicular traffic, as there are no car-free or pedestrian area or bike lanes within the downtown. parking some of the limitations of the road network are amplified by a chronic lack of parking throughout the city. the total parking surface covers 0.14 square miles. in 2005 the city hall had a waiting list for parking spaces totaling a number of 1,485 applications. in the downtown area there are no parking structures. most people park on the street or on the sidewalks. this interferes with both vehicular and pedestrian traffic. numerous feasibility studies are currently under way to determine the best location for future parking garages. public transportation an extensive transit system (including 229 buses operating on 29 routes, 110 trolleys on 6 routes, 49 trams on 3 routes, and 12 minivans) has been in place for more than three decades. this mass transit system is the result of experimenting and adjusting to the residents’ needs. however, there are challenges that the city faces as well. they include: (1) an aging stock of busses – some of them are 15 years old; (2) maintenance of routes that serves remote locations and are not economically efficient; (3) the impossibility to supplement the number of busses during peek hours because of an overcrowded road network. there is not room on city streets for exclusive bus lanes. housing there are currently 13 residential neighborhoods within the city boundaries and all of them comprise residential. in most cases residential uses are intermingled with neighborhood commercial, office space, and even light industrial. in 2004 the built surface within the 13 neighborhoods was 1.75 square miles. of the 1.75 square miles 1.73 square miles represent private property and 0.02 square miles account for public property (see figure i.2). the total built surface has increased as compared to 2000 by 11%. public built surface has decreased during the same time interval by 20.4% while the privately built surface has increased by 12.7%. in 2004 there were 116,931 housing units (all types included) within the city. compared to the year 2000 the total number of housing units has increased by 2.4%. however, during the same time interval the number of public housing units decreased by 9.5%. the number of private housing units increased from 2000to 2004 by 2.78%. figure i.2. residential built out area by property type (square miles) 140 the data portray one of the biggest challenges the city faces: lack of affordable and public housing. while private housing units are increasing the number of public housing units is decreasing at an alarming pace. housing availability is another important problem the city has to tackle. there is currently no recent study to document the condition of housing markets in cluj-napoca. in 2006 the most prestigious financial journal in romania called “capital” labeled cluj as the most expensive city in the country. the ranking system was based on an aggregated measure that looked at a variety of factors, including housing. this study, though not an academic research, seems to at least confirm some of the anecdotal information about the lack of both housing affordability and availability. municipal infrastructure (water and sewage) in the recent years the city has received extensive funding from the european union through several projects meant to help the city update the water/sewer system. at the end of 2006 approximately 124 miles of collector pipes will have been either created or retrofitted. this represents a major step toward upgrading the public utilities. more needs to be done in the future, as most of the water and sewer pipes are old and outdated. the length of the water distribution network remained the same in 2004 as compared to 2000. the length of the sewage increased by 2.46% from 2000 to 2004. during the same time frame the length of the natural gas distribution network increased by 2.47% as well. in the newly built developments that are not serviced by municipal water and sewage, developers and residents are very often willing to pay for the hook-up to the municipal system or to pay/build the necessary on-site improvements. in many cases the hook-up to the water/sewer system may not be legal. a common observed practice is for one house to pay for the hook-up and then for several other houses to branch off from the main hook-up without paying any fee (discussions with city officials 2005). metropolitan growth and urban sprawl the city exercises a considerable influence on the whole metropolitan area. it is estimated that the influence zone encompasses half of the total surface of the cluj county. there are approximately 14 to 18 villages contained within the peripheral influence zone (see figure i.3, box a). most of these villages have experienced significant population losses due to migration to the city and a decrease of the birth rate. while this situation holds true for most of these villages, there are several others that have experienced growth in the last years. these villages that managed both to retain their population and to grow economically are the ones in the very close proximity of cluj-napoca: apahida, baciu, floresti, gilau, luna de sus, sanicoara. they have grown precisely because of urban sprawl. they were able to attract big box retailers or industrial storage facilities that need large lots of land serviced by municipal infrastructure that were either not available or more costly to purchase within the city limits. residential sprawl is significant as well though no data are currently available to estimate its magnitude. however more and more people are residing in those villages in close proximity of clujnapoca and commute to the city to work. this is a somewhat reverse pattern of sprawl compared with the us where most of the jobs have followed the residential base to the suburbs. the city is considering the creation of a metropolitan area and government in order to be able to design a more coherent strategy for this area so heavily impacted by growth. eight villages are expected to form the metropolitan area (see figure i.3, box b). the creation of the metropolitan area does not represent however an immediate priority for the city and it is not part of the development strategy for 2007. it will be nonetheless included in the 2007-2013 strategy. some of the villages that are supposed to take part in the creation of the metropolitan area clearly oppose this project. not surprisingly the villages that have already rejected the project for the creation of the metropolitan area are those who benefit the most from the economic growth associated with suburban development, both commercial 141 and residential (baciu and floresti). it is unclear at this point in time whether these villages will be forced to join or the metropolitan area will be created without their participation. the area in dark gray represents the metropolitan area (see box b) the area in light gray represents the peripheral influence zone (see box a) figure i.3. the peripheral influence zone and the metropolitan area source: cluj county available on line at http://www.cjcluj.ro/zona-metropolitana-urbana/ box a: peripheral influence zone box b: metropolitan area village population surface/sq miles aghiresu 7173 40.92 garbau 2647 27.86 sanpaul 2560 35.99 borsa 1868 31.03 bontida 4734 23.79 jucu 4120 32.87 caianu 2573 21.28 cojocna 4399 53.53 aiton 1350 17.48 tureni 2582 28.59 baisoara 2353 42.87 savadisla 4497 20.12 rasca 1767 25.35 capusu mare 3698 2241 total 46,321 424.01 village population surface/sq miles apahida 8783 40.93 feleacu 3818 23.82 ciurila 1528 27.88 floresti 7504 23.52 gilau 7857 45.10 baciu 8162 33.65 chinteni 2786 37.84 cluj-napoca 318027 69.31 total 358465 302.20 142 ii. fighting sprawl: smart growth and urban growth boundaries a) growth management and smart growth cluj-napoca, as many other communities both in the us and worldwide, has been facing for the last decade significant growth pressures and the occurrence of suburbanization at the fringe of the city or within the limits of the adjoining villages. one of the reasons why local politicians are afraid of tackling the issue of uncontrolled growth is because there is un underlying assumption that a city is either pro-development or against it and that environmental concerns, even if reasonable ones cannot be addressed without jeopardizing economic growth. romanian cities are by no means the only ones that worry about the dichotomy economic growth (more jobs, more taxes etc)/environmental protection. their american counterparts have had the same concerns for several decades now. growth management and smart growth are two concepts that are considered as potential antidotes for urban sprawl. they also hold the promise of reconciling the need for economic growth with the need to preserve the environment, the already existing communities, and the historic legacy of many of the romanian cities. though many times growth management and smart growth are used interchangeably, there are scholars who point out differences. gillham (2002) states that growth management (a concept that originated back in the 1960s and then continued to develop over the next two decades) places the emphasis on preserving environmental resources by setting limits on new development and thus restricting future growth. smart growth on the other hand is managed growth that attempts to fulfill the need to provide for growth (both economic and in population) while at the same time limiting the undesirable effects of growth. based on these two definitions it could be argued that the philosophy behind growth management is no growth at all while smart growth promotes the concept of orderly, planned growth. growth management and smart growth are used and misused by a variety of stakeholders in an attempt to either defend the status quo or to fundamentally alter the current pattern of land use development. let’s take a brief look at how two different organizations whose agendas are completely different define smart growth: sprawl watch clearinghouse (gillham 2002): “smart growth is calling for an end to sprawl and a new vision of urban/suburban collaboration and regional growth management”. this definition emphasizes the traditional antagonism that exists between suburbs and inner cores with regard to land uses and stresses the importance of regional governance. national association of home builders (gillham 2002): “smart growth is understanding that suburban job growth and the strong desire to live in single-family homes will continue to encourage growth in suburbia”. this definition uses smart growth in order to reaffirm or even to legitimize the status quo. the difficulty of having a commonly agreed-upon definition for smart growth is closely related to another challenge this planning movement faces, namely its applicability. is the whole concept of smart growth of any use in the real world? even if planners and citizens, and real estate agent all agree that smart growth is the way to go, what needs to be done first? which are the concrete techniques and policy tools that have the potential to make the communities “smarter”? some of the principles and techniques associated with smart growth include: open space preservation, mixeduse developments, variety of transportation choices, regional planning/governance, downtown revitalization, urban growth boundaries/urban service boundaries etc (http://smartgrowth.org/about/ default.asp). as gillham (2002) argues, most of the aforementioned measures involve some degree of regional cooperation. in most cases an efficient transit system needs to be provided at a regional level as more and more people work and live in separate places. the same goes for different types of mechanisms that either limit or channel urban growth (growth capes, urban growth boundaries, 143 urban service lines etc). if the municipalities do not cooperate the residents and the businesses will always migrate toward the next community that has more permissive regulations. as discussed in the introductory section, communities worldwide are facing the challenges of unplanned, haphazard urban growth. more and more often ngos and local governments outside the u.s. are concerned with developing a more healthy approach to growth. though they may carry different names, smart growth and growth management are currently philosophies/planning movements that are international in scope. in 1998 the british government established an urban task force that has since advocated compact cities, reuse of abandoned brownfields, and the creation of mixed-use neighborhoods. the task force also stresses the status quo – building on greenfields is no longer sustainable. current growth patterns undermine urban economies and exacerbate racial, class, and ethnic divisions (http://www.publications.parliament.uk/pa/cm199798/cmselect/cmenvtra/ 495-ix/8051318.htm). as it can be very easily noticed, both problems and solutions are becoming international in scope though the local context can add either additional challenges or incentives. b) urban growth boundaries what are they? as growth-management initiatives are gathering unprecedented public support nationwide and internationally, more and more attention is paid to specific policy tools that could be used in order to create “smart” communities. one of the hottest planning tools is the urban-growth boundary, or urban-limit line. packaged as part of a menu of growth-management policies, ugbs have become particularly popular as potential ways to preserve farmland and open space; their advocates claim, that if land development is not permitted beyond a certain point, open space and farmland will be preserved, while existing urbanized areas will experience higher levels of investment and development. numerous communities across the united states have adopted urban growth boundary programs or variations of urban growth boundary programs (see table ii. 1). seven states mandate the use of urban growth boundaries at the local level. these seven states are: washington, tennessee, oregon, new jersey, maryland, maine, and hawaii. in some states, such as florida, urban growth boundaries are not required, but the state has recognized their importance, and as a result they have encouraged their local governments to adopt urban growth boundary programs (kolakowski et al. 2000). table ii.1. existing u.s. urban growth boundary programs location level concept examples florida state strongly encourages metro dade, sarasota, polk, orange counties hawaii state requires designation maine state requires designation maryland state requires designation baltimore and ann arundel counties minnesota state required for the 5 county region minneapolis-st. paul new jersey state requires designation cap may counties oregon state requires designation portland region, clackamas county tennessee state requires designation washington state requires designation king county arizona local left to localities tempe california local left to localities approximately 22 programs established colorado local left to localities cities of boulder, fort collins, and westminster illinois local left to localities kane county 144 kentucky local left to localities lexington/fayette county metro area massachusetts local left to localities plymouth nebraska local left to localities city of lincoln and lancaster county pennsylvania local left to localities buckingham township lancaster county south dakota local left to localities sioux falls vermont local left to localities manchester virginia local left to localities virginia city source: kolakowski et al., 2000 there is no clear-cut definition of what an ugb is. possible definitions include: a “line in the land” drawn around an urban area outside of which development is prevented or highly discouraged. urban-growth boundaries are usually considered long-term growth management tools, often established for 15 or 20 years periods (staley et al., 1999). a pro-active growth management tool that seeks to contain, control, direct or phase growth in order to promote more compact, contiguous urban development (greenbelt alliance). urban growth boundaries restrict urban growth to a specific area around a community and prevent the spread of development into the surrounding countryside (porter, 1997, cited in kolakowski et al., 2000). a perimeter around each urban area to contain urban growth. land outside of this boundary is maintained at much lower densities and receives no sewer or water services. this approach aims at establishing cities with edges, where the boundary between urban and rural is clear (williams, 1991, cited in kolakowski et al., 2000). the designation of urban growth areas identifies where growth should occur, and with a cordon of boundary line, establishes the geographical extent to which development is permissible. it is an indirect means of controlling growth in that it channels development rather than limit it (burrows 1978, cited in kolakowski et al., 2000). there are other concepts that are used interchangeably with ugbs. some other terms used to describe similar institutional arrangements include: designated growth areas, urban service districts or areas, urban service boundaries or districts, general service districts, and public utilities (kolakowski et al., 2000). while most authors consider that these concepts describe the same thing, a distinction is sometimes made between ugbs and urban service boundaries. staley et al. (1999) describe an urban service area as “determined by objective information about a local government’s costs to extend roads, water and sewer lines, or other publicly provided services. beyond some point, the county or local government determines that the extension of those services is not cost effective. urban-service areas apply to public infrastructure and utilities and reflect decisions about the cost-effectiveness of extending these services into new areas. on the other hand, ugbs are explicit attempts to channel growth for broader political purposes and goals. another main difference between ugb and service boundaries is flexibility. the urban service areas are “more flexible in expansion because they are drawn mostly consistent with the economics of planned public facilities ... whereas, urban growth boundaries have many more policy objectives in addition to providing efficient services” (nelson et al. 1995, cited in kolakowski et al., 2000). ugbs are used outside the us as well. internationally, many people look to england as the home of “green belts” and urban growth boundaries. a boundary and a 900 square mile green belt surround london. copenhagen is surrounded by a boundary and “green wedges” of open space. vancouver, british columbia, has drawn long-term boundaries, encouraged infill development and protected a “green zone” of farmlands and other open space (greenbelt alliance). 145 how do they help communities fight sprawl? there are a variety of objectives that a municipality can achieve by using an ugb. staley et al. (1999) identify six objectives. they are: – preserve open space and farmland – minimize the use of land generally by reducing lot sizes and increasing residential densities; – reduce infrastructure costs by encouraging urban revitalization, infill, and compact development; – clearly separate urban and rural uses; – ensure the orderly transition of land from rural to urban uses; and – promote a sense of unified community. some goals associated with ugbs are more contested by smart growth opponents than others (staley et al., 1999). while most opponents regard the first goal as benign, goals number 2 and 3 respectively seem to be at the center of disagreement. most pro-development groups argue that people should be able to determine the type of housing they want to live in – infill developments and multifamily complexes are not appealing to everybody. most opponents also claim that by using a ugb local governments are reducing the livability of a place. the objectives underlying the establishment of an ugb by a municipality can change over time. in the us, portland’s ugb has been initially created in order to protect the fertile farmland in the willamette valley; however, as urbanization increased, attention has shifted toward managing the forms growth takes within the established urban growth boundaries, especially in the portland metropolitan area (mayer and provo 2004) this only proves that the ugb is a flexible policy tool that can be used in order to address a large array of issues urban areas are currently confronted with. in the case of romanian cities an ugb would be most likely used in order to reduce infrastructure costs and to prevent the loss of farmland in the villages surrounding the urban areas. increased urban density and infill redevelopments are not a major concern for many romanian cities, including cluj. the city has a very vibrant, densely built downtown. even in the residential neighborhoods as well as the newly built subdivisions densities are still high. which are the steps a community needs to take in order to establish a growth boundary? ugbs can be a powerful planning tool; however, they need to be set up in such a way to allow the communities involved to easily respond to the challenges they are confronted with. the key word here is flexibility. a growth boundary is not meant to remained unchanged over time; rather it will be expanded based on the master plan as to accommodate and channel future growth towards those areas that have been identified by the community as desirable for development/new construction. there are several questions to be considered when establishing an ugb (http://www.uoregon. edu/~pppm/landuse/ugb.html): who draws the ubg? drawing an urban growth boundary is a joint effort. the city that wants to establish a growth boundary needs to closely cooperate with the adjoining communities. the assumption underlying the creation of an ugb is that in the future the city will annex the adjoining communities and that the boundary will be expanded in order to accommodate further growth. in order for this assumption to hold true various municipalities need to agree on how to “synchronize” their land-use regulations and how to actively participate in the process of drawing the boundary. in the u.s. this proves to be extremely difficult in home rule states where the excessive fragmentation of local governments may hinder cooperation in land use and planning matters. besides various local and county governments, the citizens are also an important actor in the process of drawing the ugb. the community needs to be actively involved starting with the early stages of the planning process. this may prove to be crucial for the success of the ugb especially when residents need to approve it by vote. 146 how much land is needed? the process of deciding how much land is needed inside the boundary implies a complicated research and forecasting effort on the behalf of all the municipalities involved. the amount of land to be included in the ugb depends on how much the city is expected to grow. city officials estimate growth by making population projections or by using projections already done by some state or regional agency. based on these projections, the city decides how much vacant land is likely to be needed to accommodate the expected growth. community leaders, planners, and citizens estimate how many acres will be needed for the new houses, offices, stores, factories, and parks that will serve the future population. the amount of vacant land within the city limits and the projected growth rates are thus the key elements in drawing the ugb. communities with large areas of vacant land already inside their city limits or that do not expect much growth establish their ugbs close to the current city limits. in fact, some cities have made their ugbs congruent with their city limits. cities with little vacant land and high growth rates draw their ugbs farther from the city limits, thus creating large areas of urbanizable land. can the boundary be later expanded? ugbs are meant to be a very flexible planning tool. as with other long-term, comprehensive planning efforts (such as a master plan for example) the community should be able to revise and amend the ugb every 5 years. the aim is to make sure that growth that was not anticipated can be accommodated. a flexible amending mechanism is required especially when it is hard to get reliable long-term demographic and growth forecasts. however, too much flexibility can also hurt the boundary. a balance has to be achieved between the need to keep it flexible enough so that the community does not miss important development opportunities (let’s say the attraction of a huge business incubator that needs a large lot of land outside the limits of the ugb) and the need to contain new development within the ugb limits. how is the location of the ugb decided? the municipalities involved in the creation of the ugb must decide which are the most important goals to be achieved. such goals, based on the experience of several us cities with ugbs include: efficient use of land, protection of agricultural land at the city’s edge, and cost-effective public services. the latter criterion suggests that a hilly, wooded area for example would be costly to serve with sewers, water, and therefore it should not be included in the ugb. how much inter-jurisdictional cooperation is needed? cooperation among all the jurisdictions involved is critical. in the us an ugb can be mandated statewide (as in the case of oregon) or adjoining municipalities can come together and decide they need to create an ugb in order to protect farmland and to prevent future development from spreading out. as with other growth control mechanisms, cooperation is important because otherwise new growth is simply exported to the next community that welcomes it. in the case of romanian cities inter-jurisdictional agreements are going to be very important. because undeveloped land is scarce within the city limits, an ugb will most likely encompass land located in the adjoining villages. if cooperation lacks the whole ugb becomes questionable. this is going to represent a huge challenge for romanian municipalities that have not traditionally cooperated in matters of land use planning. theoretically, a three tier planning system is already in place: national, county, and local. ideally the plans formulated at one level should coincide with the plans formulated at the superior level. however, this does not always happen in practice. c) case study on urban growth boundaries in the u.s: portland, oregon portland, oregon is not a direct comparable case study to the city of cluj-napoca. however the authors strongly believe that this case study could be informative and raise some important questions 147 with regard to the benefits and costs associated with establishing an ugb. several of the reasons why this case study was selected include: (1) a large size city that is growing; (2) urban (3) first implemented three decades ago, the impacts of the boundary are presumably already in place and more easily observable; and (4) there is a growing body of literature on portland’s ugb therefore the availability of data is not an issue. overview portland is known as the “capital of good planning”. for many urban planners the region has been the poster child for regional planning, growth management, and other innovative urban planning policies (mayer and provo 2004). the city of portland has continuously evolved during the last three decades, transforming itself from a relatively small community into one of the biggest and finest cities in the us. located on the pacific rim and bridging the states of oregon and washington, the portland metropolitan area is uniquely positioned as the strategic center of trade and commerce on the u.s. west coast. at the center of the region is multnomah county, home to the city of portland and accounting for 660,486 residents in the 2000 census. the entire region is highly urbanized, having the city of portland and the multnomah county as urban growth nuclei of the region (see table ii.2 below) table ii.2. urban-rural population, city of portland and multnomah county, oregon united states portland, oregon multnomah county, oregon total 281,421,906 529,121 660,486 urban 222,360,539 527,255 649,010 inside urbanized areas 192,323,824 527,255 648,935 inside urban clusters 30,036,715 0 75 rural 59,061,367 1,866 11,476 filler 0 0 0 source: adapted from the 2000 us census the population has grown rapidly during the last three decades both within the city of portland and the metropolitan area (see table ii.3 below) table ii.3. % population change from 1990-2000 unit of government population in 2000 % change 1990-2000 city of portland 660,486 13.1 multnomah county 529,121 20.0 portland-vancouver metropolitan area 1,918,009 26.5 source: adapted from 19990 and 2000us census the city of portland is somehow unique among its american counterparts with regard to population growth. the common trend in the us for the last five decades has been an increase in population at the metropolitan level accompanied by a drastic decrease within the city limits and especially in the downtown area. mayer and provo (2004) argue that portland population growth has been primarily attributed to the region’s economic success especially in the 1990s. the economy of portland has suffered a structural transformation in the last decades, transformation that implied a shift from reliance on natural resources to knowledge-based industries and the 148 emergence of high technology firms (mayer and provo (2004). the inner city has been able to retain a substantial portion of businesses within its limits. certain jobs have migrated to the suburbs, however employment in the central city is still fairly large (44%) compared with other american cities (mayer and provo, 2004). most of the service-oriented firms, such as public relations companies, multi-media firms, insurance brokers, and banks have their offices in the central city. high technology industry, in contrast, is concentrated in suburban washington county. the nursery industry takes advantage of the availability of agricultural lands protected from development and locates at the edge of the urbanized regions just outside of the ubg (mayer and provo 2004). the portland region has not just been able to retain but also to increase its manufacturing base during the last two decades. between 1990 and 2000, the metropolitan area added 22,871 manufacturing jobs. during the same time frame most regions in the us posted a loss in manufacturing employment due to the migration of these jobs overseas (mayer and provo, 2004) the data presented in this section portray the city of portland and the whole metropolitan region as an example of successful and balanced growth. data seem to lend support to an argument made by hamlin (2002) that in order for a region to be healthy and to develop it needs both the suburbs and the inner city. land use planning in portland urban planning has played a key role in shaping the current profile of portland for more than 3 decades. in the early 1970s senate bill 100 created the land conservation and development commission to monitor local comprehensive planning and compliance with a set of statewide planning goals. these goals are still in effect and focus comprehensively on the preservation of farmland, open space, housing, public facilities and services, urban growth boundaries, and economic development. by establishing a statewide land use planning framework portland was at the forefront of what is referred today as the smart growth movement (mayer and provo 2004). the 1973 legislation also mandated the creation of urban growth boundaries in all municipalities and required negotiations between the cities and counties so that they would agree on the boundary lines. several years later, in 1979 metro was created; it is the only regionally elected land use and transportation planning agency in the us. metro drew the ubg for the portland region as to include 24 cities and 3 counties. in the 1990s metro developed a comprehensive plan for the region called region 2040 that outlines specific goals for the next decades and clearly spells out that higher density, mixed uses developments is going to be preferred and encouraged over less intensive land uses. the plan calls for mass transit and cluster developments and emphasizes the importance of public input and stakeholders’ support toward the implementation of this regional vision (seltzer 2004). successes portland’s ugb can be considered a success in reference to the goals established by the state legislature. the boundary prevented the spreading out of new development into the surrounding farmland. by most measures portland has a limited amount of urban sprawl. chapman and lund (2004) cite a study done by ewing et al. (2002) and state that portland ranked as the 8th least sprawling of the 83 regions surveyed. in a study by mayer and provo (2004) a sprawl score of 126.12 is attributed to portland (by the same measure san francisco has a sprawl score of 146.83). there are numerous subsidies put in place by the regional government to encourage denser development within the ugb: 10 years of property tax waivers for all high-density developments along an existed or planned light rail corridor, waivers for impact fees that are normally charged to builders of low-density developments, and below market-values land for developers that agree to built more denser (staley et al. 1999). the advocates of ugbs and other smart growth policy tools contend that less urban sprawl and a denser building environment would increase the livability of a city. for most part portlanders agree that livability has increased. chapman and lund (2004) cite the results of a survey carried out by the 149 city of portland and multnomah since 1993 that tries to measure the residents’ perception on how livable portland truly is. the number of city residents who rate the livability of their neighborhood as “good” or “very good” has increased over the past decade, from 77% in 1993 to 82% in 2002. the only drawback is the fact that as chapman and lund (2004) point out the perception of livability has not been consistent across time or throughout the city or region. the ugb also positively impacted portland’s downtown and its central business district that are currently considered important assets not merely for the city but for the whole region. abbott (2004) describes downtown portland and adjacent districts as “everybody’s neighborhood”, a space that is shared and used by people throughout the whole metropolitan area. the city’s core claims nearly all the cultural institutions, civic facilities, and gathering places that serve the region as a whole. there are several aspects that distinguish downtown portland from other inner cores. in the first place, the downtown not only flourished during the last decades but it also expanded via the redevelopment of some of the adjacent neighborhoods. perhaps the most illuminating example is the case of the pearl district. a former warehouse area located on the north edge of the downtown, it was transformed into the theater/arts district with art galleries, lofts, antique stores etc. second, as mentioned previously, the downtown was able to retain and maintain its employment base. third, downtown design is an important component of portland’s success. design led to the conservation of a sense of place, friendliness to pedestrians, and the enhancement of downtown with public art. as abbott (2004) argues even successful downtowns may represent a potential problem for future development and planning. in the case of portland, the downtown is encroached by viable residential neighborhoods and industrial districts. these areas in close proximity to downtown are not in need for redevelopment and want to maintain their current use. however, this impinges upon the expansion of the downtown. the challenge for planners is to find a way to allow denser development to expand beyond the long-established boundaries of the downtown while in the same time preserving the neighborhoods adjacent to the downtown. even more challenging is to find a way to market the expanded downtown as a whole to both portlanders and visitors. portland is also unique due to its mass transit network that allows residents and visitors to use a combination of public transit modes instead of driving. while most american cities are struggling to build and subsidize public transportation, portland seems to be “blessed” with a variety of transit modes (light rail is the most important ones). there is also regional leadership that supports the aim of reducing overdependence on the automobile. metro’s 1999 regional transportation plan calls for: building 95 miles of new light rail and commuter-rail to add to the 17 miles that already existed and the 13 miles then under construction; building almost no new highways; reducing parking in existing shopping centers and office parks by 10% (o’toole 2004). tri-met, the region’s transit authority, assesses that light rail is a success in portland. in the first place, ridership has continuously increased since the first light rail line was opened back in the 1980s. second, the transit system has trigger the creation of compact, mixed-uses communities in the proximity of the transit stations – in the planning literature they are referred to as transit oriented developments or tods (mayer and provo 2004). negative, unintended effects an ugb can generate unintended effects despite its overall success. most scholars agree that the disadvantages associated with the implementation of an ugb refer to perturbations within the normal functioning of the real estate markets. kolakowski et al., 2000 argue these perturbations include: (1) segmented real estate markets; (2) increased land prices inside of boundaries and reduced prices outside; and (3) increased overall housing costs. as portland develops into one of the most attractive places to live in the us, maintaining housing affordability is a daunting task for local and regional decision-makers. smart growth advocates and opponents alike agree that housing is becoming more and more expensive in portland. howe (2004) 150 states that median sale price for existing, single-family homes in the portland metropolitan region rose over 50% from $104,743 in 1990 (in 2000 dollars) to $160,217 in 2000. in the first quarter of 2000, the national association of homebuilders ranked the portland region as having the 165thleast affordable housing markets in the nation, a sharp contrast to the first quarter of 1991 when the rank was 55th. a lot of disagreement exists however with regard to the causes that generate this increase in home prices and the policy tools to be used in order to cope with this challenge. opponents of smart growth (see for example staley et al. 1999) claim that house prices are a direct function of how much available land exists within a city. therefore, they blame the ugb for the lack of affordable housing. smart growth advocates claim that portland has became less affordable because of the redevelopment that occurred in the city. as howe (2004) states portland used to be affordable because nobody wanted to live in the city. some of the sharp increases in the prices of homes, howe warns us, need to be understood within the broader context of what happened in portland at that time. for example in 2000 home prices skyrocketed in contrast to the previous decade. however, this increase everybody witnessed was not necessarily the result of less available land but rather of a booming local economy after the recession period in the 1990s. population growth also accounts for an increase in home prices and therefore a lack of affordability. the counterargument used by smart growth opponents is that washington county (part of the same psma as portland) also experienced population growth; nonetheless single-family homes have remained more affordable than in portland (howe 2004). a solution to address the increase in housing prices is for local and state governments to provide affordable or subsidized housing. the city of portland has proactively sought to capture a significant portion of the region’s housing growth through support of downtown housing development and zoning regulations that favor higher densities, such as accessory dwellings and row houses. in the five-year period ending in june 2000 the city captured over 30% of the housing units built within the region’s ugb. it has to be said that the city leadership is committed to improving the amount of affordable housing. thus portland complies with the region’s voluntary five-year affordable housing production goal and predicts that 1,791 units will be built for households that make less than 30% of the median income. another negative impact associated with the portland’s ugb is traffic congestion. the construction of new highways has been limited in the portland region for the last several years while numerous public funds have been channeled towards the construction of new rail lines. those who oppose smart growth question however the appropriateness of this decision. though absolute mass transit ridership has increased, portlanders continue to remain highly dependent on automobile for most of their daily trips. staley et al. (1999) argue that from 1990 to 2000 per capita driving in the portland area increased by 35%, from 17.4 miles to 23.6 miles per day. also by 2020 the amount of time portlanders waste sitting in congestion will have more than quadrupled. metro predicts that once the density of the population further increases and the construction of the new rail miles is completed, the share of transit as well as of walking/cycling will increase to 12% (combined). however, this leaves autos with 88% of all travel. staley et al. (1999) conclude that even if metro’s predictions are going to materialize, mass transit is still the exception rather than the rule in portland. finally, many pro-development groups argue that the market via supply and demand should determine where new developments take place and how they look like (single family homes, condos, infill projects). staley et al. (1999) state that portlanders are more and more often rejecting the increase of density within residential neighborhoods. they also claim that the market for multi-family and apartment buildings is oversaturated. chapman and lund (2004) however argue that the problem is more complex than staley et al. (1999) suggest. a distinction needs to be made between density and infill (brownfield redevelopment). the authors claim that most portlanders oppose infill rather than denser neighborhoods. 151 future challenges as a result of oregon’s state mandate and metro’s strong regional implementation powers the portland region serves as an excellent example of an urban growth boundary’s ability to encourage and create inter-jurisdictional cooperation. this program’s success can be attributed to: the local government’s cooperation, the regional government’s power and influence, and the state legislation requiring and building the capacity of regional and local governments to cooperate (kolakowski et al. 2000). despite its obvious success however, portland and its ugb face problems as well. there is a growing debate on whether portland truly is the “ideal” city portrayed by planners and urban scholars or whether under impressive statistics lies an ugly truth, a city that is becoming less and less affordable for a variety of people, more and more congested, and bears no resemblance to what portlanders may want to see happening in their community. as r. yaro, an urban planning professor from the university of pennsylvania argues, the reality is probably somewhere in between. portland is currently facing the need to reevaluate its planning goals, both short-term and long term. an important task for regional decision-makers will be to regain the trust and the enthusiasm of portlanders with regard to growth management. the rejection of several smart growth policy initiatives may represent the sign that something needs to be changed. on nov. 2, 2004, oregon voters passed ballot measure 37. the measure provides that the owner of private real property is entitled to receive just compensation when a land use regulation is enacted after the owner or a family member became the owner of the property if the regulation restricts the use of the property and reduces its fair market value. in lieu of compensation, the measure also provides that the government responsible for the regulation may choose to “remove, modify or not apply” the regulation. the measure became effective on dec. 2. it has since been ruled unconstitutional. the state of oregon appealed the circuit court’s judgment. on february 21, 2006 the oregon supreme court issued its opinion in the macpherson vs. das case reversing the trial court decision and upholding measure 37 as constitutional. measure 37 claims against the state have been on hold since the trial court ruled last october that the measure was unconstitutional (oregon department of land conservation and development, 2006). this complicated legal situation proves that the authority of a municipality or a regional planning body to establish a ugb can be challenged in court. as with other planning decisions municipalities are carefully weighing the odds of having a planning decision challenged in court. iii. preliminary policy recommendations for cluj-napoca based on the literature review, case studies from the u.s., and the authors’ understanding of the local context, several preliminary policy recommendations are reviewed. we caution the reader however that some of the data on land use patterns for the city of cluj are limited at best, fact that hinders the accuracy of this analysis and its subsequent recommendations. an urban growth boundary should only be contemplated if a regional (metropolitan) population forecast is undertaken by an objective organization. such an organization would do a standard population forecast by appropriate age cohort. at that point a prediction for land demand would be based on population growth. such an estimate for demand on land would be based on: (1) historic residential patterns; (2) urban growth activity in similar romanian contexts; and (3) opinion surveys or other devices reflecting the preference of current residents. the conclusion of such an exercise should be a short-term (five years) and a long-term (twenty years) forecast for the demand for additional land that would be changed from agricultural/open space to a more intensive use. such an exercise should be repeated every five years with totals for required new urban land updated at that time. the boundary would be drawn to accommodate a twenty-year growth demand as previously indicated. such a boundary would be drawn large enough to provide some choice to landowners 152 who wish to convert their land to more intensive uses as well as to provide adequate alternatives to urban dwellers to choose among housing options. once established the boundary should remain the same for at least 5 years to provide stable environment for real estate investors and to discourage land speculations. the boundary area should be drawn in conformity with existing planning criteria. it is important to draw the line in conformity with natural barriers and existing road networks. individuals should be able to easily comprehend where the urban growth boundary line lies. the document creating such an ugb line should refer to the adopted master plan for the city of cluj. it is important to promote growth in a fiscally and environmentally sound manner. such a ugb would be contained in an addendum adopted as part of the plan. this addendum would contain sets of maps showing where the boundary will be in five, ten, and twenty years. the city might consider adopting the ugb as their urban service boundary. all physical infrastructure expansion would be contained within the boundary. no services would be extended outside the area. the ugb implies inter-jurisdictional cooperation and governance. unless the cluj metropolitan region/area is created, establishing an ugb doesn’t make any sense. an ugb constitutes an urban growth control policy tool that affects more than just one community. the legitimacy for such an effort should come from a higher level of government than merely a single city. local governments that are roughly equals in powers will not willingly cooperate on development issues unless there are incentives or mandatory requirements to do so. a city such as cluj should not adopt such a policy without assurances that it would be legally effective to promote planning objectives that have been determined in advance. the city should pay special attention to identifying and assessing the likelihood of unintended impacts. as the american experience shows housing affordability may become an issue within the boundary. in the case of cluj this will only add to an existing problem. if policy makers consider that such effects are likely to occur than policies that counteract them should be initiated. references books and journal articles 1. abbott, c. (2004), centers and edges: reshaping downtown portland. in ozava, c.p. (ed.), “the portland edge: challenges and successes in growing communities”, island press 2. chapman, n. and lund, h. (2004), housing density and livability in portland. in ozava, c.p. (editor), “the portland edge: challenges and successes in growing communities”, island press 3. duaney, a., elizabeth plater-zyberk, e. and speck, j (2000), suburban nation: the rise of sprawl and the decline of the american dream, new york: north point press 4. gillham, o. (2002), the limitless city: a premier on the urban sprawl debate, island press 5. hamlin, r.e., (2002), public-private partnership for inner-city redevelopment, ippsr, michigan state university 6. howe, d. (2004), the reality of portland’s housing market, in ozava, c.p. (editor), “the portland edge: challenges and successes in growing communities”, island press 7. kolakowski, k., machemer, p.l., thomas, j.m., hamlin, r.e. (2000), urban growth boundaries: a policy brief for michigan legislature, ippsr, michigan state university 8. mayer, h. and provo, j. (2004), the portland edge in context. in ozava, c.p. (editor), “the portland edge: challenges and successes in growing communities”, island press 9. o’toole, r. (2004), “a portlander’s view of smart growth”, the review of austrian economics, 17:2/3 10. seltzer, e. (2004), it’s not an experiment: regional planning at metro, 1990 to the present. in ozava, c.p. (editor), “the portland edge: challenges and successes in growing communities”, island press 11. staley, s. r., edgens, j. g., and mildner, g. c. s. (1999), a line in the land: urban-growth boundaries, smart growth, and housing affordability, policy study no. 263, los angeles: reason public policy institute 153 web-based resources 1. greenbelt alliance, urban growth boundaries: a new planning solution in california to stop urban sprawl, protect open space and strengthen our neighborhoods and cities, available on line at 2. http://www.greenbelt.org/downloads/about/ugb.pdf, accessed march 15th, 2006 3. http://www.uoregon.edu/~pppm/landuse/ugb.html 4. http://smartgrowth.org/about/default.asp 5. www.conservationeconomy.net 6. proiect planificare strategica municipiul cluj napoca (analiza preliminara), available on line at 7. http:// www.primariaclujnapoca.ro/proiect_planificare.aspx, accessed march 15th, 2006 8. mediu: cluj-napoca, 2005, available on line at http://www.primariaclujnapoca.ro/proiecte-dezbateri/politici_ comunitare_de_mediu.pdf, accessed march 15th, 2006 9. oregon department of land conservation and development 2006, measure 37, available on line at http://www. lcd.state.or.us/lcd/measure37.shtml#supreme_court_reinstates_measure_37__decision_effective_m a r c , accessed march 15th, 2006 71 transylvanian review of administrative sciences, 16 e/2006, pp. 71-83 natalya kolisnichenko associate professor, odessa regional institute of public administration, national academy of public administration, office of the president of ukraine allan rosenbaum professor, institute for public management and community services, school of policy and management, florida international university, miami central – local administrative and governance relationships in two ukrainian cities: kyiv and odessa* the institution of local self-government occupies an increasingly important position in ukrainian society. however, the contemporary system of local self-government in ukraine is still not consistent with the principles of the european charter of local self-government. in areas such as access to sources of revenue, policy initiation and citizen involvement in local governance, municipal governments in ukraine frequently fall significantly short of expected european standards. in part, this is due to the lingering influence of the soviet totalitarian past on the mentality of both the ukrainian legislators and the representatives of local governments who are working to create democratic principles of true people’s power. too often, the creation of independent self-governance authority conflicts with the strong desire of some political forces to transform local self-government into an appendage of state (national government) power under rigid and comprehensive control. but, in spite of this, democratic principles are finding their way into the re-thinking of the role of local self-government in ukranian society. the growing preoccupation in ukraine with the role of local self-government in the building of a democratic society draws upon a long tradition of european thinking about the role of local governance in democratic development. beginning in the 1700s, with the writings of the french political philosopher jean-jacques rousseau, about the importance of local government in the development of swiss democracy and, in the following century, with the observations of another frenchman, alexis detouqueville, on the centrality of local institutions in the development of democracy on the north american continent, there has been widespread acceptance of the principle that democratic development and meaningful local governance go hand in hand. • prepared for the 12th annual conference of the network of institute and schools of public administration of central and eastern europe – vilnius, lithuania, may 13-15, 2004 • revised version forthcoming as “central – local administrative and governance relationships in two ukrainian cities: kyiv and odessa” in the enlarged european union and its neighbors: institutional requirements and problem solving in public administration, edited by gyorgy jenei and bernadette connaughton; nispacee press; bratislava, slovakia 72 obviously, however, the task of developing effective, democratic local governance has been a complicated one – both historically throughout the world, and contemporarily in ukraine. much has been written by scholars of local government about both the relationship of local governments to a country’s national government and the relationship of local governments to their citizens. not surprisingly, these are issues that are equally central to the development of local government in ukraine. illustrative of this new awareness is s. grinevetsky, odessa oblast governor, who has characterized local government as a twofold phenomenon. on the one hand it is the natural product of local civil society, an instrument of self-organization and the realization of territorial communities. on the other hand, it is also an authority that possesses delegated duties and responsibilities. and here are legal collisions – with the result that most ukrainian cities cannot yet be identified as possessing fully developed urban political systems. a true urban political system is a dynamic unity of formal and informal political structures functioning with the purpose of solving conflicts, providing services according to the local system of values and transforming political demands into social policy, etc. [sakhanenko s. politychne upravlinnya mistom v umovah samovryaduvannya (urban political management in conditions of self-government). manuscript. odessa: oripa napa publishing house. 2001. p.380. p.59]. in many cases in ukraine, there are still only weak urban systems where the potential elements (bodies of local self-government, non-governmental organizations, etc.) have hardly begun to develop. for the most part, it is only those cities that serve as centers of major regions that have begun to develop as the true urban political systems of ukraine – kyiv, odessa, lviv, dnipropetrovsk and kharkiv are among them. the formal goal of public policy in ukraine is the strengthening of positive tendencies in cities in order that they may provide “the points of growth” for the whole state. consequently, the laws of ukraine and the decrees of the president of ukraine are directed towards the development and improvement of the system of local self-government. in ukraine, two legislatively identified types of local government management have begun to develop: the principal system of local governance which is under the authority of the oblast administration (and rayons if it is a small town) and a system which is characterized by the co-existence of the bodies of local self-government and of the national or state power at the urban level. within the first system, the bodies of local self-government execute only the predefined competencies of local government and any delegated responsibilities of public power. within the second type, local officials form both the bodies of local self-government and the bodies of national (or state) power. in such cities, the mayor, elected by the population, is also appointed by the president of ukraine to be the head of the local state administration. thus, the bodies of local self-government and the executive bodies of state power co-operate on the basis of mutual delegation of responsibilities. the second system exists only in two important national cities – the capital city of kyiv and the autonomous city of sebastopol. at the same time there are several proposals regarding the giving of such status to other cities – especially ones of over a million populations that are the centers of regions. ukrainian cities in soviet time at the beginning of twentieth century, ukrainian cities were growing as a result of the influx of great numbers of refugees and the migration of rural population that was being recruited to enterprises in urban areas. however, the further growth of cities was temporarily limited by revolutionary events, de-industrialization and the famine of the 20’s. during that time, the urban population declined by more than a quarter. in 1923, the population of cities began to grow again and, by 1926, they had reached the prerevolutionary level. from 1941 to 45 many cities were greatly destroyed and their population 73 declined to 60% of pre-war levels. however, from the beginning of the 50’s most cities had reached their level of pre-war population and began to grow further. this period was characterized by the rapid concentration of industry in big cities and the mass movement of population from rural areas to the cities. during the 30’s and 40’s, the idea of self-organization, or self-government, was not widely accepted. the term “self-government” was even deleted from the scientific lexis. only in the 50’s and 60’s did the idea of local councils as bodies of self-government develop in soviet literature. even then however, this concept was understood only as involving the widening of people’s participation in local administration and management, with greater informal influence over the activity of administrative bodies and greater participation in the discussion of draft decisions. during 60’s and 70’s in ukraine, long-term but fruitful work on the identification of the legal status of local bodies of power was in progress. this was because after 1937, when the constitution of the ukrainian soviet socialist republic (which consolidated a new system of local governing bodies) was adopted, not even one legislative act regulating the organization and activity of local councils was approved. in 60’s and 70’s, two laws, which defined the legal status of the local authorities, were adopted: the laws “on village councils of people’s deputies of the ukrainian ssr”, and “on oblast councils of people’s deputies of the ukrainian ssr”. however, there was no law on city councils. in the 70’s and 80’s, research was carried out in which local councils were studied both as bodies of state power and as bodies of public self-government which represent the interests of people. issues of their functioning, status, system, structure and problems were given priority. thus, at the beginning of the 90’s efforts began to develop the draft law on local self-government. the local government legal framework the key sources of municipal government in ukraine are: the constitution of ukraine, the laws of ukraine (acts of the verkhovna rada of ukraine and the council of ministers of the autonomous republic of crimea), the acts of administrative bodies in the sphere of local government, the acts of the local self-governments and international acts in the sphere of local self-government. the constitution of ukraine has provisions on the recognition and guaranteeing of local selfgovernment by the state (art. 7); on the power of the citizens through bodies of local self-government (art. 5); on the people’s right to participate in local referendums, to elect freely and to be elected to the bodies of local self-government, to have equal right of access to the services of bodies of local self-government (art. 38); on elements for elections to the bodies of local self-government (art. 71); on responsibilities of the verkhovna rada of ukraine in the sphere of local self-government (item 30); art. 85; item 15, art. 92); and, on other key issues of local self-government such as functions and responsibilities of territorial communities, order of formation and structure of representative bodies of local self-government, their main functions and responsibilities and the mechanisms of local selfgovernment provision (chapter ix). there are also important laws on local self-government – general and special (territorial and branch). the law “on local self-government in ukraine” defines the system of local self-government, including grounds for organization and activity of local bodies and officials, their functions, duties and responsibility and the guarantees of local self-government. the forms of direct provision of local self-government by territorial communities (local referendums, local initiatives etc.) are identified in this law – as well as duties of executive bodies of city councils, the status of city mayor and the material and financial grounds for local self-government. the law “on cities of kyiv and sebastopol” determines the legal status of local self-government in those cities, as well as in the autonomous republic of crimea. among the special laws in the sphere of local self-government is the law “on capital of ukraine – heroic city kyiv” where there are a number of chapters devoted to local self-government (chapter 74 ii “organizational and legal grounds for local self-government and executive power in the city of kyiv”; chapter iii “local self-government and executive authorities and officials in the city of kyiv, their functions and responsibilities”; chapter iv “material and financial grounds for local self-government” etc.). another important source of municipal authority involves acts of bodies of state power: the decrees of the president, regulations of the cabinet of ministers of ukraine, normative-legal acts of the ministries, and other central bodies of executive power, local state administrations, decisions of the constitutional court of ukraine on issues of local self-government; and normative acts of other authorities. one of the first acts of the cabinet of ministers in the sphere of local self-government was decree/decision # 311 from november 5, 1991 “on delimitation of communal property between state property and the property of administrative-territorial units”. two important actions of the constitutional court of ukraine are the decision of the constitutional court of ukraine from february 9, 2000 # 1-рп/2000 (on local self-government, charter of territorial communities of districts in cities and other issues) and from march 27, 1998 # 5-рп/п/98 (on elections in the cities of kyiv and sebastopol). according to article 59 of the law “on local self-government in ukraine” the local council has within its duties the authority to make normative and other acts in the form of decisions. the executive committees of the city and the district councils (if they are created) have responsibilities to make decisions. the city mayor and the head of district councils may make orders, which are obligatory for execution within appropriate administrative-territorial units. as regards the normative-legal acts of the subjects of the system of local self-government, local referendums and acts of representative bodies of local self-government, particularly the charters of cities and other administrative-territorial units, standing orders of councils, rules, regulations, etc. are among the most important. according to article 19 of the law “on local self-government in ukraine”, the representative body of the local self-government, on the basis of the constitution of ukraine, can adopt the charter of the city. the charter is to be registered the ministry of justice of ukraine. municipal charters the development of the system of local self-government requires an appropriate normative/ legislative basis. this action depends in part on the activity of the local governmental bodies. the representative bodies of the territorial communities have to participate in the creation of conditions for the democratic development of municipal self-government through the formation of charters for the local communities. in part 1, article 19, of the law “on local self-government in ukraine” it is provided that the charter of the territorial community can reflect historical, national-cultural, social and economic, and other features of local self-government for the territory. unlike other documents adopted by city authorities, the charter is to be registered at the ministry of justice of ukraine. the municipal charter is often called “the local constitution” because of its special status. it is the primary document that defines the acceptable acts of the city council, the orders of the city mayor, the decisions of executive bodies, the bodies of self-organization of population and the mutual meetings of residents. most urban communities are characterized by a great diversity of interests, many of which inevitably are in conflict. consequently, it is important for political and governmental power not to be monopolized by any one interest. the municipal charter must be structured so as to insure that: o different opinions and procedures of conflict-solving can be identified within the administrative-territorial unit: o mechanisms of local democracy enhance the social activity of the population and the development of civil society; 75 o the public interest is defended through the description of norms and rules of interaction in the community; and, o there is a guarantee of succession/continuity of power. thus, the charter is a means of self-regulation of the territorial community, a code for citizens’ life in the city, a reflection of the values adopted by the local units to give the residents the practical possibility to realize their needs and the right to participate in building their own life. the analysis of local laws in recent years testifies that in most places in ukraine the charter process is in a very rudimentary state. in part, this is because the development of the local municipal charter creates many conflicts, most of which are connected with the necessity of an accurate definition of its subject and structure, the coordination of charter items with the norms of existing legislation and the non-acceptance of ideas of charter rights by some local leaders, etc. the charter process in odessa odessa as a multi-functional city which is at the center of a significant regional economic system. its scientific and cultural functions reach beyond the boundaries of its oblast and spread to several neighboring oblasts, the city centers of which are less developed. the city possesses the major part of the industrial resources of the region, including complex industries which need highly-qualified cadres, enterprises/institutions and organizations of inter-oblast importance (banks, theatres, higher education institutions, research institutions etc.). as the result of the concentration of those functions, odessa has become an important center of administration, science, and culture for both the region and the whole country. for odessa, the “local community charter” process has special meaning. odessa initiated the charter process in ukraine. the preparation of a draft city charter was started in 1995, well before the adoption of the law of ukraine “on local self-government in ukraine”. this was even before the time when national law provided for the possibility of adopting a local charter. however, later this process stalled. the efforts to develop the charter of odessa were started again in 1998-1999 when three draft charters were presented for the public to discuss. the first, known as “the charter of odessa” was developed by a working group of specialists from odessa regional institute of public administration of the national academy of public administration, office of the president of ukraine, including prof.’s o.yakubovsky, s. sakhanenko and m. svirin. it focused upon the administrativeprocedural aspects of city life. the second effort, titled “the charter of the city of odessa”, was prepared by a. muchnik, a member of the odessa city council (following the proposal on improvement of city management structure by the steering committee of the city council). this project presupposed that the charter is to be adopted by a city referendum; it is based on a unified concept concerning the historic peculiarities of odessa’s development and the norms of european law. the third project – “the charter of the territorial community of the city of odessa” – was presented at the private initiative of m. orzikh, the head of the constitutional law department and the prorector of odessa national law academy. this proposed charter has the most detailed historical background of the formation and development of odessa. the author underlines the territorial development of the city as defined by long-term general plans of city development; the development of the city according to the social, economic, city-building policy of ukraine on the basis of a combination of the interests of the city community, the odessa region, the south of ukraine and all-national objectives and interests. all three draft charters have some drawbacks, the most significant of which is that they are not co-ordinated with the norms of existing national legislation. in addition, the efforts have not involved a wide spectrum of citizens and/or local interest groups. obviously, it is desirable to involve (even at 76 the initial stage) the representatives of political parties, non-governmental organizations and residents’ self-organization bodies who have the professional skills to contribute to this kind of work in the discussion of the draft document. kyiv: a case of complex state-local relations kyiv is the most important administrative, political, scientific and cultural center of ukraine. its special status is reflected in the rapidity of its development and its multi-functional nature and structure. it is the center of the all-national system of government and of the state administration. it directly influences the territory of kyiv oblast and, as a regional center, it also influences the neighboring zhytomir, chernigiv, and cherkassy oblasts which are closely connected with kyiv as regards industrial, scientific and cultural concerns. because of its complex and central role in ukraine, in order to execute its functions, the municipal government of kyiv needs significant support from the key bodies of state power: the verkhovna rada, the president and the cabinet of ministrers. on the whole, the relations between the city authorities and the highest bodies of state power are rather dynamic and balanced and testify to a consensus on key issues regarding the political and social-economic development of the capital. in fact, the municipal authorities and the highest bodies of the state hold positions of political centrism that makes them like-minded on many issues. the higher bodies generally guarantee the organizational-legal, material and financial independence of the capital city. kyiv, in turn, generally demonstrates a loyal attitude towards these bodies and assists them in their activity. but this situation does not preclude the development of some problems and conflicts between municipal authorities and the higher bodies of state power, which they solve with the help of various legal and political methods. regarding democratic development in kyiv, the relations between municipal authorities and the parliament of ukraine are of special interest. according to the constitution and the laws of ukraine, the verkhovna rada possesses responsibilities which have great importance for solving problems of management in the capital. they include the right to define the status of the capital of ukraine, the borders of the city of kyiv, etc. that is why kyiv municipal authorities regularly lobby for the interests of the capital in the verkhovna rada. in the past such lobbying was partially provided through the “capital” deputy group of people’s deputies of ukraine [kampo v. upravlinnya stolychnym mistom: polityka i pravo (governing capital city: politics and law).viche.-#5, 2002.p. 10-17.p.16]. after the elections of 2002, a committee of the verkhovna rada on issues of state building and local self-government, with a sub-committee on issues of capital management was created. the relations between the capital authorities and the cabinet of ministers normally are based on partnership; the guarantor of them de-facto is the president of ukraine. according to law, the government is to guarantee kyiv its rights. in its relations with the cabinet of ministers, kyiv from time to time has problems, – most of which involve financial matters. a comparatively new, but increasingly important and very active, factor in the formation and realization of municipal policy in kyiv are non-profit ngo’s which work on different issues of local life. the attitude of kyiv municipal authorities towards them is somewhat restrained. however, these organizations not only provide various services for citizens, but, in light of limited municipal bureaucratic capacity, they work to improve the connection and trust between the residents and authorities. administrative-territorial reform just as center – local relationships are in the process of development between the national and local governments in ukraine, so too are center-local relations being worked out within ukraine’s major cities. indeed, one of the more problematic area of local self-government in ukraine involves 77 the development of local districts within municipalities. the question of “whose competence it is to solve issues of districts in a city’s division” is a complicated one. according to a march 12, 1981 decree of the presidium of verkhovna rada of the ukrainian ssr “on order of issues of solving of administrative-territorial arrangement in ukrainian ssr” the creation and liquidation of city districts is the responsibility of the verkhovna rada of ukraine. however, the current constitution of ukraine while defining the district in a city as an administrativeterritorial unit different from the rayon (which is a component of the oblast) gives responsibility for the creation of rayons, but not districts in a city, to the verkhovna rada of ukraine. that implies that the verkhovna rada (as implied in the constitution) has no responsibility to create districts in cities and that this function can belong to other authorities, particularly to city councils. at the beginning of 2003, there were 113 city districts in 26 cities of ukraine. the system of district division which existed in soviet times had the only one criteria for the division of city territories into districts – that is the presence of approximately an equal number of communist party members in each of them. such a system was convenient for the organization of party activity. [odesskiy vestnik.february 8, 2003.p.5]. the other important indicators of balanced development of innercity territories were ignored. that is why it is not a surprise that representatives of the communist party are the most vigorous defenders of old system of district administration. today, the law of ukraine allows the creation of several organizational models of city district management. the existence of district councils in kyiv, and their executive bodies, is directly defined in the law of ukraine “on the capital of ukraine – heroic city kyiv”. that means that (contrary to other cities) the kyiv city council can not avoid the issue of district council formation. kyiv city districts coexist with the state administrations and their heads. according to existing practice (which is not clearly identified in law), the head of the district council is appointed to the position of the head of the district state administration. from the soviet times, kyiv inherited a rather archaic structure of administrative-territorial arrangements, which complicated the governance of the city and lowered the level of municipal service provision, while increasing local bureaucracy, etc. kyiv was the first ukrainian city to realize the realignment of local districts. on the basis of kyiv city council decision #162/139 from january 30, 2001 “on administrative-territorial arrangements of the city of kyiv” new borderlines for districts were established. the kyiv city council realized the reform of administrative-territorial arrangement of kyiv going from fourteen to ten districts (golosiyivsky, darnutsky, desnyansky, dniprovsky, obolonsky, pechersky, podilsky, svyatoshynsky, solomyansky, shevchenkivsky) [on administrative arrangement of kyiv / decision of kyiv city council, january 30, 2001 #162]. some deputies of the verkhovna rada of ukraine saw in this decision a breach or infringement on their own prerogatives and addressed the constitutional court of ukraine regarding this action. the constitutional court approved the decision and supported the city council. it took into account two laws of ukraine, “on local self-government in ukraine” and “on capital of ukraine – heroic city kyiv,” where the competence of city councils to make decisions on issues of administrativeterritorial arrangement is specified. an analysis of the constitutional court decision leads to the conclusion that this particular decision hasn’t a general character for all cities with district division, but applies only to kyiv because of the consideration of the special constitutional-legal status of kyiv as the capital of ukraine. the formation of the ten new districts created some political reaction in suburban administrativeterritorial units. often, members of these communities, either at their meetings, or through other forms of local democracy, expressed their wish to join the capital, and create with it a capital region/county. but the bodies and officials of local self-government and especially of local state administrations in suburban territorial units took the opposite position. this was because the placing of some of these 78 suburban territories under the jurisdiction of kyiv would reduce the territory of the kyiv oblast, and some of its rayon’s, and, at the same time, the dependence of kyiv on these administrative-territorial units. the current pace of kyiv’s development requires new plots for housing developments, the moving of industry from the central part of the capital and the building of modern transport/traffic systems for movement in and out of the city. today the perspective development of the city is restrained by the existence of strictly defined city boundaries, behind which the capitals local self-government has no rights because it is the area of authority of the kyiv oblast council. such territorial division creates serious problems for the capital city. one solution would be the creation of a new unified territorial-administrative unit – the kyiv capital county. there is however opposition to this from the kyiv oblast council. the creation of a kyiv capital county would widen the power of the capital city by making it unified with kyiv oblast into one administrative-territorial unit. in response, it has been proposed to “dissolve” the city of kyiv and to subordinate it to the oblast. in some state and political circles, which do not like kyiv mayor o.omelchenko, there is much support for this. there are several ways to possibly solve the conflict over kyiv’s territorial borders. they include: 1. agreement on a variant of capital county. an agreement between the kyiv city council and kyiv oblast council on bringing some territorial communities (suburban territories) into the capital government would be necessary. the parliament must sanction such a formation. 2. agreement on self-government collaborative variant. the population of the territorial communities of kyiv suburbs elects bodies of self-government, which are for uniting with the territorial community of kyiv on the grounds of an association of territorial communities similar to the capital county. in this case there is no need for amendments to the law. 3. political variant. president, government and parliament make appropriate political and legislative decisions on formation of body similar to the capital county, with appropriate changes in the system of capital management, etc. the “agreement on self-government collaborateive variant,” is a possible starting point because the necessary pre-conditions are already in place in terms of the representative bodies of suburban territories. in fact, it appears that the majority of those communities support their “entering” into a capital county. this question was first raised in 1992, but it was not supported by the administration of the country. today, the political situation is changing in terms of this complicated but necessary step in the development of kyiv. if there is a decision to do this, then a follow up step would be for the verkhovna rada to decide to adjust the borders of a new capital county. center-local relations in odessa a complex situation of city and district boundary issues also exists with regard to city of odessa. part of the odessa metropolitan community is located outside the borders of the city of odessa on the territory of neighboring administrative-territorial units. however, in the case of odessa it does not have the special legislative status identified by the law of ukraine for kyiv. for odessa, like the majority of other cities of ukraine, the issue of such reforms is frequently affected by the conflicting interests of both territorial communities and local self-government bodies. equally significant in this regard is the problem of the mulitiple actors that are involved in decisions of these sorts. diagram 1 below provides some sense of the many different actors that would play some role in decisionmaking regarding changing the boundaries of the municipality of odessa. despite the relatively high level of development of the local government system in odessa, it is unlikely that the municipal leadership would be able to mobilize the resources necessary to bring about a significant change in municipal boundaries. 79 diagram 1 the network of actors involved in addressing boundary issues of the city of odessa odessa city council verkhovna rada of ukraine association of cities of ukraine committee of verkhovna rada on land policy issues national council on issues of coordination of activity between all national and regional bodies and local selfgovernment odessa oblast state administration councils of neighboring territorial units and rayons cabinet of ministers of ukraine state committee on land resources commission on issues of administrative-territorial arrangement under aegis of the president of ukraine association of local selfgovernment of odessa oblast oblast council another major issue of center-local relationships in odessa is one that involves the internal matters of the city – the relationship between the city council and the city’s various local districts. this involves the internal organization of the city territory. prior to 2004, odessa was divided into eight administrative districts. those districts all had very similar amounts of funds and similar sized staffs. however, because of great variation in numbers of residents, the capacity to respond to citizen needs varied greatly from district to district and demanded correction. at an april, 2003 session of the city council, a proposal was submitted to create an independent group of experts to identify the main tasks and responsibilities of all structures of odessa city council and districts aiming to avoid duplication of functions [odesskiy vestnik. april 26, 2003. p.4] and equalize service capacity and distribution. the city council had used the norms of constitution of ukraine and law of ukraine “on local selfgovernment” to assert its competence to decide the issues of organization of city district management and to not create district councils. as a consequence, the odessa city council functions in the role of district territorial councils. executive functions are provided by the city executive committee and, at the level of districts, district executive bodies are created as structural subdivisions of the city executive committee, which interact with it on the basis of subordination. odessa became the second city of ukraine to undertake the extremely complicated task of redefining local districts (in april 2004, it is 1 year and 4 months since the realization of this reform). because odessa (unlike kyiv) has no separate law regulating its status, the city council had to take into account the norms of the constitution of ukraine, the european charter on local self-government 80 and the law of ukraine “on local self-government in ukraine”. at the same time, odessa did follow the decision of the constitutional court of ukraine #11-pn/2001 of july 13, 2001 which addresses some provisions of the constitution and a set of acts of ukraine on the legacy of administrativeterritorial division reform in kyiv. according to these documents, the reform of territorial division is to address such principal concerns as: maximizing the participation of city residents in public affairs and governance; optimization of administrative apparatus; elimination of superfluous bureaucratic obstacles/barriers; and accounting for historical and other peculiarities and/or characteristics of the city. the main task of such reform is the improvement of the living conditions of the citizens. a commission of the city council which consisted of 33 people (including the city mayor and all his deputies, the chairperson of the city executive committee, secretary and councilors, heads of executive bodies of city council and its structural divisions, representatives of higher education institutions and political parties) and a working group on the development of concepts for improvement of city administration structure of the city council (consisting of 14 people), provided detailed analyses and developed criterion for reform in odessa. the analyses provided by the working group revealed such problems, as: – many administrative functions were not supplied financially and/or legally; – there was a duplication of duties/responsibilities of various structural divisions of city selfgovernment; – there was not a well planned system of executive bodies of the city council and its structural divisions did not provide for a realization of their duties/responsibilities and the effective utilization of human resources; – there was a lack of efficient control over the execution of decisions made by the city executive committee and mayors orders; – bureaucratic mechanisms of decision making led to long delays in getting documents from the executive bodies of the city council and its structural divisions; – the administrative structures of the city were, at best, only weakly acceptable for the support of innovational and investment projects; – the bodies of local self-government were located far from the places where the majority of residents lived. the buildings of district administrations of three districts of the city (zhovtnevy, primorsky and tsentralny) were located at the extreme suburban edge of the districts and that created difficulties for citizens; – the administrative-territorial division of the city into sub-city units was characterized as archaic with a structure of district division dating from the 1950’s and 60’s; – the historical center of the city could not be maintained with integrity because the buildings and constructions which had cultural, historic and architectural value were located on the territory of different districts of the city (zhovtnevy, primorsky, zentralny and partially illichevsky). it was not feasible to create at the level of districts the special agencies and services which could provide the protection of these buildings and suitability of new constructions; – the borderlines which separated the administrative districts of odessa were not consistent with the main road lines. that meant that there was no clear responsibility for important streets, roads and territories; – there was great imbalance of resources among the city districts. the working group on concept for city management structure development proposed the following criterion for the reform of districts: – the unifying of the historic zone of the city into one administrative district; – the ensuring of conditions for equity/equality of resources among districts according to the population; 81 – the use of natural main roads as the borderlines of administrative districts; – the use of existing buildings of administrative centers (district administrations) in new administrative districts where possible; – the moving of administrative bodies nearer and closer to each citizen of the city and lessening of bureaucratic procedures with regard to his/her interactions with the bodies of local selfgovernment; – the preservation and keeping of the territorial unity of enterprises and historical monuments; – the reforming of administrative structure in accordance with the requirements of current legislation; – the coordination of administrative borders with natural city networks and communications. after much deliberation, the odessa city council reduced the number of districts from eight to four aiming to bring the administration closer to the citizen. some concern was expressed that there was a threat that ”the district bureaucrat (would be) converted to local tsar, whom it is not easy to reach” [ukraine and world today.february 14-20, 2004.p.2-3]. however, as table 1 and 2 indicate the new districts now are much more nearly equal in population and, as a result, also in resources. table 1. odessa districts before reorganization district square (km2) residents (people) density (per 1 km2) zhovtnevy 5,13 46 182 9 002 illichivsky 29,10 84 795 2 914 kyivsky 27,20 259 223 9 530 leninsky 33,97 68 116 2 005 malinovsky 25,51 151 340 5 933 primorsky 14,62 144 148 9 860 suvorovsky 22,97 194 826 8 482 tsentralny 4,70 80 172 17 058 total 163,20 1 028 802 6 304 table 2. odessa districts after reorganization district square (km2) residents (people) density (per 1 km2) kyivsky 27,84 265 331 9 531 malinovsky 56,70 258 142 4 553 primorsky 23,37 242 453 10 375 suvorovsky 55,29 262 976 4 754 total 163,20 1 028 802 6 304 in fact, it is already evident that there have been a number of positive consequences as a result of this reform. the relationship between citizens and local administrative structures has become clearer, thus making it easier for the citizen to interact with the local government. in addition, the historic center of odessa is now principally located in one district, thus making it administratively much easier to engage in downtown redevelopment activities. also, existing municipal facilities and communal property have been distributed in a more equitable manner between the new districts. the reorganization also further encouraged, and gave greater impetus to, efforts to create new administrative arrangements to address various social, economic and housing related issues faced by the citizens of odessa. 82 the success of reform (which is still in the progress) is that, as city mayor r.bodelan says, decisionmaking will be as close to the citizen as possible. that is why the change was made – to change the decision-making process – to involve in it all stakeholders (local governments/authorities/bodies of state power, members of territorial community, ngo-s, local agencies of political parties, bodies of self-organization of population etc.) [vechernyaya odessa.july 10, 2003.p.1]. the ngo “face to face” (president olexy orlovsky) conducted surveys of public opinion concerning administrativeterritorial reform. at the beginning of reform process 50% of population were for the necessity of reforming, and 50% were against it. in summer 2003 (july) – only 40% of residents were opposed to it [odesskyi vestnik.july 5, 2003.p.6]. local boundary setting – an overview: as the prior discussion indicates, issues of administrative-territorial arrangements are very complicated. responsibilities are balanced between state/public power represented by the verkhovna rada of ukraine and local communities. according to item 29, article 85 of the constitution of ukraine, the verkhovna rada has within its functions the power to decide on issues of the creation and liquidation of rayons, establishing and changing of the boundaries/border lines of rayons and cities etc. decision-making on issues of municipal-territorial arrangements are the competence of local territorial communities. according to existing norms, the population through local referendums independently decides issues on the creation, transformation, liquidation of the territorial community (by means of uniting/dividing, separation/joining, getting/losing of territory). at the same time, the state as well has certain authority on territorial community creation. it identifies the conditions, criteria, and circumstances under which a settlement or a group of settlements can create their own community. so, there is an interrelatedness between territorial communities and the state in decision-making on issues of administrative-territorial and municipal-territorial arrangements [sakhanenko s. administratyvno-terytorialny ta munitsypal’no-terytorial’ny ustrij: problemy spivvidnoshennya ta reformyvannya (administrative-territorial and municipal system: problems of interrelation and reforming). – upravlinnya suchsnym mistom (contemporary city management). #4-6 (2), 2001. p.45-53. p.50] as we have seen, around issues of district management and organization, there have been very heated discussions and disagreements. in part, this is because neither the constitution of ukraine, nor the law “on local self-government in ukraine” answer clearly all questions about the organization of power at this level. the problem of improvement of the legal norms for management in city districts remains open because the existing norms can be treated differently under different concrete circumstances. both those who support the preservation or creation of districts and district councils and those who are for their canceling find adequate legal arguments in favor of their point of view in the constitution of ukraine and in the law on local self-government. conclusion today, in ukraine, an increasingly important place in the system of political-administrative relations belongs to the sub-regional level – the level of cities. nevertheless, in decision-making on city problems in ukraine, a significant role still belongs to national, or state, power. this can be explained in part by the non-perfect system of local self-government – the system’s traditional weak roots and the paternalism inherited from the national soviet period. that is why the multi-level system of bodies of city management – bodies of self-organization of population (city), district (in the city) bodies of local self-government, city-state authorities, and oblast council is supplemented by one more level of political authority – the state power (the legislative branch, central and local bodies of executive power, and bodies of the prosecutor and courts). 83 in the soviet period, through the system of political administration, the role of the state (preferably as executive bodies) grew rapidly. one of the results of the current modernization process is the loss by the state (first of all, by its executive bodies) of its monopoly position. while building the institutions and relations of civil society, numerous parties, ngo-s/public organizations (units), independent mass media, lobby structures, local self-government have become the state’s competitors in the struggle for political power. today, relations between the state power and local self-government are one of the key problems of local self-government development in ukraine. competencies are not clearly divided legislatively between the bodies of local self-government and the bodies of executive power. for example, the laws “on local self-government in ukraine” and “on local state administrations” simultaneously define many similar responsibilities. this situation leads both to competitiveness regarding competences, and unjustified interference of local state administrations into the sphere of local self-government competence. complicated relations between the state power and local self-government are especially vividly revealed in cities that are regional centers. recent experience presents many examples of problematic situations that sometimes have been expressed in the form of open conflict between the two types of public administration at the city level. as can be seen from the analysis of events in kyiv and odessa, conflict was enhanced by an inconsistency between responsibilities and duties, and the territorial financial and economic basis for the execution of competencies both by local self-government and state power at the local level. in some cases there was also personal conflict reflecting ideological and political characteristics. all these factors influenced the system of both city and state (especially regional) administration. the relations between the two types of public administration are characterized both by some level of independence and, at the same time, by inter-dependence and defined by the actual power potential which the two sides possess in terms of resources. as the state nowadays cannot absolutely control local self-government, it builds its relations with them on the basis of negotiations, compromise, and information exchange. thus, not only does local self-government depend politically and financially on the state, but the state as well finds itself becoming more dependent on local self-government in the implementation of its political and economic role. without question, the formation of the institutions of urban self-government in ukraine are among the most complicated tasks of new state development. there exists a complex/set of problems: economic, financial (restriction of revenues and misbalance of city budgets), social (destruction of existing social infrastructure; the decline of living wage), and political (trust of the population). politico-administrative relations between the state power and local self-government can vary greatly and can involve subordination, coordination, co-operation, compromise, conflict, and competition. consequently, the process of municipal reform in a country as large and diverse as ukraine inevitably will not be simple, smooth and non-conflictual. untitled 51 on the problem of scarcity pál gervai lászló trautmann pál gervai economist, faculty of economics corvinus university of budapest, hungary tel/fax: 0036-1-2167218 lászló trautmann associate professor, faculty of economics corvinus university of budapest, hungary tel/fax: 0036-1-2167218 email: laszlo.trautmann@uni-corvinus.hu abstract a radical change had occurred in the definition of the economics in central and eastern europe at end of the 80’s. since then, the theoretical economists focused their attention on the concept of scarcity. this shift was strongly connected to the theoretical turn that pointed from the political economics towards the economics in the western sense. in the paper, firstly, we argue that even the definition of the economics in the western sense was not always attached to the concept of scarcity, and the scarcity was part of the economic thinking only in the 20thcentury. secondly, we emphasize that the adaptation of the economics in the western sense cannot be successful in central and eastern europe based merely on the concept of scarcity. the scarcity, and particularly its central and eastern european interpretation will not promote the adaptation of the western managerial culture, on the contrary, it preserves the bad technical-managerial traditions whose liquidation was the real sense of the transition. finally, we make a suggestion for a new approach of the definition of the economics due to the above mentioned. the examination of the philosophical basis of the economic thinking is an indispensable part of this approach. our standpoint is that the economics as every science has its own philosophical basis, and dealing with this basis is the integral part of the theoretical economics. the economics of central and eastern europe has a certain tradition that banks on it and this can be the comparative advantage of the economic research undertaken in this paper. the rebirth of the political economy in this sense is a perceptible tendency in the region. transylvanian review of administrative sciences, 25e/2009 pp. 51-72 52 i. introduction the definition of a discipline cannot be irrevocably finished as every discipline is changing continuously due to its true nature, and the basic issues of the discipline are raised repeatedly by the various actual results. contrary to the idea of the neoliberalism, which has been present lately in the central and eastern european region, the essence of a science consists not only in the examination of the particular problems, but in the consequent thinking that touches the core. it is a positive fact that this approach has been lately pushed into the background that occurred due to the special geopolitical model of the transition development of the region. the thinking of the economists – and thus the thinking of a significant part of entrepreneurs – has been determined by the idea, which was accepted “mechanically” by the western institutions, without understanding their ideal-theoretical basics. to some degree, this acceptance might be considered a successful strategy in the last 15-20 years; assuming that the kind of global political and economic pressure did not emerge that time, it would have relied on the autonomous and creative action. however, since the beginning of the 21st century, new global political and economic tendencies have gained momentum that is referred to as the “new world order”. a region or a nation can be successful in this framework only by exploiting its creative power. for the economists, participation and attendance in the global science community is part of the creative work. hence, from this point of view the debates on the core theoretical problems in the region cannot be given up as well. the debates and the process of restatement of the basic concepts of economics can be observed not only in the central and eastern european region. it is generally true that the “academic economics” is flourishing. nobel prize-winners are publishing theoretical writings on the issue, in which they explicate that the concept of the discipline, which characterized the last 20 years, is not adequate anymore. the economists should have social responsibility and commitment to an economic policy in its broader term. they are referring to “commitment” as to the upgrade of the moral and ethical standards of the society. they claim that the economic school that was typified during the last 20 years, referred in the paper as “neo-liberalism”, has been incorrect in the sense that it banked on indifference towards the society, it used the “methodological individualism” in its strict, narrow sense, and excluded social problems and moral questions from the circle of the economic investigation. only one thing can be added to the opinion of joseph stiglitz and edmund phelps: bringing the economics to book for merely the morality in it is not sufficient. in order to exceed the neo-liberal standpoint, a resolution of moral questions by professional use of instruments of economics is necessary. in this process, it is unavoidable to unfold the moral-ethical basis of the development of the instruments. in social sciences, the instruments are not independent from the object of the work. it is not acceptable that these instruments be used in any cases, irrespective of their value-definiteness. exploration of moral-ethical basis of economics is the job of the history of economic ideas, thus, in this paper we will make an analysis from the point of view of this discipline. we will prove that in fact the economics has always searched for the means of realization of the moral order. therefore, the turn occurred with the emergence of 53 the new world order is not against the tradition of economics – moreover, the turn is in accordance with them. certainly, the history of ideas in itself is not enough; its development is needed in a creative way. in the last years, the world was heading towards this direction. the history of ideas in itself is not enough, as the consequent joint application of values, security, freedom, and only the new world order that evolves these days can realize welfare. in other historical periods, these values were contradictory and showed up in a conflicting manner. the economics have been mapping this periodicity – the history of economics was reviewed constantly based on the changing values. in terms of the new world order, this periodicity breaks off, meaning that every economic tradition can be organized in a uniform system. this kind of ambition can be traced behind the debates on the definitions. thus, it is not sufficient to concentrate on one side or the other. the organization of the traditions into a uniform system has a direct effect in a region that can promote the region’s alignment to the world’s highest standard in the field of ideas. this is the elimination of the borderline between economics and political economics. the partition of economics into political economics and economics was the oppressive heritage of the 20th century. the economics occupied the position of a value-free science, while the political economics undertook the examination of elemental values in the economics, but this operated in a backward realm, where the western devices could be applied only partially. these two tendencies held only a limited and tangential debate with each other in the 20th century. they did not speak a uniform language, they partly used a different reference point, and this led to the situation, where the traditions were incompatible to each other. only a little group showed a performance that gained an acknowledgement on both sides. for instance, one of the hungarian philosophers, gyorgy lukacs belonged to this group. this diversification was necessary that times, due to the cold war and the emergence of the weimarian model, and there was no opportunity for cooperation among the tendencies. however, lately, a new situation arose. the consistent global political and economic order made it possible, and simultaneously forced the standardization of the theoretical heritage. we have to add two comments to this question. firstly, equality should not be asserted between the theory of the political economy and the central and eastern european countries’ practice. naturally, it cannot be claimed that there is no connection between them, but theory could be criticized only by using theoretical perspectives as well. it is not a criticism that a transformation occurred. at best, the theoretical processing of the transformation may promote the critical processing of the theoretical model of the political economy. secondly, the present political economy in the western economies, which plays an increasingly important role there, is not covering the entire central and eastern european discipline, although one would like to point out a bigger difference in hungarian economies from this point of view, than it really exists. the american tradition of the political economy examined the effect of the ethical-cultural contexts on the economy and politics likewise, but it was altered by the neo-liberalism. opposite to the neo-liberalism, american and eastern political economy in the 20th century represented the standpoint according to which politics was primary against economy. 54 that is the reason why we examine in detail the tradition of the classical political economy. a significant number of the hungarian economists – we assume it is true for the entire region – have studied the main concepts of economics on the ground of the classic tradition (and not just the marxist theory). however, after the collapse of the eastern bloc, the debate about the basic concept of western and eastern economics was missing. we would like to contribute to this through our paper. we are concerned also about its importance in long-term run, because the notion of scarcity is ambiguous. from one vantage point, there is a democratic meaning of scarcity, and it can be summarized by the opportunity cost. however, there is a wrong interpretation of scarcity – the insufficiency of resources –, which comes from the concept of dismal science. as we can observe, there is no clear distinction between the two approaches, and this task is part of our target. ii. the scarcity in the classic political economics ii. 1. the ricardo model the classical political economy has placed the production, the distribution, the exchange and the consumption of material goods into the centre of the investigation, except the scarcity. smith, ricardo, and even marx took as a starting point the fact that there is a need for a particular circle of the material goods in order to enforce the fundamental values of a society, such as freedom, equality, or fraternity. the theoretical development of the economic institutions, the incentives and the market mechanisms that are necessary to secure these values, belong to the political economy. in that period, the production of the material goods demanded a big mass of physical work, thus the political economy researches were aimed at maintaining that kind of physical work. this was a controversial approach, as marx depicted it in “the capital”. the homogeneous, monotonous physical work excludes the realization of values; hence, the principles can work only controversially. the servility of the many was necessary for the freedom of the few. although the philosophers of the enlightenment defended the denial of slavery and followed the spirit of freedom, there was not any real technical or economic opportunity for the formation of a theoretical and practical system that would have been able to get rid consistently of the tradition of slavery. the economic form of slavery took shape in the era of the classic capitalism. the relations in the economy took shape in the framework of wage slavery, which did not ensure the freedom of choice, did not allow the multitudinous evolvement of the creative effort, and did not create prosperity for the poor. ricardo, as the normative economist of the era, was the first one to expound the “iron law of wages” (although he did not use this expression himself, this appeared only later, in the language of the labor movement). according to “the iron law of wages”, if a worker gets more than what is necessary to his physical reproduction in a narrow sense, it contradicts the economic rationality and laws. the determination of these goods belongs to the economic policy and not to the worker, for the one dealing with economic policy has to know what kind of goods the workers may consume and which not. ricardo is very consistent in this issue: only those kinds of stocks are needed that support the physical work, the others set back the production. 55 although there is no prosperity in the working class, after all the scarcity is not a determining category from ricardo’s point of view. the scarcity does not result from poverty, for ricardo perceives that scarcity includes the question of choice between the necessitous circumstances. on the other hand, scarcity is the integral part of ricardo’s system because the choice of the wider social groups is not allowed, because it would threaten the economy’s organization procedure, which is based on the physical work. the exclusion from freedom, from its actual realization or from the choice is the inevitable concomitant phenomenon of the classic capitalist model. ricardo does not offend against the rules of the scientism in that case, because under some circumstances the protection, and possibly the extension of the achievable freedom assumed the maintenance of big social groups’ denial of rights. we have to add that this is not a reason to use ricardo’s tradition for the justification of the denial of rights in a totally changed technical-economic environment. in the hungarian economics, there is a strong support of the view that the unemployment and the low level of wages is a condition for competitiveness. the system of the argument lying behind this idea is based on ricardo’s view, and this is unacceptable today. the issue of scarcity is brought up in connection with ricardo’s work on land renting. he proved by examining the differential land rents that profits originating from lands of better than of worst quality made it possible for the landowners to realize incomes above the average profit. this income is the land rent, and the source of the rent is the monopoly right on the lands of better-than-worst quality. one of the basis of ricardo’s argumentation is the distinctiveness of the lands (he traced this back only to the fertility differences, but later researches manifested the rent forming power of logistic differences etc.). anomalies of social distribution arose from the differences of physical conditions, so the landowner enjoyed an unduly higher income compared to the industrial capitalist. later marx called this phenomenon “the monopoly of the object of management”. the organization of the agricultural production in the framework of the landowners system, made the appearance of land rent possible. for this reason, ricardo supported the abolition of grain customs, which would have increased the competition, and would have reduced the level of land rent. the same phenomenon may not appear in the industry, since there is no opportunity to monopolize the resources. in that period, the source of productivity in the industry was the machine itself (and the production of machines is an independent section in the history of economics, as marx noticed it in “the capital”), what makes possible the equation of yields in the industry and the function of the average profit rate. ricardo’s judgment on land renting is unambiguous. in his work, he does not claim that it should be brought to an end and that the profits should be taken away (his standpoint differs from the points of view of the later movements, for example henry george wanted to take away the land renting right from the landowners in north america). he did not want to take the rent away, but intended to warn the landowners about the use of surpluses from “monopolisable” resources. the farming monopoly is sustainable only if the farming is done according to the rules of the capitalist production. contrary to the bad, feudal system of production, ricardo is interested in a landlord modernization, where the landowners make their work according to the rules of the capitalist, industrial production. 56 this statement is proved by other conditions, which were favorable for the emergence of scarcity. namely, according to ricardo, the ground rent existed as well in the case of lands of different quality, because there was a demand for grain cultivation on the worst yielding lands as well. the reason for this is that the grain is a special stock, a fundamental element of existence, the indispensable device of the maintenance of the physical work. the landowners do not develop this specialty; it is not their virtue, but the consequence of the entire socio-economic system. however, it does not pursue that the landowners’ farming should not be organized keeping this principle in mind. the cultivation of grains or grapes is not an arbitrary decision of the landowner, but the evidence of the social responsibility of his efficient farming as well. the chapter concerning rents in h.r. varian’s textbook about “intermediate microeconomics” supports a certain kind of perpetuation of the ricardo model. in this chapter, varian is seeking the possibilities for reconciliation of the contradiction that exists between the operation of modern economies, in which profit rates differ significantly, and the concept of perfect competition required by the theory. varian’s solution is that in fact the profits of the big companies follow the logic of rent formation. according to his argumentation, since the logic of economic policy is determined by the deregulation, and generally by the stimulation of competition, the profit rates may not differ significantly from each other. the difference may be rent-like income only. it is even more interesting, as he marks the source of the rent. according to him, the main source of the rent is the talent in the modern economy. it can be deducted from varian’s model that the correct production means the exploitation of the talent at the highest possible rates. taking into consideration the theoretical issues of economics in these days, it is straightforward that varian does not connect this finding to ricardo’s. ii. 2. thomas robert malthus view on scarcity thomas robert malthus is another remarkable person of the classical political economy who dealt with scarcity. the first suggestion of scarcity is connected to malthus 20th century economics as well, due to his work entitled „an essay on the principle of population”. malthus formulates the law according to which the population increases at a geometric rate, whereas the quantity of grain produced by this population grows according to the arithmetic progression. both of them exist in natural contexts; in these circumstances, we could infer that the population tends to become poorer and poorer and that the strengthening of scarcity constitutes a natural law. in fact, malthus’s conception was a criticism to the work belonging to william godwin, „enquiry concerning political justice”. in search for the reasons of the french revolution, goldwin claimed that the king’s inadequate economic policy brought about famine, which led to the revolution. opposite to this, malthus considers the famine and scarcity to be the results of the incorrect ethical behavior of the population, and the revolution is the evidence and consequence of this immorality. according to malthus’s argumentation, the natural constraints are valid equally for the animals and 57 for the people. however, while the natural constraints prevail violently in the wild life, people are able to avoid them by using their senses. by setting up moral laws, man prevents the violent emergence of natural constraints. if the folks do not obey these moral laws, then the nature will regulate the functions of societies by violent means. using the former example of scarcity, if people are not able to follow the biblical commands relevant to the sexuality, then overpopulation will cause poverty, famine, epidemics and wars. according to malthus, the society may blame nobody else for these results but itself. malthus, from whose ideas charles darwin drew much, brings a strong connection with the immorality and the scarcity. he claims that the different natural disasters are the means of ethical upbringing. the criticisms to this perspective were bidirectional. by the first group of critics, it was proven that the man is able to break out from the framework of scarcity, since the division of labor or the use of machines raises the productivity; this refutes the context concerning the arithmetic progression. the second group of critics objected that not the individual alone is to be blamed because of the ethical imperfection; the responsibility of social-economic institutions should be raised as well. however, malthus was not criticized for the interpretation of the proper production as a political-ethical context, and for the connection made between the concept of scarcity and the requirement of proper production as well. ii.3. the marxist standpoint marx tackles scarcity in „the misery of philosophy”, where he debates the economic views of proudhon and the contemporary french socialists. proudhon originates the value of goods from their useful or abundant character. on the apropos of this, marx writes that he has simply forgotten about demand, and that a thing can be scarce or abundant only in so far as it is in demand. the moment he leaves out demand, he identifies exchange value with scarcity and use value with abundance. in reality, in saying that “who’s utility is nil and scarcity extreme are of incalculable worth”, he is simply declaring that exchange value is merely scarcity (http://www.marxists. org/archive/marx/works/1847/poverty-philosophy/ch01.htm). marx criticizes proudhon for not understanding the connection between the economic system and the maintenance of work. he does not understand that work is regarded as the source of value in the classical political economy, for it searches for the political and economic institution of making the people work. the theoretical economic question is not whether something is scant or not, but why is it scant. several times, in several writings, marx and even engels call the view vulgar, which traces back the price, the value and the scarcity only on the demand. “according to him, needs are the things for which we feel the need; values are things to which we attribute value. most things have value only because they satisfy needs engendered by estimation. the estimation of our needs may change; therefore, the utility of things, which expresses only the relation of these things to our needs, may also change. natural needs themselves are continually changing. indeed, what could be more varied than the objects which form the staple food of different peoples?” (http://www.marxists.org/archive/marx/works/1847/povertyphilosophy/ch01.htm). 58 the question of political economy concerns the joint system of needs and production. it is an unscientific point of view if the model of production and consumption is considered given from nature. when demand is proclaimed for something, then it makes the stock scant, and when the demand decreases or ceases, it becomes abundant. the relationship between abundance and scarcity is in a constant change, and it is not enough to state merely the existence of abundance or scarcity in a sector. the question is what causes the change of demand or production. marx’s point of view relies on the primitiveness of the production. ”the producer, the moment he produces in a society founded on the division of labor and on exchange (and that is m. proudhon’s hypothesis), is forced to sell. m. proudhon makes the producer master of the means of production; but he will agree with us that his means of production do not depend on free will. moreover, many of these means of production are products, which he gets from the outside, and, in modern production, he is not even free to produce the amount he wants. the actual degree of development of the productive forces compels him to produce on such or such a scale.” (http://www.marxists.org/archive/marx/works/1847/poverty-philosophy/ch01. htm). the viewpoint of production is not an arbitrary decision, but the consequence stemming from the recognition of the main political/economic direction. when something turns into scant in the production process, parallel with this something else will be abundant. the concept of scarcity contains the requisite that something has to be given up, it can be connected to the concept of the sacrifice, but this sacrificial element has not inevitably a negative content. the negative content does not result from the scarcity itself, but from the correct or incorrect character of the decision in the situation of shortage. marx analyzes this in the field of production related to the concept of work. in other writings, for example in “grundrisse”, or in “the capital” he manifests that different production models are realized in the united states and in europe, based on their relation to work, whether they catch it as scant or abundant. the abundance of work in europe developed a technological and production system that is wasting work, and is aimed not to give up physical work, but to maintain it. contrary to this, the aim of the american technological system was the redemption of the physical work, and they took the abundance of capital, machines and money as a basis. it is apparent not only today, but was clear also at that time as well that the american model is more developed. its advanced state of development results from the marxist model of scarcity: the sacrifice connected to the decision is the question of choice between the good and bad. the bad should be sacrificed and the homogenous, monotonous physical work is bad in the sense that may not and should not be maintained. the abundance of the technical devices presupposes the technical and economic culture to be open for the new results. that kind of culture is a fundamental factor of competitiveness as it is proven nowadays in researches. in contrast to this, the european model in the 19th century approved the right for exploitation based on the shortage of capital and abundance of workforce. marx points out that the abundance and scarcity is a cultural question as well. in the following assertion, marx points at the social and historical context. 59 „the consumer is no freer than the producer. his judgment depends on his means and his needs. both of these are determined by his social position, which itself depends on the entire social organization. true, the worker who buys potatoes and the kept woman who buys lace both follow their respective judgments. but the difference in their judgments is explained by the difference in the positions which they occupy in the world, and which themselves are the products of social organization.” (http://www.marxists.org/archive/marx/works/1847/poverty-philosophy/ch01.htm) the review of socio-economic organization aiming at maintaining the circumstances of scarcity is the clearest among marx’s works. the scarcity is not a form given from nature, but one of the manners of functioning of the political-economic institutional system that does not get in harmony with the democratic principles. it is necessary to bring up this aspect because the view emerged even in the hungarian economics: scarcity means that not everyone is able to have a living standard of a medium entrepreneur. in this sense, the hungarian society necessarily splits into workers and entrepreneurs, and it is not possible to build up a society that ends the scarcity. the peculiarity of the classic capitalist model mediates the scarcity of goods and the abundance of workforce. „is the entire system of needs on estimation or on the whole organization of production? most often needs arise directly from production or from a state of affairs based on production. thus, to choose another example, does not the need for lawyers suppose a given civil law which is but the expression of a certain development of property that is to say, of production?” (http://www.marxists.org/archive/marx/works/1847/poverty-philosophy/ch01.htm) marx reinterpreted the relationship between exploitation and scarcity. according to him, the changes in mode of production change the relation with scarcity. thus, contrary to the classic capital model, the oppressive character of scarcity ceases in the economy based on constitutional values. the theories of the 20th century can be considered as further steps towards this direction from the point of view of the problem of scarcity, since the 20th century was looking for the means of the realization of security, freedom, and prosperity. as it can be seen in the next section, the transformation of the concept of scarcity reflected this process. iii. the concept of scarcity in the 20th century iii. 1. the rediscovery of the concept of scarcity as a definition in economics scarcity became widespread only after world war ii due to samuelson’s work entitled „economics”. its first appearance is connected to lionel robbins, professor at london school of economics, who worked out the theoretical frames in his „essay on the nature and significance of economic science”. robbins presented some arguments in his work that supported the need for a shift regarding the object of the economics. robbins pointed out that is not sufficient to determine the object in terms of material and economic relations; an emphasis should be put on the method of decision that should be regarded as the management of scant 60 resources. according to robbins, the essence of the economic decision is the scarcity, and even if all material goods were amply at our disposal, there would be a scant stock, which one should manage rationally. it is worth stopping at this part of robbins’ train of thought. it is well apparent that robbins holds an implicit debate with the vulgar marxist economics of the 20’s and 30’s, which was all the rage in the england of the era anyway. this system of thoughts claimed that economics has to deal with the production of material goods, and it is possible to overcome the actual shortages occurring on certain areas and the scant resources by technological and organizational solutions. any kind of constraints can be extinguished by the coordination of producer activities and works, and, as a result of this poverty and underdevelopment, it can be eliminated. this view that is fundamentally ricardo’s and not of marxist origin, did not take the problem of time into account; however, time was an integral part of the marxist theory. along with the question of time, management in the economics raises the question work management, as a physical, monotonous and homogenous activity. robbins claimed in his work that even if all material can be supplied, one resource would remain to manage, which is time. behind the compulsion of time and labor, management hides not only the malthusian tradition, in which robbins’ work has a similarity with keynes anyway, but the problem that the riddance of the above mentioned work is a part of the development as well. the creative activity is the source of happiness, and it should be taken into consideration during the formation of the socio-economic order. this is in accordance with the marxist theory that contains the concept of liberation from work. the stimulation of creative work calls for other instruments, than ensure the abundance of material goods. in case of material goods, the organization of production in industrial frames can reach the abundance. however, the labor and time management can be efficient only based on the individual’s decision. a certain system of individual’s decision is desirable that aims the recognition of scarcity of time and concentrates on self-realization. by this, the managerial point of view made by robbins becomes the examination object of the economics. he claims that the correct individual managerial view promotes the realization of effectiveness in the economy. under the correct managerial view, we mean a certain level of managerial culture that does not accept the monotonous work, but moves towards the self-realization and the creative activity. robbins’s approach is not in accordance with the traditional concept of working class; on the contrary, it aims at the elimination of this concept, not as an actual social policy program, but by asking questions emerged after the abundance of material goods. this was not raised by robbins in such manner; he held a debate with the deformed interpretation marshall’s economics (even marshall has thought that the role of economics is to determine the institutions and instruments necessary for producing material goods). his aim was to extend the civil pattern for larger social groups (this later led to the idea of folk capitalism). behind that there was a historical reason; hence, nowadays, this should not be a reason in itself on which basis should be avoided the bringing of the two tendencies of economics into harmony. 61 there is a stringent need for accordance, for the scarcity had been understood in the economics in central and eastern europe in the 90’s, as if it had been recurrent to the 21st century’s economics, as if the scarcity of material goods had been the normal and necessary frame of economic development. contrary to this, the analysis of robbins shows that (1) the objects of examination are the production resources emerged beyond the supply of material goods, and (2) the scarcity raises several questions for every manager such as scarifying “what” and “why”. by placing the issue of time in the core of the problems, robbins claims that it is a part of the managerial model there is no democracy for „the bad”. the maintenance of the oppressive kind of work is not acceptable, and the scarcity compels to this kind of management. iii. 2. samuelson’s approach to scarcity paul a. samuelson wrote the book “economics” that made scarcity become the main definition of economics. this work presented the basic western development in economic theory after world war ii in the most comprehensive way. its different editions show well the changes that were raised by the western economic development from a theoretical point of view; thus, it is reasonable to examine the definition of economics and the concept of scarcity in its major editions, namely in the editions published in 1955, 1973, 1985 and 1998. in the „economics” introduced in 1955, samuelson sees the fundamental problem of the economics, how it can boost the economic activity under different circumstances. “every human society must confront three questions: what commodities are to be produced and in what quantities, how shall resources be distributed for the proper production, and for whom shall goods be produced that is how the national product to be divided among different households. every society must decide on these questions based on its own wisdom, and then its decision can be realized through customs, talents, commands or orders; in our economic system, this operates by partially the price and market system. these basic questions follow from the fundamentals of every economy: the living standard is limited under scarce resources and given state of technology. all the economic commodities are scarce and not free; the society must choose among the limited goods that, the needs and desires can not be fully satisfied at the same time.” (samuelson, 1955, pp. 33). samuelson’s book was promptly translated into german and became one of the dominant shapers of the contemporary german economic view; which fact is not a marginal circumstance, for its message can be understood better by this fact. how to govern the transition from the economic order of the fascism to the economic order based on the democratic norms constituted the prevalent question in the ‘50s. democracy does not mean homogeneity, but the symbiosis of the diverse thinking, views, and cultures, and the creation of norms necessary for this, have to be enforced in the economic decisions – claims samuelson. this explains why it should be emphasized that the economics should give diverse answers for the same question. it will not decrease its scientific character; on the 62 contrary, a perspective in economy field can be given to every society by its support. the pluralist interpretation of the economics and the aspiration for boosting the dialog between the different economic schools reflects the way samuelson talks about the power of words. this showed the specific for the time period need for scientific dialog between the western and eastern blocks. the „anti-eastern” ideology manifested in the cold war matched the inequality against the egalitarianism. there was a need in the economics for the methodology of the scarcity, since the fair level of inequality should have been defined. the western economics made an effort to avoid the two extremities: the egalitarianism and the excessive inequality. what should be added is that the equality is linked to the question of justice. even the justice has its own methodology, and the economics needs it as well. the rationality is not merely a mathematical, but a philosophical problem as well, and the economics needs both of them. the basic questions „what?”, „how?”, „for whom?” also played an important role in the later editions. finding an answer for the three basic questions can lead to different solutions in societies, and samuelson pointed out that neither of the societies can avoid the pressure for answering. this is one of the points where the engagement of politics and economy, and the improvement of the tradition of the political economy can be caught out in samuelson’s work. the application of the democratic norms is a social question, and the economic decisions should be done according to it. opposite to the fascist tradition that was against the freedom, the new western model appears to look for the economic instruments of teaching the norms of freedom. concerning the questions of „what?”, „how?”, „for whom?”, not only the answer is important, but the raising of the question itself, since by this samuelson introduces the economics as a discipline opened to the democracy. it is not self-evident, for the discipline was presented in central and eastern europe by the neo-liberal economics as if the economics had been able to give objective answers bypassing the democratic norms. this is not in accordance with samuelson’s approach, since the work expressed the openness for diversities of cultures. samuelson calls the attention to the problem of choice between democratic and antidemocratic systems. by the adaptation of the major results of the mathematical economics of the era (for example arrow’s impossibility theorem), he showed that it is not able, and it is not worth to „choose” the antidemocratic system. that is, he illustrates the impossibility of choosing the „bad” in the language of the economics. this can be seen from the fact that samuelson accepts (in this edition by all means) the theoretical economic establishment of the socialist block. by making the delicate statement that the western block enforces its decisions through market mechanisms, he says that other institutional system is conceivable as well. the important thing is not that, but the democratic character of the decision, which distinguishes the western societies from the eastern ones. compared to robbins theory, the concept of scarcity has been transformed. firstly, the scarcity is a question brought up on the social level; every society has to make a decision concerning the utilization of resources through operating democratic institutions. the compulsion and opportunity of production at the national level 63 is discoverable in the concept of scarcity. why is there a need for the concept of scarcity? secondly, there is a direct debate regarding the voluntarism that denied the scarcity at the national level. however, samuelson steps further: the concept of scarcity helps making the decision responsible. the aim and direction should be defined: what the social production can be adjusted to, and towards what direction the economy develops. this direction is very concrete; it aims at increasing the living standards. this is a radical change compared to the fascist economic policy, since the preparation for war stood in the centre of the national interest. the long discussion on the problem and the application of the transformation curve indicates this as well. according to this problem, the society has to determine whether to produce butter or cannon. the dictatorships choose the cannon, the democracies the butter. this is a hint for the notorious example of goring, who said in 1936 that it is necessary to produce cannon, so that later the butter can be taken away from others. samuelson argues with this point of view when he says that the essence of democracy is the population’s prosperity and its promotion. hence, the society could democratically decide on producing cannon, but this is not consistent with the democratic norms. the democracy is the democratization of the responsibility. one should add that this debate is not only against the fascism, but against the soviet model as well. the available level of the living standard has to be taken into consideration in the course of decision-making. by this, samuelson distances himself from the populist tendency, not only from the dictatorship. the concept of scarcity is important, for it becomes sensible, as the democracy is the model of the commonly made, correct decision, which model can be prevailed in the economy as well. he refers concretely that someone’s situation can be improved, while other social groups’ can stagnate, but these decisions may be and has to be accepted. by these means, the conceptual frame of scarcity became the improvement instrument for the democratic managerial culture. the connection between the scarcity and the managerial culture can be seen in samuelson’s „economics” edition from 1973. in this book, he formulates the definition of economics as follows: “economics is a discipline focusing on the choice of the individuals and the society either by or without the transmission of the money among the alternative, scarce resources of production for manufacturing various commodities and on how the commodities are distributed among the individuals and groups of the society for actual or future consumption. the economics analyzes further the costs and benefits of the resource-allocation improvement.” (samuelson, 1973, pp. 35) then he continues with the introduction of anomalies in calculating the gdp, and points out the difference between the quantitative and the qualitative choice. “economics shows people that, if they really want, they can exchange the quantity of goods for the quality of life” (samuelson 1973, pp. 36). in this edition, he took long discussion about the consequences of the decisions made by the economic policy, and found out that the economics should apply the double standard objectivity. the rules of the heart should be followed during the decision-making, and the rules of 64 mind during the analysis – he refers to the famous theorem of pascal. naturally, there is a need for the unity of both of them, because the prejudices can be eliminated only that way. “and especially in the field of social sciences, we must recognize that we are the victims of our prejudices, feelings and material interests” (samuelson, 1973, pp. 45). in this work, samuelson’s definition is influenced by the experiences of the neoconservative revolution started in the middle of the 70’s that reacted to the student movements of the 60’s and the related intellectual upswing of the left. the shift from the welfare model of the post world war ii era can be seen unequivocally in the theorem according to which one may and has to choose between the quality and quantity of life. samuelson responds to the proposition assuming that the welfare model based on the quantitative increase became an old fashion model, as significant social groups followed other kind of lifestyle. by making the delicate statement that new lifestyles can be followed only “if they really want”, he says that the validity of the democratic norms cannot be petered out based on “fake-revolutionary” arguments. it is out of question that the pluralism of ideologies has to be exercised during the economic decision-making, thus every tendency has a place in the society that does not want to exclude the other one. this consistent ideological pluralism explains why samuelson – in contrast to the 1955th edition – emphasizes the competencies of individuals and societies. the main question is not the making of democratic norms, but the creation of frames of cooperation between the democratic left and right middle in order to secure the social stability. this is a sensible aspect as the decisions can be transmitted either by or without money. the democracy’s prerequisite is the prosperity, and the central question in the previous edition was the creation and acceptance of the socio-economic institutional system necessary to increase the living standard. in 1973, the main question was the formation of a managerial culture that enforces the long-term viewpoints. scarcity gets a new dimension: it requires the definition of the ratio of the actual and future consumption. it presumes that the decision-making individuals have a kind of culture and view that gives a possibility for the long-term development. the democratic institutional system works in the economy, so that these long-term concepts clash and the confrontation takes shape of the economic-political management. one has to choose between the good and the bad, the concept of scarcity has to be applied at the expense of the bad, and the resources appropriated for the bad have to be revoked. the central role of the economic-political decision-making can be understood from this perspective, since one of its jobs is to harmonize the viewpoints concerning the different futures. in 1955, it is not a question because the democratic frameworks of the survival should have been created by that time. in 1973 we stepped in a new era; the majority of the western societies have already had a determined system of vision and values. the ability of their coordination is a scientific performance as well, and the instruments of the economics help in realizing this. that is why samuelson uses the pascal’s simile instead of the differentiation of the normative and positive economics; the hungarian neo-liberalism often understood that what is science is meant to be 65 positive, and what is a value is meant to be normative and not science. the heart has its rules, which have to be taken into consideration. on the other hand, one should not listen to it only, and have a dogmatic point of view, as he will be prone to committing bigoted acts. samuelson refers quiet obviously to the fact that contrary to the view of class struggle in its distorted sense, every tendency should accept the pluralist view in order to assure its own survival. the economic contribution to the basis of the ideology of the world order without a world war can be seen here, since everyone “should fight his own prejudices”. this is a question of morality and at the same time of effectiveness. the last aspect mentions that the economics can promote the improvement of the effectiveness of the resource allocation; it shows how one can organize the ideological pluralism efficiently, and reach a pareto-improvement in the economic institutions, besides scarcity of course, which everybody has to reckon. this is the minimum professional requirement, where the different economic institutions can find accordance. it has to be emphasized that the hungarian neoliberal economics, in flat contradiction with samuelson’s definition, wanted to use the concept of scarcity for „settling” the class struggle; it interpreted the scarcity in the framework of class struggle and did not understand that the western model builds the society and the political and economic culture without classes. the example of scarcity mentioned above, which quoted that the scarcity, means that not everyone is able to have the living standard of a medium entrepreneur, and it refers to the support of the class struggle characteristic of scarcity in the hungarian economics, and that contradicts the western scientific norms. it is doubtless that these ideological directions were not expressed positively later due to some historical-security and political reasons. in 1985, when william nordhaus has already become his co-author, samuelson abandoned the last sentence from the definition of the economics, respectively the thought that referred to the fact that one can indicate his decision either by or without money. however, what appears as a supplement is almost a direct theoretical preparation for the end of the cold war. on one hand, samuelson refers here to smith, the founding father of the economic discipline, and to the fact that the issue of the „wealth of nations” coincided with the american declaration of independence. the american economic institutional system results from this thought, as the necessity of adapting the efficient managerial culture arose. on the other hand, the presentation of the market mechanism plays a bigger role in this edition. the presentation has a curiosity; samuelson interpreted money as a vote. the consumers express their satisfaction or dissatisfaction with the given producer by their dollar votes. this metaphor points to the economic perception of the market at the end of 80’s, the market is part of the democratic institutional system, and it should be interpreted that way. this is a debate (that was later adopted by the hungarian neo-liberalism mechanically) with the vulgar marxist point of view that interpret market as production of goods and claiming by this that the rules of economic subsystem are valid elsewhere. by contrast, samuelson takes a position that the democracy is a norm that pervades the whole operation of the society and that one has to adapt to it. this is a substantially more delicate approach of the later fukuyama-theorem that sees the end of the history in the adaptation of institutions 66 of liberal democracy. samuelson in contrast with this proves that the expanding market economy due to its democratic character can be an adequate instrument for the global economy unity. its democratic character manifests itself when it promotes the dialogue between the ideologies in an economic conduct. the „market” of production of goods either is or not democratically consistent, by these means the cutthroat competition prevails. the dollar becomes a vote and not merely a purchase by containing a commitment towards a given culture, ideology, or movement and by indicating a system of values. this explains why samuelson quotes keynes in this edition: “the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. indeed, the world is ruled by little else. practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. i am sure that the power of vested interest is vastly exaggerated compared with the gradual encroachment of ideas. not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. but, soon or late, it is ideas, not vested interests, which are dangerous for good or evil” (nordhaus and samuelson, 1985, pp. 43). samuelson justifies the necessity for dealing with the economics by this quotation, and this enriches the scarcity concept with a new dimension. a definition based on the scarcity would merely be suitable to regard the housewife as equal with the economist, as it happened in certain areas of the hungarian economics education. the economist can be distinguished from the housewife by his ability to fit the single managerial decisions into a system and to determine the ideological direction, the tradition that is led by the manager consciously or unconsciously. calling the attention for the consciousness is the job of an economist. it is not only a cultural curiosity, but also the condition of the efficient management, since “the economy is organized by the ideas”. with this keynes-citation, samuelson takes a stand on the tradition of idealism unequivocally, contrary to the approach of the hungarian neoliberal economics that traces back the operation of the economy to interests only. the concept of scarcity, the compulsion to choose does not mean that “one has to obey the stomach”, but that the compulsion induces the need for ideas in the main social groups. the application of the scarcity is the decision between the idea of good and bad, what demands the methodology of justice. this reference to history of ideas is a shift in the economics, and the consequence is that the long-term political-cultural contexts should be dominant in the economy. samuelson approved this by the citation, and this again is in contrast with the view of the hungarian economists that divide the society into subsystems. in the subsequent, 1998 edition, the authors modify a bit the definition of the economics. “economics is the study of how societies use scarce resources to produce 67 valuable commodities and to distribute them among different people” (nordhaus and samuelson, 1998, pp. 4). the altering view is reflected by the use of adam smith’s motto: “it is not the benevolence of the butcher, the brewer, or the baker from whom we expect our dinner, but the regard of their own interest”. the authors claim that the scarcity rules our lives and we aspire to effectiveness (nordhaus and samuelson, 1998, pp. 4). if scarcity had not existed, all need could have been satisfied immediately. however “in such an eden of affluence there would be no economic goods – goods that are scarce or limited in supply” (nordhaus and samuelson, 1998, pp. 5). naturally, this state has not been reached by any society yet, for the resources are scant, in contrast with the needs, which are unlimited. in connection with the exposition of effectiveness, they put the pursuit for pareto-effectiveness in the centre, and see the main task of the economics in terms of finding out “how to organize the society by using the economy’s resources as effectively as possible” (nordhaus and samuelson, 1998, pp. 6). thus “we are studying economics not only for understanding the world we live in but for understanding the many possible alternative worlds suggested by the reformer continuously” (nordhaus and samuelson, 1998, pp. 15). the authors give considerable role to the results of the information technology revolution as they acknowledge the newer interpretations of scarcity. they intend to assimilate the effects of economic and cultural changes on economic theory caused by the internet, the mobile phones etc., as they refer to it in the work. the main theoretical economic question is the dissemination of the information technology and the foundation of the economic view necessary to this. typically, they raise a marshall-citation as a debate question. according to the citation, an economist should follow the rules of mind and heart at the same time, as the society cannot coexist with poverty for a long time, and the thinking on abolition of poverty is the responsibility of an economist as well. the abolition of poverty as an economic and political program is the tangible sign of the scarcity according to samuelson, and the shift towards correct management results from that. however, the subject of the production is the society again, and not the individual, contrary to the former standpoint. perceiving the changes in the economic-political management, the community values become the centre again, and not in terms of the kind of the individualism that was the part of the neo-liberal ideology. the scarcity compels the society towards the correct social production, and the working out of the economic-political programs necessary for this is the task of the economics. we should stop at this point and call the attention for the main problem of samuelson’s model, who argues for the separation of the scarcity and the effectiveness. samuelson argues for the necessary existence of scarcity because abundance is unimaginable and the needs are unlimited. this argument is not accurate in this form, since the unlimited nature of the needs is not self-evident. on one hand, there were historical eras, whose integral part was the restraint of the needs, like in the middle ages. this was a separate economic political period, and series of decisions promoted the elimination of restraints; this was the role of the long-distance trade for example. on the other hand, the unlimited nature and infinity of the needs is not an accurate 68 drafting, because the consumer’s aspiration always aims at having a politicallysociologically determined stock basket. the economic players are getting richer not only in generally, but also in a tangible way, and the determination of that actual consumer’s stock basket belongs to economics. this was brought to the economics’ surface through the poverty problem explained by samuelson. the considerable part of amartya sen’s researches deals with the content of the actual stock basket that ceases poverty. the result of the research is that it should be defined separately in every era. this can be extended to the other groups of the society (that is illustrated by the researches aimed at linking the incomes and the happiness). it is certainly true that the definition of the actual stock basket is a question raised repeatedly, and it cannot be solved forever. however, the merely accentuation of the infinity is a onesided point of view, according to our standpoint, the aspiration towards the unity of the limitedness and the infinity should be emphasized. thus, the definition of the consumer’s stock basket could come up as an economic question. the abundance is not merely associated with the nirvana or the kanaan, but with a state of the society, in which a considerable part of the society is happy. the source of the happiness is not only a philosophical, but an economic question as well. according to the classical philosophical standpoint, the justice is the source and justice as the material interest of behaving ethically is the happiness. the economics adds the concept of effectiveness to this. the effectiveness means the efficient validation of the justice, and this is the measure, the point of view, on which one can count when defining the form and the shape of the socio-economic development. however, samuelson could not express this model of development in a philosophical form, and thus the concept of effectiveness and scarcity is not connected in the definition. the inorganic coexistence could be brought to an end if the authors had inferred the unity of justice and effectiveness from the conceptual duality of scarcity and abundance. the management sciences have already done this by using the conceptual duality of the effectiveness and the efficiency. the effectiveness is the realization of a given production process at lowest possible expenditure, while the efficiency is the fulfillment of the market needs. this microeconomic concept means a shift, because from the point of view of the company’s operation, not simply the price-level is important, but the recognition of the long-term social needs as well. in the last 20 years, the emphasis was put rather on the effectiveness, but now the substantial question is about the efficiency. the source of the profit has changed by this as well; the source is the recognition of the needs, the adaptation to main socio-economic direction and to the ethical values. this change reinforces the aspiration for the unity of the two methodologies: the methodology of scarcity and the justice. the conceptual clarification could help understand the economic policy of the new economic and political era and the new world order. what samuelson sketches in a very correct way is the new connection between the globalization and local communities. the examination of the economics helps understand both the world itself and the diverse variety of the local reforms; that is the clarification of the relation of the one and the lot. the economics concentrated on the global order in the previous period in a one-sided way, meaning to understand the world market. beginning with 69 the new millennium, the local democracy and the support of the development of single actual cultures gets a bigger significance. the question here asks what the organizing principle of the global new world order is, and how the bigger or the smaller cultures can connect to this. the concept of scarcity is not enough; only the principle of the equity can result from the scarcity. this is a middle-term economic-political program, by which the income inequalities can be compensated and the misery can be relieved. this gives sufficient ammunition for the economists at the end of the 90’s, since the decrease of the extreme income inequalities is a middle-term economic-political aim in fact. however, the concept of the new world order and the sustainable growth calls for an economic approach, in which the structure of the consumption and the production is defined clearly and the scarcity is a less serious problem. however, this can be banked only on the unity of justice and effectiveness. according to our suggestion, one should not put simply the optimization under scarcity in the centre of the definition of the economics, but complement it with the concept of the correct decision. the results of the managerial sciences in connection with the decision theory support this, and the infiltration of these results into the economics has just begun as well. the correct decision means the application of the justice under given circumstances. one should have the standpoint of the methodological dualism contrary to the one-sidedness of the mathematical methodology; since the methodology of the justice is an economic question that one cannot get around as well. iv. the theoretical consequences of the financial crisis the financial events of the last couple of months have shown some sweeping changes in the theory also. it seems to us that new theoretical models will emerge and some others are going to sink in the next couple of years or months. we would not like to speak about the background of the financial crisis and the governmental interventions to the market. we think that it needs more time to evaluate the turbulences and the steps taken by the governments. nonetheless, it is a good occasion to rethink the state of the economics, the main theses and its consequences. first, it seems to us quite plausible that the neo-liberal approach of the economics is not enough to understand the new situation in the world economy. the neo-liberal model is based on a narrow concept of efficiency and this concept is the ground of the right choice. the cost-benefit analysis, the balance between the joyful and the painful as the main concept of the right choice is the essential of the neo-liberal economics. the main tool for raising the level of the efficiency in the framework of the cost-benefit analysis is to lower the cost or to raise the price. however, there is another aspect of the production, which is the efficacy. the notion of efficacy means the consideration of the social needs. in order to reach the efficacy the enterprise needs a long-term vision of the consumers’ culture, development and the scrutiny of the efficacy should come before the effectiveness. certainly, the concept of efficacy has been involved into the neo-liberal economics as well. however, the efficacy had a special meaning; it was narrowed just to the demand, to the will of the buyers. the financial crisis has shown that the buyers’ 70 will is part of their culture, and this culture is not independent from the whole performance of the economy. the wrong consumers’ decisions of buying products that do not support the households’ productivity lead low economic performance in all over the world. to restore the market economy every nation needs an adequate business culture. it follows that the cultural development is part of the economics and economists should build in the cultural and historical background of the economy into the mainstream. this kind of thinking is not without sample in the economics. the so-called libertarian paternalism means that the economists and the government have special responsibility to help the consumers and producers in taking the right decision. the market is a language, as vernon l. smith said, and it does matter how we speak about the joyful and painful, because it has a great influence to the whole economy. the efficacy in this context means to find products, services and methods, which can support the consumers’ long-term thinking. however, the libertarian paternalism is not the same in the central eastern european countries as in the western societies. the libertarian paternalism does not eliminate the tradition of democracy in the economics, but emphasizes another aspect of the economics in the western societies. however, the libertarian paternalism means a theoretical moving from the model of classical capitalism to the model of feudalism in cee countries. in this area, it is a shift of values: from the freedom without safety and welfare (this is the tradition of classical capitalism), to the safety and welfare without freedom. as it used to be, the theoretical moving contains more extreme socio-economic elements in the cee countries than in the western societies. the great question, which emerges from the libertarian paternalism, is what kind of institutional framework can mostly help the consumers’ and producers’ right choice. just the banking or the financial system as happened in the last couple of decades cannot establish the new model. the financial system regards only the concept of effectiveness. the lack of viewpoint of the efficacy means that the banking system focuses narrowly on the cost-benefit analysis, which is a triggered dichotomy in the economy; the worker and the entrepreneur are in the opposite side. they cannot agree with each other, because the worker would like to increase his income and the entrepreneur would like to decrease the wages. within the concept of efficiency, they cannot go over this conflict. from this point of view, the relationship between the society and the banking system is ambiguous; there is a gap between the society and the managers. neither the political nor the business leadership connects in the society. naturally, this extremist model is applicable only in the developing countries, among them the central eastern european countries that have newly joined the european union. in the developed world, the monetarism is supplemented with neoconservatism. the difference between the neo-liberal and the neo-conservative model is that the latter embraces the importance of the moral issues, the role of the state and other institutions of the civil society. however, in cee countries we can see the destruction of the civil society and moral values. the lack of trust and confidence has 71 led to the crisis and we think that the solution for this problem is not just a budgetary question but also the emergence of a new framework of the economy. this new framework is based on participation in the decision-making in the production. the democracy in the production, letting the workers contribute to the management of the company is the key element of the new model. this kind of democracy does not eliminate the personal responsibility; moreover, it can raise the general level of taking responsibility by assuming the responsible behavior from every member of the society. the individual choice is embedded in a given community and the community can help the person to take the right decision. to build communities is part of the state job. it is called “intelligent government” which means that the government by whatever means helps the individuals to find a community. the intelligent government provides the necessary and sufficient information for the right decisions. in order to reach this situation, the economy needs a new institutional framework and trust in these institutions. the trust can be based on the moral commitment of these institutions, and on the core values of the state. it is a new challenge of the economists mainly in this region. the economists should explain the above mentioned commitment and speak about the connection between values and effectiveness, the strong link between the right choice and the rule of law. for this, it is inevitable to rethink the basic models in the economics, because in the last couple of decades the trust in values belonged to other social sciences due to historical reasons. however, nowadays the situation is changing and the economists in cee countries have a special job in this field. v. conclusions in this study, we claimed that the scarcity is not a central question in the classical political economics, and the economics concentrates on the supply of the material goods. whenever the question of scarcity emerges, it is connected to the correct and ethical managerial behavior. the bad, oppressive meaning of the scarcity appears as well. moreover, the concept of scarcity becomes the central debate in the 20th century for it is regarded as a theoretical instrument necessary for the improvement of the managerial culture. the expansion of the opportunity of the decision and the democratization of the economy is expressed by the concept of the scarcity in the economics. the scarcity concept helps at the same time to create the concept of correct decision, since the economics deals with the scientific criteria of the economic decision. the definition of the economics based on the scarcity in the 20th century cannot be considered as a homogenous one. it changed in the certain medium-term eras due to the economic and political character of the given era. we proved this argument basing our assertions on the lionel robbins’s and paul samuelson’s writings. however, throughout the 20th century the scarcity meant that someone has to make sacrifices in order to reach the prosperity of the society. finally, at the beginning of the 20th century it became perceptible that the concept of scarcity is not sufficient for the correct conceptual mapping of the new world order. there is a need for the collective 72 treatment of the abundance and the scarcity, and thus for the unity of the justice and the effectiveness. we suggest a new synthesis of the economics and the philosophy, where the criteria of correct decision would be the justice and the effectiveness; nonetheless, this does not exclude the optimization under scarcity. references 1. barbon, n., a discourse of trade, [online] available at http://socserv2. socsci.mcmaster. ca/~ec on/ugcm/3ll3/barbon/trade.txt, accessed on 1st of november 2008. 2. fukuyama, f., the nation-building, new york: cornell university press, 2004. 3. fukuyama, f., the end of the history and the last man, london: penguin books, 1992. 4. hegel, g.w.f., the history of philosophy, budapest: kossuth, 1965. 5. marshall, a., the principles of economics, [online] available at http://socserv 2.socsci. mcmaster. ca/~econ/ugcm/3ll3/marshall/prin/prinbkl, accessed on 1st of november 2008. 6. marx, k., the capital, budapest: kossuth, 1967. 7. new palgrave, a dictionary of economics, london: macmillan, 2001. 8. north, d.c., economic performance through time, [online] available at http://nobelprize. org/nobel_prizes/economics/laureates/1993/north-lecture.html, accessed on 1st of november 2008. 9. pejovich, s., the economics of property rights, budapest: kjk, 1992. 10. ricardo, d., on the principle of political economy and taxation, budapest: kjk, 1995. 11. samuelson, p.a. and nordhaus, w.d., economics, new york: mcgraw-hill, 1985. 12. samuelson, p.a. and nordhaus, w.d., economics, new york: mcgraw-hill, 1998. 13. samuelson, p.a., economics, new york: mcgraw-hill, 1955. 14. samuelson, p.a, economics, new york: mcgraw-hill, 1978. 15. smith, a., an inquiry into the nature and causes of the wealth of nations, chicago: university of chicago, 1982. untitled 5 analysis of reaching the lisbon strategy targets at the national level: the eu-27 and slovenia aleksander aristovnik andrej pungartnik aleksander aristovnik (corresponding author) assistant professor, department of public sector economics, faculty of administration, university of ljubljana, slovenia tel.: 00386-1-5805548 e-mail: aleksander.aristovnik@fu.uni-lj.si andrej pungartnik m.a, faculty of economics, university of ljubljana, slovenia abstract adopted by the european council in 2000, the lisbon strategy is a long-term strategy and its main target is to make europe the most competitive, dynamic and knowledge-based economy in the world by 2010. during the 2005 mid-term review, the lisbon strategy refocused its two main targets on economic growth and employment, and formally integrated the cohesion policy into its implementation. in spite of the review, the efforts to meet the strategic targets have proven to be insufficient both at the eu and slovenian levels. while certain progress has been observed, the strategy should be further adjusted, coordinated and supplemented at the national and paneuropean levels so that the lisbon targets can be attained. the article investigates the current stage of the achievement of the targets, using the time-distance method to calculate the time lead or lag in implementing the lisbon strategy targets at the european union and slovenia levels. transylvanian review of administrative sciences, 27e/2009 pp. 5-21 6 1. introduction by adopting the lisbon strategy, the european union (eu) set itself an ambitious strategic goal of becoming the most dynamic, competitive, knowledge-based economy in the world and thus bringing prosperity to all people living in the eu. from the very beginning, in 2000 and until today, the strategy has radically changed so as to improve its efficiency and attain the set targets. however, due to the unsatisfactory progress and the ever-widening gap between europe’s potential growth and other economies’ growth rates, the eu redefined the main targets and priorities of the lisbon strategy during the 2005 mid-term review and formally integrated the cohesion policy into its implementation. the main targets of the revamped strategy were the creation of new and better jobs and the achievement of a stronger, lasting economic growth. this article basically aims to present the current state of affairs in the european union and slovenia regarding implementation of the lisbon strategy targets. the first part delves into the role of the lisbon strategy and is followed by a presentation of time distance, whereas the central part discusses using the application of the socioeconomic indicators center (sicenter)1 – the time lead or lag in implementing the lisbon strategy at the eu and slovenia levels. the last part touches upon the future of the strategy and summarizes the main findings of the analysis. 2. the lisbon strategy the european union’s basic objective is sustainable development stemming from an orientation to balanced economic growth and price stability, a highly competitive economy geared towards full employment and social progress, a high level of environmental protection and improvement in the quality of the environment. the notion of sustainable development is enshrined in the lisbon strategy which was devised in response to the new challenges posed by globalization, technological development and ageing of the population. the lisbon strategy has a long-term horizon and its principal strategic objective is to make the eu the most competitive, dynamic and knowledge-based economy in the world by 2010 (lisbon strategy, 2008). soon after the adoption of the lisbon strategy in 2000, it was criticized for failing to yield the expected results. the reason for its failure was supposedly the large number of targets and their vagueness, the conflicting priorities and insufficient coordination between the eu member states. in 2005, the european council met in brussels for the mid-term review of the strategy and presented a reformed version with two main targets focusing on economic growth and employment. the presidency conclusions recapitulated that europe should in fact rebuild the bases of its competitiveness, boost its growth and productivity potentials and reinforce social cohesion by strongly emphasizing knowledge, innovation and the better valuation of human capital. to meet 1 sicenter is a private, non-profit research institution. its activities focus on research and consultancy in the field of the analysis of economic and social indicators at various levels of aggregation, with an application to economics, politics, business and statistics. the principal researcher is prof. dr. pavle sicherl. 7 these targets, the eu must integrate all national and community resources – including the cohesion policy – into a three-dimensional (economic, social and environmental) strategy aimed at better exploiting the synergies within the general framework of sustainable development (european council in brussels presidency conclusions, 2005, pp. 1-2). when it joined the eu in 2004 slovenia committed itself to implement as many targets of this strategy as possible, using different measures. in 2005, the government of the republic of slovenia adopted slovenia’s development strategy (sds) which redefines the vision and development objectives, while at the same time integrating the lisbon goals in the national setting. in accordance with the renewed governance of the lisbon process and based on the sds, slovenia drew up a national reform program to work towards the lisbon strategy targets. the program particularly focused on reforms related to the efficient creation, transfer and use of knowledge, measures boosting the competitiveness of the economy and economic growth as well as reforms geared towards the modernization of the social state and the increase of the employment. 3. calculations of the time distances and leads or lags in meeting the lisbon strategy targets in the decision-making on economic and social development, an important role is played by the selected conceptual framework, terminology, statistical measures and indicators, all of which improve communication with the public about the nature of the problems, possible alternative scenarios and the positions of individual groups in society or in a broader globalized setting. access to information should be increased while simplified presentation and information formats should also be developed to enable participation in decision-making by all sectors of society. the notion of time distance and the s-time-distance statistical measure are presented from this broader perspective. while complementing other conventional measures of differences, it also offers vast potential use in the analysis of temporally defined data in comparisons between various units, regressions, models, forecasting and monitoring. on the other hand, the proposed methodology introduces into the literature a new perspective on the level of disparity in development and welfare, thus offering a better analytical framework for evaluations made by individuals and groups at various levels about their relative position in society as well as for new hypotheses on ways to link growth and disparity problems in theory and practice. this link is one of the keynotes of the european development paradigm as expressed in the lisbon strategy (sicherl, 2003, p. 203). 3.1. time distance in general, time distance is the distance in time between two events. s-time distance is a special category of time distance which is defined for a specified level of a variable (indicator). in contrast to statistical measures defined by a specific time unit, the s-time distance is defined for a specific level of variable and measures the distance in time between points when the two units being compared reach a given level of the observed variable. the specified distance in time (e.g. the number of years, months, days etc.) is 8 used as a dynamic (temporal) measure of the disparity between the two observed units, in the same way that the difference (absolute or relative) at a given point in time is used as a static measure of disparity between the observed units (sicherl, 2003, p. 188). when two functions or series with time subscripts are compared for a specified level of variable x, the difference in time between the obtained values t1 and t2 equals the time distance between the two units for a given level of variable x. for a given level of variable xl, xl= xi(ti) = xj(tj), the s-time distance between the (i) and (j) units is defined as: sij(xl) = ∆t(xl) = ti(xl) – tj(xl) (1) where t is defined by xl. in a particular case, t can be a function of the level of variable xl, whereas as a rule one may expect to obtain several values for time t when the given level of the variable was achieved at several points in time or time intervals. in such cases the s-time distance becomes a vector whose elements are also linked with time, besides the level of variable xl. generally speaking, the s-time distance between the (i) and (j) units is defined by the level of variable xl in a given time (t). the following three subscripts are required to characterize the specific value of the s-time distance: (1 and 2) two units which are used to measure the time distance and (3) the level of variable x (similarly to using the time subscript for characterizing statistical measures of differences). as a rule, a fourth subscript is required to indicate the point in time defining the time distance (t1, t2… tn). the sign of the time distance used for comparing two units is important to distinguish whether we are dealing with a time lead (-) or lag (+) (in a statistical sense and not as a functional relationship). sij(xl) = -sji(xl) (2) to calculate the s-time distance at macro level, two time series are needed: the time series of the actual values of indicator and the time series of the anticipated target values (line to target). time distance is therefore the distance between the actual time and the time on the line to the target for each actual value of the variable (sicherl, 2008, p. 2.): s(xt) = actual time t – time on the target line t for each actual value of variable xt (3) s(xt) = t(xt) – t(xt) (4) the introduction of time distance in the analysis of differences is intended to complement, rather than replace, the conventional static methods and measurements as well as to broaden the overall theoretical and methodological approach. the application of the time-distance concept and its operationalization using the s-time-distance statistical measure are instruments complementing the existing methods of analysis, thus enhancing the understanding of the problem and improving two areas, conceptual and analytical. an advantage of the s-time distance lies in the fact that the latter is expressed in time units and is thus understandable by everyone, while another advantage is its ability to leave all previous methods and results (not necessarily the conclusions) unchanged since the time distance adds a new dimension rather than replaces other perspectives (sicherl, 2003, p. 189). 9 3.2. calculation of the lags and leads in meeting the lisbon strategy targets using the sicenter application to evaluate time distances and deviations from the lisbon targets an application by the socio-economic indicators center (sicenter) was used to calculate the time lead or lag in implementing the lisbon strategy targets at the level of both the european union and individual member states. faced with unsatisfactory results after the first few years, the eu revamped the strategy in 2005 and defined as the two main targets the creation of more and better jobs and the achievement of stronger, long-lasting economic growth. the most important two targets of the growth and jobs agenda thus included the achievement of 3% of eu gdp for r&d by 2010 and 70% employment in the eu by the same year. the analysis uses sicenter’s application to calculate time distances and deviations from the abovementioned two lisbon targets at the levels of the eu and slovenia as well as from the target of the average 3% annual gdp growth rate in the eu and slovenia. 3.2.1. lisbon target: 3% of eu gdp for r&d by 2010 in line with the target, research and development expenditure should rise to account for 3% of eu gdp by 2010. the indicator which most clearly shows the lag is time distance (s-time distance). it is evident that already in the first year of implementation the eu27 lagged behind the target value by nearly one year and the lag was only increasing (figure 1). in 2006, the lag already equaled six years and revealed that the most alarming situation in the eu concerned investments in r&d and that r&d investments lagged considerably behind the target. the last three columns (for years 2004, 2005 and 2006) in the figures (1 and 2) showing time distances denote the years in which the actual indicator value was lower compared to the initial 2000 indicator value. 6 5 4 2. 89 1. 78 0. 89 0 0 1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -ti m e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 1: time distance of the eu-27 in meeting the target of 3% of eu gdp for r&d by 2010. source: eurostat, own calculations. the commission and the member states soon realized that the target of 3% of eu gdp for r&d by 2010 was too ambitious, which is why some member states redefined the targets in their national reform programs to a more realistic level. for example, 10 spain reset the target value at 2% of gdp for r&d (cyprus only 0.75%), whereas the most developed countries which had already attained the 3% target raised it even higher (sweden and finland to 4% of gdp for r&d). slovenia left this target unchanged. however, due to the corrections slovenia started pursuing a newly set target of 2.6% of gdp for r&d which is in fact the average of all the redefined target values of the eu-27. the results do not differ much compared to the original target, hence the time distance in 2006 was still six years (figure 2). 6 5 4 2. 84 1. 68 0. 84 0 0 1 2 3 4 5 6 7 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -ti m e d is ta nc e note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 2: time distance of the eu-27 in meeting the target of 2.6% of eu gdp for r&d by 2010. source: eurostat, own calculations. 3.2.2. lisbon target: a 70% employment rate in the eu by 2010 besides investments in r&d, another key target of the lisbon strategy is to attain a 70% employment rate in the eu by 2010. two sub-targets are enshrined in this target, namely a 60% employment rate for women in the eu and a 50% employment rate for the elderly (aged between 55 and 64), both by 2010. compared to the targeted gdp share for r&d, the situation regarding the realization of the 70% employment rate target painted a better picture. in 2007, the lag equaled somewhat less than three years and had thus improved slightly after the year 2006 (figure 3). 2. 75 3. 06 3. 383 .0 52. 59 1. 860 .5 9 0 0 0,5 1 1,5 2 2,5 3 3,5 4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -ti m e d is ta nc e note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 3: time distance of the eu-27 in meeting the target of a 70% employment rate by 2010. source: eurostat, own calculations. 11 developments in implementation of the other two sub-targets related to employment give reason for more optimism. in 2007, the targeted employment rate for women in the european union was attained for the first time, as the time lead was 0.41 of a year (figure 4). the sub-target of a 50% employment rate of the elderly performed worse as the 2007 lag was 0.69 of a year (figure 5). 0 .4 1 0. 31 0. 90 1. 19 1. 17 0. 83 00 -0,6 -0,4 -0,2 0 0,2 0,4 0,6 0,8 1 1,2 1,4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -t im e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 4: time distance of the eu-27 in meeting the target of a 60% employment rate for women by 2010. source: eurostat, own calculations. 0. 690 .5 90. 51 0. 78 0. 35 0. 61 0. 30 0 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -ti m e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 5: time distance of the eu-27 in meeting the target of a 50% employment rate for the elderly by 2010. source: eurostat, own calculations. 3.2.3. lisbon target: average 3% annual growth in eu gdp by 2010 besides the main two targets, the strategy also mentions the target of average 3% annual growth in gdp. the fact that the target was defined only vaguely, without any numerical value for 2010, made measurement of the time distance slightly difficult. the line to target was defined by assuming that 2000 was the basis year with the value 1; consequently, the average 3% annual growth in gdp in ten years yielded the targeted value of 1.34. it can be established that the eu-27 lagged behind the target values from the very beginning of the lisbon strategy implementation, whereas figure 6 shows that in the last three investigated years the lag leveled off at about two years. in 2007, the time distance was 1.97 years. 12 1. 97 1. 97 2. 00 1. 661. 48 0. 940. 33 0 0 0,5 1 1,5 2 2,5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -t im e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 6: time distance of the eu-27 in meeting the target of average 3% annual growth in gdp. source: eurostat, own calculations. a recapitulation of the targets in the table (table 1) shows that if the two basic targets (employment rate and the gdp share for r&d) are compared, the odds are in favor of the 70% employment rate target. in 2006 the lag behind the target value at the eu-27 level was nearly three years smaller compared to the targeted 3% gdp for r&d. it is interesting that the lags in the share of gdp for r&d are practically the same in terms of the number of studied eu member states (eu-15 and eu-27); however, there are bigger differences in the employment rate as a result of the high dispersion of the results of the 27 members. differences can also be observed in implementation of the target of an average 3% annual gdp growth rate, where the lags of the eu-15 exceeded those of the eu-27, which is understandable given that less-developed, newly-associated countries are growing faster on average than the old member states. table 1: monitoring the implementation of the lisbon strategy in the time dimension s-time distance in years targets 2000 2001 2002 2003 2004 2005 2006 2007 employment rate eu-27 0 0.59 1.86 2.59 3.05 3.38 3.06 2.75 eu-15 0 0.05 0.73 1.58 1.95 2.02 1.94 1.42 % of r&d in gdp eu-27 0 0.89 1.78 2.89 4 5 6 nd eu-15 0 0.89 1.77 2.89 4 5 6 nd annual gdp growth rate eu-27 0 0.33 0.94 1.48 1.66 2.00 1.97 1.97 eu-15 0 0.37 1.00 1.58 1.81 2.28 2.36 2.30 note: s-time distance: (-) actual ahead or (+) behind the line to target (in years); nd no data. source: eurostat, own calculations. 13 3.2.4. lisbon target for slovenia: 3% of gdp for r&d by 2010 similarly to the trend witnessed by almost all eu member states, slovenia is also lagging behind in terms of investments in research and development. in fact, this lag behind the target value existed from the outset but the positive aspect is that a slight improvement was recorded in the last year under discussion and that the lag is smaller than the eu-27 average. the 2006 lag at the eu level was six years and in slovenia it was 4.42 years (figure 7). unlike some other countries, slovenia failed to set in its national reform program a redefined, more realistic target which would be more easily attainable by 2010. the column corresponding to year 2003 in figures (7, 8 and 9) showing time distances denote the year in which the actual indicator value was lower compared to the initial 2000 indicator value, in the slovenian case. 0 0. 01 1. 28 3 3. 91 4. 55 4. 42 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -t im e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 7: time distance of slovenia in meeting the target of 3% of gdp for r&d by 2010. source: eurostat, own calculations. 3.2.5. lisbon target for slovenia: a 70% employment rate by 2010 at the eu level the average 2007 lag of the actual employment rate behind the targeted one was slightly less than three years. in slovenia, the situation in employment is much better. in the 2004-2006 period a small lag was observed; however, in regard to employment slovenia moved close to the line of the target and even exceeded it in the last year studied. the 2007 time lead was 0.06 of a year which was much better compared to the eu-27 level. should there be no upheavals in the global economy slovenia could be well on the road to achieving this lisbon target in 2010. 14 0 .0 60 0 .4 5 1. 12 3 0. 40 0. 42 0. 59 -1 -0,5 0 0,5 1 1,5 2 2,5 3 3,5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -t im e d is ta nc e note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 8: time distance of slovenia in meeting the target of a 70% employment rate by 2010. source: eurostat, own calculations. one of the sub-targets of the lisbon strategy related to employment is the attainment of a 60% employment rate for women by 2010. in this area, slovenia was close to the target value already prior to implementation of the strategy and therefore this subtarget was perhaps insufficiently ambitious for slovenia in contrast to the targeted gdp share for r&d. despite to a big lag in 2003, which was mainly due to the use of new statistical data capture methodology, slovenia succeeded in exceeding the target value already a year later, as shown in figure 9, and the trend continued in subsequent years. tatatata 3 0. 74 1 .5 3 0 -3 -2 -1 0 1 2 3 4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -ti m e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years); tatarget already achieved. figure 9: time distance of slovenia in meeting the target of a 60% employment rate for women by 2010. source: eurostat, own calculations. the second sub-target is a 50% employment rate for the elderly, aged between 55 and 64, by 2010. the data revealed a less favorable picture compared to other employmentrelated targets. the employment rate for the elderly was increasing as of 2004; however, the lag behind the target value was also on the rise which proved that the growth was simply not fast enough. figure 10 shows that the lag in the last four studied years was indeed smaller than in 2003 but still had a negative trend. the time distance in 2007 was 15 2.07 years, which means that the level attained by slovenia in 2007 should have been attained already 2.07 years earlier. the negative trend in employment of the elderly raises concern and, if there is no positive reversal in the final years, the lisbon target will not be achieved by 2010. of all three targets related to employment, the segment of the elderly came off the worst and therefore more attention has to be paid to the life-long learning and active ageing strategies. 2. 07 1. 431. 180. 90 2. 57 1. 03 0 .4 60 -1 -0,5 0 0,5 1 1,5 2 2,5 3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -t im e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 10: time distance of slovenia in meeting the target of a 50% employment rate for the elderly by 2010. source: eurostat, own calculations. 3.2.6. lisbon target for slovenia: average 3% annual growth in gdp by 2010 as a recently associated and young member state, slovenia has achieved good results in terms of its economic growth compared to the eu average. from the very beginning, the actual values exceeded the targeted ones which is also reflected in the time-distance results (figure 11). in 2007, slovenia recorded a nearly three-year (2.97) time lead which increased over the last four years under study. 2 .9 7 1 .9 7 1 .0 6 0 .6 1 0 .1 8 0 .2 5 0. 07 0 -3 -2,5 -2 -1,5 -1 -0,5 0 0,5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -ti m e di st an ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 11: time distance of slovenia in meeting the target of average 3% annual growth in gdp. source: eurostat, own calculations. 16 3.2.6.1. economic development targets of slovenia given that sds also includes the economic development target to achieve or exceed the average level of economic development of the eu (measured by gdp per capita in purchasing power parity) by 2013, we were also interested in establishing the time distance for this target. slovenia’s economic development is expressed as the percentage of the average gdp p.c. of the european union and, in line with the target, it should reach 100% in 2013. the analysis used the value on the line to target in 2010 as the target value since the period under scrutiny was again 2000-2010. the target value for 2010 was thus 95.34. the column corresponding to year 2001 in figure 12 denotes the year in which the actual indicator value was lower compared to the initial 2000 indicator value, in the slovenian case. 0. 95 0. 98 0. 11 0 .2 5 0. 68 0. 39 1 0 -0,4 -0,2 0 0,2 0,4 0,6 0,8 1 1,2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 time s -t im e d is ta n ce note: s-time distance: (-) actual ahead or (+) behind the line to target (in years). figure 12: time distance of slovenia in meeting its economic development target. source: eurostat, own calculations. it can be established that, with the exception of the year 2004, slovenia lags behind the line to target. of great concern is the deterioration in the last two years under study as the 2007 lag was almost one year (figure 12). however, when discussing this indicator as a measure of slovenia’s performance one must be aware that approximation to the average value of eu economic development is not necessarily a consequence of the fast growth in slovenia’s gdp p.c. since the inclusion of new, less-developed countries such as romania and bulgaria decreases the average level of development of the eu and thus enhances slovenia’s approximation to the set target. the results of the time distance in slovenia’s implementation of its economic development target are not too encouraging. moreover, in the period characterized by the global economic crisis and slower, even negative economic growth, how slovenia copes with the recession will be particularly important because it will have to reverse the negative trend to achieve the set target. 3.2.7. analysis of the results if the results of the analysis of the discussed targets for slovenia are recapitulated in a table (table 2) together with the eu-level results, a much clearer picture emerges 17 about slovenia’s position vis-à-vis other eu member states. besides the eu-27, the table also shows the results at the eu-15 level, encompassing old and generally more developed member states, and offers a better basis for comparison for a young state such as slovenia. table 2: time distances of slovenia, the eu-27 and the eu-15 in meeting the lisbon strategy targets s-time distance in years targets 2000 2001 2002 2003 2004 2005 2006 2007 target 1 eu-27 0 0.89 1.78 2.89 4 5 6 nd eu-15 0 0.89 1.77 2.89 4 5 6 nd slo 0 0.01 1.28 3 3.91 4.55 4.42 nd target 2 eu-27 0 0.84 1.68 2.84 4 5 6 nd eu-15 0 0.83 1.66 2.83 4 5 6 nd slo 0 0.01 1.28 3 3.91 4.55 4.42 nd target 3 eu-27 0 0.59 1.86 2.59 3.05 3.38 3.06 2.75 eu-15 0 0.05 0.73 1.58 1.95 2.02 1.94 1.42 slo 0 0.45 1.12 3 0.40 0.42 0.59 -0.06 target 4 eu-27 0 0.00 0.83 1.17 1.19 0.90 0.31 -0.41 eu-15 0 -0.59 -0.64 -0.33 -0.70 -1.22 -1.72 -2.51 slo 0 -1.53 0.74 3 ta ta ta ta target 5 eu-27 0 0.30 0.61 0.35 0.78 0.51 0.59 0.69 eu-15 0 0.07 -0.20 -0.51 -0.19 -0.51 -0.47 -0.40 slo 0 -0.46 1.03 2.57 0.90 1.18 1.43 2.07 target 6 eu-27 0 0.33 0.94 1.48 1.66 2.00 1.97 1.97 eu-15 0 0.37 1.00 1.58 1.81 2.28 2.36 2.30 slo 0 0.07 -0.25 -0.18 -0.61 -1.06 -1.97 -2.97 note: target 1: 3% gdp eu for r&d by 2010; target 2: 2,6% gdp eu for r&d by 2010; target 3: eu employment rate of 70% by 2010; target 4: eu employment rate for women of 60% by 2010; target 5: eu employment rate for older workers of 50% by 2010; target 6: 3% annual eu gdp growth; ta target already achieved; nd no data. source: eurostat, own calculations. 18 it is interesting that the time-distance results for the target of the gdp share for r&d are practically the same at the level of both the eu-27 and the eu-15. one would expect the lag of the 15 member states to be smaller; however, the mediterranean countries spain, greece, italy and portugal reduce the average value, whereas sweden and finland stand out for investing nearly 4% of their gdp in research and development. slovenia’s lag behind the target of 3% of gdp for r&d is thus smaller than the eu-27 and eu-15 average. in 2006, the gap between the eu and slovenia equaled more than 1.5 years. it must also be considered that the inclusion of new, less developed countries (with bulgaria and romania being the last of all) decreases the average value at the eu level and further widens the gap. this, of course, should not provide a justification for big lags, with the exception of sweden and finland which both achieved the set goal, whereas all other member states lagged behind the line to target and nothing seems to reverse this situation. it is evident that investments in research and development are insufficient in practically all member states and that progress is too slow. on the other hand, this incapacity of the countries to pursue the set target shows that the target was too ambitious. when the lisbon strategy was adopted the state of affairs in research and development in the eu was not assessed realistically, nor was the readiness of the member states to improve this situation. the gap between the actual and target values thus widens over the years, which is why a number of countries put more realistic national targets in their national reform programs even though they are still lagging behind them. in the case of slovenia the time distances in targets 1 and 2 are the same due to the fact that the original target was not corrected. it has to be noticed that slovenia performs better than the eu average but the lags behind the target value are still worrying. in 2006, the lag was 4.42 years. it is clear that the target of 3% of gdp for r&d by 2010 will not be achieved; however, it is important that gross domestic expenditure for research and development as a share of gdp has increased since 2004, the biggest progress being recorded in 2006 when the share equaled 1.59% of gdp and the lag, compared to the year before, decreased for the first time (from 4.55 to 4.42 years). on the other hand, r&d expenditure as a share of gdp in the eu member states has not increased on average which, in turn, was reflected in the ever-widening lag. the trend in slovenia in the last period was positive but the progress was not fast enough which is why slovenia has a lot of work ahead of it in the years to come. it is of the utmost importance for slovenia to formulate a research and innovation strategy and to strengthen its efficient implementation, part of which includes an evaluation of the adopted measures and their results. the clarity and simplicity of the time-distance method make it an important link in the evaluation chain as this method clearly illustrates the countries’ actual state of affairs in different areas, including the share of investments in r&d. as regards to the employment rate targets the results are more reassuring. a closer look at the time distance of the target of a 70% employment rate in the eu by 2010 (target 3) reveals that slovenia performed far better in this indicator than the eu average. the gap had widened until 2003 when it reached its nadir, but afterwards it was less than one year. in 2006 the lag was 0.59 of a year, whereas the latest data show that in 2007 19 it turned into a lead when the actual employment rate exceeded the targeted one. this puts slovenia well on the road to achieve or even exceed the 70% employment rate target in 2010, provided that the global economy does not witness any upheavals. as regards the employment target, the differences in time distances are considerable and depend on the size of the eu (eu-15 or eu-27) – quite the contrary to the gdp share for the r&d target – whereas the lags are particularly big at the eu-27 level and slightly smaller at the eu-15 level. this can be ascribed to the fact that the results of the 27 countries are highly dispersed. by 2007, seven member states had already met the set target, six were nearing the line to target and as many as 14 lagged behind, with eight of them lagging behind by at least four years. slovenia’s best results were recorded in women’s employment rate as the 60% target value had already been achieved in 2004 and increased further in the next four years. in the eu-15 the average actual value was higher than the targeted one, whereas in the eu-27 the time lag turned into a lead for the first time in 2007. hence it can be concluded that by 2010 this target will be achieved if the upward trend continues. by 2007 as many as 15 countries had achieved the set target, whereas six countries lagged behind by at least five years. as regards the targeted employment rate for the elderly, slovenia performed poorer than the eu, lagging behind both the eu-15 and the eu-27. the employment rate for the elderly in slovenia indeed rose but its pace was too slow which is why the time distance kept increasing and reached 2.07 years in the last year studied. it is obvious that the time-distance method offers another perspective on the efficiency of meeting the targets as, judging from the positive growth in the employment rate for the elderly, one could easily conclude that the implementation was nearing the target when in fact the time distance reveals an ever larger lag. the negative trend and the widening gap in the last three years under discussion augur ill for slovenia in its achievement of the target in 2010 and, given the current situation in the world economy, a substantial increase in the lag can be expected. as regards the targeted average of 3% annual eu gdp growth rate, it can be established that the time-distance results are much more favorable at the slovenian level than at the eu-27 and particularly eu-15 levels. in 2007, the lag behind the target value was nearly two years at the eu-27 level, while slovenia was nearly three years ahead in the same year. this is in line with the expectations since the average economic growth in slovenia in the 2000-2007 period was above and in the eu-27 below 3%. in the mentioned period, slovenia’s economic growth recorded an average rate of 4.4% whereas those at the eu-27 and eu-15 levels were 2.4% and 2.2%, respectively. considering that the goals of the cohesion policy and the lisbon strategy also include a reduction in development disparities between countries and regions and thus the achievement of convergence, the slovenia’s result met the expectations because the less developed countries must grow faster than the developed ones to draw closer or catch up with them. the results of the calculation of the time distances generally corroborate the expectations and the estimates prepared on the basis of statistical indexes. an important difference between indexes and time distances is demonstrated by comparing the gap width, as in some cases the time distances paint a different picture due to the fact that the ability 20 to move close the targets differs by area. the perception of the differences expressed as time distance differs from the perception of differences expressed as indexes, as the calculation of gaps expressed in time units (years) is clearer and more comprehensible and easier to present to all publics. 4. conclusions at the eu level, many initiatives and proposals were put forward to help achieve its goal of becoming the most competitive economy in the world. these served as a basis for drawing up the lisbon strategy, which was reviewed in 2005. the strategy was mainly implemented as a counterbalance to the increasing lag behind the us economy and the lurking danger of the growing asian economy. despite the 2005 mid-term review, it has failed to yield the anticipated results and, to call a spade a spade, was lagging behind them. we measured the size of these lags behind the lisbon strategy targets by using an application of the socio-economic indicators center (sicenter) which enables the calculation of time distances and deviations from the targets. the main advantage of using the time-distance method is its clarity and understandability and the fact that the results of the analysis (not necessarily the conclusions) remain unchanged, as the time distance adds a new dimension to other approaches rather than replaces them. the relaunched strategy set new main targets within the growth and jobs agenda, namely the achievement of 3% of eu gdp for r&d by 2010 and a 70% employment rate in the eu by the same year. using sicenter’s application, time distances were calculated along with deviations from the two main targets, their sub-targets and the target of average annual gdp growth at the levels of the eu and slovenia. the empirical results show that investments in research and development were insufficient in practically all member states and the progress was too slow. in 2006 the time distance at the eu-27 level was six years, whereas slovenia scored slightly better with a lag of four years. it can be concluded that at the time the lisbon strategy was adopted the state of affairs in the eu’s research and development and, above all, the readiness of the member states to improve this situation were not assessed realistically. the member states’ incapacity to pursue the set target in itself shows that the target was too ambitious. for this reason, many member states put more realistic national targets in their national reform programs, yet they are still lagging behind. as regards the employment rate targets, the results are better mainly in implementation of the employment rate targets for women and the elderly in the eu. in 2007 the time distance of the target of a 70% employment rate by 2010 was slightly less than three years at the eu level, whereas in slovenia the lag had turned into a lead for the first time. with the 2007 lead of nearly three years, slovenia’s implementation of the target of an average 3% annual growth rate in gdp was highly encouraging, whereas at the eu level the results were much poorer with the lag behind the target value mainly being a consequence of the slower growth in the old member states. the calculation of the 2007 time distance in slovenia’s implementation of the economic development target shows a nearly 1-year lag. however, with a positive reversal in the years to come slovenia could achieve or even exceed the average level of eu economic development by 2013. 21 the results also show that both the eu and slovenia lagged behind the lisbon targets. it can be concluded that the strategy targets at the eu level will most likely not be achieved by 2010 because the lag is too big. similar holds for slovenia which is in a better position compared to the eu average, especially as regards the growth and employment rates; however, the global recession and hence slower economic growth and higher unemployment will thwart the achievement of the targets or even render it impossible. the eu should therefore accordingly adapt its existing policies and instruments as well as build on new policies so as to respond more effectively to the concerns of people dealing with the negative consequences of the economic and social changes. within this framework, a bigger role should be attributed to the social dimension, flexicurity policies, energy and climate changes as well as education and professional qualifications as elements of modernizing european markets, promoting innovation and providing new possibilities for citizens in the knowledge-based society. nevertheless, we should be aware that the lisbon strategy cannot prevent natural economic cycles from occurring. though it cannot prevent external shocks, it can boost europe’s potential in the structural reforms and contribute to economies becoming more flexible and resistant. therefore, in a time of financial and economic crisis it is vital that the implementation of the strategy proceeds in deeper layers so as to mitigate the effects of the recession. throughout its history, the european union has overcome a series of crises and always succeeded in becoming even stronger and more united. the current global economic crisis creates another window of opportunity for the eu to demonstrate its unity and produce an even more sophisticated and efficient strategy for the future. references 1. sicenter application, [online] available at http://www.gaptimer.eu/s-t-d_monitoring_ tool.html, accessed on july 1st 2009. 2. socio-economic indicators center, sicenter, [online] available at http://www.sicenter. si/indexsi.html, accessed on july 17th 2009. 3. ‘european council in brussels presidency conclusions’, council of the european union, 2005, brussels. 4. eurostat, [online] available at http://www.ec.europa.eu/eurostat/, accessed on july 25th 2009. 5. the lisbon strategy, [online] available at http://www.evropa.gov.si/si/vsebina/ pogosta_ vprasanja/vprasanje/news//bfcd61165c/?tx_evropafaq_pi1[q]=653, accessed on june 20th 2009. 6. government of the republic of slovenia, ‘program reform za izvajanje lizbonske strategije v sloveniji’, [reform program for the implementation of the lisbon strategy], ljubljana, 2005. 7. sicherl, p., fleksibilnost dela primerjalna analiza, work flexibility comparative analysis, ljubljana: faculty of social sciences, 2003. 8. sicherl, p., monitoring implementation of lisbon and nrp targets with s-time-distance measure, ljubljana: sicenter, 2008. 184 abstract leadership has been one of the most studied concepts in the last 50 years in western countries but has become a buzz word in social sciences in the former communist countries only recently. transformational leadership theory is of high interest for social researchers especially because of the argument of achieving performance beyond the expectations that it promises. the present paper is focused on offering a short theoretical framing of transformational leadership and discusses from a theoretical standpoint the possibility of a transformational change of the romanian educational system starting from the transformational leadership paradigm. keywords: transformational leadership, transactional leadership, education, educational reform, romania. transformational leadership in education: concept analysis1 cristina mora cristina mora lecturer, public administration department, faculty of political, administrative and communication sciences, babeș-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: cristina.mora@gmail.com 1 this article is the outcome of post-doctoral research financed through a post-doctoral grant under european social fund, operational sectorial program for the development of human resources, ‘transnational network for the integrated management of post-doctoral research in the field of science communication. institutional building (postdoctoral school) and grant program (commscie)’ contract no. posdru/89/1.5/s/63663. transylvanian review of administrative sciences, special issue, pp. 184-192 185 introduction leadership is probably one of the most (scientifically) studied and least understood concepts of the last 50 years. stogdill (1974) had the same opinion at the beginning of the 70’s when he stated that ‘there are almost as many definitions of leadership as there are persons who have attempted to define the concept’ while bennis admits of the difficulty of understanding the concept (1959, p. 259): ‘of all the hazy and confounding areas in social psychology, leadership theory undoubtedly contends for the top nomination. and, ironically, probably more has been written and less known about leadership than about any other topic in the behavioral sciences’. still, socia l scientist seem fascinated by the concept, one of the reasons being probably that it is directly linked to some kind of ‘performance’ or ‘results’ – in the sense that leaders have a great influence over getting results. this is probably the element that has drawn the most attention long before the scientific study of the phenomenon. in his writings around 2300 b.c., ptahhotep mentioned the three essential qualities that a pharaoh has to have – authoritative utterness in thy mouth, perception is in thy heart and thy tongue is the shrine of justice (lichtheim, 1973). confucius also wrote about the moral qualities that leaders have to promote and encourage. closer to europe, homer portrayed leaders as being respected because of a set of special qualities like integrity, integrity of reasoning, wisdom, courage. plato in his famous work the republic thinks that philosophers are the best suited leaders because of their ‘true understanding’ of the world around them. going forward, machiavelli can be seen as one of the founding fathers of modern political thought and his work the prince can be seen as the first modern leadership ‘manual’. besides introducing a certain level of reality (or even cynicism) machaivelli also acknowledges the numerous challenges and great responsibilities leaders usually have to face in order to maintain their position. starting from the twentieth century the phenomenon of leadership has been studied scientifically but after more than 100 years of study there is still large debate even regarding its actual meaning. we can reasonably say that we are in front of a social phenomenon that has followed mankind right from the beginning but still raises challenges regarding its true understanding. in this paper i will focus on three essential aspects of leadership: meaning – i will try to offer a simple but usable meaning of the concept; theoretical frame – i will focus on a popular theory, transformational leadership; context i will place this approach (transformational leadership) in the context of education. the purpose is to see whether transformational leadership can be a viable approach for a positive change in the educational system. 2. leadership defined leadership has been defined in numerous ways based on the interest of scientists in particular elements of the concept, thus creating approaches focused on traits, behavior, process of influence, organizational context, power mechanisms or role attribution. garry yukl (has managed to select a number of definitions that basically cover all the 186 elements above (yukl, 2010, p. 21): – leadership is ‘the behavior of an individual…directing the activities of a group toward a shared goal’ (hemphill and coons, 1957 apud yukl, 2010, p. 21). – leadership is ‘the influential increment over and above mechanical compliance with the routine directives of the organization’ (katz and kahn, 1978 apud yukl, 2010, p. 21). – ‘leadership is exercised when persons mobilize institutional, political, psychological, and other resources so as to arouse, engage, and satisfy the motives of followers’ (burns, 1978 apud yukl, 2010, p. 21). – ‘leadership is realized in the process whereby one or more individuals succeed in attempting to frame and define the reality of others’ (smircich and morgan, 1982 apud yukl, 2010, p. 21). – leadership is ‘the process of influencing the activities of an organized group toward goal achievement’ (rauch and behling, 1984 apud yukl, 2010, p. 21). – ‘leadership is about articulating visions, embodying values, and creating the environment within which things can be accomplished’ (richards and engle, 1986 apud yukl, 2010, p. 21). – ‘leadership is a process of giving purpose (meaningful direction) to collective effort, and causing willing effort to be expended to achieve purpose’ (jacobs and jaques, 1990 apud yukl, 2010, p. 21). – leadership ‘is the ability to step outside the culture...to start evolutionary change processes that are more adaptive’ (schein, 1992 apud yukl, 2010, p. 21). – ‘leadership is the process of making sense of what people are doing together so that people will understand and be committed’ (drath and palus, 1994 apud yukl, 2010, p. 21). – leadership is ‘the ability of an individual to influence, motivate, and enable others to contribute toward the effectiveness and success of the organization’ (house et al., 1999 apud yukl, 2010, p. 21). if we analyze the above mentioned definitions we can argue the following: 1. leadership is a process of intentional influence. the fact that it is intentional is relevant because successful leaders are those that are capable of influencing their followers towards achieving certain objectives and goals. unintentional influence happens frequently (even in leader follower relations) but leadership is concerned with the process of influence with purpose. 2. leadership means having followers. it is no use talking about leaders without followers. we could say that we recognize a leader by the number of followers that he or she is able to gather. thus a leader without followers is purely ‘a lone nut’. 3. leadership is about inspiring people. things like sense making, framing and defining reality, creating a vision, enable others to have a meaningful contribution are essential to leadership, as they differentiate it from management. it is more than 187 a formal relationship based on the possibility of sanction or reward. leaders become role models for their followers. 4. leadership is about achieving results. no matter how inspirational and charismatic a leader may be without ‘success’, the leaders capacity to inspire and influence is doomed to fade. leadership makes sense if it can achieve the expected results or even more. the appeal of the concept lies also in the capacity of true leaders to achieve more than what is expected of them. we could say that this is probably the most important criteria that differentiate leaders from ‘non-leaders’. in light of all the above, i would propose the following definition of leadership: leadership refers to a non-routine process of intentional influence, from an individual (the leader) towards a group of individuals, aimed at accomplishing certain predefined objectives relevant to both the group and the leader (mora and ţiclău, 2012, p. 76). 3. transformational leadership we established that leaders are exceptional individuals, capable of inspiring others to do great things. in this light, we could say that another essential aspect with which leaders are concerned is change. as i have stated in another paper (mora and ţiclău, 2012, p. 77) ‘leaders are agents of change, be they at organizational level or at societal level; they represent the catalysts of social movements; they can fulfill this role by inspiring those around them, setting an example and creating a vision of the future that is both attractive and credible’. this is one of the assumptions of transformational leadership theory – that leaders are capable of creating meaningful change for the world around them. barnard m. bass is considered one of the developers of the transformational leadership theory although his work was based on james burns book on political leadership (1978) entitled leadership. burns (1978) defined a transforming leader as one who: ‘(1) raises the followers level of consciousness about the importance and value of designated outcomes and ways of reaching them; (2) gets the followers to transcend their own self-interest for the sake of the team; (3) raises the followers level of need on maslow’s (1954) hierarchy of needs, from lower level concerns for safety and security to higher level needs for achievement and self-actualization’ (bass, 2008, p. 619). in other words transformational leaders are capable to motivate their followers beyond self-interest and using more than extrinsic motivators. the transformational leader is put forward by contrast to the transactional leader which bases his or hers influence on the nature of a mutual-beneficial exchange between leader follower. although different perspectives, burns agrees that transformational and transactional leadership are not opposed but rather different sides of the same coin. bass developed the theory by empirically demonstrating that transformational and transactional leadership were positively correlated (bass, 1985). bass described a transactional leader as (bass, 1985, p. 11) a person that: (1) recognizes what their associates want to get from their work, and tries to see that they get it, if their performance so 188 warrants (2) exchanges rewards and promises of reward for appropriate levels of effort and (3) responds to the needs and desires of associates as long as they are getting the job done. in other words a transactional leader understands very well his or her followers (and their needs), is capable of offering certain rewards or benefits in exchange for effort towards the organizational objectives. a transformational leader on the other hand is capable of delivering performance beyond expectations (bass, 1985, p. 16) by (1) raising followers level of awareness of the importance of achieving valued outcomes and the strategies for reaching them, (2) encouraging followers to transcend their self-interest for the sake of the team, organization, or a larger cause and (3) developing associates’ needs to higher levels in such areas as achievement, autonomy, and affiliation, which can be both work related or outside work related. bass explains this performance beyond expectations through the fact that followers are motivated by the sacrifices the leader is making to achieve the mission and at the same time personally identify with the mission set forth by the leader (personal identification process) (avolio and bass, 2004). through this approach, bass accepts and incorporates maslow’s idea regarding the hierarchy of needs and also the prepotency of self-actualization (miner, 2005, p. 363). although, as miner (2005) shows, bass’s transformational model incorporates some of the elements of house’s (1977) charismatic leadership, he does develop a more comprehensive model that goes beyond the ‘observable and rational’ aspects of charisma (on which house has focused) and includes emotional elements also (miner, 2005). the full range leadership model developed by avolio and bass (2004) includes three types of leadership behaviors which are part of a continuum on the one side having a passive leader and on the other the transformational one, with the transactional leader somewhere in the middle. according to the authors the characteristics of each of these leadership styles or types are as follows (avollio and bass, 2004). transformational leadership comprises 4 major elements: 1. idealized influence – refers to the level of respect trust and admiration that leaders get from their followers. this includes idealized attributes (qualities that the followers identify in the leader as exceptional and that induce respect and pride) and idealized behaviors (specific behaviors that are highly regarded and valued by the followers). this is in major part what other authors called charisma. 2. inspirational motivation – refers to the capacity of the leader to inspire those around him and to look at the future in an optimistic way. this raises both enthusiasm about what people are working on and confidence regarding the future achievements. 3. intellectual stimulation – refers to the capability of the leaders to arouse followers to think outside the box, to challenge their assumptions and to come up with new ideas or solutions for the problems they face. in other words, transformational leaders encourage creative thinking and nurture a open minded environment. 4. individual consideration – is seen when leaders understand the differences (in needs) between followers and adapt their behavior accordingly. transformational 189 leaders are excellent coaches or mentors and constantly try to encourage personal development of their followers. transactional leadership consists of two major elements: 1. contingent reward – refers to the way in which leaders are defining and clarifying what they expect from their followers and performance rewarding. this also implies sanctioning those that do not comply or aren’t able to achieve the standards set out by the leader. thus contingent reward basically means rewarding performance and sanctioning lack of it. 2. active management by exception – means the leader is constantly monitoring follower activity and intervenes when established standards or protocols are not respected. basically the leader is constantly searching for possible mistakes, errors and failures in an attempt to correct them before they get bigger. passive avoidant leadership consists of two major elements: 1. passive management by exception – is similar in goal with active mbe but differs in the point when the leader is intervening. in its passive form leaders intervene only when problems become critical and unavoidable. it is mostly reactive and leaders who manifest such a behavior are usually strong believers in the ‘if it is not broken do not fix it’ proverb. 2. laissez-faire – is basically referring to a leader that has minimal or no interference in the group’s activity. this is basically a non-leadership behavior because it declines all the major functions that leaders normally have. synthesizing the three approaches we can easily see that the passive avoidant leadership is almost the opposite of the transformational leadership. on the one side we have avoidance of involvement, commitment, taking responsibility while on the other we have total commitment, full responsibility and complete involvement in the group’s activities. keep in mind that transformational and transactional leadership complete each other (are not opposed). 4. transformational leadership for a transformational change in education? leadership in educational settings is more or less in the same ‘research state’ as in social sciences in general – it is a crowded terrain both in quantity and quality; there is no universal approach to successful leadership in education. and, similar to other fields, the topic remains a hot one because of its relation to results – researchers try to link certain leadership types or models with better educational outcomes. it is not the purpose of this paper to analyze and discuss the validity of such models. instead, i will try to put forward some questions regarding the possibility of adopting a transformational leadership paradigm and creating a transformational change in the romanian educational system. romania has undertaken serious changes in the last 23 years (from a state administration perspective) coming from a communist dictatorship until 1989 to a full democracy and eu member state in 2007. although romania from 2013 is clearly 190 another country compared to what it was 23 years ago, it still faces an uphill battle to catch its other eastern european countries in most important issues (economy, education, social services, and public administration). in this continually changing context, education has always been a major topic of debate for any party that has held power in the last 23 years, with the most ambitious promise being a common national pact for education signed by all political leaders in 2008 which aimed at reshaping the entire educational system in order to better face the challenges of the 21st century. unfortunately this has been understood differently by almost each political party, the constant changing especially regarding the legal framework as changes accord on the political arena proving that the guiding principle in public policy (including education) can be framed by the following axiom: ‘what the others did was wrong but we are here to make it right’. what we are left with is the facts, pointed out by a presidential commission report, and they are not encouraging (romanian presidential commission, 2007): – romania is ranked last among eu member states at pisa, timss and pirls rankings. – romania ranks amongst the last countries in eu on a knowledge based economy – lisbon indicators. – the romanian educational system is highly inequitable, only 24% of children living in rural areas reaching to high school level, educational results for rural students at literature and mathematics being between 2 and 6 times lower compared to their urban counterparts. – only 18% of teachers in schools have had itc training for use of modern technology while almost 75% percent of students until 8th grade declare that their teachers usually dictate the learning materials in class. – in higher education, no romanian university is in any international rankings amongst the first 500. – the ratio of scientific articles produced (taking the total population as reference) is 11 times lower compared to oecd average and 4 times lower compared to hungary, 2 times lower compared to bulgaria. – promotion rate on baccalaureate exam has been below 50% in the last 2 years since the introduction of video cameras for monitoring. in conclusion, the report argues that the current educational system is ineffective, irrelevant, inequitable and of poor quality. it is clear that a change of paradigm is needed in dealing with these issues. this is where the transformational leadership paradigm can be a possible solution, or at least an alternative for the current approach. by this i understand a new type of approach in changing the current educational system but in a different manner than what it has been done since now. although some of the issues were kept in mind when elaborating and adopting the new law of education (law no.1/2011) as mentioned earlier a change in political power at the beginning of 2012 has meant again several changes to this law. 191 a series of solutions proposed by gabriel bădescu (2010) can be linked to typical transformational leadership behaviors: 1. higher performance standards that are comparable to international standards – one major issue with current performance levels is that we seem to ‘perform’ well when national standards are applied and very poor when more clear and strict standards are in place. a good example is the promotion rate for the final high school exam – baccalaureate – which has halved in the last two years after the introduction of video cameras for surveillance. going to research performance, most isi articles are written in national journals that have very low impact factor and are hardly read. a change in this area would mean a change of paradigm what we understand through performance at each educational level? another important aspect is the ethics involved in evaluating performance. both these are essential elements in a transformational leadership paradigm. it would translate into a new vision on what a performing educational system should look like. 2. a better and more realistic definition of quality in education. although romania ranks mostly last in almost all international rankings on quality of education, the general perception is that romania’s educational system is performing well – in a national study in 2009 the majority of respondents felt that the education children get in schools is solid. it’s hard to imagine a change of a system that is generally perceived as doing well. a transformational approach should first be honest about the present level of quality in education and based on that propose new, long term solutions to tackle this issue.a vision for the future. the current paradigm in which we pride ourselves with a handful of olympics, the classic success stories, although real has negative effects on the long term. firstly because it backs up the idea that nothing is wrong and secondly because it is actually not true. if you take a filed like mathematics you will see we have no romanian winners for the most prestigious prizes in the field – fields medal, abel prize and wolf prize (bădescu, 2010). if we apply this formula to almost any other educational field we get more or less similar results. the question is whether we have the courage to face the facts and propose a vision for the future that is both ambitious but also realistic. leadership plays a key part in such an attempt. 5. conclusions the present paper has explored the concept of transformational leadership and tried to link some specific attributes of this concept to the current romanian educational context. although this has been mostly a theoretical approach and even a philosophical one regarding the link between the transformational leadership model and the current educational system in romania the main purpose was to raise a series of questions that can lead to more pragmatic endeavors in the future. 192 references 1. avolio b.j and bass, b.m., multifactor leadership questionnaire: third edition manual and sampler set, redwood city, ca: mind garden, 2004. 2. bădescu, g., ‘wunderkind, olimpici și angajaţi de top. ce fel de performanţe ne dorim în educaţie?’, 2010, [online] available at http://www.cogitus.ro/educatie/ce-fel-de-performanta-ne-dorim-in-educatie, accessed on december 10, 2012. 3. bass, b.m. and bass, r., the bass handbook of leadership: theory, research, and managerial applications, 4th ed., new york: free press, 2008. 4. bass, b.m., leadership and performance beyond expectations, new york: free press, 1985. 5. bennis, w., ‘leadership theory and administrative behaviour: the problems of authority’, 1959, administrative science quarterly, vol. 4, pp. 259-301. 6. lichtheim, g., collected essays, new york: viking press, 1973. 7. miner, j.b., organizational behavior i. essential theories of motivation and leadership, armonk, new york: m.e. sharpe, 2005. 8. mora c. and ţiclău, t., ‘transformational leadership in the public sector. a pilot study using mlq to evaluate leadership style in cluj county local authorities’, 2012, revista de cercetare și intervenţie socială, vol. 36, pp. 74-98. 9. romanian presidential commission, ‘the report of the romanian presidential commission for the analysis and drafting of policies in the field of education and research in romania’, 2007, [online] available at http://edu.presidency.ro/upload/raport_edu. pdf, accessed on december 15, 2012. 10. stogdill, r.m., handbook of leadership: a survey of theory and research, new york: free press, 1974. 11. yukl, g., leadership in organizations, 7th ed., upper saddle river, n.j.: pearson prentice hall inc., 2010. 19 abstract this article aims at creating a correlation between the non-governmental (non-profit sector) and local development in order to highlight the role that these entities play in this process. the article will particularly emphasize the impact of these actors on the local development of clujnapoca and argues in favor of a paradigm shift concerning how local development policies are currently implemented. through this approach we want to propose a paradigm shift with respect to the development policies implemented in local communities for the purposes of capitalizing aspects of quality of life and diversity of services addressed to the population to the detriment of classic indicators of development: paved streets, foreign investment etc. keywords: non-governmental organizations, local development, public policy actors. non-governmental organizations – factors for local development*1 balogh martin balogh martin lecturer, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university cluj-napoca, romania tel.: 0040-264-431.361 e-mail: marton@fspac.ro * acknowledgement. this article is the outcome of post-doctoral research financed through a post-doctoral grant under european social fund, operational sectorial program for the development of human resources, ‘transnational network for the integrated management of post-doctoral research in the field of science communication. institutional building (post-doctoral school) and grant program (commscie)’ contract no. posdru/89/1.5/s/63663. transylvanian review of administrative sciences, special issue, pp. 19-31 20 1. introduction lately, local development represents one of the most common used and debated concepts. the concept’s timeliness is obvious both at theoretical level, where numerous studies and articles are published, and also in practice where various activities are included within the sphere of development and many initiatives are designed to support these trends. it can be seen that these development initiatives are often adaptations of the development models implemented by international financial organizations (european union, world bank etc.) and they rarely represent innovative models of development based on the local context. in this respect, cluj-napoca, one of the most developed urban centers in romania (development strategy of cluj-napoca, 2006, p. 9), could provide the basis for a model of development that would represent a departure from the classical models on which development policy formulation is based. the essence of a classical local development policy is represented by the support offered for the business sector and promotion of public investments related to municipal infrastructure. the field of local development is changing and, in addition to the aspects considered important in the early stages (such as: the number of foreign investors, the number of jobs created, kilometers of paved road etc.), a series of aspects regarding the quality of life in local communities is also currently considered, such as: the level of services (public and private) available for the population, leisure opportunities, investment in research and innovation etc. in this regard, in order to illustrate the need for a paradigm shift in local development policies, we consider cluj-napoca to be a very good example. we hereby specify at least two categories of actors whose potential is currently underexploited in this community: universities and non-governmental organizations. the paper, however, will focus on the latter category. the authors strongly support the changes occurring with respect to theoretical approaches regarding the economic and political theories and how they apply to the role ngos play in society. politically, we can observe ‛the collapse of the reforming and revolutionary left project, with its emphasis on state power. economically, there is the rise of neo-liberal economics and its emphasis on the retreat of the state and development led by private sector’ (pearce, 1993, p. 223). in this paper we emphasize and bring new evidence regarding putnam’s statement according to which ‛social capital and civil society organizations promote economic growth’ (putnam, 1993a;1993b; 1995; 1998; defilippis, 2001). with respect to the associative sector, all existing national reports mention clujnapoca as the second center after bucharest (fdcs, 2010). it is estimated that there are approximately 5,000 local nongovernmental organizations established within the local community (development strategy of cluj-napoca, 2006). 2. theoretical framework we will focus in this section on theoretical approaches that explain the role of non-governmental organizations in society. from the perspective of our approach of involving also other actors in the process of local development policy, we consider 21 the theoretical substantiation of the place and role non-governmental organizations play in society to be interesting and relevant. we especially include the following types of organizations in the category of non-governmental organizations: foundations, associations, federations and unions, without excluding, however, trade unions, cooperatives, and credit unions. most theories underlying the development/evolution of the nonprofit sector (whether political or economic) try to provide sufficient and clear answers with respect to the role of non-profit organizations in society and to the functions they perform in a society. the two important categories of theories (political and economic ones) that explain the evolution of the non-governmental (non-profit) sector are presented below. the economic approaches to the emergence, development and consolidation of the non-profit sector in a society are rooted in the concepts promoted by adam smith, known as ‛the father of modern economics’. in his work, an inquiry into the nature and causes of the wealth of nations (smith, 2001, p. 11), he divides the work process into two distinct and completely different categories: the productive labor and the unproductive labor. according to smith, productive labor ‛adds to the value of the subject upon which it is bestowed’ and unproductive labor ‛does not add value of the subject’. the non-profit sector was seen by most economists as being outside economic reasons, because it did not seek to obtain profit, but it was a sector that helped toward maintaining economic stability, given the fact that its activity mostly concerns the social sphere. through the division of labor into productive and unproductive labor, economists try to find a universally valid economic explanation that justifies, almost exhaustively, the importance of the non-profit sector, the reason why this sector emerged as well as the set of distinct features it possesses and that other sectors do not have. a first set of explanations developed in this respect were the theories of failure. the theories of failure explain the existence or actions of a phenomenon by the failure or insufficiency of another phenomenon. to illustrate this theory, salamon and anheier give us a real and sufficient situation in order to understand what failure theories mean (ott, 2010, p. 181). the market sets the price of houses as a result of the interaction between the offer of houses on the market and the demand for houses, coming from interested persons. because housing prices are very high and people with modest financial resources cannot afford this comfort, the government and the non-governmental non-profit organizations intervene in the market. government entities intervene with policy instruments such as subsidies, vouchers or grants. some non-governmental (non-profit organizations) build houses for prospective occupiers and sell them at lower prices than those of the market. therefore, we can see that the presence and actions of non-governmental non-profit organizations on the market is explained by the insufficiency or failure of the market system which fails to meet the demand for houses coming from people of limited means and the failure of the government to alleviate this problem. non-governmental non-profit organizations operate in the market as other players have failed to meet the needs for low-cost houses in the community or society. 22 a second set of economic explanations for the emergence of the non-governmental non-profit sector is reflected in the theory of government failure. public sector failures are often the result of ‛inefficient government policies, the government’s intervention in its own structures being eminently necessary in order to correct market failures and ensure social welfare’ (platiș, 2003, p. 32). therefore, failure correction and recovery fall under the government’s responsibility, which has an important role because it recovers market failures, redistributes income, provides health and social insurances against risks etc. an example of government failure refers to the context in which the potential benefits of the necessary intervention are smaller than the full direct and indirect costs, that is the situation in which market failures are not attenuated and the efficient allocation of resources is not obtained through the government’s measures. the dimension of governmental failure theory having been discussed, it is important to clarify the relation between it and the non-profit non-governmental sector. when there is a market failure or insufficiencies, economists turn their attention to the government, or, according to the new trends (gassler, 1986, p. 136), to non-governmental non-profit organizations in order to respond to the still unaddressed requests by the market instruments. however, when governmental failures occur, economic failures are taken to another level. when the governance fails to satisfactorily respond to a market failure, demands remain unmet. non-governmental organizations get intensively involved, ‛make a step forward’, and, through their activity address social needs which neither the public sector nor the market can address, either because of government failures or because of market failures. this theory of governmental failure actively involves the non-profit sector in solving the inefficiencies caused by governmental policies, the non-profit sector being a complementary pillar in addressing social needs and in the provision of public goods and services. political approaches on the emergence, development and consolidation of the nonprofit sector in society developed after the second world war, when the importance of this sector was recognized in several directions of action. political theories on the development of the non-governmental sector are based on concepts such as civil society, civic participation, civic development, solidarism and pluralism. through non-governmental non-profit organizations, the community or group of citizens can influence the decisions taken by the local authorities, promoting solidarity and citizenship development in order to solve problems that are found within that community. being independent from the governmental institutions and apparatus and addressing individual needs of association, non-governmental organizations are often considered as a ‛helping hand’ when administrative authorities commit abuses, thus being a powerful instrument that can correct a negative situation. non-governmental nonprofit organizations contribute to ensuring democratic stability when political regimes in a society are at a dead end, they support democratic stability, involve citizens in the development of a civic society within which strong democratic binders are created 23 in order to withstand different situations that endanger the democracy of a society. the non-profit sector animates the civic spirit of the community, the involvement in community affairs, based on a partnership, the community no longer has expectations of local authorities, but together with associations and foundations solves public interest problems. the community thus self-governs itself, has a high degree of independence in mobilizing resources to solve a problem, being solidary with other communities, thus creating the so-called social capital, very important in the development of any community. according to political theories, the non-governmental non-profit sector ensures democratic stability and a proper development for the society due to the specific features of this sector. independence, autonomy and also orientation towards values, public goods and not towards profit are key elements that place the non-profit sector in the position of defender and guarantor of citizens’ rights and freedoms when the political regime or economic instability of a society totters and democratic stability is affected. likewise, smith (1988, pp. 2-10) presents a series of new functions of the nonprofit sector: 1. the non-profit sector enables public sector institutions and the business environment to select and institutionalize the most promising innovations. 2. it places emphasis on defining morality and reality, questioning dominant assumptions about what exists, what is good and what should be done in society. 3. it provides activities aimed at the relaxation and recreation of society members. the activity undertaken by this sector has a major impact on the level of social integration in a society. 4. it may emancipate the individuals and widely allows them to express their potential and capacity in the community, in the social environment. 5. it is beneficial for society, given that it provides ‛negative feedback’ when appropriate. 6. it supports the economic system of society. 7. it represents an important latent resource for all types of goal achievements that consider the interests of society as a whole. smith’s stated functions make us also think about certain characteristics of the non-profit sector but, however, there is also a wide range of activities undertaken by non-profit organizations together with their assumed responsibilities. they value and accept old ideas, are open to new ideas and are characterized by fairness, given that they give negative feedback when appropriate. in this context, the idea that non-governmental organizations represent a ‘thermometer’ of the community is often true, precisely because the role of these organizations in the community is to identify the problem and to solve it. often, ‛ngos can better and cheaper meet certain needs of the community, than the public sector can do’ (plumb, androniceanu and abăluţă, 2003, p. 167). ultimately, this is the result of different managerial practices and volunteering. in most cases, public authorities use the lack of funds as a pretext when they are unable to solve 24 certain community problems. however, non-governmental organizations use far less resources than public authorities in order to provide certain services. this is because non-governmental organizations use volunteers, unlike public institutions which have to provide a salary for the personnel in charge with addressing those problems. there are also many fields where non-governmental organizations work almost for free, such fields being those of animal protection, environmental protection, education for adults etc. analyzing the information presented above, something very important can be observed, namely the fact that non-governmental organizations do not act only for the benefit of citizens, but also for the benefit of public authorities. it can be seen that a number of strategies have been designed for this purpose, primarily aimed to improve and streamline the public administration activity, by ‘enforcing institutions, increasing the professional qualifications of personnel, their training and strengthening managerial capacities’ (plumb, androniceanu and abăluţă, 2003, p. 168). also, a great part of non-governmental organizations are trying to achieve better collaboration between public authorities and civil society representatives and, why not, their collaboration on specific projects. increasing the frequency of meetings between organizations and authorities, the latter will be aware of the needs, respectively of the community problems. in conclusion, non-governmental organizations, through the services they provide, have become ‘agents of human change’ where their ‘product’ is a cured patient, a learning child, a young man or woman transformed into adults with personal dignity, a human life completely changed. therefore, the ‛product’ or the outcome determined by an organization’s objective will always be linked to human transformation (jura, 2003, p. 16). 3. the non-governmental sector in cluj-napoca the cluj county in general and the city of cluj-napoca in particular, represent an important center of the associative phenomenon. this statement is supported both in terms of the number of non-governmental organizations and in terms of their density. on the other hand, we can also mention the existence of certain informal associative forms in the community area of cluj-napoca (civic associations, initiative groups, civic groups etc.), which are not legally constituted and are aimed at solving specific problems. in the following lines we will focus on the development of the associative sector in cluj-napoca in the period from 2004 to 2007 using four distinct dimensions in the analysis: 1. the evolution of the number of active organizations; 2. the main fields of activity of ngos in cluj; 3. the evolution of the budgets available to nongovernmental organizations; and 4. the number of persons who are employed in these organizations. 25 all analyses studying the dynamics of non-governmental organizations in the city of cluj-napoca reveal a continuous oscillation in the number of newly established ngos, but in the same time they also highlight a difficulty in determining the number of active ngos. it can be observed (both at local level and also at national level) that new organizations are registered every year, but at the same time, there are others that are dissolved or simply because of certain problems they fail to undertake their activity and become inactive. to determine the size of the sector and the number of active non-governmental organizations in cluj-napoca, the basis of this analysis was represented by the accounting synthesis documents submitted by non-governmental organizations to the general directorate of public finance (gdpf) cluj at the end of the 2004-2007 fiscal years. an important factor in the analysis is also represented by the choice of significant samples in the county, respectively 99% of non-governmental organizations that submitted the balance of accounts in the reference years and also the selection of an income sample with a significant share in the financing of ngos, in this case a number of seven income groups, namely: subscription fees, registration fees, donations, sponsorships, dividends, budgetary resources and grants. the first aspect analyzed takes into account the evolution in the number of active organizations and establishes the dynamics of the associative sector in cluj-napoca in the period under review: table 1: the ngos’ dynamics in cluj county year 2004 2005 2006 2007 no. of organizations 1499 1499 1542 1243 source: own calculations based on the data obtained from gdpf cluj, 2008 based on this table we can estimate the size of the associative sector in terms of the number of non-governmental organizations registered in cluj county; in this table there are included both the organizations which undertook an activity represented by the movement of budgetary resources and the organizations that have submitted the balance of accounts without any income. from the analysis and processing of data it can be observed that a percentage of 23% up to 30% of organizations, even if they submitted the balance of accounts, had not recorded any income during the year. according to the data obtained from the regional resource1 centre for ngos cluj, the distribution of nongovernmental organizations in the city of cluj-napoca, on fields of activity, in 2000 looks as follows, indicating that some non-governmental organizations have marked several areas as their scope of activity: 1 the regional resource centre for ngos cluj was founded in 2001 as an initiative of centras in partnership with several ngos in cluj. currently the center has ceased its activity. 26 table 2: the distribution of ngos in cluj-napoca according to their field of activity scope of activity percent culture 48% education 48% social services 32% health 26% ecology 13% economic and social development 14% citizens’ rights 15% philanthropy and volunteering 14% international cooperation 24% professional and business associations 8% religion 10% source: the regional resource centre for ngos cluj (2001) an important influence on the development of the nonprofit sector is also the fact that the city of cluj-napoca is a university center, the number of organizations founded by students and teachers, the organizations in the field of education, research and science manifesting a higher level than the indicators characteristic for the sector in general. from the perspective of the non-governmental organizations’ budget we will make an analysis on two levels – the main revenues sources and the budgets of ngos during the period of 2004-2007, according to data obtained from the balance of accounts prepared for these years and submitted to the general directorate of public finance cluj. figure 1: the ngos’ income dynamics in cluj county for the period of 2004-2007 (in usd) source: own calculations based on the data obtained from gdpf cluj, 2008 as shown in the figure above, the three main funding sources of non-governmental organizations in cluj-napoca, in order of size, are grants, donations and sponsorships. in the period of 2004-2007 grants represented the most consistent source of funding for ngos in cluj-napoca and consisted in the allocation of money from certain international and national organizations and institutions for carrying out projects and programs. the main source of funds was and still is the european union budget, to 27 which other european sources were added. currently, with the allocation of structural funds, the european money dedicated to civil society organizations represent a much bigger percentage in the non-governmental organizations’ budgets and thus lead to the development and diversification of services provided by them as a viable alternative for a range of services provided by public authorities. with respect to the donations from natural and legal persons, they are important, but their share is correlated and is directly related to taxation, especially for legal persons. finally, sponsorships are made by legal persons and the amounts of money obtained are most often limited by the tax provisions in force at the time. table 3: the planning and realization of the annual budget on the main sources of revenue income sources realized 2004 planned 2005 realized 2005 planned 2006 realized 2006 planned 2007 realized 2007 subscription fees 26,954,654 26,954,654 26,954,654 27,952,048 34,676,506 25,815,483 35,467,364 registration fees 1,633,490 1,500,000 2,002,013 1,048,285 1,923,324 1,295,135 1,988,558 donations 37,162,914 34,092,733 44,290,331 28,941,819 38,011,063 33,403,258 41,808,853 sponsorships 13,389,546 8,581,406 16,494,460 17,074,178 35,292,373 10,967,373 36,925,162 dividends 350,829 242,732 423,303 298,831 306,807 214,963 300,562 budgetary resources 17,989,050 18,228,021 19,977,254 16,029,714 17,549,852 29,459,713 34,249,116 grants 86,713,539 67,833,477 92,165,215 97,004,930 89,351,824 69,966,208 73,672,355 total income (ron) 184,194,022 157,433,023 202,307,230 188,349,805 217,111,749 171,122,133 224,411,970 source: own calculations based on the data obtained from gdpf cluj, 2008 analyzing how the budget was realized in the fiscal year of 2005, it can be observed that the realized budget exceeds the planned one, by reference to the fiscal year of 2004 on the one hand and considering the planning made for 2005, on the other hand. in the case of the main source of income, grants, it can be observed an excedent of even 135.87% of the amounts attracted in comparison with those planned. this increase can be explained by identifying new funding sources and development of new programs along the year. another aspect is linked to the fact that the grants’ share in the total revenue for 2005 represented almost 50%, thus proving the importance of this source of funding. on the other hand, the idea that ngos represent, based on the grants attracted from external sources, an important driver of local economic development since the amounts of money attracted by them are generally spent locally, thus supporting the local economy, can be accredited. the evolution of the shares of the various sources of funding represents a signal of how various other organizations, natural persons or institutions in the country and abroad are interested in supporting the programs and projects initiated by non-governmental organizations in our country. in the fiscal year 2006, the share of funding sources in the total income changed to some extent, the amount of grants being reduced from 47% in 2004 to 46% in 2005, and in 2006 up to 41.5%. it is remarkable that between the three years (2004-2006) 28 there was an increase in the share of sponsorships in the total revenues, from 7.27% in 2004 to 16.26% in 2006. this certainly indicates a reorientation of local financiers who, through the amendments brought to the tax law, gain more confidence and are more determined in sponsoring non-profit organizations and a reorientation of foreign financiers to other countries. we can also observe a good management of the revenues budget planning for 2006, the income plan being exceeded in the presented chapters with significant percentage, but noting that at the sponsorship chapter the exceeded of the planned figures is made at a rate of over 200%, and in the grants chapter the estimated figures are not achieved, the rate of completion being only of 92.11%. in 2007 the share of revenues sources from grants decreased, while there was a spectacular increase in the budgetary resources category. this can be explained by the growing interest of the local and central authorities in nongovernmental organizations as promoters of local community development through the actions and activities they undertake and through the services they provide locally. at the same time, some of the largest organizations (according to the budget available) in romania at the level of the non-governmental sector can be found in cluj-napoca. thus, of the first (largest) 16 organizations according to the budgetary figures available, four are in cluj-napoca. it is noted that they are mainly active in the field of education, culture and sports. table 4: non-governmental organizations with a revenue of over 10 million ron in 2008 name of legal person total revenue (ron) ‘lebanese international school’ foundation 47,672,620 ‘iskola alapitvany’ foundation for school 47,350,705 ‘future romania’ foundation 41,684,049 ‘sapientia’ foundation 30,618,734 ‘post privatization’ foundation 23,850,853 ‘romanian angel appeal’ foundation 20,892,417 ‘charity’ foundation 16,986,648 ‘dr. victor babeş’ foundation 16,407,725 ‘dinu patriciu’ foundation 15,250,554 ‘communitas’ foundation 14,261,043 ‘football club cfr ecomax cluj’ foundation 14,066,656 ‘sera’ romania foundation 12,129,210 ‘center for economic development’ foundation 11,704,467 ‘junior focus (british school)’ foundation 11,696,991 ‘menachem h. elias family’ foundation 11,262,994 ‘vodafone romania’ foundation 10,128,749 source: ministry of finance, given their balance sheet submitted by ngos at 31.12.2008 based on these data we can observe a polarization trend in the sector as there is a significant percentage of inactive organizations and even in the case of those 29 which submit their balance of accounts, 30% state that they operate without the use of financial resources. at the same time however, there are also organizations managing budgets of over 10 million euros annually (see in table 4 for example iskola alapítvány foundation for school). in the period examined, the conclusion is that a stabilization in the structure of revenues sources is expected for the future, by reducing the share of grants, increasing the share of sponsorships and revenues from the resources of different budgets and a stabilization in the donations’ share. another dimension of our analysis refers to the proportion of the nongovernmental sector with reference to the employers in cluj-napoca. thus, the existing local statistics show that in 2004 there were a total number of 17,929 people employed in non-governmental organizations in cluj county. 11,126 people of these were employed in carrying out activities without a patrimonial character and 6,803 in patrimonial activities. if we consider that there was a total number of 299,700 employees in cluj county in 2003 (according to the national institute of statistics) it results that approximately 6% of cluj county employees were employed in an ngo. even though some changes were observed in the following years with respect to the number of persons employed in the nonprofit environment, the ngo employee share among all employees remained constant. 4. conclusions although our study focused mainly on the quantitative aspects of the evolution of the non-governmental non-profit sector in cluj-napoca, we believe that the need to strengthen the role of ngos in meeting the needs and interests of the community is also important in terms of extra-financial elements such as: 1. identification of programs focused on priority needs of the community (community development, health services, social services, environmental protection, public participation, local economic development especially regarding inter-sectorial relationships, visibility and role of women and children); 2. the increase in the capacity of influencing public policy; 3. the establishment of organizations dealing with public policy; 4. the perception of the double role played by non-governmental organizations as providers of services and as promoters of change; and 5. the development of non-governmental organizations active in the community and open to cooperation within the sector and the stimulation of structures such as: community groups, alliances to promote shared interests, self-help networks and groups. as shown in our analysis, overall, the operating budgets of the non-governmental sector have increased due to rises in other sources of funding, although grants decreased because at that time there were not very many active lines of financing, that being the period between european programming cycles. at the same time, an increased level of transparency, accountability and credibility to the public should be the basis for 30 attracting funds from both inside and outside the country. as our analysis revealed, the theoretical model followed is rather asset-based community development approach then needs-based community development approach. from this perspective, we believe that local ngos represent ‘assets’ in local development processes (mathie and cunningham, 2003). we believe that the analysis was successful in presenting certain arguments according to which the role of the nongovernmental sector in local development is essential, both in terms of the available budgets and in terms of the position of an important local employer. therefore, we believe that the development of nongovernmental organizations’ capacity to attract funding from various sources and place them in local projects identified in accordance with local needs would stimulate not only cohesion but also development processes. to achieve this goal there is a need for an intensive collaboration between the public and non-profit sectors, and also for initiatives taken in the two sectors to stimulate the increased capacity to develop local policies. in addition to the impact on local development, the ability to cooperate is based on habit and practice and it also influences social capital (fukuyama, 2010). at the level of the public sector there are necessary initiatives to boost the capacity of local policy making in a participatory manner, to increase the level of transparency and predictability regarding local development and application of similar conditions for all local actors involved. with reference to the latter aspect, we believe that if foreign investors create a number of jobs and, through direct investments (even if they are temporary), receive certain facilities, tax deductions, the same treatment should be applied to local non-governmental organizations which attract substantial financial resources, create jobs and implicitly bring an additional economic development in the community every year. as with regard to the non-profit sector, a number of recommendations can be made to increase its capacity of intervening in local development policies. we refer here to the development of ngos’ capacity to estimate the impact of their work through their own assessment of the development process, to the formation of needs assessment skills and activities with a strong participatory character, to the accountability for democratic practices and strategic development by the nongovernmental organization leadership, and in particular, to the concentration of efforts on developing a generation of leaders addressing organizational development from an ethical perspective, centered on values and which stimulate strategic thinking and action. references: 1. defilippis, j., ‘the myth of social capital in community development’, 2001, housing policy debate, vol. 12, no. 4, pp. 781-806. 2. development strategy of cluj-napoca [online] available at http://www.primariaclujnapoca.ro/doc/strategie/strategia_municipiului_cluj_napoca.pdf, accessed on december 3, 2012. 31 3. fukuyama, f., ‘social capital, civil society and development, 2010, third world quarterly, vol. 22, no. 1, pp. 7-20. 4. fdsc (foundation for the development of civil society), ‘românia 2010. the nongovernmental sector profile, trends, challenges’, [online] available at http://www.fdsc. ro/, accessed on december 3, 2012. 5. gassler, s.r., the economics of nonprofit enterprise: a study in applied economic theory, new york: university press of america, 1986. 6. jura, c., rolul organizaţiilor nonguvernamentale pe plan internaţional, bucurești: all beck, 2003. 7. mathie, a. and cunningham, g., ‘from clients to citizens: asset-based community development as a strategy for community-driven development’, 2003, development in practice, vol. 13, no. 5, pp. 474-486. 8. ott, j.s., the nature of the nonprofit sector, utah: westview press, 2010. 9. pearce, j., ‘ngos and social change: agents or facilitators?’, 1993, development in practice, vol. 3, no. 3, pp. 222-227. 10. platiș, m., economia sectorului public, bucurești: editura universităţii bucurești, 2003. 11. plumb, i., androniceanu, a. and abăluţă, o., managementul serviciilor publice, bucurești: editura ase, 2nd edition, 2003. 12. putnam, r., ‘bowling alone: america’s declining social capital’, 1995, journal of democracy, vol. 6, no. 1, pp. 65-78. 13. putnam, r., ‘foreword’, 1998, housing policy debate, vol. 9, no. 1, pp. v-viii. 14. putnam, r., making democracy work: civic traditions in modern italy, princeton university press, 1993a. 15. putnam, r., ‘the prosperous community: social capital an public life’, 1993b, american prospect, vol. 4, no. 13, pp. 35-42. 16. smith, a., avuţia naţiunilor (an inquiry into the nature and causes of the wealth of nations), bucurești: editura publică, 2001. 17. smith, d.h., ‘the impact of the nonprofit voluntary sector on society’ in connors, t.d. (ed.), the nonprofit organization handbook, new york: mcgraw-hill book company, 1988, pp. 2-10. untitled 199 abstract the paper investigates the relationship between ethnocultural diversity and political culture. the first part of the study explores the literature on ethnocultural diversity as a sociologically relevant variable, its impact on other structural variables, and the way in which ethnicity became relevant to the study of political culture. in the second part, the secondary analysis of data provided by a research conducted in romania in 2003 shows that the relationship which can be established between the explored variables is highly inconsistent with relevant studies from the international literature. the findings are in agreement, however, with the contact theory which asserts that the exposure to diversity has a positive impact on the minoritymajority relations. broadly speaking, this research proves that ethnocultural diversity is not necessarily conducive to an environment permeable to extremist views. due to methodological limitations, the conclusions of the study need to be dealt with precaution. ethnocultural diversity and aspects of political culture levente salat monica căluşer amelia gorcea olimpia moşteanu levente salat associate professor, department of political sciences, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431505 email: levente.salat@polito.ubbcluj.ro monica căluşer program coordinator, the ethnocultural diversity resource center, cluj-napoca, romania tel.: 00400264-420490 email: mcaluser@edrc.ro amelia gorcea program coordinator, the ethnocultural diversity resource center, cluj-napoca, romania tel.: 00400264-420490 email: agorcea@edrc.ro olimpia moşteanu program coordinator assistant, the ethnocultural diversity resource center, cluj-napoca, romania tel.: 00400264-420490 email: omosteanu@edrc.ro transylvanian review of administrative sciences, 27e/2009 pp. 199-219 200 1. introduction1 the study intolerance, discrimination and authoritarianism of public opinion in romania claims that the romanian society is permeable to extremism not only because of the instability of the democratic regime, but also due to romanian political parties’ inclinations toward populism (ipp, 2003). the research report also argues that not only the extremist parties, but also any other type of political organization is to some extent inclined to get involved in debate over controversial issues looking to enhance their political capital. it is averred that these views take form as ideological programs of marginal groups. the report asserts that even if the marginal groups lack the power to impose their views on public opinion, if the political milieu presents some particular characteristics then some of these extremist views enter the public sphere. it is the aim of the ipp research report to identify the characteristics that make possible the spread of extremist ideas into public sphere. the present approach links the aforementioned assumptions to studies regarding the detrimental impact of ethnocultural diversity on economic growth, social cohesion, trust, institutional performance and social and political stability. it also considers research studies which regard ethnocultural diversity as a predictive factor for the emergence of conflict. bearing in mind that both the characteristics of the political milieu and the “content” of public sphere refer to the political culture, this analysis will place the issues of intolerance, discrimination, extremism in politicians’ or media discourse and the negative social representations in the larger framework of political culture. broadly speaking, the research attempts to investigate the extent to which ethnocultural diversity is conducive or not to an environment permeable to extremist views. 2. the study of ethnocultural diversity and political culture the first attempt to use ethnocultural diversity as a predictor for certain structural variables of societies dates back to 1967, when marie r. haug tried to classify societies according to varying levels of pluralism and to establish systematic differences among the ranked societies in critical structural variables. with the help of an index of pluralism she ranked 114 independent polities of the world (based on data from 1963) and found that the degree of pluralism is in a linear relationship with a series of demographic, economic and political variables. based on her findings, haug concluded that pluralism (ethnocultural diversity in our terms) is a factor which cannot be ignored in social system analysis (haug, 1967).based on data included in the atlas narodov mira (1964), taylor and hudson (1972) constructed an index of ethnolinguistic fractionalization2, measuring the probability that two randomly selected individuals in a country will belong to different ethnolinguistic groups. 1 this article has been elaborated as part of a research project entitled the impact of diversity on political culture in romania, financed through uefiscsu, contract no.419/1.10.2007. 2 1 1 2n i i pf = −= , where p1, p2, p3...pn are the share of the various thnic groups. 201 fearon (2003) provides a cross-national database with values of ethnic fractionalization calculated with the help of available data, warning however that there are significant inconsistencies among the sources he used. in addition to the fractionalization index, fearon constructs a measure of cultural diversity3 calculated with the help of the estimated linguistic and religious distance among groups. alesina et al. (2003) distinguish among the ethnic, linguistic and religious dimensions of diversity, calculating for each of these dimensions the value of the fractionalization index, characteristic for 215 states and dependent territories. in spite of the different sources they used, the results of fearon and alesina et al. are largely similar. montalvo and reynal-querol (2005) construct an index of polarization4 which measures the normalized distance of a particular distribution of ethnic and religious groups from a bimodal distribution. the q index is used to assess the relationship between social heterogeneity and the likelihood of conflict, offering a more nuanced picture of the widespread belief that increase in diversity increases the probability of conflict. since evidence show that there are more conflicts in societies where a large ethic minority faces a majority, the polarization index is a more reliable predictor of ethnic conflict than fractionalization. montalvo and reynal-querol provide a cross-national database with the values of the four variables: ethnic polarization, ethnic fractionalization, religious polarization and religious fractionalization, calculated for the world countries. while the fractionalization index grows with the number of the groups, the polarization index has a maximum at two groups. for low levels of fractionalization the correlation between ethnic fractionalization and ethnic polarization is positive and close to linear, for the medium range of the fractionalization values the correlation is zero, while for high values of fractionalization the correlation is negative (montalvo and reynal-querol, 2005). as far as the impact of the different diversity measures on various structural variables is concerned, the opinions of different authors vary on a large scale. haug found that geographic size and thinly scattered, illiterate population regularly correlates with high values of the pluralism index, as dependent variable, while pluralism, as independent variable in this case, goes hand in hand with low per capita gdp and political instability (haug, 1964). according to mauro (1995), between ethnolinguistic fractionalization and institutional efficiency a strong negative correlation can be established, while fractionalization correlates positively with corruption. furthermore, high level of ethnocultural diversity implies generally a lower level of investment. mauro sees fractionalization as a proxy for ethnic conflict, which may lead to political instability or even civil war. easterly and levine (1997) argue that ethnic diversity helps in explaining cross-country differences as far as public policy choices and other economic indicators 3 ,1 1 1 −= = = ijj n i n j i rppcd where: pi – ethnic group i; pj – ethnic group j; rji – resemblance factor. 4 w,45.0 5.0 1 j1 1 2 2 1 πππ π = ≠ = = − −= n i j ii n i iq where πs are the sizes of the group in the population 202 are concerned. focusing on sub-saharan africa, they found that the region’s high ethnic fragmentation can explain a significant part of the indicators which reflect low schooling, political instability, underdeveloped financial systems, high government deficits and poor infrastructure. in their view, the findings are not characteristic exclusively to africa: it can be generally stated that high ethnic diversity is regularly associated with interest group polarization which leads to rent-seeking behavior and reduces the consensus on public goods (easterly and levine, 1997, p. 1241). la porta et al. (1999) found, as well, that ethnolinguistic fractionalization is in a significant degree negatively correlated with latitude and per capita income, and has a consistent adverse effect on government performance: higher fractionalization is associated with more interventionism (worse property rights and regulation), lower government efficiency (more corruption, longer delays and lower tax compliance), inferior provision of public goods (higher infant mortality and illiteracy, lower school attainment and infrastructure quality), more state enterprises and less political freedom, due mainly to the predisposition of ethnic groups in power to redistribute income (la porta et al., 1999, p. 245). fearon (2003), on his turn, warns that the effect of ethnic fractionalization on structural variables like economic growth, political conflict, party structure etc. might depend on the specific measure of diversity the particular researches deploy. in a more nuanced analysis of the different dimensions of diversity as possible predictor of certain structural variables, alesina et al. (2003) conclude that high values of ethnic and linguistic fractionalization regularly correlate with low gdp output and poor economic performances, democratic deficits, bad governance (reflected in the quality of public policies, literacy rate and infant mortality), poor performance of public institutions (measured by the extent of corruption, indicators of fundamental and political freedom etc). however, the study emphasizes that it is difficult to assess precisely the size of such effects, due to the strong correlation of ethnolinguistic fractionalization variables with a number of other potentially explanatory variables, especially geographic ones (latitude, for instance). alesina et al. found on the other hand that religious fractionalization correlates positively with economic growth, public policy quality, corruption control, literacy rate and civic and political liberties. it is also observed that ethnic fractionalization has a stronger predictive potential than linguistic fractionalization, which seems to generate effects less significant statistically (alesina et al., 2003, pp. 182-183). montalvo and reynal-querol (2005) go further in refining the analysis by assessing separately the impact of ethnolinguistic fractionalizations (f) and ethnolinguistic polarization (q). they confirm the significant negative direct effect of ethnolinguistic fractionalization on economic growth, reported by many other authors, while the ethnolinguistic polarization exerts, in their view, its negative impact through indirect channels: investment, government consumption and the incidence of civil war. as far as the religious dimension is concerned, according to montalvo and reynal-querol, religious polarization exerts the expected negative effect on the above mentioned indirect channels, while the effect of religious fractionalization is the opposite: more 203 diversity increases the investment rate, decreases the level of government consumption over the gdp and reduces the probability of civil war, which is largely consistent with the findings of alesina et al. (2003). the relationship between ethnocultural diversity and the probability of civil war is addressed by fearon and laitin (2003). the authors argue that conditions which favor insurgency weak states marked by poverty, large population and political instability are better predictors of the likeliness of ethnic violence than the indicators of ethnic and religious diversity or even measures of various grievances, like economic inequality, lack of civic and political liberties, state discrimination against minority religions and languages. in addition to the cross-national perspective detailed in the above, alesina, baqir and easterly (1999) observe that more ethnically diverse jurisdictions in the united states have higher spending and higher deficits/debt per capita, and yet devote lower shares of spending to core public goods like education, roads, sewer and trash pickup. these findings confirm theories holding that heterogeneous and polarized societies value less public goods, patronage more and are collectively careless about fiscal discipline. putnam (2007) distinguishes between the immediate and the long lasting effects of ethnic diversity on social solidarity and social capital. stemming from a quantitative analysis conducted in united states, his findings suggest that in ethnically diverse neighborhoods, residents of all races are likely to present lower levels of trust. as putnam argues, “trust (even of one’s own race) is lower, altruism and community cooperation rarer, friends fewer; but in the long run, however, successful immigrant societies have overcome such fragmentation by creating new, cross-cutting forms of social solidarity and more encompassing identities” (putnam, 2007, p. 137). other studies focusing on the constituents of social capital and their macro or micro effects on society claim that social trust presupposes homogeneous societies, therefore researchers should keep in mind that this form of social capital is apparently less characteristic in the case of more diverse societies (hooghe, 2005). subsequently, it is argued that, when studying the relationship between social capital and ethnocultural diversity, researchers need to pay attention to contextual information about the environment in which diverse social interactions occur or to the attitudinal aspects of social cohesion (hooghe, 2005; hooghe et al., 2006). if the study of ethnocultural diversity and the research dedicated to its impact on various structural variables of the polity are relatively recent phenomena, political culture has been in the focus of the attention of several influential authors since the seminal work of almond and verba (1963), the civic culture. based on a comparative study conducted between 1957-1962, aiming to assess public attitudes towards politics and their role in shaping the political system in five countries (us, great britain, germany, italy and mexico), almond and verba concluded that a nation’s political culture reflects its citizens orientations and evaluations towards three levels: the political system, the political and policymaking process and the policy outcomes and outputs. they found that political cultures are defined essentially by the combination of three patterns of orientation toward involvement in the political process, each the result of different circumstances of political socialization: parochialism (characterized by total 204 lack of awareness of the ingredients of the system and process), subject-mentality (passive obedience and lack of active involvement) and participatory behavior (active involvement in the process). the share of the three patterns in the overall political culture of a nation, respectively the dominance of one or the other define the nature of the political system as authoritarian or democratic,traditional/preindustrial or industrial, and combinations of the former categories. the concept of civic culture was coined by almond and verba to describe a particular type of political culture, found to be dominant for western democratic countries, which combines the allegiant subject mentality with the constraints and filtering effects of the participant mentality. the concept itself emphasizes the key ingredients of political stability and equilibrium in a modern society: the willingness of the citizens to be governed, accepting the legitimacy of power and authority, as well as the citizen’s willingness to participate in power and decisions (almond, 1996). another important element of the theory of almond and verba is the cultural congruence thesis which holds that political structures and political culture are mutually reinforcing in the sense that sustaining democratic institutions in a country lacking a sufficient proportion of subjects ready and prepared to participate, or to impose authoritarianism over a society with a significant share of people willing to participate, are equally impossible. due to its heuristic and interpretative power, the concept of political culture has become over time the target of serious academic scrutiny. the congruence thesis was confirmed by inglehart (1990), while putnam (1993) offered consistent arguments in the support of the political socialization theory. the balance inclines, however, in favor of those who have found the concept vulnerable. the most frequent critical arguments target the concept’s weaknesses as an explanatory variable: instead of being empirically measurable, some see it as a vague, stereotypic description of the unit of analysis (kaase, 1983 apud dalton, 2000), while others highlight the weak predictive power of the concept, with reference to the uneven evidence of its causal effects (laitin, 1995). indeed, inglehart (1977, 1990, 1997), barnes et al. (1979), dalton et al. (1994), putnam (1995), norris (1999), and dalton (2000) provided evidence of political transformations in the world which the concept itself could not forecast5. the equilibrium thesis of the civic culture has been challenged by the emergence of the postmaterial value change followed by participatory populism, decline of the public trust in government, voter dealignment and realignment, growing political spontaneity and disrespect for traditional political authority. the congruence thesis has also come under pressure during the 1990s, in the context of the democratic transformation in eastern europe, where the role of the political culture has been less evident (dalton, 2000; armingeon and careja, 2008), the 5 bad publicity to the forecasting potential of the concept has been provided especially by walter a. rosenbaum, who reached the conclusion, in a study dedicated to the cohesive capacity of political culture over language differences, regionally dispersed resources and parochial loyalties, that in authoritarian or totalitarian systems are more likely to dominate among the world’s political cultures (rosenbaum, 1975). 205 developments sustaining eckstein’s (1992) thesis about the gradual change of political culture and the frequent syncretism between the institutions of new political system and elements of the previous regime’s political culture. in 1996, under the pressure of mounting evidence, almond saw himself obliged to conclude that “the balanced mix of the civic culture of loyal subjects and consensual participatory elements celebrated in our book of 1963, begins to give way to alienated subject combined with a form of participation weakened and demoralized by populism, extremism and apathy” (almond, 1996, p. 10). political culture remains nevertheless in the focus of scholarly research in political science. the growing sophistication of political behavior attracts much attention, researchers aiming to understand the new complexities of public-issue interests’ increasing heterogeneity, the refusal of more and more citizens to depend on party elites or on conventional, institutionalized methods of political participation, the shift from involvement in electoral politics to more direct forms of political participation, or the effort of several democratizing nations across the world to seek variants of democracy which are more congruent with their history and cultural traditions (dalton, 2000). a special chapter of these more recent research endeavors is dedicated to the study of the new forms of political culture and emerging new social movements, amongst which identity politics, politics of difference and politics of recognition. several of the studies published under these headings (nelson, 1979; bickford, 1999; scarritt and mozzafar, 1999; alesina and la ferrara, 2000; deleon and naff, 2004; posner, 2004; segura and rodrigues, 2006; birnir, 2007 etc) discover the relevance of ethnocultural diversity to politics in general, and political culture in particular, exploring the various ways in which race, ethnicity, gender, identity and group membership influence the different forms of political participation. 3. data sources, variables and method of analysis the data analyzed in the research were provided by a survey conducted in 2003, within the frameworks of a project initiated by the institute for public policy, aiming to identify indicators of intolerance, discrimination and authoritarianism in the country’s public opinion.6 the project was meant to raise the awareness of political and civil society actors upon extremist movements and also to identify policies and programs that promote tolerance, strengthen democratic values and diminish the impact of radical views on public discourse. the institute for public policy averred that extremist views were not marginal phenomena, but an alarming indicator of intolerance sustaining social deprivations that had characterized the romanian society for a long period of time (ipp report, 2003, p. 6). since the project explored extremist attitudes and behaviors such as 6 the survey intolerance, discrimination and authoritarianism of public opinion in romania was part of the extremism in romania program run by ipp. the data were collected by the gallup organization romania in september 2003. the sample, including 1500 respondents, was representative for the adult, non-institutionalized romanian population, with an accepted error of ± 2.7 %. the survey book can be accessed on the www.ipp.ro website. the analyzed data set has been kindly made available to us by the institute for public policy. 206 discrimination and intolerance of ethnic, religious and sexual minorities, authoritarian inclinations and religious fundamentalism, it seemed to provide a suitable research target for our intent to assess the relationship between ethnocultural diversity and political culture. given that the data were collected “after the facts”, and since at the moment we initiated the research we had no control over possible extraneous variables, the research was carried out with the help of an ex post facto research design. taking into consideration the research question, the sampling method, the degree of control over the variables, as well as the time factor, we reached the conclusion that a correlational research design is most appropriate. with regard to the nature of the analysis, a secondary data analysis has been employed, consisting in a number of analyses of pairs of values for each respondent, in order to assess the corresponding relations between the explored variables. the major conceptual issues that should be addressed when carrying on a secondary data analysis include the problem of theoretical congruence and variable operationalization (orsi et al., 1999). the issue of theoretical congruence refers to the extent to which the questions used in secondary analysis are different from the research questions in the original study. fawcett et al. (1992) argue that once the questions and the corresponding concepts have been identified, the researcher must ascertain whether the operational definitions of the concepts in the original data set are consistent with the concepts that are to be used in the secondary analysis. when the operationalization of the concepts in the secondary analysis research questions does not fit the theoretical definitions in the original data sets, then the concept operationalization may limit the ability to use the original empirical indicators (kiecolt et al., 1985). moreover, the use of those empirical indicators in the secondary analysis may be detrimental for the validity of the research design. creating empirical indicators from original data sets can be employed, but the issues of the operational definitions and item comparability should be considered. our hypothesis was generated with the help of the existing theories and the previously evoked research findings regarding the impact of various indicators of ethnocultural diversity upon political culture. based on the findings reflected in the literature, we expect that the level of ethnocultural diversity to be related, in away or other, to the political culture, i.e. there are statistically significant correlations between the level of ethnocultural diversity and the political culture. there is a high level of theoretical congruence between the data set resulted from the intolerance, discrimination and authoritarianism of public opinion in romania survey and the scope of this research project. therefore, the concept of political culture will be operationalized in accordance with the original empirical indicators, as follows7. the 7 an inclusive, yet hard to use, operationalization of political culture devised by elazar comprises the following dimensions: 1) orientation to political organization: “how have particular people or groups of people addressed the organization of political life?” 2) orientation to civil society: elitist, participatory elitist, leader-centered populist and participatory populist. 3) orientation to polity: civic, corporatist, statist, subject, and tribal.4) orientation to political action: represents the summation of persistent patterns of underlying political attitudes and 207 measurement of the political culture consists of eight ordinal variables, each measured on 4-point scales. the first 15-item variable reflects the feelings one has about being romanian. among others, the question explores the pride of being romanian, the preference of romanians over the members of other ethnocultural groups, and the presence or absence of tolerance for minorities. the second question is based on the bogardus social distance scale and investigates individuals’ willingness to participate in social contacts of varying degrees of closeness with members of diverse social groups (in our study we look at roma, hungarian, arab, chinese, black people, jehovah’s witnesses, muslim, homosexual, lesbian, citizen of republic of moldova). the third variable deals with views pertaining to the roma people. the forth one considers a more general topic, namely the opinion about the number of rights held by minorities in romania. the variable explores the extent to which romanians feel that minority groups in romania have “too many rights”, “too few rights” or “just as needed”. the fifth variable is a 6-item question concerning the romanian-hungarian relations ranging from education to autonomy issues. the last three variables deal with several aspects of people’s orientation to political organization focusing on elements as different as “the man should decide in a family”, “it is good to have a market economy” or “books and ideas that distrust state authority should be forbidden”8. ethnocultural diversity is measured using the ethnic and linguistic fractionalization indices. the attractiveness of these indices in empirical applications can be understood if one looks at two different aspects. on the one hand, the computation of these indices can be performed both from micro and from aggregate data: all that is required is the value of shares of the various groups in the population. on the other hand, these indices benefit from an intuitive interpretation: they measure the probability that two randomly drawn individuals from the overall population belong to different ethnic groups. 4. data analysis alesina et al. (2003, p. 188) found the following fractionalization indices for romania: the index of ethnic fractionalization is 0.3069; the index of linguistic fractionalization is 0.1723; the index of religious fractionalization is 0.2373. as for the present construction of indices we used the 2002 romanian census in order to come up with the values of the shares of the various groups in the romanian population. these indices were constructed to match the cases comprised in the institute for public policy’s data set; therefore, from the total of 2952 romanian localities we used the 106 localities included in the ipp sample, in order to properly link the available data on political culture to the ethnolinguistic distribution of romanians. hence, unlike alesina et al. (2003), the values of the fractionalization indices we use are not illustrative for the entire characteristic responses to political concerns that is manifest in a particular political order. 5) orientation to political economy: market, corporatist, commonwealth, state involved, and state controlled political economy (the daniel elazar on-line library, available at http:// www.jcpa.org/index.htm). 8 for the complete list of variables see appendix, list of the variables used to measure political culture. 208 romanian population, but they reflect the level of diversity for those 106 localities our sample has individuals from. the indices at the level of the respective localities are as follows: 0.1104 the index of ethnic fractionalization; 0.0890 the index of linguistic fractionalization; 0.1608 the index of religious fractionalization. these variables are measured on an interval scale. table 1: indices of ethnic and linguistic fractionalization ethnic fractionalization index linguistic fractionalization index n valid 1500 1500 missing 0 0 mean .110473 .089071 std. error of mean .0036842 .0034244 median .058302 .030132 mode .0583 .0301 std. deviation .1426873 .1326257 variance .020 .018 range .6191 .5494 minimum .0000 .0000 maximum .6191 .5494 given the interpretation of the fractionalization indices (a “.0000” value indicates that there is only one ethnic or linguistic group; a “.5000” value signifies an equal distribution between two groups; a “1.0000” value corresponds to a great number of small groups) we can state that, with regard to the cases investigated, in the most frequently met situations we have one large group and a small number of tiny groups. it is important to note that the “large group” can represent (1) a group that is both a majority at the national level and in a certain locality; or (2) a group that is a minority at the national level but a majority in a certain locality. table 2: correlations between the indices of ethnic, linguistic and religious fractionalization ethnic fractionalization index linguistic fractionalization index religious fractionalization index ethnic fractionalization index pearson correlation 1 .987(**) .804(**) sig. (2-tailed) .000 .000 n 1500 1500 1500 linguistic fractionalization index pearson correlation .987(**) 1 .812(**) sig. (2-tailed) .000 .000 n 1500 1500 1500 religious fractionalization index pearson correlation .804(**) .812(**) 1 sig. (2-tailed) .000 .000 n 1500 1500 1500 ** correlation is significant at the 0.01 level (2-tailed). 209 the second table shows the positive high correlations between these three constructed indices. as one can see, the correlation between the index of ethnic fractionalization and the index of linguistic fractionalization is very strong: 0.987, which means that ethnic and linguistic identity overlap to a significant degree in romania. as far as the correlation coefficients of the operationalized variables are concerned, the following can be stated. throughout this analysis we used spearman’s rho nonparametric coefficient because the studied relationships entail both interval (ethnic fractionalization index) and ordinal data (all the variables that measure political culture). in other cases we constructed indices to discover if some multiple dimensional questions were explained by latent factors and to ascertain how these factors correlate with the ethnolinguistic indices. a 0.903 cronbach’s alpha coefficient showed the internal consistency of the 15 items of the first variable. a factor analysis was employed for this variable and it rendered a 0.922 statistically significant kaiser-meyer-olkin coefficient, proving the appropriateness of conducting such an investigation. a two-dimensional factor was found: the first dimension referred to “the pride of being romanian” and the second one to “the preference of romanians over other people”. the factors explain the 56.84% of the existent variance. the factor scores estimates were saved as variables using the regression method (the synthetic variable was created by applying weights to the all observed variables). these were used afterward in a correlation analysis that revealed that “the pride of being romanian” dimension negatively correlates with the ethnic and linguistic indices and “the preference of romanians over others” positively correlates with the ethnolinguistic fractionalization indices. in other words, the correlational analysis showed that, when the pride of being romanian is assessed in more diverse localities (diversity being illustrated by the increase in the fractionalization index), it has lower values, but when it is measured in rather homogeneous localities (characterized by an index of fractionalization almost equal to.0000), it records higher values. the positive pearson’s coefficients explained that individuals from rather homogeneous communities are less likely to share “the feeling of preferring romanians over other people” compared to those from heterogeneous communities. the not so high values of pearson’s correlation coefficients could stem from the difficulty to clearly assess both “the pride of being romanian” and “the preference of romanians over others” when the whole romanian population is taken into account, namely because at the national level there are various levels of experienced ethnocultural diversity. 210 table 3: correlations between the regression factor scores and the ethnolinguistic indices ethnic fractionalization index linguistic fractionalization index pride of being romanian preference of romanians over others ethnic fractionalization index pearson correlation 1 .987(**) -.166(**) .096(**) sig. (2-tailed) .000 .000 .001 n 1500 1500 1147 1147 linguistic fractionalization index pearson correlation .987(**) 1 -.157(**) .108(**) sig. (2-tailed) .000 .000 .000 n 1500 1500 1147 1147 pride of being romanian pearson correlation -.166(**) -.157(**) 1 .023 sig. (2-tailed) .000 .000 .443 n 1147 1147 1147 1147 preference of romanians over others pearson correlation .096(**) .108(**) .023 1 sig. (2-tailed) .001 .000 .443 n 1147 1147 1147 1147 ** correlation is significant at the 0.01 level (2-tailed). with regard to the indicators of social distance9, the analysis revealed that it is significantly correlated with the indices of ethnolinguistic fractionalization. we extracted two factors which explained 41.467% of the common variance. the first one refers to the sexual diversity and the other one comprises all the other types of ethnic, racial and religious diversity. we found small significant positive pearson’s correlation coefficients between the first factor and the ethnolinguistic indices and moderate significant negative correlations between the second factor and the indices of fractionalization. this implies that, to some extent, ethnic diversity could be conducive to a more tolerant feeling towards all a various ranges of groups, except sexually diverse minorities10. the small values of the pearson’s coefficients support the previous remarks concerning the difficulty of assessing the experienced diversity at the national level, and this becomes even more noticeable when one peruses the correlation coefficients corresponding to the relations between the sexual diversity and the indices of ethnocultural diversity. the investigation of the third and fourth questions referring to the romanian political culture, namely to the opinion about the amount of rights held by the romanian national minorities and regarding the roma population, lead to the conclusion that there are no statistically significant relationships between the ethnolinguistic fractionalization indices and these aspects of political culture. therefore, it is hard to articulate any conclusions about how ethnocultural diversity relates either to the rights held by the romanian minorities or to the life and needs of the roma population11. 9 this is an 11-item question measured on a 6-point scale, for details see appendix, q2. it has a 0.947 cronbach’s alpha coefficient which proves its internal consistency. 10 for more information on these correlations see appendix, table 5. 11 for further statistical data on this issue see appendix, table 6. 211 the analysis dedicated to the fifth variable, targeting the extent to which people agree/disagree with several statements about the hungarians in romania12, revealed that the more diverse a community is the more openness people show towards the needs of minorities. the results also ascertained that in homogeneous communities individuals are less inclined to be tolerant. for the sake of exemplification, when the ethnic fractionalization index has a lower value the subjects tended to agree with the statement “hungarians should use only the romanian language in their relation with the public administration”. conversely, when the ethnolinguistic indices have higher values the subjects were inclined to agree with the statements “romanian state should provide hungarian children education in hungarian” and “the counties where the hungarians represent majority should be offered increased autonomy”13. the analysis of the last three questions that operationalize political culture illustrated a set of interconnected aspects with regard to the romanian political culture. the results revealed that ethnic diversity is less likely to be conducive to extremist or radical views. as a case in point, there is a medium negative correlation coefficient between the “it is good to have only one political party” variable and the index of ethnic fractionalization, meaning that to a higher degree of diversity corresponds a lower degree of agreement on the issue and that to a lower degree of diversity corresponds a higher degree of agreement. 5. conclusions and limitations this research study placed the concept of political culture within the framework of the ethnic diversity and tried to investigate their relationships. given the constraints discussed in the methodological part, the focus was on the correlations between a set of variables measuring the romanian political culture and the index of ethnic fractionalization. in the light of the presented data we can state that there are, indeed, statistically significant correlations between the level of ethnocultural diversity and political culture, therefore the hypothesis is confirmed. as far as the nature of the established relationship is concerned, the findings provide a somewhat contradictory picture about the investigated phenomena. one simple answer to our research question would be that the relationship found is highly inconsistent with other international studies which reflect the detrimental effect of ethnocultural diversity on a large variety of structural variables, both in cross-national and in national contexts. nevertheless, our findings are in agreement with the contact theory which asserts that exposure to diversity has a positive impact on the minority-majority relations. broadly speaking, this research revealed that ethnocultural diversity is not 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(this question corresponds to the b1a-o variable from ipp data set) to what extent do you agree with the following items? a. i feel that i am romanian b. i feel that romania is my country c. i like the romanian language d. i like romania e. it is good to be romanian f. generally speaking, i like romanians g. i am proud of romania h. i am proud that i am romanian i. i am proud of what the romanians accomplished j. generally speaking, i prefer to get in touch with the romanian people than with people from other countries k. generally speaking, i like romanians more than people from other countries l. i feel that all romanians are members of a large family which also includes me m. i believe that all romanians should live in romania n. romanians should not mix with other nations o. people of other nationality than romanian should leave romania this is an ordinal variable which takes the following values: 1disagree; 2 rather disagree; 3 rather agree; 4 totally agree; 9 no response/don’t know. q2. (this question corresponds to the b3a-k variable from ipp data set) what is the closest relationship that you would establish with someone who is…? a. jew? b. roma c. hungarian d. arab 215 e. chinese f. black people g. jehovah’s witnesses h. muslim i. homosexual j. lesbian k. citizen of the republic of moldova this is an ordinal variable which takes the following values: 1as a family member; 2 as a friend; 3 as a colleague; 4 to live in my locality; 5 to live in romania; 6 they should not be allowed to live in romania; 9 no response/don’t know. q3. (this question corresponds to the c2a-h variable from ipp data set) i will read a list of statements and i would like you to tell me to what extent do you agree with them or not…? a. roma people should be forced to live separately from the rest of society, because they can not integrate. b. the state should provide more subsidies and assistance to roma population. c. it is good to have special places for roma in state universities. d. there should be pubs (bars, restaurants, discos) and shops where the access of roma to be restricted. e. the inhabitants of localities in romania should be allowed to decide whether roma people could live there or not. f. most of the roma population breaks the rules. g. the state should take legal action in order to stop the increase of roma population. h. roma people shouldn’t be allowed to travel abroad, because they embarrass us and cause troubles. this is an ordinal variable which takes the following values: 1disagree; 2 rather disagree; 3 rather agree; 4 totally agree; 9 no response/don’t know. q4. (this question corresponds to the c1 variable from ipp data set) nowadays do you think that, in romania, minorities have … rights? this is an ordinal variable which takes the following values: 1 too many rights; 2 too few rights; 3 just as needed; 9 no response/don’t know. q5. (this question corresponds to the c5a-g variable from ipp data set) to what extent do you agree with the following statements about hungarians in romania? a. romanian state should provide hungarian children education in hungarian b. the interests of hungarian population in romania are most often distinctive of other citizens’ interests in our country c. it would be better if the hungarians went to live in hungary 216 d. hungarians in romania should use romanian in their relation with public administration, even though, in some areas, their number is higher than the romanians’ e. the counties where the hungarians represent majority should be offered increased autonomy f. there are many hungarians who avoid speaking romanian, despite knowing it g. hungarians would never abandon their aspiration to link transylvania up to hungary this is an ordinal variable which takes the following values: 1disagree; 2 rather disagree; 3 rather agree; 4 totally agree; 9 no response/don’t know. q6. (this question corresponds to the d1a-j variable from ipp data set) i will read a list of statements and i would like you to tell me to what extent do you agree with them or not…? a. things would go better if everybody would always listen to the authorities’ orders b. keeping public order is more important than individual liberties c. the man should decide in a family d. it is natural that everyone chooses its own style life, even though it differs from majority’s e. children should be punished violently (be hit) in order to learn how to behave f. books and ideas that distrust state authority should be forbidden g. obeying and respecting authorities are the most important things children should learn h. romania needs a powerful leader to organize the country i. those who do not pay respect to the hymn, flag or national heroes should be punished j. the use of violence is often more efficient that long discussions this is an ordinal variable which takes the following values: 1disagree; 2 rather disagree; 3 rather agree; 4 totally agree; 9 no response/don’t know. q7. (this question corresponds to the d2a-b variable from ipp data set) how well you think that would be for romania...? a. have a military leadership b. have a democratic political system this is an ordinal variable which takes the following values: 1disagree; 2 rather disagree; 3 rather agree; 4 totally agree; 9 no response/don’t know. q8. (this question corresponds to the d3a-b question from ipp data set) from your point of view...? a. it is better to have only one political party b. it is good to have a market economy 217 this is an ordinal variable which takes the following values: 1disagree; 2 rather disagree; 3 rather agree; 4 totally agree; 9 no response/don’t know. table 4: values of the ethnic, linguistic and religious fractionalization indices and at the regional level region ethnic fractionalization index linguistic fractionalization index religious fractionalization index crişana-maramureş mean .298542 .261006 .457765 n 133 133 133 std. deviation .1791549 .1624101 .1688854 banat mean .228128 .198654 .334767 n 70 70 70 std. deviation .0880319 .0773426 .1269062 oltenia mean .051592 .041330 .016627 n 161 161 161 std. deviation .0513686 .0500022 .0119421 muntenia mean .035053 .019908 .028926 n 296 296 296 std. deviation .0487527 .0456502 .0196585 dobrogea mean .099092 .071412 .102997 n 67 67 67 std. deviation .0636889 .0501168 .0544408 transilvania mean .209599 .182289 .309152 n 295 295 295 std. deviation .1651049 .1642004 .1950130 moldova mean .044915 .029660 .113279 n 324 324 324 std. deviation .1057274 .0878739 .1219643 bucureşti mean .054089 .027723 .070666 n 154 154 154 std. deviation .0133253 .0072922 .0171337 total mean .110473 .089071 .160827 n 1500 1500 1500 std. deviation .1426873 .1326257 .1867526 218 table 5: correlations between the second variable of political culture and the ethnolinguistic indices regr factor score 1 for analysis 1 regr factor score 2 for analysis 1 ethnic fractionalization index linguistic fractionalization index regr factor score 1 for analysis 1 pearson correlation 1 .023 -.166(**) -.157(**) sig. (2-tailed) .443 .000 .000 n 1147 1147 1147 1147 regr factor score 2 for analysis 1 pearson correlation .023 1 .096(**) .108(**) sig. (2-tailed) .443 .001 .000 n 1147 1147 1147 1147 ethnic fractionalization index pearson correlation -.166(**) .096(**) 1 .987(**) sig. (2-tailed) .000 .001 .000 n 1147 1147 1500 1500 linguistic fractionalization index pearson correlation -.157(**) .108(**) .987(**) 1 sig. (2-tailed) .000 .000 .000 n 1147 1147 1500 1500 ** correlation is significant at the 0.01 level (2-tailed). table 6: correlations between the fourth variable of political culture and the ethnolinguistic indices14 ethnic fractionalization index linguistic fractionalization index rejection of the roma people integration of the roma people ethnic fractionalization index pearson correlation 1 .987(**) .020 .018 sig. (2-tailed) .000 .519 .551 n 1500 1500 1064 1064 linguistic fractionalization index pearson correlation .987(**) 1 .021 .028 sig. (2-tailed) .000 .491 .356 n 1500 1500 1064 1064 rejection of the roma people pearson correlation .020 .021 1 .000 sig. (2-tailed) .519 .491 .994 n 1064 1064 1064 1064 integration of the roma people pearson correlation .018 .028 .000 1 sig. (2-tailed) .551 .356 .994 n 1064 1064 1064 1064 ** correlation is significant at the 0.01 level (2-tailed). 14 two regression factor scores were constructed based on the 8-item question we had from the ipp data set. one factor was referring to the rejection of the roma people and the other one 219 table 7: correlations between two of the fifth variable items and the ethic fractionalization index ethnic fractionalization index romanian state should provide hungarian children education in hungarian the counties where the hungarians represent majority should be offered increased autonomy spearman’s rho ethnic fractionalization index correlation coefficient 1.000 .131(**) .152(**) sig. (2tailed) . .000 .000 n 1500 1368 1323 romanian state should provide hungarian children education in hungarian correlation coefficient .131(**) 1.000 .318(**) sig. (2tailed) .000 . .000 n 1368 1368 1280 the counties where the hungarians represent majority should be offered increased autonomy correlation coefficient .152(**) .318(**) 1.000 sig. (2tailed) .000 .000 . n 1323 1280 1323 ** correlation is significant at the 0.01 level (2-tailed). to the integration of the roma population and together explained 41.467 of the common variance. the kmo coefficient for this factor analysis was 0.846. untitled 277 abstract ever since romania started its transition in the 1990s, it consistently scored poorly in various comparative performance assessments aimed at rating developing countries. in this paper we analyze whether romania has managed to overcome the transition period or not, by pointing out both the drawbacks as well as the progress that has been made over the transition period, but most of all since our accession to the european union in 2007. we discuss the concept of good governance for a new eu member state, by focusing on the state of public governance in romania, but also addressing the other two important actors in the society, the private sector and the civil society. romania – new e.u. member state, a new phase of its transition*1 marius profiroiu alina profiroiu laura mina marian nica marius profiroiu (corresponding author) professor, administration and public management department, faculty of administration and public management, academy of economic studies, bucharest, romania tel.: 0040-213.191.900 e-mail: profiroiu@gmail.com alina profiroiu associate professor, administration and public management department, faculty of administration and public management, academy of economic studies, bucharest, romania tel.: 0040-213.191.900 e-mail: alina_profiroiu@yahoo.com laura mina assistant professor, administration and public management department, faculty of administration and public management, academy of economic studies, bucharest, romania marian nica phd candidate, administration and public management department, faculty of administration and public management, academy of economic studies, bucharest, romania * this paper was presented at the international research society for public management xiv conference, the crisis: challenges for public management, held in berne, switzerland, april 7-9, 2010. transylvanian review of administrative sciences, no. 33 e/2011, pp. 277-294 278 1. introduction accession to the european union implied the beginning of a new phase of development for central and eastern european countries. in our opinion the concept of good governance for a new eu country can be translated into democratic governance, meaning transparent and accountable governance, capable of enhancing participation and assuring the rule of law. thus, all countries that join the eu are formally considered to be democracies, as this is one primary condition that candidate states must fulfill. however, it is not surprising to see that many new eu member states have copied more or less accurately the superficial aspects of western mature democracies, without taking much care of the content. in other words, these countries call themselves democracies because they have managed to put in place specific institutional arrangements, although such arrangements are not always effective. this is more or less the case of romania, which in 2009 reached a democracy score of 3,36, that still places it in the semi-consolidated democracies group (with scores ranging from 3 to 3,99), together with bulgaria (3,04), croatia (3,71), serbia (3,79), montenegro (3,79), albania (3,82) and macedonia (3,86). therefore, the goal for romania should be to join the consolidated democracies group (with scores ranging from 1 to 2,99), together with slovenia (1,93), estonia (1,93), latvia (2,18), czech republic (2,18), poland (2,25), hungary (2,29), lithuania (2,29), slovakia (2,46). once a new eu member state has a genuine democratic governance, focus should be placed on the forms of governance (political/public governance, economic governance and social governance), because as developing and transitioning countries proceed down the path to democracy, changes take place in how all sectors of the society interact: state, private sector and civil society. this interaction is the essence of governance (brinkerhoff and crosby, 2002, p. 7). this paper examines the extent to which romania has continued the progress achieved prior to the eu adhesion in 2007 and the extent to which romania has managed to deal with the catching-up process. starting with the 1990s, when romania took the pathway towards democracy, it also became part of the transitional and developing countries group. in 2007, after 17 years of continuous efforts, romania joined the european union. at this point one would normally imagine that romania has managed to overcome its transition period and at least join the “intermediate developed countries” group. in the early 1990s, the government’s strategy focused greatly on the economy. only later on it became evident that economic reform was not possible without a proper public administration reform, which explains both the lags and distortions that resulted during the economic reform implementation process. in this paper we analyze whether romania has indeed achieved this status change, by highlighting both the deficits and growths. 279 2. the state of governance in romania when romania gained full eu membership in 2007 everybody expected transition to be over and also the “developing country” label. nonetheless, almost all statistics place romania towards the bottom of the list. there is no doubt that the eu accession process helped us speed-up and even burn some stages of the transitions’ travails. however, despite the efforts made in the pre-accession period, there is still a long way to reach the western european developed countries. several foreign and domestic analysts share the same opinion that although romania made a lot of efforts in order to improve the social and economic conditions of its populace, something essential must be missing since substantive democracy and prosperity are still on the wait (mungiu-pippidi et al., 2003, p. 2). to this respect, there is a growing consensus on what the missing ingredient might be: good governance. this would explain why countries facing more adverse circumstances have achieved more visible progress, as it is the case of bulgaria. some authors consider that the deficit of governance in romania spans over many aspects of the public life and gets translated into wrong institutional arrangements, lack of political will and missing implementation skills (mungiu-pippidi et al., 2003, p. 3). their position is supported by quantitative data, like the quality of governance indicator calculated by the world bank (2009), which measures six core dimensions of governance (figure 1). the evolution of this indicator in the last decade shows that the most sensitive governance areas in romania are the control of corruption, the rule of law and governance effectiveness. note: scores lie between -2,5 and 2,5, with high scores corresponding to better outcomes. figure 1: the quality of governance in romania source: adapted from kaufmann et al. (2009) if we take a closer look at the corruption dimension and also consult other comprehensive evaluations, like transparency international indicators (figure 2), we can easily notice that the most notable progress was made in the pre-accession 280 period, when the cpi scored increases of 0,6 points (3,1 in 2006, by comparison with 3,7 in 2007). once romania joined the eu, the cpi score rose very little (3,8 in 2008, by comparison with 3,7 in 2007) or remained constant (3,8 in 2009). the progress achieved in 2008 in the anticorruption fight was held steady in 2009 most probably because of the parliament’s try to reinstate immunity for ministers who also enjoyed the member of parliament status (freedom house, 2009). note: ratings are based on a scale of 1 to 10, with 1 representing the highest level of corruption and 10 the lowest level of corruption. figure 2: romania’s corruption perception index (cpi) evolution between 1997-2008 source: transparency international (2009) when checking on other comparative ratings (table 1), scores seem to indicate, with small exceptions, a stagnation or even decline of the progress registered prior to the eu accession. apart from the electoral process, for which ratings improved from 2,75 to 2,5 due to a new, original electoral system replacing proportional, list-based voting, the other dimensions got worse or remained constant. table 1: nations in transit ratings and averaged score 1999-2000 2001 2002 2003 2004 2005 2005 2007 2008 2009 electoral process 2,75 3 3 2,75 2,75 2,75 2,75 2,75 2,75 2,5 civil society 3 3 3 2,75 2,5 2,25 2,25 2,25 2,25 2,5 independent media 3,5 3,5 3,5 3,75 3,75 4 4 3,75 3,75 3,75 governance* 3,5 3,75 3,75 3,75 3,75 n/a n/a n/a n/a n/a national democratic governance n/a n/a n/a n/a n/a 3,5 3,5 3,5 3,75 3,75 local democratic governance n/a n/a n/a n/a n/a 3 3 3 3 3 judicial framework and independence 4,25 4,25 4,25 4,25 4,25 4 4 3,75 4 4 * starting with the 2005 edition, freedom house introduced separate analysis and ratings for national democratic governance and local democratic governance to provide readers with more detailed and nuanced analysis of these two important subjects. 281 1999-2000 2001 2002 2003 2004 2005 2005 2007 2008 2009 corruption 4,25 4,5 4,75 4,5 4,5 4,25 4,25 4 4 4 democracy score 3,54 3,67 3,71 3,63 3,58 3,39 3,39 3,29 3,36 3,36 note: the ratings are based on a scale of 1 to 7, with 1 representing the highest level of democratic progress and 7 the lowest. the democracy score is an average of ratings for the categories tracked in a given year. source: mungiu-pippidi (2009) from a theoretical and practical point of view, public management and good governance are strongly interrelated with public administration (pa). a common mistake of those who use management methods in the service of the state and of the good governance supporters is that they do not take into consideration the above mentioned interactions/relations. a complex analysis reveals that without pa, neither public management nor good governance can achieve the expected outcomes. this aspect must be taken into account as a high priority for pa modernization, and above all it is important to exactly determine what it consists of. first of all, it is important to admit, accept and reaffirm the role of pa as decisive factor for an effective public management and good governance. secondly, the main pa functions must be redefined, especially those that cannot be delegated to the private sector and the civil society: justice, security, provision of essential public services for human development and protection of the environment. it is obvious that an oversized pa, that carries functions that could be better performed by the market sector and the civil society cannot be either effective or efficient. and third of all, a new start for pa should not be over-sufficient; pa should not limit itself to exclusively perform its functions and supply public goods and services in a paternalistic and monopolistic way. pa has to understand the importance and the advantages of partnerships with the private sector and the civil society, aimed at achieving synergy, at local, national, regional and international level. in this way pa can maximize the experience, competences, knowledge and resources in order to better satisfy the citizens’ needs. partnerships will therefore be the engine for modernization, as they can mix together the best capabilities of all three types of administrative practices (public administration, public management and good governance) in order to transform pa in an effective, efficient, lean, transparent and accountable instrument in the service of the state. 3. public administration sector in general, a modern public administration should be endowed (at the level of institutions, structures, mechanisms, procedures, networks, relationships, work procedures and hierarchical rules) with a series of attributes that allow it to be efficient, effective, economic, transparent, responsible, equitable, capable of adapting to the public needs and to allow the participation of various actors from all the sectors and levels. 282 a democratic and efficient public administration is one of the key elements which define a country’s level of modernization (profiroiu et al., 2006, p. 3). consequently, the state of public administration is a good indicator for identifying the phase of a country’s transition. romania makes no exception to this trend. thus, the first phase of reforming the public administration system begun immediately after the change of political regime, in 1990. starting with 1993, pa reform focused on changing the relationship between pa and society, meaning that pa must serve the society and not subordinate the society, as well as on the separation between the state and the civil society. it also emphasized the support for increasing the civil society’s auto-regulation capacity and for local individual initiatives, a new relationship between citizens and administration, strengthening the role of local public authorities and developing a partnership with the civil society. other drivers for increasing the pace of pa reform were the need for structural and functional pa modernization and the eu integration process. this is the moment when, after the crucial process of democratization, the paths of central european administrative reforms began to come closer again in the late 1990 as a result of the eu accession process. although public administration was not an explicit part of the acquis communautaire, several targets set by the eu regarded more or less directly administrative/management reforms in the public sector: establishing the civil service, e-government services, further decentralization, improving the system of financial controls to be able to use efficiently and effectively eu funds (nemec, 2008, pp. 343-344). in romania, external pressure, coming especially from the european union, but also from other international stakeholders, have made the administrative reform a top priority, closely intertwined with the process of accession to the european union (hinţea, 2008, p. 277). this new phase of the administrative reform (2001-2006) was aimed at promoting values and principles such as: separation between political and administrative functions; creating and strengthening a new corps of professional and neutral career civil servants; bringing the decision-making processes closer to the citizens, decisionmaking autonomy; transparency; administrative simplification and respect for citizens; competence delegation and service deconcentration; protection of citizens’ rights. several european commission reports signaled that many of the initially set goals as well as the adopted laws were not effectively respected and implemented and the new created entities did not manage to entirely fulfill their mission. it is for this reason that the pa reform kept the top of the pre and post eu integration agenda. taking into account the recommendations made in the european commission’s report in 2003, the priorities of the pa transformation process focused on the civil service, aimed at creating a professional, stable and politically neutral corps of civil servants, local public administration, by continuing the public services decentralization/deconcentration process and central public administration, by improving the public policy process. the monitoring process of the civil service and continuous training for public servants legislation implementation revealed several problems, related both to the 283 legal framework, as well as to the management of public employees. all these findings led to changes in legislation and to a consolidated role of the national agency for civil servants. law no. 16/2003 helped better regulate incompatibilities and conflicts of interest. other relevant pieces of legislation adopted were related to the career system, parity and disciplinary commissions, professional dossier, civil servants professional conduct code. despite all the attention, the reform process apparently gave to the civil service an integrated strategy, exclusively dedicated to all aspects of the public service, capable of proving awareness that decisions that materialize into laws can be effectively implemented only by a professional, stable and politically neutral corps of pa professionals (table 2). the main weak points of the romanian pa human resources management (hrm) were related to the selection, recruitment, motivation, evaluation and salary system. thus, the recruitment and selection processes are not as transparent and correct as they should be. people working in the pa hrm departments are not capable of selecting the best candidates, because they limit the selection procedures to the conditions set by laws. also, there are few intermediaries used in order to promote vacancies (the most important intermediary, the national agency for public servants did not manage to centralize on its website all the vacancies available in all 41 counties), and public institutions rarely have proper updated websites. as for the motivation of civil servants, there is a lack of alternative motivation instruments, compensations are not sufficient in order to assure a decent standard of living and newcomers into the system are not at all well paid. all these elements lead to an increased number of corruption cases and a negative image surrounding public servants. table 2: dimensions of the current reform process young people’s interest for the civil service employees’ mobility continuous training improvement corruption reduction increase of transparency development and empowerment of employees potential not at all 9.1 4.8 0.0 0.0 0.0 0.0 very little 18.2 28.6 9.5 18.2 22.7 4.5 moderated 31.8 47.6 28.6 50.0 13.6 27.3 pretty much 13.6 14.3 52.4 13.6 27.3 18.2 very much 27.3 4.8 9.5 18.2 31.8 40.9 no answer 0.0 0.0 0.0 0.0 4.5 9.1 total 100.0 100.0 100.0 100.0 100.0 100.0 source: profiroiu et al. (2006) starting with 2006, a considerable increase of the government employees’ salaries occurred, gradually leading to an excessive growth in the number employees. in the context of the present financial crisis high wages were not sustainable anymore, which made it necessary to adopt, in 2009, the unitary salary system law for the budgetary sector. it aimed at abolishing major discrepancies between the various 284 public sector categories of employees by introducing wage coefficients ranging on a scale from 1 to 12. despite uncontested efforts, empirical evidence reveals that pa reform in romania can be defined as a process which failed to bring about the expected transformations (profiroiu et al., 2006, p. 40). thus, the results of a survey carried out among local and central pa practitioners indicated that 50% of the mayors in romania do not have a positive opinion about the changes that resulted in the pa field in the last years, while 36,4% of the modernizers (public sector employees responsible for pa modernization) feel that public administration is subject to a reform process to a very little extend. the decentralization of competences from central to local level, generated a lot of difficulties in the public service provision process, because local communities were not prepared to assume such responsibilities. moreover, under the public deficit pressure, central pa did not accompany the package of decentralized competences with the corresponding financial resources. in romania, decentralization was perceived as an antidote for the communist regime remains. however, the persuasive role of the central pa in relation with the local pa control, the inadequate level of resources at local level and the territorial discrepancies related to the public services quality represent likely areas for intervention aiming at improving the effects of decentralization (world bank, 2006). local public administration law balanced the decision power in favor of local and regional authorities. unfortunately this legal framework which established clear rules and principles for decentralization was adopted in 2004, almost 13 years after the decentralization process had begun. during the last decade, romania has made significant steps in the field of financial decentralization. within this process four cycles have been identified (profiroiu, andrei and profiroiu, 2008, pp. 172-173): • in the first cycle (1991-1994) important changes were made in the structure and the financing system of local authorities, including also the introduction of the local taxes and fees system. • in the second reform policy cycle (1998-2000) new steps were made, for making the administrative and financial decentralization effective. thus, on the basis of the new legislation concerning local public authorities financing, the local budgets quota from the gdp increased, as well as the corresponding proportion of the local expenditures in the total public expenditures (between 19982001 the percentage from the gdp increased from 3,6% to 6,5% and the local expenditures from 14,4 to 26,6%). • during the third cycle (2001-2004) the new laws (local public administration law no. 215/2004, community public utilities law no. 326/2001) have adopted and established new rules for some functions of the local authorities, especially with regard to the public services/utilities. tendencies of centralization and decentralization existed all over this time period. some new legal provisions strengthened the control power of central authorities over local authorities, 285 while others have acted in the spirit of decentralization. in july 2003 a new law concerning the local public finances abrogated the previous one. the new legal framework included provisions correlated with law on public finances no. 500/2002 (harmonized with the provisions of the council of the european union (ec, euratom), regulation no.1605/2002) and led to an increased percentage taken from the tax on income applied individually (ipp) which was transferred to the local budget. • during the fourth cycle (2004-present), the reform continued with the adoption of the decentralization law no. 195/2006, which clearly classifies the competences of local pa authorities, dividing them into three major categories: exclusive, shared and delegated competences. according to the two important stages of the pa reforms in central europe, external financial help can also be separated in two categories. thus in the first phase of democratization of pa, financial support came through sigma, oecd, eu funds (phare program) and international donors, such as the world bank, usaid or the international monetary fund. the second phase of reforming the public sector in cee was dominated by the eu accession process and therefore eu financial aid for reinforcement of institutional and administrative capacities was received mainly through phare and transition facility programs and later on through structural funds. since its accession to the european union (january 1st, 2007) romania was considered ready to meet obligations arising from its membership, but also to exercise its rights under such acts, including participation in the formulation and implementation of the community cohesion policy. therefore, the efforts to consolidate the evaluation capacity are continued. currently, romania is one of the eu member states benefiting from an operational program, financed by the structural funds, which is entirely dedicated to the administrative capacity development. the need for a separate operational program for solving this problem is emphasized in all studies on the evolution of public administration institutions in romania. therefore, the ministry of administration and interior is entitled to act as managing authority for the administrative capacity development operational program. the overall objective is to increase government efficiency, while the specific objectives relate to improving public policy management cycle and the quality and efficiency of service delivery. despite all efforts above presented, evaluation capacity is still insufficient, proving that its development requires time and resources. the problems identified in the development of the evaluation capacity relate primarily to the romanian evaluation culture (ministry of public finance, national evaluation strategy 2007-2013). first, there is confusion about the concept of evaluation, its significance, and the language used to describe it. the purpose of evaluation is not well understood at the various levels of government administration. evaluation, as a process that supports the management of public administration and good governance, is lost to some extent in reporting and control function. in the romanian public administration there is rather a culture of reporting, focused primarily on financial audits. also, due to a 286 strong reporting culture, emphasis is placed on describing the work rather than on evaluating it. last but not least, the supply of domestic evaluators is low, regardless the field. there is a small pool of evaluators, their experience being gained through a combination of practical experience and training, but their capacity should be further supported and developed. moreover, due to the existence of a legalistic tradition in the romanian public administration – excessive use of normative acts, strict procedures – development of a monitoring and evaluation culture based on performance, transparency, efficiency and effectiveness, in terms of public policies, has proved difficult. the problems identified at the level of central public administration in romania generated by the legalistic tradition relate to: – institutional deficiencies: information on actions taken and the results achieved is difficult to be obtained and used. monitoring and evaluation activities are not perceived as current and systematic activities within central administration, but rather imposed by the requirements for the implementation of eu funded projects. there are no plans of joint monitoring and evaluation of inter-institutional programs or public policy proposals. these facts might illustrate the insufficient political and administrative support for monitoring and evaluation activities. – lack of resources: there are no appropriate financial and human resources allocated to monitoring and evaluation (except the evaluation of the european structural funds), and outsourcing of such a function is very difficult. there are few opportunities in terms of technical assistance programs and training for monitoring and evaluation activities. – structural problems: there are limitations regarding the use of monitoring and evaluation results, including public transparency. the audit and control activities are more present than monitoring and evaluation activities and quantitative indicators are favored to qualitative ones. 4. private sector according to the two already mentioned phases of pa management reform in cee countries, romania’s transition to the market economy can also be broken down into two different stages, very much similar to the first ones: the liberalization phase and the pre-accession phase. the liberalization phase began in the early 1990s with radical economic reforms aimed at producing the switch from a centrally-planned economy to a market economy. the first economic reforms were directed towards a massive privatization and restructuring of the economic system. these reforms were considered compulsory for other further economic measures. prices liberalization was another important modality for allocating resources in order to be used with maximum efficiency. trade liberalization, proliferation of the private property, opening towards the international capital market were just a few of the most important reforms at the beginning of the road to capitalism. 287 romania managed to attract foreign investors later than other cee countries due to the constant hesitations it showed, once it started on the pathway to democracy. only in the middle of the 1990s, when the effects of the democratic transformations came into force, did romania became an interesting location for investments. however, that late start seems to “haunt” romania, as recent data shows it did not manage to catch-up with other transition and developing economies. thus, the results provided by imd competitiveness yearbook1 in 2009 ranked romania at the bottom of the list (position 54 out of 57), before argentina, ukraine and venezuela. romania suffered a considerable reversal as it fell nine places, from the 45th to the 54th place, and was severely surpassed by all european union member states2. the world competitiveness yearbook shows the country’s state of governance, as it is a well-known fact that good governance means institutions that establish a predictable, impartial, and consistently enforced set of rules for investors, which is crucial for sustained and rapid growth in per capita incomes, especially in transition and developing countries. according to data of the world bank report “doing business 2008 – comparing regulation in 178 economies”, romania has achieved a substantial improvement in the regulations that address the private sector. thus, romania ranks on the 48th position at global level concerning the easiness to start and develop a business from a legal point of view, despite the fact that reforms have not proved to be unitary. the report also signals out the most problematic areas: obtaining authorizations, hiring and dismissing procedures, private property registration procedures, tax levels and payment modalities, and bankruptcy declaration process. a recent national survey, carried out in 2009 (nicolescu et al., 2010, p. 30) reveals the opinions of entrepreneurs and managers on the main contextual factors that negatively influence the activity and management of private companies (figure 3). the results indicate a strong connection between the business environment quality and the public management quality. thus, the main culprit for the poor performance of the private sector seems to be the poor economic and public management, which makes romania an “unfriendly” business environment for domestic investors also. 1 the world competitiveness yearbook is the world’s most renowned and comprehensive annual report on the competitiveness of nations, which analyzes and ranks the ability of nations to create and maintain an environment that sustains the competitiveness of enterprises, by dividing national environments into four main factors: economic performance, government efficiency, business efficiency and infrastructure. the wcy results for romania are useful both for the business community as well as for the academic world, but most of all they are useful for the government, allowing them to assess and benchmark their policy success and see how other countries perform. 2 other central and eastern european countries, which had the same government system before 1989 scored much better: czech republic (rank 29), lithuania (rank 31), slovenia (rank 32), slovak republic (rank 33), estonia (rank 35), bulgaria (rank 39), poland (rank 44), hungary (rank 45). even candidate countries or potential candidate countries performed better: croatia (rank 53), turkey (rank 47). 288 figure 3: frequency of the main contextual evolutions that negatively impacted on the private companies’ activity and management source: nicolescu, verboncu and profiroiu (2010) in the context of new pressures such as loss of monopoly, greater competition, demand for efficiency and effectiveness correlated with budgetary constraints, globalization etc., the romanian public sector has to reconsider and reformulate its intervention in the economy, by keeping for itself its original function and roles and delegating service delivery to the private sector. in front of such challenges, western democracies have opted for public-private partnerships (ppps) arrangements. the social and economic context in romania represents a challenge for publicprivate partnerships. ppps are considered to be a viable alternative to insufficient public budgets and inefficient bureaucracies. another driver for ppps arose from pressure from citizens, who were increasingly aware of their rights as taxpayers and who demanded high quality public goods and services. the transition to the market economy, the eu integration process, the decentralization process, and also the current financial crisis stand as drivers for better co-operation between the public and the private sector in romania. european union countries are even more motivated to use ppps because they have to respect the fiscal requirements set by the maastricht treaty, which impose on member states a budget deficit below 3% of gdp and a public debt below 60% of gdp. as a consequence, the maastricht criteria limit the member states’ borrowing capacity. however, eurostat fiscal treatment for ppps offers the possibility of keeping the ppp project from having a negative impact on the budget deficit, by considering all the assets involved in a ppp as being non-governmental, if two requirements are met: the private partner takes over the construction risk (which covers risks associated with late delivery, poor quality, additional costs, technical faults of the delivered output etc.); and the private partner bears at least one of the following risks: the demand risk (which covers the fluctuation of the demand) or the availability risk (which guarantees the viability of the concessioned infrastructure or utility). bureaucracy 289 in the current financial crisis context, the cooperation between the public and the private sectors can bring both opportunities and threats. opportunities are expressed as job creation, generation of new sources of income, new infrastructures and new services, increasing fiscal income, better directing public budgets, better absorption of eu funds. threats instead are related to tighter lending conditions, decrease in investors’ confidence due to high risk and uncertainty, weaker external demand, expressed as number of tenders (given that fewer tenders means a less competitive price for ppps and higher prices are translated into lower efficiency, which in the end mean less value for money). 5. civil society no matter how much we take care of the public-private sector interactions, we should not disregard that good governance also implies a relationship based on trust and an active partnership with the civil society. that is why governance reforms seek to engage citizens more fully and effectively in politics and policy-making, most often by strengthening civil society (brinkerhoff and crosby, 2002, p. 7). in well-functioning democracies, non-governmental organizations (ngo) perform a vital function in keeping the actions of the government under scrutiny, calling it to account, and in channeling the active participation of citizens in the public policy debate. the vitality of such organizations is of paramount importance to the emergence of a stable government that is responsive to the needs of its citizens. the growth and development of the not for profit organizations are directly linked to the advancement of a democratic society. romania’s transition from communism to democracy has been an uneven process. its progress in “closing the chapters” in negotiations with the eu has been slower than that of many other candidates. the total number of ngos in romania range between 17,000 and 30,000, but only about 7,000 of them are active. the united states agency for international development (usaid) released in the summer of 2009 the 12th edition of the ngo sustainability index, a key analytical tool that measures the progress of non-governmental organizations (ngos) in the european and eurasia (e&e) region. usaid tracks the progress of the ngo sector in 29 countries in europe and eurasia. contained in the 12 years collection is a historical record that provides a wealth of data on each country. according to the ngo sustainability index, for the first time in recent years, the ngo sector development in romania has stagnated, with the overall state of the sector remaining the same as in 2007 (figure 4). anchored in solving the needs of the community, constantly challenged to struggle for financial resources, ngos’ participation in the process of policy formulation and monitoring of policy implementation is still limited. the withdrawal of major donors in the context of eu accession makes the sustainability of ngo sector a continuous effort that should be supported, by both communities and governments. 290 note: scores range from 7 (early transition) to 1 (consolidation) figure 4: evolution ngo sector in romania according to the ngo sustainability index source: united states agency for international development (2009) after romania became member of the european union, there is a widespread perception that advocacy campaigns are less effective than they used to be prior to romania’s eu accession. there are also fewer supporters at the political level for ngo advocacy initiatives. especially, at the regional and local levels, advocacy initiatives have been less visible and less successful. nevertheless, examples of successful involvement of ngo in the public debate are still present. in february 2008, the pro-democracy association facilitated a consensus among the main political parties for the introduction of a uninominal electoral system, which was adopted by the parliament in march. the most recent initiative of the civil society is the creation of a coalition for structural funds. concluding, we can say that in the past 12 years there was significant progress regarding the institutional setting on government and civil society collaboration. a notable development is the creation, in 2007, of the department of relations with civil society, a governmental body that functions within the prime minister’s office. this department promotes and evaluates governmental policies related to the civil society, assuring a dialogue platform between the prime minister and civil society, assuring the transparency of the governmental decisions through permanent involvement and communication with civil society. 6. concluding remarks ever since the early 1990s romania’s evolution was a continuous struggle to overcome its status, whatever that was: socialist country, transition economy, eu candidate country, semi-consolidated democracy etc. during these two decades of struggle, romania registered both progress and drawbacks. of course, it is difficult to quantify them all and then draw a line and 291 conclude whether advances exceed drawbacks or vice versa. the real challenge for every state is however its capacity to maintain and improve the progresses and diminish and overcome deficits. what we can say for sure is that the stimulus for transformation and for the adoption of most reforms measures in romania was to a large extent generated by factors outside the national governments, mainly the european union. after the eu accession, pressure for change diminished, which is why in order to continue the catching-up process, reforms should become a “voluntary” and domestically generated process. external incentives for reform have therefore proved to be both a lever, as well as an obstructive instrument. in many fields romania has performed reforms just because it was forced to do so, not because it felt so. if we look at the public sector, we will see that although public administration reform has always been part of all the governmental programs, it has never been a real priority; on the contrary, centralized models were to a large extent preferred and the changes were either too slow or too fragmented. although romania started a new chapter in its evolution, the post-accession chapter, several setbacks lead to a deficit of governance, which spans over many aspects of public life: • the system is mainly based on expenses, not on results, due to a faulty planning and budgetary control mechanism. focus is placed on whether the approved sums are spent respecting the legality and regularity rules and not on the results achieved after spending the public money. the budget is based on the nature of expenses and not on programs and public policies with quantifiable results. • the system shows examples of good practice in the field of eu programs monitoring and evaluation, but cannot offer information about the same type of activities financed by the public budget. in most cases there are not enough human and financial resources for the above mentioned activities. insufficient financial resources makes it difficult to outsource the assessment and monitoring services, except for those contracted through international technical assistance projects. insufficient human resources are a consequence of the fact that both offer and demand for technical assistance and training programs in this field are very small. • the system gives a disproportional importance to norms and laws. this is a generalized trend at the level of pas and public sector employees, who tend to exaggerate when respecting rules, which leads to confusion between goals and instruments and too much attention given to internal rules and procedures rather than to results. although a procedure for the formulation, monitoring and evaluation of public policies was issued (compulsory for central pa), it is only formally respected and sometimes even dissimulated, as policy-makers do not really understand the role of that procedure, the reasons why various alternative solutions for the problems on the public agenda must be developed, the need for ex-ante evaluation or the importance of stakeholders consulting. 292 • the evolution of the system is slow, inert and incapable of adapting to changes in real time. the closer the decision-making process is to the local level, there are more chances for decisions to better adapt to the various changes. although theoretically romania is a decentralized state, as the constitution guarantees local self-government, abolishes hierarchical relations between central and local administration and endows local authorities with extended competences in the fields of education, health, social protection, public utilities etc., in reality things are different because of financial matters. moreover, at local level, the effects of decentralization are inconsistent and most of the times annual budgets are adjusted during the financial exercise, depending on the fiscal incomes and expenses, forcing various local communities to request supplementary funds. • the system is reticent to the citizens’ and civil society’s participation in the decision making process. there are very few occasions when citizens, as taxpayers and non-governmental organizations are invited to take part in more or less formal public consultations. participation and public consultation are reduced to simple conversations, in an inadequate framework for an effective consultation, many times without being previously prepared. most of the times they are regarded as events that must be checked off the public or political agenda. civil society is still not “strong” enough to support an active consultation, as there are several problems related to aggregation of interests, formulations of requests and competences. • the civil service remains politicized and lacks professional public servants. a good example is the prefect and sub-prefect functions, whose holders are changed whenever a new party comes to power. they are not recruited from a professional corps of civil servants, but are externally selected according to the party’s preferences. recently, a strong politicization pressure tried to transform the positions of directors of ministries’ deconcentrated services in positions for the clients of the ruling political party. • the system continues to produce regulations that induce excessive administrative costs and tasks, despite the administrative simplification efforts undertaken at central level, generating unsatisfaction among beneficiaries. consequently, in this field a series of deficits emerge, such as low quality regulations due to poor substantiation and inexistence of an integrated approach assessing administrative costs exclusively generated by the national legal framework. in the end, our conclusion is that since eu adhesion, romania has tended to discontinue most pre-accession reforms, thus continuing its’ post-accession transition pathway. there is no doubt the global crisis is one of the main culprits for the stagnation of reforms and setbacks, but this proves again that romania’s governance practice is not strong enough to deal with critical moments. 293 references 1. bouckaert, g., ‘public sector reform in cee countries: an 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workshop: comparative experiences, bucureşti: world bank, 2006. 22. world bank, doing business 2008 – comparing regulation in 178 economies, [online] available at http://www.doingbusiness.org/~/media/fpdkm/doing%20business/ documents/annual-reports/english/db08-fullreport.pdf, accessed on january 15, 2010. 23. world bank, ‘worldwide governance indicator’, [online] available at http://info. worldbank.org/governance/wgi/resources.htm, accessed on january 23, 2010. 98 abstract one of the most important things that influence people’s happiness is the strength of their relationship with others: feeling close to and valued by others is a fundamental human need and the strength of our communities also depends on the connections and relations that people have within them. appearing and evolving along with human communities, public spaces were the scene of many manifestations of the community, a place of conviviality, of spirituality – in all its forms – a religious, administrative and legal landmark. urban public spaces are those where all the processes related to peoples existence take place and, especially, peoples’ cohabitation. these places are a reflection of the social structure, of the level of development and computer technology, not a flat, clean and shiny surface. the changing face of cities starts as well from the public space. keywords: public spaces, communities, planners, communication, urbanism. back to agora elena maria minea elena maria minea associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-234-431.361 e-mail: elena_maria_minea@yahoo.com transylvanian review of administrative sciences, special issue, pp. 98-108 99 1. in times entirely dedicated to neologisms, my proposal to ‘review’ or, more precisely, to return to the classical urban vocabulary (even archaic) may occur as strange. at a more careful analysis, the approach appears not just in terms of curiosity, but, as i truly hope, it should at least be understood. i do not think that i am the only one (or one of the few nostalgics who believes that a return to the past, to its experiences and the lessons it taught us, would be a very appropriate way to solve a series of new challenges that our society has to face nowadays. the dynamics of change, that influenced all areas of our existence – has generated deep changes in each and every one of us. on the other hand, research and results in every area of human life and activity, due mostly to archaeologists and anthropologists, have brought to our knowledge the proof that many current performances (in the field of technology, medicine, astronomy, construction etc.) that we are proud of, have been known and used for hundreds and even thousands of years ago. therefore, same old, same old! moreover, even the genesis of humanity is in question, since the existent theories are complemented or annulled by the new emerging ones. in this context, more and more people are reconsidering their opinions and show a natural tendency to pay more attention to the past’s experience, in order to avoid the same mistakes and mostly in order to define ‘our common future’ respecting the principle of sustainable development. 2. we have to accept and admit, objectively and responsibly, the fact that not everything that belongs to the past is ‘old’, outdated and unnecessary. everything related to the development of a process (historically speaking) can not be canceled and maybe the fact that some things and phenomena do not just happen again, but they come back to people’s attention in a different shape, it is not all ‘cyclic’, but it might as well have yet unrevealed significance. urbanism, the target area of the analysis, is certainly not a new field (excepting probably its definition) of preoccupation – moreover, in terms of art, science and technology, the proof is that it has always been there. the evidence is more than enough, it is abundant! obviously, the problem it needs to solve is increasingly challenging, but just as in mathematics, we must admit that sometimes the most difficult problems have the most... trivial solutions. we can only hope that the key to success for many actions that we undertake is to be sought in simple matters, even common sense sometimes. this is the bet upon which a future research should start, respectively with aiming at how certain urban components could undertake the training part regarding people’s attitude and behavior, providing the fact that we must be aware that the global economic crisis associated to the environmental crisis, have as a main trigger the human crisis. obviously, selfishness, malice, envy, jealousy, these are not new behaviors on earth, but their exacerbation generated, fostered and maintained by the abnormally fast rate of change, the social dynamics worldwide, they are likely to worry everyone. 100 3. the alteration of human relationships, the development and increased rate of all human activities, the time crisis (explained by the theories of contraction), eagerness, material wealth etc. are already emblematic of the times we live in. as there are sufficient grounds to justify the current state of humanity, we must also find reasons to restore balance in society, by finding solutions for an individual rebalance, by restoring at its rightful place all the good and beautiful properties that characterize the human race; restoring individual balance should be the number one priority. re-modeling our behavior, rebuilding it on grounds of inner beauty, good faith, altruism, cohesion and solidarity would certainly provide a different perspective on the future of humanity, and solutions to current problems could more easily be found. a decisive role model has always been education – in all terms and across all institutions: the more the community has invested in education, the more the prosperity came faster and the benefits have been earlier recorded. along science and culture, which it interferes with, education means social development. de facto, education can not be reduced to any of its components – information, storage, training, learning practice, behavior, attitude etc. which, unfortunately, have lost importance and significance. the return ‘to the whole’ is an imperative must, but the means to do it are extremely difficult since the resistance is strong. in these circumstances, the training role should be divided between authority and competence factors that must benefit from trust and transparency and the action must be conducted in a responsible framework. this framework should not be closed, on the contrary, it should be opened to the community members, it must be desirable, pleasant and comfortable, to provide certainty and novelty as long as it is safe, easy to find and always available to the applicant/recipient. the public space – with all its history, with the greek agora brand or as well the roman forum – we think would entirely fulfill this mission. 4. appearing and evolving along with human communities, public spaces1 were the scene of many manifestations of the community, a place of conviviality, of spirituality – in all its forms – a religious, administrative and legal landmark. initially, the political space, as an archaic form, was devoted to the public space – the agora – it was meant as a place for circulating and spinning ideas and manifestations of public opinion in the debate. the role and the further significances contributed to their load of various activities (exchange of goods, trade, celebrations and ceremonies) and urban art monuments (cemeteries of the wealthy, statues, fountains, street furniture), aspects that led to the acquisition of complex uses. 1 in a broad sense, public spaces consist of streets, parks, playgrounds, parking etc. the attribute ‘public’ means opening, accesibility. this trait of belonging to all is, in fact, extremly complex, because ‘all’ use the place, but ‘all’ must also assume the responsability for the way of doing that. 101 what is worth to be kept in mind is the direct communication which could easily be achieved, the social cohesion that ensured the participation of all the community members in general interest actions and expressions and the easy access to the time’s public information. thus, the public space perpetuated its sensibility and permeability to all social, political even mentality changes of inhabitants, as well as to technical, cultural and any other progress that appeared in their society. the public space’s valences were initially about their definition as built spaces, with outstanding architectural and urban value and, and on the other hand, their estimation as a reflection of social and political structure of society, a third valence following, namely the field of administrative and legal sphere, involving separate and different issues. 5. the reason we raised the public spaces issue and pointed out their importance in the urban context is determined by the fact that the full responsibility of its management belongs to the local public authorities: it is them that make the decisions regarding the architectural, aesthetic, landscaping model, as well its functioning and maintenance. the administration has the power in the territory, being situated close the citizens, to the community. it is a known fact that ‘we can govern by distance, but we can only manage by close’ (introductory words to a french decree of 1852). the public space is an actual area, a constructed planned place, natural or artificial, that challenges different categories of professionals, such as architects, planners, geographers, historians, engineers, landscapers, which are regulated in their activities by special legal urbanism rules. the framework of urban planning law seeks to harmonize the permanent conflict between the rules governing the public and the private property, to ensure the proper conduct of negotiations between the public and the private sectors. usually, the surrounding buildings of public space belong to the private sector, which have been awarded a prior authorization from the public authorities – the building permit (which is a final administrative document certifying the compliance of the building with the urban planning provisions, which, in turn, express the tendency of the city development). moreover, the facades of these buildings define the whole landscape, the public decoration, the specificity of the framework. the administration must consider and decide how to make the transition from the public space to private real estate (buildings or land). nowadays, the public spaces are facing a delicate moment in their existence and their mission: belonging to everybody, they tend to no longer belong to anyone else; they are simple passages, eyewitnesses of a hurried transit, no longer focal point or meeting place for joint activities. the lack of funds, the focus of interest on commercial areas, moving the pole of attraction to these areas, targeting places to spend free time inside, the extinction of stores in the central areas led to their oblivion, to the considerable decrease of interest. however, no one can deny the fact that the image, the cities’ individuality is mainly defined by these public spaces, and the (aggregates) indicator of life quality is also closely linked to these issues. 102 6. all over the world, central places of great cities are full of important – from historical and administrative perspective – buildings, fountains, statues, columns, arches and other monuments2. in so called ‘mental maps’, public spaces have a significant place: so ‘this is not surprising that a person’s mental map is a product of social interaction. the way we perceive space and the environment is socially learned and is based on experience. the imagery of the city can be seen as a result of how people perceive it. urban imagery also has consequences in the shaping of city itself. urban images have a symbolic function. images help provide strong associations with a place that help facilitate interaction between people who share a common environment’ (hutter, 2012, p. 137). in this respect, kewin lynch has pointed this out: ‘the landscape pays a social role as well. the named environment, familiar to all, furnishes material for common memories and symbols which bind the group together and allow them to communicate with one another. the landscape serves as a vast mnemonic system for the retention of group history and ideas’ (1960, p. 126, apud hutter, 2012, p. 138). very often in these spaces historical and cultural events took place that are celebrated even in our days. these places are characterized by human interaction, solidarity and urban experience. history strongly puts its footprint on these central places in european cities – important reason for preserving their identity. we have to accept – critically speaking – that if old architecture allowed and still allows, hundreds of years after edification, the identification of the location where different monuments belong to, the new neighborhoods of the cities do not have the same status, that is, individualization and fast tracking (minea, 2011). it has been argued (and rightly considered) that it was the ‘urbanization’ that led to ‘urbanalization’ (muñoz, 2008). in these terms we can talk, without making hazardous statements, about a decreasing diversity; or, diversity is a condition of perpetuating values, multiplying them in other principles, schemes and algorithms, other than those related to the non-customized imitation of patterns. we can say that we are witnessing an identity crisis of urban landscapes. 7. urban and art historian donald j. olsen suggested in 1986 the importance of conceiving ‘the city as a work of art’; probably a ‘replay’ in an updated form of this expression would be ‘city as a work of heart’. being in the author’s consent, we also state that we have to study the city as ‘objects to be cherished and understood rather than evils to be exposed, as works of arts rather than instances of social pathology’. in this context it is useful and interesting to mention another opinion – assessed by le corbusier – according to which ‘cities are biological phenomena’; from his perspective urban forms of manifestation are just like biological ones, both in their 2 all these ‘works of art’ are known, in our romanian legal framework, as ‘public monuments’ and are protected by several regulations such as law no. 120/2006 concerning public monuments, law no. 350/2001 concerning urban planning and town planning, law no. 50/1991 concerning the authorization of construction works etc. 103 existence and composition and reflecting a biological being of their inhabitants, as well as of other living forms that cohabitate with them. beyond the elements that define and characterize it, the city stores also an inner energy that by complex phenomena becomes and generates a continuous metabolic change; this process is very similar to which occurs at the level of living organisms (crăciun, 2008, pp. 15-17). it is very important to take into serious account the fact that major changes are required in the field of special structures composition, which are directly responsible for urban planning activities. strictly applying the enforced regulations, even if it is a mandatory act (like all rules of public law), not everything is limited to it: modeling urban spaces and adapting to the general dynamics requires more than a blind compliance, meaningless to the fine perception of the phenomena that occur in this area; it requires a good understanding of what ‘urban body’ means (minea, 2011). 8. the changing face of cities starts as well from the public spaces! in these circumstances we consider that achieving these objectives must aim to their revitalization, the increase of activities, the promotion of new features, in order to bring back the citizens to the space that we traditionally call as their own, the revival of civic spirit and their motivation for active involvement in the city life. this change that must be operated on the public space can not only be achieved by specialists (developers or architects), but it should benefit of public support and involvement. it is stated that governance of persons and places can be initiated and enacted as much by non-state actors as by state authorities (rose and miller,1992, apud lippert, 2012), by ‘governance’ understanding ‘any attempt to control or manage any known object’( hunt and wickham, 1994, p. 78). the success of such an approach should mean: providing comfort and a pleasant image (clean places, friendly, green, attractive and safe); accessibility and easy communication (easily accessible, providing the possibility to connect to other spaces of interest); sociability (organized, friendly and stable). active involvement of the citizens in spatial planning is an imperative that must be understood and then applied. in the achievement of ‘the power of place’3 (hutter, 2012), communities play a very important role. one can also speak about ‘the sense of place’, defined as a sum of fragments, a sum of urban pieces of time that reveals a special kind of interaction between a person and a territory that is characterized by certain features (muñoz, 2008, p. 83). of course, a co-production approach to engaging existing community assets and resources should become an integral part of the development process. this requires the professionals work with, not just for local residents, business, and community groups 3 in her book ‘the power of place’ (1995) dolores hayden argues that planners involved in historic preservation should understand that the historic preservation of the architecture and histories of multiple classes, ethnicities, and genders is important. urban renewal and economic development is a powerful tool that can cleanse the landscape of any references to past inhabitants – their struggles, lives, and uses of place. 104 (new economics foundation). a broader dialogue and a cultural shift regarding the principles and values underpinning the planning methods, design and development of urban places and neighborhoods must be realized if we want to achieve a sustainable well-being (the personal and the social one). one of the most important things that influence peoples happiness is the strength of their relationship with others: feeling close to and valued by others is a fundamental human need (new economics foundation) and the strength of our communities also depends on the connections and relations that people have within them. ways in which such changes could be made are theoretically very numerous, but they obviously must be approved by the community. the proposed solutions are different, there are the traditional options, based on classic urban interventions (remodeling, rehabilitation, landscape interventions, elimination of traffic in these areas etc.) or models based on the logics of virtual networks (panel screens to facilitate mass virtual communication). taking into account the young generations’ preferences for virtual ‘are we destined to withdraw further into cyberspace as the popularity of internet expands?’ banerjee (2001) asks himself. 9. given the fact that people spend a lot of time indoors, the fact that we accepted (even in a tacit manner) the communication that doesn’t require direct contact, we could say that either option could be appropriate. if we also consider the cohabitation with the computer screens, both at home and at work, solutions would be heading towards the traditional option. sustainable development, that is our common goal, involves the powerful penetration of nature in the grey areas of cities. the bioclimatic urbanism seeks the best use of settlements’ natural potential as an effective means to promote their identity (higueras, 2006). the competition between modern technology and spaces defined by their natural aspects should not be encouraged and the public character of the urban activities should be read in another key – it is not so important the fact that public spaces belong to everybody, but the fact that they are used by everyone. anyway, there were a lot of critics concerning modern communication technology brought in the street: urban critic michael sorkin (1992) described the ‘city as a theme park’ as characterized by places that are synthetic and simulations of real places. michael dear stated that ‘the phone and modem have rendered the street irrelevant, and the new city threatens an unimagined sameness, characterized by loosening of ties to any specific space, rising levels of surveillance, manipulation, and segregation and the city as a theme park’ (dear, 2002, p. 19, apud hutter, 2012). professor francesc muñoz from universidad autόnoma de barcelona speaks also in one of his books (muñoz, 2008, p. 86) about spaces as theme parks, identifying them with malls and outlet stores, stating that actually they alter the density maps of metropolitan regions. he states that in the actual context a new type of territories appeared – multiplex spaces – which implies the logic of flows. through them time and mobility arches are created: arches between inhabitants and between inhabitants and places. multiplex spaces give rise to a genuine map of weekend leisure. this mapping, 105 comprising places and moments, is characterized by multiplicity and flexibility: we got, this way, multiplex places and moments! these issues influenced entirely public spaces by altering their traditional functions, character and morphology. in this frame we have to restate concepts like inhabitant, community, living space, local culture, in a context in which flexibility and mobility of human behavior characterize a metropolitan inhabitant who lives in a changing geography and in cities with variable geometry. 10. urban public spaces are those where all the processes related to people’s existence take place and, especially, peoples cohabitation. these places are a reflection of the social structure, of the level of development and computer technology, not a flat, clean and shiny surface. they can and must become surfaces able to reflect, as a magic mirror, the real human happiness, a real human smile, being able to dissolve the evil and the madness that had subjugated humanity during (at least) last decades. public spaces are locations where, somehow independent of their will, all the social categories meet. the social segregation – real and sustained even by inappropriate or wrong urban decisions and actions – can be mitigated by bringing the members of the community together, in the same area, where appearances can erase significant differences between the old and the young, the healthy people and the ones with disabilities, people with full account and those with debt, direct communication, direct eye contact, people standing face to face, direct socialization, all these could be an effective treatment for various urban diseases (loneliness, stress, apathy, depression etc.). here, where it is more discernible than elsewhere, the sun, the sky, the rain, the snow, the wind, pretty freely offered equally to all, one should really feel like going back to agora! conclusions ‘seemingly, three major trends: privatization, globalization, and the communication revolution – will continue to shape the future demand and supply of public space. planners must anticipate the effects of such trends, but also focus on the concept of public life, which encompasses both public and private realms advancing the cause of public space and the opportunities and initiatives for the future’ (banerjee, 2001). in this respect we appreciate that several axes of thinking and acting would be interesting and useful to follow: – the interaction between generations must be encouraged: groups of different ages have to occupy the same space by avoiding the separation of younger and older people. – security and accessibility – in terms of possibility to easily arrive there and the pleasure to be there – are very important also. it is stated, meantime, that access includes the ability to occupy a place and the activities contained within (nemeth, 2012, p. 815). accessibility is the key determinant of publicness (varna and tiesdell 2010, p. 578 apud nemeth, 2012). if physical/social accessibility is generally recognized, an interesting position (mandanipour, 1999 apud faye and 106 le fur, 2011) shows that public spaces have also accessibility constraints, derived largely from social practices that implement social exclusion (lehrer, 1998). – with respect to what ‘urban’ means, i think that we must instil a particular version of ‘civility’ within the urban and suburban vernacular (mcleod and johnstone, 2012). bannister et al. (2006, p. 928) states that ‘in city centres civility is founded on the removal of ‘otherness’ or contrary actions and behaviour’. although it was said that ‘communication is not free, nor is use of space’ (németh, 2012), we sustain that the cited ‘code of conduct’ would be an extremely useful and profitable regulatory framework in terms of education (young people have to be conducted to achieve good manners for certain circumstances). being free to use something (including public spaces) doesn’t mean we must accept anything – also inadequate language and behaviour – in the name of recognized and established freedom. – centrally situated public spaces, dominated by important and monumental public buildings or decorative compositions (historical monuments, palaces, statues, colons, fountains etc.) are fragments of a city, its inhabitants identifies with them; they constitute a renewed focus for regeneration due to their network interconnection role and their capacity to ‘encapsulate’ the history (smith et al., 2002 apud faye and le fur, 2011). – we have to redevelop the piazza style square, at night and at day. – we must impose a social control that will have far-reaching consequences for how we understand the meanings of public space, social justice and the parameters of state power (colemann, 2003, p. 21). – the provision of facilities such as toilets, suitable seating, lighting, signage, have a great influence on peoples attitudes to the public spaces, as these most common activities (sitting, walking, waiting, watching, chatting) take place in these areas; there is a must to provide them in the best manner possible. – cities around the world have placed more emphasis on policies for arts and culture over the past years, a shift that reflects the centrality of culture in promoting an urban renaissance. policy makers see cultural industries as a source of new jobs; not only does culture enhance urban quality and multi-functionality, it has also become a key economic sector in itself (herrero et al., 2006 apud van aalst and van melik, 2011). it is shown that cultural functions make an essential contribution to the urban economy: ‘concentrations of arts facilities did not only represent aesthetic amenities, they also raised property values and attracted commercial development’ (zukin, 1995, p. 117). with no intention for an apotheosis approach of the presented issues we firmly state that changing the face of the cities starts from public spaces and that, beyond economics, social and cultural aspects, the city – as a ‘whole’ – and public spaces – as components – must be a work of heart. 107 references: 1. banerjee, t., ‘the future of public space: beyond invented streets and reinvented places’, 2001, journal of the american planning association, vol. 67, no. 1, pp. 9-24. 2. bannister, j., fyfe, n. and kearns, a., ‘respectable or respectful? (in)civility and the city’, 2006, urban studies, vol. 43, no. 5-6, pp. 919-937. 3. crăciun, c., metabolismul urban. o abordare neconvenţională a organismului urban, bucureşti: editura universitară ‘ion mincu’, 2008. 4. colemann, r., ‘images from neoliberal city: the state, surveillance and social control’, 2003, critical criminology, vol. 12, no. 1, pp. 21-42. 5. dear, m. and flusty, s., ‘postmodern urbanism’, 1998, annals of the association of american geographers, vol. 88, no. 1, pp. 50-72. 6. faye, b. and le fur, é., ‘square, plazza, piazza, place: what do we know about these targets of urban regeneration programmes?’, 2012, urban studies, vol. 49, no. 14, pp. 3081-3099. 7. hayden, d., the power of place. urban landscapes as public history, cambridge, ma: mit press, 1995. 8. herrero, l.c., sanz, j.a., devesa, m., bedate, a. and del barrio, m.j, ‘the economic impact of cultural events. a case-study of salamanca 2002 european capital of culture, 2006, european urban and regional studies, vol. 13, no. 1, pp. 41-57. 9. higueras, e., urbanismo bioclimático, barcelona: gustavo gili, 2006. 10. hunt, a. and wickham, g., foucault and law: towards a sociology of law as governance, london: pluto press, 1994. 11. hutter, m., experiencing cities, boston: allyn &bacon, 2012. 12. lehrer, a., ‘is there still room for public space? globalizing cities and the privatisation of the public realm’, in inura, possible urban worlds: urban strategies at the end of the 20 th century, basel: birkhauser verlag, 1998, pp. 200-207. 13. lippert r., ‘clean and safe’ passage: business improvement districts, urban security modes, and knowledge brokers’, 2012, european urban and regional studies, vol. 19, no. 2, pp. 167-180. 14. lynch, k., the image of the city, cambridge ma: mit press, 1960. 15. macleod, g. and johnstone, c., ‘stretching urban renaissance: privatizing space, civilizing place, summoning ‘community’’, 2012, international journal of urban and regional research, vol. 36, no. 1, pp. 1-28. 16. minea, e.m., ‘urbanism crisis – significant component of global change’ in international conference of economics, law and management icelm-3, târgu-mureș, conference volume, miskolc, 2011. 17. muñoz, f., urbanalización. paisajes communes, lugares globales, barcelona: gustavo gili, 2008. 18. németh, j., ‘controlling the commons: how public is public space?’, 2012, urban affairs review, vol. 46, no. 6, pp. 811-835. 19. olsen, d.j., the city as a work of art: london, paris, vienna, new haven, ct: yale university press, 1986. 20. rose, n. and miller, p., ‘political power beyond the state: problematics of government’, 1992, british journal of sociology, vol. 43, no. 2, pp. 172-205. 108 21. smith, v.k., poulos, c. and kim, h. ‘treating open space as an urban amenity’, 2002, resource and energy economics, vol. 24, no. 1-2, pp. 107-129. 22. sorkin, m. (ed.), variations on a theme park: the new american city and the end of public space, new york: hill and wang, 1992. 23. the new economics foundation (nef), [online] available at http://www.neweconomics. org/, accessed december 1, 2012. 24. van aalst, i. and van melik, r., ‘city festivals and urban development: does place matter?’, 2011, european urban and regional studies, vol. 19, no. 2, pp. 195-206. 25. varna, g., and tiesdell, s. ‘assessing the publicness of public space: the star model of publicness’, 2010, journal of urban design, vol. 15, no. 4, pp. 575-598. 26. zukin, s., the cultures of cities, oxford: blackwell publishers, 1995. 98 abstract the article discusses the new developments in the public procurement system triggered by the empowerment of the national council for solving administrative disputes (an administrative body) as the only first instance review body for remedies before the conclusion of public procurement contracts. the legislative development entails discussions regarding the constitutionality of the solution and also about the efficiency of subjecting complainants to an administrative body instead of courts. the conclusion of the study highlights the fact that the search for effectiveness in awarding contracts (mainly for the purpose of spending the structural funds) is pushing the government towards unconstitutional solutions like the one promoted recently, regardless of the constant probability of such provisions being ousted by the constitutional court on the basis of open access to justice principle enshrined in our constitution. keywords: alternative dispute, public procurement, romania, general administrative appeal, pre-trial procedures. alternative dispute resolution mechanisms in the field of public procurement: between effectiveness and constitutionality* dacian dragoş dacian dragoş associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: dragos@apubb.ro transylvanian review of administrative sciences, no. 34 e/2011, pp. 98-113 * this article is the outcome of post-doctoral research financed through a post-doctoral grant under european social fund, operational sectoral program for the development of human resources, ‘transnational network for the integrated management of post-doctoral research in the field of science communication. institutional building (post-doctoral school) and grant program (commscie)’ contract no. posdru/89/1.5/s/63663. it is also a part of a chapter on romania in a book dedicated to remedies in european public procurement, published at djoef copenhagen in 2011. 99 1. public procurement legislation public procurement in romania is regulated by emergency governmental ordinance no. 34/20061 (with all the subsequent amendments), which transposes the provisions of the ec directives in this field: directive 2004/18/ec, directive 2004/17/ec, directive 1989/665/eec, directive 1992/13/eec, and directive 2007/66/ec. romania has reported the transposition of the amendments to the remedies directives by two emergency governmental ordinances (executive decision with the legal force of a law, issued in exceptional and urgent situations – hereafter ego), ego no. 19/20092 and ego no. 72/20093, further completed with some missing provisions by a new regulation, ego no. 76/2010. in the recent years the legislative changes brought with regard to the competent entity to solve complaints up to the conclusion of the contract and the effects associated with lodging such a complaint have been related to the way in which litigation in public procurement (pp) affected the absorption of eu structural funds in romania. the main problem was related to the fact that litigation in pp, mainly before a court of law, meant delays up to several months (even years) and this impedes upon the absorption process, where deadlines for application/execution/reimbursement are relatively short. this problem has been raised and discussed not only in the expert community in pp but it represents a rather general public policy concern, frequently addressed by various stakeholders4. in light of this context, in addition to the already mentioned legislative changes, ego no. 76/2010 was approved by the parliament at the very end of 2010, with significant changes regarding the remedies system (law no. 278/24.12.20105). 2. review procedure and review bodies – a constant strive to achieve effectiveness? legal actions regarding the review of decisions to award public contracts are brought before different review bodies and following a distinct review procedure depending on the stage in the award of the public procurement contract. the changes brought to ego no. 76/2010 by the approval law mainly regard the review bodies before which a complaint can be lodged up to the conclusion of the contract. since these latest changes seem to go against the provisions of the constitution and the jurisprudence 1 published in the official monitor of romania, section i, no. 418 from 15.05.2006 2 ego no. 19/7.03.2009, regarding some measures in the public procurement field, published in the official monitor of romania, no. 156 from 12.03.2009 3 ego no. 72/17.06.2009, regarding the modification of the emergency governmental ordinance no. 34/2006 on public procurement contracts and concession contracts, published in the official monitor of romania, no. 426 from 23.06.2009 4 recently it was the president of the state who argued in favor of speediness in court proceedings that involved litigation in pp, when contracts financed through eu structural funds are concerned. 5 law no. 278/24.12.2010, published in the official monitor of romania no. 898 from 31.12.2010 100 of the constitutional court and since it is likely to have these provisions reinstated in the future, in the following section will be presented both the current situation (as of 31.12.2010) and the previous one. in any case, the interplay between review bodies has taken a central role in the public procurement field in recent years, as it was considered the main influence on the effectiveness of public procurement procedures, so the analysis has to take into account the complexity of this dynamic. 2.1. pre-trial procedures vs. legal action to courts – a dynamic interplay the role of the review bodies in the public procurement field has suffered many changes in the last years. the preeminence of pre-trial procedures (administrative appeals) over the procedures conducted by courts seems to be the underlying feature of this legislative dynamic. the central place in this evolving process is played by the national council for solving legal disputes, a quasi-jurisdictional body with independent status. up to 2010, the law allowed complainants to choose between the administrativejurisdictional path (the national council for solving legal disputes, hereafter the council) and the purely judicial one (court of law). the preference of complainants for one of the two review paths was associated with the implied benefits associated with each of them. in the early stages the preference for choosing the council was justified by the immediate and automatic suspensive effect associated with such an action (for more details see below); more recently, after july 2010, the costs implied by an action before the council resulted in a slight decrease in the number of actions brought before the council. currently, the review by the council is mandatory. 2.1.1. the national council for solving legal disputes the council is an independent, administrative-jurisdictional (or quasi-judicial) review body, independent from other structures with regard to its decisions. starting with january 1st 2007, the council gained the status of legal person and thus romania addressed the problem regarding the independence of the council which had been raised by the european commission in several occasions. through the approval law of ego no. 76/2010, the independence of the council was further strengthened: if previously the law stated that the council functioned within the institutional framework of the general secretariat of the government, currently all references to such dependence are eliminated from the law. the law also makes a more clear distinction between the administrative activity of the council and its ruling as an administrative-jurisdictional body. the members of the council are civil servants with a special status, appointed by the prime minister, based on a competitive selection process and the fulfillment of several mandatory requirements regarding previous experience/educational background. they are evaluated (with regard to the administrative and organizational activity of the council) by a mixed committee which comprises representatives of the national authority for regulating and monitoring public procurement in romania, of the romanian parliament, of the national agency for civil servants and of the competition council. 101 2.1.2. forum-shopping for a review body (prior to 31.12.2010) before 2011, the claimant was free to choose between the council and the court of law (the competent court in the first instance was the tribunal). however, the law stated that it is forbidden to lodge the same complaint simultaneously with both the council and the court of law. if this situation occurs, the procedure before the council was automatically suspended. it was presumed that by lodging the same complaint with the court, the claimant renounces the administrative (quasi-judicial) procedure. statistics show that during the last years the number of complaints before the council has increased significantly6; incentives for going first before the council include: speediness and flexibility of the procedure (legal obligation to solve the complaint within 20 days; possibility given to the complainant to specify the object of the complaint after lodging it), presumably lower costs (no need to hire a lawyer, no fees, at least until mid-2010); a general distrust in the judicial system and perception of major delays associated with court litigations (not necessarily in public procurement but in general), and finally but very important, the effect of automatic suspension, associated until 2010 only with the proceedings before the council (now abrogated). this situation is already changing due to recent legislative modifications, as will be shown further on. in light of these data (which show the preference of tenderers for the council as a first instance body), it seems odd that the legislator has made the action before the council mandatory, claiming that otherwise access to eu funds will be blocked by lengthy court proceedings. this needs to be further explained – it is true that a significant number of complainants choose the council; however, in the case of large infrastructure contracts, the economic operators preferred to go to court. the legislator, when operating the change, was mostly concerned with those tenderers who went before the court with the intention to delay the pp procedures (in many cases, though they could have asked for a speedier litigation, by changing the dates allocated electronically, they opted against it). another benefit considered by tenderers while ‘forum shopping’ refers to the suspensive effect of an action before the council (the suspensive effect evolved from automatic, immediate, and unconditioned by other actions of the contester in 2006 to an automatic suspension conditioned by the notification of the contracting authority, effective a day before the end of the standstill period in 2009. this was in place until july 2010. the award procedure was thus stopped if for example a tenderer lodged a complaint concerning the award documentation. this provision is currently abrogated – the legal action before the council no longer stops the contracting authority from continuing the awarding procedures. the interdiction that currently operates refers to the conclusion of the contract prior to the decision of the council. another advantage refers to the flexibility of the administrative-jurisdictional review procedure compared to the court one. it allows the tenderers to clarify/modify some of the mandatory elements required by law, including the object of the complaint 6 national council for solving legal disputes, statistics 102 (within five days timeframe, at the request of the council). in practice, because tenderers have a very short time span for lodging a complaint with the council, they tend to lodge the complaint only formally, in order to comply with the deadline, but without presenting a solid legal justification of the alleged breach, backed by the required evidence/documents. thus, the complainant gains two additional benefits from this flexibility: the complaint is not declared inadmissible if some constitutive elements are missing and the council indicates what is missing and how it should be remedied; second, the tardiness of the complaint as a ground for rejection by the council is at least postponed with an additional five days. aside from having a mandatory review before the council as of 31.12.2010, the advantages described above are still operating in favor of the tenderers. the only change is that the action can no longer be lodged before a court of law, as an alternative to the council. when the complainant decided to go directly to court, the court action was directed against the acts of the contracting authority issued within the award procedure as well as for damages caused during the award procedure. in the absence of an action before the council, the court of first instance was the tribunal (established in all 41 counties), the administrative and fiscal law section. the ruling of the first instance court can be challenged with recourse within a time frame of five days from notification before the appellate court, administrative and fiscal law section if the legal action concerns the award procedure up to conclusion of the contract. if the legal action concerns the execution, nullity, annulment etc. of the contract, the commercial law section of the appellate court was the recourse instance. 2.1.3. review procedure before the council with the amendments brought by law no. 278/2010 with the occasion of approval of ego no. 76/2010 in parliament (law no. 278/2010) a mandatory action before the council was introduced. the complainant can lodge a contestation before the council in a timeframe of five or ten days, depending on the value of the contract, from the moment in which the tenderer is notified about any act/action of the contracting authority related to the public procurement procedures. when the tender documentation is published in the electronic system for public procurement, the deadline starts from the day when the tender documentation is published and becomes available online. after receiving a complaint, the council needs to issue a decision within 10 or 20 days. before assessing the case on its merits, the council will review it in light of several exceptions7 (tardiness, lack of standing, lack of object, lack of competence 7 exceptions are procedural means through which, under the provisions of the law, the interested party, the prosecutor or the court of law/review body, raises, without considering the case on its merits, the question of procedural irregularities regarding the composition or the competence of the court, errors concerning the right of the 103 on the behalf of the council etc.) which can lead to the rejection of the contestation as being inadmissible. when the decision of the council is based on exceptions, the deadline for reaching a decision is 10 days. if the case is assessed on its merits, the deadline is 20 days (this can be extended by a maximum of ten days, once, in exceptional cases). the deadlines within which the parties have to apply for review have to be calculated so as to give preeminence to the party, and not to the council or the court. thus, the date when the contestation was presented at the post office is to be considered the date of the contestation, rather than the date when the contestation reaches the council8. in general, the deadlines applicable to public procurement procedures are those provided by the law, regardless of the errors made by the contracting authorities when notifying the participants about them. thus, the courts have held that different deadlines from those stated in the law are to be disregarded by those interested, even if they were indicated by the contracting authority, because the law takes prevalence over administrative communications9. there were cases when the council delayed the solving of the contestation beyond the time frame provided by law (now 20 days with a possible extension of 10 days), reaching even to months. the penalties for the delay are only disciplinary, and they are not enforced, so practically there are no incentives to strictly follow the deadlines. the majority of the courts have held that in such cases the decision of the council cannot be annulled only on the basis of the delay10. even a delay of three months was considered to have no impact on the legality of the decision issued by the council11, although the ‘reasonable time frame’ principle from the echr jurisprudence was invoked. again, not all courts have the same opinion on the issue: one of them stated that in a case when the annulment came four months after the opening of the offers, during which time the contracting authority had already received some products from the winning bidder, it is not admissible12. currently, if the statistics of the council party to sue, with the intention to postpone the judgment, to ask to have some documents redrafted, or to reject the case altogether. in our case, the term exception refers to those irregularities discovered by the council which prevent the case from being judged on its merits. 8 judgment no. 970/17.09.2008, alba iulia appellate court, division for administrative and fiscal matters; judgment no. 1861/11.09.2008, bucharest appellate court, division for administrative and fiscal matters. 9 judgment no. 118/19.01.2009, bucharest appellate court, division for administrative and fiscal matters; judgment no. 1975/01.10.2008, craiova appellate court, division for administrative and fiscal matters. 10 judgment no. 114/30.01.2008, ploieşti appellate court, division for administrative and fiscal matters 11 judgment no. 115/30.01.2008, ploieşti appellate court, division for administrative and fiscal matters 12 judgment no. 2532/06.11.2008, cluj appellate court, division for administrative and fiscal matters 104 are accurate, the average time span for solving a decision is approximately 19 days. there is also an evaluation procedure which can lead to disciplinary penalties for the members of the council. the decision of the council may consist in the annulment, total or partial, of an act of the contracting authority; the council can request the contracting authority to issue an act or it can adopt any other necessary measures for remedying the acts of the contracting authority which affect the award procedure. if the council in the process of analyzing the tender documentation finds that there are other breaches besides the ones listed in the complaint, it can only notify the national authority for regulating and monitoring public procurement (narmpp is the monitoring body responsible for the entire public procurement system in romania) as well as the unit for the coordination and monitoring of public procurements (ucmpp is a body whose competences slightly overlap with those of narmpp, functioning within the ministry of public finances). until 2009, the council did not have to limit its ruling to the object of the complaint at hand; it was allowed to analyze the award documentation in its entirety and to establish, ex officio, its legality. based on the case law13, there were instances when the council identified significant breaches of the law in the award documentation or procedure, which were not signaled by the tenderer in his complaint. currently, the council can only decide whether the contracting authority can continue with the award procedure or it can annul it. the council cannot however decide to award the contract to a certain tenderer. the exact character of the remedies which can be offered by the council is not always accurately perceived by the tenderers. in a significant number of complaints examined, the complainants asked the council to award them the contract as a result of a faulty procedure (real or perceived). even more, the council had in some cases ruled a complaint as inadmissible for lack of object if the tenderer, using an inappropriate legal language, complained about the result of the award procedure. the council interpreted that the complainant requested the council to award the contract to that specific tenderer. the appellate court ruled that the council should have analyzed the complaint in light of the implicit legal breach, namely the illegality of the evaluation of the tenders and the act of the contracting authority used to award the contract. the council was considered in breach of the flexibility requirement which allows the complainant to refine his complaint provided that the council asks it14. in this case, the court sent the case back to the council that was required to judge it based on its merit. currently, the law states that if a court action is brought against a decision of the council which ruled based on exception 13 judgment no. 2656/29.11.2008, bucharest appellate court, division for administrative and fiscal matters; judgment no. 1030/7.06/2007, bucharest appellate court, division for administrative and fiscal matters; judgment no. 1576/16.06/2008, bucharest appellate court, division for administrative and fiscal matters 14 judgment no. 214/25.02.2008, alba iulia appellate court, division for administrative and fiscal matters 105 (tardiness, lack of object etc.) and is declared admissible, the court will retain the complaint and solve it on its merits15. though the provision of the law which states that the council cannot award the contract to a certain tenderer is very clear, the issue is more complex. apart from some cases where the council has decided that a certain offer is not conforming and thus ordered the resuming of the award procedure without the rejected offer16, the council has refused constantly to go beyond the annulment of decisions of the contracting authority and to establish the winning offer or to award the contract17. the main argument used refers to the provisions of ego no. 34/2006 (article 200) and the subsidiary legislation of implementation (governmental decision no. 925/2006, article 72 par. 2), which state that the authority competent to award the contract by establishing the winning offer is the contracting authority. however, the question here is whether the contracting authority is the only competent authority to do that? at a closer look, both provisions invoked by the council and by some courts refer to the power of the contracting authority to decide, or to the obligation to decide in a certain time frame, but they are not clear whether this power is exclusive or not, when transposed into the context of the review phase. in other words, the power to decide the winning offer and to award the contract is evidently exclusive in the administrative phase, but is it still exclusive in the review phase? this raises the question whether the council or the court can establish the winning offer and then award the contract, or at least establish the winning offer. the separation of powers principle, as understood in romanian legal system, prohibits courts to ‘step into the shoes’ of public authorities and decide the matter themselves. the principle of separation of powers can be invoked when talking about courts, so the answer seems to be negative in the first case, but not when the council is involved, as the council is a public authority, belonging to the same branch as the contracting authority, and its decisions can be assessed within the administrative control paradigm. however, some courts seem to have another take on this matter. in a noteworthy case, the court has ‘put itself in the shoes’ of the contracting authority, stating that the criteria for the assessment of technical specifications are lacking, therefore the assessment made by each member of the evaluation commission was subjective. consequently, it granted the maximum score for the contested evaluation criteria to all tenderers, re-ranking the bidders according to the new scores. the court action was rejected in the end because the new ranking did not change the winner of the award procedure, 15 article 285(2) ego no. 34/2006 with amendments by ego no. 76/2010 16 see judgment no. 2722/03.12.2008, bucharest appellate court, division for administrative and fiscal matters confirming the decision of the council, and judgment no. 318/09.10.2008, oradea appellate court, division for administrative and fiscal matters, infirming such an approach 17 judgment no. 2156/29.11.2007, bucharest appellate court, division for administrative and fiscal matters, confirming the decision of the council 106 but the case is interesting in itself, when comes to the extent of the review conducted by the court18. in a scholarly opinion criticizing this decision, it was argued that the court had no place in re-ranking the list of bidders, because the law does not confer this power upon the courts. the solution to grant all bidders maximum score for the contested criteria is not a solution with fundament in law19. nevertheless, the case shows the willingness of some courts to go on a path of effective dispute settlement, looking with the corner of an eye at the principle of separation of powers while at the same time interpreting in a flexible manner the provisions of the law. the case is not unique, as other courts have done the same20. other courts, on the contrary, have followed a more restrictive approach, refusing to decide which offer is the winning one21 or to comparatively evaluate the offers22. following their argumentation, the court can only require the contracting authority to resume the award procedure from a certain point or start anew.the courts have stated that the non reformatio in pejus principle does not apply in proceedings before the council23. the conclusion is in accordance with the general opinion of the doctrine, that administrative procedures do not confer such protection (dragoş, 2009, p. 235). if the council decides that measures regarding the remedying of an act are necessary, then narmpp is notified and has the obligation to monitor the way in which the contracting authority proceeds to carry out this obligation. the decision of the council is mandatory for the contracting authority. a public procurement contract awarded in disregard of the council’s decision is affected by nullity. against the decision of the council, the tenderer can lodge a complaint with the appellate court in whose jurisdiction the premises of the contracting authority are located in. this provision had suffered several subsequent modifications. in the initial version of ego no. 34/2006, a complaint against the decision of the council had to be lodged with the council which was responsible for forwarding it to the court within three days after the expiration of the ten days deadline for lodging this complaint. following a decision by the constitutional court, in 2008 the law (ego no. 143/2008) allowed the complainants to lodge the complaint with either the council or the court. currently, the law expressly states that the complaint needs to be lodged with the 18 judgment no. 764/13.11.2008, bacău appellate court, division for administrative and fiscal matters 19 comment on the judgment no. 764/13.11.2008, bacău appellate court, division for administrative and fiscal matters, in şerban (2009, p. 99) 20 judgment no. 1066/11.06.2007, bucharest appellate court, division for administrative and fiscal matters 21 judgment no. 868/r/18.12.2008, braşov appellate court, division for administrative and fiscal matters 22 judgment no. 503/15.03.2007, bucharest appellate court, division for administrative and fiscal matters 23 judgment no. 467/16.02.2009, bucharest appellate court, division for administrative and fiscal matters 107 court (ego no. 19/2009). in practice however, this last modification generates delays in the court proceedings because the council, which could be unaware of a court action, does not send in time for the first hearing, the dossier of the case. if the appellate court declares the complaint admissible, it modifies the decision of the council by ruling: the annulment, total or partial, of an act of the contracting authority; it can request the contracting authority to issue an act; it can require the contracting authority to fulfill any obligation related to the award documentation or the award procedure; or any other measures necessary to remedy breaches of the public procurement legislation. if the council has rejected a complaint as inadmissible on the grounds of an exception (tardiness, lack of standing, lack of object etc.) the appellate court, in the case of admitting the complaint, will annul the decision of the council and will solve the complaint on its merit. 2.1.4. deadlines for lodging a complaint with the council as already mentioned, the deadline for lodging an action with the council, before the conclusion of the contract, is of five or ten days, depending on the value of the contract. the five days deadline is clearly a national one, for contracts below the eu value thresholds. the existence of different national deadlines, shorter than the ones from the eu law, even if they apply to contracts below the threshold, creates confusion among the tenderers. in an illustrative case, an economic operator lodged a complaint before the council which was rejected on grounds of tardiness. the complainant then lodged a subsequent court action against the decision of the council arguing that the decision does not take into consideration the deadlines from the 2004/18/ce and 2007/66/ce directives, which have preeminence over the national legal provisions. more specifically, the romanian pp legislation established a shorter deadline for lodging a complaint in the case of contracts under the eu value threshold (five days starting with the next day following notification). the economic operator argued that the ten days deadline from the directive should apply in this case. the court ruled that the national legislation can establish different conditions for contracts/procurement under the eu value threshold24. this type of litigation is illustrative for a problem that has been identified in relation to pp in romania. the romanian legislation, in the process of transposing eu procurement law, makes relatively few distinctions with regard to contracts under and above the eu thresholds. the result is that the eu requirements apply also to low value contracts. this has determined some scholars to label it as ‘excessive’ application of the procurement law (both to under the thresholds contracts and to economic operators other than contracting authorities, including ngos). with respect to remedies, besides a shorter standstill period, there are no distinct provisions for contracts under the threshold (filipon, 2010). 24 judgment no. 1920/8.10.2009, bucharest appellate court, division for administrative and fiscal matters 108 3. constitutionality of the administrative-jurisdictional review conducted by the council. the legal status of the council since the adoption of ego no. 34 in 2006 the constitutionality of this review was questioned. the constitution states that administrative jurisdictions have to be elective and free of charge. the constitutionality of the review by the council was assessed against these two main criteria. • in the original version of ego no. 34/2006, the tenderer who was dissatisfied with the decision of the council, was able to lodge a court action provided that the complaint was lodged with the council which had the responsibility to send it to the court. this meant that the tenderer was forced to lodge the complaint with the same body which ruled against him, thus having his access to justice limited. this situation resulted in a plea of unconstitutionality raised before an appellate court which led to a ruling by the constitutional court. the constitutional court ruled that the provision discussed above has the potential to limit the right to free access to justice and to due process25; this is because the law required the council to act as an intermediary between the complainant and the court, without establishing any sanction for the council provided that it delays the process by not sending the complaint to the court. following the decision of unconstitutionality, this provision is no longer in place. • the law establishes that in the cases when the tenderer chooses to lodge his initial complaint with the council, the appellate court is the recourse instance. against this legal provision, several pleas of unconstitutionality were raised regarding the limitation of free access to justice and the absence of a first instance court – the council is not a real court but an administrative jurisdictional (quasi-judicial) body. the constitutional court ruled that administrative review in general is constitutional and it does not act as a limitation to the free access to justice since it is elective and free of charge. the aggrieved claimant has in addition the liberty to choose between an administrative review procedure and a court action26. in a subsequent decision, the court ruled that the principle of free access to justice should be interpreted in the sense that no group or social category can be excluded from the exercise of procedural rights. it is allowed however by the constitution to establish by law special procedural rules and specific means for the exercise of procedural rights. therefore, free access to justice does not mean access to all judicial bodies and to all jurisdiction tiers27. • ego no. 76/2010 introduced penalties for lodging a complaint with the council which is then rejected – the complainant will lose a portion of the deposit made 25 constitutional court of romania, decision no. 569/15.05.2008, published in the official monitor of romania no. 537 from 16.07.2008 26 constitutional court of romania, decision no. 887/16.10.2007 published in the official monitor of romania no. 779 from 16.11.2007 27 constitutional court of romania, decision no. 230/4.08.2008, published in the official monitor of romania no. 300 from 17.04.2008 109 with the contracting authority. this contradicts the constitutional principle of having free of charge access to administrative jurisdictions. • another constitutionality issue is related to the mandatory character of the review before the council introduced as of 31.12.2010. this provision clearly violates the provision of the constitution which states that administrative jurisdictions have to be elective. if in the case discussed above (penalties for losing the case before the council) it is debatable if access to justice is prohibited (the penalties will be paid only after the ruling and if the tenderer losses the case); in the latter case the situation is clearer and in our opinion it represents a breach of the constitution. according to the law, narmpp can also be considered an actor within the remedies system. though the institution cannot grant remedies it has an important monitoring role concerning the implementation of the legal decisions that grant remedies to tenderers. it also has legal standing in cases concerning the ineffectiveness of the contracts. another debated issue refers to the legal status of the council – although according to the law it is an administrative jurisdictional (quasi-judicial) body, in practice it tends to behave more like a court of law. some aspects that lead to this conclusion are analyzed below: • in situations when it received a complaint that was not within the boundaries of its competence the council has declined its competence in favor of the court. such an action is considered incompatible with the legal nature of the council, which should have rejected the complaint as inadmissible. the decline of competence is a procedure reserved for courts of law. • the council has no standing in court actions brought against its decisions, a feature similar to that of a court (şerban, 2008b). this is a unique situation in the romanian legislation, as other administrative jurisdictions are part of the legal action brought against their decisions. this provision establishes an exceptional status for the council. we believe that there were practical considerations justifying this measure – the council has to be part in court proceedings all over the country since the recourse against its decisions is filled with the court of appeal in whose jurisdiction the contracting authority is located. nevertheless, the legal fundament for this approach is missing. 4. interactions between review bodies a first situation refers to the dynamic of the interaction between the council and the courts in the context of the review of the decisions issued by the council. especially in the early stages of the activity of the council, probably because of the lack of expertise and experience of the council, some of its decisions were stricken down by the courts on grounds of exceeding its competences. the most frequent situation identified by courts regarded the evaluation of tenders and the subsequent 110 assessment of these tenders as non-compliant with the requirements of the award documentation28. currently, the activity of the council is publicly perceived as more trustworthy by the actors involved in the pp process (specialized forums and blogs on pp, economic operators, media etc.).the latest legislative change, which made the review before the council mandatory, acknowledges this fact. if the decisions of the council as a first review body will be stricken down by courts, several months later, after the contract was concluded, following the standstill period, we are going to witness an increase in the number of actions for damages. the legislator seems to think that this risk is not worth considering. in practice, interesting situations occurred concerning the decline of competences by the council and by the courts. the nature of the council, considered an administrative jurisdictional (quasi-judicial) body or a special jurisdiction similar to a tribunal in the common law system, has resulted in contrary jurisprudence regarding the possibility to decline the competence to the courts and back. in early cases, the council had refused to decline its competence to the court, while in others the courts have refused to receive such actions29. other courts, on the contrary, have held that such decline is admissible30. in court proceedings against decisions of the council, the parties can invoke only evidence that was invoked before the council, as no new evidence is admissible31. in the earlier versions of the pp law, the lack of notification by the tenderer of the contracting authority generated different effects, depending on whether the action was brought before the council or before the court. the law stated that the tenderer who goes before the council must notify the contracting authority under the penalty of having his complaint rejected on grounds of tardiness. thus, some courts have held that such nullity is absolute and can be invoked either before the council or before the court32, while other courts make distinction between relative nullity and absolute nullity and thus restrict its effects to the proceedings before the council, considering also the abuse of the contracting authority manifested in the omission to invoke the nullity at this level in order to invoke it later, in court33. 28 judgment no. 2775/12.12.2008, bucharest appellate court, division for administrative and fiscal matters 29 judgment no. 229/27.02.2008 and no. 230/27.02.2008, alba iulia appellate court, division for administrative and fiscal matters 30 judgment no. 348/11.05.2007, constanţa appellate court, division for administrative and fiscal matters 31 judgment no. 1616/17.07.2008, craiova appellate court, division for administrative and fiscal matters 32 judgment no. 1364/12.06.2008, craiova appellate court, division for administrative and fiscal matters 33 judgment no. 1284/28.05.2008, cluj appellate court, division for administrative and fiscal matters 111 5. general administrative appeal as a mandatory alternative to the review by the council? until the changes from december 31st 2010, when complainants could choose to go in the first instance either before the council or before the court, an interesting debate concerning the administrative appeal against acts issued by contracting authorities in public procurement, in cases when the action was lodged directly with the court, was raised. the general law on judicial review34 provides for a mandatory reconsideration of administrative acts (administrative appeal/appeal in front of public authority) in cases when there are no other prior administrative proceedings imposed by the special legislation (this applies to the proceedings before the council). thus, for those who went directly in court in public procurement cases, a formal notification of the contracting authority by which the complainant asks for annulment of the decision or other measures would have been necessary. the lack of such prior appeal makes the court action inadmissible (this was later changed – the lack of such a notification would have no longer prohibited the filing of a court action). such an interpretation is in line with the provisions of the 2007/66/ce directive which in article 1(5) states that member states may establish a mandatory review with the contracting authority provided that the use of this action leads to the immediate suspension of the conclusion of the contract. the national courts have also different views on this issue. some courts argue that the special procedure regulated by the public procurement law is to be understood as excluding the general administrative appeal thus opening up a direct action before the court35; other courts, on the contrary, contend that in cases when the council is not involved in review, the general administrative appeal to the issuer (the contracting authority) should be exercised36. moreover, some courts have gone even further, arguing that a review by the council is inadmissible after the party has exercised the administrative appeal provided by the law on judicial review37. the solution is debatable, as the jurisdiction of the council was optional and the administrative appeal is mandatory, so there is no contradiction between the two modes of review, even though they have the same legal nature of administrative proceedings. following the latest changes – the review before the council is mandatory –, this issue remains important from a doctrinarian perspective. if the constitutional court will strike down the mandatory review, then it will regain its relevance. for award procedures organized following the public procurement law by choice by entities that are not contracting authorities in the sense of the pp law (falling outside the scope of this law – i.e. ngos), the council has no jurisdiction to hear 34 law no. 554/2004 35 judgment no. 2954/09.12.2008, cluj appellate court, division for administrative and fiscal matters 36 judgment no. 325/02.10.2007, galaţi appellate court, division for administrative and fiscal matters 37 judgment no. 593/13.06.2008, piteşti appellate court, division for administrative and fiscal matters 112 cases in first instance. the courts have stated that resorting voluntary to the public procurement provisions does not expand the jurisdiction of the council to hear such cases38, and that ego no. 34/2006 regulating the jurisdiction of the council takes prevalence against the award documentation, which may wrongfully indicate the council as the review body. 6. other alternative dispute resolution (adr) tools available in public procurement the law creates the framework for the establishment of adr tools in public procurement. the government can regulate, by means of decision, the situations and the way in which tenderers and contracting authorities have the right to participate in a conciliation procedure (it applies only during the execution of the contract). currently there is no such decision in place. nevertheless, the general law on judicial review39 sends the parties of the public contracts to conciliation regulated by the code of civil procedure40 for commercial contracts. it is a prior requirement for lodging a court action, so it is mandatory. moreover, among the adr tools available there is also the procedure of mediation, regulated in a general manner in law no. 192/2006 which can be in principle applied to public procurement procedures and contracts as well. nevertheless, there is reluctance from the contracting authorities regarding the use of such tools in practice, as they are fearful of the controls conducted by the court of auditors, which does not encourage such practices. this happens in light of potential abuses by the contracting authorities. 7. concluding remarks in romania, the dynamic relation between courts and other review bodies is a feature of the remedies system in public procurement law since its development based on the implementation of european directives. the prevalence of adr tools when compared with traditional review performed by courts has its roots in specific problems arising from the need to have a better effectiveness in awarding contracts in the context of structural funds. nevertheless, the unconstitutionality of the mandatory review performed by the national council for solving legal disputes, if decided by the constitutional court, may hinder again the efforts to speed up award procedures. this perspective poses the question whether making the council the only first instance review body is the correct solution, instead of speeding up procedures in front of courts and making the council the chosen alternative of the tenderers, due to certain advantages inherent to administrative appeal procedures. 38 judgment no. 836/r/09.12.2008, braşov appellate court, division for administrative and fiscal matters; judgment no. 1807/05.11.2007 and judgment no. 1991/15.11.2007, bucharest appellate court, division for administrative and fiscal matters 39 law no. 554/2004, article 7 par. 2 40 article 7201 of the code of civil procedure 113 in the context of a larger research on the effectiveness of adr tools in administrative law, this case-study illustrates the more and more important role played by alternative review mechanisms in relation to the well-established court system, overloaded with cases and ineffective in providing justice, especially in new democracies. it should not be overlooked, though, that the background against which these administrative appeal procedures thrive is the current need to access structural funds as quickly as possible. the courts are considered a menace for this process, impeding the absorption process and offering abusive tenderers a chance to delay necessary projects. however, walking on the edge of constitutionality may prove an erroneous policy choice if the constitutional court does not change its jurisprudence on this matter, with effects that are difficult to assess. and an assessment of the role of adr tools in administrative matters in other fields than public procurement, not subjected in such a way to the pressure of accessing structural funds, may relieve different conclusions. from the perspective of the increasing role of administrative appeals and other forms of adr in administrative justice, nevertheless, the above case-study proves their effectiveness when assessed against court proceedings, making the case for this the importance of the institution in administrative law. references: 1. dragoş, d.c., legea contenciosului administrativ. comentarii şi explicaţii, 2nd edition, bucureşti: c.h. beck, 2009. 2. filipon, ş., the romanian experience with interim measures and automatic suspension, paper presented at the public procurement: global revolution v conference, university of copenhagen, denmark, september 2010. 3. consiliul naţional de soluţionare a contestaţiilor (national council for solving legal disputes), [online] available at http://www.cnsc.ro, accessed on may 23, 2011. 4. pătraşcu, h., culegere de practică judiciară în materie de achiziţii publice, bucureşti: wolters kluwer, 2010. 5. societatea academică română, sar, (romanian academic society), o evaluare a eficienţei, integrităţii şi transparenţei sistemului de achiziţii publice din românia. banul public şi interesul privat, policy brief no. 43, 2009, [online] available at http://www. sar.org.ro/files/409_paper-final.pdf, accessed on may 23, 2011. 6. şerban, d.d., jurisprudenţa comentată în domeniul achiziţiilor publice, bucureşti: wolters kluwer, 2009. 7. şerban, d.d., ‘despre ordonanţa preşedinţială în materia achiziţiilor publice – studiu de caz’, 2008a, pandectele române, vol. 6, pp. 77-86. 8. şerban, d.d., ‘calitatea procesuală activă în litigiile care au ca obiect plângeri împotriva deciziilor consiliului naţional de soluţionare a contestaţiilor’, dreptul, no. 10, 2009. 9. transparency international romania, riscuri de corupţie în achiziţiile publice. excelenţă şi integritate în achiziţiile publice, 2010, [online] available at http://www.transparency. org.ro/proiecte/proiecte_incheiate/2010/proiect_3/riscuri%20de%20coruptie%20in%20 achizitii%20publice.pdf, accessed on may 23, 2011. 126 abstract increasing pressures on universities and educational institutions to be more involved in the communities that house them have led to a wave of interactions that have been both creative and mutually supportive. these ‘town-gown’ relations have stemmed not only from pressures by government leaders, but also from the sense of civic responsibility and the drive for ‘service learning’ where students move beyond the academic walls to engage in real life situations as part of the learning process. the resultant merits are invaluable lessons and experiences that are mutually beneficial to the students and the communities. similarly, the involvement of community residents with events on campus fosters a mutual relationship and a positive perception towards the university. challenges with such partnerships include the resentment between the community residents and the university members and the ‘us and them’ mentality that leads to communication blocks, mistrust and resentment. overcoming these sentiments requires perseverance, patience, and creative thinking. this paper discusses one successful partnership between the university of massachusetts at amherst and the city of springfield in massachusetts. this collaboration was targeted to benefit the city by helping with their economic revitalization efforts, and the university by giving them a space in downtown springfield for a ‘design center’, where students have a meeting space for studio and field work and can then exhibit their work. the paper ends with a set of principles that can guide other institutions and communities in developing strategic outreach and engagement activities. keywords: town-gown, service learning, partnerships, outreach, economic development. the university and local economic development john mullin zeenat kotval-k jonathan cooper john mullin (corresponding author) faicp, professor, department of landscape architecture and regional planning, university of massachusetts, amherst, united states of america tel.: 001-413-577.2345 e-mail: jmullin@provost.umass.edu zeenat kotval-k doctoral candidate, department of geography, michigan state university, east lansing, mi, united states of america tel: 001-517-303.0912 e-mail: kotvalze@msu.edu jonathan cooper graduate student, department of landscape architecture and regional planning, university of massachusetts, amherst, united states of america transylvanian review of administrative sciences, special issue, pp. 126-136 127 1. introduction over the past decade there has been increasing pressures on universities, colleges and community colleges to be more closely aligned with the interests of the communities that house them. at times, pressure has come from the governmental leaders (the governor mandates it!). at times it has come from the host communities who feel short changed by the presence of these academic institutions (they use their services but don’t pay them). at still other times, the faculties push the institutions to live up to a sense of civic responsibility and, as well, arguing for the students move beyond the academic walls to see the world as it is. regardless of the stimulus, the fact remains that academic institutions are becoming key economic and social changing engines in cities and towns across the nation. in many cases there have been dramatic successes while, in others, the efforts have not held up to expectations. this paper is an analysis of a series of efforts of outreach experiences across the new england region of the united states, particularly the umass-amherst and the city of springfield partnership, that reflect the characteristics noted above. the paper ends with a set of principles that are important for any city and university that would like to forge such relationships. 2. literature review higher education has historically fostered democracy and social value through its educative responsibilities. this function, in the recent decades has caught wind again in research literature and dialogue, after having gone through a diminishing phase in the past few decades (sax, 2000). university-community engagement has been formed through various ways from service learning opportunities to consultation and large projects. these have often resulted in an improved quality of life, economic development opportunities and increased provision of expertise (mullins and gilderbloom, 2002). service learning is defined as ‘course-based, credit-bearing educational experience in which students (a) participate in an organized service activity that meets identified community needs and (b) reflect on the service activity in such a way as to gain further understanding of course content, a broader appreciation of the discipline, and an enhanced sense of civic responsibility’ (bringle and hatcher, 1995, p. 112). service learning opportunities are invaluable lessons and experiences gained when students engage with the community, whether through class projects, internships, or volunteering efforts. these skills complement classroom learning and provide priceless experiences, while at the same time providing communities with new thoughts, ideas and talent that young minds expend (bonsall, harris and marczak, 2002; markus, howard and king, 1993; cashman and seifer, 2008). while not limiting the interaction to be only university based, bruning, mcgrew and cooper (2006) stress the importance of involving the community residents and ‘inviting’ them to the university campuses to engage in cultural events (sports, theater and so on). 128 this type of engagement they have shown to be critical in the positive perception of the community towards the university. in this way, involvement with and contributions to the local community will enhance the image of the university and create a positive environment for continued interactions and stronger partnerships (kim, brunner and fitch-hauser, 2006). leading from stronger partnerships come opportunities where the community and the university can come together to work on a common issue that would be beneficial to both parties. halverston and plotas (2006) talk about a 4 year academic partnership between library and a public library which ended up working together to automate their systems. similarly, smith (2006) talks of another partnership between a public library and a university library that resulted in shared locations, personnel and collections. the advantages of such partnerships include mutual benefits, reduced costs, greater services for patrons and shared expertise. partnerships bring challenges with them as well; the main one referring to the resentment between the community residents and the university members (faculty and students). a reoccurring issue is the ‘us and them’ mentality. this mentality leads to communication issues that by themselves result in more challenges and hardships. as smith (2006) puts it, ‘when communication breaks down, relationships become strained and we are less willing to compromise’ (p. 631). as universities are tax-exempt institutions, they do not pay taxes or contribute to the local coffers. thus, when they purchase a building that was formerly owned by a profit orientated company, the city loses tax revenue from that structure. this status makes for most of the resentment and mistrust. however, many cities are requiring some form of ‘payments in lieu of taxes’ (pilots) if universities buy up taxable properties while others are requiring that universities replace the properties converted into non-profit use by buying non-profit parcels and requiring them to become taxable. this has helped it to be perceived as a responsible community member. boston was the first city to suggest these voluntary pilots from its non-profit institutions and the city is said to receive one of its most generous packages from its universities (baker-minkel, moody and kieser, 2004). in summary, these partnerships specifically, and the call for greater civic engagement in general, stems from claims that universities must serve some purpose that is greater than teaching students in classrooms. addressing socially relevant issues, imparting practical knowledge and experience opportunities, and addressing civic education and public scholarship helps justify universities’ continued existence and related (often rising) costs (ostrander, 2004). the call to move away from ‘education as a commodity, students as customers’ (boyte and kari, 1996, p 185), positions universities at the forefront of civic participation. other factors such as the increased need for faculty to engage with and work on real world issues facing their communities and imparting this sense of practical readiness for problem solving to students also stresses on the importance of effective civic engagement through town-gown relations. 129 the next section discusses the university of massachusetts at amherst and the city of springfield partnership as a case study for a relatively detailed look into the workings of town-gown collaboration. 3. the university of massachusetts, amherst (umass-amherst) and the city of springfield: a case study of a successful partnership the city of springfield, the third largest in the state of massachusetts, has had a rich industrial history. it has, in the past decade, seen its share of economic and demographic decline. in 2007, the governor of the state asked umass amherst and the city to collaborate and develop initiatives that would help with the city’s economic revitalization efforts. consequently, a partnership team was created in december 2007 that consisted of various senior officials from the university and the city government, and its primary duty was to determine how to bring the collaboration to be a success. in november 2008, officials at umass-amherst and the city of springfield finalized and signed a memorandum of understanding that created a partnership between the two entities that would further the research, teaching, and outreach capacities of the university to enhance the economic growth of the greater springfield area. in particular, the economic effort would be in establishing the springfield area ‘in the long term as a center for environmentally beneficial green industries, to boost the city’s arts and creative economy, and to expand relevant university teaching and outreach initiatives’ (blaguszewski, 2008). springfield has a rich history of manufacturing and industry, and this historical asset was paired with the university’s capacity for research in green and sustainable technologies. another area of focus was developing the performance arts in springfield so that it lends to increased life and helps with the revitalization efforts. it was expected that the increase in business related to the arts would attract more people to the downtown area and complement the efforts towards the green industries cluster and sustainable technologies. the city had identified the ‘21 elm street’ building as one that would serve as an anchor and target for attracting new residents in the downtown area. this would be possible only if the downtown area was vibrant, and in turn, the vibrancy of the downtown depended on creative activity (ced, 2010). thus the focus needs to be on encouraging this economic aspect of the city. the city had purchased the ‘first church’ located on 50 elm street and had hoped to designate it as a space for the artistic community and their activities. the partnership was jointly funded by a grant from the economic development administration (eda) for $150,000, with the city and the university matching the grant for a total of over $320,000 (blaguszewski, 2008). one aspect of the partnership involved the creation of a design center in downtown springfield, which opened up in 2010, and runs on funding from the city of springfield and umass amherst, without any other external funding source. the design center provides services such as coordination of design studios, integration of design and planning disciplines, providing a visual component of ideas, assisting neighborhoods with grant proposals, and hosting events related to the work of the center. 130 community engagement and interaction is a key addition to the work at this location. public participation and interaction is witnessed and experienced first-hand by students and this is a benefit for both groups. apart from this, students benefit by having a meeting space for studio and field work, a space for exhibiting their work, and an archive of previous projects. the community benefits by having the university physically present in the city, having a teaching and learning facility, and space for public gatherings (sleegers, 2011). even though the success of the collaboration is ongoing and cannot be fully measured, there are various accomplishments that have been made by this collaboration. initial accomplishments include meetings on a regular basis for continuing discussions to new strategies that can be undertaken by the collaboration, networking between the director of the partnership and a variety of people on and off campus to elicit support for the projects, an inventory of programs on campus that are springfield-based that relate to the industries that are being encouraged, community forums for those in the creative arts fields as well as those involved in green industries, and conferences and fairs to exhibit and create interest in the collaboration and its work. apart from the above, continued efforts were put in determining potential sites for spin-offs from the university in the city in the targeted industries, creation of the urban design center, channeling new activities to the first church building that relate to the creative economy, applications for grants to the state for funding for the collaboration work that would create jobs, and bring vitality to the downtown area. from dance companies, to art exhibits, continued efforts in fostering the creative economy is bringing success to the works of the collaboration. in terms of green industries, significant advancement has been made with the collaboration of umass amherst and the springfield technical community college (stcc) in the creation and running of the stcc incubator that attracts and gives incentives to green industries locating in the area. not only has there been continued dialogue between the partnership entities, but the inclusion of the community has also been key in the success of this collaboration. all plans and studies that have been put in place have been discussed by the city, the university, the community stakeholders and the residents. these activities and accomplishments highlight the commitment of the university to springfield’s future. with the presence of the university in center city springfield, encouragement and attraction of green industries and the creative arts community has been enhanced. the benefits also accrue to the university participants. from service learning, to space and venues for further expression of talent, faculty and students from umass amherst can find ways to put theory to practice and increase their regional/ global marketability. from the above experiences, one can construct a set of principles that may be of value to other institutions interested in developing strategic outreach and engagement activities in their host community or nearby cities and towns. these principles are noted below and are followed by a set of conclusions. 131 4. guiding principles for effective town-gown collaborations 4.1. principle one the mayor and the president of the university must be in agreement concerning mutual involvement. at the most basic level, it should be solidified through a signed memo of understanding (mou). this agreement should contain the agreed on pilots and should be publicized and used as a working guide for actions that follow. the absence of a working guide can lead to suspicion. for example, the efforts of harvard university to build a new campus were first developed with little regard of the needs of the city of boston, the neighborhood or even the mayor. this failure led to a collapse in advancing the project, acrimony between the university and the mayor and a sense of distrust between the institution and the neighbors. this split between ‘town and gown’, we expect, will color the implementation of this project for decades to come. in contrast, the partnership between boston’s mayor and the suffolk university and emerson college has dramatically transformed the city’s downtown. this area ravaged by changing markets and the great recession of the past four years, was in danger of being quite endangered. today, new buildings, dormitories, classrooms, and entertainment facilities are located throughout the district. it is a lively, vibrant place that brings pride to both universities and the city. 4.2. principle two universities must promise only that which they can actually deliver. universities hold an honored place in their host communities across the united states. however, their honored position has often been tarnished by their outreach work. the local community will hear, for example, that a university is coming to the community to undertake some project. this quickly gets interpreted as there will be a long term presence of the university some place in the city. when the project ends, the university goes home and, once again, the community is bitterly disappointed. there must be a clear understanding of the university’s roles and objectives. for example, the university of massachusetts amherst developed a one year workable program for 2011-12 that called for: (1) the movement of its radio station, with forty new jobs to springfield, massachusetts, (2) the creation of a design center that would assist the city’s planning department, (3) investment in a life sciences institute that would be located in the city, (4) increased links with the city’s school system that are designed to expand the number of students enrolling at umass from springfield city schools and (5) establishing a physical presence in downtown that, hopefully, could be expanded over time. all five of its goals/objectives were announced in the press and thus, expectations for that year became known. as well, the goals/objectives became the score card on the effectiveness of the university-city partnership. 132 4.3. principle three while faculty should be encouraged to undertake research in the community, they should not use the city as a laboratory. too often, for example, an educator will obtain a grant to improve science scores in the center city middle school. with a cadre of graduate students, the faculty member provides instruction for a year to these students. they are remarkably successful for that one year and then go home to write up their findings. in the meantime, the students return to life as it occurred before the project. who really gained? in many cities, this constant short term ‘quick’ interventions practice has so embittered school administrators and teachers that city systems often balk at the offer of universities’ involvement. it is clear that an understanding of where the project fits in terms of the existing curriculum is crucial. it is hard enough for local teachers to satisfy federal and state mandates without adding new assignments and spending time on non-essential activities that raise expectations that cannot be met. again, a workable program is essential. 4.4. principle four a town-gown relationship should be developed for the long term. it must be able to withstand the life of university projects and the term limits of mayors. otherwise, all projects will be short term and reflect the dictum of ‘if it can’t be done in one term, it can’t be done’. unfortunately, community investments, particularly capital projects, require years and years to build. patience is a virtue in a town-gown relationship. this is a sensitive issue for often the mayor and the president of the university are at odds. in most cases in new england, it has been most effective when staff irons out the cantankerous issues and then presents the solutions to the leadership as a ‘fait accompli’. 4.5. principle five a town-gown relationship must be a true partnership. this means that shared decision making must occur. it also means that some times each side will lose. given that two powerful leaders are in charge, this is often acrimonious. still, wellmeaning people can work together. to insure this long term relationship, staff from the university and the city at the strategic level must be assigned oversight of the partnership. the key word in the above is ‘strategic’. the staff must be able to interact at the senior level of both institutions. critical elements of their jobs will be the creation of the annual work plan, finding the funds to pay for the projects and insuring that the partnership remains healthy. 4.6. principle six the physical presence of the university in the community is important. while one can understand the idea of the university has a place of quiet thinking and analysis separated from the realities of everyday life, the reality is that the university is a critical player in stimulating the 21st century economic engine. 133 citizens of the host city want to be able to see the university’s structure and students and faculty moving about the community. they want the banner of the university at the grade schools, laboratories and theaters where the university is involved. in many cases the image of the community’s presence is more important than the actual activities that occur in the buildings housing its program. such is the case in hartford, connecticut where the university of connecticut’s mba program is housed in one of hartford’s high rise buildings. attached to the building is a large marquis that announces uconn’s presence. the actual space occupied by uconn is a scant number of floors. on the other hand, the impact of the new hafen university in hamburg’s hafen city was a major stabilizing influence in the revitalization of this area. a similar result can be found in trinity college’s urban neighborhood in hartford, connecticut. in a final analysis, if universities occupy key space in the community it can be a major value to the community. we have found, as silly as it sounds, that banners, flags and signs proclaiming the university’s involvement in the host city are critical. very quickly, the mayor will trumpet the fact that a new university has established a footprint in the community, pictures of the building will appear in promotional materials and the university space will become a meeting venue. stated alternatively, one cannot underplay the economic, social, educational and political impact of housing a university in a city. when universities move into a neighborhood they introduce new people, tend to add value to homes, change markets and can stimulate regeneration. it is clear, however, that both the community and university have to be aware of their impacts. 4.7. principle seven the university-town connection is enhanced by two-way student actions. the university’s students can spend money in the host city, create more activity through the downtowns and stimulate vibrancy throughout the entire city. what’s more they can rent space not easily filled. one can see this vividly at work as suffolk university’s night law school brings vitality by bringing hundreds of students to downtown boston five nights a week. a similar experience can be found in manchester’s amoskeag mill works that houses the university of new hampshire’s manchester branch. placing students on the street helps to make the area safer and more exciting. the involvement of students in a downtown moves far beyond spending. students are lively and bring vibrancy and a sense of youth to the community. imagine a formerly decayed urban downtown full of such people. the sounds and color alone are priceless. all one has to do is to take a walk along providence’s college street or worcester’s route 9 at two in the morning to see the impact that students can have on the neighborhoods where they live. irritating? yes. priceless? also yes! the second element occurs through the university’s involvement with the city’s residents. for most people universities are highly mysterious places that can be intimidating. one would be surprised by the number of youngsters who pass a campus 134 gate regularly but never enter. they believe that such places are for someone else. by bringing these kids to campus or the building in the city, some of the fears of higher education can be minimized. further, if the university’s students help the parents of student prospects to prepare forms, advise about financing and courses and explain about campus life, the possibility of improved recruiting could occur. one interesting example of how this is being explored is a creation of a program that would allow any city of springfield, massachusetts high school student to obtain free transit from the city to the five colleges area, fifteen miles in distance. the five colleges are amherst, hampshire, mount holyoke, smith and the university of massachusetts amherst. the intent is to help overcome the sense of distance between the city and those often perceived intimidating places. it is a small step but on that will prove beneficial. in short, the human side of the university interacting with the people of the city can add great value to the experiences of both. 4.8. principle eight the university must remember that it is primarily an educational institution. too often in state mandated instances or through the appeals of local leaders, universities get drawn into assignments that are outside its core mission. at times, for example, it will be given the assignment of improving the water system, creating cultural attractions and/or even serving as city staff. while all of these can work on the short term, they should not become part of the university’s portfolio. on the other hand, workforce training, preparing a diverse school population for higher education or building a branch campus in the host community are activities that are clearly within the mission of most universities. so are bringing sports events, theater productions and art exhibits to the city. in these cases, the triumph of the local team, the applause of a well-performed event or the crowds at an exhibition all add to the positive cache of the university in the city. the community is even more proud when the participants come from the local community. there is clearly a mutuality of interest between the university and host community but it must be part of the university’s mission. 4.9. principle nine universities have the ability to respond to the needs of surrounding neighborhoods. the experiences of yale in new haven and trinity in hartford are quite telling. in both cases, the universities have invested in their surrounding neighborhoods by providing low cost mortgages to faculty and staff, opening several theaters and assisting in local education. in these instances, there are self-interests at stake: a safer, more aesthetically pleasing place and easy access to the university are all assets for the university while improved housing and a higher tax base are in the interest of the community. in any case, universities have consistently been ready to help improve their surroundings. on the other hand, this must be undertaken with great care: universities also have the power to transform neighborhoods. all one has to do is look at the 135 experience of boston’s northwestern university or its surroundings. they have changed from areas with working class characteristics to ones populated by students, faculty and upscale shops. 4.10. principle ten collectives of universities and colleges can add great value to the host community. too often, universities located in the same city develop their own town-gown protocols without regard for the other institutions in the community. this may result in more projects in the community but also can create extensive duplication of efforts and the atomization of the impacts. it is clear that creating a climate of collaboration can be more effective: more funds, more depth of effort and better coordination can result. of course, it means that each of the institutions must sacrifice its independence. doing so is not always an easy task. the best example in new england is five colleges, inc. which is an umbrella organization that promotes cooperation among the five institutions of higher learning in the mid pioneer valley of massachusetts. the organization has focused upon ongoing continuous dialogs with nearby communities with great success. arguably the most impressive result has been a five college bus route system that connects the five colleges and is free to all students and residents of nearby communities. 5. conclusions not all universities are alike. the united states is made up of private colleges and universities, community colleges, public colleges and universities and, increasingly, ‘virtual’ universities which offer on-line education. in all instances, the style and degree of involvement will be different. what’s more, there are no rational models or legislative directives that can serve as guides. still the opportunities are endless. it is clear that there is no turning back the clock to the times of the high walled, cloistered university of old. the university must now become a critical player in the future and economy of its city and region. there is no formula, set of standards or national programs that can guide how best the participation of these institutions can occur. however, there are now tens of ‘best examples’ that can be found throughout the us. these range from projects as personal as providing mortgage assistance to faculty and staff to the creation of large business centers, industrial parks and even new town centers. in all cases, the orientation of the university will require the commitment of its administration to change how it operates, to commit funds and staff to the effort and to become a true partner with its host community. as the university’s students reach out beyond campus walls for knowledge so must the university reach out to build the community. references: 1. baker-mink el, k., moody, j. and kieser, w., ‘town and gown: the impact of universities on city budgets’, 2004, economic development journal, vol. 3, no. 4, pp. 7-15. 2. blaguszewski, e., ‘greater springfield-umass amherst partnership agreement announced by city, university officials’, university of massachusetts, amherst, office of news 136 & media relations, november 7, 2008, [online] available at http://www.umass.edu/ newsoffice/newsreleases/articles/80664.php.html, accessed on april 1, 2012. 3. bonsall, d.l., harris, r.a. and marczak, j.n., ‘the community as a classroom’, 2002, new directions for student services, vol. 2002, no. 100, pp. 85-96. 4. boyte, h.c. and kari, n.n., building america: the democratic promise of public work, philadelphia: temple university press, 1996. 5. bringle, r.g. and hatcher, j.a., ‘a service-learning curriculum for faculty’, 1995, michigan journal of community service learning, vol. 2, no. 1, pp. 112-122. 6. bruning, s.d., mcgrew, s. and cooper, m., ‘town-gown relationships: exploring university-community engagement from the perspective of community members’, 2006, public relations review, vol. 32, no. 2, pp. 125-130. 7. cashman, s. and seifer, s.d., ‘service learning: an integral part of undergraduate public health’, 2008, american journal of preventative medicine, vol. 35, no. 3, pp. 273-278. 8. ced, center for economic development, ‘final report. submitted to the economic development association as a final report’, november 2010. 9. halverson, k. and plotas, j. ‘creating and capitalizing on the town/gown relationship: an academic library and a public library form a community partnership’, 2006, journal of academic librarianship, vol. 32, no. 6, pp. 624-629. 10. kim, s.-h, brunner, b. and fitch-hauser, m., ‘exploring community relations in a university setting’, 2006, public relations review, vol. 32, no. 2, pp. 191-193. 11. markus, g.b., howard, j.p.f. and king, d.c., ‘integrating community service and classroom instruction enhances learning: results from an experiment’, 1993, educational evaluation and policy analysis, vol. 15, no. 4, pp. 410-419. 12. mullins, r.l. and gilderbloom, j.i., ‘urban revitalization partnerships: perceptions of the university’s role in louisville, kentucky’, 2002, local environment: the international journal of justice and sustainability, vol. 7, no. 2, pp. 163-176. 13. ostrander, s.a., ‘democracy, civic participation, and the university: a comparative study of civic engagement on five campuses’, 2004, nonprofit and voluntary sector quarterly, vol. 33, no. 1, pp. 74-93. 14. sax, l.j., ‘citizenship development and the american college student’ in ehrlich, t. (ed.), civic responsibility and higher education, phoenix: oryx press, 2000, pp. 3-18. 15. sleegers, f., ‘the creation of a university design center and its impact upon learning experience and community involvement’, 2011, presentation at erasing boundaries: service learning in design and planning, second national symposium of educating at the boundaries: community matters, april 29-30, 2011, hunter college, new york city. 16. smith, v., ‘a further perspective on joint partnerships: a commentary on creating and capitalizing on the town/gown relationship’, 2006, the journal of academic librarianship, vol. 32, no. 6, pp. 630-631. 216 abstract public corruption has received significant attention from scholars across a large array of disciplines. despite the numerous academic efforts, however, our current understandings of the motivation and the evolution of public corruption still suffer from an agonizing amount of ambiguity, and on many occasions fail to provide practical guidance. one of the reasons for the limited progress in the area is the fact that, given its nature, corruption does not lend itself easily to empirical studies. especially rare is qualitative research that examines and challenges the findings of previous studies within different institutional, cultural and social environments. this article provides the results of a study that examined nine theory building propositions suggested by de graaf and huberts (2008) within the context of developing democracies, specifically the republic of moldova. the study confirmed six of the nine propositions. among others, it was determined that in developing democracies corruption is highly influenced by the social matrix and public officials often assume their positions with the implicit expectations of reaping rewards from corrupt behaviors. keywords: corruption, public sector, moldova, social matrix. refocusing perspectives on public corruption away from the individual: insights from the moldovan social matrix alexandru vasile roman alexandru vasile roman assistant professor of public administration, college of business and public administration, california state university, san bernardino, united states of america tel.: 0001-909-537.5762 e-mail: aroman@csusb.edu transylvanian review of administrative sciences, no. 43 e/2014, pp. 216-231 217 1. introduction the nature of corruption makes research in the area challenging (williams, 2000; de graaf and huberts, 2008) as what corruption is and how it is defined will depend on the context or one’s theoretical perspective. the latter, however, becomes particularly consequential since the proposed solutions, more often than not, will be in large part the byproduct of the original assumptions. scholars (rose-ackerman, 1999; johnston, 2001; von alemann, 2004) have argued that our understandings and definitions of corruption are diachronically dependent and are routinely satiated with normative connotations and beliefs. according to pardo (2004, p. 2), ‘in any given society, corruption is a changing phenomenon, some of its aspects and received morality are culturally specific and its conceptualization is affected by personal interest, cultural values and socio-economic status’. jain (1998; 2001) has suggested that many of the failures in terms of generating practical solutions, but also the fragmentation in the extant body of literature on corruption, can be attributed to the presence of manifold active definitions and understandings. the study of public corruption is also exposed to debates over causal associations and mechanisms. for example, a corrupt bureaucratic system can be either the cause or the outcome of corrupt behavior; it is essentially impossible to empirically identify which is the first condition to develop. much of this debate remains to be resolved at the philosophical and theoretical levels and is beyond the scope of this paper. yet, within this vein it is important to note, that there is a troublesome tendency within the more recent body of literature to attribute perhaps too much decision-making power to the individual. researchers habitually assume, especially those who embrace rational choice perspectives, that the decision to become corrupt is shaped solely at the individual level (persson, rothstein and teorell, 2013). the principal-agent model, typically invoked in such studies, has also been challenged on the grounds that it misses multiple critical dimensions of corruption (kahana and qijun, 2010). furthermore, an important stream of academic literature subtly enforces overly-simplistic dichotomies of ‘us versus the other’ (haller and shore, 2005) and accepts material or power interests as the primary motivators of corrupt behavior. while, assuming that the individual has full control over the decision of whether or not to undertake a corrupt act, does indeed reduce some of the theoretical complexity associated with the study of corruption – such supposition, however, also imposes strict constraints on the broader dynamics that the researcher can ultimately uncover. attempts to enforce stereotypical dichotomies are vulnerable to similar criticisms; labeling behavior within rigid categories is a way of observing some things, but also a way of overlooking others. notwithstanding the difficulties associated with research on public corruption, scholars appear to agree that developing practical interpretations about the nature of corruption and unethical behavior is critical for achieving improved democratic governance (menzel, 2009). in a recent effort to address the inability of the extant body of literature to adequately explain public corruption and the lack of a convincing theoretical framework, de 218 graaf and huberts (2008) undertook a qualitative investigation of the nature of corruption in western democracies. in their study of corruption in netherlands, the authors studied in detail 10 important public corruption cases and offered nine propositions. the dutch researchers concluded that corruption develops within enduring relationships and the process of becoming corrupt can be described as a slippery slope. while the usual suspect, material gain, was part of the motivational context, their research also recognized that corruption could be motivated by love, friendship, status, and the desire to impress others. the conclusions reached in the dutch study were intriguing, but their claim to generalizability was limited since the suggestions were framed within the context of economically developed countries with established democracies. given the potential of the nine propositions in terms of generating a powerful theoretical framework, this study examined them within a different environment, treating them as hypotheses. the research presented here attempted to determine whether the nine propositions derived from the dutch study could be transferred and upheld within the context of developing countries of eastern europe, which are inexperienced democracies. the methodological approach was reproduced in studying 28 moldovan corruption cases. different from the original study, however, 33 additional interviews were conducted. the interviews were found to be necessary in order to gauge the nuances of the social and cultural structures within the new setting. the findings confirmed six of the nine original propositions. this provides hope that a practical and encompassing understanding of the motivational constructs behind public corruption can indeed be achieved. the three propositions that were not confirmed, nevertheless, suggest that the de graaf and huberts’ (2008) framework somewhat underestimates the role of the social context, at least when applied to developing democracies. consequently, by underestimating the effect of social associations and kinship pressures, the framework empowers the individual decision-maker beyond the pragmatic reality of his or her social environment. this paper, then, makes a two-fold contribution to current public administration literature. first, it is one of a small number of studies on public corruption that examines, challenges and attempts to confirm propositions suggested as a result of a previous qualitative study. second, the research is sufficiently generalizable in character in order to be applicable and of academic, and practical interest for established and fledgling democracies alike. taken together, given the methodological variation from the original study, the research presented here should be treated both as confirmatory and exploratory in nature. following this introduction the discussion is broken down into three main sections. in the next section i introduce the de graaf and huberts (2008) study and their methodology, and explain why replicating their research design was found to be appropriate and theoretically justifiable. in the section that follows, i present the results of the study on the background of the original nine propositions. the discussion focuses mainly on the propositions that were not confirmed. in the final section, the broader implications of the findings are further discussed. 219 2. from dutch to moldovan: an overview of the methodological approach the difficulty that is associated with the attempts to frame the nature of public corruption and the limited knowledge about causal relationships, and their directions – make studying corruption highly complex. the normative overtones and the implicit assumptions behind what corruption is dictate what is being examined and what is eventually being offered as a policy solution (anechiarico and jacobs, 1996; philp, 1997; johnston, 2001). presently, the literature does not offer one single or reliable indicator that would provide a substantive anticipation of corrupt behavior. whilst quantitative examinations have their place in this field of study, in instances when the researcher would like to uncover dynamics unfettered by theoretical assumptions, it is probably appropriate to undertake a qualitatively-heuristic approach to research (menzel, 2003). qualitative methodologies are often found more useful than quantitative approaches in terms of their capacity to develop understandings of corruption (doig, 2011) and in terms of providing improved policy suggestions (anechiarico and jacobs, 1996). in their research, de graaf and huberts (2008) employed a multiple case study design within an explorative and inductive research strategy (höffling, 2002), in order to focus on a specific setting (yin, 2009) and generate theory through propositions (harris and sutton, 1986). the researchers selected and studied in great detail 10 important corruption cases from the netherlands. the complex nature of corruption and the lack of academic agreement on the topic made an explorative inductive research approach fitting for deconstructing the character of the public officials and the dimensions of the motivators behind their corrupt behavior. the cases were analyzed within their contexts and following the frameworks offered by anechiarico and jacobs (1996), della porta and vannucci (1997), and höffling (2002). for the purposes of the original study, to be corrupt, as per huberts and nelen (2005), meant to act (or fail to act) as a result of receiving personal rewards from interested third parties. the original exploration focused specifically on the netherlands, a high-income country, where it is commonly believed that corrupt behavior in the public sector is the exception rather than the norm. in this sense, the nine propositions that were suggested by de graaf and huberts (2008), as a result of their analysis, should be interpreted within the situational context of western democracies, with developed economies and stable institutionalized political systems. while powerful in their own right, examining their conclusions within a different setting would provide a valid test for the robustness and transferability potential of the nine propositions. the republic of moldova was identified as an appropriate environment for replicating the study. the choice was driven by two main considerations. first, moldova is sufficiently different1 in terms of economic development, historical traditions and 1 moldova is commonly considered a country with high levels of corruption (spinei et. al, 2008) – for instance in 2011 it was ranked as the 112th least corrupt country in the world, 220 cultural structures to provide a challenging test for the propositions generated in the dutch study. yet, at the same time, the institutional structures were believed to be sufficiently similar to warrant employing an analogous research design. second, this represented a convenience sample; it was the only research setting, where it was possible to assure the needed richness of information and level of access. a total of 28 complete corruption cases, from 2003 to 2009, were made available by the supreme court of justice of republic of moldova (scjrm, 2010) and by the center for combating economic crimes and corruption (ccecc, 2010). each file provided comprehensive information on the investigations and court proceedings, while on a number of occasions the files also contained audio or video recordings. additional data, whenever possible, were collected from other publicly available sources, which most of the time were internet-based. the cases were examined following the methodological format employed by de graaf and huberts (2008) as closely as reasonably possible. multiple data sources were iteratively reviewed and triangulated in order to reconstruct an individual profile for each of the corrupt public officials and to understand the motivational framework for engaging in the specific corrupt act. differently from the original study, however, an additional 33 interviews with business owners (five), current (four) and former (three) anti-corruption agencies’ employees, fiscal/judicial/custom employees (five), journalists (eight) and other public officials (eight) – were conducted. the interviews with the informants were conducted in person in december of 2010. the interviews were motivated by the intention to provide the data necessary to evaluate the cultural dimensions of corruption, but also to assist with interpretations of uncovered patterns. the interviews were semi-structured in nature and were selected through a snowball approach. although the informants were allowed to discuss any particular matter that they found important to be shared, they were directed to focus on describing existing social perceptions of corruption. they were also encouraged to frame their insights within stories. the latter were found to provide a great number of thick and useful descriptions and understandings regarding the inner fundamentals of the moldovan social matrix. interviews were stopped when it was believed that a theoretical saturation was achieved, for which even sets less than 50 interviews can frequently suffice (strauss, 1987; ritchie, lewis and elam, 2003). a number of the informants were also intimately familiar with some of the cases being examined; as such, they provided an additional useful source that complemented the information derived from the investigation files. sharing the same ranking with algeria, egypt, kosovo, senegal and vietnam (transparency international, 2012). in addition, the nation has been experimenting with democracy for less than three decades. 221 3. findings 3.1. confirmations by focusing on predisposing causes of corruption, de graaf and huberts (2008) determine that next to material gain, friendship, love, status2 and attempts to impress others, are the most significant motives for corrupt behavior. their results also suggest that the process of becoming corrupt is a slippery slope and as a rule the individual becomes entrapped by developing dynamics, which lead to limited self-awareness or control, hence increased levels of corrupt behavior. these findings are intriguing in several important ways. first, the results lend support to the argument that in order to properly delineate behavior the researchers should rely on both individual and societal lenses (vardi and weitz, 2004; de graaf, 2007). interpreting corruption from one single perspective can easily lead to the re-enforcement of simplistic and banal beliefs about corruption motivating mechanisms. second, de graaf and huberts (2008) convincingly argue that anticorruption policies have to be flexible in order to be effective as context is found to be critically important in terms of evaluating and managing corruption. specific circumstances will demand a different mix of anticorruption controls and ethical constructs (de graaf and huberts, 2008). finally, and most importantly, given the methodological approach, the dutch study provides the basis for developing theoretical insights about the nature of corruption unconstrained by over-simplistic assumptions about the individual, organizational or societal constructs. the patterns that were uncovered as a result of the in-depth analysis of 28 moldovan cases supported six of the nine propositions put forward as a result of the original study. table 1 provides a summary description of the nine leading propositions by de graaf and huberts (2008) and their confirmation. appendix 13 provides a summary description of the coding for each moldovan corruption case. the aggregate analysis of the moldovan cases juxtaposed with content analysis of the interviews confirmed that the relationships between the interested third parties and the corrupt public officials are typically lasting and constructed based on mutual trust (proposition eight). one of the suspected public officials was quoted in one of 2 when it is argued that corruption was motivated by status it is meant that one engaged in corruption due to one’s belief that one’s social position excused or allowed such behavior. in bland terms, one’s position made one feel untouchable and supposedly gave one preferential treatment under the law. 3 in the analysis, one’s personality was coded based on the deconstruction of one’s answers and dialogues during integration, one’s court statements and evaluation provided in one’s fi le, as well, whenever present, the characterizations off ered by one’s co-workers. although, as in de graaf and huberts (2008), personality labeling was unstandardized, the data was suffi ciently thick and rich to provide the appropriate basis to identify one’s att itude and general personality traits. on multiple occasions the evaluation by investigators also provided solid insights into one’s personality. 222 table 1: de graaf and huberts propositions (2008) the individual motive 1. next to material gain the most important motives for offi cials to become corrupt are friendship or love, status, and making an impression on colleagues and friends process of becoming corrupt 2. offi cials ‘slide down’ toward corruption; most processes of becoming corrupt can be considered a slippery slope. character 3. often corrupt offi cials have dominant and strong personalities, know how to ‘get things done’, take or get the freedom to do things independently, and oversee formal boundaries of authority. [confi rmed4] space to maneuver 4. more ‘business type’ public offi cials, brings (sic) the risk of more corruption. [confi rmed] the organization supervision 5. in most corruption cases, supervision of the corrupt offi cial is not strong. [con-fi rmed] organizational structure 6. in most corruption cases, management has not promoted a clear integrity policy. [confi rmed] organizational culture 7. because of loyalty and solidarity, colleagues are hesitant to report suspicions of another’s corrupt activities. the relationship between the briber and the corrupt offi cial the exchange of favors; the length, initiative, and nature of the relationship; and the interest of bribers 8. the relationship between briber and offi cial is most often enduring. [confi rmed] corrupt networks 9. corrupt offi cials, including those who operate outside-called corrupt networks, do not limit their corruption to one incident. [confi rmed] the case files stating: ‘i didn’t do favors just for anyone. i usually helped or dealt only with people whom i trusted. most of the time they were guys i knew from school. for me it was very important that i could depend on them. when it came to big staff, i normally had two guys that i went through…no one else. we were on the same page in terms of what needed to be done’.4 corrupt behavior is habitually repetitive/not limited to one incident (proposition nine). in one of the files, for instance, the investigation team identified the following corruption pattern: ‘there have been at least four other known instances in which the suspect has engaged in unlawful activities. in the first two months of 2008, the suspect is believed to have subtracted 3000 lei [approximately $240] from four different wholesalers in exchange for favorable inspections. a clear and lasting pattern of unlawful acts can be established. the suspect had a well-known system for receiving fees for inspections from wholesalers’. the latter dynamic is regularly aided by weak organizational supervision and failures to institute policies that would otherwise uphold and enforce ethical behavior (propositions five and six). during one of the interviews, a long time anti-corruption agent stated: ‘one huge issue in moldova is the fact that there is total disinterest in fighting corruption. moral behavior is not something high on the priority list for public agencies. high ranking state employees are not interested in developing or enforcing strict moral codes. it is against their interest to promote such policies. it makes doing things on the side more difficult. but why would anyone want to do that? it makes no sense for them to do that’. 4 here ‘confi rmed’ means that the data from the moldovan cases supported the proposition made by de graaf and huberts (2008). in other terms, moldovan data warranted reaching similar conclusions about the nature and triggers of corrupt behavior. 223 the moldovan cases confirmed that public officials, who eventually undertake corrupt behavior, can be normally described as having strong personalities (proposition three). they were able to claim ample discretionary spaces to maneuver within their organizations, which with time increased the risk of corruption (proposition four). one of the informants, an anti-corruption investigator, concluded: ‘if i would have to choose one specific thing that characterized most of the corrupt state workers whom i have encountered over the years, it would be arrogance. they are usually domineering and feel self-important. they truly believe, most of the time for good reason, that nobody can do anything to them. people are either afraid of them or just don’t care enough to do anything. as time goes by, they assume more and more liberties. they don’t like to answer to anyone and can get nasty when challenged. the longer they do what they are doing and the higher they climb, the more powerful and entitled they become. it is actually not easy [to be so dishonest] … you have to be a different kind of man to be able to do some of the things that i have seen’. while the confirmation of six of the nine propositions is a commanding outcome that warrants significant attention; the dynamics behind the three propositions that were not confirmed are perhaps even more theoretically intriguing. the next sub-section introduces and discusses the three propositions that were not confirmed. 3.2. differences the analysis of the 28 cases did not provide the grounds for a complete and unchallenged acceptance of propositions one, two and seven. within the moldovan context, neither friendship nor love was confirmed as important motives that lead public officials to become corrupt. in fact, no case revealed love or friendship as the primary reason for engaging in corrupt acts (proposition one). next to material gain, kinship associations join status as the two most important motives for corrupt behavior. it was determined that in ten cases kinship pressures were the main trigger of the specific corrupt act while in another five cases, public officials acted corruptly due primarily to status considerations. one of the informants, a high ranking government official, elegantly captured the condition during one of the interviews: ‘our people have an obsession with power and status. they always chase it. they want more, and more and more… moldovans have this unexplainable dumb definition of democracy. for moldovans democracy means doing anything that you want. there is no respect for the law. everybody is in it for themselves and for their clans. communism has killed any sense of community and now all everyone wants is to feel important. all people want is to take care of their families and their relatives. people say that it is always about money. that’s not true. yes, money is very important, but i can tell you for a fact that it is not always true. many times our officials want to show off that they can do anything that they want. in such cases corruption has nothing to do with money. it is just about showing off. it’s moldovenism through and through…a disease’. most critically, however, unlike dutch public officials, moldovan public officials often come into their positions already corruptly-predisposed; they expect and demand status and benefits that would, on paper, not be sanctioned for holders of public 224 office (proposition two). an interrogation transcript from one of the files reveals the following exchange: ‘investigator: you don’t think there is anything wrong with what you did? suspected official (s.o.): no, of course not. i only did what everyone else does and i only took what is rightfully mine. investigator: rightfully yours? s.o.: yes. it comes with the job. sometimes you do things on the side. you should know this better than me. it is not like anyone in this country actually lives on salary alone. investigator: i do. s.o.: no. you don’t. i guarantee you don’t. investigator: why are you so sure? s.o.: because you work for the state and nobody can live on a state salary. people only work for the state because they can make money off the books or they want to get to power. that’s the only reason anyone wants a state job’. explaining misbehavior as a normal expectation of one’s position represented a common occurrence within the examined cases. indeed, the possibility of commanding additional, job unsanctioned benefits, was a pervasive theme with the motivational structures for corrupt public officials. finally, different from the dutch cases, neither individual nor organizational loyalty could be confirmed as an inhibitor of the willingness of other public employees to report suspicious behavior (proposition seven). on the contrary, minimal levels of organizational identification and dominance of kinship associations made reporting of suspicious behavior – which one would expect to be an organizational priority – unimportant. public officials rarely, if ever, would identify with their coworkers or organizations. the latter, for instance, is well captured in the following dialogue from one of the interrogation transcripts: ‘investigator: you have worked here for five years, right? suspected official (s.o.): yes, almost six. investigator: you don’t seem too upset that you have lost your job. s.o.: why should i be? the mayoralty didn’t do much for me. it was a job. i got what i could while i could’. table 2 delineates the three unconfirmed propositions and their proposed alternative interpretations. there are several consequential theoretical implications that are bound to come with these findings. first, within the context of post-communist countries kinship and other social associations might rival and at times might even dominate material interest (karklins, 2005; barsukova, 2009; roman and miller, 2014). in more than half of the cases in the data set, other motives than material interest acted as predisposing causes for corrupt behavior (appendix 1). along these lines, the nature of the material interest-corruption nexus within low income, developing democracies might not be 225 table 2: proposed alternatives to unconfirmed propositions original propositions alternative propositions the individual motive next to material gain the most important motives for offi cials to become corrupt are friendship or love, status, and making an impression on colleagues and friends. next to material gain the most important motives for offi cials to become corrupt are kinship and status. process of becoming corrupt offi cials slide down toward corruption; most processes of becoming corrupt can be considered a slippery slope. offi cials come into a position expecting the status and benefi ts outside their salary, the offi cials are corrupt oriented even before taking a position. the organization organizational culture because of loyalty and solidarity, colleagues are hesitant to report suspicions of another’s corrupt activities. colleagues are not interested in reporting suspicions of another’s corrupt activities for a variety of intertwined reasons having to do with culture, lack of organizational loyalty, unclear reporting procedures, unwillingness to get involved and predominance of corruption in the organization. significantly different from those in high income, established democracies. under this scenario, the expectations that better economic conditions would lead to less corruption (e.g., treisman, 2000; paldam, 2001; fishman and gatti, 2002; rauch and evans, 2000; gundlach and paldam, 2009; blackburn and forgues-puccio, 2010) become theoretically strenuous. corruption might indeed be less of an economic problem than it is commonly assumed. second, within studies of corruption in fledgling democracies with developing economies, it is probably ill-advised to make any assumptions about the normative expectations, values and behaviors of individuals upon entry into public service. the process of becoming corrupt can certainly be described as a slippery slope. the slope, in developing countries, however, is probably much steeper and has a different starting point than it is the case of established democracies, with developed economies and time-honored institutional structures. as such, it is inappropriate to assume that most public officials become corrupt on the job. this latter realization induces a great deal of challenges since few organizational controls are powerful enough to account for the behavioral predispositions of the individual upon entry into public service. there is a whole new set of lessons and dynamics, outside decision-making at the individual level, which researchers have to learn in terms of managing public corruption. if the individual enters public service already corruptly-orientated, we could expect that integrity control structures will be perceived as nothing more than a minute inconvenience. in developing democracies, the critical question of managing public corruption, then, will not be that of guiding individual decision-making but of that of reconstructing the broader telos behind public service employment. thirdly, while the findings suggest substantial levels of commonality among the two settings, hence possible theoretical transferability, in terms of policy design, public corruption in low income countries might demand approaches that differ in ways that matter from anticorruption policies in established democracies. i have previously 226 argued that boiler plate anticorruption approaches, that assume that public corruption in developing countries is driven by poverty and material gain, have been rather ineffective and might in fact backfired by motivating more corruption (roman, 2012). in fledgling democracies, institutional and social constructs are not well behaved nor do they lend themselves to rational predictability (persson, rothstein and teorell, 2013; ledeneva, 2011). mccarthy (2010), for instance, has suggested that the failures and inadequacies of institutional structures are much more consequential in terms of explaining public corruption than it is led to believe. in post-soviet democracies it is common for anticorruption and law-enforcing agencies, which are critical for enforcing anticorruption policies, to be some of the most corrupt organizations (barsukova, 2009; ledeneva, 2011). as a result, public corruption in low income countries often remains unresponsive and unaffected by policies imported from established democracies, which take for granted the integrity and effectiveness of local anticorruption agencies. finally, there are valid reasons to believe that corruption is a self-generating and self-fulfilling condition. meaning that corrupt behavior in the public sector might simultaneously be the outcome and the cause of specific circumstantial developments within the individual-social environment nexus. the latter does not mean that any directional assumption about causality becomes worthless or theoretically inappropriate; it merely means that if simplifying suppositions should be made, they should be based on well-constructed contextual understandings of the condition. 3.3. limitations at this point, it is central to note that there are four, possibly critical, weaknesses in term of the research approach that could endanger the validity of the confirmatory efforts. first, the dutch cases were considered important. the moldovan cases were not necessarily important in the same manner that the dutch cases were; furthermore, their selection was based on availability/convenience and not on discretionary academic judgment. in fact, only two of the 28 studied cases could have been considered as important. thus, in general lines, the original study dealt with salient or elite cases whereas in the second setting the data was a mix of cases primarily reflecting petty or routine corruption. there was an obvious bias in the type of corruption cases being prosecuted in moldova, which in itself represented a very powerful realization and should be investigated by further research. second, while in terms of institutional structure and stated legal processes, in theory, the two countries might appear rather similar, in reality the two settings might respond dramatically different to an identical set of conditions. third, as it is the case for all research efforts of this type, the final interpretations are as much the reflection of the researcher’s training as of the methodological approaches being employed. even the earnest of efforts and the most exacting research designs cannot properly remove all traces of bias of the unstated and unrealized assumptions that the researcher possesses. this analysis is certainly not immune to that. i cannot nor do i wish to claim such exactness. 227 lastly, the methodological approach was reproduced to the extent made possible by the detail provided in the original article. while, all sources used by the dutch researchers were consulted closely, it is not excluded that the methodology used in studying the moldovan cases might not have been an exact replication. nevertheless, despite these possibly significant vulnerabilities, i find sufficient grounds to believe that the comparison of the findings under the two contexts is warranted and provides meaningful insights into expanding our understandings about triggers and motivators of public corruption. although the differences between the two environments and the nature of the data might raise some concerns, passing such a demanding test would provide increased validity to the original suggestions. 4. conclusions de graaf and huberts note that ‘in the literature on corruption, there is much speculation on its nature, but there are hardly any empirical qualitative studies on the nature of corruption’ (2008, p. 650). if it accomplished anything, this study at a minimum provides a rare examination and confirmation effort of previous qualitative empirical research. under the best case scenario the findings presented here laid the grounds for a practical and generalizable theoretical framework that is driven by heuristic logic and makes few simplifying assumptions. the successful confirmation of six of the nine propositions gives hope that it might indeed be possible to generate a satisfactory understanding of the nature of corruption. yet, the three unconfirmed dimensions induce a necessary level of realism to such enthusiasm by suggesting that much remains to be done. due to the methodological difficulties of confirming qualitative research and the inherent weaknesses of explorative efforts, the conclusions reached in this article should be treated with an adequate level of academic skepticism. having in mind the potential imitations of the study, nevertheless, the richness of the data and the methodological rigor provide acceptable levels of confidence in order to believe that the suggestions are indeed robust. paradoxically, the two main possible weaknesses of this study, that are associated with reproducing the research within such a dramatically different environment, could, in some sense, be considered the primary strengths of this scholarly effort. the original propositions were confirmed not only within the context of a different environment, but also within a data set that was primarily composed of petty corruption cases. the main contribution of this research, then, rests in its efforts to confirm and expand our knowledge about the nature of public corruption. while the profile and nature of the individuals are confirmed as important in constructing the predisposing causes for corrupt behavior, i argue that in low income developing democracies the social matrix is more powerful in shaping individual behavioral dynamics than the other way around. curiously, when de tocqueville (1835/1840/2001) first introduced the term individualism, he used it to 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(ed.), explaining corruption, cheltenham, uk: edward elgar, 2000. 42. yin, b.r., case study research: design and methods, thousand oaks, ca: sage, 2009. 231 appendix 1 key variables for the 28 corruption cases5 ye ar g en de r ag e po sit io n/ de pa rtm en t/ ar ea fi rs t a cc us at io n/ cr im in al o ffe ns e br ib e pr es en ce fi na nc ia l/ fa vo r im pl ica tio ns m ot iva tio n5 as se rti ve / st ro ng pe rs on al ity 1 2008 male 38 police/judicial yes yes low fi nancial yes 2 2008 female 56 education yes yes low fi nancial yes 3 2003 male 39 police/judicial yes yes high fi nancial yes 4 2005 female 25 customs/fi scal yes yes low fi nancial yes 5 2005 male 25 police/judicial no yes medium fi nancial yes 6 2008 male 60 administration/services yes yes high fi nancial yes 7 2008 male 30 administration/services yes yes high fi nancial yes 8 2008 male 28 police/judicial yes yes medium fi nancial yes 9 2002 male 27 administration/service yes no high fi nancial yes 10 2008 male 53 education no yes high fi nancial yes 11 2006 male 24 police/judicial no yes low fi nancial yes 12 2007 male 26 police/judicial no yes low fi nancial yes 13 2002 female 26 administration/service yes no high fi nancial yes 14 2003 female 51 police/judicial yes no high kinship no 15 2008 female 46 education no yes low kinship no 16 2007 male 34 police/judicial yes no medium kinship yes 17 2006 male 48 administration/service no no low kinship yes 18 2007 male 54 education no no low kinship yes 19 2007 male 53 education no no low kinship no 20 2006 male 35 customs/fi scal yes yes low kinship yes 21 2008 male 54 police/judicial yes no low kinship yes 22 2008 male 26 police/judicial yes no high kinship yes 23 2005 male 28 police/judicial no no low kinship no 24 2009 male 29 customs/fi scal no yes low status yes 25 2008 male 26 police/judicial no no high status yes 26 2004 male 55 police/judicial yes yes low status yes 27 2004 male 43 police/judicial yes yes low status yes 28 2007 male 52 administration/service yes no low status yes 5 the motive of the corrupt act was determined based on the triangulation of several data sources: the statements made by suspected public offi cials, the information obtained from interrogation and court transcripts. although, on most occasions there might have been several motives for engaging in corruption, in each case there was a clear dominant motive for engaging in the specifi c corrupt act for which one was being investigated. it is important to note here that the presence of a bribe did not necessary mean that the act was motivated by fi nancial considerations. for instance, in 12 of the studied cases there was no bribe involved. in eight of the twelve instances, the suspected public offi cials motivated their actions by the need to satisfy the interest of their networks of association. in two cases although no bribe was involved it was still determined that the main reason behind the corrupt act was fi nancial. even if the public offi cials did not receive a bribe, they engaged in corrupt behavior with the expectation of future fi nancial benefi ts. furthermore, in two of the instances when bribe was demanded, it was done so in order to pay off someone else in the system; the actual corrupt act was still undertaken for the benefi t of someone in one’s appropriate network. 201 abstract the communication processes public administration is involved in (as part of communication relations) should always accompany administrative action in its efforts to achieve its mission and objectives, namely the public needs. the framework of the deployment of local authorities’ communication activities has several features, one of them being the definition and description of communication methods (with the public, but also with the media) in the legislation. sometimes, even though defined by law, communication methods are not used by public administration, thus public authorities minimize the fact that those who receive information from the administration represent at the same time sources of information for the administration. mass media has a very important role in public communication. depending on how the message is received, the effects of communication will be different. they consist in the emergence of actions, attitudes, behaviors or mentalities that manifest among the public, being partially measurable and having a longterm (positive or negative) impact on the receptors. keywords: communication, public authority, mass-media, public agenda, methods of communication. the communication of local public authorities with mass-media. effects and best practices ana elena ranta ana elena ranta assistant professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: anaelena_ranta@yahoo.com transylvanian review of administrative sciences, no. 34 e/2011, pp. 201-216 202 1. preamble. methodological issues public communication is a field in which research can be approached from a multitude of perspectives, such as: types of communication, purpose of communication, means of communication, communication content, the effects of communication etc. the present paper aims at analyzing the practices or methods of communication used by the local public administration authorities in relation to mass-media. by this approach i intend to reach two objectives: (1) the analysis regarding the stage of implementation of the specific legal framework in order to highlight the way in which, being aware of the role of public communication, the communication relationship is achieved between the local government and the media, beyond the limits imposed by law, and (2) the analysis of the way in which mass-media contributes to setting an administrative agenda, thus setting a communication relationship with the local government. thus i will try to emphasize the fact that public administration authorities, although operating within the statutory requirements, although expressing themselves in ways apparently fixed by the legislative power, are, on the one hand, able to increase the number of communication methods and practices and, on the other hand, they can prioritize aspects linked to institutional communication, with the purpose of reforming and modernizing the operation and organization of their work. considering the multitude and complexity of aspects regarding the communicational activity of public administration authorities, this paper will analyze the communication relationship between the local government and mass-media, especially focusing on the role the media in the context of the communication between the local government and citizens. the research method used is the semi-structured interview with the spokespersons in the mass-media office of the city hall of cluj-napoca and cluj county council and with two persons in charge with the activity of the public relations and massmedia departments of the aforementioned authorities. the selection criterion of the persons to whom i applied the interview was that their tasks at work should include communication activities with mass-media and the citizens. for the substantiation of the analysis i also interviewed a journalist interested, due to his profession, in communicating with local authorities, as a secondary source of information. the research is limited to the analysis of local municipal authorities’ communication with the media, because as a result of interviews conducted with mayors in rural areas i concluded that, at this level, the local government’s communication processes manifest a series of differences with the communication undertaken by authorities in urban areas. for example, in rural areas the spokesperson position is not filled and citizens get involved very little on their own initiative in the communication process with the administration, limiting themselves to the role of receptors of messages coming from the administration. thus, the public, as a beneficiary of the public administration’s activity, ignores the fact that it has the right to make complaints, to make proposals and suggestions or to request information from the public administration authorities. 203 therefore, i consider that highlighting the differences in the communication processes which involve the public administration and are carried out in rural and urban areas should be the subject of a distinct study. 2. the theoretical background of the research institutional communication “is the discourse of institutions (public, private, associative) about themselves. it is not the discourse about their products, but about the nature of the institution, its principles, personality, project, options, objectives, actions, performance” (daniel apud sfez, 1993, p. 1177). in the present context, institutional communication becomes an effective tool used by organizations (public or private) for: succeeding in business, creating a relevant public image, surpassing a crisis, creating a favorable climate in the institution, change with respect to the human behavior in relation to the services provided by the institution (rogojanu et al., 2004, p. 1). whether we talk about a private company or a state institution, the use of institutional communication is mandatory, because in this way the information flow will be correctly perceived by the target audience and therefore there will be a major change in the organization’s image. externally, institutional communication is aimed at two types of audience: the direct audience and indirect audience. for the direct audience, external institutional communication is mainly focused on marketing communication, being addressed to the company’s clients, sales representatives, merchandisers, distributors, suppliers and competitors. the indirect audience is provided with what we call institutional communication, oriented towards potential clients and investors, the financial community, the institutional community, government and the community oriented towards environmental issues. thus, through the messages/information sent by the administration to the direct public, the administration tries to convince the public that the measures taken and services provided are opportune, efficient and qualitative; in other words, the administration tries to find support among the public. by communicating with the indirect public, public administration authorities send other types of information which take other forms. through this information the administration transmits conditions, requirements, standards, exigencies, results or performance. the differences between these types of communication – between administration and the direct public, respectively administration and the indirect public – are mainly related to the purpose of communication and its contents. the communication space is created and it develops in line with the precise nature of the public field where it takes place. the progress of the human community leads by default to its institutional development out of the need to create the proper communication framework with the public opinion. thus, a new segment of communication science is formed: the public communication. “public communication makes reference to the state administration’s increasingly visible and organized use of means of advertising and public relations” (miege, 2000, p. 74). public communication is based on three communication cores: the administration, the media and the public. by using public communication strategies, public administration 204 tries to find out the public’s option, but also to evaluate its public image. thus, public administration will be interested in the manner in which its image is promoted and perceived, primarily using mass media in order to communicate. “in some cases, they [the public authorities] seek to act not only on their media representations, but also on our behavior: it is the case of campaigns of public interest on themes such as health, public safety, environment (...). in these cases we speak about social or behavioral communication.” (rieffel, 2001, p. 28). thus, it is considered that local communication can be perceived as a subcategory of public communication. this involves municipalities, local and regional or county councils, which need to promote their initiatives, achievements and projects in the eyes of voters, seeking to create a stronger sense of belonging. in order to come to the fore, they have to be known and recognized by the general public (rieffel, 2001, p. 29). by public communication the administrative authorities also seek to find out the population’s needs and desires so as to, by the role and responsibilities they hold, address them, thus fulfilling their mission. if communication within an organization takes place between employees, management or investors (in some cases), the external public category includes: the community, the consumers, the government, the international public and often even mass-media (newsom et al., 2003, pp. 134-135). 3. the communication of the local government: features the communication processes in which public administration is involved should permanently accompany administrative action in its efforts to achieve its mission and objectives, respectively to address public needs. the framework in which this communication relationship unfolds has some particularities arising from the privileged position of the public administration in relation to the beneficiaries of its services, a position under which the administration has the option (recognized by law) to impose binding decisions. most of the times, the public communication of public organizations is achieved through spokespersons who represent them, by messages to the media and also by the publications of its own communication activity. public communication is directed towards the public, which means that the latter’s actions impact public administration and vice versa. the message consists of information or opinions formulated and framed according to a set of specific rules for each communication channel and each type of target audience. the communication channel ensures the transmission of messages from the administration to the target audience and varies depending on the type of communication. from the perspective of citizens or beneficiaries of the administrative action, the communication with the administrative authorities is mainly achieved through frameworks settled by the legislative power. these frameworks consist of regulations that permit and enable the public to access information, to participate or contribute to the decision making process and also to transmit requests, suggestions, complaints or claims whose resolution lies within the public administration’s competence. by 205 communicating with the administration, the public seeks to impose its own views in order to create the possibility of social change, in other words, it seeks to participate and get involved in the decision making process. 4. the importance of communication between public administration and the media and its effects with respect to public communication, an important role is held by the media. depending on the manner in which the message is received, the effects of communication will be different. they consist in the emergence of actions, attitudes, behaviors or mentalities that manifest within the public, being partially measurable and having a long-term positive/negative impact on receptors. most of the times, the institutions’ messages may be perceived in a distorted manner. at this point, the so-called “noise” or “disturbance” appears which will encumber or even break the information flow. it is therefore necessary to choose a fluent and technologically developed communication channel in order to reduce, as much as possible, these disturbances of communication. in order to assess how important the mass-media system has become, it is enough to imagine what would happen in the social and personal life if, because of an inexplicable reason, all forms of mass communication we have today would suddenly disappear. how would order and stability be maintained? how would social change be produced, how would community conflicts be solved, how would adaptation be reached in changing environments? how would groups and organizations fulfill their goals and actions? thus, mass media is a system which society, organizations and individuals have become dependent upon (defleur, 1999, pp. 296-322). mass media presents itself as a core magnifier of the information provided by the administration. a good communication with the media is always important in order to smooth the information flow of the institutional communication, both within and especially outside the organization, since information media has the capacity to facilitate change in a free society; they may give importance or significance to a message or a problem, providing space in the news. sometimes, the public opinion with regard to an issue develops independently, being totally ignored by the media (newsom et al., 2003, p. 236). public information is usually done in two ways: the provision of information for transmission to the target audience and providing answers to questions that may rise with respect to the communicated message. the media can have a positive or negative impact on the individual, depending on the individual’s choice. it can be assessed that the impact of media is positive if, when used as a communication channel by the public administration, it contributes to obtaining the public’s adhesion as well as to ensuring transparency of actions taken by the administration or, in other words, to reducing suspicion or doubt among the public. also, aspects that influence the image of the institution are reflected in the press, given the general role of the media, that of influencing and forming the public opinion. the positive or negative impact depends on various aspects among which can be 206 specified the way in which the information is sent, the credibility of the communication channel used, the relevance of the message, the relevance of the arguments expressed. the mass media’s negative impact on the public is diminished if the form, structure and content of information are less altered. considering the diversity and closeness of mass media sources we can state that the local and central administration should make use of the media in order to provide the citizens with public information. in their relations with the press, the majority of organizations build communication strategies based on an asymmetric model: they transmit information to the press and track the way in which the messages are taken over and processed by the mass media institutions; sometimes, unsatisfied with the media’s behavior, they send new messages, exercising their right of reply, but without making an assessment of their internal system of communication with the media and, generally, with the external environment. it is often noticed that organizations have a tendency to blame external factors for their negative image and that, as a reaction to evaluations, thus they do not seek to change their internal and external communication strategy, to change their organizational structure or management strategies. in ordinary conditions, an imperfect presentation of an organization in the media does not immediately affect the proper functioning of that organization; in times of crisis, however, any distortion of data related to the organization will increase that state of crisis, will reduce public trust (coman, 2001, p. 145). 5. the public agenda and the role of mass media in setting it analyzing the forms of exertion of the media’s influence, we cannot overlook the models identified in the specialized literature, the agenda model being of special interest to administrative action (coman, 2004, pp. 137-142). according to this model, the mass-media functions as a “creator of agenda”, a creator of classifications and priorities for individuals that form their audience (coman, 2004, p. 137). this hypothesis, launched in 1972 by mccombs and shaw was named the agenda model (agenda setting). in the theory of public agenda setting the message receiver is considered to be under the pressure of information, without discretion, representing the final point of the communication process. the source is the one who establishes the importance of public issues, the one who will decide how to interpret situations and will select those issues that will later become sources of public interest. thus, the intention is to tell the public “what to think” and “what is relevant”. mass-media often plays the role of a magnifier of public issues or of the promoted solutions by certain interest groups or think-tank organizations. they also represent an opportunity for some issues to get public attention (profiroiu and iorga, 2009, p. 39). it can be stated that there are three types of agendas: a public agenda encompassing all problems perceived by the members of an organization, an institutional agenda summing up all problems the decision making actors plan to solve in a specific period of time and the media agenda which acts as a facilitator between the public and the institutional agenda, but it can sometimes promote its own priorities (profiroiu and iorga, 2009, p. 45). 207 the administrative agenda makes reference to the list of activities and priorities which guide the administrations’ activity, being the assembly of issues that require an administrative intervention, therefore and it must be understood separately from the political agenda. the latter represents the list of objectives and measures the political power intends to achieve or undertake during its term of office. at a first glance, the public administration does not control the process of setting the activity agenda and the list of issues to be taken into consideration is apparently imposed from outside, under the double pressure of social demands and political constraints (chevallier, 1994). the administration does nothing more besides implementing the measures decided by others (politicians, citizens etc.) for its agenda. but this vision is not realistic. thus the administrative agenda results, at least in part, from an autonomous production of the administration. public administration benefits from autonomy in specifying the actual content of the activities undertaken. on the other hand, the administration’s position in relation to social demands is complex; even if the administration must respond to such demands, it contributes instead to its development having the resources that allow an influence on the contents of the agenda. with regard to the administrative agenda, it is important to distinguish between the institutional agenda (mainly made up of routine issues, meaning the assembly of issues traditionally linked to the administration’s sphere of competence) and the opportunistic agenda (concerning new issues for which there is a debate over the opportunity of an administrative intervention). if in the case of the institutional agenda mass media may be considered a device used to mediate access to public administration, in the case of the opportunistic agenda the inclusion of various issues on the agenda represents an extremely complex process that involves groups with diverse profiles and resources; the promotion of these issues can be done by different categories of actors in the public space – social, political and administrative actors – in which the increasingly important role played by mass-media in agenda setting is to be noted, a role resulted from the fact that mass-media gives particular visibility to certain aspects, being able to generate a new prioritization of administrative action. during the interviews with the spokespersons and representatives of public relations departments, in the process of identifying the extent of mass-media’s influence, the interviewed persons have stated that local authorities are aware of the role the media plays in giving visibility to issues of local interest and therefore public debates, proposals, solutions and evolutions in the media with regard to various issues of local interest tracked by the public servants in the mass-media departments. frequently, the proposals for solving certain problems or for a series of projects, debated in the media, were taken over by local counselors, being included in the draft decisions of the local council and subsequently adopted. in this respect, examples of such situations were given by public servants in both city halls and local councils, most of these situations being linked to the local council’s and the mayor’s activity. unfortunately, there is no procedure to record such cases. also, the interviewed public servants mentioned that it can be observed, especially 208 at the level of municipal authorities, an increasing tendency of receiving suggestions or proposals from citizens, which usually overlap with the solutions debated in press articles, but also vice versa. the press bring into public debate the solutions obtained from citizens, problems and solutions which enjoy a broader support from the community through the media, so that authorities can no longer ignore them; these problems get to be included in the public authorities’ opportunistic agenda. in this regard, some examples were given, such as the need to improve the options for entertainment and playground for children in public parks, the need for demolition of insalubrious buildings or the need to clearly delineate the areas which are under the responsibility of the two companies dealing with city sanitation. also in order to highlight the impact of the media’s actions, there have been given examples where decisions of local councils that proposed unpopular solutions and were unsupported by the local collectivity, have been revoked. 6. legal aspects regarding the relationship between public administration and mass media the legal framework with regard to the administration’s means of communication encompasses a series of regulations aimed at either direct communication with the citizens or indirect communication with its service beneficiaries. thus mass media is used as a communication channel by the public administration. i will briefly present the main legal provisions concerning the communication aspects of public administration, activity which also involves the media. in this respect, a first regulation is law no. 215/2001 regarding the organization and functioning of the local public administration and which provides that the normative documents adopted are to be made public by various means, including the media. the second important regulation is law no. 544/2001 regarding information of public interest. it also contains special provisions with regard to the access of mass media to information of public interest, this regulation establishing a series of minimum requirements and standards. in this sense, a first rule is that access to public information is guaranteed (art. 15). another rule to this effect is that the gathering and dissemination of public interest information conducted by means of mass information is considered to be a proof of the citizens’ right to have access to any information of public interest. in order to guarantee mass media access to public interest information, the law mandates that public institutions should designate a spokesperson from the department of information and public relations. in this respect, public authorities should organize press conferences at least once a month in order to provide the media with this information. the discrimination against journalists or mass media representatives who wish to attend these conferences is forbidden (art. 18). a third regulation that has to be noted in this context is law no. 52/2003 on decisional transparency in public administration. the obligation of transparency refers to the public authorities’ duty to inform the public about draft legislation and subject 209 it to public debate, to allow access of citizens and legally established associations to administrative decision making and the minutes of public meetings. according to this regulation, within the procedure of drafting legislation, the institutions are required to publish a notice on their website with regard to the draft act, or to post it at their official address or in a place accessible to the public and to transmit this notice to the central and local media. also, the institution must notice the public with at least 30 days prior to submission for review, approval and adoption by public authorities and to include a substantiation note in the notice, a statement of reasons or, where appropriate, an approval paper regarding the need for the proposed enactment to be adopted. with respect to the obligation to ensure the citizens’ participation in the decision making process, this includes the dissemination of the notice and inviting citizens to the public meeting, tasks that are under the competence of the person designated as responsible for relations with the civil society and accomplished by displaying at the institution’s official address, on its web site and transmission to the media within three days before the public meeting (art. 7). 7. analysis of the methods of communication with the media used by the public administration in this section i will try to analyze the methods of communication with the media used by the two abovementioned authorities and the extent to which, by using these methods, they strictly fulfill the obligations imposed by law or if they exceed the minimum legal obligations, thus creating best practices to reverberate positively on their own activities. the public administration’s communication with the media is achieved through the following ways: direct (verbal), radio or central/local television broadcasts, interviews, conferences and press releases, local newspapers, official newsletters, the internet. 7.1. the press release this is an important pr form of communication that aims at transmitting information to a specialized audience, media editors or reporters, and it represents the main means of communication of a public authority with the media. with respect to the design of a press release, it is first of all necessary to ensure the transmission of all the desired information by the public organization or authority, all the information journalists need in order to create a material of interest. the main requirement of a press release is that it should be clear and unambiguous. likewise, it is important that the relationship with the press is also addressed in accordance with the latter’s point of view, since the media needs news that will sell the newspaper. the way in which the event is presented is influenced by the author of the press release and this could direct the media’s attention and thus the one of the public opinion (achelis et al., 2004, p. 48). thus, from interviews conducted with the spokespersons and public relations departments’ representatives in cluj county council and cluj-napoca city hall, it appears that local authorities, through the press offices, customarily transmit the 210 information presented at the conference after it took place, both for those who did not attend the conference and for those who participated. therefore, the public servants in charge with the analysis of media articles and comments with reference to their institution mentioned during interviews that the media transmits the full text of the original press release, avoiding the transmission of modified texts. it can be seen that generally there is full media coverage of the topics presented at a press conference, with few insignificant and generally explicable exceptions. the interviewed persons, both in cluj county council and cluj-napoca city hall, have admitted that there is even a competition between the county council and the city hall in terms of the number of press releases sent to the media, thus both institutions seeking to develop as much as possible a good communication relationship with mass media. the press releases are not only transmitted to newspapers, but also via e-mail to journalists from the local or national mass media: for example, the cluj county council transmits every press release to 526 e-mail addresses of journalists. the law only entails authorities to make public the normative acts adopted, to inform the media and send notices in the situations imposed by law no. 52/2003 on decisional transparency. thus, we can conclude that a frequent use of the press release is one of the communication practices used by the analyzed administrative authorities, which shows a very intense dissemination of information, exceeding the minimum legal requirements or those imposed by the principle of transparency. 7.2. the press conference press conferences have become a common method that proved to be also extremely effective in transmitting information to the press. these are convenient when it is necessary that the spokesperson informs the public about unprecedented events or when an important or controversial issue arises, which may generate questions from journalists. before the press conference, in special cases with regard to delicate topics, it is recommended to organize a briefing where it is established what to tell to journalists and how to answer questions that may arise. the introductory speech should be short, especially if it is anticipated that many questions will be formulated. the journalists present at the press conferences have expectations related to the novelty of the organization’s activity, sincere, prompt, clear, concise, direct information, and a suitable form of written messages (achelis et al., 2004, p. 48). analyzing how the authorities respect this obligation, as a result of the interviews undertaken, it can be seen that there may be differences, as it is the case of the city hall in cluj-napoca or of similar institutions in rural areas, and also if we compare the situation between the city hall and the county council. press conferences virtually take place weekly in both institutions (with an exception in the last two years in the case of the reminded cluj-napoca city hall) while the law entails the organization of one press conference every month. in the conference, the mayor, the county council president or the spokesperson present the topics they consider important for public debate. generally, journalists from all publications and broadcasters in the city take 211 part in the press conference. with respect to the journalists’ participation in the press conferences, interviews revealed that sometimes when journalists from the regional publications and broadcasters do not participate, only those from the local media do; the explanation lies in the fact that quite often, the topics which represent the subject of the press conference are not previously announced, in which case, if the events that took place in the capital city are more interesting, the journalists from regional publications will lean towards the latter, disregarding the ones of local interest. those interviewed have mentioned that currently, the press conferences organized by the municipal and county authorities are considered occasions where the authorities, through their representatives, transmit what they consider to be necessary, thus it can be noticed the journalists’ growing tendency of not asking questions. if there still are unanswered questions, they ask for clarifications, thus enabling the conference holder to detail the topic. this was observed in comparison with the way in which press conferences were held during other terms of office, when the relationship between massmedia and local authorities was tensed. those interviewed in the city hall offered examples of situations in which journalists brought to attention various issues related to the topic presented at the conference, issues that the person who held the conference did not address and refused to answer, considering the journalists to be mischievous. thus, those interviewed have stated that the local public administration’s relation with the mass media unfolds in good conditions also because the dialogue occurs more often and the degree of public transparency has increased. a good practice with respect to the organization of press conferences was identified in the cluj county council where the representatives of subordinated institutions which undertake projects of maximum interest for the community or which may be of interest to the mass media, are also invited to address to the press. this is another example of a situation where good practices are used beyond the legal obligations. this practice has extremely beneficial consequences because the sphere of competence of the subordinated public institutions and authorities was better outlined in the collective mentality. another communication practice used by the county council, related to press accreditation, is to give media institutions complete freedom in delegating journalists to handle the relationship with the county council and not to grant accreditation for individual journalists. but in practice there have been certain moments when representatives of the county council have regretted this choice; in this situation, the interviewed public servants sometimes stated that the accreditation would have determined the journalists to specialize themselves in issues of public administration in general and of the county council in particular, with favorable consequences in terms of an easier understanding of certain technical aspects and their correct reflection in practice. 7.3. the spokesperson the spokesperson’s position can be established at organizational level, and the press and public expect formal and credible information from the spokesperson. the spokesperson is requested in certain situations, such as the lack of time of the head 212 of an institution, his absence from the country, his aversion or fear of the media or communication in general. the spokesperson has many attributions, being the person that is in charge with and is directly responsible for everything that involves the image of the head of the institution – public appearances, interviews, conferences, meetings with the press, official meetings etc. the spokesperson is also responsible for declarations regarding the institution’s positions and for the announcement of various events during press meetings (achelis et al., 2004, p. 67). with respect to the spokesperson’s institution within the local administration, currently there is a trend to promote in spokespersons positions people who come from the media, which confers an advantage for the institution and is likely to ensure a good relationship with the media representatives; these persons have the necessary knowledge and skills to carry out this function successfully. in the context of the dilemma of choosing between a good specialist in the field of public administration and a good communicator, some authorities tend to choose the latter. it is also the case of the spokespersons in the cluj-napoca city hall and cluj county council. in a short period of time, these persons (the spokespersons) have specialized themselves in specific issues of public administration. in other situations, the spokesperson is recruited from the team of advisors of certain dignitaries. in addition to the organization of press conferences, the spokesperson is also in charge with answering specific requests from the press. during the interviews with the spokespersons in the two institutions, they listed as ways of responding to journalists about activities, projects: e-mail or instant messaging, dialogue at the institution’s headquarter, and telephone calls. according to the respondents, other activities performed by the spokesperson together with the public servants in the public relations departments, in addition to those mentioned above, are: to issue publications of the institution and different materials of presentation and promotion, to draw-up activity reports, and to constantly update and adapt the institution’s website. it can be noticed that also in the case of spokespersons public administration institutions can promote good practices, with beneficial effects on the institutions’ activity and image, although the law does not specify obligations in this respect, except for the obligation to set up the position of spokesperson. 7.4. the web page nowadays, it is impossible to conceive an effective communication process of organizations without the use of the internet. this means of communication is used by public and private organizations in order to send information to anyone interested, without addressing a certain type of receptor. in the case of public administration authorities, receptors may be other public institutions, the clients-citizens of public services, non-governmental organizations, companies and not least, the press. although the information transmitted through web pages is of general interest, it is still not generally accessible as a form of transmission of information, because unfortunately, 213 not everyone interested in the information transmitted by the administration has the possibility to access the internet. this aspect was highlighted by the public relations officers, starting from the fact that some of the persons who request the communication of public interest information come to the institution’s headquarters, although the information is available on its website. they motivate that they do not have internet access or the ability to use the computer. in rural areas the internet is even less used by citizens in order to obtain information of public interest. an additional cause of this fact is the low interest manifested by the rural public authorities in this form of communication, justified by the low number of people who can use this source of information. another good practice used in communication by public administration is the official site, but there is also a privately managed site (domnuleprimar.ro), where the answers to questions are directly visible, thus it can be stated that there is a real competition between the local public administration’s institutions (mayors, in this case) with respect to the number of responses given and complaints resolved. through this site, the citizens have the possibility to communicate their personal problems or problems of community interest to their mayor. the citizen fills in a form on the website and is asked to briefly write the message and provide real data regarding his identity and contact information. the requirements the message has to comply with and the situations in which the messages will be deleted are presented on the site. according to law no. 544/2001 (art. 7, paragraph 1), the respective mayor will have the possibility to respond within 30 days. both the citizen’s requests and the mayor’s response are available on the site in an attempt to ensure transparency and rapid communication between citizens and elected mayors. in addition to the possibility of addressing requests, the site enables mayors to post bulletins, local information and present interviews and analyses of local interest. 7.5. participation in radio and television broadcasts participation in radio and television broadcasts can take the form of a dialogue between the public authority representative (this may be the mayor, the deputy mayor, the chairman of the county council, the prefect, or their representatives) and the citizens or of an interview conducted by the broadcaster with the person invited on the show. this is another good practice which can be reported in the communicational activity of public authorities. for example, the mayor of cluj-napoca maintains a permanent dialogue with the citizens in live, weekly broadcasts, at two television stations. in this case, the media’s role is purely technical, namely to facilitate the mayor’s contact with the citizens who present their problems live and within a week, in the next broadcast, they get an answer directly from the mayor. the interviewed persons stated that such communication is more and more successful in the case of the city hall and it has a moderate success if the president of the county council participates in such broadcasts, fact also acknowledged by the persons interviewed in the county council. the explanation is that most of the problems raised by citizens 214 are under the competence of the administrative level nearest to the citizens, namely the mayor and the local council. the success of this type of communication can be observed taking into consideration the high number of questions addressed to the person participating in the broadcast. the prefect’s presence in this type of broadcasts is rare (monthly), since citizens manifest less interest in them. 7.6. telephone discussions and requests for information another positive practice in the communication activity of the public administration with mass media is identified in terms of the communication related to the request for public information. such discussions take place in situations where journalists want to obtain information, in addition to those provided during press conferences. as i have already shown in the section on legal aspects (section 6), law no. 544/2001 provides the possibility of requesting public interest information, thus journalists are guaranteed by law free access to information about public authorities. the persons interviewed in the office for public relations and mass-media of the city hall specified that the provision of information is very efficient (rapid) and that law no. 544/2001 is invoked only in exceptional cases, usually the journalists are given an answer immediately, if not, in 2-3 hours at most, these situations having the largest occurrence. in the case of the county council, the average answer time to requests made under law no. 544/2001 is about three days for 2009 and 2010, well below the legal limit of 10 days or, where appropriate, 30 working days; the fact that 74.17% of all requests were solved in a day or less than a day, is also relevant. this data is not recorded in the reports on the implementation of law no. 544/2001, since the reports only include information on how citizens’ requests for public interest information are answered. also, the public servants noticed that there is a growing concern from the part of journalists for the citizens’ problems, projects and local development, to the detriment of local policy, thus the journalists’ requests with respect to the citizens’ specific problems represent the majority of public information requests. trying to determine, through the interviews undertaken, whether a communication strategy with mass media exists at the level of the two institutions in which the research was conducted, i found out that such a strategy does not exist. the institution’s communication strategy that should also include the strategic planning of communication with the media, acts as a guide in using the communication means analyzed above. by using public communication strategies, a public organization tries to find out what are the public’s options and also to evaluate its public image. thus, any public institution should be interested in the manner in which its image is promoted and perceived, primarily using, for communication the mass-media, demonstrating awareness regarding the importance of a sustained communication, based on objectives, planned actions, the identification of arising or created opportunities and results. this involves taking into consideration the following types of relationships: relationships with the media, relations with citizens/service beneficiaries, relations with public and private firms or services, relationships with public servants and relationships with different actors involved in the organization of public events. 215 with respect to the county council, i found that there is no communication strategy with the media as a single document containing key goals, minimum standards etc. but instead there is a series of disparate documents with strategic character, which regulate the relationship with the press and also other aspects of communication with citizens. these documents set out the authorities’ objectives and priorities in relation to the media, the concrete ways of their achievement and evaluation etc. these documents are also transmitted to and assimilated by institutions operating under the authority of the county council in order to comply with their requirements. the heads of the public relations departments in the city hall and the county council state that it would be very useful to create a single document covering all these aspects, which should be known by all employees in order to impose certain objectives, actions, standards and results, according to various categories of recipients (citizens, massmedia, companies and private public services, non-governmental organizations) as well as for the organization of certain events. in the city hall, although such a strategy is not developed, participation in television broadcasts, press conferences, events with media participation and subsequently with written coverage, basically all means of communication with the press are carried out according to certain objectives established by the mayor. these objectives are set with the purpose of ensuring transparency and preserving good relations with the media, since these elements will reflect positively on the image the mayor will have at the end of his term in office. these aspects cannot be observed in the case of mayors from rural areas who were also interviewed, since in the rural environment the elaboration of a communication strategy is not considered in a context where other problems gain priority. 8. conclusions the analysis of the two local authorities’ communication activity reveals a multitude of good practices used in relation to mass media and not only, practices generated by the awareness of the role the media plays in addressing public issues of local interest, used beyond the imperatives imposed by law. given the permanent character of communication, the frequency of use, the multitude of means of communication, the promptness in giving answers it can be emphasized that two important objectives for the two institutions were fulfilled, namely the improvement of the local authorities’ image and of their transparency with regard to activities. starting from the idea that the use of communication in public administration’s activity represents one of the objectives in the reform process of the administrative system, we can conclude that achieving these objectives is possible at the level of urban administrations, with mass media as an essential factor. certainly, the communication practices of administrative authorities with the media go far beyond the legal provisions in the field because these institutions do not perceive the communication relationship with the media as a legal obligation, but as an opportunity to promote their own projects and successes, as a marketing tool, and why not, as a permanent free advertising. 216 although from the perspective of their communicational activity the analyzed institutions do not have a communication strategy, the fact that they promote and support a good communication with the media can lead to the conclusion that these institutions are aware of the role played by such communication relations. it can be also concluded that both institutions have a purpose in their communication activities, more specifically improvements in the image of the institution in the eyes of the beneficiaries of services provided, namely the citizens of the city and county of cluj, as well as the increase in citizens’ satisfaction with regard to provision of information. last, but not least, public communication of the two institutions through the media seeks not only to inform the public, but also to consult it. citizens thus have the opportunity to submit proposals or suggestions, to approach aspects of interest with regard to the authorities’ initiatives and actions, or to propose amendments. on the other hand, mass media synthesizes and brings into public debate issues of public interest, some of which are brought to the attention of journalists by citizens. once brought into public debate, the authorities cannot ignore these issues. it was acknowledged that, in the case of both institutions, the media often contributes to the completion or modification of the administrative agenda of the respective public authority. references: 1. achelis, t., epure, l.l., foarţă, ş., mărăscu, c., rus, f.c., tolcea, m., tudor, d. and veen, t., relaţiile publice: coduri, practici, interferenţe, timişoara: mirton, 2004. 2. chevallier, j., science administrative, 2nd edition, thémis droit, paris: puf, 1994. 3. coman, c., relaţiile publice. principii şi strategii, iaşi: polirom, 2001. 4. coman, m., introducere în sistemul mass-media, 2nd edition, iaşi: polirom, 2004. 5. daniel, j., ‘definition of institutional communication’, in sfez, l., dictionnaire critique de la communication, paris: puf, 1993. 6. defleur, m.l. and ball-rokeach, s., teorii ale comunicării de masă, iaşi: polirom, 1999. 7. law no. 215/2001 of local public administration, published in the official monitor of romania, no. 204 from april 23, 2001. 8. law no. 544/2001 on free access to information of public interest, published in the official monitor of romania, no. 663 from october 23, 2001. 9. law no. 52/2003 on decisional transparency in public administration, published in the official monitor of romania, no. 70 from february 3, 2003. 10. miege, b., societatea cucerită de comunicare, iaşi: polirom, 2000. 11. newsom, d., van slyke turk, j. and kruckeberg, d., totul despre relaţiile publice, iaşi: polirom, 2003. 12. profiroiu, m. and iorga, e., manual de politici publice, bucureşti: editura economică, 2009. 13. rieffel r., ‘noţiuni şi modele’, in bertrand, c.j. (ed.), o introducere în presa scrisă şi vorbită, iaşi: polirom, 2001, pp. 17-30. 14. rogojanu, a., taşnadi, a. and hristache, d.a., comunicare instituţională, bucureşti: editura ase, 2004. untitled 129 abstract in the netherlands the administrative court sometimes has the possibility to settle the case without jeopardizing the separation of administrative and judicial responsibilities based on the separation of powers doctrine. this paper addresses the question of how often administrative courts use the powers they currently have for final settlement of disputes and whether they make optimal use of these powers. final dispute settlement in numbers: report of an examination of final dispute settlement in the utrecht district court paulien willemsen rick busscher niels groot philip langbroek linnea langerak paulien willemsen (*corresponding author) assistant professor, utrecht university institute of constitutional and administrative law, the netherlands tel.: 0031-30-2539158 email: p.a.willemsen@uu.nl rick busscher former law student, utrecht university, the netherlands niels groot former law student, utrecht university, the netherlands philip langbroek professor, montaigne centre of the utrecht university school of law, the netherlands linnea langerak former law student, utrecht university, the netherlands transylvanian review of administrative sciences, no. 28 e si/2009 pp. 129-146 130 1. introduction 1.1. background this article addresses the question of how often administrative courts use the powers they currently have for final settlement of disputes and whether they make optimal use of these powers. the article is based on a research report commissioned by the utrecht district court. in the autumn of 2007, utrecht university’s institute of constitutional and administrative law and the administrative law section of the utrecht district court organized a study afternoon about the final settlement of disputes. the administrative law section wished to examine any possible options for administrative courts to use their procedural and ruling powers in order to contribute to the final settlement of the disputes presented to them. on this occasion, the parties agreed to assess this new court policy after one year in order to examine the degree to which actual final settlement proved possible and successful. the present study is based on this cooperation between the utrecht district court and the montaigne centre of the utrecht university’s school of law. the core research questions in this utrecht report coincide with the article of a.t. marseille and r.r. van der heide, ‘de onderbenutting van de mogelijkheden tot finale beslechting door de bestuursrechter’ (marseille and van der heide, 2008, pp. 78-92). this article does not aim to analyze the margins that the administrative court has to uphold legal consequences or to substitute its decision for that of the administrative authority. this aspect is now briefly covered by a description of the current conditions for courts to do so. first, for upholding legal consequences, the basic premise is that courts can only uphold the legal consequences if the defects on which the annulment is based can be fully remedied. otherwise, the premise is that courts can only use their power to uphold legal consequences if it is established that the administrative authority will legally have to take the same decision when ruling on the same case a second time. this premise has since been corrected. in recent rulings, the administrative law division1 found as follows: ‘if a decision is annulled, the court shall examine the options for final settlement of the dispute, where it should be considered whether there is reason to apply article 8:72, paragraph 3, of the general administrative law act (awb) and uphold the legal consequences of the decision. as the division held before, in case no. 200705490/1 of 26 march 2008, upholding the legal consequences does not require that only one possible decision remains. in a case such as the present one, in which a decision 1 see abrvs 26 march 2008, case no. 200705490/1; abrvs 10 december 2008, jb 2009/39; vz. abrvs 27 march 2009, case no. 200901078/2/h1; abrvs 6 april 2009, case no. 200803001/1; abrvs 10 june 2009, 200806623/1/h2. also compare c.l.g.f.h. albers in abrvs 20 february 2008, jb 2008/76. (abrvs = administrative law division of the council of state; vz. = chairperson.) 131 is annulled due to interests not having been properly weighed, in view of the administrative authority’s freedom of policy and for judicial efficiency there may be reason to uphold the legal consequences of the decision, if the administrative authority sticks to its decision, this time properly weighing the relevant interests and allowing the other parties involved sufficient opportunity to respond. the decisive factor is whether, after this new weighing of interests, the content of the annulled decision will pass the test of judicial review.’2 a second option for final settlement of a dispute is for the court to substitute its own decision for the challenged decision of the administration. this latter power is used if upholding the legal consequences is not an option. with respect to the option of substitution based on article 8:72, paragraph 4, awb, the legislator has stated that the rule is that the administrative court can only do so if legally only one possible decision remains after the court has annulled the decision challenged.3 this means that in principle the administrative court cannot take an administrative decision itself and substitute this for the challenged decision if the latter is based on a discretionary power. this is to some extent open to qualification, however, because even if the challenged decision is based on a discretionary power, it may be that the result of the required weighing of interests to which the administrative authority would come is sometimes already known from the documents before the court. both when the court substitutes its decision for that of the administrative authority and when the legal consequences of the administrative decision are upheld, the court’s decision must be grounded on a full and current statement of the facts. in addition, the interests of third parties must be included in the weighing of interests. if the court substitutes it decision for that of the administration, this will also involve any unknown third parties that are not party to the conflict, which is different when the legal consequences are upheld. the last condition for final settlement is that the practical and technical execution should be feasible for the court. in addition to upholding the legal consequences and the substitution of the administration’s decision, this article distinguishes a third instrument for the final settlement of disputes: the court may render a judgment that includes far-reaching clarification regarding the aspects that the administrative authority must consider when taking a new decision. in this case, the court rules on the substantive part of the dispute and leaves the practical and/or technical details to the administrative authority (schueler, 2007, pp. 173-174). below, this manner of final settlement will be referred to as ‘channeling’ of the case or of the margins that the administrative authority has when issuing a new decision. 2 from abrvs 10 december 2008, jb 2009/39. also see abrvs 26 march 2008, case no. 200705490/1; vz. abrvs 27 march 2009, case no. 200901078/2/h1; abrvs 6 april 2009, case no. 200803001/1; abrvs 10 june 2009, 200806623/1/h2. also compare c.l.g.f.h. albers in abrvs 20 february 2008, jb 2008/76. 3 pg awb, p. 460 (pg = parliamentary history). 132 1.2. structure section 2 will describe the research questions and the research method. section 3 presents the empirical research results for the questions of how often the existing powers are used and how optimal this use is. it will also try to explain these results. section 4 will close this article presenting a conclusion. 2. research questions and method 2.1. marseille and van der heide the utrecht study is largely based on the questions and method that marseille and van der heide used in their article as previously mentioned (marseille and van der heide, 2008). first, therefore, we will briefly describe marseille and van der heide’s article. according to marseille and van der heide ‘various publications have shown that there is still too little clarity with respect to two crucial aspects of the options that administrative courts have for final settlement. this mainly concerns the question of how often the existing powers are used; and how often they are not used where they could have been used with only little effort’ (marseille and van der heide, 2008). for this reason, marseille and van der heide analyzed the extent to which courts used their powers for final settlement of a dispute. their study from 2007 included 299 court judgments of five different courts, 104 of which were annulments (marseille and van der heide 2008, p. 82, note 23). they mainly focused on upholding the legal consequences and substituting the administrative authority’s decision by a decision of the court itself. then they examined the effort it would have taken the administrative court to apply articles 8:72, paragraphs 3 and 4, awb (marseille and van der heide, 2008, p. 85). they did so by determining what the ground for annulment was for the cases that were simply annulled (referred to as ‘simple annulments’) and subsequently assessing how much effort it would have taken the court to reach final settlement by substitution of the administrative authority’s decision or by upholding the legal consequences (marseille and van der heide, 2008, p. 86). they conducted their study on the basis of three recent studies.4 2.2. utrecht 2008 in our study, we used mostly the same method to answer the same questions for the utrecht district court: how often do courts use their powers for final settlement of a dispute and how optimal is the result? 4 a study in 2004 analysed 101 judgments of five different district courts, one in 2006 analysed 141 judgments of one district court, and one in 2007 analysed 104 judgments. the judgments analysed in 2007 came from the archives of five different district courts. marseille and van der heide’s article includes no further details on the selection of the judgments or on their exact origin. 133 the study is based on a list of all cases included in the electronic administration files that were declared well-founded in 2008, leaving out the judgments in the field of tax law and the law concerning aliens. this totals 228 cases, 201 of which we examined. of the remaining 27 cases, 11 cases were on the list but could not be found anywhere in the electronic archive or in the paper archive. the other 16 cases were consolidated cases.5 the study also covered 23 cases added from www.rechtspraak. nl6, which were also handled in 2008 and were declared well-founded but were not included in the list mentioned above.7 as mentioned, marseille and van der heide limited their study to cases where the legal consequences were upheld and cases where the court substituted its own decision for that of the administrative authority. our study also includes judgments where the court ‘channeled’ the margins in which the administrative authority may operate when taking a new decision. the following section presents the results of the utrecht study and compares them with those of marseille and van der heide. we will limit this comparison to the part of marseille and van der heide’s study that relates to 2007, since that is the most recent. 3. research results this section presents the results of the utrecht study and compares them with those of marseille and van der heide’s study from 2007. 3.1. general overview tables 1, 2, and 3 present the total results. the following subsections will describe further details of table 2 and table 3 and will compare the results with those of marseille and van der heide from 2007. the utrecht study is limited to the legal fields of social security, the environment and construction works and other/miscellaneous. as stated, tax law and the law concerning aliens were excluded, due to the very particular characteristics of these fields of law. we did not examine how many cases reached final settlement for each individual field of law. table 1 shows the number of files analyzed for each field of law and makes a distinction between disputes between two parties and disputes between multiple parties. the table shows that 2008 saw a large number of judgments on cases which involved two parties in a dispute relating to social security. 5 this means that one single judgment has several file numbers, because the case involved several claimants. we included these cases as one single case in our study, in view of the coherence with the decisions opposed by the claimants. 6 this website contains a large number of judgments rendered by the dutch courts. 7 we were unable to find an exact explanation for cases being listed on www.rechtspraak. nl but not included in the archives. despite careful selection of files, there might be some inconsistencies. this might be due to inaccurate data entries. 134 table 1: number of files analyzed for each field of law field of law ↓ number of parties → two parties multiple parties social security 130 4 environment and construction works 32 15 other/miscellaneous 42 1 table 2: data comparison between the utrecht study results and those by marseille and van der heide study utrecht district court 2008 percentage marseille and van der heide percentage number of judgments 224 100,0% 104 100,0% final settlements 73 32,6% 31 29,8% upholding legal consequences 31 13,8% 11 10,6% substitution of administrative decisions 42 18,8% 20 19,2% simple annulments 151 67,4% 73 70,2% final settlement possible 15 6,7% 26 25% this table distinguishes two categories. for the utrecht district court, the column labeled ‘final settlements’ includes judgments in which the court used its powers under article 8:72, paragraph 3 (upholding legal consequences) and article 8:72, paragraph 4, awb (substitution of administrative decisions). in 32.6 percent of the cases that were declared well-founded in 2008, the utrecht district court produced final settlement. in marseille and van der heide’s study regarding final settlements in 2007, 29.8 percent of the judgments produced a ‘final settlement’. the table shows the number of ‘simple annulments’. in the utrecht study, 67.4 percent of the cases involved simple annulment. this concerns the cases where the court declared the appeal well-founded, but without upholding the legal consequences or substitution. in marseille and van der heide, these cases amount to 70.2 percent. the row labeled ‘final settlement possible’ includes simple annulments for which final settlement could have been reached with relatively little effort but where the court failed to do so. for the utrecht district court, this amounted to 6.7 percent of the judgments. in marseille and van der heide’s study, a total of 25 percent of cases that were considered well-founded was annulled and referred back to the relevant administrative authority, whereas marseille and van der heide believed that final settlement would have been possible. table 3 distinguishes three categories. for the utrecht district court, the column labeled ‘final settlements’ includes judgments in which the court used its powers under article 8:72, paragraph 3 or article 8:72, paragraph 4, awb, or in which it channeled the case. this last subcategory constitutes 5.8 percentages of the cases. marseille and van der heide did not consider the channeling aspect. 135 table 3 study utrecht district court 2008 percentage number of judgments 224 100,0% final settlements 86 38,4% upholding legal consequences 31 13,8% substitution of administrative decisions 42 18,8% channeling 13 5,8% simple annulments 138 61,6% final settlement possible 2 0,9% if the channeled cases are considered as final settlements and not as simple annulments then only 61.6 percent of the cases involved simple annulment. this concerns the cases where the court declared the appeal well-founded, but without upholding the legal consequences, substitution or channeling the decision. in that case the utrecht district court produced final settlement in 38.4 percent of the cases. the row labeled ‘final settlement possible’ includes simple annulments for which final settlement could have been reached with relatively little effort but where the court failed to do so. for the utrecht district court, this amounted to 6.7 percent of the judgments, when adding the channeled cases to the simple annulments. if the channeled cases are considered as final settlements, this is only 0.9 percent. a possible conclusion is that the utrecht district court seizes most every opportunity to use its powers or instruments to produce final settlement, unlike the courts in marseille and van der heide’s study. after all, the difference between the results of marseille and van der heide and those of the utrecht study cannot be completely explained by the fact that marseille and van der heide placed the judgments in which the court channeled the future decision in the category of ‘simple annulments’. the difference is too large for that to be the case. section 3.3 will take a detailed look at these differences and try to explain them. 3.2. substitution of administrative decisions, upholding legal consequences and channeling this subsection compares the utrecht results for the substitution of administrative decisions by the court’s own decision and upholding legal consequences with the relevant results in marseille and van der heide. 3.2.1. substitution of administrative decisions marseille and van der heide marseille and van der heide studied the number of cases in which the court substituted its own decision for the challenged administrative decision, analyzing the court’s role in the application of its power to substitute. they distinguish three 136 different types of substitution. in the first category, ‘court takes amended decision’ the court substitutes a decision of its own for that of the administration because based on substantive findings the court itself has established what the only legally correct decision would be, or is. in substantive terms, as marseille and van der heide argue, this first category is the only situation that involves ‘substantial’ substitution (marseille and van der heide, 2008, p. 83). the second category includes cases where the court responded to or consulted with the parties and took a legally correct decision with which the parties agreed, subsequently substituting this decision for that of the administration according to the parties’ wishes. this they compare with the situation in which the administrative authority, with the procedure pending, applied article 6:18 awb and took a new decision, because it concluded that the challenged decision was unlawful. the difference is that in the former situation it is the court, not the administrative authority that takes the new decision (marseille and van der heide 2008, p. 83). the table places this under ‘court substitutes at parties’ request’. the third category includes cases where the court officially found that the appeal could not result in a judgment regarding the lawfulness of the challenged decision, because in the appeal proceedings the administrative authority incorrectly assessed the appeal on its merits. the court did not reach a substantive judgment on the use of the substantive power included in the decision challenged. the table indicates this as ‘court officially finds the appeal inadmissible’. looking at the results of marseille and van der heide from 2007, it is striking that in most cases the court officially substituted a decision of its own for that of the administration. this is true for 14 out of the 20 cases in which the administrative authority’s decision was substituted. in 5 cases the court substituted because based on substantive findings the court itself established what the only legally correct decision was. there was only one case in which the court used its power to substitute at the request of the parties. utrecht 2008 table 4 table 5 marseille and van der heide 2007 utrecht district court 2008 number percentage number percentage court takes amended decision 5 4.8% court takes amended decision 33 14.7% court substitutes at parties’ request 1 1% court substitutes at parties’ request 2 0.9% court offi cially fi nds the appeal inadmissible 14 13.5% court offi cially fi nds the appeal inadmissible 7 3.1% total 20 19.2% total 42 18.8% 137 our study shows that in utrecht, for 33 out of 224 files the court substituted its own decision for that of the administrative authority based on substantive findings. in considerably fewer cases, the court officially substituted the administrative decision challenged by its own decision after having officially found that the appeal was inadmissible. this applies to only 7 of the cases. what occurred least frequently was that the court used its power to substitute at the parties’ request. this concerned two cases. the conclusion is that in 2008, the utrecht district court substituted in 42 of 224 cases. when comparing these two tables, the first remarkable point is that in 2008 the court used its power to substitute in a considerable higher number of cases by taking an amended decision based on substantive findings: no less than 14.7 percent, where 2007 saw only 4.8 percent. in 2008, the number of cases in which the court officially found the appeal inadmissible and substituted the administrative authority’s decision was considerably smaller than in 2007: 3.1 percent in 2008 and 13.5 percent in 2007. the number of cases in which the court used its power to substitute at the parties’ request is practically equal, with 1,0 percent in 2007 and 0.9 percent in 2008. when comparing the total number of cases in which the administrative authority’s decision was substituted by a decision of the court without distinguishing between the various categories, the total for 2007 is 19.2 percent and for 2008 it is 18.8 percent. the conclusion is that there is little difference in the number of cases in which the court used its power to substitute. the lower number of cases in which the court officially found that the appeal was inadmissible may be explained by the relatively large number of social security cases in the utrecht study, although we cannot be sure about this. 3.2.2. upholding legal consequences marseille and van der heide marseille and van der heide’s article does not include a separate table for upholding legal consequences. the presentation and description of their results, however, do offer sufficient information to assess the use of the power to uphold legal consequences and to make a comparison on this point. for upholding legal consequences, marseille and van der heide distinguish three categories. the first category includes the cases in which the court’s role is limited to the observation that, although the challenged decision is unlawful and must be annulled, the legal consequences can be upheld (marseille and van der heide, 2008, p. 83). our table includes this under ‘limited to observation’. the second category includes the cases in which the court observes that, although the decision challenged is unlawful and should be annulled, the legal consequences can be upheld, but where this is not based on the court’s own analysis. in these cases, the court reached this conclusion based on information actively supplied by the administrative authority, e.g. in a supplement to the substantiation of the decision in the statement of defence (marseille and van der heide, 2008, p. 83). our table labels this as ‘administrative authority takes action’. 138 the third category included the cases in which the legal consequences must be upheld as a result of an action taken by the court, e.g. asking questions during the hearing with the administrative authority (marseille and van der heide 2008, p. 83). our table calls this ‘court takes action’. the results from marseille and van der heide’s study show that the court’s role is almost always limited to the observation that the legal consequences of the decision to be annulled can be upheld, therefore without any action taken by the administrative authority or by the court (marseille and van der heide, 2008, p. 83). utrecht 2008 the results for the utrecht district court also show that the majority of cases in which the legal consequences of a decision are upheld, this is done based on the simple observation that the legal consequences can be upheld. this was true for 24 out of 31 cases in which the legal consequences were upheld. only in 5 cases the legal consequences of the annulled decision were upheld based on information actively submitted by the administrative authority (‘administrative authority takes action’). in only 2 out of 31 cases the legal consequences were upheld after action taken by the court, i.e. by asking questions during the hearing. table 6 table 7 marseille and van der heide 2007 utrecht district court 2008 number percentage number percentage administrative authority takes action unknown unknown administrative authority takes action 5 2.2% court takes action unknown unknown court takes action 2 0.9% simple observation unknown unknown simple observation 24 10.7% total 118 10.6% total 31 13.8% as indicated in the table, marseille and van der heide’s results present no details regarding the question of whether the judgment involved a simple observation or action taken by the administrative authority or the court. it is still possible, however, to compare the total number of cases. the conclusion is that in 2008, there was an increase of 3.2 percent point in the number of cases for which the legal consequences were upheld. in 2007, the total number of cases in which the legal consequences were upheld was 10.6 percent and in the utrecht study this was 13.8 percent. 3.2.3. channelling marseille and van der heide’s study distinguishes two categories of final settlement: ‘substitution’ and ‘upholding the legal consequences’. in subsection 1.2 we described that we distinguish a third category: channeling, or substantive channeling, of the 8 for this number, see marseille & van der heide, 2008, p. 82, note 23. 139 administrative margins for the new decision to be taken after annulment. this way, a dispute can reach final settlement, without the court using its powers under article 8:72, paragraph 3 or 4, awb. the utrecht study, unlike marseille and van der heide, also examined the options to substantively channel a case. the dispute will be solved if the court’s judgment is complied with. this type of cases often concerns cases where the administrative authority only needs to take a practical decision, e.g. making a calculation. the utrecht study found 13 cases in which the court channeled a decision, making this a percentage of 5.8. 3.3. grounds for annulment and options for final settlement this subsection describes the judgments in which the court decided on annulment of the decision without using its power to substitute or upholding the legal consequences. as observed in subsection 3.1, in marseille and van der heide’s study this was true for 73 of the 104 cases (70.2 percent) and in the utrecht study for 151 out of 224 files (67.4%). we analyzed whether the court could have used its powers under article 8:72, paragraph 3, and paragraph 4 awb. we did not analyze whether the court could have channeled the case, since this is difficult to establish. the question whether the legal consequences could have been upheld or whether the administration’s decision could have been substituted by a decision of the court has three possible answers: it would have been possible, it would not have been possible, or it might have been possible. the question whether it would have been possible to further channel the case, however, cannot be answered this straightforwardly, but represents a more fluent process. this is because the court may partly channel the administrative margins upon substitution, but at the same time could have, or at least might possibly have, given the administrative authority more detailed instructions. the simple annulments were examined for two characteristics. the first characteristic is the ground for annulment based on which the challenged decision is annulled. this means that for each judgment, the challenged decision was analyzed for the defect based on which the decision was annulled. the second characteristic is the option for final settlement. this means that we analyzed each judgment on whether the court might have been able to use its power to uphold the legal consequences or to substitute the administration’s decision by a decision of its own. marseille and van der heide also established the grounds for annulment based on which decisions were annulled, for the judgments that resulted in annulment of the challenged decision but not in final settlement. they distinguished six grounds for annulment and placed each judgment in one of these categories. the first two categories are of a procedural nature: power of the administrative authority and the appellant’s right to appeal. the ground power of the administrative authority includes the cases in which the court finds that the challenged decision was taken without the relevant authority having the power to do so. the second category, appellant’s right to appeal, includes cases in which the administrative authority failed 140 to recognize someone as interested party or incorrectly found a certain failure to meet a deadline to be inexcusable. the third and fourth categories are insufficient substantiation and insufficient fact finding. the ground insufficient substantiation pertains to cases in which the court finds that the substantiation of a decision is lacking, incorrect or incomplete. for insufficient fact finding, the court finds that the administrative authority’s decision was not preceded by sufficient examination of the facts, e.g. because the administrative authority based the challenged decision on an incomplete expert’s report. the fifth and sixth categories are incorrect establishment of facts and incorrect qualification of facts. there is an extremely fine line between these two categories, which is difficult to define.9 in both cases, the administrative authority’s examination of the facts was sufficient. in the event of an incorrect establishment of facts, however, the administrative authority has drawn the wrong factual conclusion from the facts at hand. this may be the case, for example, if the administrative authority concluded that a case involved permanent living in a holiday home, while this conclusion cannot be found to be based on the available facts. in the event of an incorrect qualification of facts, the wrong legal consequence has been assigned to the established facts (e.g. when someone has, incorrectly, not been qualified as a ‘disabled person’ under the disability (reintegration) act) (marseille and van der heide, 2008, p. 90). grounds for annulment: marseille and van der heide marseille and van der heide analysed 73 files for the grounds based on which they were annulled (marseille and van der heide, 2008, p. 87). table 8 marseille and van der heide 2007 ground for annulment number percentage power of administrative body 2 2.7 appellant’s right to appeal 6 8.2 substantiation 17 23.3 insuffi cient fact fi nding 28 38.4 incorrect establishment of facts 9 12.3 incorrect qualifi cation of facts 11 15.1 total 73 100 9 marseille and van der heide do not define the difference between these two categories. they do give an example of a case that involved incorrect establishment of facts, followed by an example that involved incorrect qualification of facts. marseille & van der heide 2008, pp. 86-90. 141 this table shows that substantiation and insufficient fact finding are by far the most frequent grounds for annulment: they make up 61.7 percent of the number of simple annulments. by contrast, the power of the administrative authority and the appellant’s right to appeal make up less than 11 percent of the number of simple annulments. drawing the wrong conclusions from the available facts (incorrect establishment of facts and incorrect qualification of facts) accounts for a little more than a quarter: 27.4 percent of the number of simple annulments. grounds for annulment: utrecht 2008 in our utrecht study, we divided the judgments that included simple annulment into the same categories as those in marseille and van der heide. the table below compares the utrecht results with those of marseille and van der heide. table 9 utrecht district court 2008 marseille and van der heide 2007 utrecht district court 2008 ground for annulment number percentage number percentage power of administrative authority 2 2.7 0 0.0 appellant’s right to appeal 6 8.2 6 4.0 substantiation 17 23.3 76 50.3 insuffi cient fact fi nding 28 38.4 52 34.4 incorrect establishment of facts 9 12.3 1 0.7 incorrect qualifi cation of facts 11 15.1 16 10.6 total 73 100 151 100 there are a number of clear differences. the number of cases that result in annulment based on a procedural ground for annulment (power of administrative authority and appellant’s right to appeal) in marseille and van der heide is higher than in the utrecht study: 10.9 percent against 4.0 percent. this may partially be explained by the fact that as a policy, the utrecht district court never refers cases back based on a lack of power of the relevant administrative authority. the fact that the utrecht study includes fewer procedural annulments automatically means that the percentage of annulments based on other grounds is higher. the number of cases resulting in annulment based on ‘insufficient substantiation’ is remarkably high in this study: 50.3 percent, against 23.3 percent in marseille and van der heide. another notable difference is in the annulments based on an incorrect establishment of facts: in marseille and van der heide’s study, this includes 12.3 percent of simple annulments, and in the utrecht study 0.7 percent. after marseille and van der heide established the grounds for annulments on which the judgments were based, they examined the extent to which it would have 142 been possible for the court to use its powers under article 8:72, paragraphs 3 and 4, awb (marseille and van der heide, 2008, p. 87). in order to do so, they divided the judgments into three categories: ‘possible’, ‘might have been possible’ and ‘not possible. the category ‘possible’ includes the cases for which the court could have produced final settlement with little extra effort. the category ‘not possible’ includes the cases in which the court could not have produced final settlement, or would have had to make a great effort. the category ‘might have been possible’ includes the cases in which it is unclear whether the court could have produced final settlement using its legal powers. options for final settlement: marseille and van der heide 2007 marseille and van der heide report the following results (2008, p. 90): table 10 marseille and van der heide 2007 category number percentage possible 26 35.6 might have been possible 13 17.8 not possible 34 46.6 total 73 100 this shows that in almost half of the cases (46.6 percent) it was not possible for the court to produce final settlement. in more than one third of the cases (35.6 percent), however, the court did have the opportunity to produce final settlement, but did not actually do so. for almost one fifth of the cases (17.8 percent), it cannot be ascertained whether the court could have used its powers under article 8:72, paragraphs 3 and 4, awb. options for final settlement: utrecht district court in the utrecht study, we followed marseille and van der heide’s model and analyzed the judgments for the options for final settlement. the table below presents the results and compares them with marseille and van der heide: table 11 marseille and van der heide 2007 utrecht district court 2008 category number percentage number percentage possible 26 35.6 15 10.1 might have been possible 13 17.8 1 0.7 not possible 34 46.6 135 89.2 total 73 100 151 100 143 what is striking is that the number of cases in which the court does not produce final settlement – in spite of having the opportunity – is much smaller in the utrecht study than in marseille and van der heide, in whose study the cases that could have been settled are a significant part of the total. the differences might be explained by the various grounds for annulment on which the judgment is based. we will go into these aspects below. links between the grounds for annulment and the options for final settlement now that we have examined the grounds for annulments and the options for final settlement, we can analyze the link between these two characteristics. are decisions that were annulled on certain grounds for annulment more suitable for final settlement than decisions annulled on other grounds? marseille and van der heide in order to answer this question, marseille and van der heide examined the options for substitution for each ground for annulment. the results are as follows (marseille and van der heide, 2008, p. 91): table 12 marseille and van der heide 2007 category power procedure substantiation fact fi nding establishment of facts qualifi cation of facts total possible 1 0 4 2 9 10 26 might have been possible 0 0 13 0 0 0 13 not possible 1 6 0 26 0 1 34 total 2 6 17 28 9 11 73 based on this table and an analysis of the specific circumstances, marseille and van der heide drew the following conclusions (marseille and van der heide, 2008, pp. 87-89): power: if a decision is annulled due to a lack of power, the court has options for final settlement. marseille and van der heide describe the example of a subsidy application, on which not the municipal council (gemeenteraad) but the mayor and aldermen (burgemeester en wethouders) should have decided. in such cases, the court could ask the mayor and aldermen to adopt it as their own, and thus settle the case; procedure: few options for final settlement, since the decision has not been considered on its merits; substantiation: substitution is difficult, since it remains unclear whether the challenged decision is correct, due to the lack of substantiation; insufficient fact finding: final settlement is not possible, since the facts on which the decision is based are unclear; incorrect establishment of facts: final settlement is possible; 144 incorrect qualification of facts: final settlement is possible. utrecht 2008 in our utrecht study, we also analyzed the link between the grounds for annulments and the options for substitution, using the table in marseille and van der heide: table 13 utrecht district court 2008 category power procedure substantiation fact fi nding establishment of facts qualifi cation of facts total possible 0 0 2 0 0 13 15 might have been possible 0 0 1 0 0 0 1 not possible 0 6 73 52 1 3 135 total 0 6 76 52 1 16 151 we can draw the following conclusions: power: the utrecht study did not include any annulments based on a lack of power, and thus no conclusion can be drawn on this point; procedure: the utrecht study found 6 annulments based on a procedural defect. such declarations stating that the appeal is well-founded are not suitable for final settlement; substantiation: 76 judgments stated that the appeal was well-founded based on a lack of substantiation. although 2 judgments were suitable for final settlement and one judgment might have been suitable for final settlement, the great majority of these judgments were not suitable for final settlement due to lack of substantiation; insufficient fact finding: 52 judgments stated that the appeal was well-founded due to insufficient fact finding. none of them was suitable for final settlement; incorrect establishment of facts: the judgments examined in the utrecht study included one statement that the appeal was well-founded based on incorrect establishment of facts. this judgment was not suitable for final settlement. incorrect qualification of facts: in 3 cases that involved an incorrect qualification of facts, final settlement was still impossible. in the remaining cases final settlement would have been possible. comparison before comparing the results, we would like to make two observations. first, when in doubt about the question of which ground for annulment the court used and about the question of whether final settlement would have been possible, we checked these details with the relevant judge. second, we should emphasize that the information 145 described above represents research results. we are aware that nowadays more and more often courts try to find options for final settlement in the event of insufficient fact finding and annulments of substantiation (schueler et al., 2007 and barkhuysen et al., 2007).10 when comparing the results for the link between grounds for annulment and options for final settlement, this leads to the following conclusions. the results for the ‘procedural’ ground for annulment are similar: both in marseille and van der heide’s study and in the utrecht study, the conclusion is that when the appeal is considered well-founded on procedural grounds, the dispute is not suitable for final settlement. for the ‘substantiation’ ground, the conclusion is that there is a considerable difference between the two studies, not for the ‘possible’ category, but mainly for the ‘might have been possible’ category. unlike marseille and van der heide, for annulments due to a lack of substantiation, we hardly ever concluded that final settlement might have been possible. we believe this may be explained by the fact that in cases of a lack of substantiation, it is usually impossible for the court to produce final settlement without the administrative authority offering further explanation. for the ‘insufficient fact finding’ ground, we can conclude that the results of the two studies are very similar. although marseille and van der heide found 2 cases where final settlement would have been possible, for most cases final settlement would have been difficult to achieve. for the ‘incorrect establishment of facts’ ground, we can conclude that there are considerable differences. in marseille and van der heide, all 9 cases could have reached final settlement. the utrecht study only included 1 annulment on the basis of incorrect establishment of facts, where final settlement would not have been possible. the last ground for annulment is ‘incorrect qualification of facts’. the results in this category are similar. marseille and van der heide conclude that final settlement would have been possible for 10 out of 11 cases. in our study, this category includes 13 out of 16 cases. what is striking is that in the utrecht study these 13 cases were placed under ‘channeling’, and were only regarded as simple annulments for the sake of comparison in this section. 4. conclusions and recommendations this study served to analyze the way that the utrecht district court used its options for final settlement in the year 2008. marseille and van der heide previously reported on a similar study, executed in 2007. we compared our results with theirs and have reached the following conclusions. the utrecht district court seized most opportunities it had for final settlement. this conclusion is based on two observations. in the first place, the utrecht district court produced a relatively high number of final settlements. in the second place, of the cases where the court does not produce final settlement, final settlement might 10 see the crvb judgment of 18 december 2008, ab 2009, 18 annotated by a. tollenaar (crvb = central appeals tribunal for the public services and for social security matters). 146 only have been possible for a small number of cases. after all, in only a very small number of cases (0.9 percent), the court could have produced final settlement. in marseille and van der heide’s study, this was 25 percent. we should note, however, that we consider the cases where the court channeled the case – thus informing the parties where they stand – as final settlement as well. the corrected percentage is 6.7%. this second conclusion needs some important additional comments, however. one of the causes is the large number of annulments based on a lack of substantiation. for this ground for annulment, final settlement is difficult to achieve. therefore, it seems that for the utrecht district court the administrative loop offers the best opportunity for improvement. when, after applying the administrative loop, the decision proves substantively correct, the court can uphold the legal consequences. if it proves impossible to uphold the legal consequences, after applying the loop it will at least be possible to produce a more substantive judgment, in the sense that citizens and administrative authorities receive better insight into the decision yet to be taken. we also recommend careful analysis of whether the case really involves a lack of substantiation and whether it does not actually involve incorrect establishment of facts, for example. if the court finds that the case involves incorrect establishment of facts, it will, or might, be able to offer the parties more clarity. moreover, final settlement will then be easier to reach. references 1. barkhuysen, t., et al., feitenvaststelling in beroep (‘establishment of facts in appeal cases’), the hague: bju, 2007. 2. marseille, a.t. and van der heide, r.r., ‘de onderbenutting van de mogelijkheden tot finale beslechting door de bestuursrechter’ (‘the insufficient use of options for final settlement by administrative courts’), 2008, jbplus, pp.78-92. 3. schueler, b.j., ‘vernietigen of geschillen beslechten?’ (‘annulment or dispute settlement?’), 2007, jbplus, no. 3, pp. 173-174. 4. schueler, b.j. et al., definitieve geschilbeslechting door de bestuursrechter (‘final settlement of disputes by the administrative court’), the hague: bju, 2007. 137 abstract this paper investigates the trend of greening the smes sector by means of creating publicprivate partnerships. there are two main theoretical concepts used to frame the debate – social corporate responsibility and eco-efficiency. the paper describes and analyzes one possible tool local governments have in order to encourage smes to become more efficient from an environmental standpoint – the ecoprofit-type approach. ecoprofit is a program implemented in austria and then extended to other countries in which local governments offer training and certificates to smes who want to become more eco-efficient. in the empirical research we tested: a) the perceptions and attitudes of smes with regard to the greening of their operations and products/ services; and b) whether romanian smes would be interested in taking part in such a program. the conclusion is that smes perceive environmental management as a burden and tend to comply only with the mandatory requirements of the law. keywords: small and medium enterprises, public-private partnerships, environmental responsibility, ecoprofit, eco-efficiency, romania. public-private partnerships for stimulating the eco-efficiency and environmental responsibility of smes* bogdana neamţu bogdana neamţu lecturer, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: bogdananeamtu@apubb.ro transylvanian review of administrative sciences, no. 34 e/2011, pp. 137-154 * this article is the outcome of post-doctoral research financed through a post-doctoral grant under european social fund, operational sectoral program for the development of human resources, ‘transnational network for the integrated management of post-doctoral research in the field of science communication. institutional building (post-doctoral school) and grant program (commscie)’ contract no. posdru/89/1.5/s/63663. 138 1. introduction – toward building a sustainable local economy the type and composition of a local economy can influence in tremendous ways a city’s ecological footprint and impact. in too many cities, however, the environment is a secondary consideration (if considered at all) in crafting economic development policy (portney, 2003, p. 369). several shifts have been taking place recently and they seem to enable local stakeholders to be better equipped in advancing the goals of sustainable economic development: a) traditionally, national states/central governments have been responsible for environmental policies. this is changing; responsibilities are being shifted to the supranational level as well as to regional and local institutions (lintz and nobis, 2008, pp. 3-4). there are cases where the states have failed while sub-national entities are at the forefront of the environmental movement (in the us california is known as the greenest state, mainly due to initiatives at the local and state level). the local level gained particular attention from chapter 28 of the agenda 21 adopted by the united nations in rio de janeiro in 1992 (hooghe and marks, 2001). the local level is relevant because local authorities are closer to people and businesses than central governments; in the same time municipalities often make policy decisions with environmental implications especially as they affect infrastructure projects, urban planning etc. (connelly and smith, 2003; camagni, 1991). b) another change refers to the policy tools used by governments in order to achieve sustainable development. the regulation-oriented policies are replaced with management support programs and other incentives which are meant to help smes to increase their environmental efficiency (odake, 2009; fresner; 1998). while regulations are often rigid and hard to adapt to the local context, incentives-based policies can be better tailored by local governments as to respond to the local needs. assistance programs targeting smes implemented by local governments aim generally to reduce negative environmental impacts not through forcing smes to follow governments’ measures but rather through supporting smes’ own efforts to decrease such impacts (odake, 2009). c) new forms of governance have emerged, involving more political levels and cooperation with an increasing range of actors. at the local level, chambers of commerce and different businesses associations of businesses are becoming relevant partners for the public sector. nowadays it is not unusual to have multiple stakeholders working together to solve complex environmental challenges. d) a completely different attitude and mindset among businesses than two or three decades ago have emerged. thus, the environmentalists versus industrialists debates of the 1970s and 1980s are gradually being replaced by solutions-oriented approaches. companies are no longer concerned only with quality, service and cost; they have to also consider their environmental performance. because less energy, less materials, and less pollution translates into savings for the companies, they seem to voluntarily agree to become more environmentally-friendly and even engage in innovating this field. moreover, some companies go beyond eco-efficiency and try to 139 tackle sustainability by considering the environmental impact of the materials they select, the social implications of their products and operations, and in some case the need for their product at all (brady, henson and fava, 1999, p. 33). in light of these shifts, the paper investigates how local governments can partner with the smes sector in order to promote a higher level of eco-efficiency on smes behalf. it starts by exploring the reasons which determine smes to engage in voluntary programs, which go beyond what is mandated by law in the field of environmental protection. two concepts are used to frame this section: corporate social responsibility and eco-efficiency. the paper then focuses on various tools available to smes for greening their operations and highlights the importance of a specific tool which allows for public-private partnerships between smes and municipalities. one such partnership scheme – ecoprofit, austria, is examined and several elements which could be transferred to other countries are analyzed. in the empirical part the article scrutinizes: a) the perceptions and attitudes of smes in romania with regard to the greening of their operations and products/services; and b) whether romanian smes would be interested in partnering with the municipalities and taking part in an ecoprofit-type program. 2. translating sustainability into corporate sustainability and/or eco-efficiency the business community usually agrees with the tenets of sustainable development and embraces the idea of greening the economy, however very often there is a gap between this abstract concept and the daily practices of businesses. morris (1997, pp. 107-108) states that there are two main obstacles companies face in this endeavor: the lack of a bridge that converts sustainable development as a philosophy to a program that is practical and realistic; and no tools to design and implement sustainable development programs. she also claims that other more applied concepts should be used in order to bridge the abstractness of sustainable development with the mundane operations of companies (morris, 1997, p. 108). within this section two such concepts are offered: corporate social responsibility (hereafter csr) and eco-efficiency. also, several possible tools developed over the last ten years are explored more in depth. corporate social responsibility is an elusive notion, hard to define as it means different things to different people. in the literature there are broadly two categories of definitions, one which is very broad and a second one which is narrower, emphasizing the altruistic dimension of csr. one definition that fits in the first category is offered by lyon and maxwell (2008, pp. 1-2): csr includes all environmentally friendly actions not required by law, also referred to as going beyond compliance, the private provision of public goods, or voluntarily internalizing externalities. definitions that fall in the second category usually state that an action counts as csr only if it is not motivated by obtaining a profit; socially beneficial actions that increase a company’s profits should not count as csr (lantos, 2002). baron (2001) distinguishes between altruistic csr (it is similar with the narrower definitions described above) and 140 strategic csr (which is profitable for companies). though in theory companies may engage in altruistic csr activities, most authors consider that these cases are rare and very often companies have their own agenda (the gains do not have to be immediate and material, they can be also symbolic or on the medium and long term) (meehan, meehan and richards, 2006). given the focus of the paper on smes, it should be mentioned that smes, more than large companies, encounter specific challenges with regard to corporate sustainability. a growing body of literature on this topic points toward the most significant ones: smes are generally owner-managed, and less bureaucratic, leading to a rather informal management of cs; emphasize informal and/or personal relationships shaping their stakeholder management approach; follow less formalized strategies and an adhoc management resulting in an reactive approach to cs issues; inherent resource constraints such as lack of time, financial and human resources as well as capabilities and knowledge (klewitz and zeyen, 2010, pp. 6-7). eco-efficiency is perhaps a more useful concept in the context of our analysis regarding the triggers of an environmentally-responsible behavior for businesses. broadly speaking, it refers to the utilization of the natural resources in the most economically, socially and ecologically efficient manner possible (please see that social considerations are included, however in practice they are most of the time absent, the focus being on environmental aspects). the principle of eco-efficiency connects environmental protection with technological and economic efficiency. it implies both a technical dimension (new products and technologies) as well as a social one (new forms of cooperation, new consumption behavior). the main goal of eco-efficiency is to de-link economic growth from increased resource consumption and emissions (oecd, 2000). perhaps the most well-known definition is the one by the world business council for sustainable development (wbcsd), an organization that aims to provide leadership as a catalyst for change in the achievement of environmental excellence, and promotes the achievement of eco-efficiency through high standards of environmental management in business. thus, eco-efficiency can be defined as the delivery of competitively priced goods and services that satisfy human needs and bring quality of life while progressively reducing ecological impacts and resource intensity through the life cycle, to a level at least in line with the earth’s estimated carrying capacity (wbcsd, 1995; morris, 1997). in addition, wbcsd also defined seven principles for eco-efficiency: 1) reduce the material intensity of products and services; 2) reduce the energy intensity of products and services; 3) reduce the dispersion of toxic materials in industrial processes; 4) increase material recyclability; 5) maximize sustainable use of renewable resources; 6) extend the durability of products; 7) increase the service intensity of goods and products. klewitz and zeyen (2010) define eco-efficiency as the ratio of economic value created to environmental impact added. furthermore, it is either improved by reducing environmental impact whilst keeping the same economic value, or by expanding economic value whilst remaining on a constant level of environmental impact (p. 6). 141 the concepts of csr and eco-efficiency represent the first step toward a more pragmatic adaptation of sustainability to the daily operations of businesses. however, the next step implies a set of tools businesses may use in order to become more environmentally-responsible. figure 1 below comprises a broad variety of such tools developed based on the existing literature. cleaner production guides; corporate environmental reporting; design for environment; design for disassembly; eco-compass; eco-auditing; eco-effi ciency; eco-industrial parks; eco-profi ling; environmental auditing; environmental management systems; and environmental performance measures. life-cycle assessment; life-cycle costing; life-cycle management; life-cycle value assessment; pollution prevention; product stewardship; social justice indicators; responsible care; standards-is0 14000 and various national environmental standards; supply chain management; and system conditions of the natural step. source: brady, henson and fava, 1999, p. 35 figure 1: tools supporting the greening of the industry some of the tools listed in figure 1 should be viewed as overarching concepts rather than specific tools (see for example eco-efficiency). also, it has to be mentioned that in general these tools originate from three sources: from within the business sector (businesses associations which develop for example cleaner production guidelines for a specific industry), from third independent parties (iso certification for example), and from the public sector (ecoprofit-type programs, please see next section for more details). though there seems to be growing consensus among various stakeholders, including companies, with regard to the importance of greening the economy, the willingness of companies to engage in such efforts should be viewed in light of the advantages brought by these efforts. they include: reductions in operating costs; production and process improvements; reduced liability and risk; enhanced brand image; increased employee morale; increased opportunity for innovation; increased opportunity for revenue generation-new markets and price premiums; better supply chain management; and better relationships with customers (brady, henson and fava, 1999, p. 5). on the other hand, there is a growing body of literature on the limited awareness of smes with regard to their overall environmental impact (hillary, 1995, 2000; rutherfoord et al., 2000; revell and blackburn, 2007). much of the evidence suggests that this is the result of a combination of factors ranging from ignorance to deliberate strategies to avoid rises in production or service costs (revell and blackburn, 2007, p. 406). with regard to existing barriers, there are several interesting concepts emerging in the literature. revell and blackburn (2007, pp. 406-407) discuss the following: – low levels of eco-literacy; – negative perception of the ‘business case’ for sustainability – environmental protection is generally seen as a burden which rarely results in economic benefits. 142 – lack of customer and supply chain pressure – smes experience little external pressure to adopt environmental management systems. – vulnerable compliance – due to limited awareness of environmental regulations coupled with low level of empathy with the said regulations. 3. environmental management systems (emss) as tools to promote eco-efficiency this section first introduces the concept of environmental management system and points out the potential role of the public sector in establishing such systems. it then focuses on a specific, partnership-type of ems. public authorities have a wide range of tools to promote the eco-efficiency of enterprises. among these are legislation, permission procedures, environmental fees and taxes and different types of subventions. in addition, since the beginning of the 1990s, more or less formal environmental management systems have been developed (lehtonen, not dated). 3.1. emss – definitions generally speaking, an environmental management system (ems) is part of the overall management system of an organization that includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy (melnyk, sroufe and calantone, 2003; stege, 2000; hillary, 2004). one can model the ems around a number of standards available – some are international (iso 14001), some european (eu in fact – emas), while others can be designed by organizations/authorities at national or sub-national levels (in germany the prema system). in all the cases mentioned above, the ems implies not just a focus on results of actions in form of material objectives and limits but on setting up organizational structures and managerial processes and subject these to continual control. companies have to develop and make use of different abilities such as formulating environmental objectives and implementing organizational structures and processes as well as measuring achievements. this engagement is rewarded with a certificate that shows to the public the corporate environmental commitment. in certain cases (emas) the certificate is combined with the right to use the logo (freimann and walther, 2002, p. 92). for the national/local programs, technical assistance and support may be also included, especially for smes. 3.2. ecoprofit, austria ecoprofit is an innovative program operated by the city of graz since 1991. it is intended to educate local businesses and to help them identify changes in production processes that could reduce waste and resource consumption, and in turn increase profitability (portney, 2003, p. 370). it is an internationally registered and copyrighted trademark. it was originally developed to improve the environmental situation in 143 graz1 – in the early 1990s the region of the city of graz experience serious problems with its local air quality. in this critical context the city of graz and the university of graz cooperated in the development of an initiative called ecoprofit. today ecoprofit is implemented worldwide, its broadest dissemination taking place in germany (odake, 2009, p. 2328). ecoprofit is often described in the literature as a win-win-model, using integrated environmental technologies to strengthen economic efficiency and to improve the local environment at the same time (balcazar, 2010, p. 29). the program is based on a public-private partnership model. the municipality initiates the establishment of the ecoprofit program in order to improve the local environmental situation by working together with the local companies and consultants. the companies participate in the program on a voluntarily basis and have some degree of flexibility with regard to their level of involvement. throughout the implementation of the program, networking is a key element for success, not only among the participating businesses but also with the representatives of the city. participation in the program follows several stages (portney, 2003, pp. 370-372): first, workshops are held to inform and educate companies about low environmental impact production methods; during these workshops consultants work with each company, individually, in order to identify low cost improvements meant not only to reduce pollution but also to increase efficiency and subsequently profits. second, the company needs to establish a unit within the organization and to assign staff who will be working with the consultants and the company in order to identify those areas where the environmental impact can be reduced. third, companies are awarded the ecoprofit logo, provided that they meet certain requirements (modeled after emas but adapted for smes). the logo is awarded for one year and in order to maintain certification continuous progress must be achieved. ecoprofit consists of three main programs, basic program, special programs (such as tourist) and club program. the basic program is for beginners and it consists of workshops and individual consultations. the themes of the workshop include: organization, controlling, energy, emissions, waste, water, occupational safety etc. the idea behind these workshops is know-how transfer. individual consultations benefit the individual company by bringing experts to their sites and providing solution-oriented service. parallel to these activities, companies use their new knowledge for activities such as organizing an environmental team, developing an international program, stocktaking etc. the club program is for companies which have already completed the basic program. the club has been operating since 1994. the club program consists of workshops and workgroups aiming towards continuous development and implementation of new measures while encouraging cooperation between companies, consultants, and local authorities. the club is often described 1 graz is the capital of the austrian province of styria, with a population of approximately 250,000 inhabitants. 144 as a platform for exchanging ideas among members, for mutual learning as well as for promoting sustainable development in the region, together with the local/regional authorities (balcazar, 2010; grothe-senf and ludwig, 2002). there are two categories of factors that can determine the success of the ecoprofit program (lintz and beier, 2006; lintz and nobis, 2008): on the one hand, there are general factors (existing conditions within the municipalities or the regions which can determine the successful implementation of the program); on the other hand, there are spatial factors such as the close relationship between city administration and companies; local public communication; and working in a group (lintz and nobis, 2008, pp. 8-9). municipalities, more than other levels of government, are presumed to interest in a more direct way with the local smes and to be able to motivate them to take part in an ecoprofit-type program. at the local level there are bigger chances for finding an interested audience (citizens, business community at large, other governmental agencies etc.) in the activities of the program and its impact. finally, working in a group with other similar businesses, offers smes the chance to benefit from the experience of their peers in dealing with similar problems. such interactions are not possible when applying for iso or emas certification. one last aspect discussed in this section refers to the impact of the ecoprofit program. as already mentioned, from an institutional perspective, the program has been used extensively since its creation. in this sense, it could be called a success. in terms of environmental impacts achieved, there are empirical studies conducted for lots of companies enrolled in ecoprofit programs administered by various cities. portney (2003, p. 371) cites a 1994 report by iclei which states that positive impacts from the program include improved housekeeping, changes in material selections, and the implementation of new technologies and process modifications. in numbers, such changes led to 25% reduction in the total amount of paint used (a vehicle repair garage) or a 70% reduction in chemical inputs in reproduction processes (printing enterprise). in a more recent evaluation of ecoprofit in dresden, sizeable energy savings and reductions in emissions were achieved (average energy savings – 7.3%; carbon dioxide emissions reduced by around 1,100t per year etc.) (report cited in lintz and nobis, 2008, pp. 10-11). 4. methodology 4.1. research questions there are two main research questions that guided our effort: a) which are the perceptions and attitudes of smes with regard to the greening of their operations and products/services; and b) whether romanian smes would be interested in taking part in an ecoprofit-type program. 4.2. research method we used a mixed method approach consisting of document analysis and semistructured interviews. in order to get a better understanding of the activity of the 145 researched businesses, several documents were analyzed. these documents include: the legal charter, strategic and operational business plans, marketing plans, documents used when applying for grant money (mostly eu) or loans, documents used during various certification procedures etc. in the case of two companies, there were no such documents available, with the exception of the legal charter. after the initial screening of the documents, which took place in all cases on the companies’ premises, semistructured interviews were conducted. for each company we interviewed the manager and, in four cases, also an additional person who was in charge of administrative aspects of the operation – basic accounting responsibilities, file the paperwork; in all four cases this person was indicated during the initial interview with the manager. 4.3. sample seven cluj-based smes were selected for the purpose of this study, each of them having no more than 25 employees. all of the selected firms have been operating for at least 3 years. • a printing shop; • a car painting and occasionally auto repair firm; • a car washing firm; • a small packaging company (plant seeds and pesticides); • a small timber operation which occasionally also does carpentry jobs; • a family owned and operated meat processing firm; and • a dry-cleaning business for clothing. 4.4. structure of the interview the questions from the interview were split into three main dimensions: a) attitude of the company towards eco-efficiency and voluntary instruments for reducing the impact of the company on the environment; b) self-assessment of the company’s impact on the environment; areas where progress can be achieved (different types of resources committed and different time horizons); and c) interest in partnering with the public sector in an ecoprofit-type of program. in order to get meaningful answers to the questions pertaining to this section of the interview, all the interviewees were given a short presentation of the ecoprofit program as well as printed materials for future use/reference. 5. main findings the first question from the interview inquired about how managers assess the attitude of smes in romania with regard to the conservation of the environment. moreover, we wanted to find out if smes are interested in obtaining certificates that prove that they are paying attention to environmental issues as they relate to the operation of their companies. all the surveyed smes stated that the conservation of the environment is not a priority and it is usually addressed in an isolated manner, without representing an integrated part of the strategic management process. five managers argued that in their opinion the burden of environmental conservation should 146 not be placed on the shoulders of the smes since their impact on the environment is relatively low. rather, big companies should be held responsible since in most cases the bigger the company the larger the negative impact on the environment. none of the interviewees addressed however the issue of the cumulated impact of smes in light of their share in the total number of businesses operating in our country. another reason why large companies should pay more is related to the resources available to them. one manager stated: ‘large companies can afford to spare more resources for environmental conservation; therefore it is only fair to ask them to contribute more’. several interviewees also stated that the cash flow problems and the very small profits these companies make also influence their ability to address environmental issues. one manager stated that ‘the owner wants to see immediate results… preferably results that translate into more profit… very often the profit is not reinvested in the company’. a similar argument was provided by another interviewee who claimed that ‘the minute a big transaction is completed and there is cash available, the cash goes directly to the owner… it is very hard to convince him to fix the pipes or the equipment… he won’t invest money in something that is not an emergency…’. all managers declared that they are interested in obtaining a certificate that proves that they comply with environmentally-related standards. four of them claimed that in romania you never know when a certificate might prove useful. they all offered anecdotal stories about people or companies which collect degrees, certificates or prizes. in their opinion all these can be helpful when you try to obtain european money or a big loan, when you try to create a website of the company or when you interact with partner companies from abroad. only one manager declared that by applying for such a certificate ‘you are forced to pay more attention to these environmental issues…also you need to do it in a structured way and to constantly monitor progress in the area of environmental conservation…’. managers were then asked if their company is certified according to emas, iso 14001 or other standards. also, inquiries were made whether they are familiar with this type of certification and whether they plan on becoming certified in the short, medium or long run. three out of the seven companies hold an iso 14001 certificate. one of these three smes had originally applied for emas certification but the process proved to be too time-consuming. instead, they opted for iso 14001. contrary to what we expected, the remaining four smes claimed that they plan to get an iso certificate in the near future. in the literature it is often argued that big companies rather than smes apply for this type of certification as it requires high efforts (i.e. documentation). in romania, the situation is a bit different; there are a lot of companies which hold an iso 14001 certificate2. though there are no clear data with regard to how many of 2 in 2010, the total number of companies holding an iso 14001 certificate placed romania among the leading 10 countries worldwide in this field; for more details see iso survey 2007, as well as highlights of the iso survey – 2009 (http://www.iso.org/ iso/pressrelease.htm?refid=ref1363). 147 these are smes, it is believed the percentage is around 35%-45% (iso organization, http://www.iso.org). the third question tried to identify the trigger for an eco-responsible behavior on the behalf of smes. managers were asked if in the area of environmental conservation, they usually comply solely with legislative requirements or if they are willing to go beyond them and pursue other strategies on a voluntarily basis. all the managers declared that they try to meet the legal requirements mainly because of the sanctions implied in cases of non-compliance. they acknowledged however that because of weak enforcement as well as corruption they are sometimes able to elude such requirements. the forth question inquired about the instruments/measures for environmental conservation used in the surveyed companies and about whether managers plan to use others in the future. the type of measures described by the interviewed managers can be grouped into the following categories: waste/waste disposal, energy efficiency, hazardous materials, organization/training, waste/sewage, and emissions reduction. these measures range from very basic, baby steps such as replacing old lighting fixtures with modern, ecological ones to more sophisticated measures, including a complete new technology for the main activity of the business. many managers stated that in some areas, such as recycling/reuse, they had encountered barriers mostly because recycling programs managed by governmental organizations are not always well managed. as one manager stated ‘once we wanted to get rid of some old appliances and we found out that there is such a governmental program, however the authorities failed to let us know that it only applies to residents and not to companies… we ended up with a ton of appliances at the curb and we had to take them back into the store’. none of the organizations showed interest in training which was perceived as a ‘waste of time and money’. one manager claimed that in his opinion ‘training, especially training done by consultants, is important for the development of the employees as individuals but not for the organizations these are working for…; it is seldom that training focuses on how to improve the organization, given the context smes in romania operate in’. all businesses said that they intend to do all they can to comply with the existing legal requirements mostly because they want to avoid fines as well as bureaucratic hassle. one manager stated that ‘once you get in trouble with the governmental agencies they have a tendency to keep it in mind and monitor you more assiduous than they are doing with other companies… this is something i want to avoid in the future…’. it is interesting to mention that none of the companies holding an iso certification said that it has in place an environmental management system (underlying requirement for the certificate). when asked, one manager stated that ‘yes, it is true, but we have this certificate for a number of years now and we do not constantly think about it… sometimes updates need to be done but i have to be honest and tell you that we do not use it as a tool during our daily operations… i know we probably should…’. the meat processing business stated that the business is part of a professional association and that, in theory they should follow the cleaner production guidelines designed and endorsed by this association. however the manager claimed that ‘in his opinion 148 those guidelines are merely window dressing, the representatives of the associations had drafted them because this was their duty... however even the association knows that nobody complies with them’. we also inquired if the surveyed companies buy green products and services and if during the selection of supplies the approach of the potential suppliers with regard to environmental protection is taken into account. none of the companies considers that a supplier’s policy with regard to the environment represent a criterion for their selection. several managers declared that there are certain products they buy that are from recycled materials. however these products are not the most important ones during their production processes. for example several managers declared that they buy recycled paper, however this is not essential for their products. we wanted to find out if the surveyed businesses had experienced any pressures to become more eco-efficient. also, we wanted to know which is (are) the main trigger(s) for implementing voluntary mechanisms for the conservation of the environment. in general, the interviewed managers declared that the pressure for becoming more eco-efficient is rather low. we discovered however that several of the interviewees identified two common motivating factors: the residents from the neighborhoods where the businesses are located and their own employees. all businesses, with the exception of the meat processing facility, are located within already established residential neighborhoods. some of the locations used to house light industrial activities in the previous decades. because of this close interaction between smes and residents, which is encountered in the case of many former communist cities, the latter are more likely to complain about negative externalities that affect them and/or the surrounding environment. one manager declared that ‘in the past it was a lot easier to dispose of the empty ink cartridges... we would simply throw them away with the rest of the garbage… one day several neighbors complained that we shouldn’t do it, that we should try to recycle them or something… the first time we ignored them but one day we received a fine based on the complaint from several neighbors and thus we decided to become more responsible neighbors…’. the manager of the car washing firm stated that his neighbors complained that some residual water is not properly collected and discharged into the municipal sewage system, therefore polluting the underground water…i am not completely sure that their allegations were true but i knew that according to the law i could get fined or even have my business closed down’. some pressure also comes from their employees. as one manager put it ‘… the younger employees, those who had just graduated, they come with a lot of fancy ideas about how to operate the business… some of them are unrealistic, i mean from the standpoint of what we can afford or are willing to do, but it is good to know what other businesses, especially from abroad, are doing. in many cases it is about the introduction of new technologies which are more environmentally friendly’. another manager said that the employees working in the administration of the business have started different initiatives for becoming greener – ‘we put a bike rack in front of the building for customers, we buy only recycled paper and other similar products, we 149 can only order lunch from a bio/green restaurant etc.’ he acknowledged however that ‘these are efforts driven by the ambition and perseverance of employees who are eco-conscious outside the office as well’. the second section of the interview concerns itself with how managers assess the company’s impact on the environment; and if they identify areas where progress can be achieved (different types of resources committed and different time horizons). we first asked them if any type of analysis was conducted in order to determine the impact of the business on the environment or if they plan to do so in the following year. none of the companies had conducted any form of structured/formal analysis in this field. this lack of formalization is present with regard to other areas of the businesses’ management. formal strategic and operational documents are missing from their files; where they exist, this is the result of the requirements of iso certification or of applications for bank loans. however, several managers had made inquiries about certain products/technologies that could be applicable in the case of their business. the manager of the meat processing business stated that ‘a few months ago there was technical assistance offered through a professional association at a low cost; it addressed the enhancement and modernization of the entire production cycle, including environmental aspects, mainly energy reduction and waste management’. managers were then asked to assess, on a scale from 0 to 5 (0 being no impact while 5 is high impact), the environmental impact of their business field and also of their own company, as an individual entity. there was only one manager who assessed the environmental impact of his field of operation as high; he explained that he is aware of all the stories presented on tv about how timber operations heavily pollute the environment. however, he assessed the individual impact of his business as being relatively low (2). the general tendency of all the interviewed managers was to consider the individual impact as low. one manager declared that ‘we are such a small business that no matter what we do the impact is not going to be significant’. managers were asked if there any areas/processes which they could make more environmentally friendly and if they are aware of methods/technologies for doing it. four of the interviewed managers declared that they had seen and/or visited state of the art facilities in their field of operation. they were able to name processes and technologies which will make their business more eco-efficient. three of them also knew how much it will cost them to implement these technologies and if they are available in romania. their answers to this question proves that even though they do not conduct formal analyses regarding the environmental impact of their business, they do know certain things and more importantly they try to plan ahead, even if in an unstructured manner. most of the changes proposed by the managers referred to aspects of their businesses that are visible to neighbors and authorities. in some cases their solutions had more to do with appeasing the community than with solving the negative environmental externality. as one manager put it ‘i am very careful to give the neighbors the impression that we recycle the cartridges, in reality i just don’t dispose them where they (the neighbors) can see them’. another manager declared 150 that his first concern was ‘to take care of those aspects that were unpleasant for his neighbors – noise for example, as well as the saw dust’. another question inquired about the correlation between cost savings and investments in eco-efficient production methods. all of the interviewees pointed out that in their opinion the initial costs of having eco-efficient production methods and technologies are too high for the business they operate. two managers pointed out that they are not even sure their business is still going to be in operation in two or three years. in one person’s opinion ‘in theory we all know that over time those initial investments are going to pay off, however sometimes we simply can’t afford to wait…our business could get bankrupt in the meanwhile, especially with all the economic instability from romania’. three managers declared that dissemination among fellow managers of successful practices in this field is the key. one manager compared investment in eco-friendly technology in his field with the governmental sponsored program meant to insulate the apartment buildings from the communist era: ‘in the beginning nobody was interested in insulating their apartment, however after several residents had done it and were able to then observe de real benefits, everybody became interested. i think that people are more willing to believe such stories if they come from their fellows and not from state authorities or other organizations which are removed from what happens in the real life’. along the same lines, a second manager declared that he will implement more costly technologies which protect the environment only if other competitors do it. in general, all managers are at least partly aware that over time the initial investment will pay off, however uncertainty coupled with lack of information seem to be the main deterrents. the third section of the interview investigated the interest of the smes in partnering with the public sector in an ecoprofit-type program. we first asked managers to assess ecoprofit by comparing it against iso 14001 or emas. we asked them if ecoprofit is ‘less’ or ‘more’ from the smes’ point of view. in the preliminary discussions with the managers we made sure that all of them had basic knowledge about these programs/ certifications. one manager declared that ‘everybody had heard about iso but this is for the first time when i hear the name of ecoprofit’. two managers claimed that the city hall will never initiate such a program since ‘they do not care about smes, about how they can help us…they are only interested in big companies which can hire a lot of people…they can then say that they worked with the business sector to increase employment and thus gain more votes…’. the managers of companies who hold an iso certificate declared that they opted for it because it is recognized worldwide and everybody sees it as ‘legit’. only one manager stated that in his opinion, based on the information provided about ecoprofit, ‘the program seems to cater to the specific needs of smes…it looks as if the program really cares about our businesses and our needs…my experience with technical support in the past was highly impersonal…i did not feel as part of the solution offered’. the managers were asked to assess the role of the actors involved. they were asked to say which of the following actors – the public authority, the consultants or 151 the peers in the working group, could provide them with the most useful support in addressing environmental issues as they relate to the operation of their company. all the interviewees perceive that the local public authorities are key actors in relationship to their businesses. as one manager put it ‘it is the city hall we go to when we need a permit…or when our neighbors complain they often approach the city even if the city is not the competent authority to fine us’. two managers argued that the city hall should also involve other governmental agencies in this program. since in certain cases they need to get special permits from and can be fined by other agencies besides the city hall, the managers want to be sure that these agencies know that they participate in a voluntary program. one manager stated that ‘they are more likely to cut us some slack if they know that there is somebody monitoring what we are doing. for me, and i think that for others as well, partnering with public authorities will act as a safety net…i don’t have to constantly worry about when the authorities will pay me a visit…’. most managers declared that they are completely distrustful of consultants and three managers even went thus far as to argue that they want nothing to do with them. when asked to elaborate, most managers explained that they had bad experience with consultants, especially when trying to get bank loans and/or when applying for european money (this situation was more frequent). the main problem with consultants, based on their previous experience, had to do with fees/costs as well as with the lengthy process, marked by numerous two or three hours meetings, discussions etc. the attitude of experts in most cases also seems to be a problem: ‘they treat us as if we know nothing about the businesses we run…sometimes they are rather arrogant and think that their expertise entitles them to treat us as inferior individuals…’. peers on the other hand are seen as extremely important; their experiences and input is seen as trustworthy by most of the interviewees. however, three managers explained that they would prefer to be partnered with peers facing the same problems. one manager declared: ‘…last year i attended a seminar on quality assurance, where we had several assignments…i was paired with a manager of a gigantic sme, we had nothing in common…the challenges were completely different’. other managers declared that they would trust ‘any suggestion coming from a peer, even a peer they are in competition with, because the daily running of a business offers insight which is invaluable…no consultant, no matter how good, can have it’. managers were asked to list three factors which would heavily influence the success of such a program, from the smes’ point of view. four managers pointed out that they would agree to participate in such a program only if it is coordinated by the city and only if upon completion they will gain a tangible result, for example a certificate. as one manager declared: ‘i don’t have time or resources to get involved in something that is not official…i don’t want to have to deal with banks, consultancy companies or even the commerce chamber’. another factor mentioned by several managers refers to keeping paperwork to a minimum; as well as minimal fees for entering and completing the program. the final question inquired if managers would be interested in obtaining the certificate at the end of the first year. also we wanted to find out what type of value/ 152 purpose they assign to this certificate. as already mentioned, all the interviewed managers view the certificate as the most valuable outcome of the entire program. as one manager declared ‘degrees and diplomas are important in romania, you never know when you will need them…several years ago i didn’t consider iso certification important nowadays i can’t participate in public procurement tendering if i don’t have it…’. the certificate is perceived as an end in itself and less as proof of an increased performance in the field of environmental management. several managers also declared that the certificate could help them improve their company’s image, especially if the certificates are awarded in a public ceremony which will be highly advertised. five managers also declared that they would be interested in this certificate only if the reaccreditation procedures are kept to a minimum. they argue that they see the point in continuous monitoring, to make sure that everybody keeps following the rules and making progress, but, on the other hand, their resources, especially time and employees are limited. 6. recommendations and conclusions as part of the sustainability agenda, the greening of local economies is an important goal for a broad variety of stakeholders; different stakeholders very often have diverging priorities and interests underlying the broad goal of sustainability. due to shifts in the area of environmental policy – level where policies are drafted/implemented, actors involved, tools used etc., partnerships among various actors are nowadays common. municipalities no longer use merely regulatory means to promote environmental protection; they prefer to engage in partnership-type programs with the smes and to offer them incentives for becoming more eco-efficient. on the other hand, smes themselves are starting to realize that in numerous cases some changes in their production processes or the way they select suppliers could lead not just to positive environmental impacts but in the same time to savings. the program analyzed more in depth – ecoprofit, is very interesting and instructive as a local and cooperative policy approach. though more research is needed on its impact, it is nonetheless a successful program given its widespread and also given the resource savings some of the firms enrolled obtained. our empirical research showed that the success of such a program may be contextual and therefore should be addressed in close connection to the broader governance arrangements within one country/region. our research points out toward a major problem with the win-win philosophy underlying ecoprofit. smes have little incentives to voluntarily improve their environmental performance whilst they remain unconvinced of the business case for sustainability. according to the researched smes they would endorse such a program provided that it has minimal fees, it offers a certificate in exchange of little improvements, and it keeps paperwork to a minimum. in light of these findings, municipalities should carefully consider the proper instrument to achieve an increase of environmental performances from smes. 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rutherfoord, r., blackburn, r. and spence, l., ‘environmental management and the small firm: an international comparison’, international journal of entrepreneurial behavior and research, vol. 6, no. 6, pp. 310-325. 26. stege, u., ‘environmental management systems: empirical evidence and further perspectives, 2000, european management journal, vol. 18, no. 1, pp. 23-37. 27. wbcsd (world business council for sustainable development), ‘achieving eco efficiency in business’, second antwerp eco efficiency workshop, march 14-15, 1995. untitled 194 abstract the first south african ombudsman appointed in 1979 in terms of the advocate-general act 118 of 1979, as amended by advocate-general amendment act 55 of 1983, was known as the advocate-general. the need for this office was apparent after the facts about the information scandal had come to light. the office of the advocate-general could be compared to that of the special prosecutor of the united states, which was also instituted in similar fashion in the wake of the watergate scandal. the primary reason for the creation of the office of the advocate-general was to maintain honest public administration and orderly government. this office was replaced by the ombudsman in 1983 after amending the advocate general act by the ombudsman act of 1983. then in 1994 the constitution act 108 of 1996 repealed the interim constitution act 200 of 1993 and paved the way for the promulgation of the public protector act 23 of 1994 which made provision for the establishment of the office and the governing principles of the public protector. in view of the above brief explanation, this article seeks to unravel evolution of the ombudsman in south africa, the challenges affecting the functioning of the public protector including the “independence” of the office as well as the duplication of functions with other agencies. one case study will be used, namely, the controversial “arms deal joint investigation” as well a comparative study will be done with the parliamentary ombudsman of sweden. the functioning of ombudsman (public protector) in south africa: redress and checks and balances? moses montesh senior lecturer, department of police practice, college of law, school of criminal justice, university of south africa tel.: +27 11 471 2066/3007 e-mail: mmontesh@unisa.ac.za transylvanian review of administrative sciences, no. 28 e si/2009 pp. 194-208 195 introduction the office of the ombudsman in south africa was first established in 1979 and was called the advocate-general. in 1983 the advocate-general changed its name to ombudsman. the purpose of this office was to ensure and maintain efficient and proper public administration. during the multi-party negotiations that preceded the 1994 elections, political parties in the multiparty negotiation forum agreed that south africa should have a public protector (ombudsman). the basis of this idea was taken from the king report of 1992 which formed the framework of corporate governance in south africa. in addition to the king report, the framework of the advocate general and the ombudsman were also considered. the public protector was established by means of the provisions of the interim constitution act 200 of 1993 and confirmed as an institution that strengthens constitutional democracy by the final constitution act 108 of 1996. as a result of legislative amendments, the office of the public protector was finally established on 1 october 1995. in this article, the author highlights the evolution of the ombudsman office in south africa, the challenges, the basic principles that governing public administration in south africa, the principles of corporate governance as well as the duplication of functions and the recommendations. research methodology the basis of this research is a literature study. a thorough literature study is an indispensable component of all research. it familiarizes the researcher with both the research which has already been done in his/her field as well as with current research. in addition unstructured interviews and a case study were used to gather evidence. it is worth noting that little exists in the way of official records of ombudsman under apartheid. many of the official records were destroyed prior to 1994, and this is a huge challenge to researchers. background the “information” scandal in the latter part of the 1970s, south africa was rocked by a major political scandal involving the department of information, which was allegedly misappropriating state funds for secret projects. the information scandal (or lnfogate or rhoodiegate or mulderqate), as it came to be known, was to culminate in the resignation of cabinet minister dr connie mulder and the state president, b.j. vorster (rees and day, 1980, p. 34). at the beginning of 1971, eschel rhoodie, then press officer of the south african embassy at the hague, clandestinely negotiated an agreement with a dutch publisher by the name of hubert jussen whereby jussen agreed to help with the establishment of a new magazine to the point. 196 to the point was to be secretly financed by the south african government and was intended to counter some of the unfavorable press coverage south africa was receiving overseas (roherty, 1992, p. 105). this secret scheme had the approval of the then prime minister, b.j. vorster; the chief of the intelligence services, general hendrik van den bergh; the minister of information, dr connie mulder and mr. gerald barrie, the then head of the department of information. to the point was launched before the end of 1971. in july 1972, rhoodie was appointed to the post of secretary of information. from 1973 onwards, by which time rhoodie was working in close cooperation with ‘the power behind the throne’ general hendrik van den bergh, the then head of the bureau of state security (boss), new schemes and projects were constantly being introduced. they were all run by eschel rhoodie’s department of information and they were all paid for with government money. due to the delicacy of the situation, money was often handed over in cash without any receipt (barron, 1999, p. 107). by july 1977, rumors and speculation concerning financial malpractice in the department of information became so serious that an audit of the department’s books was ordered. in the autumn of 1978, the information affair reached crisis proportions. the then minister of finance, owen horwood, instituted an inquiry under the auspices of judge anton mostert to probe exchange-control violations. on 2 november 1978, despite protestations from the new prime minister, p.w. botha, and minister horwood, justice mostert called a press conference to divulge details of the ‘scandal’ (de beer, 1995, p. 60). judge mostert released evidence, which showed beyond doubt, that the citizen newspaper was financed through state funds (rees and day, 1980, p. 70). and in evidence under oath, mr louis luyt named the former prime minister, mr. b.j vorster, the then minister of plural relations, dr connie mulder and general hendrik van den bergh, as key figures in the secret project to finance the newspaper. in february 1979, journalists finally tracked rhoodie to the ground in ecuador. by this time he was south africa’s “most wanted man” and the government had instituted legal proceedings against him. in march 1979, rhoodie moved to the great britain where he attempted, albeit unsuccessfully, to gain political asylum (de beer, 1995, p. 45). the trial of dr eschel rhoodie began at the pretoria supreme court on 22 september 1979. he was charged with seven counts of fraud, alternatively theft, involving a total of r63 205 of government money. despite the fact that it was shown during the trial that he controlled a series of slush funds in switzerland, holland and great britain to finance the information department’s secret projects a total of between r18and r20-million, of which ‘not a cent was missing’ he was found guilty on 8 october 1979 of five charges of fraud and sentenced to an effective six years’ imprisonment (de beer, 1995, p. 46). a year later, in october 1980, dr eschel rhoodie was acquitted on all counts involving state monies by the appeal court in bloemfontein (barron, 1999, p. 52). the following day, he gave a press conference and issued a ten-page statement in 197 which he expressed his abhorrence and outrage at the treatment he had received at the hands of the south african government. it was estimated that the south african government spent almost r500 000 to establish that dr eschel rhoodie was innocent of fraud charges brought against him (barron, 1999, p. 54). in march 1982, dr eschel rhoodie and his wife katie emigrated to the united states. his book “the real information scandal” which was published in october 1983, contained sweeping allegations of big-name involvement in secret information projects. he further maintained that dozens of senior government officials were aware of the secret projects his department actively pursued, and that r75million had been allocated over a five-year period to finance these projects. official figures released when the scandal broke, accounted for only r64-million. dr rhoodie lived in the united states until his death in the mid 1990s (rees and day, 1980, p. 49). as a result of the information scandal, the then prime minister asked the parliament to institute a commission of an inquiry to identify the alleged irregularities committed within the department of information (brynard, 1986, p. 2). at the same time, the south african parliament realized that, after the commission had published its final report, there would always be a need to investigate matters of a similar nature. the thinking was that there were no guarantees that another scandal will not take place in the future. the erasmus commission the aftermath of the information scandal resulted in the establishment of the erasmus commission in 1978. the erasmus commission under judge r p botha erasmus was given a broad mandate but a short period of time to conduct the investigation on the “information scandal”. the findings of the commission reported that former prime minister john voster and dr connie mulder “knew everything about the misuse of funds” by the department of information. this report destroyed the political careers of the two individuals. interestingly, van vuuren (2006, p. 31) states that from the findings of the commission, it was clear that it did not undertake its work without intimidation from the likes of van der berg, the then head of bureau of state security (boss), who did not mince his words when appearing before the commission by stating the following: “i really want to tell you…that i can do the impossible…i have enough men to commit murder if i tell them…to kill. i do not care who the prey is or how important they are. these are the types of men i have. and if i want to do something like that to protect the security of the state, nobody would stop me. i would stop at nothing”. although commissions of enquiry are meant to signal the beginning of attempts to tackle issues such as abuse of power/office, as epitomized by the information scandal, the attempts to investigate this scandal signaled, in reality, the end of any attempt at probing the myriad of secret accounts that would grow under the tenure of prime 198 minister p w botha’s presidency. indeed, after the results of the commission were published, the south african parliament recommended that a permanent structure should be established to serve as a guardian of “honest public administration and orderly government” (brynard, 1986, p. 2). on the basis of this parliamentary recommendation, the idea of establishing an advocate general as a replacement of the erasmus commission was announced in september 1978. it is worth noting that there is a causal connection between the information scandal and the erasmus commission which resulted in the establishment of the advocate general. the advocate general and the office of the ombudsman the office of the advocate general was established as an attempt by the apartheid government to establish an institution to deal with the abuse of office by public officials. this institution was established in terms of section 4 (1) of the advocate general act 118 of 1979. in terms of this section, the advocate general had the power “to act if approached by any person who had a reasonable suspicion that public money was being dealt with dishonestly or that a person was being enriched or was receiving an advantage in an improper or unlawful manner at the expense of the state or any institution dealing with public money or as a result of any act or omission by any employee of the state or public institution or in connection with the affairs of the state or any such institution”. due to the fact that this agency was hastily assembled, the government realized that a mistake was made in the mandate by including black people. as a result, in 1983, a new constitution act 83 of 1983 was promulgated. this act formally classified the south african population into four groups, namely, blacks, coloureds, indians and whites (akpomuvire, 2007, p. 13). after the promulgation of the act, the government decided to exclude blacks from the services of the advocate general. the office of the advocate general was then replaced by the ombudsman when the ombudsman act 110 of 1983 was promulgated in 1983. in terms of section 11 of the act, the institution of the ombudsman was empowered to act as a remedy to deficiencies in the legislation. if in the exercise of the ombudsman’s supervisory powers it transpires that there are grounds for initiating a change in the statutes or some other official measure, the ombudsman was empowered to represent this circumstance to the south african parliament or the government. more often an ombudsman of this era would submit adjudication to the appropriate authority or parliamentary committee when it was considered to indicate legislative shortcomings that the legislature should be aware of. in 1995 the office of the public protector replaced the ombudsman. this is how the information scandal influenced the establishment of the erasmus commission which in turn led to the establishment of the advocate general. over and above all this, the advocate general was hastily replaced by the ombudsman in 1983 which was also replaced by the public protector in 1995. it is also worth noting that the king report of 1992 which was adopted in 1994 formed an integral part in formation of the public protector in 1995. 199 theories of corporate governance in south africa corporate governance in south africa was institutionalized by the publication of the king report on corporate governance in november 1994. the king committee on corporate governance was formed in 1992, under the auspices of the institute of directors, to consider corporate governance, of increasing interest around the world, in the context of south africa (king report, 2002, p. 6). this coincided with profound social and political transformation at the time with the drawing of democracy and the re-admission of south africa into the community of nations and the world. according to akpomuvire (2007, p. 13), the king report was used by national party whilst negotiating for a democratic south africa with the african national congress in 1992. therefore, the king report became a blueprint document where various institutions and policies were established to address the recommendations outlined in the report. the purpose of the king report was, and remains, to promote the highest standards of corporate governance and ethics in south africa. the king report (1994, p. 7) went beyond the financial and regulatory aspects of corporate governance in advocating an integrated approach to good governance in the interests of a wide range of stakeholders having regard to the fundamental principles of good financial, social, ethical and environmental practice. as a result, the king report (1994, p.10) recommended seven characteristics of good corporate governance: discipline corporate discipline is a commitment by a carport’s senior management to adhere to behavior that is universally recognized and accepted to be correct and proper. this encompasses an institution’s awareness of, and commitment to, the underlying principles of good governance, particularly at senior management level. transparency and openness according to the king report, citizens should be told how national, provincial and other government institutions are run, how much they cost and who is in charge. these aspects are outlined in annual plans of all government institutions, including auditor general’s report. independence independence is the extent to which mechanisms have been put in place to minimize or avoid potential conflicts of interests that may exist, such as dominance by a strong bureaucrat. these mechanisms range from the composition of the board of directors, tender committees, selection committees and external parties such as the auditors. in this regard the king report further proposed that when decisions are made, and internal processes established, should be objective and should not allow for undue influences. this was based on an assumption that corruption and, undue influence and tender rigging were prevalent in most government institutions as well as in state owned enterprises (soe) (king report, 1992, p. 7). 200 accountability individuals in any level of governance, who make decisions and take actions on specific issues, need to be accountable for their decisions and actions. the king report recommended that mechanisms must exist and be effective to allow for accountability. these provide investors with the means to query and access the actions of the board and its committees. responsibility responsibility pertains to behavior that allows for corrective action and for penalizing mismanagement. responsible management would, when necessary, put in place what it would take to set the organization on the right path. in addition, the king report recommended that management at all levels of governance must act responsively to and with responsibility towards all stakeholders. fairness fairness is usually related to the concept of justice. this involves what is right and equal. fairness can also be regarded as being equal in provision, in opportunity or in result. the king report recommended that government institutions are expected to treat citizens fairly and equally. social responsibility a well managed company will be aware of, and respond to, social issues, placing a high priority on ethical standards. a good corporate citizen is increasingly seen as one that is on-discriminatory, non-exploitative, and responsible with regard to environmental and human rights issues. basic values and principles governing public administration in south africa section 195 of the constitution act 108 of 1996 states that the basic values and principles governing public administration are as follows: “public administration must be governed by the democratic values and principles enshrined in the constitution, including the following principles; a high standard of professional ethics must be promoted and maintained, efficient, economic and effective use of resources must be promoted, public administration must be development-oriented, services must be provided impartially, fairly, equitably and without bias, people’s needs must be responded to, and the public must be encouraged to participate in policy-making, public administration must be accountable, transparency must be fostered by providing the public with timely, accessible and accurate information, good human-resource management and career-development practices, to maximize human potential, must be cultivated, public administration must be broadly representative of the south african people, with employment and personnel management practices based on 201 ability, objectivity, fairness, and the need to redress the imbalances of the past to achieve broad representation”. the above principles apply to administration in every sphere of government, organs of state; and public enterprises. these principles are a cornerstone to which the south african public protector as well as other agencies with similar functions has been established. the south african public protector why the office of the public protector was established any government institution is established for a reason. according to akpomuvire (2007, p. 13), the south african public protector was established due to the following reasons: • discrimination: the state institutions were not always readily available to the poorest of the poor. there was also fear of reprisals if one complained. • geographical location: vast geographical rural areas of south africa also made it impossible to reach each and every individual. • ignorance of basic human rights: human rights cannot be properly exercised if not known by the people. • the majorities of people in south africa are blacks and are located in the rural areas. as victims of oppression, they were deprived of any knowledge or their rights. • abuse of power: abuse of power and chronic maladministration practiced by the apartheid regime was a major stumbling block to effective service delivery. therefore this needed to be eliminated at all means. • constitutional democracy: since south africa became a democratic state, there was a need to maintain and sustain constitutional democracy in south africa by all government institutions and other agencies or enterprises attached to the government. judging from the above-mentioned reasons, it is quite clear that the king report played a major role as a blueprint to the establishment of the public protector. according to akpomuvire (2007, p. 15), during the negotiations for a democratic south africa in 1992, some political parties wanted judge mervin king, the author of the king report to be the chairperson of a new agency which could perform some oversight functions over government institutions. however this proposal was rejected by the african national congress (anc) and its allies. one of the reasons for the rejection of judge king was that although he was a retired judge, the liberation movements felt that he was not suitable to lead such an important institution because he had been an apartheid judge. however, as a compromise, most of the recommendations from the report formed part of the guidelines used to establish the public protector. such guidelines were incorporated into the interim constitution act 200 of 1993 which paved the way for the promulgation of the public protector act 23 of 1994. 202 mandate the mandate of south africa’s public protector is found in section 181 and 182 of the constitution act 108 of 1996 read with the public protector act 23 of 1994. in terms of section 4 (a) of the public protector amendment act 113 of 1998, the public protector is competent to investigate maladministration in connection with the affairs of government at any level, abuse of or unjustifiable exercise of power or unfair, capricious, discourteous or other improper conduct or undue delay by a person performing a public function, improper dishonest act or omission or corruption, with respect to public money, improper or unlawful enrichment, or receipt or improper advantage or promise of such enrichment or advantage, by a person as a result of an act or omission in the public administration or in connection with the affairs of government at any level or a person performing a public function. furthermore, the office of the public protector has a mandate to investigate an act or omission by a person in the employ of government at any level, or person performing a public function, which results in unlawful or improper prejudice to any other person. in addition, the public protector’s mandate is to investigate and make recommendations to state departments and state enterprises on any conduct which may have resulted in prejudice to citizens. powers and functions the public protector is neither an advocate for the complainant nor for the public authority concerned. according the public service commission report (2001, p.20) the public protector has the following core functions: to undertake investigations within its sphere of jurisdiction and to provide administrative support for such investigations. during an investigation, the public protector, may if he/she considers it appropriate or necessary; direct any person to appear before him to give evidence or to produce any document in his/her possession or under his/her control which, in the opinion of the public protector, has bearing on the matter being investigated, and may examine such person for that purpose. this is done in terms of section 7 of the public protector act. jurisdiction the public protector has jurisdiction over all organs of state, any institution in which the state is the majority or controlling shareholder and any public entity or parastatal as defined in section 1 of the public finance management act 1 of 1999. the public protector has no jurisdiction to investigate court decisions, including convictions and sentences, private acts by individuals, private companies, doctors or lawyers who are not working for the state, matters occurring before 1 october 1995, complaints brought to the attention of the public protector more than two years after the date of the occurrence which gave rise to the complaint, unless there are exceptional circumstances. 203 independence of the public protector it is alleged that the independence of the public protector is found in section 181 (2) of the constitution act 108 of 1996, where it provides that the institution is independent, and subject only to the constitution and the law. the constitution stipulates that the public protector must be impartial and must exercise his/her powers and perform his/her function without fear, favor or prejudice. this is not possible because the public protector is an entity of the south african department of justice and constitutional development. this means that the minister of justice and constitutional development is responsible for all the work of the public protector. therefore “independence” in this instance is suspicious. appointment the president of the republic of south africa appoints the public protector in his capacity as the head of state, on recommendation of the national assembly, in terms of section 193(5) of the constitution. the recommended candidate requires a support vote of at least 60% of members of the national assembly. the appointment of the south african public protector is little bit controversial. since the office was established in 1995, the incumbents have been political deployees from the ruling african national congress (anc). such appointment taints the aspect of impartiality especially when members of the ruling party are to be investigated by the public protector. case study the arms deal joint investigation in 2003, the public protector undertook a joint investigation with the national prosecuting authority of south africa. the investigation became known as the “arms deal investigation”. the purpose of the investigation was to find out if the then minister of defense, the then deputy president of south africa and mr. schabir shaik were involved in corruption with regard to awarding of government tenders. according to fourie (2003, p. 20), the public protector concluded its findings and comments. “no evidence was found of any impropriety or unlawful conduct by the government. the irregularities and improprieties referred to in the findings as contained in the report, point to the conduct of certain officials of the government departments involved and cannot be ascribed to the president, the ministers involved or cabinet. there are therefore no grounds to suggest that the government’s contracting position is flawed”. however, subsequent investigation by the directorate of special operations found that mr. schabir shaik committed corruption during the awarding of the tenders and was found guilty and sentenced to 15 years of imprisonment (montesh, 2007, p. 130). the two conflicting investigations drew criticism to the role and functions of the public protector. 204 on top of the mercedes benz is mr tony yengeni, the former african national congress chief whip who was convicted of fraud and corruption after he obtained 50% of the same vehicle as part of his reward for his part in the “arms deal”. on the right hand side are the two former south african national defence force generals (general sphiwe nyanda and general roelof beukes) who also got massive discounts from daimler chrysler for their roles in the “arms deal” and in front are german representatives who were implicated in the “arms deal scandal”. (source: www. udm.org.za). challenges duplication of functions in 2001, the south african public service commission commissioned a review of south africa’s national anti-corruption agencies. the commission found that there were serious duplication of functions between the public protector and the public service commission. such duplication is found in section 196 (4) of the constitution act 108 of 1996 read with sections 8, 10 and 11 of the public service laws amendment act 13 of 1997 which states that “the main functions of the public service commission are to promote the values and principles of public administration; to investigate, monitor and evaluate the organization and administration and personnel practices of the public service; to advise national and provincial organs of state regarding personnel practices as well as reporting its findings and recommendations to the national assembly”. these are the same functions of the public protector as outlined in sections 7 and 8 of the public protector act 23 of 1994 read with section 182 of the constitution act 108 of 1996. therefore, there is a thin line between the two sections of the constitution. if so, then there is no need to have the two institutions because this amounts to waste of taxpayer’s money. lack of power and authority to enforce findings one of the criticisms leveled against the south african public protector is the lack of power and authority to enforce findings. the current arrangement in the constitution and in the public protector act does not allow the public protector to take any institution to court for failure to implement its findings. such an arrangement 205 renders the institution ineffective and is often called a “toothless dog” which does not bite. this is a serious concern to the author because the public protector is a very important office, yet it has not been accorded the same status and powers as the south african human rights commission which can take any individual or institution to court for failure to implement its recommendations. impartiality and independence one of the challenges facing the public protector in south africa is doubts about the independence and impartiality of the office holder. fombad (2001, p. 60) states that this has usually centered on the manner of their appointment, tenure, staffing, budgeting and other related matters. in terms of the public protector act 23 of 1994, the public protector is appointed by the president in conjunction with the parliament. since 1994, the incumbents have been political deployees from the ruling party. in addition, the public protector is accountable to the minister of justice and constitutional development. this arrangement is often criticized because although the incumbents have “resigned” from their political activities, they are always vulnerable to political interference. political deployment of cadres ever since the public protector was established in 1995, the office bearer (public protector) has been a political deployee from the ruling african national congress (anc). such an appointment tarnishes the image and the integrity of the office of the public protector. in most cases, complaints are registered against various government departments which are managed by ministers from the ruling party. this becomes difficult for the public protector to conduct a fair investigation because in one hand an investigation needs to be carried out in terms of the constitution, whilst on the other hand the public protector need to respect his/her political masters. as a result of this arrangement, the office of the public protector becomes a “toothless dog”. recommendations legislative reforms it is clear from the above discussion that there are serious legislative flaws within the south african public protector. it is therefore recommended that amendments in the constitution act 108 of 1996 as well as in the public protector act 23 of 1994 need to be made. in this instance, it is recommended that legislation creating the public protector should provide powers necessary to function according to international norms. this is in line with the recommendations of the report on the ad hoc committee on the review of chapter 9 and associated institutions (2007, p. xii). although the same report makes recommendations that “the failure of state departments and other organs of state to respond to recommendations made by the respective institutions should be pertinently brought to the attention of parliament”, such 206 a recommendation is insufficient because the parliament has no power to take such departments to court. this is a serious problem. legislation needs to be amended to make provision for the public protector to challenge government agencies in a court of law. by so doing, justice will be served to the victim of injustice and maladministration. appointments in terms of section 2 of the public protector act, “the parliament in accordance with the rules and orders of the parliament, appoints a committee for the purpose of considering appointments of the public protector”. this has so far proved to be ineffective because all the recommendations that have been made so far proved to be overpowered by the ruling party. therefore, it is recommended that a body like the south african judicial service commission which is used to identify and appoint judges be appointed to scan, screen, interview and make recommendations to parliament for the appointment of a public protector. such a body needs to given powers to challenge the parliament in case deviations have been made from the preferred candidate. this recommendation can solve political deployment. independence and impartiality independence is probably the most fundamental and indispensable value for the successful functioning of the public protector. generally speaking, independence describes a state of not being controlled by other people or things. the underlying rationale for independence in this context is that the public protector has to be capable of conducting fair and impartial investigations, credible to both complainants and the authorities that may be reviewed by the office of the public protector. in south africa, although the public protector is accountable to the parliament, it is an entity of the department of justice and constitutional development. therefore this arrangement dilutes the notion of independence and impartiality. it is recommended that for the public protector must be impartial, and should be independent from the department of justice and constitutional development. handling of corruption in the public sector one of the duties of the public protector is to investigate “improper dishonest acts, or omission or corruption, with respect to public money as well as improper or unlawful enrichment by public servants”. in essence all these acts are criminal offences (corruption). corruption means the giving or offering of a benefit to another with the intention of influencing them to commit or to do any action relating to their power of duty (snyman, 1992, p. 277). this definition covers aspects such as, donations and gifts, employment or contract of employment, any favor or advantage of any description, any right or privilege. all these acts are punishable in terms of section 10 of the prevention and combating of corrupt activities act 12 of 2004. therefore if this is the situation, then the public 207 protector is usurping the functions of the south african police service. the public protector has no power to arrest and detain suspected individuals. therefore the public protector’s efforts to combat corruption are ineffective. it is therefore recommended that legislative amendments be effected to remedy this situation. corruption must be removed from the mandate of the public protector. conclusion drawn from this evidence of the article, it is clear that office of the public protector has been in existence in south aica since 1978. from then up to now, the institution has gone through various stages of growth. however, one needs to highlight that in the last seven years since democracy was established in south africa, the public protector has been clouded with controversy. the arms deal joint investigation is a classical example where the findings of the public protector did not find any wrongdoing on the part of the politicians and government officials but a criminal investigation has proved otherwise. this is one of the reasons that the author believes that drastic reforms needs to effected as a matter of urgency into the way in which the south african public protector operates. south africa needs to urgently evaluate the current setup and bring about legislative reforms which will protect the individual from violations of their rights by the government, abuse of power, administrative errors, negligence, unfair decisions and maladministration. in addition, such legislative reforms must be able to uncover structural weakness in government administrative reforms. over and above, the office of the public protector must be able to enforce its decisions via a court of law. this will ensure that the findings of the public protector are not taken for granted. the appointment of the public protector needs a lot of attention. the current position where appointees have revealed a tendency of political deployment from the ruling african national congress, taints the credibility and independence of the office. references 1. akpomuvire, m., the ombudsman phenomenon in african states public services, nigeria: obafeni awolowo universty, 2007. 2. barron, c., ‘the judge was a pawn in pw’s cover up bid’, 1999, sunday times, insight from 25 april 1999, p. 4, [online] at: http://www.sahistory. org.za/pages/chronology/ thisday/1969-05-16.htm, accessed 12/08/2009. 3. brynard, p., ‘the advocate general: the south african ombudsman’, pretia: unisa. 4. de beer, m., who did what in south africa, jeppestown: ad donker, 1995. 5. fombad, c, m., ‘the enhancement of good governance in botswana; a critical assessment of the ombudsman act of 1995’, 2001, journal of southern african studies, vol. 27, no. 1, pp. 57-77. 6. fourie, s., the joint investigation into the strategic defense procurement packages of the south african defense force. pretoria: office of the public protector, 2003. 7. king report, ‘king committee on corporate governance’, institute of directors, 1994. 8. king report, ‘king committee on corporate governance’, executive summary, institute of directors, 2002. 208 9. montesh, m., ‘a critical analysis of crime investigative institutions within the south african criminal justice system: a comparative study’, 2007, dlit et phil in police science, pretoria: unisa. 10. public service commission report. 2001. public service commission. pretoria. 11. rees, m. and day, c., muldergate: the story of the info scandal, macmillan, 1980. 12. roherty, j.m., the state security in south africa. civil-military relations under p.w. botha., new york and london: me sharpe inc., 1992. 13. snyman, c.r., criminal law, only study guide for crl 100-e., pretoria: unisa, 1992. 14. south africa, ‘advocate general act 118 of 1979’, 1979, pretoria: government printer. 15. south africa, ‘constitution of the republic of south africa act 108 of 1996’, 1996 pretoria: government printer. 16. south africa, ‘interim constitution act 200 of 1993’, 1993, pretoria: government printer. 17. south africa, ‘ombudsman act 110 of 1983’, 1983, pretoria: government printer. 18. south africa, ‘public finance management act 1 of 1999’, 1999, pretoria: government printer. 19. south africa, ‘public protector act 23 of 1994’, 1994, pretoria: government printer. 20. south africa, ‘public protector amendment act 113 of 1998’, 1998, pretoria: government printer. 21. south africa, ‘public service act 103 of 1994’, 1994, pretoria: government printer. 22. south africa, ‘public service laws amendment act 13 of 1997’, 1997, pretoria: government printer. 23. south africa, ‘prevention and combating of corrupt activities act 12 of 2004’, 2004, pretoria: government printer. 24. south africa., ‘report on the ad hoc committee on the review of chapter 9 and associated institutions’, 2007, cape town: south african parliament. 25. united democratic movement, ‘arms deal joint investigation report: udm’s reaction’, 2006, [online] at http://www.udm.org.za, accessed on 28/07/2009. 54 abstract the article focuses on the issue of administrative structure and its development in a postcommunist context. the case of the estonian administrative system is analyzed. the article aims to find out how and why a decentralized administrative structure has formed in estonia. to fulfill this aim, the current organizational landscape of the estonian public administration is described and its trajectories of development over the 20-year period are discussed. the analytical framework of the article draws on organization theory and literature on post-communist transition. it is found that during the 20 years of regained independence, factors have combined in favor of specialization over coordination in estonia. first, the aim of overthrowing the legacy of centralized soviet public administration in combination with pressures of transition and the sectoral character of the eu accession process have contributed to the development of a public administration with strong ministries having a considerable leverage over the issues falling to their areas of governance. second, the neo-liberal worldview of estonia’s politico-administrative elite and its inclination towards a lean state and down-sizing have led to reluctance towards investing into coordinating functions and administrative development more generally. keywords: estonia, administrative structure, coordination, institutionalization, post-communist development. post-communist development of administrative structure in estonia: from fragmentation to segmentation*1 külli sarapuu külli sarapuu research fellow, chair of public management and policy department of public administration, tallinn university of technology, tallinn, estonia tel.: 00372-620.2661 e-mail: kylli.sarapuu@ttu.ee * the study was supported by the estonian target financing grant no. sf0140094s08 and by the estonian science foundation grant no. 7441. it has benefitted greatly from the cost action is0601 ‘comparative research into current trends in public sector organization – cripo’. transylvanian review of administrative sciences, special issue, pp. 54-73 55 1. introduction the focus of this article is on the administrative structure and its development in a post-communist context. the administrative structure has a vital importance in a state for it directs the way public policies are designed and implemented. organizational forms and their modes of operation create constraints on and possibilities for actors’ use of discretion and, as a result, shape their behavior in the policy process (christensen et al., 2007). changes in a state’s organizational structure may alter the balance between different values, shift the focus on tasks to be performed and increase or diminish the potential for political control (lægreid et al., 2008; egeberg, 1999). consequently, administrative structure has a critical role to play in the functioning of a politico-administrative system. the last few decades have seen a lot of reform effort directed at changing the administrative structures of states, both in the countries of ‘west’ and ‘east’. in the countries of central and eastern europe (cee), the structural reforms have been of an overwhelming magnitude. the radical shift of political regime from communism to democracy also necessitated changes in the institutional structures of the states. especially in the countries that were formerly part of the soviet union, the question was not so much about reforming the states’ organizations but building them up, as the structures assumed from the communist predecessors were inadequate and in some policy fields even absent. consequently, the cee countries faced the challenge of building up administrative institutions that would be able to fulfill their roles in a democratic policy-making and implementation cycle. among other things, it also meant reforming the mechanisms of cooperation and coordination in a situation where the communist party as a central coordinating power had lost its position. considering that most of the cee countries inherited fragmented administrative systems with a high number of individual organizations, many of them designed as single-purpose agencies (beblavý, 2002; goetz and wollmann, 2001), this was not an easy task. the article at hand focuses on the post-communist development of administrative structure in one of the cee countries – estonia. in estonia, a decentralized administrative system has formed during the 20 years since regaining its independence in 1991. in terms of structural development, estonia has moved from a fragmented system inherited from the soviet republic to a segmented system that relies on strong ministries supervising their areas of governance regarding both policy and structure. the ministries are rather small and their role is mostly confined to policy formulation. the implementation of the policies is carried out by various agencies under their supervision. such a decentralized arrangement has shown both considerable strengths and considerable weaknesses. on the one hand, there is clear accountability for certain policy fields, accumulation of professional knowledge, the possibility for relatively quick problem-solving and the need to spend fewer resources on central coordinating units. on the other hand, difficulties related to solving problems that engage several areas of governance have arisen as they defy clear responsibility and engage clashes between different agency ideologies. calls for a better horizontal integration of policy 56 sectors and for a whole-of-government approach have been voiced by social actors, the national audit office and other experts. most recently, the coordination problems have been underlined by the oecd (2011) review of estonian governance which résuméd that there is considerable room for development in terms of joined-up policy design and implementation. the aim of this article is to find out how and why such a decentralized administrative structure has formed in estonia during the 20 years of regained independence and transition to democracy. why has estonia’s post-communist administrative development advanced from a fragmented to a segmented system? to fulfill this aim, first, the current organizational landscape of the estonian public administration is described and analyzed and, second, its trajectories of development over the 20-year period are discussed. the analytical framework of the article draws on organization theory and literature on post-communist transition. the approach applied to the organizational change can be defined as ‘transformative’ (see christensen et al., 2007, pp. 165-175) – it is expected that changes in the structure of the public sector are born in a complex interplay between conscious and planned strategies of political and administrative leaders, cultural-historical features and reform pressures originating from the external context of organizations. at the nexus of these diverse factors of influence, transformations occur (christensen et al., 2007). the goal is to explain how they have combined in the case of estonian administrative development. the perspective adopted can also be termed institutional. the article attempts to find out how the estonian administrative structure has institutionalized – what kinds of working practices have become entrenched and why? the empirical part of the analysis is based largely on a research exercise started in 2008 with the aim to achieve an overview of the administrative development by mapping all events whereby full organizations have been established, terminated or reorganized at the center of the estonian government from 1990 to 2010. the mapping of events relied on the analysis of various documentation (legislative initiatives and their accompanying notes, records of discussion in the parliament riigikogu, newspaper articles, different surveys and analysis etc.) in which the content and explanations of reorganizing estonian government structures have been conserved. this knowledge has been complimented with information from other secondary sources on the organization of the estonian public administration and its development (audits by the estonian national audit office, reports by the ministry of finance, public service yearbooks etc.). the analysis of documented information has been further supported by informal conversations with key persons who have participated in the change processes at various points in time. 2. theoretical framework 2.1. administrative structure there is a growing amount of international academic discussion on the issues related to the administrative structure of states. a big part of the discourse focuses on the phenomenon of ‘agencification’, its nature and effects (for a comparative treatment 57 of cee and western european countries see van thiel, this issue). in their essence, these discussions revolve around the organizational architecture of states and the division of functions between different actors in the system. for the research interest of this article, the concept of ‘specialization’ is of central interest. agencification has meant increasing specialization of the state structures. also in the context of cee, it is relevant to find out how the specialization of administrative structure has been addressed in the process of transition to democracies. specialization can be analyzed along two dimensions – vertical and horizontal (christensen et al., 2007; egeberg, 1999; lægreid et al., 2008). the vertical specialization indicates how political and administrative tasks and authorities are allocated among organizations at different levels, i.e. between ministries and their subordinate agencies. in terms of process, it means a conversion of existing state organizations or functions into units that are organizationally further away from the central political authorities or the transfer of tasks to such units. the horizontal specialization focuses on how tasks and authorities are distributed among different organizations at the same hierarchical level, i.e. between ministries or among government agencies. horizontal specialization in terms of process means that existing organizations are split into smaller sub-units or that new organizations are founded at the same hierarchical level. in the context of a complex administrative structure, there is another side to specialization – it enhances the need for coordination (verhoest and bouckaert, 2005, p. 104). peters (1998, p. 296) refers to coordination as ‘an end-state in which the policies and programmes of government are characterized by minimal redundancy, incoherence and lacunae’. coordination becomes manifest in ‘instruments and mechanisms that aim to enhance the voluntary or forced alignment of tasks and efforts of organizations’ (bouckaert et al., 2010, p. 16). in accordance with the two dimensions of specialization, there are also two dimensions to coordination (bouckaert et al., 2010, p. 24). horizontal coordination appears between organizations on the same hierarchical tier within government, e.g. between ministries. vertical coordination takes place when higher-level organizations (e.g. ministries) coordinate lower-level actors’ (agencies) actions. new public management (npm) type of agencification reforms made manifest the negative effects of specialization. it has been discovered that agencification and npm’s narrow focus on organization level efficiency resulted in decoupled policy cycles, meta-organizational coordination problems and loss of states’ overall policy capacity (verhoest and bouckaert, 2005). ‘managerial efficiency was displacing political effectiveness’ (verhoest and bouckaert, 2005, p. 104). this trade-off led to a renewed emphasis on public-sector coordination. ‘re-integrating government’, ‘whole-of-government’, ‘joined-up’and ‘single’ government initiatives have brought attention back to the importance of coordination within the organizational architecture of states and its relevance for governments’ policy capacity (verhoest and bouckaert, 2005; see also christensen and lægreid, 2007; halligan, 2007). governments’ policy capacity is also something that countries of central and eastern europe have tried to 58 build up in the process of transition to democratic governance. among other issues, it has meant the need to deal with instruments and mechanisms that bind their public sectors together in a situation where the communist party as the supreme coordinating centre disappeared. whatever the results, the change of administrative structure has consisted of many smaller or bigger transformations that have led to the structural configurations present in cee countries after two decades of development. 2.2. administrative change in cee there are different factors that help to explain the specific trajectories of administrative change. basically, these explanatory factors can be grouped into three types: first, the conscious strategies of political leaders, second, the administrative culture and its understanding of the appropriate course of development (alias historical-cultural context), and third, environmental pressures, deriving both from international as well as national contexts (see christensen et al., 2007; peters, 1992). according to the transformative approach, changes in the structure of public-sector organization can be expected to be born in a complex interplay between these three factors (christensen et al., 2007, pp. 165-175). political structure, historical-cultural context and environmental pressures have also been seen to combine for change in the post-communist reforms of the cee countries (see e.g. armingeon and careja, 2008; crawford and lijphart, 1995; eriksen, 2007; goetz, 2001; hesse, 1997; meyer-sahling, 2009). these combinations have been invariably born in specific points in time – institutional arrangements are usually ‘a product of situation-specific compromises’ (olsen, 2009, p. 18). the factors combine at different moments in time to produce specific institutional formations. with regard to the historical institutional analysis that this article is in its essence, there are two central conceptions that must be taken into account. these are the concepts of ‘critical junctures’ and ‘developmental pathways’ (thelen, 1999, p. 387). the first denotes that there are crucial founding moments that send countries along broadly different developmental paths. the second points to the fact that further evolution of the structure is always constrained by past trajectories. for the cee countries, the end of the 1980s and the early 1990s were a critical juncture – a moment in time where fundamental change was possible and the basic rules of the coming order in the polity, economy and society were set (armingeon and careja, 2008). several authors emphasize the magnitude and complicatedness of the changes undertaken (see e.g. agh, 2001, p. 238; schmitter and santiso, 1998, p. 70). offe (2004, p. 502) has characterized the initiated transformation as ‘a revolution without a historical model and a revolution without a revolutionary theory’. at that time, a choice of different developmental pathways was possible. however, politico-administrative development has a strong inclination towards ‘path dependency’ (pierson, 2000), which means that the first years of post-communist transition were a time of critical decisions that established the basis for the future development. nevertheless, both the transformations of the first years of transition and the changes appearing in the 59 latter years of development can be expected to be born in the interplay of the three types of factors named above. it is just reasonable to anticipate that in different points in time they have different weight and combinations. the analysis of the cee post-communist development offers several periodizations trying to capture the temporal spirit of the transitions (see e.g. hesse, 1997; lippert et al., 2001; nemec, 2009). altogether, three general phases are manifest with regard to the content and drivers of administrative change. first, the initial phase of transformation (starting usually at the end of the 1980s or the beginning of the 1990s) was characterized by a radical break with the old legal, political, social and economic orders and the early formation of new structures. when stability increased, a more systematic approach both to economic and institutional reforms became possible. as hesse (1997) has convincingly argued, in the initial years of transition, public-sector reform was guided less by an assessment of the new requirements associated with political and economic change than by the intention to overcome the legacy of socialism. the demise of the communist system constituted a massive de-institutionalization of political and economic spheres (zubek and goetz, 2010). especially in the former soviet states, the question was not so much about reforming the states, but building them up as the structures inherited from communism were both inadequate and inappropriate. furthermore, the communist system of ruling left a legacy of institutionally fragmented administration. as goetz and wollmann (2001, p. 867) describe the situation in four central european states (bulgaria, the czech republic, hungary and poland): the central executives consisted of a very high number of ministries, including the sectoral ministries and other central agencies. many of the latter were formally attached to the office of the council of ministers, but operated largely autonomously. the central state apparatus was institutionally fragmented and specialized units proliferated. the same has been emphasized by beblavý (2002), who shows that the communist systems bestowed to their democratic heirs highly specialized administrations with a big number of individual organizations that were often based on a single-purpose agency principle. at the same time, these organizations were not part of a centralized, horizontally and vertically well-integrated hierarchy, as is often presumed, but of an amorphous system that endured thanks to accommodating both the party’s organizational and its members’ and administrators’ individual interests (beblavý, 2002). in the first phase of transition, the administrative changes can be expected to be driven most of all by the strategies of political elites with an aim to overcome the legacy of the previous system. in that, they were considerably assisted by different international donors who rushed in with financial help and consultancy right after the collapse of the communist regimes (see e.g. randma-liiv, 2005). secondly, with their request to join the european union, cee countries entered into a new period of development characterized by increasing adaptational pressures 60 from the eu. the pursuit of the eu membership is usually bound with the notion of ‘conditionality’ (see e.g. sedelmeier, 2008). conditionality reflects the presumption that the cee candidate states had to demonstrate administrative capacity and the ability to effectively apply the ‘acquis communautaire’ before accordance of full membership. conditionality allowed a considerable intervention of the eu in the administrative development of the candidate states. there were several mechanisms for that – besides gate-keeping also the provision of legislative and institutional templates, technical assistance, benchmarking and monitoring, advice and twinning (grabbe, 2003). however, it should also be noted that there were limitations to the potential impact of these mechanisms, too. these were related to the ‘aspects of uncertainty’ involved in the process (see grabbe, 2001, 2003). among others, there were no eu-wide rules or models of public administration, and the influence of the eu on the development of candidates’ governance patterns was limited by its own diffusion, partly owing to the diversity of its existent member states. nevertheless, as the accession coincided with the general administrative reform and the burden of adopting the acquis was significant, there are good reasons to expect the process to have transformative power (goetz, 2001; grabbe, 2001). not only because there was a considerable ‘misfit’ between the eu expectations and candidates’ administrative institutions (börzel and risse, 2003), but also because there were political and administrative elites present in cee motivated to ‘restore’ their country’s place in europe and to adapt to the eu-level pressures. drechsler (2005, p. 100) has even argued that the reforms geared to the increase of ‘administrative capacity’ have been primarily eu-driven in cee. third, with joining the eu (in 2004 for most of them), the international adaptive pressures resumed, and cee states found themselves in a new situation where they were on their own in deciding on the further development of their administrative systems. by that time, it should be possible to talk about cee countries as ‘normal democracies’. structural changes of this post-accession time can be expected to be born from a complex interplay between political strategies, historical-cultural convictions and environmental pressures without any of them having such a defining role as they did in the previous two phases. nevertheless, this last phase of development has seen the arrival of the global financial crisis that has put new and intensive pressure on governments to change, either for economic reasons in order to cut the costs of governing or for political reasons to change the economic policies that have been seen to contribute to the crisis. however, the reactions to the crisis can be presumed to be highly context-specific, and there is no one template for these reforms (peters et al., 2011). in the international environment, this last phase has also seen the renewed emphasis of coordination and ‘whole-of-government’ initiatives mentioned above. among other things, this has meant the re-strengthening of the centres of government (both political and administrative) for building coherence in policies and their implementation (bouckaert et al., 2010, p. 19). considering that the coordinative capacities of the centres of government were generally weak in cee (goetz 61 and margetts, 1999), the latter shift in the international rhethoric could be expected also to reverberate in the cee context. 3. the case of estonian public administration 3.1. description of the administrative system estonia is a small country with an area of 45,227 km² and a population of 1.34 million. in 2009, the estonian public sector engaged 26.6% of its employed workforce (statistics estonia, available at www.stat.ee, accessed on january 11, 2010). around half of the public-sector employees (51%, 72,410 people) were working in its state institutions and the rest in 227 local governments (rahandusministeerium, 2010). the workforce of eleven estonian ministries counted 2,448 employees (civil servants and support staff together), i.e. with the exception of the ministry of foreign affairs, which constitutes one large unitary structure with its foreign representations, there were 200 or less people working in most of the individual ministries. executive government institutions covered by the civil service employed just fewer than 20,000 employees all together. civil servants make up around 91% of the workforce of the central government institutions. the remaining 9% are technical support staff employed under labor law (rahandusministeerium, 2010).the small size of estonia was reflected in the size of its state structure. a central trait of the estonian administrative system is its reliance on ministerial responsibility. although ministries are small, they represent strong administrative actors that have considerable leverage over the issues belonging to their areas of governance. other coordinating centers in the system (the government office and the prime minister’s office, the ministry of finance) are equipped with restricted coordinating powers and, in addition, often constrained by limited resources. the role of the ministries is mostly confined to policy formulation while the implementation of the policies is carried out by various agencies under their supervision. in accordance with the ministerial responsibility, all public organizations are more or less directly subordinated to specific ministries, and their communication with the cabinet goes through the parent departments. consequently, it can be said that the estonian administrative structure is considerably specialized both in vertical and horizontal terms. agencies play an important role in the estonian state. they employ the vast majority of the public-sector employees and spend most of the state budget. as estonia is historically strongly rooted in continental european legal thinking (with a considerable german influence), its public agencies are usually also differentiated and categorized by their legal status. four types of agencies can be identified – (1) government organizations, (2) state agencies, (3) public institutions, and (4) private law bodies, with a central role for the state foundations. the first two of these can be classified as semi-autonomous bodies without legal independence, public institutions are legally independent organizations with managerial autonomy, and foundations fall into the category of private law-based not-for-profit organizations established on behalf of the government (van thiel and cripo team, 2009). see table 1 for an overview. 62 table 1: organization of estonian public administration 2010 type of organization number¹ legal status employment relationships staff/share² list/examples g ov er nm en t i ns tit ut io ns ministries 11 no legal personality civil service 2,448/3.4% education and research, justice, defence, the environment, culture, economic affairs and communications, agriculture, finance, internal affairs, social affairs, foreign affairs government organizations (boards, inspectorates) 27 no legal personality civil service 10,438/14.4% defence resources agency, data protection inspectorate, national heritage board, consumer protection board, civil aviation administration, veterinary and food board, police and border guard board, language inspectorate county governments 15 no legal personality civil service 608/0.8% harju, hiiu, ida-viru, jõgeva, järva, lääne, lääne-viru, põlva, pärnu, rapla, saare, tartu, valga, viljandi, võru other government institutions 9 no legal personality civil service 6,406/8.8% state chancellery, estonian national archives, prosecutor’s offi ce, estonian defence forces, prisons (5 units) state agencies 150 no legal personality labor law 8,672/12% estonian children’s literature centre, räpina gardening school, pärnumaa centre for vocational education, estonian literary museum, agricultural research centre, veterinary and food laboratory, haapsalu orphanage public institutions 21 legal persons, public law labor law 10,257/14.2% health insurance fund, unemployment insurance fund, defence league, auditing board, public broadcasting, national opera, national library, academy of sciences, public universities (6) foundations 66 legal persons, private law labor law 9,547/13.2% environmental investment center, estonian film foundation, estonian science foundation, enterprise estonia, north estonia medical center, russian theatre ¹ sources: ministry of finance; register of state and local government organizations, ministry of finance, available at http://register.fi n.ee/register/index.php, accessed on december 30, 2010. ² staff: total number of employees on december 31, 2009; in government institutions both civil servants and support staff are included. share: % of total workforce employed by the state institutions (72,410, including judiciary and legislative branch). source: rahandusministeerium 2010. first, government organizations are agencies that are financed from the state budget, operate under the direct supervision of ministries and do not have a legal personality of their own. together with ministries, county governments and a few other organizations, they form the group of ‘government institutions’. according 63 to the government of the republic act (gra), their main function is to exercise executive power – to perform state supervision and to apply the state’s power of enforcement. most of the government organizations have regulatory tasks, both in the fields of economic and social regulation. a list of these agencies is provided in the gra, in which also two specific types of organizations are described – boards (ametid) and inspectorates (inspektsioonid). the latter are supposed to have more limited tasks, concentrating on regulation and law enforcement, whereas boards can also have a role in policy elaboration. ministries with their subordinate government organizations form a well-defined core of public administration in estonia that is critical from the perspective of policy-making and using the state’s power of execution. the size of government organizations varies considerably (from 17 to 1,800 officials and an exceptional 7,000 in the police and border guard board), and they are often considerably larger than their parent departments. the government organizations are the only type of agencies in estonia covered by civil-service legislation. as the government organizations operate closest to the ministries, their autonomy is restricted more than is true for other types of agencies. the policy autonomy of government organizations is first of all determined by the legislation regulating their field of functioning. in some cases, there is a very high policy autonomy prescribed by law, especially for the economic regulators (e.g. competition board). second, state agencies (with the full name of ‘state agencies under supervision of government institutions’) are financed from the state budget, but their main function is not to exercise public authority (gra). these agencies are basically policyimplementation organizations that serve government institutions in the fields of culture, education, research and others. except for eleven social-service units (mostly orphanages) that are supervised by the county governments, all state agencies report directly to the ministries. although the scale of activities in this group is rather wide, there are some tasks that dominate; there are 33 museums, 69 educational institutions (secondary schools, vocational schools, institutions for pupils with disabilities etc.), several research institutes and a number of agencies providing support services to the ministries (it, accounting). state agencies form a very mixed group, and there is no common management structure prescribed. the autonomy of the state agencies can vary quite a lot depending on their task; there is more independence for some (e.g. schools) and less for others that operate closer to the parent ministries. third, public institutions are public organizations created by law (i.e. parliamentary decision) to serve public interests. issues related to their tasks, financing and functioning are normally addressed on a case-by-case basis. several institutions that have traditionally possessed considerable autonomy (e.g. public universities) or whose profession presumes the right to self-government (e.g. the estonian bar association, the estonian chamber of bailiffs and trustees in bankruptcy) belong to this category. besides these, four public foundations managing the assets of a specific purpose (e.g. health insurance fund, unemployment insurance fund) also have the status of public institutions. in accordance with the diverse nature of this type of agencies, their 64 steering and supervision varies considerably and is prescribed by the individual case laws. however, this category includes organizations that have traditionally enjoyed high autonomy. fourth, the state can establish or have shares in three types of private law bodies: enterprises, not-for-profit associations and foundations. the last-mentioned have an important role to play in the estonian public administration. foundations are not-for-profit entities whose purpose is ‘to administer and use assets to achieve the objectives specified in their articles of association’ (foundations act). of the 66 foundations established by the state, 45 are operating under ministry supervision. besides a few theaters and a couple of small research institutes and several medical institutions, there are a number of influential bodies in this group that the state uses to channel eu structural support to the estonian economy, infrastructure, environment and higher education (e.g. enterprise estonia, environmental investment center, foundation archimedes). in 2008, they managed 668 million eur in total assets. foundations have their basis in private law. differently from the other agencies, they are treated as a distinctive group and annually reviewed by the ministry of finance, which is responsible for administering the state’s assets. foundations’ management structure is prescribed in law; they have a supervisory board and a chief executive or a management board appointed by the supervisory board. the four types of agencies described above – government organizations, state agencies, public institutions and foundations – are not evenly distributed between different policy areas and ministries. the most populous field of governance falls to the estonian ministry of education and research; the high number of state schools make up for more than one third of all agencies (91 all together). the second largest policy field when it comes to agencification is culture, because of the high number of state agencies (mostly museums) and a considerable number of different foundations (60 agencies all together). together, the fields of education and culture oversee almost two thirds of all estonian agencies. in other areas of governance, the number of agencies is considerably smaller. for example, the ministry that by itself spent 45% of the whole estonian state budget in 2010 – the ministry of social affairs – supervises 17 agencies. nevertheless, with a few exceptions, in most policy fields, there are agencies from all four legal types. 3.2. functioning of the system as already argued above, estonia operates a decentralized administrative system where the responsibility for public policies and programmes lies with individual ministries, and such an arrangement is also supported by budgetary and strategic planning frameworks. however, the ministries are rather small and in everyday work rely very much on their subordinate agencies, where most of the professional knowledge is located. due to the constraints on resources (money, people, expertise), the ministries’ capacity to supervise and steer their subordinate agencies’ daily functioning is limited. from the ministries’ point of view, most mechanisms for steering 65 the performance of subordinate organizations are managerial ones; the annual budget of government organizations and state agencies is negotiated for and determined by the parent ministry, strategic workplans are coordinated by the ministries as well as the management of support functions. the general framework of vertical coordination relies strongly on ex-ante control mechanisms. regardless of the investments made into developing the strategic planning, ex-post control tools are often used as an ad-hoc reaction to specific problems. due to the complexity of the issues handled by the agencies (especially government organizations), their frequent monopoly of expert knowledge and limited resources of the ministries, the influence of agencies on policies can be very high. for example, in terms of vertical specialization, there are a number of organizations in operation with specific tasks allocated to them, but the mechanisms for vertical coordination are limited. in terms of horizontal coordination, problems due to the segmented system of public administration have become more and more evident. most of all, these are related to the decentralized arrangement of policy design and implementation. coordinating centers in the system are equipped with restricted coordinating powers and, in addition, often constrained by limited resources. the government office is mostly a technical support unit to the cabinet (although hosting units for eu coordination and strategic planning), and the prime minister’s office consists of a handful of people. the strongest mechanisms of coordination in the system belong to the ministry of finance, which is responsible for the budgetary process. such a decentralized system has effectively reproduced itself and has been reluctant in according coordinating powers to some central units. horizontal coordination mechanisms that have been built into the system (e.g. consultation of draft regulations, management of eu affairs) are based on network-type cooperation and in that way reinforce the central role of ministries in deciding over the policies falling to their areas of governance. decentralized decision-making also applies to the administrative policy. the limited central coordination of structural development has resulted in heterogeneity of organizational solutions, often not comparable or compatible with each other. for example, one of the latest issues taken up by the estonian national audit office (riigikontroll, 2010) addressed the regional representations of the government organizations, whose reform has been largely un-coordinated and has resulted in different definitions of the ‘regions’ (combinations of the counties) and region centers. similar heterogeneity is also manifest among the private law bodies of the state. the ministry of finance has attempted to use its coordinating power to foster the steering of the foundations according to the performance-management principles. individual ministries are expected to define specific goals that the foundations operating in their areas of governance have to pursue, to evaluate their achievement on a yearly basis as well as give their opinion in every annual report on the necessity of the foundations to be continued. however, the success of this attempt has been dependent on the line ministries’ capacity and willingness to do it and has varied to a great extent. 66 consequently, there is a call for better horizontal integration of policy sectors and for a whole-of-government approach. as has been recently pointed out by oecd (2011), the estonian administrative system has demonstrated ability to work in a ‘joined-up fashion’. however, it has shined more in times of crisis or when a more immediate policy response is needed than in ‘business-as-usual’ activities (oecd, 2011, p. 26). furthermore, the cooperation on these occasions has relied very much on personal contacts and informal networks. in order to transform the joined-up way of working into an every-day mode of operation, there is the need to make it part of the administrative culture (oecd, 2011). however, it takes the issues back to the administrative policy. the whole-of-government approach presumes that there are some shared values in the system, some standardization and a shared administrative culture. as peters (1998, pp. 298-299) has pointed out, shared values and organizational logics support coordination and make it more likely to appear without using authority or disrupting organizational routines. nevertheless, in estonia, also the civil-service system is decentralized, and there are few mechanisms that bind the cultures of different organizations together (e.g. the civil-service code of ethics could be mentioned here). the initiatives of creating more unity within the system have met with institutional resistance and have moved on only very slowly. so, the issues related to the coordination of sectoral policies cannot be solved without dealing also with the management of the administrative organization itself. to conclude, estonia operates an administrative system where the vertical and horizontal specialization has helped to enhance the micro-level policy capacity of single organizations, both ministries and their subordinate agencies. however, this specialization has not been balanced with coordination mechanisms that would foster the macro-level policy capacity of the government as a whole. why such a decentralized administrative structure has evolved in estonia and what have been the factors behind its development will be analyzed in the next section. 3.3. development of the system the research undertaken for analyzing the institutional development of the estonian administrative system shows that such a decentralized system has emerged and taken root in a combination of different factors. over the two decades of development, specific factors have combined in favor of specialization over coordination. the three general phases of cee development described above are also visible in the development of the estonian administrative structure (see also lauristin and vihalemm, 1997; tõnnisson and randma-liiv, 2009; viks and randma-liiv, 2005). in different phases, specific dominating drivers and motives for change appear. first of all, it is important to look at the basis from which the structural reforms started. estonia re-gained independence formally in august 1991. however, a major reform of administrative structure was already initiated at the end of 1989 as a part of aspirations to gain more independence within the soviet union. with the december 1989 act on the government of the soviet republic of estonia, a new ministry-agency 67 structure was created. the law stated that there were 17 ministries, a state chancellery and state boards and inspectorates under the steering of the government. to arrive at such a structure, in the first half of 1990, two existing ministries were abolished and ten ministries were established based on the previously existing state committees. many existing units were given new labels of ‘boards’ or ‘inspectorates’. the official restoration of independence in the following year led to a massive restructuring of the public administration. however, these reforms were already building on the changes initiated in 1990. structure-wise, the early reformers faced two central problems. first, the system inherited from the soviet republic was highly fragmented and consisted of a large number of executive organizations with no clear system of organization and subordination. second, several core functions of the state needed to be built from scratch (foreign affairs, defence) or reorganized completely (economic affairs). for example, at the beginning of 1990, there were only 12 people working at the ministry of foreign affairs (välisministeerium, 2002). furthermore, the division of functions between the local, regional and state levels had to be decided again. the regional level ceased to exist as a tier of self-government, and several of its functions were given to the central government agencies (see sepp and veemaa, 2010 for a further discussion). with respect to the organization of the executive branch, very basic questions came out from the discussions of that time – the debate revolved very much around optimal number and task portfolios of ministries and government organizations, as well as the subordination relationships between them (riigikogu, 1992a; 1992b; 1992c). problems were mostly seen to lie with various government agencies that, in spite of being placed in specific areas of governance, functioned rather independently and were formally subordinated to the cabinet, not individual ministers. at the beginning of the 1990s, both ministries and government organizations were reorganized actively, most of all through mergers and different kinds of successions. in this first phase of transition, critical decisions for the further administrative development were taken. for this article, reliance on a decentralized arrangement of policy design and implementation is of prime interest. it becomes clear from the research that the foundations to a segmented administrative system were already laid down in the initial stage of transition and the further development has followed this path. reasons for that can be found in the strategies of political leaders, the historicalcultural context as well as environmental pressures. the next sections discuss how they have combined in time. to begin with, there were several reasons for the choice of a decentralized system and reliance on the responsibility of individual ministries at the outset of the administrative reforms. first, in a situation where the communist party as a coordinating center had disappeared and a new state structure had been established formally with the adoption of the democratic constitution in june 1992, the whole system of governance was in its essence de-institutionalized. in such a context, the inception of new democratic coordination mechanisms and decision-making procedures was 68 necessary but extremely complicated. it was difficult to decide what was needed. furthermore, the high uncertainty, enormous workload and intensive time pressure of the early transition made the decentralized problem-solving approach seem like the only working solution. there was no time for coordination and consultation. last but not least, the aim of overthrowing the legacy of centralized and overwhelming soviet public administration meant that the political elite were very cautious towards all manifestations of centralization. consequently, a decentralized arrangement was deemed a proper solution. by the time estonia started to move towards the membership of the european union (the application was submitted in november 1995), initial stability had been achieved and the basic ministry-agency structure was agreed on. nevertheless, ‘simplifying’ and ‘downsizing’ the government machinery still stood high on the to-do list of the government (explanatory note to the draft act on the government of the republic, 1995), and, most of all, it was supposed to appear in the form of reducing the number of government organizations, as these were perceived to lead to a doubling of the number of centers of executive power next to the ministries. the aim was to reduce the vertical specialization of the administrative structure. on january 1, 1996, the new government of the republic act came into force that prescribed a decentralized administrative system with strong ministries responsible for specific areas of governance. although ministries were accorded more power for steering agencies in their areas of governance, the strengthening of the horizontal coordination mechanisms was much more modest and the attribution of coordinating power to some central units was avoided. the decentralized system had already institutionalized enough in order to reproduce itself. the latter was also reflected in the organization of the estonian national accession process, where the issues were divided between ministries according to their mandates and the coordination was based on the network type of cooperation instruments. such a solution strengthened again the position of individual ministries. furthermore, the sectoral approach of the eu itself cannot be underestimated. on the one hand, the eu’s competence in different sectors varies, so do the legislative procedures and decision rules applied (kassim, 2003, p. 87). on the other, the eu’s reliance on a sectoral approach in evaluating and supporting administrative development in cee has been noted (see e.g. jacobs, 2004, p. 322; dimitrova, 2002, p. 179). as a consequence, the estonian decentralized administrative structure was further institutionalized in the process of the eu accession. nevertheless, it is important to note that at the same time, it was also increasingly discerned in estonia that its public administration needs better mechanisms for coordination. therefore, although accession to the eu strengthened the decentralized architecture of the estonian state, it also helped to institutionalize coordination that is needed in a functioning democratic state. last but not least, due to the eu pressure, the previous policy of terminating government organizations (mostly through mergers to the parent ministries) was abolished and reversed in order to accommodate regulatory responsibilities in accordance with 69 the eu rules. also several new agencies were created in the form of private-law foundations. the accession process also increased the vertical specialization of the structure potentially creating new problems of coordination (see also suurna and kattel, 2010, for a more general cee discussion). such a decentralized administrative system as is present in estonia could not develop if it was not supported by the historical-cultural context or, in other words, prevailing values within the organization and its environment. the initial aim to overcome the legacy of a centralized soviet system was already mentioned. nevertheless, there is another aspect that deserves attention. the post-communist structural reorganization started at a time in history when the international environment was dominated by neoliberal definitions of problems and solutions for democratic governing. bruszt (2002) has brought out that in the initial years of economic reforms in the cee countries, the policies were basically shaped by the ‘washington consensus’, and the building up of regulative state capacities began long after the introduction of liberalizing measures. in the case of estonia, the seed of neo-liberalism fell on fertile ground and took strong roots. its reign has been supported by the political structure with two main parties carrying the worldview – pro patria union and the reform party – firmly institutionalized in the political landscape and with a long record of being in power. in their comparative analysis of administrative traditions of the three baltic states in 1993 and 2001-2002, nørgaard and winding (2005) concluded that out of the three, estonia was leaning the most towards the contractual state epitomized by the anglosaxon countries. furthermore, lauristin et al. (2005, p. 6) claim that also the estonian media have been oriented towards the liberal market economy and individualistic values. drechsler (2000, p. 269) finds that the ‘somewhat extreme libertarianism’ to be found in estonia is an ‘unsurprising reaction against the soviet past and finds resonance in estonian’s predisposition to individualism and to a historical distrust of the state’. although this neo-liberal mindset of the politico-administrative elite has also meant a high receptiveness to the ideas of npm (drechsler (2004, p. 391) even claims that estonia is ‘one of the cee countries closest to npm models’), with regard to the administrative structure the impact is not so straightforward. the reforms undertaken can rather be summarized as down-sizing and trimming of the system with agencification appearing mostly as a response to the pressures of acceding to the eu. nevertheless, this dominating neo-liberal worldview has had a strong influence on the way the state and its development have been perceived in estonia. the elite’s belief in the ‘lean’ state and the narrow focus on micro-level efficiency have led to the reluctance towards investing into coordinating functions (often discerned as ‘doubling’ the work) and administrative development more generally. as resumed recently by oecd (2011), ‘the apparent ambivalence of politicians and administrative leaders regarding reforms seems to reveal a lack of shared understanding about the role of the public administration for ensuring estonia’s future’. 70 4. conclusion estonia operates a decentralized administrative system. a central trait of it is its reliance on ministerial responsibility. such a decentralized arrangement has shown both considerable strengths and considerable weaknesses. on the one hand, there is clear accountability for certain policy fields, accumulation of professional knowledge and less need to spend resources on coordination. on the other hand, problems related to a segmented administrative system have become more and more evident – there are difficulties related to solving problems that engage several areas of governance, policies are not coherent, and solutions to the ‘wicked issues’ get postponed. the aim of this article was to find out how and why such a decentralized administrative structure has formed in estonia during the 20 years of regained independence and transition to democracy. the applied approach to the organizational change can be defined as ‘transformative’ – it was expected that changes in the structure of the public sector were born in a complex interplay between conscious and planned strategies of political and administrative leaders, cultural-historical features and reform pressures originating from the external context of organizations. the goal was to explain how they have combined in the case of estonian administrative development. it was found out that over the two decades of development, specific factors have combined in favor of specialization over coordination. this can be summed up in two points. first, the aim of overthrowing the legacy of centralized soviet public administration by introducing considerable decentralization, the following institutionalization of the decentralized system in combination with the sectoral approach of the eu and the organization of the estonian accession process in a way of dividing the issues between ministries according to their mandate have contributed to the development of a public administration with strong ministries having considerable leverage over the issues falling to their areas of governance. second, the neo-liberal worldview of estonia’s politico-administrative elite and its inclination towards a lean state and down-sizing as a measure to promote performance have led to the reluctance towards investing into coordinating functions and administrative development more generally. nevetheless, understanding the need for coordination has been accumulating in time, and with ‘whole-of-government’ initiatives being the international vogue, there is growing attention to it also in estonia. references: 1. agh, a., ‘public sector reforms, institutional design and strategy for good governance in east central europe’, 2001, studies in east european thought, vol. 53, no. 3, pp. 233-255. 2. armingeon, k. and careja, r., ‘institutional change and stability in postcommunist countries, 1990-2002’, 2008, european journal of political research, vol. 47, no. 4, pp. 436-466. 3. beblavý, m., ‘understanding the waves of agencification and the governance problems they have raised in central and eastern european countries’, 2002, oecd journal of budgeting, vol. 2, no. 1, pp. 121-139. 71 4. bouckaert, g., peters b.g. and verhoest, k., the coordination of public sector organizations: shifting patterns of public management, basingstoke: palgrave macmillan, 2010. 5. börzel, t.a. and risse, t., ‘conceptualizing the domestic impact of europe’, in featherstone, k. and radaelli, c.m. 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including the use of new technologies and social media – that top local administrators should acquire in order to develop a better relationship with their constituencies. the study is based on assessments of eight workshops conducted in romania and the republic of moldova with government spokespersons and top public administration managers, and on the most recent data on internet use and internet penetration in romania provided by internet world stats (2012) and by intellinews (2013). keywords: public administration education in romania, communication skills, communication management, relationship with media, new technologies. is there anybody out there? for a better communication between romanian public administrators and their constituencies tudor vlad tudor vlad senior research scientist, phd., associate director, james m. cox jr. center for international mass communication training and research, grady college of journalism and mass communication, university of georgia, athens, usa tel.: 001-706-542.5037 e-mail: tvlad@uga.edu transylvanian review of administrative sciences, special issue, pp. 189-195 190 during many training programs for journalists and/or government communicators in east and central europe1, discussions have often focused on the same complaints and concerns by both sides. journalists were often claiming that government officials were hostile to the media, unwilling to share the information, secretive or lacked communication skills. government officials were saying that journalists were lazy, superficial, biased or did not represent the public’s interest. what the participants in the programs usually concluded after three or four days of workshop was that, while local or central government entities and media do not always have the same goals, they can work with each other to the betterment of the public if both parties are honest and respect each other. modern public administration education has become a part of the academic curricula in east and central european universities only in the early nineties. public administration schools have experienced a significant development only after the fall of the communist regimes in the cee countries; after this moment they strived to develop in a similar way to their western or american counterparts (hinţea, 2013). post-academic training programs in public administration hosted by universities in east and central europe have been rare, and usually their goals have been narrow. an exception is the new program on communication management in the public sector, a partnership between the college of political sciences, public administration and communication at babeș-bolyai university, cluj-napoca, romania, the carl vinson institute of government and the cox international center, university of georgia, usa (făclia, 2013). as a result, most of the government sector employees in east and central europe, and especially romanian employees in the public administration sector haven’t had the opportunity to attend educational programs that fit the needs of their occupation or had the opportunity to enhance their professional development. one of the most important issues related to public administration organizations is their ability to communicate effectively with their constituencies. as with public administration education and training, romania has a very short history of communication education (coman, 2007). before 1989, there was only one school of journalism in the entire country and its courses were based on the communist doctrine. after the fall of communism, new journalism and communication programs were created within universities, but the quality of the education was uneven and courses on professional communication have been added only recently (vlad and balasescu, 2010). however, a potential advantage in the future for romanian graduates in public administration is that their programs are often hosted by colleges of political sciences, public administration and journalism, which makes it easy to incorporate into their curriculum communication courses. 1 for such a program in romania including both u.s. and romanian journalists and government spokespersons, see http://www.grady.uga.edu/coxcenter/activities/act_2001_to_2002/ act0102_16.php. for a program in the republic of moldova, see http://www.grady.uga.edu/ coxcenter/activities/act_2011_to_2012 /act1112_6.php 191 good communication skills are crucial for senior public administration employees. according to some studies (scudder, 2012), 90% of the job of a ceo is communication. though the job descriptions are not similar, there are resemblances between the work of executives in the private sector and the duties of top public administrators managers: their employees have to be motivated to do a good job, social groups and individual citizens need to believe that the organization operates ethically, and that the services that are offered are safe and reliable. senior public administrators communicate with their constituents in a variety of ways. they should always have in mind the principles of good communication. what they say has to be clear, concise, credible, and delivered with confidence (scuder, 2012, p. 4). as the central and local governments’ work is reflected in the media and mass communication channels, these become an efficient way to disseminate information to large audiences. as a result, understanding how the media function is of great value to public administrators. sigal (1973) argues that the larger the news organization, the more complex its characteristics of bureaucracy are. no matter the size however, every media outlet develops routines to generate stories. these ‘news routines’, as described by shoemaker and reese (1996), are the result of the limited human and financial resources of media entities that are used to select and produce stories from a vast amount of raw material that has the potential to become news. newspapers, television and radio organizations have created mechanisms to generate story ideas, a process that bantz, mccorkle and baade (1980) have called ‘story ideation’. these routines vary based either on the type of media (newspaper vs. television), on their size, or on the ‘news philosophy’ that the organization develops (becker and vlad, 2009). journalists assess information coming into the newsroom from a variety of sources such as telephone calls, other media, press releases, mail reporter tips, or information from police or firefighters. in television, an early decision by the news director or assignment editor about what is going to be in the newscast – except for breaking news – is important as tv crews cannot afford to produce many stories that will not be aired. the economic crisis in romania, as in many other countries, has negatively affected the media industry. advertising budgets have been cut, newspapers’ circulation has dropped, and many journalists have lost their jobs. as a result, the remaining reporters, editors and producers have more assignments and less time to create stories. public administrators who understand this process can take advantage of it. the probability for good press releases supplemented by professional audio or visual materials to make the news is higher than ever. press conferences scheduled three or four days in advance at times convenient to the media workers, along with an agenda and other informative materials distributed prior to the event, will be well attended. knowing the reporters’ assignments and sending the materials or calling the right person also are useful tips. during one training program in the republic of moldova with government communicators and one in romania with senior court clerks, the groups were asked to grade from 1 to 10 the quality of the media coverage of their organization by the 192 newspaper with the highest circulation and the tv or radio station with the highest audience in their city. two days later these same groups were asked to report if those media organizations had the same reporter assigned to cover their institution most of the times or the coverage was more random. 22% of the respondents did not know the answers. out of those who knew the answer, it was observed that the grades that had been given to assess the quality of the coverage by those who said ‘yes’ were much higher than the grades given by those who responded ‘no’. this is informative, though it is based on a small scale and non-probabilistic sample, both for the media and for public administrators. if this is the case, public administration organizations should identify whose journalists’ reporting has been more accurate and then constantly provide information to those news workers. some of the most influential local public administrators in romania have been called by the media ‘local barons’. many of them have not understood the role of the press in the society. as a result, they have perceived the local media coverage (which, in some cases, has been biased or less professional) as personal offense. in a polarized country like romania where media sometimes ignore the long-term impact of lack of credibility, there are occasions when media manipulate and are manipulated as well. however, the assumption that this is the norm is wrong. the attempt of some of the ‘barons’ to bribe or to intimidate journalists or media organizations has led to two negative effects: the citizens’ trust – both in their administration and in the local media – has dropped and consequently the local government leaders have weakened their most accessible channel to communicate with the constituency. it would be much better if top public administration managers understood the importance of accurate communication and hired professional communicators to create and carry their messages. the public’s negative perception of the government work and disbelief in the traditional media is not unique in romania. in the united states, gunther and schmitt’s research (2004) has demonstrated that traditional media were singled out for hostile assessments, and that those perceptions disappeared when the same content was attributed to non-media sources. gunther and liebhart (2006) used the same data to test the impact of the sources (journalist vs. student) and the recipient (media entity vs. classroom composition). the findings suggest that messages associated with larger audiences, such as a story published in a newspaper are more likely to generate a contrast bias, while a message in a smaller size context has the potential to lead to an assimilation bias. fortunately, newspapers, television and radio stations are not any more the only mass communication channels accessible to central and local governments (though the importance of radio in rural romanian communities should not be underestimated). the modern communication technologies have created new avenues to reach the audiences and get their feedback. though there are still many public administration units in the rural areas of romania that are not well equipped and the internet access in those regions is limited (mostly because people cannot afford to buy a computer), it is not too early to talk about the use of ict (information and communication tech193 nologies) in local public administration. some researchers claim that the digital divide (defined as a huge gap between internet users and non-users) will create additional problems in poor countries if the governments will use ict in their communication with the citizenry. the consequences, based on a study in africa, would be social exclusion, separation, and isolation (ochara-muganda and van belle, 2010). in europe however, it is a common belief that public services using ict will have a positive impact on citizens’ life standards and economic wellbeing (osimo, 2008). central and local public administration organizations have already opened the access to their databases to encourage the involvement of the citizens into the decision-making process acknowledging the role of the internet and social media in increased government transparency. a u.s. study found that 90% of local governments surveyed were using social media such as facebook and/or twitter to communicate with their citizens, and of these, 72% had an official facebook page overseen by the mayor’s office or by city’s communication office, a 22% increase in two years (hansen-flaschen and parker, 2012). there were 9,642,383 internet users in romania (44.1% of the population) by june of 2012. the percentage of users is divided almost equally among three age groups, 18-24, 25-34 and 35-45 (internet world stats, 2012). many local government units in romania have developed sophisticated web sites. it is difficult for the public administrators to persuade the public that it is worth visiting those sources. the belief that the governmental administration is a slow and opaque bureaucracy that is unwilling to develop an open and efficient dialog with the citizens is still alive in the minds of many romanians. that is why local governments in cities in romania need the communication skills to move one step further toward social media. this would provide public administrators four major potential advantages: participation, collaboration, empowerment, and time (bertot et al., 2010). participation and collaboration belong to the nature of these mass communication tools, being identified as interaction. the participants create communities based on their interest, exchange information and agree on specific goals. the empowerment comes from the online coalitions that distribute information and use these platforms to express themselves. social media also are time-effective and have the potential to become the main sources of information when traditional media ignore an event or an issue or are forced not to report on it as the arab spring has shown. the social media outlets have the potential to promote positive images of the public administration if used properly. romania still lags behind in the use of social media compared to the countries in the european union. the top five social networks in 2012, according to internet world stats (2012), were hi5 (3.5 million users), netlog (1.6 million users), neogen (1 million users), facebook (327,000 users) and myspace (170,000 users) (internet world stats, 2012). the numbers have grown exponentially however in recent years, and it is expected that this trend will continue. the number of households with broadband connection doubled in romania between 2010 and 2012, while between 2008 and 2012 the most spectacular increase (more than 30%) had been recorded in the czech republic, 194 romania and slovakia (seibert, 2012). the rural areas still lag behind the urban areas. nonetheless, the growth rate in rural areas in romania in 2012 was 22.2% compared to only 3.9% increase in the number of connections in urban areas (intellinews, 2013). it is always easier to be relevant in the new technology world by anticipating and acting early rather than reacting, so it would be better if new social media users in romania found from the beginning public administration dialog partners and sources of information. the categories of communicators that can be easily involved in an online dialog with public administration units are bloggers, community and citizen journalists. they are generally willing to participate in such debates as this is how they gain visibility. in a study of the new media market in one romanian community, the city of cluj-napoca, vingan (2013) found that bloggers wanted to differentiate themselves from the journalists working for local media, but were willing to compete against the local media in terms of audience. though it is a relatively new trend in romania, some bloggers, citizen and community journalists have the potential to become important public voices and good communication links between the local administration and local citizens, and this would be beneficial to all sides. with a recent and notable exception, the protest against the planned gold extraction at roșia montana, the youth in romania have been relatively silent in the public sphere. if this phenomenon is not desired by the central and local government, social media can be used by the administrators to invite and engage the younger generation in the debate of issues relevant to their communities. if this is accomplished, young technology-skilled people also can become a transmission channel of information to their older relatives. this is also true in rural areas where most of the households do not have computer access, but many of the middle or high schools have at least an internet lab. according to internet world stats (2012), school is one of the most popular places where people access internet, with almost 10% of participation occurring there. the mayor’s office, as an example, can invite the technology-knowledgeable students to help with the design and update of an information website for the community. in conclusion, romanian public administrators and their constituencies have to overcome a stereotype that has been in existence for many years: while publics have thought that employees of central or local governments had no desire to transparently communicate, public administrators have believed that citizens are passive and not interested to engage in a dialog. a good use of the traditional media and of the new communication technologies has the potential to improve the relationship leading to better management and more mutual trust. references: 1. bantz, c.r., mccorkle, s. and baade, r.c., ‘the news factory’, 1980, communication research, vol. 7, no. 1, pp. 45-68. 2. becker, l.b. and vlad, t., ‘news organizations and routines’, in wahl-jorgensen, k. and hanitzsch, t. (eds.), the handbook of journalism studies, new york: routledge, 2009, pp. 59-72. 195 3. bertot, j.c., jaeger, p.t. and grimes, j.m., ‘using icts to create a culture of transparency: e-government and social media as openness and anti-corruption tools for societies’, 2010, government information quarterly, vol. 27, no. 3, pp. 264-271. 4. coman, m., ‘global pattern and local experience: journalism education in romania’, in bohrmann, h., klaus, e. and machill, m. (eds.), media industry, journalism culture and communication policies in europe, köln: halem, 2007, pp. 187-205. 5. făclia, ‘program postuniversitar internaţional’, article published on october 25, 2013, [online] available at http://www.ziarulfaclia.ro/program-postuniversitar-international/, accessed on november 13, 2013. 6. gunther, a.c. and schmitt, k., ‘mapping boundaries of the hostile media effect’, 2004, journal of communication, vol. 54, no. 1, pp. 55-70. 7. gunther, a.c. and liebhart, j.l., ‘broad reach or biased source? decomposing the hostile media effect’, 2006, journal of communication, vol. 56, no. 3, pp. 449-466. 8. hansen-flaschen, l. and parker, k., the rise of social government, philadelphia: fels institute of government, 2012, [online] available at http://2012naspaaconference.wikispaces.com/file/view/social_media_2_promising_practices_final_web_version.pdf, accessed on october 14, 2013. 9. internet world stats, ‘internet penetration in europe’, 2012, [online] available at http:// www.internetworldstats.com/stats4.htm#europe, accessed on september 12, 2013. 10. hinţea, c., ‘public administration schools in romania: strategic choices for the future’, 2013, revista de cercetare și intervenţie socială, no. 42, pp. 294-309. 11. intellinews, ‘broadband internet penetration rate for romanian households hits 45.2% at end-2012’, 2013, [online] available at http://www.intellinews.com/cee-telecoms-media-it-newswatch-1208/broadband-internet-penetration-rate-for-romanianhouseholds-hits-45-2-at-end-2012-6052/, accessed on november 11, 2013. 12. ochara-muganda, n. and van belle, j., ‘a proposed framework for e-government knowledge infrastructures for africa’s transition economies’, 2010, journal of e-government studies and best practices, pp. 1-9. 13. osimo, d., ‘web 2.0 in government: why and how?’, jrc scientific and technical reports, european commission, joint research centre, institute for prospective technological studies, seville, spain, 2008, [online] available at ftp://ftp.jrc.es/pub/eurdoc/ eurdoc/jrc45269.pdf, accessed on november 12, 2012. 14. scudder, v., world class communication, hoboken, nj: john whiley & sons, 2012. 15. seibert, h., ‘internet use in households and by individuals in 2012’, eurostat, 2012, [online] available at http://epp.eurostat.ec.europa.eu/cache/ity_offpub/ks-sf-12-050/ en/ks-sf-12-050-en.pdf, accessed on october 13, 2013. 16. shoemaker, p. and reese, s., mediating the message, white plains, ny: longman, 1996. 17. sigal, l.v., reporters and officials: the organization and politics of newsmaking. lexington, ma: d.c. health, 1973. 18. vingan, a., digital communication. challenges in the new mass media in cluj, unpublished ph.d. thesis, babes-bolyai university, cluj-napoca, romania, 2013. 19. vlad, t. and balasescu, m., ‘few educators, many media and journalism programs: journalism and mass communication education in romania after the fall of communism’, in josephi, b. (ed.), journalism education in countries with limited media freedom, new york: peter lang, 2010, pp. 217-233. 5 this article examines the impact of the reformist agenda implemented in english local government since the election in 1997 of the first blair government. under 18 years of conservative administrations (1979-1997), english local government had survived what some described as a legislative onslaught which had been designed to direct, control and remove functions from local authorities. against this background, the first blair administration inherited a system of local government upon which it would depend for key policy implementation. however, many within the blair inner circles were deeply suspicious as to the motivations and capacity of local government to deliver on these key policies. the result therefore was a widespread overall of how local authorities were to be managed and importantly how they were to connect with their respective communities. as the article will examine, one of the key strategies for achieving blair’s objectives was to be, in terms of the uk, both a radical and controversial innovation. central to the blairite agenda was the introduction to the uk of the concept of a directly elected mayor. reforming local government in england: an examination of the blairite agenda dr. andy asquith professor, department of management and international business, massey university – auckland, new zealand transylvanian review of administrative sciences, 17 e/2006, pp. 5-15 context. the thatcher and major administration’s view of local government can be succinctly summed up by quoting a knowledgeable source in the form of a former cabinet member thus: “only about 25% of the electorate vote in local elections. and all they do is treat it as a popularity poll on the political leaders in westminster … nobody knows who their local councillor is. and the councillors know nobody knows who they are. or what they do. so they spend four totally unaccountable years on a publicly subsidised ego trip, handing out ratepayers hard earned money to subsidise lesbian awareness courses and borough pet watch schemes to combat cat theft. they ruin the schools, they let the inner cities fall to bits, they demoralise the police and undermine law and order.” a more academic interpretation is offered by wilson and doig who note: “successive conservative governments between 1979-97 viewed local authorities with considerable hostility, generally regarded them as inefficient, unresponsive and monopolistic bureaucracies.” (2000, p.58) against this somewhat negative view, we can contrast the optimistic stance offered by the then chief executive of a major metropolitan local authority in 1990 who ventured: 6 “we have a wider role to play in society which we have tended to neglect, other than our statutory conditions. we are not the sum of our strategic parts, because we are the only effective democratic voice of the local community. there is no other, and there is unlikely to be another … i mean i’m hoping that members will see that in due course, far from having their role diminished, they have a wider role.” a contemporary angle to this view is offered by wilson thus: “elected local government in the united kingdom is now one part of an elected mosaic of agencies concerned with community governance. in the past two decades its role has as a direct service provider has declined markedly. partnerships at local level have increased: elected local authorities now ‘share the turf’ with a wide range of non-elected agencies.” (2005, p.155) (emphasis in original) it could be argued that despite the inherent optimism contained in the chief executives words, he should nevertheless be considered to have been a visionary. indeed, at the time he made the comment, he was widely credited, along with a ‘new’ labour council (some four years before blair et al coined the term.) of taking a former traditional, victorian municipal corporation, transforming it into a ‘model’ local authority which won many plaudits. recognition for the success of the transformation – which blazed a trail for entrepreneurial local government embracing sustainable community development – came from across the political spectrum – and to some extent served as a ‘test bed’ for some of the local government goals later championed by the blair administration. the conservative legacy. it is generally agreed that following the election of the first thatcher administration in 1979, local government in great britain (and indeed the public sector as a whole) underwent, and in fact is still undergoing, profound change (flynn, 2002; hughes, 2003; isaac-henry et al, 1997; pollitt, 2003). indeed, as bennis et al (1976) and waterman (1988) observed, the 'only constant is change'. quirk (1991), then assistant chief executive of the london borough of lewisham, indeed argued that 'transformation' rather than 'change' is the appropriate term to apply to local government. despite quirk's (1991) qualifications about the extent and nature of the change experienced by local government, there has undoubtedly been a fundamental reappraisal of the nature and role of the public sector. traditional values, structures and practices have been challenged by models whose philosophical bases rest firmly within the private business sector. public administration has to some extent been replaced by public management, and even more fundamentally, services are now customer or client led rather than provider led (osborne and gaebler, 1992). flynn (2002) accredits much of this change to the rise of the ideas of the 'new right' within british politics, who gave intellectual rigour to the aspirations of the thatcher administrations. the agenda of the 'new right' contained four principal planks: the curtailment of the growth in public expenditure; a belief in the workings of the free market; enhancement of individual choice and the development of 'self-reliance'; and the ending of what they saw as the 'nanny state', meaning the targeting of resources to those groups in society deemed to be in genuine need of the welfare state's expenditure. although this paper is concerned solely with one specific arm of the public sector, the local government system in england, both the general features of the change process, and indeed the outcomes of the process, are equally applicable to the local government systems in scotland and wales, and indeed to other parts of the public sector. it can be argued further that the general findings are applicable to the public sectors in other countries. batley and stoker (1991), denters and rose (2005) and pollitt (2003), writing about the management of change in local authorities in different countries, all relay similar examples of the management of change to those identified in this study. in order to get an adequate grasp of this change process, it is necessary initially to examine the major 7 changes that have affected local authorities before the actual management of change process can be addressed. the real extent of the conservative governments reform agenda can be seen in the fact that in the uk between 1979 and 1997 there were 210 acts of parliament which were directly concerned with the activities of local authorities (wilson and game, 2003). such an active legislative agenda led davis (1988) to suggest that local government was in effect 'under siege', whilst wilson and game (2003) observe that the ability of local authorities to comprehend and accommodate wave after wave of change represents a fundamental cultural shift for them. indeed, the ability of local authorities to encompass such a concerted period of intense change, all the while retaining their respective corporate identities, speaks volumes for the qualities exhibited by both the elected representatives – the councillors, and of the calibre of managers recruited and retained by english local authorities. whilst it would not be appropriate in this paper to detail the minutiae of the conservative legislation, it is worth noting in a general sense the line of attack successive acts of parliament took in an attempt to emasculate local authorities – unsuccessfully in the eyes of the writer. indeed it might be appropriate to liken the relationship to the one enjoyed by the cartoon characters tom and jerry. no matter what pains tom (the conservative government) seeks to afflict on jerry (local government), tom never managed to ‘kill’ jerry – despite all his efforts. to a certain extent though, despite the obvious frustrations of conservative environment/secretaries (the uk cabinet minister charged with responsibility for local government) this situation was one deemed to be beneficial to central government. certainly in the uk, there has been a trend for the political composition of local government in general to be opposite that of parliament. hence during the period 1979-1997, whilst parliament had a conservative majority, local government was generally dominated by the other two main political parties, labour and the liberal democrats. hence, policies developed and implemented within local government deemed to be outside the accepted (central government) ‘norms’ or those committing to additional expenditure could be easily be blamed away on inefficient labour or liberal democrat regimes within local government. as such, there are a number of examples where local authorities were openly recognised to have been wasteful and woefully badly run – both politically and managerially – which were left to fester because it suited the cause of the conservative government. cases which jump out here are liverpool in the 1980’s; several inner london boroughs and hull city council – more of which later. as the majority of these failing local authorities were labour controlled, it is clear to see that blair et al, with their modernising, efficient new broom could not afford politically or practically, to allow this woeful state to continue to exist. hence, reform of local government was a very hot topic after labours election victory in 1997. the new labour agenda whilst in opposition between 1979 and 1997 the labour party vigorously opposed the legislation introduced by the thatcher and major administrations which was designed to reform local government. the labour party argued that this legislation was basically aimed at ‘neutering’ local government, and was being implemented by a conservative government which was bent on centralising state power. indeed travers (1996) observed that despite thatcher’s general anti-government, laissez-faire stance, her actions, towards local government at least, were more controlling and dictatorial than those exhibited by stalin. to a certain extent it can be argued that the position of local government was seriously weakened by this torrent of legislation. the ability of local government to raise revenue and then to spend it was effectively removed with the imposition of a system of universal ‘capping’. under the capping 8 regime, a complex formula was used by central government to determine exactly what each local authority needed to spend in order to provide a ‘standard’ level of service – a most unscientific, weberian process if ever there was one. further, it is now difficult to identify a single local authority department or service that remotely resembles what it looked like in 1979. yet, it can be argued that such ‘reformed’ departments and services were lucky. the conservative government actually resorted to abolishing certain authorities it felt were neither reformable nor necessary. hence, if you look at a map of local government in england, you will not find an authority called the greater london council (glc) nor one called west midlands metropolitan county council both were abolished in 1986, along with 5 other metropolitan counties. the glc was a particularly difficulty for the conservatives, with its leader, ken livingstone being a particular thorn in the side of margaret thatcher’s government. upon loosing his position as leader of the glc, livingstone subsequently became a london labour mp, and as we shall see later, upon blair’s victory in 1997, somewhat acrimoniously became the elected mayor of london, much to blair’s annoyance. despite such draconian actions though, the conservatives were constitutionally correct in their actions. the united kingdom is a unitary state, as such it has a single source of legitimate authority, the legislature, which of course consists of both the house of commons and the house of lords. hence, any legislation which is approved by both houses of parliament becomes law. when the labour government were elected to office in may 1997 they pledged to radically reform both the way in which whitehall related to local government and the ways in which local authorities operated. two themes underpinned the new labour agenda – continued managerialism combined with community engagement. once in office, the labour government was indeed quick to act. there was a realisation that a constructive relationship with local authorities was required if crucial manifesto pledges, specifically those relating to education, were to be achieved – blair had famously said that his key priorities were ‘education, education and education’. in a country where local authorities run the majority of the schools, local government found itself as a key tool of central government policy implementation. the importance of this new relationship was illustrated by the creation of a new whitehall ‘super’ department of the environment, transport and the regions (detr) which was headed by the deputy prime minister, john prescott. one of prescott’s first acts at the detr was to establish a ‘central-local partnership’ (clp) with the local government association (lga). the lga is the representative body of virtually all local authorities in england and wales. the aim of the clp was to involve the local authorities much earlier in the policy making process than has previously been the experience. it is worth noting that margaret thatcher’s epic policy disaster, the poll tax was embarked upon without any form of local authority consultation whatsoever. clearly, prescott was hoping to avoid thatcher’s mistakes. another theme in the labour manifesto in 1997 was a commitment to create a strategic elected authority for london, the greater london authority (gla) and an elected mayor, covering the area of the former greater london council. it was argued that of all the western capital cities, london was unique in not having an elected mayor. in it’s first year in office, the labour government produced a white paper on the issue. the mayor would be elected separately from the gla by the people of london. as such the mayor would have a separate authority or mandate from the people to that of the gla. despite this opening up the possibility of legislative/policy ‘gridlock’ similar to that experienced in the united states when different political parties control the congress and the white house – this has not been the case. a referendum was held on 7 may 1998 to coincide with elections to the london boroughs to ascertain whether or not support for a mayor of london and the gla existed. the outcome was an overwhelming ‘yes’ vote on both counts. the other interesting feature about the elections for 9 both the gla and the mayor of london is the electoral system to be used. for the first time on the mainland the ‘first past the post’ electoral system is being abandoned in favour of a hybrid form of pr which should ensure that the gla is a non-partisan body which is more representative of the voting intentions of londoners. the subsequent mayoral election in london saw the former glc leader and then labour mp ken livingstone elected to office, much to the annoyance of tony blair. livingstone had run as an independent, having been vetoed as ‘unacceptable’ to be the official labour party candidate. the prime minister ‘persuaded’ the then health secretary and london labour mp frank dobson, to resign from the cabinet to run as the official labour mayoral candidate. the outcome of the mayoral election was highly embarrassing to blair who in effect had livingstone expelled from the labour party. once in office however, livingstone proved to be a popular mayor, who despite the odd skirmish with controversy, appeared to have realised that his role was somewhat different to that as leader of the glc. in a humiliating reconciliation in 2004, livingstone was readmitted to the labour party prior to the london mayoral election to avoid him once again running as an independent and defeating the official labour party candidate who had spent the previous mayoral term as livingstone’s official deputy. in addition to the white paper on london, the beginning of 1998 saw the publication of no less that six green papers on local government. these consultative papers dealt with a range of issues. probable the most important one dealt with ‘democratic renewal’. the government was seeking ways in which local authorities could be increasingly seen as being of importance by the voting public, in that they (local authorities) have an important role to play in society. the uk has some of the lowest rates of turnout in local authority elections in the european union, with an average turnout of between 35-40%, compared to over 70% in general elections. the next highest figure is 54% in the netherlands, with 80% of germans and danes voting in local elections. the government was determined that if local government was to have any meaning to individual citizens, then they (the citizens) must perceive that it is important that they participate in the electoral process. it is often argued that apart from citizens seeing local government as having little influence over their everyday lives, citizens do not vote in local elections because they are concerned about the motivations and ethics of those seeking election to office the so-called ‘sleaze’ factor. indeed, in the late 1990s the labour party, both in opposition and in government was embarrassed by major scandals involving labour controlled local authorities in both england and scotland. the labour government was very keen to act to clean up such scandals and to prevent them from happening again. it therefore proposed the adoption of a new ethical framework for both local councillors and officials. whilst this new code is ‘voluntary’, there is a clear element of ‘adopt or else’ attached to it. new labour in action. a review of the literature generated by the blair agenda vis a vis local government demonstrates a three pronged approach based around management; performance and governance (hartley et al, 2002; newman et al, 2001, painter et al 2003; wilson, 2005; wilson and doig, 2000). these can be extrapolated to mean that blair believed in the need for strong management of public services which needed to perform and be seen to perform, in an environment acknowledged to exhibit and demonstrate the highest standards of governance and probity. there were an alarming number of local authorities whose activities were if not illegal, left a lot to be desired (collyns, 2002; hanlon, 2002; local government chronicle, 2002a; parsons, 2002; shaw, 2002b; simmon-lewis, 2002; triggle, 2002). where as thatcher came to power advocating the introduction of markets as a means of overcoming (as she saw them) the inefficient bureaucracies which delivered public services in the uk, blair’s 10 election saw him advocating a different mantra. whilst accepting the need for a strong managerialist streak in public service provision, this was intertwined with a belief in the values of public service – whereas thatcher could be described as anti-public service. blair’s vehicle for delivering his manifesto commitments entailed the use of ‘network’ arrangements to ensure effective implementation of ‘joined up government’ (pollitt, 2003). however underpinning this desire was a driving belief on a strong centre (i.e. whitehall) was needed to ensure delivery. blair’s approach to government was to be strikingly different from that seen before, and was termed the ‘third way’ – in that it was neither driven by traditional arguments from the political left or right. hartley et al sum up blair’s philosophy thus: “the ‘third way’ is a rhetoric intended to capture this fusion: neo-liberal economic policies combined with social inclusion and active citizen participation in governance.” (2002, p.388) critics of new labours reforming agenda in relation to local government are numerous, pointing to a strategy vacuum in a number of areas. painter et al (2003) points to the seemingly endless list of initiatives forced upon local government as whitehall seeks the optimal solution to any given issue – giving rise to the disease ‘initiavitis’. others point to the overly complex nature of the comprehensive performance assessment which requires a raft of detailed service inspections and creates additional bureaucracy for local authorities (lorimer and tahir, 2002). lacklustre local governance was clearly something which the blair administrations made clear would not be tolerated (wilson and game, 2003). from the outset in 1997, it was clear that public services would receive considerable new investment. it was stated unequivocally that this new investment would be made along stringent performance management criteria policed primarily by the audit commission, alongside a range of other monitoring agencies. signs of service failure or organisational weakness were not to be tolerated. whereas as noted above, it politically suited the thatcher and major administrations to have public service organisations which were deemed to be either failing or to have failed – such failure fuelled the drive towards privatisation – such failure was politically unacceptable to blair. effective, public services were central to blair’s agenda. as such, it was therefore essential that those organisation charged with service delivery did so in an efficient and economic manner. hence, whist local authorities began to operate in an environment which placed a new importance on their roles, this new central/local relationship contained fresh tensions. as hartley et al observed, these relationships are: “… less confrontational and more collaborative in its initial form, but which demands rapid improvements in the quality of public service and where government threatens to intervene very directly and forcibly if minimum standards are not met.” (2002, p.389) examples abound of new labour acting to correct these service or organisational failings. it was noted above that the conservatives let liverpool fester in a sea of mis-management in the 1980’s and a number of inner-london boroughs likewise in the 1990’s. upon entering office in 1997, labour acted with some haste to tackle such failings, supported by findings from the audit commission and a number of inspectorates. a number of devices were used to achieve the desire outcomes. in both leeds and bradford for example, the failing education services were outsourced to private contractors. elsewhere senior managers were displaced or had mentors from either the public or private sectors brought in to watch over them. in more serious cases, the entire management team of local authorities were displaced, as happened in walsall (shaw, 2002a). the case in hull mentioned above is one of considerable embarrassment to the government. apart from a short period of time, the cabinet minister with responsibility for local government since 1997 has been john prescott, the deputy prime minister. prescott is a member of parliament for hull, an old-fashioned right wing labour bastion. hull is most famous for its municipal controlled telephony system, the only one in the uk. for years the labour council had used profits from the telephone 11 system to subsidise the municipal coffers. this had led in effect to an one-party municipality, which in turn bred both managerial and political indifference and complacency. this situation came to a head in 2002 when a series of damning reports from the audit commission and the office for standards in education earned the city council the label as the worst in england. the council management was a mess and its schools delivered the poorest educated children in england (audit commission, 2002; office for standards in education, 2003). prescott quickly handed the file on hull to his deputy minister with instructions to sort out the problem. the issue came to a head when labour lost control of the city council in hull in 2002. the new liberal administration ‘leaked’ a previously confidential report from the audit commission which chronicled the organisational weaknesses and failings – particularly amongst the outgoing labour administration. the initial government response was to appoint a mentor, an experienced senior civil servant with a remit to essentially run the organisation until a time when it is deemed the organisation is in a healthy enough state to run its own affairs once more (local government chronicle, 2002b). later, a former local authority chief executive was appointed to fulfil this corporate governance mentoring role. one of the most damning elements of the report related to the bullying of officers by labour councillors. the controlling liberal group sought to tackle these organisational deficiencies by replacing the entire top tier of managers with a new elite team led by a newly recruited managing director. fast forward to may 2003 to the next municipal elections which saw a labour victory. on the day after the elections, the labour leader issued a warning to the top tier of managers, particularly the managing director, that if they did not perform, then their jobs are at risk – this from a man accused of bullying officers (humphries, 2002). a short time later, the managing director was suspended and eventually paid off with €250,000 (local government chronicle, 2003c). the shenanigans in hull still continues, with a new management team installed and the schools still ranked as the poorest performing in england – with follow up reports still indicating fundamental organisational weakness (audit commission, 2002b, 2003, 2004). constitutional reforms. if local authorities were to meet the challenges posed by the blair government, it was argued that the status quo on internal organisation which had existed in a largely unchanged format for over 100 years, had to be reformed. in a series of green papers (and subsequent white papers), which in turn became enshrined in the local government act (2000), local authorities were to transform their internal management by adopting one of three models. only those smaller district councils with less than 85,000 population were to be exempt (wilson and game, 2003). the three models were a leader with a cabinet (a la whitehall); a directly elected mayor with a cabinet or a directly elected mayor with a council manager (rao, 2003). as expected, the majority of councils opted for the leader and cabinet model, and only one authority opting for the mayor with a council manager model. however, it is the mayor with cabinet model which attracted the most attention. traditionally in england, each city, district or town council has had a mayor, this person has typically taken over the role of council chair for a year, and served as the areas ‘first citizen’. it is common for the mayor to be a councillor of many years standing, and the mayors chain is often seen as a reward for service to the community. the blair reforms though set out to fundamentally challenge the perception, driven along by group called the new local government network (nlgn). the nlgn is a group of elected (labour) councillors, academics and practitioners advocating fundamental change in local government, principally around the concept of an elected mayor. the leading academic proponent of the nlgn, gerry stoker has led the call for directly elected mayors since the early 1990’s (stoker and wolman, 1992). as an adviser to the labour government on local governance issues, stoker can clearly be seen as an new labour ‘insider’ with the prime ministerial ear. 12 the mayoral model was sold to an unsuspecting nation with a raft of extravagant sounding claims (sandford, 2004). these claims centred around the election of a figure who would be above the pettypolitics seen to characterise local government. there was also a hope that senior business figures or celebrities would seek the mayoral office – with richard branson of virgin cited as a possible candidate in london – which didn’t happen. this ‘super-politician’ would be able to act to achieve things on behalf of the populace, cutting through red-tape and bureaucracy. the whole idea seemed to hang on the premise that a mayor would almost depoliticise local government, and remove power from under-performing councillors. indeed, in an poignant article ‘if mayors are the answer, then what was the question?’, orr (2004) poses some searching questions about the whole (ill-conceived) mayoral question. perhaps the most telling of these is the use of internationally known ‘super-mayors’ – the most famous of whom is the former mayor of new york, rudi guiliani to ‘sell’ the idea to the nation. the supporters of elected mayors in the uk cited such examples, conveniently forgetting the fact that in the uk model, as outlined in the local government act (2000), the mayor has very little executive power, having to work with an elected council with whom legal authority rests. elsewhere, copus (2004) questions whether a mayor elected on a party ticket will remain loyal to that party when as mayor, his first loyalty should be towards the general community well-being, which may be at times put him at odds with his political party, both within the local authority and in the wider world. the first mayoral elections took place in 2002 and were an humiliating experience for the blair government. despite hopes and aspirations that business people, even celebrities might seek election as mayor, the first round of elections offered a somewhat different picture. it is indeed true that two ‘celebrities’ were elected as mayors – against strong labour party opposition. both middlesbrough and hartlepool in the north east of england found themselves with directly elected mayors in the form of robocop (ray mallon a disgraced former police commander) and h’angus the monkey (stuart drummond the wearer of the local soccer teams monkey suit mascot) – hardly the storming success predicted by nlgn (leach, 2002; parsons et al, 2002; shaw, 2002a). indeed, one leading academic commentator on local government noted that if these results didn’t encourage the government to abandon the mayoral drive, then nothing would. in may 2002, in total 11 local authorities elected mayors for the first time – for differing lengths of term according to their local electoral cycle. it is however very interesting to note, that off this wave of first time mayors elected since 2002, those who stood for re-election in 2005 enjoyed differing fortunes. whilst drummond/h’angus in hartlepool increased his majority from 603 to over 10,000, another pioneering independent mayor, mike wolfe in stoke-on-trent was defeated by a labour party candidate. elsewhere the labour mayor in doncaster saw his majority fall from 13,000 to under 8,500, and in north tyneside the sitting conservative mayor was narrowly defeated by a labour party candidate. hence, it would appear that from the evidence available that there is little to support the argument that when mayors are seen to be above traditional local politics, then their level of electoral support reflects this. the evidence elsewhere regarding the general public perception of the elected mayor issue us somewhat patchy – with no marked improvement in voter participation levels for mayoral elections – one of the key rationales for the model (sandford, 2004). indeed, it is worth noting that the march towards elected mayors is somewhat indifferent. in order to trigger a mayoral election, a local referendum must vote in favour of such an election (as was the case in london). the number of ‘no’ votes from such referenda actually outweighs the ‘yes’ results (rao, 2003). this can hardly be seen as an endorsement for the mayoral experiment envisaged by the new local government network, and it is argued that this was a direct result of the overall public apathy towards the elected mayor model (latham, 2002). 13 away from the media spotlight surrounding robocop and h’angus, it should be noted that the elected mayoral figure has not been a total failure. the london borough of lewisham, a long-time trailblazer of radical reform in local government, and an oft cited beacon of excellence in local governance, was in the first tranche of authorities to follow the mayoral path in 2002 (parsons et al, 2002). in lewisham the mayor is a very popular and public figure, with a higher visibility rating than any of the local mps. further, the mayor has successfully used his office to further enhance the well-being of the community within lewisham – exactly along the lines advocated by nlgn. the writer would suggest caution here though. lewisham has a long history of excellent leadership, both political and managerial which together form an environment within which the mayoral model would be expected to thrive (asquith, 1994, 1997). this though is not to negate the fact that such success does not just ‘happen’, it requires continuous energy from both managers and politicians to renew and invigorate relationships both within and outside the authority (bullock, 2003; quirk, 2003). the new constitutional arrangements clearly redrew the boundaries surrounding the officer/elected member interface. alongside these internal manifestations, were the changes brought about by the requirement of local authority managers to accommodate the concept of ‘joined up government’. hence, new skills were required to management both intra local authority relationships and inter local authority relationships. as such, painter et al observe that: “public managers with the requisite collaborative competencies and mindsets have been described as ‘boundary spanners’. this offers another vantage point from which to assess the transition from the classic bureaucratic form operating in the intra-organisational domain to the post-modern networking form operating in the inter-organisational domain.” (2003, p.39) the developments in political leadership outlined above have been significantly reinforced by events in 2006. firstly, four of the original mayoral cohort were re-elected to serve further four year terms in may 2006, in hackney, lewisham, newham and watford. of key importance in these reelections, all four mayors received more voter support than in their first election. there was also an overall increase in the level of citizen participation in the mayoral contests. interestingly in lewisham, a ‘flag ship’ mayoral authority, the rise in popularity of the labour mayor, steve bullock, was not matched in terms of electoral support for labour party candidates for the council. for the first time in over 20 years, the labour party lost control of lewisham council. this would appear to indicate that the mayor in lewisham was seen as being separate (and above) from the traditional minutiae surrounding local government. this was one of the key objectives outlined by the nlgn, and is seen as being a vindication of the pro-mayoral lobby. in addition to the mayoral electoral successes of 2006, the department of communities and local government, the whitehall successor to the detr, published a white paper in november which sought to radically extend the use of the mayoral model by compelling local authorities to move towards either a directly elected mayor or alternatively a directly elected council executive (department of communities and local government, 2006). further, the white paper argues that the new internal management arrangements should vest all the executive power of the local authority in either the directly elected mayor or the elected executive. this at a stroke would both assuage critics who complain that the mayoral model introduced in 2000 lacks real ‘teeth’ and would create local government leadership model which is similar to the one used originally to ‘sell’ the model to the public from 2000 onwards. it would of course, provide ammunition to critics of the mayoral model who argued that it undermines the concept of representative democracy in local government (latham, 2002). the implementation of these reforms will be watched with great interest. 14 conclusion. we can see from the evidence above that whilst new labour entered office seeking to effect a major policy change both in terms of its relations with local government and in the way local government acted as agents of change for the centre. however this has not always met with overwhelming success. whilst it would be easy to follow the old conservative line and simply blame local authorities for being hostile to change, and more conciliatory line is offered by painter et al when they note: “… given the conflicts and tensions in new labours modernisation programme, perhaps we ought to be less critical of local authorities when they are accused of dragging their feet and be more appreciative of the dilemmas they face.” (2003, p.34) within the new labour agenda lies the threat that rather than freeing local authority managers (and indeed public service managers in general) to get on with their respective tasks, what in fact the agenda might ultimately do is to rebureaucratise public services. the requirement to build and maintain a raft of network arrangements in order to deliver public services within the target driven performance regime within which they exist, carries with it a danger of recreating a corporate management structure so despised by blair and his acolytes. the somewhat historic account by cockburn (1977) of corporate management in lambeth should serve as a warning. local government in england is undoubtedly stronger now than it was under the thatcher/major administrations – not least because it exists now in a climate which accepts the need for (local) governments involvement in public service provision. indeed, local government resilience during years of conflict signifies this strength. what local government must do though is to rise to the challenges offered by the blair agenda. local government certainly seems to be aware of the opportunities offered to it, and generally speaking seems to want to exploit these openings to strengthen local governance in 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'private sector set to rescue the falling stars', local government chronicle, 07.06.02, 1. 41. stoker, g. and wolman, h. 1992. ‘drawing lessons from us experience: an elected mayor for british local government’, public administration, 70, 2, 241-267. 42. travers, t. 1996. ‘town hall turns red’, the society guardian, 11.12.96, 6-7. 43. triggle, n. 2002. 'walsall receives final warning', local government chronicle, 31.05.02, 5. 44. waterman, r. h. 1988. the renewal factor. london: bantam. 45. wilson, d. 2005. ‘the united kingdom: an increasingly differentiated polity’. in denters, b. and rose, l. e. (eds.), comparing local governance. basingstoke: palgrave. 46. wilson, d. and game, c. 2003. local government in the united kingdom (3rd. edition). basingstoke: macmillan. 47. wilson, j. and doig, a. 2000. ‘local government management: a model for the future?’, public management, 2, 1, 57-83. 115 abstract the paper explores the patterns of romanian ministerial control over executive agencies, based on the data collected in 2010 using the cobra survey. seven research questions were constructed starting from the major theories existing in the field aimed at describing and understanding the control patterns. the paper’s main conclusion is that ministries still prefer ex ante types of control in exchange to those after-the-fact, although some rather incremental shifts toward ex post control can be noticed. keywords: romania, autonomy, ex post and ex ante control, executive agencies, trust, rewards, sanctions, performance measurement, accountability. patterns of control in the romanian executive agencies: an exploratory research*1 călin hinţea adrian hudrea dan balica călin hinţea associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: hintea@apubb.ro adrian hudrea researcher, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: hudrea@apubb.ro dan balica researcher, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: dan.balica@apubb.ro * the research was also supported by uefiscu-cncsis, idei, grant no. 2595/2008, within the project entitled ‘decision-making models in the romanian public institutions at local and county levels’. transylvanian review of administrative sciences, special issue, pp. 115-139 116 1. introduction the creation of governmental agencies is probably one of the most studied manifestations of new public management (npm). seen as entities structurally disaggregated from the core governmental apex that operate under more businesslike conditions than their bureaucratic counterparts (van thiel, 2009), agencies were meant at increasing the general quality of public services by specialization (bouckaert and peters, 2004, p. 29) and simplification (world bank1, not dated), facilitating performance management (through performance contracting for example), deregulation (verhoest et al., 2004a), depoliticization (oecd, 2005) and by facilitating competition (peters apud bouckaert and peters, 2004, p. 29). moreover, it is considered that structural disaggregation will encourage innovation, adaptation and responsiveness (schick, 2002) and also will increase bureaucratic commitment to task accomplishment (christensen, 2009). still, as probably any decision concerning public issues, agencification is not a pareto optimal decision. the literature evokes some downsides to agencification, which vary from learning to be autonomous (schick, 2002), fragmentation of public sector (bouckaert, peters and verhoest, 2010; yesilkagit and van thiel, 2011) or deficit of democracy (christensen and lægreid, 2007, p. 20; papadopoulos, 2007). therefore, agencification, also known as autonomization, requires a special focus on the control-related aspects meant at maximizing the pros and minimizing the possible cons. following, the paper examines the theoretical framework of agency control and then approaches the issue related to romanian agencies. 2. why should agencies be controlled? when it comes to public organizations, control is fundamental for two main reasons: political and managerial. on the political side, control is meant at guaranteeing that democracy is safeguarded. in this understanding it is included the principal-agent paradigm: citizens elect politicians to represent their interests and politicians appoint bureaucrats to make sure that citizens’ needs are being addressed. without the control of the politicians on the bureaucrats, the democratic chain is broken and we are confronted with what is called a democratic deficit. the problem is that elected officials depend on the information their subordinates provide them and unless they have a strong corpus of advisors and inspectors, we are confronted with some sort of information asymmetry between the two parts (moynihan, 2006, p. 1033; christensen and lægreid, 2005; van thiel and yesilkagit, 2008; talbot et al., 2005). this deficit has the premises to be more significant when it comes to agencies where task specialization offers an information asymmetry hard to overcome. this ministerial incompetence is closely connected to the idea of failure to monitor and evaluate agency performance. 1 the label does not appear as such in the wb document. it was defined as such in order to facilitate the understanding of the logic behind the argument. 117 the political control deficit is an important critique of the agency model and of the npm movement at large (although the agencification process, as part of npm, generated most of the issues on this level – christensen and lægreid (2007), and an argument for measures aimed at limiting the autonomization process (new zeeland or australia are relevant examples in this sense). on the managerial side, control is needed to make sure that the objectives are attained (the classical managerial functions elaborated by fayol – planning, organizing, command, coordinate, control – or gulick’s posdcorb are of extreme relevance in this sense) and improvements are brought where they are needed. regarding this last statement, christensen (1999) makes a difference between the desired consequences of granting autonomy and the perverse effects they might generate. these perverse effects act both on the democratic dimension (bureaucratic exploitation of information asymmetry and bureaucratic politics, unresponsiveness and low accountability) and on the managerial one (budget maximization and slack maximization). because of these perverse effects, the control of agencies is justified. 3. what are the patterns of control faced by romanian agencies? one way of analyzing the alternatives that the principals have at their disposal for controlling the agents is by classifying them depending on the moment in which they take place. in this perspective, control can happen before the agency takes any action (before-the-fact) or after such situations. in the literature this dichotomy is known as ex ante and ex post control (thompson, 1993; epstein and o’halloran, 1994; verhoest et al., 2010; mccubbins, noll and weingast, 1987; de kruijf, 2010; eichenberger and schelker, 2006; huber, shipan and pfahler, 1998; aberbach, 1990). in the first scenario, known as ex ante control, the parent ministry controls the resources (inputs) the agency uses for accomplishing its objectives, the process for fulfilling its mission and the discretional decision making power the management has, by demanding prior approval for some type of decisions (or by possessing nullification rights), while the grounds for which the agency is held accountable are rule compliance, fairness and equity, and integrity. in some views (berry and gerse, 2010), structural aspects can also be included in ex ante control since, by means of structure, like assignment of the ceo or of board members, the principal ensure a before-the-fact form of control. in the second scenario, known as ex post control, the parent ministry liberates the agency from control over inputs or pre-established objectives or rules and regulations, but monitors the result the agent has and evaluates its performance, while the grounds of accountability are represented by the efficiency and effectiveness of its activity, its responsiveness and its overall performance. in theory, agencification demands a shift from the former to the latter (verhoest et al., 2004; christensen and lægreid, 2007) in line with the idea of freeing managers, as was evidenced by norman (2001, p. 68): liberation management concepts can be seen at work in a delegation of authority to managers, letting them make decisions about choices of inputs and staff instead of holding them subject to complex centrally driven procedure manuals. 118 following, these two large groups of control alternatives are described in more depth. 3.1. ex ante agency control as aforementioned, one alternative of controlling agencies is by providing the resources they need to fulfill their objectives. resources can vary from financial ones, to hrm and even material ones, if, for example, the agency cannot make acquisitions on its own. regarding financial resources, one way of using them as control mechanisms is by making agencies dependent, as much as possible, on the resources coming from the principal. in this respect, what matters is how much of the agency’s income comes from state budget and how much from alternative sources or it is self-generated. if there is a great level of dependency on the state budget, it can be argued that parent ministries can use financial resources to steer executive agencies by reducing or increasing the level of budget granted to the agency (verhoest et al., 2004; vershuere, 2006; verhoest et al., 2010; christensen, 1999). therefore, the more an agency depends on the state budget, the stronger the financial control it has to face. but financial control can be expanded by taking also into consideration how much discretion agencies have in deciding over aspects like setting tariffs and raising resources through taxes, shift between budgets or contracting loans (verhoest et al., 2004; barbieri et al., 2010; mcgauran, verhoest and humphreys, 2005). the latter are usually included in the larger framework of financial autonomy. at this stage we approach only the former understanding of financial autonomy, while the latter is approached later when analyzing the decision-making restrictions agencies face. but financial resources are just one type of resources an organization needs to fairly conduct its activity. staff represents another type, an even more important in anything but few opinions. because of this, controlling such an important resource would suggest that the ministries practice the so called hands on agency management (hood, 1991, 1995), in line with ex ante control. from this perspective, the parent ministry can control an agency’s activity by controlling the number of employees the organization has (eisner and meier, 1990). it is understandable that if, in order to better accomplish its objectives, an agency needs to increase the number of its employees, but cannot do this or can do it only with the ministry’s consent, the control it faces is fairly strong. control over personnel can be further operationalized in control over the employee’s salary, the career or evaluation policy, but at this stage we will focus only on the degree to which agencies can control the total number of their employees starting from these two input dimensions – financial and personnel – a first research question for the current study can be formulated. q1: how strong is the level of input control agencies have to face in terms of main sources of income and setting the staff policy? besides controlling agency inputs, the parent ministry can control the process that agencies need to follow to fulfill their objectives (mccubbins, noll and weingast, 1987; verhoest et al., 2004). at this level, the involvement of the parent ministry in aspects like choosing implementation instrument, target group and implementation 119 process can vary from none, case in which agencies solely decide on the mater, to full, when the parent ministry makes all the decisions, regardless of the organization. in the latter case in fact the level of process control the agency faces is total since it plays no role in this regard. but the extent of control the ministry exerts over the manner of task fulfillment is not the only criterion for judging principal control. the ministry’s involvement can be more or less generous in terms of scope. in other words, the ministry can set the manner of task fulfillment, but it can also decide (or not) which policy instrument should the agency use in fulfilling its objectives (lægreid, roness and rubecksen, 2005) or which part of the society should benefit from its activity (setting the target group) (epstein and o’halloran, 1994). starting from this, the second research question can be developed. q2: how strong is the level of process control agencies have to face in terms of choosing the target group, choosing the policy instrument and in deciding the manner in which the task is fulfilled? by merging the two, it can be observed that ministries can control agencies by restricting their access to the inputs they need to conduct their activity and by telling them how to fulfill their mission. but ministries can also demand agencies to consult them when certain decisions are made (epstein and o’halloran, 1994; langbein, 2004, p. 55). in this case the subject of control is neither the input, nor the process, but rather the discretion agencies have in making some decisions2. this also qualifies for ex ante control because it takes place before-the-fact, or before any decision is actually made and before any action is truly implemented. we will call this discretional control. moreover, in some interpretations (vershuere, 2007; verhoest et al., 2010, p. 25; berry and gerson, 2010) in the same category can also be included veto rights (or nullification rights) and the possibility to influence the decision-making process through agents, like board members. we subscribe to this interpretation because, as is the case for control over inputs or process, the control takes place before the result, in all cases the subject of control being the decision, itself, and not its results. starting from the above, a third research question is constructed. q3: how strong is the level of discretional control agencies face in terms of prior approval, veto right and agents of influence? last but not least, as was aforementioned, one way of ex ante controlling agencies is by structural means. this is not commonly included in ex ante form of control, 2 there is a thin line in this respect between the control faced by agencies regarding the policy process and that faced in reference to the scope of its decision-making competences. the latter case regards those situations in which agencies have decision-making abilities, whereas the former describes whether or not the organizations have such decision-making possibility. in other words, in order to face discretional control, you need to possess some decision-making powers. in any case, the two categories are not mutually exclusive, but rather complementary, the distinction being introduced mostly for the sake of analysis, to have a better insight of the profile of ministerial control agencies face. 120 but we adhere from this perspective to berry’s and gerse’s (2010) and epstein and o’halloran (1994) view, which do describe this as a form of ex ante control (berryand and gerse, 2010, p. 5): given the challenges of ex post monitoring (mccubbins and schwartz, 1984), the structure and process literature tends to emphasize ex ante restrictions that mitigate the informational advantage enjoyed by agencies and stack the deck in favor of certain interests to ensure the durability of the original bargain. one way of defining structural control is as the inverse of structural autonomy3. the latter, as christensen (1999)4 highlights, is determined by the presence of an intermediary board between the agency and the parent ministry (see also yesilkagit and christensen, 2010, p. 63; verhoest et al., 2004; painter and yee, 2011). this board will act as a buffer between the ministry and the agency head, increasing his autonomy. still, the mere presence of a board does not mean total structural autonomy. this board’s independence (defined as who appoints its members) and its relationship with the ceo (if it appoints the ceo and if the ceo is accountable before the board for its activity) are other variables in building a more comprehensive view on what is the level of structural autonomy (in the same vein, gilliardi and maggetti, 2010; berry and gerson, 2010). in other words, an agency faces a strong level of structural control if it has no governing board and the ceo is assigned and accountable before the parent ministry. on the contrary, an agency faces a low level of structural control if it has a governing board, whose members are assigned by other actors than the executive government and the board appoints the ceo, the latter being accountable for its actions only before the governing board. q4: what is the level of structural control that romanian agencies have to face? 3.2. ex post agency control the above questions describe the so called ex ante control agencies have to face, but as we previously mentioned, ministries can control agencies not only before-thefact, but also after decisions are made and actions taken. this is called ex post control and, as sulle (2010, p. 247) puts it, (…) can be regarded as a management process that consists of interrelated subsystems: a planning system (setting goals for agencies), a monitoring system 3 defining control as the inverse of autonomy is promoted also by verhoest et al. (2004, p. 106): ‘control is defined here as the mechanisms and instruments used by the government to influence the decisions and the behavior of the agency intentionally in order to achieve government objectives (white, 1991, p. 189) (…) in this view, control is clearly the inverse of autonomy, taking into account that autonomy and control both are multidimensional concepts’. 4 ‘structural autonomy, i.e., the insertion of either an alternative or a competing level of political supervision’ (christensen, 1999, p. 9). 121 (measuring agency performance results) and an evaluation system (where sanctions and rewards are applied). regarding the planning system, ex post control arrangements demand the existence of pre-established organizational objectives, against which agency performance can be evaluated. several aspects are of interest at this level. firstly, the actor that establishes the objectives; if these are set by the parent ministry than it is reasonable to assume that the agency faces a stronger control than in the case in which it formulated its own objectives. second, whether these objectives are measurable or not. effective performance management is dependent on measurable objectives (kaplan and norton, 1992). unless these objectives fulfill this characteristic, the de facto level of control the agency faces is weaker. planning is followed by monitoring, which takes the form of reporting5 and auditing arrangements. at this level what matters is not only if such arrangements are at work or not, but also how strong these are, one indicator of their strength being the frequency with which they take place. therefore, the more agencies have to report, the stronger the ministerial control. the more agencies are audited, the stronger the ministerial control. last but not least, the planning and monitoring systems, in order to be truly effective, need to be associated with reward and sanction systems (verhoest et al., 2004). therefore, in case the agency did fulfill or even overachieved its objectives, it receives some sort of benefits, while, on the contrary, in case it failed to do so, it faces some sort of sanctions. this ‘stick and carrot’ logic is translated into tangible consequences the conclusions of the assessment process described above. moreover, assuming that individuals tend to maximize the utility, they will be more sensitive to rewards and sanctions aimed at them than at those aimed at the organization, at large. in the latter case the possible benefits are exported to those that may or may not have something to do with the success, while the sanctions are being externalized on others, so the costs of failure are not fully born by those responsible. in both cases, responsiveness is lowered and so is the effectiveness of rewards and sanctions as control instruments. because of this we argue that the level of ministerial control is stronger for those agencies that face rewards and sanctions aimed at individuals rather than at the agency, since in this case the benefit/sanction is not diffused. moreover, since according to prospective theory (kahnema and tversky, 1979, p. 279) losses are weighted stronger than gains, we argue that the control an agency faces is stronger if sanctions are present. starting from the above, several questions need to be answered when it comes to romanian agencies. q5: how strong is the level of ex post control agencies have to face in terms of measurability of objectives and reporting and auditing arrangements? 5 epstein and o’halloran (1994, p. 698) include this in ex post arrangements. 122 q6: in what degree do agencies face reward and sanctions systems and are these aimed at the individual or at the organization? all the instruments previously described can, with relative certainty, be included in the so called dichotomy of ex ante and ex post control alternatives. but there is another form of control that, on its one, is somewhere in between, and that is the grounds on which the agency and the agency management are accountable before the parent ministry. it could be argued that this is an ex post instrument since it is based on after-fact assessments, but if the grounds of accountability are base more on legality and rule compliance and less on results, it clearly represents an ex ante control instrument. on the contrary, if the ceo or the agencies are held accountable for the efficiency, effectiveness or responsiveness, the accountability offers a clear sign of ex post preferences (verhoest et al., 2010). therefore, a seventh research question can be formulated. q7: are the grounds on which the agencies are held accountable more characteristic to ex ante or ex post control? these would be the main facets of agency control. following, by answering the questions that were formulated, we intend to find out what is the pattern of control romanian agencies face. is it more ex ante or ex post focused? did a shift from before-the-fact to after-the-fact control take place, as the classic agencification model suggests? in this respect, these are the two central questions our present study strives to answer. furthermore, we are interested to see how much the different types of control agencies face vary in terms of agency size, defined as full time employees (fte), agency task (policy formulation, development and advice; regulation, scrutiny, control and inspection; other kind of exercising public authority; providing general public services – cobra, 2010) and agency structure (defined by the presence or absence of a governing boards). the latter therefore represents both an independent and a dependent variable (berry and gerse, 2010; verhoest et al. 2010). the conclusions are aimed at representing the grounds of future analysis of patterns of autonomy and control of romanian executive agencies. 4. data and methodology the findings highlighted in the present study are based on the cobra survey (cobra, 2010) that was carried in romania in 2010. the survey targeted 125 romanian executive agencies. the response rate was 36.85 % (46 agencies answered the cobra questionnaire). in order to differentiate between executive agencies and other forms of public organizations the following criteria were used to select the public entities that would participate in the study as executive agencies (adapted after pollitt and talbot, 2004): 1. structurally separated from the main hierarchy of the ministry (defined as separate legal personality); 2. carries out tasks at the national level; 3. not commercial activity; 123 4. not totally independent from its ministry from a legal standpoint (subordinated to the executive, not the parliament); 5. vested in public law (either law or other governmental act); and 6. staffed with public employees. 5. data analysis q1: how strong is the level of input control agencies have to face in terms of main sources of income and setting the staff policy? 5.1. financial control this dimension, as was previously stated, describes the level to which agencies depend on transfers or allocations from other government bodies to accomplish their tasks. the more an agency depends on such resources, the stronger the financial control the organization faces. this dependency can be used, theoretically, by the parent ministry to steer the agency in the direction it pleases, therefore reducing its de facto autonomy. based on the cobra survey methodology the following alternatives were constructed: category 1: the agency is solely funded by some kind of transfer/budget allocation/ subsidies from governmental bodies category 2: the agency has a mixed funding, but mainly represented by some kind of transfer/budget allocation/subsidies from governmental bodies category 3: the agency has a mixed funding, but most of its income comes from other sources than transfer/budget allocation/subsidies from governmental bodies category 4: the agency is solely funded by other sources of income therefore, the further an agency is from category 1, the lower the financial control it faces. on the contrary, the closer an agency is to category 1, the higher the financial control it faces. how do romanian agencies present themselves from this perspective? figure 1 offers a first insight on the issue. source: authors’ calculations figure 1: agency sources of income 124 almost half of the responding agencies are solely funded by some kind of transfer/budget allocation/subsidies from governmental bodies, suggesting therefore that they face a high level of financial control. moreover, for over 80% of agencies, governmental income sources represent the main funding. in other words, from a financial perspective, most romanian agencies face a high level of control. regarding the level of financial control and agency characteristics as size, task or structure (defined as presence or absence of a governing board), several aspects were noticed: it appears that there is no difference between the level of financial control agencies face based on task or size. there seems to be though a difference between agencies that have and agencies that do not have a governing board in the sense that those that do have a board tend to be less dependent on government sources then agencies that do not have a governing board, although most of their income still comes from government sources. one possible explanation for this situation could be the presence of representatives of other actors in the agencies’ board. these board members could bring extra sources of income for the agency. we do not have specific data to test this but we did noticed that, for example, out of the six agencies that are solely financed from other sources than the state budget, two cases include in their boards representatives with voting rights coming also from other government levels. still, further investigations are needed to see if there is a real and significant connection between the level of financial control agencies face and their board membership. 5.2. staff control as was said before, financial resources represent only one alternative of controlling the agency by inputs. the principal can also control agency staffing and by this directly influencing its activity6. at this level we were interested to see in what degree the parent ministry keeps control over the agencies’ employment policy. the following were noticed: less than a fifth of responding agencies can set the number of staff it needs while the majority can do this, but only with prior approval from the parent ministry. from this perspective agencies face an average towards strong level of ministerial control since most of them cannot do this or can do this only with prior ministerial consent. there is no difference from this perspective between agencies depending on structure, size or task. 6 the cobra survey included a question aimed at assessing the level of autonomy agencies have in setting the staff number (under budgetary limits). the question had three possible answers: yes, the agency can set the policy regarding the agency staff, yes, but only with prior approval, and no, it cannot decide on the matter. the question was designed to assess the level of autonomy, not necessarily the level of ministerial control. because of this, not being able to decide on setting the policy regarding the agency staff does not directly imply that the ministry can. it only suggests that de decision-making power lays somewhere else. but the second answer choice (yes, but with prior consultation of the parent ministry) suggests ministerial control on this type of organizational input. 125 q2: how strong is the level of process control agencies have to face in terms of choosing the target group, choosing the policy instrument and in deciding the manner in which the task is fulfilled? the cobra questionnaire asked agencies to answer who has the leading role in setting the target group, policy instrument and in deciding the manner in which the task is fulfilled. regarding the setting of target group, in the large majority of cases (73.9%) parent ministries either do not get involved whatsoever (10.9%) or they intervene in a small degree, by demanding prior consultations from the agencies’ behalf (63%). therefore, agencies face a rather low average level of ministerial control when it comes to setting the target group. the same trend was noticed also in reference to the level of ministerial involvement in the setting of the implementation instrument. in 67.4% of the cases the ministry either does not get involved (10.9%) or, as the previous case, demands only prior consolations (56.5% of cases). therefore, again, agencies face a rather low level of ministerial control. things are even more radical when it comes to deciding the manner in which the task is fulfilled. in this case, in 91.3% of the cases agencies either take this decision themselves (23.9%) or the ministry demands only prior consultations, but lets the agency to decide on the matter (67.4%). in no case does the ministry, solely, decide the manner in which the task is fulfilled. there is no statistical difference between agencies that have and those that do not have a governing board in terms of process control on all three variables (instrument, manner of fulfillment or target group). the same were observed also in reference to agency size. there was a difference noticed, though, between agencies with different primary task when it comes to choosing the policy instrument. it appears that agencies that have as primary task benefit from the lowest level of control, while those responsible for other kind of exerting public authority face a tougher control. overall, primary task explains about 32.6% (eta2) of the difference between groups of agencies with different tasks. no differences were noticed though between agencies with different tasks in selecting the target group or choosing the manner in which the task is fulfilled. source: authors’ calculations figure 2: agency employment policy 126 the results suggest a rather hands off ministerial attitude regarding procedural control over agencies. even though in the large majority of cases prior consultations are needed, the decision is taken by the agency not the ministry. this is especially valid for choosing the manner of task fulfillment, the dimension which is consider as being the most sensitive to ministerial control (verhoest et al., 2004, p. 109) q3: how strong is the level of discretional control agencies face in terms of prior approval, veto right and agents of influence? discretional control is seen as that specific form of control in which agencies do possess the capacity to decide on certain matters, but their discretion on the matter (or scope of their decision) is restricted by specific means, like the need to ask the ministry for its point of view, the possibility to influence the decision itself through influence actors (like board members or other kind of agents) or by threatening to nullify the decision. in all these cases, the agencies do possess the right to decide but this right can be more or less restricted by the parent ministry. in order to see if such restrictions are at work, agencies were asked to tell if, in their specific case, parent ministries have veto-rights, demand to be consulted before certain decisions are made, or influence the decision-making process by internal agents. first, regarding the degree to which the parent ministry has veto right on organizational decisions, in 50% of cases the parent ministry has such powers. this suggests an average level of discretional control. second, when it comes to influencing the decision-making process through internal agents (the cobra discriminated between board members with voting rights and other ministerial agents) in 54.3% of agencies, the parent ministry does use agents to steer the decisions as desired. moreover, in 10 cases (22.2%) even though the principal does not influence the agency using inside agents, it does have nullification rights. overall, this means that in 76.5% of cases the parent ministry does exert some sort of influence through agents or nullification rights. discretional control also refers to those cases in which the ministry lets the agency to decide on certain aspects, but requests the organization to consult it before making any decisions. requiring before-the-act consultation represents, from where we stand, a clear sign of control the ministry exerts on the agency and a limitation of its decisionmaking competences (or autonomy). the cobra survey included several questions regarding human resource management and financial management autonomy and these questions ask the responding agencies to say if they can make those decision or not, and if they can, with or without prior consultations with the ministry. on most aspects related to setting hr policies, like deciding on salary, promotion, evaluation, appointment or downsizing policy, the majority of agencies have decision-making powers (except setting the salary policy), and, except deciding on matters regarding the downsizing policy, the ministry, as a general rule, prefers not to demand prior consultations. the table below shows on which dimensions parent ministry tends to demand more often prior consultations. 127 table 1: agency discretional control policy no. of agencies that candecide on the matter (t1) no. of agencies that can decide on the matter, but after consulting the ministry (t2) % t2/t1 salary 22 14 63.6% promotion 33 16 48.4% evaluation 36 6 16.6% appointment 37 11 29.7% downsizing 31 26 83.87% source: authors’ calculations it seems that the lowest level of ministerial control regards the evaluation and appointment policy, while the strongest control is kept on the salary and downsizing policy. this makes sense considering the budgetary impact these decisions usually have and the rather political salient character of downsizing. if we corroborate the results with what was observed at q2 (that most agencies can decide on those matters but after consulting the ministry), it can be concluded that, overall, agencies face a rather strong ministerial control. q4: what is the level of structural control that romanian agencies have to face? at this level several variables are of interest, as was specified above: whether the agency has a governing board or not? who appoints the board members? who appoints and evaluates the ceo? regarding the first dimension, presence of a board, 37% (17) of agencies have a governing board while 13% have an advisory board; all in all, half of agencies have some sort of structural buffer between the parent ministry and the organization. still, when it comes to the strength of this buffer, the data suggests that structural control is rather strong. first, only 37% of agencies have a governing board, which means that in only 37% of cases the board has decision-making powers related to the agency. second, out of these 37%, in 64.7% of cases the board members are assigned by the parent ministry, suggesting therefore that even if the board has decision-making powers, it is still very exposed to ministry interventions. moreover, as the cobra data shows, 76% of agencies that declared as having a governing board also declared that the parent ministry uses its board members to exert influence on the organization. in none of the cases the board assigns the ceo (see below). table 2: ceo appointment who appoints the ceo? percentage 1. the government or minister 82.6% 2. the government or minister, after nomination by or consultation of the board or of the organization itself 6.5% 3. another actor 10.9% source: authors’ calculations 128 as it can be noticed from table 2, in 82.6% of cases the government or the ministry assign the agency ceo. this suggests a high level of structural control that the executive agencies have to face. if we add the fact that in 78.3% of cases the agencies are evaluated by the government or parent ministries, and only in 10.9% by the board then it can be concluded that agencies face a strong level of structural control. table 3: ceo evaluation who evaluates the ceo? percentage 1. the government or minister 78.3% 2. the board 10.9% 3. the parliament 2.2% 4. another actor 8.7% source: authors’ calculations q5: how strong is the level of ex post control agencies have to face in terms of measurability of objectives and reporting and auditing arrangements? all three dimensions describe the core of ex post control and are very much dependent one on the other. regarding the planning system or the degree in which agencies face pre-established organizational objectives and their level of measurability, the cobra data shows that only three agencies have no objectives, suggesting that in romanian agencies at least some steps were made towards the implementation of performance management principles. however, when analyzing the measurability of these objectives, a different picture appears before us: from the total number of responding agencies, 26 (56%) have measurable objectives7 mentioned in some sort of document, percentage that puts the agency population under an average level of control8. there is no relationship, though, between the level of measurable objectives and the agency structure, task or size (tested by compare means and correlations, the test not being statistically significant). taking into consideration the fact that 78.2% of agencies formulate these objectives themselves, with or without prior consultations with the parent ministry, it can be concluded that the control by the oversight authority over the agencies is rather limited. if regarding planning ministries exert a rather low level of control, a different picture is observed with respect to the frequency with which the agency has to report on objectives and overall results to the oversight authority. the average reporting frequency, on a scale from 1 (no reporting) to 6 (monthly) is 4.2, which means around twice per year. this could suggest that despite the relative freedoms regarding the setting of organizational objective, there is still a strong degree of control by the parent ministry. findings also indicate that the most frequent reporting arrangements are 7 another study found a contrary trend (stan et al., 2005). 8 the average agency scores 0.75 (scale from 0 to 1), so somewhere between having objectives and having measurable objectives. 129 with agencies that have no objectives, followed by agencies with objectives which are difficult to measure. this would suggest that the parent ministry uses reporting requirements to compensate for a lack of measurable objectives. reporting is not related to agency task or structure, but it is related to agency size, meaning that there is a positive but rather weak relationship between the frequency of reporting and the number of fte. apparently, bigger agencies tend to report slightly more often than the smaller ones. related to reporting arrangements are the auditing arrangements. only one agency said that no audit takes place. most agencies run regular internal audits (73.9%) while only 17.4% hire an external entity to conduct it. 45% of agencies declare that they are subjected to regular audits conducted by other executive audit entities, while only 26.1% are subjected to regular audits of a non-executive court of audit. 37% of agencies are subjected to audits conducted by other entities assigned by the superior political or administrative entity. regarding the strength of this audit, 29 agencies out of 46 are subjected to some form of executive auditing system, conducted either by another unit of the executive government or by an entity assigned by the parent ministry. this means that 63% of agencies are placed under some sort of external regular auditing system, which makes the executive control rather present. table 4: type of regular audit arrangements agencies have to face type of regular audit percentage 1. regular internal audits 73.9% 2. others, contracted by the organization 17.4% 3. another unit of the executive government 45% 4. court of audit linked to the parliament 26.1% 5. another actor commissioned by the oversight authorities 37% 6. no regular audits 2.17% source: authors’ calculations regarding the possible relationships existing between organizational characteristics like structure, size or agency tasks, on the one hand, and presence of external auditing system, several mentions must be made. firstly, no such relationship was noticed regarding agency structure or size. therefore, it can be assumed that it makes no difference if an agency has a governing board, or how big it is; it has the same chances of being subjected to regular external auditing systems. second, there appears to be a difference between agency task and the presence/absence of an external executive regular auditing system (see figure 3 below). further inquiries are needed though to better understand how agency tasks influence the presence of external regular auditing systems, conducted by executive government entities. 130 source: authors’ calculations figure 3: frequency of external auditing arrangements and agency task q6: in what degree agencies face reward and sanctions systems and are these aimed at individuals or at the organization? as the cobra data show, in 84.4% of cases no reward system for the achievement of the objectives is found. this suggests that here is a low level of ‘carrot’ interventional control in romanian agencies. three agencies report as having wage increase or bonus for manager or other personnel member as rewards, while other three report as benefiting from increased resource allocation for the organization, if they appropriately or even overcome their objectives. no agency on the other hand benefits from increased autonomy (for the organization or individual manager) as reward for the accomplishment of its objectives. a different picture emerges when it comes to the presence of sanctions for failure to accomplish the pre-established results. 25 agencies (54.3%) declared they would face sanctions in case of failure of achieving their objectives. table 5 below shows what types of sanctions are most common. table 5: sanctions agencies have to face in case of failure of reaching their goals what sanctions does the organization face in case of failure to reach its goals? percentage 1. wage decrease or bonus reduction for manager or other personnel members 15.2% 2. decreased resource allocation 19.6% 3. less autonomy for the organization or individual manager in relation to senior politico-administrative units 4.3% 4. restructuring or abolishment of the organization 19.6% 5. other sanctions 10.9% source: authors’ calculations 131 as it can be noticed, in those cases where a sanction system is implemented, there is a tendency to punish the organization and less the management; more precisely, 34.8% of agencies face sanctions aimed at the organization (such as the reduction of financial resources, reduction of autonomy or restructuring/abolishment) while only 15.2% face sanctions like wage decrease or bonus reduction for the manager or other staff members. this could give us an insight into the level of de facto accountability of agency’s management, since they rarely have to face sanctions for their failure (that is if we interpret organizational failure as being the management’s responsibility). but, as before, a question arises: how much agencies differ on rewards and sanction systems in terms of size, structure and task? the possible relationship was tested using correlations and it appears that the answer is: not that much. except the correlation between size and rewards, all other correlations are not statistically significant, meaning that structure, task and size (at least for sanctions) make no difference when it comes to ‘stick and carrot’ arrangements. regarding the rewards, it appears that there is a relationship between agency size and the presence of a reward system, meaning that bigger agencies have higher chances of being rewarded if they accomplish or overcome their goals. the relationship is rather weak, though, pearson correlation being 0.364. but even though a weak one, a relationship between size and goals still exists. could this be explained by the fact that such organizations, with more employees, have stronger negotiation power and obtained more concessions from the parent ministry? we do not have the data yet to test this hypothesis, but it is worth debating. an interesting hypothesis can be developed starting from the aforementioned observations: agencies face an average level of sanctions, but at the same time face an average level of objective measurability. do the agencies that have a low level of measurability of objectives overlap with those that face sanction systems?9 and if yes, how does the interaction between the agency and the parent ministry, in terms of mutual trust (in the agency’s eyes), presents itself? from where we stand, three major possibilities can be met in this scenario: 1. agencies with low objective measurability that do face sanction systems tend to have a more trustworthy relationship with the parent ministry. in this case it could be argued that trust compensates (or even justifies) the lack of measurable objectives, or that ‘trust and a trust-based organizational culture could be an option which limits the necessity of explicit performance indicator-based steering’ (greiling, 2007, p. 12). 9 if yes, this could suggest that in those cases parent ministries could have higher level of discretion on steering agencies; since there is no term of reference which can be used by agencies to protect themselves, ministries could sanction agencies for not accomplishing their objectives. how can the agency prove otherwise if it has no terms of reference – measurement of objectives? in such a scenario it can be argued that the parent ministry has the premises for exerting stronger informal steering power over the agency. 132 2. agencies with low objective measurability that face sanction systems tend to have a less trustworthy relationship with the parent ministry, one possible explanation being that the ambiguity in terms of objectives makes a more uncomfortable relationship between the two parts. this alternative is based on the idea that (at least) relational trust depends on the level of positive expectations, vulnerability and risks (choudhury, 2008, p. 595): ‘risk herein in the very grant of discretion where determining success or failure is difficult to ascertain due to goal ambiguity, measurement problems, and the long duration of policy effects’10. 3. there is no difference between agencies with measurable objectives and those without measurable objectives in terms of trust in relation with the parent ministry. in order to test the new hypotheses, a cross tabulation between the presence of measurable objectives in some sort of document and the presence of a sanction system was made. the results are the following: table 6: cross tabulation between the presence of measurable objectives in some sort of document and the presence of a sanction system measurable objectives total yes no sanctions yes 18 7 25 no 8 12 20 total 26 19 45 source: authors’ calculations apparently, most agencies that face a sanction system also have measurable objectives present in some sort of written document – 18 out of 25. this is explainable since a fair system of sanctions and rewards depends on fair assessments and one criterion for a fair assessment is transparency, hard to imagine in the absence of a measurable system of objectives attainment. so, in order to answer our research questions: agencies that have a low level of measurability of objectives coincide only in a small degree with those that face sanction systems11. still, it remains the question of patterns of trust between agencies that do not have measurable objectives and the parent ministries. even though their number is fairly low (7) it is worth testing which of the three assumptions are more probable. the figure bellow offers a first insight on the issue: 10 this interpretation of trust can also be related to the idea of procedural justice, defined as ‘fairness of the procedures used to determine organizational outcomes’ (connell, ferres and travaglione, 2003, p. 572). 11 this invalidates the construct presented in note 4. 133 source: authors’ calculations figure 4: level of trust of agencies which face sanction systems that have measurable objectives (1) and that do not have measurable objectives (0) at a first glance, it appears that agencies with measurable objectives (the set of agencies situated on the right side of the figure) tend to describe in more trustworthy terms their relationship with the parent ministry than those without measurable objectives (the left category). but when comparing the average assessment of trust12 on both categories, there appears to be no difference: agencies without measurable objectives describe their level of trust with the parent ministry around 0.840 (on a scale from 0 – no trust – to 1 – high level of trust), while agencies with measurable objectives describe their level of trust around 0.847. basically, there is no difference between the two categories of agencies in terms of the reported level of trust with the parent ministry. this means that the presence of a sanction system influences in no way the level of trust between the agency and the parent ministry, in terms of how measurable the organizational objectives are. q7: are the grounds on which the agencies are held accountable more characteristic to ex ante or ex post control? regarding what matters when auditing or evaluating the ceo’s results, the following were noticed: 12 for agencies without measurable objectives, the average assessment of trust, per group of agencies, was calculated as follows: 0.75*(4/7) + 1*(3/7). for agencies with measurable objectives, the average assessment of trust, per group of agencies, was calculated as follows: 0.5*(2/18) + 0.75*(7/18) + 1*(9/18) 2 4 7 3 9 0 1 2 3 4 5 6 7 8 9 10 .00 1.00 .50 .75 1.00 level of trust goal measurability: 1 measurable; 0 unmeasurable 134 table 7: criteria used in evaluating the ceo rules/legality results/objectives accomplishment audit 19.6% 10.9% ceo accountability average of 0.95013 average of 0.93014 source: authors’ calculations13 14 as table 7 shows, there is a tendency towards focusing more on rules and legality than on results in assessing agencies, 19.6% of agencies declaring that regular audits are predominantly focused on legality aspects, while a little over 10% declared that audits focus on results. the data suggests that even though result related aspects are stressed by the superior ministry, legality still remains the rule. if we add the fact that the main criteria used by the parent ministry for steering and controlling agencies is legality (see table 8 below), then we can conclude that the shift from a priori to a posteriori control is rather low, legality and rule compliance still being the main assessment criteria. table 8: criteria used by the parent ministry for steering and controlling agencies15 first score second score third score 1st most important criterion for control legality/compliance to rules economy criteria effectiveness/goal attainment 89.1% 2.2% 2.2% 2nd most important criterion for control effectiveness/goal attainment effi ciency economy criteria 37% 23.9% 15.2% 3rd most important criterion for control effectiveness/goal attainment effi ciency economy criteria/equal access to service 30.4% 23.9% 4.3% source: authors’ calculations 6. conclusions and future steps one of the aims of the present paper was to have a better understanding on the patterns of control romanian agencies face. this is welcomed since few inquiries in understanding different consequences of more or less coherent administrative reforms were made and even more when it comes to agencification, in particular. therefore, our endeavor was focused on finding whether the expected shift from ex 13 on a scale from 0 to 1, 0 meaning it is not accountable, 0.5 meaning it is accountable to some extent and 1 that it is accountable to a large extent. 14 the same as for rules/legality. 15 agencies were asked to rank which criteria were used by parent ministries in the steering controlling process. they had to prioritize between legality, equity, economy, efficiency and others. as table 4 shows, 89.1% of responding agencies declared that legality is the most important criteria for control, while only 2.2% of agencies declared that the main criteria of control are economy and effectiveness. 135 ante to ex post control was met, as it is evidenced in theory. as was observed, there is a certain shift in this direction, but apparently ministries still keep a rather firm ex ante control over agencies. input control seems to be the preferred alternative of ex ante control, ministries keeping agencies rather dependent both in terms of budget and staff. this could be owed to the fact that in 2009 the government enacted an ordinance that significantly reduced agencies’ abilities to find alternative sources of income, like fees, in order to have a better control over governmental spendings. process control seems to be also present, although it is less stressed by parent ministries. in the large majority of cases agencies can decide on aspects like selecting the target group, the policy instrument or the manner of fulfilling, but only after consulting the parent ministry. in other words, agencies face what is called discretional control, or that type of control where agencies have decision-making capacity, but this capacity is bordered by certain ministerial tools, like demand prior consultations, keeping veto rights or using internal agents as influencers. as we found, ministries exert a fairly strong discretional control over agencies, in the large majority of cases having either veto right or using internal agents as tools to influence the organization’s decisions. last but not least, ministries keep a firm hand over agencies even from a structural perspective, very few of them having governing boards, which should put the agency and the management at a safer distance from the principal. moreover, even in those cases the large majority of board members are assigned by the ministry, as is the case also for the ceo (appointed solely by the ministry in over 80% of cases). but as we specified, there are some ex post alternatives of control valued by the ministries. reporting is one of them, most agencies have to report around twice per year. a similar trend was noticed also regarding audit arrangements, over 60% of agencies facing some sort of external executive audit. it is hard to tell how effective and truly useful are these instruments for parent ministries, considering that only about half of these agencies have measurable objectives and these, in the large majority, are set by the organization not by the principal. a lower level of control was noticed though regarding rewards and sanctions instruments. few agencies ‘benefit’ from these tools, and even when they do, as is the case for sanction (met in over half of agencies), are rather focused on the agency and not on the individuals. from where we stand this strongly reduces the factual level of accountability in the principal agent relationship and, we believe, deserves to be paid more attention in future studies on the matter. overall, as we said before, it seems that ministries still prefer ex ante types of control in exchange to those after-the-fact. it is hard to explain this trend based only in the cobra data we have, but some alternative explanations can be advanced. the first has to do with the rather exceptional character of these times. financial crises and recession reduced the resources available to the government. moreover, the media is more sensitive than ever to public spending and decisions. since the 136 ministries are one of the first entities that have to answer in case of mismanagement, this could represent one incentive for hands on approach. an alternative explanation has to do with the lack of capacity to shift control from ex ante to ex post arrangements. reporting, auditing, and assessing, all demand resources, both in terms of hr and finance. this is even harder to do when agencies’ tasks are more technical and specific. it can be argued that this could be an explanatory reason, but we do not have any specific data to support this perspective. the aforementioned conclusions, even though they bring more light on the relationship between executive agencies and their parent ministries, explain only one side of the agencification coin. these observations need to 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(eds.), the encyclopedia of public choice, vol. 2, dordrecht: kluwer academic publishers, 2004, pp. 53-58. 24. mccubbins, m.d., noll, r.g. and weingast, b.r., ‘administrative procedures as instruments of political control’, 1987, journal of law, economics, and organization, vol. 3, no. 2, pp. 243-277. 138 25. mcgauran, a.m., verhoest, k. and humphreys, p.c., ‘the corporate governance of agencies in ireland. non-commercial national agencies’, institute of public administration, dublin, 2005, [online] available at http://www.cpmr.gov.ie/documents/ the%20corporate%20governance%20of%20agencies%20in%20ireland.pdf, accessed on may 5, 2011. 26. norman, r., ‘letting and making managers manage: the effect of control systems on management action in new zealand’s central government’, 2001, international public management journal, vol. 4, no. 1, pp. 65-89. 27. oecd, ‘agencies: their benefits and risks’, 2005, oecd journal on budgeting, vol. 4, no. 4, [online] available at http://www.oecd.org/dataoecd/3/7/43487848.pdf, accessed on august 10, 2011. 28. painter, m. and yee, w.h., ‘task matters: a structural-instrumental analysis of the autonomy of hong kong government bodies’, 2011, american review of public administration, vol. 41, no. 1, pp. 395-410. 29. papadopoulos, y., ‘problems of democratic accountability in network and multilevel governance’, 2007, european law journal, vol. 13, no. 4, pp. 469-486. 30. pollitt, c. and talbot, c. (eds.), unbundled government. a critical analysis of the global trend to agencies, quangos and contractualisation, london: routledge, 2004. 31. ruffner, m. and sevilla, j., ‘public sector modernisation: modernising accountability and control’, 2004, oecd journal on budgeting, vol. 4, no. 2, pp. 123-141. 32. schick, a., ‘agencies in search of principles?’, 2002, oecd journal of budgeting, vol. 2, pp. 7-26. 33. sulle, a., ‘the application of new public management doctrines in the developing world: an exploratory study of the autonomy and control of executive agencies in tanzania’, 2010, public administration and development, vol. 30, no. 5, pp. 345-354. 34. thompson, f., ‘matching responsibilities with tactics: administrative controls and modern government’, 1993, public administration review, vol. 53, no. 4, pp. 373-318. 35. van thiel, s., ‘the rise of executive agencies: comparing the agentification of 25 tasks in 21 countries’, paper presented at egpa conference 2009, malta, september 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control balance in flemish arm’s length public agencies’, 2007, public management review, vol. 9, no. 1, pp. 107-133. 139 40. world bank, ‘policy and implementation – together or separate?’, not dated, [online] available at http://www1.worldbank.org/publicsector/civilservice/pol-imp.doc, accessed on may 7, 2010. 41. yesilkagit, k. and christensen, j.g., ‘institutional design and formal autonomy: political versus historical and cultural explanations’, 2010, journal of public administration research and theory, vol. 20, no. 1, pp. 53-74. 42. yesilkagit, k. and van thiel, s., ‘autonomous agencies and perceptions of stakeholder influence in parliamentary democracies’, 2011, journal of public administration research and theory, available at: http://jpart.oxfordjournals.org/content/early/2011/06/02/ jopart.mur001.abstract, accessed on june 24, 2011. 26 abstract unlike the open competition economic sectors where tens, hundreds or even thousands of companies ‘struggle’ to provide consumers not only with services but also with special utility, the regulated markets (power supply, public transportation, public safety etc.) are dominated by a limited number of service providers. sometimes the situation is pushed to the point where a few companies ‘control’ the market and set the prices. although the power and gas supply is still ‘dictated’ by the romanian authorities, the directives of the european union coerce the government to deregulate the utility sector and liberalize prices. for the companies concerned, this entails a better customer orientation and an adaptation of their services to the customers’ expectations and preferences. from this point forward, the utility suppliers will have to better cope with the public’s various forms of dissatisfaction with prices, performance or communication etc. the authors of the current paper attempt to analyze how some characteristics of the marketing mix of utility providers may contribute to a proper understanding and building satisfaction with two surveyed regional providers. the findings reveal significant management implications which help utility providers better channel their efforts into the proper knowledge of markets and particularly the target segments that they approach. keywords: public administration, public services, public utilities, customer satisfaction, market regulation, romania. a customer-oriented approach to satisfaction with public service providers. empirical findings from a market undergoing liberalization* dan-cristian dabija raluca băbuţ (comiati) ciprian-marcel pop dan-cristian dabija assoc. prof., phd, department of marketing, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania tel.: 0040-740-189.659 / 0040-264-418.652 / 3 / 4 / 5 e-mail: cristian.dabija@econ.ubbcluj.ro raluca băbuţ (comiati) lecturer, phd, department of marketing, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania e-mail: raluca.babut@econ.ubbcluj.ro ciprian-marcel pop associate professor, phd, department of marketing, faculty of economics and business administration, babeş-bolyai university, cluj-napoca, romania e-mail: marcel.pop@econ.ubbcluj.ro * acknowledgment: this paper has been co-financed from the european social fund, through the 2007-2013 human resources development operational sector program project number posdru/1.5/s/59184 “performance and excellence in the post-doctoral research within the economic field in romania”. transylvanian review of administrative sciences, special issue, pp. 26-49 27 1. introduction a well-organized public sector with services adapted to the citizens’ requirements and characteristics must be a reality within a well-functioning market economy. the central and, particularly, the local public administration bodies must ensure that the public services essential for citizens (electricity or thermal energy, lighting, clean-up, public safety and order, regional or local transportation, support for the disabled, educational or medical assistance, payment of fines, taxes and fees) are always provided according to the highest standards. the supply of these services requires a lot of personnel, time and effort, does not generate profit, and is often viewed as a millstone around the neck of the central or local administration bodies. consequently, a real challenge for both the company and the top management of local or national public administration is to make the operation of these services more effective so that the citizens may be satisfied with them (wright, chew and hines, 2012). the constant and, as far as possible, the impeccable supply of these services will guarantee the advancement of the human society (ionescu, lăzăroiu, and iosif, 2012; brezuleanu, brezuleanu and iatco, 2013). operating on a relatively highly-regulated market, the regional energy suppliers – electrica furnizare transilvania nord (eftn) and e.on gaz – represent two quasimonopolies for the captive citizens (domestic consumers) who are unable to choose another supplier. there are special instances when the customer may give up the services of the gas company and set up his/her own heating system (heat pump, solar panels etc.). similarly, the citizen may give up the services of the electricity supplier and set up his/her own power systems (solar panels, wind systems etc.). however, due to the high financial costs and the red tape, such solutions are unlikely, or less likely, to be implemented. since it is physically impossible to have the two services (electricity and gas) supplied by several companies, the two suppliers are not compelled by any means to adopt a marketing approach (focused on adapting the products and services to the customers’ requirements and needs). naturally, the concerned regulation bodies impose the price ranges (tariffs), the conditions on the supply safety, and the sanctions to be applied in case of failure to ensure the optimal supply. although gaining customers’ satisfaction is not the most important goal of the two companies, the citizens’ opinions and perceptions should change due to the personnel’s behavior, the services provided and the investment programs for the renewal of the supply infrastructure. 2. the public sector – the energy market in romania the energy market in romania, be it the electricity or the natural gas market, has been liberalized for several years from a legislative standpoint. liberalization involves the existence of many organizations capable of providing consumers with services specialized in producing, distributing or supplying the needed products or services. liberalization also makes it possible for consumers to reduce the final costs, ensures a relatively free price, and turns the energy-producing process into a more 28 effective one (trăistaru, 2010a; transelectrica, 2013). liberalization allows consumers to freely choose or change the supplier, whenever they wish or see fit, without being charged extra fees, in addition to those stipulated by the contract. in reality, however, the romanian citizen is a captive consumer, unable to freely choose his/her supplier (electrica, 2013). this is accounted for by the lack of proper law-enforcement procedures – despite the legal possibility to migrate from the regulated towards the free market – and the fact that the majority of energy suppliers are still owned by the state which, for social and political reasons, prefers to impose a regulated, below the market, price (trăistaru, 2010a, 2010b). table 1 presents a short overview on the major energy providers in romania. table 1: major energy providers in romania type of service providers state owned / private observations (year when it entered the romanian market, % of shares, type of price) electricity (regional providers) e.on moldova (e.on germany) private 2005 (24,6% of former electrica moldova) + capital increase to 51%, prices are not liberalized cez oltenia (cez cehia) private 2005 (24,6% of former electrica oltenia) + capital increase to 51% + acquisition of shares from other shareholders in 2009, prices are not liberalized enel romania (enel italy) private 2005 (51% of former state owned electrica banat and electrica dobrogea) + 2007 (67,5% of former electrica muntenia sud), prices are not liberalized electrica state owned 78% electrica furnizare (former electrica distribuție transilvania nord, electrica distribuție transilvania sud, electrica distribuție muntenia nord), prices are not liberalized 23,6% electrica distribuție muntenia sud 24,9% electrica distribuție banat 24,9% electrica distribuție dobrogea 27% electrica distribuție moldova 27% electrica distribuție oltenia water supply regional providers state owned regulated prices, depending on the regional production and distribution costs gas (regional providers) gdf suez energy romania (gas de france) private 2005 (30% of former distrigaz sud) + capital increase to 51%, prices should be fully liberalized within fi ve years e.on gaz distribuție romania (e.on germany) private 2005 (30% of former distrigaz nord) + capital increase to 51%, prices should be fully liberalized within fi ve years congaz constanța private coshared by ruhrgas, snp petrom, distrigaz sud, petroconst constanţa and the local communities of medgidia, ovidiu, kogălniceanu and cogealac, prices should be fully liberalized within fi ve years thermal local providers state owned mostly owned by local communities, price level depends on the type of fuel as well as on the subsidies given by authorities sources: proprietatea fund in 2013, the companies’ web pages, wikipedia. romania’s accession to the european union entailed the acceptance by the romanian government of complete liberalization of the energy market. thus, a timetable 29 was agreed upon to ‘align’ the gas and electricity prices for domestic consumers and non-domestic consumers by the end of 2017 and by december 31st, 2015, respectively (pîrvoiu, 2013). in compliance with these regulations, the regulated prices of natural gas for economic operators were done away with as of december 1st, 2012, while for domestic consumers they were eliminated on july 1st, 2013. as for the electricity market, the removal of price regulation started on september 1st, 2012 for non-domestic customers and will further be effective on july 1st, 2013 for domestic consumers. the responsibility for supervising, controlling and regulating the romanian energy sector rests with the romanian energy regulatory authority (anre). the main function of the said authority is to set up, on an annual basis, the tariffs/prices to be paid by the captive consumers (trăistaru, 2010a, 2010b). anre will have to ensure the proper enforcement of these regulations, in compliance with the terms of the new law. the complete liberalization of the romanian electricity market started on september 1st, 2012 while that of the gas market started on december 1st, 2012 (liberalization of the energy market, 2012). although the short-term effect of the liberalization of the energy market on the end consumer is the adjustment of the current prices, the process may be thought of as beneficial due to the number of competitors in the field of energy production (for example, due to the use of alternative energy sources, wind power, biomass, geothermal or solar). on the other hand, the number of energy producers varies according to the type of the market – households versus companies, the latter segment being more attractive to energy producers because price is determined freely between supply and demand (liberalization of the energy market, 2012). the energy market is an oligopoly to the ‘captive’ households, while these are relatively unattractive to energy producers as they consume very small quantities. at the same time, liberalization entails the increase of decision-making transparency and of the objectivity concerning the access to these services of the end customer and the setting up of the final prices (transelectrica, 2013). in the future, the companies operating on the energy market will be able to provide the domestic customers with both natural gas (heating) and electricity. at the time being, however, the legislation on the development of infrastructure for the supply of energy products is ambiguous and the customer is highly hampered in choosing the preferred supplier (trăistaru, 2010b). the main players in the sector of electricity are the companies that supply nuclear energy (nuclearelectrica), water energy (hidroelectrica), thermal energy (termoelectrica) as well as those which produce green energy from renewable sources, mainly wind, solar, geothermal or biogas (trăistaru, 2010b). the liberalization of the electricity market made room for the european concerns – rwe germany, e.on germany, eftn italy, electrabel belgium, cez the czech republic, iberdola spain etc. – to herald their intention of approaching the market by each type of energy (nuclear, water, thermal, alternative). the production capacities of these companies have been relatively small until now, significant investments being announced for the following 30 years, such as the building of other nuclear reactors at cernavoda and the development of wind farms (fantaziu, 2013). moreover, the big steel mills – arcelormittal – also announced their intention to produce electricity (matache, 2013). several companies operate on the home gas market, both in the field of extraction and distribution, and in the field of supply to the end consumers, both domestic and industrial. according to the data provided by anre, about 82% of the gas consumed in 2012 was extracted from the romanian fields by the five domestic companies (amromco ploieşti, romgaz intern, omv petrom, foraj sonde, raffles energy), and the remaining 18% was imported by about 11 companies – azomureş, arelco power, gdf suez energy romania, elcen bucharest, conef gaz, interagro, intergaz, romgaz import, mol energy trade, omv petrom gas, wiee romania srl. the biggest producers are the companies romgaz and omv petrom (anre, 2012). while significant shares of the romanian free gas market are held by the companies interagro and romgaz (each holding about 21%), omv petrom gas and petrom sucursale (each holding about 15%), gdf suez energy romania and e.on energie romania (each holding about 6%), the biggest players on the regulated market are gdf suez energy romania (with a share of 55%) and e.on romania (with a share of 35%). the suppliers congaz, intergaz and petrom distribution have each a market share of 1% while the rest of shares are held by companies such as gaz est vaslui, wirom gas, gazvest, distrigaz vest, cpl concordia etc. (anre, 2012). overall, anre certified 74 companies to conduct activities in the gas sector on the romanian territory (anre, 2013). 3. marketing mix of public services there are a number of striking similarities between the marketing mix of public utilities and that of private suppliers. in fact, both mixes will, of necessity, include a product offer, prices, distribution and promotion elements, personnel, and physical evidences (nedelea, 2006b, p. 94). from the marketing point of view, the public product comprises the whole range of elements that stimulate the demand of services of this kind. it is made up of all material (tangible) and immaterial (intangible) characteristics of this sector, as well as the surrounding atmosphere (munteanu, 2003, p. 196). it is very important/relevant to the current public supplier to differentiate/delineate its product as precisely as possible: cultural and sports services, social assistance services, public order, education services, electricity supply, health services, road building etc. the heterogeneous nature of public services demands that a compromise be reached between performance and flexibility, between standardization and differentiation (tănăsescu, 2008, p. 51). although it seems quite simple, this compromise is not easily worked out because each beneficiary of the public services has his/her own expectations, needs, preferences, attitudes and criteria for assessing the degree of service differentiation. due to economic reasons and in order to make the supply faster, more simple and accessible, the public utilities standardize the supply to a great extent, which sometimes brings them in conflict with the customers’ interests. for instance, the regional electricity company, electrica furnizare transilvania nord-vest, 31 in its attempt to adapt somewhat to the market needs, provides standard services that are priced according to the minimum basic consumption. the company also provides other consumption variants/opportunities in the form of seven different tariff systems to choose from, depending on the quantity of consumed energy, the time-of-day and the nature of the supply circuit (eftn, 2013). as far as the gas supplier is concerned, flexibility represents the customer’s opportunity to choose between the billing based on the estimated quantities within the consumption program agreed on by customer and supplier, and the billing based on meter reading and sending the reading to the supplier (e.on, 2013). the price of public services exhibits a number of peculiarities. for instance, although some public services are apparently supplied for free, they are indirectly funded through taxes and duties paid by the citizens. the state authorities are faced with an acute dilemma when it comes to the services that must be supplied on a regular basis (safety, public order, medical services). thus, the services must be supplied regardless of the costs incurred and the citizens must permanently be granted access to them (barbu, 2011, pp. 46-56; olteanu, ionescu and barbu, 2013). when developing the price strategy, the public utilities adopt a cost-oriented as well as a demand-oriented approach. thus, an attempt is made to optimize costs and the utility of the public product. however, some problems may arise because the citizens-customers perceive utility in a different manner. to some customers utility is identical to low tariffs whereas others expect the products and services to have intrinsic characteristics (quality, reliability) (munteanu, 2003, p. 213; lutilsky, vasicek and vasicek, 2012, pp. 413-419). two tariff systems are used in romania to price the local public services: real pricing where the amounts paid by the citizens are directly proportional to the received service quantity, and the global pricing. in the latter case, the price for the public service is calculated according to some formula and does not reflect the real costs (costea, 2000, pp. 140-141). whereas the former tariff setting is similar to a price system set by the market, in the case of the global pricing the extra consumption is not reflected in costs. for that reason, many view this method as being unfair. the tariffs for electricity and gas are set by decisions of romanian energy regulatory authority, a distinction being made between domestic consumers and those assimilated to domestic consumers, on the one hand, and non-domestic consumers (companies), on the other hand (electrica furnizare, 2013). the nominal value of the electricity tariffs paid by romanians is one of the lowest in europe. benchmarked against the purchasing power, the electricity tariffs paid by the romanian captive domestic consumers are above the average in the european union and almost twice as high as that in france. the gas price paid by the romanian population is the lowest in the european union, both in terms of the nominal value and in relation to the purchasing power (finanţiștii, 2012). distribution of public services refers to the time and place/space where customercitizens have access to the offer of public products and services. distribution is heavily 32 influenced by service intangibility and inseparability. therefore, the direct distribution channel prevails while intermediaries are resorted to only in special circumstances (munteanu, 2003, p. 344). the distribution policy of the analyzed public utilities is translated into finding the optimal location for desks, offices and public relation centers (dabija and băbuţ, 2012). suppliers must identify solutions to a number of problems that might arise within these units, such as the waiting time, personnel kindness and competence, atmosphere and cleanness of customer relation centers (kotler and lee, 2008, p. 99). the satisfaction of the customer-citizens’ needs begins with solving these problems and creating a pleasant and attractive atmosphere. the importance of placing support desks close to the customer has been understood by electricity and gas suppliers as well. consequently, they have opened customer relation centers close to the customers where they have the opportunity to dial special numbers twentyfour seven and send complaints, dissatisfactions or objections (pranic and roehl, 2012, pp. 244-247). the role of the marketing communication is to inform, to educate and, sometimes, to persuade the target market to adopt a proper behavior (kotler and lee, 2008, p. 135). in the case of public services, the messages usually convey information of public utility. therefore, public communication should make citizens aware of the existence of public organizations, their duties and modus operandi, the legality and timeliness of the decisions adopted. at the same time, public communication should serve as a means of knowing people’s needs and expectations so that public institutions, by their role and duties, may be able to meet them and, thus, serve the general interest (nedelea, 2006b, p. 131). the purpose of the communication campaigns in the public sector is to persuade citizens that the goal of the public decisions being made is the common welfare and, thus, citizens are expected to support them. hence, the citizen must be informed about the existence and the operation method of public services, attention must be paid to when s/he voices his/her dissatisfaction, and his/her desires and needs must be attended to (wright, chew and hines, 2012, pp. 433-450). the pr and advertising campaigns of gas and electricity suppliers are aimed at turning the spotlight on the supplier in order to build and improve its image and promote its values. the campaigns inform the customer-citizens about the characteristics of services and the improvements these undergo, and about the investment projects or the social responsibility actions being performed. another means of communication between gas and electricity suppliers and citizens is the virtual environment. the suppliers developed specialized platforms (oficiul virtual electrica, 2013; myline e.on, 2013) where customers may create their own accounts, check the updated consumption, upload meter readings, pay the bills for the received services, file complaints or suggestions and find out the calculation formula for the electricity/gas prices. additionally, the platforms may be used to find answers to frequently asked questions, find information about contracts, tariffs and duties, and see the contact information and the working hours of the customer relation offices etc. 33 the personnel policy is the best means of interaction between the public utilities and citizens. customers sometimes identify the supplier’s image with their perception of the office personnel or the maintenance employees. therefore, the contact personnel’s lack of receptiveness and politeness or their improper behavior could ruin other marketing efforts made to satisfy the needs of the customer-citizens. conversely, the kindness and professionalism of the counter staff exerts a positive effect on the image of the public utility. among the goals of a proper personnel policy one should include the personnel recruitment and coordination, their proper motivation, ensuring they are highly efficient in every activity performed, their assessment and remuneration, their involvement in marketing events and gaining the personnel’s loyalty (homburg and stock, 2001). the personnel of gas and electricity suppliers working in customer relation and bill payment centers as well as the emergency repair staff may undoubtedly check whether or not citizens are satisfied with the company’s service performance or the level of tariff acceptance. in fact, the personnel may notice the customer’s reaction to tariff changes and the various actions performed by the company, which takes the form of a valuable feedback for the decision-making factors. physical evidence stands for the actual space where public services are supplied, including the interior design (decor), atmosphere and how well it is equipped. it is the place where the direct contact between the supplier’s employees and citizens takes place (nedelea, 2006a, pp. 416-419). the intangibility of public services and the difficulty of expressing and perceiving their quality turn physical evidence into a tool that should help the citizen ‘see’, understand, appreciate and, mainly, recognize the utility of the service. to many payers, physical evidence is the needed indicator that helps them appreciate properly the quality of services to be purchased, which contributes to building a positive image of the supplier (lovelock, 1983, p. 199). a number of aesthetic factors (architecture, design, color etc.) have been considered by the gas and electricity suppliers when developing customer relation centers, so that the customer-citizens’ attitude and mood may be positively influenced. thus, customer relation centers convey the image of prompt service so that queuing may be avoided as much as possible. 4. customer orientation and the citizens’ satisfaction with the products and services of public utilities nowadays the public services market in romania is characterized by three convergent courses of action: privatization, decentralization and deregulation (tănăsescu, 2008, p. 52). within this context, it is imperative for the suppliers operating on the market to understand that merely providing services is not enough for citizens. although very few customers can afford to shift to alternative heating or energy systems (heat pumps etc.), the dependence on a single supplier (which creates monopoly) tends to become history. therefore, the orientation towards the citizens’ needs has to become a top priority, even a must, for public utilities. whereas customer satisfaction is a major goal that exerts a significant, even overwhelming, effect on the success and profitabil34 ity of the other (private) service providers, in the public sector the citizens’ satisfaction and contentment generates trust in suppliers and a favorable image about them. exhibiting customer orientation presupposes the integration of expectations, demands and desires of the target group into the offer of the utility suppliers. to this effect, the companies may choose to develop service packages adjusted as best as possible to the customer-citizens’ socio-demographic profile (the income, in particular). for instance, the electricity supplier may charge customers lower tariffs for the night-time power or the power consumed during low-consumption periods so that citizens may timetable specific activities during these intervals (washing, ironing etc.). similarly, the gas supplier could make a more attentive tariff differentiation of customers according to the quantity consumed. customer orientation also implies giving a prompt reply to complaints and suggestions (pop et al. 2012), ensuring a proper maintenance of equipment, conducting regular checks on the supply infrastructure and making always sure that customers are satisfied. the satisfaction felt by an individual represents the extent to which the service provided or its components produce a satisfactory level of fulfillment/contentment by comparison with the citizen’s expectations (oliver, 1999, pp. 33-44). therefore, satisfaction is understood as the consumer’s emotional reaction to the gap between his/her expectations and the adequate offer (henning-thurau, gwinner and gremler, 2002). the customers-citizens’ expectations with regard to public services are influenced by a number of factors the most significant of which are culture, individual needs, the image of the public service supplied, the past experience with the service, the utility obtained by consuming the service in comparison with other similar services, status, age, ethnic group, the frequency and regularity of service usage etc. (nedelea, 2006b, p. 49). suppliers may influence the citizens’ degree of expectation and thus prevent them from becoming dissatisfied by providing information on the objective conditions that citizens must satisfy to benefit from the services and on what can be expected with regard to the service quality. another factor that differentiates the public sector from the private sector is the opportunity for the customers-citizens to sometimes be exempt from payment for the public service because they are legally entitled to it. at the same time, the access and eligibility of customers-citizens to the public services or programs is dependent on a mixture of social and political reasons (şandor and raboca, 2004; collins and kim, 2009). the public utility can gain a number of advantages by paying increased attention to the customers-citizens’ satisfaction: increase of income, considerable support for obtaining funds, increase in operational effectiveness and the improvement of the activity indicators (kotler and lee, 2008, pp. 164-167). this is further facilitated by five main practices: supporting employees to provide faultless service, securing infrastructures and systems that foster (and not suppress) the service, creating customer relation management systems, applying the principles of total quality management (tqm), searching for customers’ expectations and determining their degree of satisfaction (kotler and lee, 2008, pp. 168-175). 35 5. research methodology in order to analyze whether citizens can be satisfied by utility providers through various stimuli, two regionally representative companies were selected, namely, the gas supplier e.on romania, and the electricity supplier electrica furnizare transilvania nord. since the services of the two companies are essential for what is considered a decent living, the challenge of the current research is to reveal the impact and significance of all elements of the marketing mix on customers’ satisfaction with the two investigated suppliers. the gas supplier is a private company whereas the electricity supplier is still under the ownership of the romanian state. therefore, it is interesting to find out the extent to which the two companies operating on a regulated market manage to make citizens, through their mix of marketing tools, feel a proper level of satisfaction with their products and services. for meeting the above stated objectives, the authors conducted a quantitative research based on questionnaire administration. the dimensions of the model presented in figure 1 have been operationalized according to the literature guidelines. thus, the investigated dimensions were changed into measurable indicators from the customers’ perspective (pop et al., 2011) and included in the questionnaires which were distributed to customers by means of face-to-face interviews. the analysis of the effect of public utility characteristics (services offer, communication, customer relation center, web presence, service, customer orientation, tariffs) on satisfaction was conducted by means of the structural equations modeling (amos 20.0). the answers aggregated into a spss database were previously subject to specific tests to check their validity, consistency and reliability. to this effect, use was made of the cronbach α coefficient, the ‘item-to-total’ correlation, and the exploratory factor analysis. as the tests revealed more than satisfactory values, the econometric models could be applied on the investigated phenomenon, as shown in figure 1. as the romanian literature review showed, there are no similar studies focused on citizens’ perception of the public utilities. consequently, the authors conducted an exploratory research in which they adopted a scientific, systematic and structured approach to the concepts of satisfaction and the marketing mix, which they applied to a regulated market. in this respect, the authors relied on convenience sampling. however, in order to ensure proper research representativeness, a quota sampling on age and gender was used, in compliance with the directives of the annual romanian statistics yearbook of 2010. furthermore, the questionnaire was administered in both urban and rural areas. the interviewers were instructed to approach respondents in public places (parks, in the street etc.) and at their workplace or domicile. the questions were framed on a five-point likert scale (from total disagreement to total agreement) and respondents were asked to choose the level that best fits their perception of the concerned supplier. 36 satisfaction services offer communication customer relation cent rs web presence service tariffs customer orientation figure 1: proposed analysis model (values for the sample as a whole) source: authors’ own research 5.1. operationalization of constructs the following are the conceptualized characteristics that customers perceive with the public utilities analyzed: services offer, communication, tariffs charged, customer relation centers (service distribution), supplier’s presence in the media, customer service, and orientation towards customer loyalization (keller, 1993; chowdhury, reardon and srivastava, 1998, pp. 74-75; martin-consuegra, molina and esteban, 2007; arnold, oum and tigert, 1983, p. 152; yoo and donthu, 2002, p. 387; hansen and deutscher, 1977/1978, p. 65; sirdeshmukh, singh and sabol, 2002, p. 34; léo and philippe, 2002, p. 137; binninger, 2008, p. 104). thus, the quantification of customers’ perception of the services offer took into account the quality of products and services (‘the supplier …. provides high-quality services’) or the entire range of provided services (‘the supplier … has a good services offer’). since every supplier attempts to communicate with the customers, the analysis focused on the amount of information provided by ads (‘advertising of supplier … is informative’), as well as on the public’s access to extra information materials about the company or its services. the quantification of the supplier’s physical presence was achieved through statements about the accessibility and proximity (convenience) of its location (‘the public utility …. runs a customer relation center in an optimal location/downtown’). as both suppliers have a web presence, citizens were asked to express their opinion about how attractive and accessible their web page is, and about the possibility to make online payments (‘the web page of the public utility … is easily accessible/attractively designed’, ‘the public utility … allows customers the opportunity to make online payments’). the quantification of the customer service was made by assessing the employees’ earnestness in dealing with customers, as well as their professionalism (‘employees of the supplier … are always earnest/willing to help customers/are always competent’). the customers’ perception of the tariffs charged by suppliers was measured by asking respondents to express their (dis)agreement regarding the manner of setting tariffs (‘the prices of supplier … are fair/acceptable/ethical/constant in time’) and regarding the ratio between the service quality and the price paid (‘the … supplier offers a good 37 quality/price ratio’). the quantification of the extent to which respondents believe the two suppliers are customer-oriented was made through statements about loyalization actions performed by the private sector (‘the supplier … has an attractive loyalization program’ or ‘the supplier … is concerned with responding to customers’ complaints or suggestions’). the assessment of customers’ satisfaction with the provided services was performed through a number of statements over which respondents expressed their level of agreement (‘in my opinion, the supplier … honors its promise’, ‘the supplier … have been so far the place where i’ve always made a right decision’, ‘the supplier … is a good choice for me’, ‘i am satisfied with choosing this public utility’, ‘the supplier … would do its best so that my satisfaction should be complete’). 5.2. sample characteristics over half of the questionnaires were filled in at respondents’ home (53.3%), one third of them (36.8%) in various public places (in the street, in parks, in front of stores etc.), and only a small number (9.6%) were completed at respondents’ workplace. the research was mainly conducted in the cluj county, the majority of respondents being residents of cluj-napoca city and other smaller villages and communes (floreşti, baciu, dej, gherla, săvădisla etc.). of the more than 1,500 collected questionnaires, only 1,272 could be validated (575 for eftn and 697 for e.on). for a better sample representativeness, the selected respondents had not only to know the company, but also to be its clients. consequently, we were able to obtain a larger number of valid responses, which allowed a more accurate analysis of the collected data. out of the total sample, 53% are females and 47% are males. in order to assess the citizens’ satisfaction with the selected public utilities, we believe the breakdown of respondents is relevant not only according to gender and age group but also according to the size of their household, education, housing status, workplace and the income group to which they belong. the resulted sample structure according to respondents’ socio-demographic profile is presented in table 2. table 2: the respondents’ socio-demographic profile according to selected suppliers eftn e.on total n % n % n % gender male 276 21,7 327 25,7 603 47,4 female 299 23,5 370 29,1 669 52,6 total 575 45,2 697 54,8 1.272 100,0 age below 25 84 6,6 109 8,6 193 15,2 26 40 175 13,8 196 15,4 371 29,2 41-50 76 6,0 101 7,9 177 13,9 51-60 81 6,4 142 11,2 223 17,5 61-70 125 9,8 122 9,6 247 19,4 71 onward 34 2,7 27 2,1 61 4,8 total 575 45,2 697 54,8 1.272 100,0 38 eftn e.on total n % n % n % number of persons per household 1 person 101 8,1 98 7,9 199 16,0 2 persons 214 17,2 266 21,4 480 38,7 3-4 persons 224 18,0 282 22,7 506 40,8 5 and over 5 persons 19 1,5 37 3,0 56 4,5 total 558 45,0 683 55,0 1.241 100,0 education high school 135 10,6 139 10,9 274 21,6 post secondary 50 3,9 72 5,7 122 9,6 vocational training 65 5,1 101 8,0 166 13,1 higher education 291 22,9 354 27,9 645 50,8 without education 33 2,6 30 2,4 63 5,0 total 574 45,2 696 54,8 1.270 100,0 income group (lei) below 1000 89 9,2 92 9,5 181 18,7 1001 – 2000 142 14,7 171 17,7 313 32,3 2001 – 3000 107 11,1 133 13,7 240 24,8 3001 and over 100 10,3 134 13,8 234 24,2 total 438 45,2 530 54,8 968 100,0 source: own research 6. results 6.1. checking data validity, reliability and consistency the testing of data validity, reliability and consistency was carried out in compliance with the guidelines of the technical literature (churchill, 1991, pp. 64-73; dabija, 2010, pp. 172-180) by resorting to cronbach α coefficient, the ‘item-to-total’ correlation, as well as the exploratory factor analysis. as table 3 indicates, all constructs of the analyzed model meet the minimum threshold of exactingness set by the literature even if they are not always very high. table 3: testing validity and reliability construct no. items α 1 kmo2 χ2; df; p3 eigen-value % variance service offer 4 0,852 0,800 2.183,763; 6; **** 2,772 69,30 prices (tariffs) 5 0,910 0,837 4.633,067; 10; **** 3,683 73,66 supplier’s physical presence 4 0,901 0,835 3.245,16; 6; **** 3,068 77,16 supplier’s web presence 4 0,904 0,835 3.266,345; 6; **** 3,110 77,74 personnel 5 0,878 0,809 3.759,565; 10; **** 3,384 67,78 communication 5 0,908 0,878 4.054,31; 10; **** 3,663 73,26 customer orientation 2 0,875 0,800 1.187,56; 7; **** 1,177 88,97 satisfaction 5 0,861 0,802 3.643,391; 10; **** 3,251 65,021 1 – cronbach α coeffi cient (testing reliability of data); 2 – kaiser-meyer-ohlin criterion (exploratory factor analysis) for each construct of corporate reputation and retail brand value, respectively; 3 – bartlett’s test of sphericity (χ2 – chi-square, df – degree of freedom, p – probability; ****p < 0,001; *** p < 0,01; ** p < 0,05; * p < 0,1). 39 as each resulted dimension proved to be stable enough, an exploratory factor analysis was further conducted for the overall characteristics of utility suppliers. in conducting the factor analysis, we took into consideration both the resulted reliability indicators as well as the values shown in the pattern and in structure matrix, respectively. due to space limitations, the authors have only used a brief presentation of the seven dimensions resulted in the factor analysis in strict order of their extraction (table 4). table 4: simplified results of the factor analysis applied to the marketing mix of the analyzed utility suppliers factor no title eigenvalues % of variance factor 1 services offer 9,543 32,906 factor 2 advertising 3,827 13,197 factor 3 physical distribution 2,507 8,645 factor 4 personnel 1,891 6,520 factor 5 web presence 1,791 6,175 factor 6 customer orientation 1,169 4,032 factor 7 prices (tariffs) 1,109 3,832 kmo = 0,911 extraction method: principal axis factoring. rotation method: oblimin with kaiser normalization. source: authors’ own research to facilitate data interpretation and increase the consistency of results, in particular when variables scores of the different factors are unreliable as their delimitation is not very precise, literature recommends factor rotation (backhaus et al., 2008, p. 372). since we assumed (based on theory) that the existing factor structure is not independent, we have used a principal axis factoring with oblique rotation (walsh and beatty, 2007). the exploratory factor analysis confirmed the possibility of aggregating the entire range of characteristics of the two analyzed utility suppliers as the resulted dimensions preserved their stability (table 4). consequently, the authors proceeded to model the phenomenon by means of the structural equations (see figure 2). satisfaction service offer communication customer relation centers web presence personnel customer orientation prices (tariffs) 0,706**** 0,021n.s. 0,005n.s. -0,069*** 0,034n.s. -0,075*** 0,168**** figure 2: determining factors in building satisfaction with, and loyalty towards public utilities 40 the reliability of the model was assessed by calculating various indicators (gfi, agfi, tli, nli, cfi, srmr, rmsea). the indicators, along with the minimum thresholds of exactingness set by the literature (forza and filippini, 1998; ju et al., 2006; jiang and klein, 1999/2000; dabija, 2010, pp. 181-183) are presented in table 5. table 5: reliability indicators of the general model respondents 1.272 χ2 df χ2/df tli offer à satisfaction 0,706**** 3.991,233 565 7,064 0,882 media à satisfaction 0,021n.s. rmsea (≤ 0,08) gfi agfi crc à satisfaction 0,005n.s. 0,069 0,835 0,805 web à satisfaction -0,069*** srmr (≤ 0,08) nfi cfi personnel à satisfaction 0,034 n.s. 0,0705 0,879 0,894 customer orientation à satisfaction -0,075*** n.s. – not signifi cant *p<0,1 prices (tariffs) à satisfaction 0,168**** ***p<0,01 **p<0,05 ****p<0,001 tli, gfi, agfi, nfi, cfi > 0,8 source: authors’ own research 6.2. research findings for the general model service offer as table 5 indicates, a strong and significant effect on satisfaction is exerted by the services offer of the two analyzed suppliers – eftn and e.on (0.706****). at first sight, the results are surprising because respondents do not have the chance of choosing another supplier and thus are deprived of an appropriate benchmark. consumers make comparisons across time and acknowledge the important steps taken to improve the quality and flexibility of the provided services. suppliers allow consumers to modify the contract terms any time and as often as they want without being charged extra costs. consumers may sometimes perform contractual changes by phone or via the supplier’s web platform without having to go to customer relation centers. as far as outages are concerned, they happen quite rarely and when they do, they are immediately remedied. power or gas cuts for technical reasons are brought to customers’ knowledge in advance. prices (tariffs) as strange as it may seem, the level of the tariffs charged also exerts a significant effect on satisfaction (0.168****). the interviewed citizens are likely to be aware that the price paid for gas and electricity is regulated or ‘controlled’ by authorities, and not a ‘free’ price set by the market competition. thus, they feel a certain ‘satisfaction’ with the current price, hoping it will not go up in the future. a number of customers are probably aware that the energy price, albeit high by comparison to romanians’ purchasing power, is below the price level in the european union. web presence and customer orientation an interesting and somewhat unexpected situation was revealed concerning the impact on satisfaction of the two suppliers’ web presence and their efforts to draw 41 customers and gain their loyalty. the effect of the two constructs on satisfaction is significant but negative. the web presence and the customer orientation have revealed an inversely proportional effect on satisfaction to the effect that they contribute to the decrease of the satisfaction level felt by the citizens. these results highlight an increased potential to improve the way in which the supplier decides to define its online presence, interact with the customers and approach them through specific tools to gain their loyalty. our opinion is that the two suppliers could, at least with regard to the last aspect, choose to develop individualized service packages according to the amount of consumption and the material wealth of the target group. the inversely proportional effect of the web presence on satisfaction may be accounted for by some consumers’ lack of knowledge about the suppliers’ web pages and what can be learned from them, despite the fact that the online platforms are well developed and provide users with many facilities. one should not overlook the fact, however, that certain romanian consumer segments are not familiar with the internet while others, by mere habit, probably prefer the classical means of communication with suppliers. at the same time, the lack of viable alternatives makes the web presence uninteresting to those who seek extra information about the current and potential suppliers. given the intrinsic nature of the market (regulated market) and the type of customers (captive customers), the negative effect of customer orientation on satisfaction is accounted for by the fact that the investigated suppliers are not, and in fact should be little, concerned with adopting consistent measures to optimize the relationship with the customers. however, it should be favorably appreciated the effort of the two suppliers to modernize not only the distribution grid, but also the format/ content of bills sent to consumers. the bills often feature information elements on the source of energy used, important data about the company, the services payment options, and the existence of a web page that facilitates communication etc. (dabija and băbut, 2012). within their customer orientation policy, the two suppliers naturally strive to make customers report anything that prevents them from attaining a proper satisfaction. however, the problem lies with the customers who either are unaware of this research tool or do not have the time or interest to fill in the forms, and thus provide the supplier with upbuilding feedback. communication (media presence) and personnel the marketing characteristics of utility suppliers that exert an insignificant effect on satisfaction are, contrary to our expectations, the media presence (communication), the interaction by means of customer relation centers, and the personnel service. on second thought, however, it is only natural that these elements should not influence satisfaction significantly for the mere reason that the citizen does not have time to interact with them. the communication of the two utility suppliers has a limited effect because they most often convey general information on the back side of the bill forms (payment options, consumption details etc.) and focus less on the active communication that should impact on the romanian consumer. the two suppliers 42 sometimes choose to send customers thank-you letters or letters of information about the constituents of the bill or the modernization and maintenance of the distribution grid. these, however, are not perceived by customers/respondents as communication means/tools. another explanation is the lack of overlapping elements between the communication of public utilities and that of private suppliers in terms of objectives, implementation means or budget. to put it differently, advertising, as it is known and understood by the romanian consumers from their experience with private companies, is absent from the agenda of public utilities. as to the csr campaigns launched by the gas and electricity suppliers, these do not draw the attention of, nor are they understood by certain consumer segments. customer relation centers the contribution of customer relation centers to building satisfaction is absent with the two utility suppliers. this absence is justified at least in the case of the gas supplier e.on since it outsourced to a great extent the payment of bills within its own units. in order to pay the gas bills, a plethora of payment methods are available to customers (direct debit, pay point, other payment locations). the regional electricity supplier (eftn) is the only one offering customers, to a certain extent, the opportunity to pay the monthly bill within its own customer relation centers. more and more romanians choose to pay their bills through the bank systems either for convenience (those who pay services online) or to save time (one can pay several bills during a single visit to the bank in the neighborhood without having to pay extra costs). 6.3. breakdown of research findings by the two suppliers the breakdown of research findings by the two suppliers revealed a very interesting, even surprising, situation. a certain change was recorded in the values of the reliability indicators. however, their values are still within the acceptable limits set by the literature (forza and filippini, 1998; ju et al., 2006), which entitles us to accept the reliability of calculations. as table 6 shows, respondents are able to make a proper differentiation between the two utility suppliers. moreover, the elements that help build satisfaction are different from one company to another. even if the values of coefficients that give the size of the impact of the studied factors on satisfaction (service offer, prices, web presence etc.) are relatively close between the two providers, we believe that results allow a correct interpretation. this is especially interesting as the authors are not aware of previous similar studies on the romanians’ perception of utility providers, such as gas or electricity. service offer thus, one can notice the substantial, yet of varying intensity, effect on satisfaction of the two suppliers’ offer. interestingly, respondents declared themselves better satisfied with the gas (0.755****) than with the electricity (0.652****) supplier. this may 43 be accounted for by the fact that gas outages are less frequent than power outages. additionally, consumers might appreciate the opportunity to send meter readings themselves and adjust the payment of the gas consumption to their financial status (they overpay the consumption during the summer months and declare a lower consumption for which they pay less during the winter months when the bills are heftier). personnel whereas service has an insignificant effect on building satisfaction in the case of the general model, the situation changes with the breakdown of research findings by the two suppliers. in fact, citizens state that the manner in which the employees of the electricity supplier interact with customers contributes to a very low extent (0.078*) to building the satisfaction with this company. this may be due to the fact that the regional electricity supplier served customers through the personnel of customer relation centers where they can pay in consideration of the monthly-provided services. web presence whereas the effect of the gas company’s web presence on satisfaction is significant but inversely proportional, the same effect is insignificant in the case of the electricity supplier. this apparently paradoxical situation may be accounted for by the fact that the web pages of the two suppliers are used to a little extent to find news/new information. while e.on allows customers to pay their bills through its web page, eftn only allows customers to view its content (amount to be paid). the negative impact of the web presence on satisfaction may be due to the lack of a userfriendly navigation while the web page of the gas supplier, for instance, takes much time to load and makes the online payments difficult to process. customer orientation the customer orientation reveals another interesting situation. while the effect of this element on satisfaction is not significant in the case of the gas supplier, the measures taken by eftn in this regard reveal a significant, but inversely proportional effect. in other words, eftn customer orientation efforts have caused a decrease in customers’ satisfaction. thus, as far as management is concerned, a change of tactics may be required to approach customers, possibly by consolidating the media and the web presence and personnel’s attitude towards customers. table 6: comparative effect of the marketing tools on the analyzed utility suppliers respondents e.on eftn χ2 df χ2/df tli service offer à satisfaction 0,755**** 0,652**** 4.607,905 1.024 4,500 0,874 media à satisfaction 0,024 n.s. 0,021 n.s. rmsea (≤ 0,08) gfi agfi crc à satisfaction 0,002n.s. -0,010 n.s. 0,052 0,912 0,881 web à satisfaction -0,079** -0,052 n.s. srmr (≤ 0,08) nfi cfi personnel à satisfaction 0,009 n.s. 0,078* 0,0733 0,857 0,885 customer orientation à satisfaction -0,057 n.s. -0,115**** n.s. insignifi cant *p<0,1 prices (tariffs)à satisfaction 0,192**** 0,109** ***p<0,01 **p<0,05 ****p<0,001 tli, gfi, agfi, nfi, cfi > 0,8 44 prices (tariffs) the tariffs charged by the two suppliers also contribute to the increase of satisfaction felt by respondents. the prices charged by the gas supplier exert a more substantial and significant effect (0.192****) than do the prices of the electricity supplier (0.109**). this difference may indeed result from respondents’ understanding of the fact that the price currently paid is lower than that in other european states. the contribution of price to building satisfaction is likely to decrease significantly over time. 7. conclusions, limitations and research outlook notwithstanding the regulated market on which the two suppliers operate, the citizens who responded to the questionnaire deemed necessary that the regional suppliers – eftn and e.on – should take serious account of the possibility to adopt a genuine customer-oriented behavior. we believe that there is increased potential for both suppliers to attract customers and gain their loyalty. a proper customer orientation is obviously hampered by the nature and conditions of the market. therefore, it is quite difficult to exhibit customer orientation in the context of a regulated market where prices do not fluctuate freely. moreover, it is difficult to repair and improve the infrastructure and the characteristics of the gas and electricity supply industry. if the two companies operated in a market with strong competition, displaying an appropriate customer orientation would be not only a necessity but a reliable strategy to approach the market. it is strategically important for utility providers to exhibit a high customer orientation, satisfy customers and attempt to gain their loyalty. strengthening a company’s favorable image in the mind of the customer may represent a key element in attracting them and maintaining their loyalty. national statistics show an increasing number of romanians (albeit tiny by comparison with the total number of households) which opt for alternative energy sources, both thermal and electrical (micu, 2013). the suppliers’ exhibiting a ‘green’ orientation, in accordance with the principles of sustainable development and social responsibility, may contribute to increasing the value the customers place on the two companies. thus, should the citizens be fully satisfied with public utility providers, when they purchase a house or build a new one they could choose to connect their houses to the provider’s electricity or gas infrastructure instead of opting for alternative heating or lighting sources. we could state categorically that in such a hypothetical situation the two companies are really focused on satisfying the citizens’ needs in order to attract them and, in particular, bind them to the company. in our opinion, the two providers should make constant efforts to adjust their offer to the citizens’ requirements, attempt to draw them and make them fully aware of the highest safety conditions of service provision, at the best/fairest quality price ratio. last but not least, suppliers should make sure that an attractive and unitary image is embedded in romanians’ minds. customers may also be drawn closer by improving the communication methods, focusing more specifically on the online presence, send45 ing newsletters on a regular basis and providing friendly, attentive and competent service through the personnel. as shown in tables 5 and 6, services and service charges exert the greatest impact on customer satisfaction with utility providers. the impact of other factors on satisfaction is minor and shall not be taken into consideration. in other words, the only elements that actually contribute to the perceived image (and, certainly, the customer satisfaction) of utility providers are the services provided and the related prices. if the two companies operated on an open market without a monopoly situation, in which customers themselves were able to decide on the best heating or electricity source (e.g. making use of photovoltaic panels, heat pumps, domestic wind turbines), or if existing infrastructure allowed customers to connect directly to the provider with the best deal, then, the two analyzed companies would surely emphasize the marketing elements given that markets have become fiercely competitive. although theoretically liberalized, currently the energy market is still highly regulated. through its institutions, the european union exerts pressure on the romanian authorities to completely liberalize the energy market. in this context, the suppliers’ customer orientation will become a top priority as they envisage the opportunity of gaining a better market position in the future and increasing the profitability of their own business. despite the respondents’ status as captive customers, unable to choose another supplier, the decision-making factors of these companies should consider developing a favorable attitude towards the company, and its products and services when they define their goals and strategies. the findings of the current research clearly reveal that citizens are sometimes able to perceive the marketing tools that utility providers use to approach the market and appreciate favorably when products and services are diversified. in fact, the analyzed utility providers intensify their efforts to ‘copy’ the behavior of competing companies by allowing citizens to use various extra payment facilities (cash card, money transfer, direct debit etc.). therefore, the ongoing and consistent effort of these companies to adapt to the new conditions of a market undergoing liberalization is to be appreciated. as long as the supplier’s basic offer meets the customers’ expectations and demands, the effect of other marketing tools (communication, service etc.) on satisfaction should be improved. the suppliers may already have performed concrete actions in this regard but consumers may not have been fully aware of them. despite being a pilot study, the current research presents a relatively substantial image of the public utility market in the cluj area. although a convenience sampling was used, special attention was paid so that two conditions had to be met regarding respondents: they had to be selected according to the quotas from the annual romanian statistics yearbook (gender, age) for the studied area and had to know both providers. the limits pending correction in the future concern mainly the unequal number of persons willing to give answers about how they perceive the investigated companies. we appreciate that more attention is required in the future on how constructs are operationalized in the questionnaire, so that it should convey more accu46 rately the perception of utility providers. certainly, any other public utility providers (drinking water, transportation or public administration) could be selected as the subject of future research. references: 1. anre (romanian energy regulatory authority), 2013, 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16, 2013. 52. walsh, g. and beatty, s.e., ‘customer-based corporate reputation of a service firm: scale development and validation’, 2007, journal of the academy of marketing science, vol. 35, no. 1, pp. 127-143. 53. wright, g., chew, c. and hines, a., ‘the relevance and efficacy of marketing in public and non-profit service management’, 2012, public management review, vol. 14, no. 4, pp. 433-450. 54. yoo, b. and donthu, n., ‘testing cross-cultural invariance of the brand-equity creation process’, 2002, journal of product & brand management, vol. 11, no. 6, pp. 380-398. 55. ***, finanţiștii, online newspaper, ‘eurostat: energia electrică în românia este de două ori mai scumpă decât în franţa’, 2012, [online] available at http://www.finantistii.ro/ energie/eurostat-energia-electrica-in-romania-e-de-doua-ori-mai-scumpa-decat-infranta-72803, accessed on february 17, 2013. 56. ***, ionmuntean, blog on efficiency (and) energy, liberalization of the energy market [...], ‘liberalizarea totală a pieţei energiei electrice în românia începe pe 1 septembrie 2012, iar cea a gazelor naturale pe 1 decembrie 2012’, 2012, [online] available at http:// ionmuntean.com/2012/07/23/liberalizarea-totala-a-pietei-energiei-electrice-in-romania-incepe-pe-1-septembrie-2012-iar-cea-a-gazelor-naturale-pe-1-decembrie-2012/, accessed on february 16, 2013. 12 transylvanian review of administrative sciences, 16 e/2006, pp. 12-24 dacian c. dragoş associate professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca bogdana neamţu assistant professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca the rise and evolution of freedom of information legal regime in the european union the article presents the struggle for openness in the european union and the establishment of regulations regarding freedom of information in the activity of european institutions. the issue of public access to documents held by european institutions was taken into consideration rather late, strangely enough considering the experience of some member states, like sweden, which has freedom of information regime in place since the 18th century. introduction. free access to public information has always heated debate and generated controversy, probably more than other aspects of contemporary government and administration. the concept typically means having access to files, or to information in any form, in order to know what the government is up to (birkinshaw, 2001). freedom of expression is one of the best known and most fundamental of human rights. a number of different explanations have been offered as to why freedom of expression is so important, and these accounts often differ as to the kinds of expression which should be protected. nonetheless, there is broad consensus that the extent to which freedom of expression is protected is perhaps the most basic indicator of a liberal democratic society. this is because freedom of expression is considered, among other things, as an essential element of democracy itself – in order for members of a democracy to deliberate properly about what the law should be requires free and open exchange of different ideas and opinions. the importance of assuring free access to public documents and, through that, the openness and transparency in administration is evident, because: 13 a) in this way the citizens’ trust in governance is increasing; b) it helps making a more efficient system of public administration; c) the evaluation of the performance in governance is more effective; d) communication between the citizens and administration is better when administration is more open and transparent, and the citizens well informed; e) the autonomy of public administration from the politic influence is increasing as well; f) the public administration is more oriented to change and less resistant to that; g) the corruption is reduced as the process of government is more open and the individuals, the companies and the media can freely access the public documents. in this context, it is necessary to highlight the fact that the access to information in the public administration identifies problems concerning its integrity. a very important aspect of the impact of the freedom of information upon public administration is the weakening of the monopoly on information. the very curiosity of the public is a strong anticipatory weapon against corruption if it uses effective tools. nearly each of the quarrels regarding information (except vexatious requests) not only that identifies the problem in the relevant office (at least in communication with public) but it also often reveals corruption behaviour. the legal regime of freedom of information in european union. most european union member states have now freedom of information legislation, the exceptions being austria, italy and luxembourg, where under existing legislation only those directly affected by, or with a legal interest in a particular decision can apply for access to information contained in it. the limitations of this approach are illustrated by the fact that a journalist writing about on an issue, but not personally affected by it, would have no right to information. however, it should be noted that general access to information is not regulated at the level of european union (as applying to all member states) and europeanization of public administration is not yet finalized. the european union, thus, has distinct regulations on this issue, applicable only to the european institutions. after a great effort carried out by journalists, open national governments and even european institutions, the results start to confirm that the struggle was not in vain. whether or not transparency can be counted among the general principles of ec law remains open to debate, but it’s undeniable that its importance and status increased considerably, in particular since the time of maastricht treaty. the european union system of access to documents is similar to systems of access to documents or information in force in most countries that have legislation in this field (österdahl, 1998) and tries to respect the recommendation of the council of europe recommendation (2002) and the århus convention on access to information, public participation in decision-making and access to justice in environmental matters (1998) (ec commission report, 2004). the maastricht treaty. the evolution of regulations regarding free access to documents in european union started thus with the maastricht treaty (1992), which contains a new article 255 which enshrines the principle of public access to european parliament, council and commission documents; the treaty had annexed also a declaration on the “right of access to information”; the use of the word “right” in the title of this declaration was rather misleading, since the text of the declaration merely recommended that the commission should draft a report on “measures designed to improve public access to the information available to the institutions.” (deckmyn, 2002) the code of conduct from 1993. the second stage of evolution was the enactment of a code of conduct1, adopted jointly by commission and council in 1993 as a response to the recommendation 1 code of conduct (1993) o.j. l340/41 14 enclosed in the maastricht treaty. the code was implemented through two separate regulations (council decision 93/731 and commission decision of 8 february 1994). the code had a number of shortcomings, like the lack of right to access documents that were only partially accessible under it and the lack of provisions for establishing records of documents by the european institutions. the shortcomings were addressed later by the european court of justice in cases like hautala v council of the european union and kuijer v council of the european union. the code remained in force until 2001 when the council of the european union adopted a new regulation. during the timeframe when the code of conduct was in place, a series of court cases agitated the easy life of european union institutions (peers 2002, naôme 2002, öberg, 1999). thus, in carvel and guardian newspapers ltd. v. council of the european union2, john carvel, the european affairs editor of the guardian, wrote to the secretary-general of the council and asked for preparatory reports, minutes, the attendance and voting records, and the decisions of three meetings of the council for social affairs, justice and agriculture in october and november 1993. he was given from the general secretariat of the council a copy of the preparatory reports, the minutes and the attendance and voting records of the social affairs councils of 12 october and 23 november 1993 (by mistake, apparently) (armstrong, 1996, chitti, 1996, constantinesco, 1996). on the other hand, he was refused access to the minutes, the attendance and voting records and the decisions of the justice council of 29 and 30 november 1993, on the ground that the documents in question “directly refer to the deliberations of the council and cannot, under its rules of procedure, be disclosed”. the council also refused access to the preparatory reports to the justice council of 29 and 30 november 1993 on its future work program, on the ground that these were “preliminary texts preceding the decision of the council (justice and home affairs) to recommend the adoption by the european council of 10/11 december 1993 of the plan of action to be taken in the fields of justice and home affairs”. instead, the council sent the definitive texts, which had been adopted. the applicant renewed the request for justice affairs documents, asking the council to reconsider its decision. after a new refusal, john carvel filed an action to the european court of justice. in its findings, the court stated that the council had a discretionary power to allow access or to deny access to documents requested, and it failed in exercising its discretion when refused the disclosure under the pretext that the regulation does not permit it. the council should have balanced its own interest in withholding the information and the public interest in disclosure before making any decision, and this fact should have resulted from the case; on the contrary, from the case resulted only that the council believed it had no option regarding the disclosure of the documents. consequently, the council was required to pay applicant’s costs of the case. another relevant case, svenska journalistforbundet v. council of the european union3, came to the attention of the courts soon after sweden joined the european union in 1995. the journalists’ union, in an attempt to test the way in which the swedish authorities allowed access to documents relating to european union activities, applied to the swedish government for 20 documents of the council of ministers on europol. 18 of the 20 documents were provided with some sections blanked out. later, the union asked again for the same set of 20 documents, but this time directly the council of ministers; the council supplied only two documents, and then, in the confirmatory application (appeal) two other documents were supplied, making 4 out of 20 documents. in its response the council claimed access was refused on the grounds of maintaining the confidentiality of its proceedings (article 4.2 of the 1993 decision on access) as the documents mentioned the views of member states, and that the documents’ disclosure would be harmful to the “public interest” (article 4.1). it should be 2 case t-194/94 19.10.1995, available at http://europa.eu.int/ispo/legal/en/access/carvel.html 3 case t-174/95 (1998) ecr ii-02289 15 observed in this context the division between “open” governments and “secret” governments among the members of the european union, as the council was joined in the action by the governments of france and the uk, while the governments of denmark, netherlands and sweden intervened in support of the swedish journalist union. the first strategy of the council, and the two supporting governments, was to challenge the admissibility of the union’s case in part on the grounds that they were already in possession of the documents in question. nevertheless, the court’s opinion on the issue is categorical: “the fact that the requested documents were already in the public domain is irrelevant; the objective of the 1993 council decision on access to document is to give effect to the largest possible access for citizens to information with a view to strengthening the democratic character of the institutions”. one of the most interesting aspects of the court’s judgment is its findings on the concept of “public security”, in the sense that it covers “internal security” and “external security” as well as the interruption of essential services and could equally well include “attempts of authorities to prevent criminal activities”. moreover, the court was able to differentiate between documents concerned with “operational matters of europol itself” (which none of the documents enclosed) and the negotiations (including the views of european union governments) on the adoption of the europol convention (which the documents did include), observing that there was no evidence that disclosure would “be liable to prejudice a particular aspect of public security”. the court seems here to be creating a crucial distinction between policy-making (which properly belong in the public sphere) and particular (specific) operational matters (which do not) (bunyan: 1999: 37). in the end, the court annulled the decision of the council to refuse access to the documents to the swedish journalists union. when deciding the financial aspects of the ruling, though, the court unveiled that it was very annoyed at the newspaper placing on the internet (without consultation of their lawyers) the council’s defense in the case, and a s a consequence ordered the council to pay only two-thirds of the applicant’s costs as well as its own. in an equally important case, hautala v. council of the european union4, heidi hautala, a member of the european parliament, submitted in 1996 a question to the council requesting clarification of the eight criteria for arms exports. the council replied that “the political committee approved a report from the working group on conventional arms exports, with a view to further enhancing of the common criteria”, meaning that it is only a preliminary draft of a future decision. the report was though never formally approved by the council, and it was drawn up under a special correspondence system, which limited its distribution. hautala submitted therefore a confirmatory application for access to the report, but the council rejected the request, stating this time that the report’s release could be harmful to its relations with other countries. furthermore, the applicant lodged a complaint with the court of first instance. the council raised a jurisdictional objection, asserting that the report dealt with questions falling within title v of the treaty of european union, which expressly excludes jurisdiction of the court of justice, but the court held that the content of the report had no effect on its jurisdiction: “the fact that under article l of the treaty on european union the court of first instance does not have jurisdiction to assess the lawfulness of acts falling within title v thus does not exclude its jurisdiction to rule on public access to those acts.” further more, the court rejected hautala’s first assertion that the confirmatory application was given inadequate consideration by the council. it further dismissed her second argument that access to the report would not harm foreign relations. the court limited its review to verifying whether the decision of the council was properly reasoned, finding that the council produced the report for internal use, not general publication, and the report 4 european court reports 1999, page ii-02489 16 contained information that could cause tension with non-member states. finally, the court looked at whether the council overreached article 4(1) of decision 93/731 by refusing to grant access to passages in the report that were not covered by the protection of public interest exception, and found that the council could decide to grant partial access to the report, this being the turning point of the case. in light of these considerations, the court turned to its decision in svenska journalistforbundet stating that “the objective of decision 93/731 is to give effect to the principle of the largest possible access for citizens to information with a view to strengthening the democratic character of the institutions”, and concluding that the council would achieve its goal of public access to documents if it removed the passages that might harm institutional relations. finally, the court decided that article 4(1) of decision 93/731 must be interpreted under the principle of proportionality and the right to information and ultimately annulled the council’s decision, which refused access to the report of the working group on conventional arms exports. on 6 december 2001 the court of justice upheld the decision of the court of first instance. similar issues were raised in kuijer v. council of the european union5. aldo kuijer, a university lecturer and researcher in asylum and immigration field from utrecht in the netherlands, made a request to access certain european council’s reports: reports from 1994-1997 and for 1998, on the situations in 28 third countries in relation to asylum-seekers; reports carried out by member states and sent to the council’s centre for information, discussion and exchange on asylum (cirea); a list of contact persons used by cirea in asylum cases. he was refused access to these documents and told that the cirea reports did not exist. kuijer made a confirmatory application appealing against the decision and saying that he believes the documents did exist. the council turned down the appeal on general grounds saying that disclosure could undermine international relations. on top of that the council tried to argue that the 1993 decision on public access was only to allow the public to have access to the council’s documents, not to the information contained in them. in its decision on 6 april 2000 the court reaffirmed the approach in hautala case, stating that the applicant should have been granted access to the documents with the exception of those parts properly covered by the exception, and the council should have supplied the list of contact names (without the fax and phone numbers as the applicant had suggested). an examination of 10 reports supplied showed that the council had failed to show how the exemption applied to the documents refused and had, in the applicant’s words, used “short, identical and ritualistic” responses. however, on 5 june, the council still refused access claiming new grounds for refusal and the case went back to the court of justice. in its judgment on 7 february 2002, the court found against the council new arguments. the council’s basic argument was that the content of the documents could be construed as criticism of the third countries in question and that their disclosure could therefore be prejudicial to the european union’s relations with those countries. the court, after ordering the production of the documents so that they could be examined, dismissed this view on several grounds: a) the fact that the documents contained “information or negative comments” did not of itself mean there was a risk of the public interest being undermined. refusal must, the court said, “must be founded on an analysis of factors specific to the contents or context of each report”; b) the documents contained analyses of the political situation and many of the facts “have already been made public” and the european union may “itself, through its institutions, in particular the council and the presidency, have already officially criticized the internal situation of the countries concerned” and its relations “may be such that they cannot be damage by disclosure of any criticism”; c) the court also said the council “erred in law” when it refused access to the names of contact persons which had been 5 see case t-188/98, available at http://www.statewatch.org/docbin/caselaw/cfit188-98.html 17 made public in certain member states. therefore, the court of first instance annulled the council’s decision of 5 june 2000 refusing the applicant access to certain reports drawn up by the centre for information, discussion and exchange on asylum, to certain reports of joint missions or reports of missions undertaken by member states sent to the centre, and to information contained in the list of persons responsible in the member states for asylum applications to which access is permitted in certain member states, with the exception of those persons’ telephone and fax numbers and ordered the council to pay the applicant’s costs and to bear its own costs (bunyan 1999). in a recent decided case, mattila v council of the european union and commission of the european communities 1999 with decision on appeal in 2004 (c-353/01 p), the european court of justice in appeal set aside the decision of the court of first instance and the decisions of the commission and the council refusing mr. mattila, a finnish citizen, access to 11 documents concerning principally the relations of the european union with russia and ukraine, based on the failure by the community institutions to fulfill their obligation to examine the possibility of granting the public partial access to documents in their possession (press release no 10/04, 22 january 2004, www.statewatch.org). the amsterdam treaty. the third stage of evolution is represented by the signing of the amsterdam treaty (1997). in accordance with art.255 of the ec treaty, article introduced with this occasion, “any citizen of the union, and any natural or legal person residing or having its registered office in a member state, shall have a right of access to european parliament, council and commission documents (…); general principles and limits on grounds of public or private interest governing this right of access to documents shall be determined by the council, (…) within two years of the entry into force of the treaty of amsterdam”. each institution referred to above had the duty to elaborate in its own rules of procedure specific provisions regarding access to its documents (öberg, 1998). the 2001 regulation. following the aforementioned provisions, the right to access public documents was regulated by council regulation (ec) 1049/20016 which replaced the code of conduct and came into force in 3 december 2001 as directly applicable in all member states (peers, 2002). the regulation, a very short and concise document unlike other freedom of information laws, was designed to “give the fullest possible effect to the right of public access to documents and to lay down the general principles and limits on such access in accordance with article 255(2) of the ec treaty”(recital no.4). specifically, the regulation is intended to help create a culture of openness that enables citizens to assume more active roles in the decision-making processes and general life of the european union. however, regulation 1049/2001 has introduced a number of innovations which have considerably changed the regime of access to public information: the right of access has been extended to all documents held by the institutions concerned, including documents from third parties, thus excluding the “originator rule” under which only documents issued by the public authority could be disclosed upon request. another novelty, this time not in the interest of applicants, was the insertion of new specific exception intended to cover defense and military matters. a very important provision allows exceptions to be overridden as a result of a public interest test. thus, the regulation states that the protection of certain interests must be balanced with the public interest in disclosure, and if there is an overriding public interest in disclosure, the document will be made accessible even if an exception is applicable to the right of access. each institution must establish a public register of documents that can be consulted on the internet. in addition, the regulation lays down the objective that the documents should, where possible, be made directly accessible in electronic form. finally, the regulation imposes shorter time-limits for replies: the one-month time6 official journal of the european communities l 145/43, 31.5.2001 18 limit for reply has been cut to 15 working days, with the possibility of an extension of 15 working days in duly justified cases. furthermore, the court of justice has extended through its jurisprudence the exemptions also to include legal opinions (case t-610/97 r, carlsen and others v. council, and case t-44/97, ghignone and others v. council)7. on the other hand, a principle laid down in case law (t-14/98 hautala v. council)8 now forms part of the regulation (article 4(6)). thus, all parts of a document not covered by an exception must be disclosed, unless the selection of passages to be disclosed represents a disproportionate administrative burden compared with the value of the information contained in these passages. in accordance with the obligation imposed by the article 17 of the regulation, the commission, the council of the european union and the parliament have submitted annual reports that provide a general overview how each institution implemented the regulation in the previous year9. they encompass the number of cases in which the institution refused to grant access to documents, the reasons for such refusals and the number of sensitive documents not recorded in the register. analyzing these reports and the independent reports that came out, and especially the one drawn up by european citizen action service (ferguson, 2003) the conclusion is that at the very most, the institutions fulfilled the minimal requirements for correctly and consistently implementing regulation 1049. moreover, in certain cases, such as the implementation of article 4 (exemptions), the institutions do not seem to be compliant with the regulation. furthermore, the annual reports10 released by the council and commission do not contain enough useful information to give a thorough and accurate assessment of each institution’s implementation of the regulation. it is cases such as these that are the most worrisome, and therefore require the closest attention. above all, it is premature to claim that the implementation of regulation 1049/2001 has thus far resulted in a greater “culture of openness” in the union. significant strides are still needed by the institutions to ensure that there will be a greater culture of openness and transparency in the union (ferguson, 2003). at the latest by 31 january 2004, the commission was required to publish a report on the implementation of the principles of this regulation and shall make recommendations, including, if appropriate, proposals for the revision of this regulation and an action program of measures to be taken by the institutions. the report was published as promised, and it analyzes some of the problems encountered by the institutions when applying the regulation (commission’s report, 2004). it was noted for instance that very few journalists use the right to access to documents, although they act as vectors of information for the public and they should profit more from this regulation. this seems to happen because journalists are mainly interested in immediate news, in information on the spot and they won’t wait fifteen working days to receive a reply. usually, journalists are interested in sound recordings of european parliament meetings, documents concerning negotiations at the council, in particular in relation to the common foreign and security policy, the common foreign and defense policy and justice and home affairs, as well as investigations into specific issues such as the commission’s real estate policy or the practice of granting leave on personal grounds to officials. this last type of application clearly falls within the domain of investigative journalism. another observation is that the vast majority 7 (1998) ecr ii-485 and reports – public service 2000, p. ia-223 ; ii-1023 8 [1999] ecr ii-2489 9 parliament: review of the implementation within the european parliament of regulation (ec) 1049/2001(pe 324.892/bur.); commission: report from the commission on the application in 2002 of regulation (ec) no 1049/2001 (com (2003) 216, 29.4.2003); council: annual report of the council on the implementation of regulation (ec) 1049/2001 (6353/03, 7.3.2003) 10 commission: report from the commission on the application in 2002 of regulation (ec) no 1049/2001 (com (2003) 216, 29.4.2003); council: annual report of the council on the implementation of regulation (ec) 1049/ 2001 (6353/03, 7.3.2003) 19 of applications come from a very small number of journalists. in other words, journalists who are “specializing” on european affairs and have experience in requesting information are the most likely to use fully the regulation regarding access to documents. regarding the rate of refusals, the commission’s report (2004) and the independent reports (ferguson, 2003) are colliding on the conclusions. in commission’s opinion, taking into consideration that the number of applications doubled in 2002 compared with the previous year, during which the institutions applied the old system of access to their documents, and the figures for 2003 indicate another considerable increase in demand, the stable rate of positive responses and consequently the constantly growing number of documents made directly accessible is a positive development. in an opposite evaluation, the independent report observed that paradoxically, as access to documents became statutory with regulation 1049/2001, the refusal rate for access to documents has actually increased rather than decreased. for instance, the rate of refusal by the commission has steadily increased from 19% in 1999 to 23.4% in 2000, to 29.7% in 2001, and, finally, to over 33% in 2002 (counting as refusals the partial access, too). as concerns the exceptions invoked, the highest rate belongs to a combination of exemptions (38%), while inspections, investigations and audits count for 35.9% and protection of decision making for 8.6%. protection of personal data counts only for 5.2% of the refusals, court proceedings and legal advice for 3.7% and international relations for 1.8%. the situation in the council of the european union is a little better: in 2002, it granted 76.4% full access and 12.2% partial access, which brings the refusal rate (counting also partial witholding) to 23.6%. most of the witholding was based on protection of decision-making process (28%), followed by international relations (24.5%), public security (22.9%), court proceedings and legal advice (11.4%), only 0.2% on protection of personal data, while 10.5% were based on a combination of exceptions. from 1 january 2003 to 9 september 2003, the council had received a total of 1,933 total applications requesting a total of 9,249 documents, which means that the council only released 71.1% of those documents, resulting in 28.9% refusal rate. once the partial release of documents is included, the rate of release increases to a more impressive 86% (resulting in a 14% refusal rate). based on the council’s preliminary 2003 statistics, their 28.9% refusal rate (based only on documents released wholly) is nearly twice as high as their refusal rates for the past four years (again based only on documents released wholly) – it was 14.6% in 2002; 11.8% in 2001; 16.1% in 2000; and 16.3% in 1999. while there are possible explanations for this (such as the increase in the number of requests for documents), according to ferguson (2003), the fact that the refusal rate continues to go up, rather than stabilize or go down is still considered unacceptable. parliament appears to be the institution with the most openness, since it refused access only to 9 out of 528 admissible applications, hence a rate of positive response of 98.3%. one refusal led to a confirmatory application, following which partial access was granted. as regards the reasons for witholding, 22.2% of the refusals are based on protection of personal data, 55.6% on court proceedings and legal advice, while11.1% on protection of decision-making process (commission’s report, 2004). the difference in figures regarding exceptions used as a reason for witholding the documents reflects the different missions and activities of the institutions, not a different interpretation of the provisions in the regulation. thus, over half of parliament’s refusals are based on the need to protect legal opinions, while the council is concern with protecting its activities in the areas of intergovernmental cooperation (external and security policy, defense and cooperation on justice and home affairs) as well as its deliberation process. by far the most significant reason for refusing access invoked by the commission concerns the protection of its work of inspection, investigation and auditing. it has to be noted here that taking into consideration all three institutions, this exception (alone or together with other) is used to justify about two-thirds of the refusals. the doctrine has critically observed that 20 requests seem to be systematically refused when they fall within a category of exempted information, rather than taken on a case-by-case basis as instructed by regulation 1049/2001 (ferguson, 2003). rules of procedure for implementing the 2001 regulation. after the adoption of the 2001 regulation on access to public documents of the european union institutions, each institution has revised or adopted rules of procedure for granting access to own documents: bureau decision c 2001/374/01 for parliament11, the decision 13465/01 of amending the council’s rules of procedure for the council of the european union, respectively the detailed rules for the application of regulation (ec) no 1049/2001 for the commission12. during a review of all the regulations establishing the agencies, a provision was included in the founding instruments making regulation 1049/2001 applicable to the agencies and stating that the latter should adopt implementing rules by april 1st 2004. as a result, some agencies have adopted their own regulations: decision 2004/508/ ec of the administrative board of the european agency for safety and health at work13; decision 2004/605/ec of the translation centre for the bodies of the european union14; decision 2004/321/ec of the administrative board of the european foundation for the improvement of living and working conditions15; rules on public access to documents 2002/c 292/08 of the european investment bank16. the committee of the regions adopted a system of access to its documents on 11 february 2003, which is appreciated by the commission to be “quite in line with the provisions in regulation 1049/ 2001”17 (commission report, 2004). the economic and social committee adopted a similar system on 1 july 200318. the court of auditors, the european investment bank and the european central bank apply rules on access to their documents that are more restrictive than regulation 1049/2001 (commission report, 2004). as judicial bodies, the court of justice and the court of first instance have not adopted rules on access to their documents. the charter of fundamental rights. in december 2000 the parliament, the commission and the council jointly signed the charter of fundamental rights of the european union19, which is incorporated into the constitution of the european union that is now in a stalemate due to its reject by netherlands and france. in art.42 the chart proclaims the right to access public documents in european union: “any citizen of the union and any natural or legal person residing or having its registered office in a member state have a right of access to european parliament, council and commission documents”. this phase, which was supposed to mark the development of the right to access public documents in the european union into a fundamental human right, was delayed unfortunately by the rejection of the constitution of the european union by two countries (france and the netherlands) followed by the postponement of the debate regarding this issue indefinitely. proposals for improving the 2001 regulation and its implementation. upon analyzing the annual reports made available by the institutions, the european citizen action service has made some proposals for a better regulation in this field. their proposals include establishing a single 11 official journal of the european communities c 374/1, 29.12.2001 12 official journal of the european communities l 145, 31.5.2001 13 official journal l 210, 11/06/2004 p. 0001-0003 14 official journal l 272, 20/08/2004 p. 0013-0015 15 official journal l 102, 07/04/2004 p. 0081-0083 16 official journal c 292, 27/11/2002 p. 0010-0012 17 decision no 64/2003, oj l 160, 28.6.2003, p. 96 18 decision no 603/2003, oj l 205, 14.8.2003, p. 19 19 available at http://www.europarl.eu.int/charter/default_en.htm 21 register for all the commission documents; standardize the reporting mechanisms, harmonize the statistical information, and develop a common coding system within the three institutions to make it easier for citizens to trace certain legislative issues through all of the institutions; revising article 4 of regulation 1049 that allows for concrete guidelines to be developed by each institution to help its employees perform public interest tests consistently and successfully. in the same context, the commission is requested to investigate the high rates of refusal in the institutions and the possible misuse of the partial release of documents; look into the possibility of funding an independent help desk that would assist citizens with their requests for documents; submit a proposal that would require the council to not only release the positions of member states but also the identity of those council members that are responsible for such positions; address the commission’s responsibility and accountability to complainants; draft a proposal that clarifies the institutions’ treatment of applications requesting opinions drafted by the legal services departments; review and enforce the responsibility of the institutional agencies to submit annual reports (like the institutions themselves) regarding their implementation of regulation 1049 in the previous calendar year; launch a publicity campaign to increase citizens’ awareness of their right to access european union documents (ferguson, 2003). inter-institutional cooperation regarding access to documents. under the provisions of the art.15 of the regulation, the institutions are required to establish an inter-institutional committee to examine best practice, to address possible conflicts and discuss future developments on public access to documents. an independent evaluation of this requirement (ferguson, 2003) observed that commission, council and parliament do not categorize requests for documents in a standardized manner, thus making it quite difficult to accurately compare the types of requests the institutions receive. this also makes it challenging to assess how one institution handles a certain category of requests as compared with the other institutions. moreover, the statistical information cited in the institutions’ annual reports is not harmonized, making it difficult to draw inter-institutional comparisons and assessments about document requests, refusals, partial access etc. the institutions should therefore use the same statistical categories and reporting mechanisms in their annual reports. it was suggested also that such inter-institutional cooperation should include a general “coding system” for “the types of documents and for the decisional procedures to which they refer”, in order to alleviate the current confusion surrounding the use of several different coding systems among the institutions, as well as enable citizens to trace certain legislation or issues through all of the european union institutions with greater ease. yet, the author also believes that “inter-institutional cooperation can be extended too far, potentially harming or restricting the citizens’ ability to access documents”. it is important thus to admit that the powers of the institutions should in fact be kept separate. thus, as each institution has its own positive and negative attributes in terms of its policies and practices regarding public access to documents, if the three institutions were to pool together their documents in a single repository, our fear is that the lowest common degree of public access would result. this would therefore represent a weakening, rather than an improvement, of the citizen’s access to documents. in the context of inter-institutional cooperation and good practices, a parliament resolution20 mentioned the possibility of setting up an “inter-institutional help desk” that would assist citizens with their requests for documents. in ferguson’s opinion (2003), the idea of a help desk is a good one and the citizens of the union could benefit greatly from its formation. the author proposes though that the help desk should be organized independently from the institutions and staffed by representatives 20 http://www3.europarl.eu.int/omk/omnsapir.so.html 22 of ngos and other groups that are the primary applicants for access to documents (hence they could share their knowledge and experience with those less initiated with the process). the help desk would be in this way of a great value when writing the applications for access to documents, because, although applicants are not required to state their reasons for requesting documents, those applicants who provide compelling reasons for the release of documents (such as an overriding public interest) often have a greater chance of accessing those documents. the danger of setting the help desk alongside the institutions (i.e. as a formal body of the european union) consists in the fact that it would become increasingly likely that the citizen’s access to documents would be determined by the lowest common standard on which all of the institutions could agree, which would be a step backward, rather than forward. court cases under the 2001 regulation. it is worth mentioning that the european union has two courts. the lower court, the court of first instance, deals with cases where individuals sue the european union institutions. since most disputes over access to documents involve disputes between the institutions denying access to documents and individuals disputing legality of the decision, most of them are before the court of first instance. the second court is the european court of justice, which hears appeals against the judgments of the court of first instance (by individuals, the european union institutions or member states). it also hears cases where the european union institutions sue each other and cases between the european union institutions and the member states, including for example cases where a member state sues to annul an act of the institutions. also, it answers questions about european union law referred from national courts. the european court of justice is assisted by advocate-generals, who release a non-binding but influential opinion about how to decide each case before the court’s judgment. in addition to issuing full judgments, the courts can also issue orders, for example where an applicant has requested emergency measures, where they believe a case is inadmissible and so there is no need to rule on the merits of the argument (because, for instance, the applicant is out of time to sue), or where they are striking out a case because it has been settled. a very important feature of the legal regime of the decisions issued by the courts is that they cannot order the european union institutions to release documents when they refused to do so. they have only the more limited power to annul an institution’s refusal to release them, which still leaves the institution free to refuse the documents on other grounds. two years after the implementation of the regulation, the court of first instance had issued only one ruling and the ombudsman had resolved eleven complaints21. thus, in messina v. commission 2003 (t-76/02 ecr ii-17), a law lecturer asked for documents concerning state aids. the dispute concerned italian documents held by the commission, and the italians disagreed with their release. the commission therefore referred to article 4(5) of the regulation, allowing member states to request that their documents not be disclosed. the court ruled that the commission had not committed a manifest error of assessment in agreeing with the italian request, but on the other hand it did not rule expressly that member state’s ‘requests’ are in all cases binding on the european union institutions. the european union has still a long way to go towards openness and transparency. nevertheless, the ascending trajectory followed by the freedom of information regime from the carvel case is also impressive and reflects the progress in reforming the european institutions and a hope for the future. 21 six complaints against the council: 917/2000/gg, 1542/2000/pb, 573/2001/ijh, 648/2002/ijh, 1015/2002/pb and 1795/2002/ijh. five complaints against the commission:1128/2001/ijh, 1184/2002/pb, 1437/2002/ijh, 1753/2002/gg and 412/2003/gg 23 on the other hand, new developments triggered by the terrorist threats makes it harder to advance on the path of transparency and already puts a lot of tension on the decision-making process in the european union, in the same way as it does across the ocean, in the united states. references 1. armstrong, k. a., “citizenship of the union? lessons from carvel and the guardian”, the modern law review, 1996, pp. 582-588 2. birkinshaw, p., freedom of information. the law, the practice and the ideal, third edition, butterworths, 2001 3. borras rodriguez, a., jurisprudencia del tribunal de justicia de las comunidades europeas, revista juridica de catalunya, 1996, pp. 901-904 4. bunyan, t., secrecy and openness in the european union, kogan page, 1999 5. campbell, k., “access to european community official information”, international and comparative law quarterly, 1997, pp. 174-180 6. chiti, e., “il diritto di accesso ai documenti nel caso the guardian”, rivista italiana di diritto pubblico comunitario, 1996, pp. 369-380 7. commission of the european union, report on the implementation of the principles in ec regulation no 1049/2001 regarding public access to european parliament, council and commission documents, 2004 8. constantinesco, v., “chronique de jurisprudence du tribunal et de la cour de justice des communautes europeennes. institutions et ordre juridique communautaire”, journal du droit international, 1996, pp. 464-467 9. curtin, d., “betwixt and between: democracy and transparency in the governance of the european union”, in de witte, et al, (eds.), reforming the treaty on european union: the legal debate, kluwer 1996, p. 95 10. curtin, d., “citizens. fundamental rights of access to european union information: an evolving digital passepartout?”., (2000) 37 common market law review, p. 41 11. curtin, d., “the fundamental principle of open decision-making and eu (political) citizenship”, in o.keeffe and twomey, (eds.), legal issues of the amsterdam treaty (hart, 1999), p. 71 12. curtin, d., meijer, h., “access to european union information: an element of citizenship and a neglected constitutional right”, in neuwahl and rosas, (eds.), the european union and human rights, kluwer 1995, p. 77 13. curtin, d., meijer, h., “the principle of open government in schengen and the european union: democratic retrogression?” (1995) 32 common market law review, p. 392 14. davis, r. w., “public access to community documents: a fundamental human right?” european integration on-line papers, 3 (1999) 15. deckmyn, v., “introduction” to deckmyn (ed.), increasing transparency in the european union? european institute of public administration, maastricht, the netherlands, 2002, pp. 3-5 16. driessen, b., “the council of the european union and access to documents”, european law review issue 30, 2005 pp. 675-696 17. dyrberg, “current issues in the public debates on access to documents”, european law review vol.24 (1999), p. 157 18. ferguson, j., improving citizens’ access to documents: european citizen action service’s recommendations to the european commission and other institutions, 2003, available at www.ecas.org 19. harden, i., “citizenship and information”, european public law no.7, 2001, pp. 165-193 20. harden, i., “the european ombudsman’s efforts to increase openness in the union”, in deckmyn, v. (ed.), increasing transparency in the european union? european institute of public administration, maastricht, the netherlands, 2002, pp. 123-146 21. harlow, c., “freedom of information and transparency as administrative and constitutional rights”, cambridge yearbook of european legal studies, no.2, 1999, pp. 285-303 22. macdonald, j. and jones, c., (editors), the law of freedom of information, oxford university press, 2005 23. manzella, g. p., ziotti, p., “transparenza e diritto di accesso ai documenti”, giornale di diritto amministrativo, 1996, pp. 141-142 24 24. naôme, c., “the case-law of the corut of justice and of the court of first instance of the european communities on transparency: from carvel to hautala ii (1995-2001)”, in deckmyn, v., (ed.), increasing transparency in the european union? european institute of public administration, maastricht, the netherlands, 2002, pp. 147-198 25. o’neill, m., “the right to information in the european union”, in gazette of the incorporated law society of ireland, 1995, suppl. eurlegal, nr. 54, pag. 1 26. öberg, u., european citizens. rights to know: the improbable adoption of a european freedom of information act. cambridge yearbook of european legal studies no.2, 1999, pp. 303-329 27. öberg, u., public access to documents after the entry into force of the treaty of amsterdam: much ado about nothing? (1998) european integration on-line papers 28. österdahl, i., “openness and. secrecy: public access to documents in sweden and the european union”, european law review vol.23 no.4 (1998), p. 336 29. peers, s., “the new regulation on access to documents: a critical analysis”, yearbook of european law, vol. 21, 2002 30. peers, s., “from maastricht to laeken: the political agenda of openness and transparency in the european union”, in deckmyn, v., (ed.), increasing transparency in the european union? european institute of public administration, maastricht, the netherlands, 2002, pp. 7-32 31. ragnemalm, h., “the community courts and openness within the european union”, in cambridge yearbook of european legal studies no.2/1999, pp. 19-31 32. resources for the future, public access to environmental information and data: practice examples and lessons from the united states, the european union, and central and eastern europe, november 2001, washington, d.c. 33. ricatte, j., “transparence ou confidentialite du fonctionnement du conseil de l’union europeenne et de la comission: le cas exemplaire de l affaire “guardian” et ses suites jurisprudentielles”, gazette du palais, 1998, iii doct, pp. 1618-1625 34. sandulli, a., “l’accesso ai documenti nell ordinamento comunitario”, giornale di diritto amministrativo, 1996, pp. 448-449 35. tomkins, a., “transparency and the emergence of a european administrative law”, yearbook of european law, oup, volume 19: 1999/2000, p. 217 36. van bijsterveld, s., transparency in the european union: a crucial link in shaping the new social contract between the citizen and the european union, 2003, available at www.ip-rs.si 37. wachsmann, a., „droit d’acces des particuliers aux documents des institutions europeennes“, l’observateur de bruxelles, 1997, pp. 12-14 108 zero base budgeting method applied at education expenditures of cluj-napoca budget paul zai teaching assistant, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca adrian mihai inceu associate professor, department of finances, faculty of economics, babeşbolyai university, cluj-napoca dan tudor lazăr associate professor, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca transylvanian review of administrative sciences, 18 e/2006, pp. 108-118 this study is tyiing to propose alternative methods for budget elaboration, in order to be able to forcast the budget. for presenting the practical part of zbb (zero base budgeting), we have decided to apply zbb method for forecasting cluj-napoca budget chapter education. to estimate the values of the principal expenditures we will study the data from a budgetary centre, and a tertiary unit. the accuracy of our predictions is trying to underline the necessity of using modern methods for budget elaboration. the bases for this method have been formulated and developed by verne lewis in 1952 when he had done the first references for the marginal analyze of the decisions formulation regarding the assignation of the resources. this technique that is specific for the finances of the firm, the same way the cost-advantage analyze has been took over by jimmy carter when was the governor of georgia state and applied public sector. then when he became president he expanded it to the federal level. due the complexity of the analytic tackle, as well as the laborious process of documentation, in short time from the introducing this method, it has quit his implementation. however, further, due the absence of necessary resources for covering the request for new public services, the method become an interesting one for the specialists who have formulated the target –base budgeting. 109 zbb is a model a non-instrumentalist model and it is focusing on the process of reallocation of the resources, keeping a tackle from the base to the top in the implementation process of the budget. this method is differentiating from the others by giving value to the manager’s involvement in the process of taking decisions. zbb model, along with the performance budgets method, is based on the manager’s capacity to expert, to plan the budgetary policy, to choose among the alternatives solutions for development, as well as on the manner of allocating the resources. verne lewis1, the initiator of the method, presents the primary role of these methods. he says that “a marginal analyze for the assignation of the resources can not function coherently if the decisional unit is not optimized”. zbb is a method of budget preparation that was trying to prevent the increasing of the costs from year to year. this objective was achieved by an annual examination of the costs, based on the marginal analyze, made from the smallest decisional unit (the bureau) till the highest. it is suppose that each unit is starting from the premise that it hasn’t any budget for the actual year and it is elaborating the alternatives solutions for each financed program. it is establish which programs must be financed, it is made a hierarchy and they are sent to the superior decisional unit. the totality of the decisional packages is reflected in the estimated budget of the state, or of the local community. then it is determining the limit of the available resources for the costs, and it is made a hierarchy of the decisional packages, depending on the general priorities of the government (local or central) as it follows: the superior level takes the budgetary numbers that correspond to the inferior decisional unit for the previous year, and it analyze the utility and the efficacy for each program. when the efficiency of the program is low it is called level zero, and it is a cancel of the budgetary allocation for the respectively decisional package. if the efficiency is relatively reduced, comparing to the spent sums we are around the zero level that means the finance will continue with less resources. when the finances for the decisional package are increased and the allocations remain the same, it is called a normal level. the same process will take place to the inferior level, too, till the base, by choosing which decisional package will be financed from the existing resources. a similar method is the target-base budgeting that demands for the managers to evaluate their decisional package starting from the premise that the future budgetary allowances will be cut down to 70 or 80 percent from the current allowances. this fact will force the managers to compose new decisional package for avoid the situation in which their finances could be interrupted or reduced. on the other hand the managers will be stimulated to find alternative sources for finances and to increase the collecting index of the dues and taxes. the advantages of this method are the followings: • to the process of budget preparation takes part all levels of decision and that is a good communication between the higher and the lower coordinator of credits • a better evaluation of the needs of each organizationally unit; • this method stimulated the competition inside the organization to elaborate more coherent decisional package well underlined, with the objective to obtain the budgetary allowance. • at the same time zbb encourage the decisional units to be more efficient, if they wish to supplement their resources. although, the zbb method has a few disadvantages2: in the application of this method it did not made a allowance for in the political factor, which plays a decisive role for the founds assignation and this leaded to a falsification of the hierarchy of the decisional package due the influence of the superior decisional forum; 1 gianakis, gerasimos a., mccue, clifford p., ”local government budgeting – a managerial approach”, praeger publishers, wesport, 1999, pg.27 2 ibidem, pg. 82 110 in the preparation process the information get to the base till the top in the process of the budge realization, and from top down to the base m in the implementation of the budgetary decision. this thing has complicated the preparation of the budget, because of the huge number of information and it was impossible to process them the hierarchy of the decisional package did not make an allowance for the differences between the duties of the decisional units. for example, a hospital wouldn’t be more efficient than another one, if it cures more patients, it depends very much of the sickness they had. one of the most important disadvantages is the time factor. such a bulk of information needs a long period for taking the budgetary decision and at the same time there are many levels of processing the information. zbb conceptually speaking is the only method that stimulates the public institutions to be efficient, not wasting the money. it is also an efficacy method because it responds to the pupil’s needs. the failure of zbb is being due to the complexity of the phenomenon and he time factor, as well as to the hurry for being introduced and implemented. in order to present the practical part of zbb (zero base budgeting), we have decided to apply zbb method for forecasting cluj-napoca budget chapter education. to estimate the values of the principal expenditures we will study the data from a budgetary centre, and a tertiary unit. steps that have to be followed: 1. budget preparation of each education unit financed from local budget, based on the established objectives, and also budget grounding note. 2. cluj-napoca council is analyzing budget proposals, taking into consideration how efficient are used the allocated resources in the last year, and other efficiency criteria. 3. the comparison of asked sums level with available resources, depending on available local budgetary policy. 4. the allocation of financial resources on each financed unit is based on the result of an efficiency analysis and also on the efficiency of budgetary resources: ► low efficiency (funds)allocation at inferior level; ► normal efficiency (funds)allocation at asked level; ► superior efficiency (funds)-allocation at superior level; in order to realize this part of my case study we will analyze how funds are allocated, based on available budget, and also based on budget grounding note. we applied zbb at all kindergartens, schools and high schools from cluj-napoca. we identified 14 budgetary centers, and 39 schools and high schools. the budgetary centers have the following structure: • budgetary center no. 2 is formed from the following kinder gardens: kinder garden no. (1, 2, 6, 14, 15, 18, 32, 39, 40, 43, 44, 52, 57, 58, 59, 61, 69, 74, 26); • budgetary center no. 3 : kinder gardens no. (56, 8, 10, 13, 20, 21, 22, 23, 29, 37, 42, 45, 46, 47, 49, 51, 53, 67); • budgetary center no. 4 : kinder gardens no. (64, 3, 4, 12, 16, 19, 36, 38, 55, 63, 66, 68, 70, 71, 72, 73); • budgetary center no. 5 : school ioan bob, emil isac, high school waldorf, school no. 9, nicolae iorga; • budgetary center no. 6 : school octavian goga, ioan lupas, no. 20; • budgetary center no. 7 : school s. bărnuţiu, school no. 22, no. 27; • budgetary center no. 8 : school ion creangă, school no.21, high school e. pora, school no. 6; 111 • budgetary center no. 9: school liviu rebreanu, school no.3; • budgetary center no. 10: theoretical high school lucian blaga; • budgetary center no. 11: school ion agârbiceanu, school david prodan, school no 12; • budgetary center no. 12 : high school octavian stroia, high school romulus radea; • budgetary center no. 13 : high school terapia; • budgetary center no. 14 : high school gheorghe lazăr; • budgetary center no. 15 : high school forestier, school horea; we also have tertiary units formed by the following high schools: onisifor ghibu, emil racoviţă, apaczai c. janos, reformat, sanitar, g. bariţiu, ioan micu, s. toduţa, music school, edmond nicolau, maranatha, industria uşoară, economic, poştă şi telecomunicaţii, unirea, a. salini, tehnofrig, a. vlaicu, transporturi, energetic, raluca ripan, borza, ortodox, g. sincai, g. coşbuc, victor babeş, emanuel, baptist, m. eminescu, t. popoviciu, i. bathory, romano-catolic, brassai, unitarian, n. bălcescu, a. iancu, n. titulescu and c. brâncuşi. the budgetary centers no. 2, 3 and 4 are formed only from kinder gardens with normal and long schedule and all the others budgetary centers and tertiary units are composed from schools and high schools. the budgetary centre that we will study more will be liviu rebreanu school (budgetary center no 9), and nicolae bălcescu school. we have to say that from september 2005 the budgetary centres were eliminate but this problem won’t have a big influence in our research. from september 2005 each school has its own money. budgetary center no 9 is formed only from liviu rebreanu school and the levels of allocation are inferior for all important expenditures. this school is functioning from 1977 in mănăştur neighborhood, cluj-napoca. it has 22 classrooms, 7 labs (physics, chemistry, biology, geography, english, french, informatics), 2 workshops, 1 medical cabinet, library, and gym hall. thousands lei table 1 expenses 2005 2006 aprouved 2006 request total expenditures 1,634,460 987,400 2,405,000 curent expenditures 1,634,460 987,400 2,405,000 personal expenditures 1,243,460 735,000 1,500,000 material and services expenditures 391,000 250,000 900,000 transfers 0 2,400 5,000 in order to determine all important expenditures we will have to take into consideration some data presented in table 1 from 2004 and 2005. the total expenditures are composed from current expenditure, investments, loans and expenses on loans. the current expenditures are formed from personal expenditures, materials and services expenditures subsidies and transfers. if we look in at table 1 we will see that the sum approved by the cluj-napoca city hall is 987,400 thousands lei and the total requested sum was 2,405,000 thousands lei. at the current expenditures the differences are the same. regarding the personal expenditures cluj-napoca neighborhood approved in 2005 for liviu rebreanu school 735,000 thousands lei while the requested sum was 1,500,000 thousands lei. we can observe an interesting thing if we calculate the difference between the personal expenditures estimated by us and the approved ones and we will se that there is no difference because the number of classes and the number of hour are not changing from one year to another. here we will have to take also in to consideration the number of professors that are promoted but here is not the case. if we study the personal expenditures we will see that most of them are formed from salaries, followed by the expenses with state social assurance. 112 the approved sums for services and materials expenditure are 250,000 thousands lei and the solicited sum is 900,000 thousands lei. the principal components of the material and services expenditures are current reparations and maintenance expenditures. the materials and services expenditures are determined also by the proposed works for 2005 (frontage, gym floor changing, sanitation). the principal component of the maintenance expenditures are determined by expenses with heating, and then sewerage expenditures. percentage table 2 expenses 2006 apr / 2005 (%) 2006 req / 2005 2006 apr / req total expenditures 60.41 147.14 41.06 curent expenditures 60.41 147.14 41.06 personal expenditures 59.11 120.63 49.00 material and services expenditures 63.94 230.18 27.78 transfers 48.00 we have calculated some qualitative and quantitative indicators. first we calculated how the approved expenditures from 2006 are growing or not in comparison with the approved sums from 2005. the percentages of all important expenditures are under 100%.we also have calculated how the values of all important requested expenditures from liviu rebreanu school are growing in comparison with the approved sums from 2005. we have obtained the biggest percentage 198,84%, at materials and services expenditures. if we take the sums approved for 2006 and the sums requested we will see that the percent at personal expenditures is 49% and at transfers 48%. table 4 no. classes no. hours/ week no. of hours/week 2005 2006 2006/ 2005 2005 2006 2006/ 2005 2005 2006 2006/ 2005 i 3 3 1.00 18 18 1.000 54 54 1.00 ii 4 3 0.75 18 18 1.000 72 54 0.75 iii 4 3 0.75 18 18 1.000 72 54 0.75 iv 4 3 0.75 18 18 1.000 72 54 0.75 v 4 3 0.75 18 18 1.000 72 54 0.75 vi 3 3 1.00 18 18 1.000 54 54 1.00 vii 4 3 0.75 18 18 1.000 72 54 0.75 viii 5 3 0.60 18 18 1.000 90 54 0.60 total 31 24 0.77 144 144 1.000 558 432 0.77 an interesting thing is happening if we divide the approved values from 2006 at the requested ones. we will see that here all the percentages are under 100%. at personal expenditures 49%, at transfers we have 48% at current and total expenditures is 41,06%, and at material and services expenditures 27,78%. in order to estimate all important expenditures of liviu rebreanu school we have to take into consideration some data related to this school like: surface, the number of classrooms, number of hours per week, number of teachers, the administrative personal. we will need this data in 2005 and 2006. table 3 year 2005 year 2006 no. of buildings 2 2 surface of building no 1 1574,7 m2 1574,7 m2 surface of building 2 420 m2 420 m2 table 5 2005 2006 % no. teachers 42 42 100% no of administrative personal 14 14 100% 113 as we can see from table 3 we have two buildings 2005 and in 2006. the surface and the number of buildings are the same because in 2006 was not built anything at liviu rebreanu school. we have calculated the number of classes per number of classrooms and this number is in 2005 of 1.41, and in 2006 1.09. we also calculated the degree of classes increase by dividing the number of classes in 2005 to the one in 2006 and it is 0,77. the surface of the building was not modified so this surface does not influence the materials and services expenditures. this school has just classes from 1 to 8 and the number decreased with seven classes from 2005 to 2006, in 2005 we have 3 first classes, 4 fifth classes, 3 sixth classes, 4 seventh classes and in 2006 we have 3 first classes, 3 fifth classes, 3 sixth classes, 3 seventh classes. as we can see from table 4 in 2005 we have 31 classes and in 2006 just 24. the numbers of classes remains the same in 2006 at all classes and in 2005 the classes varies form 3 classes at first classes to 5 classes at the eight classes. we observe a reduction of the number of classes from 2005 and 2006. regarding the numbers of hours per week we can see that the total number of hours per week remains in 2006 the same at all classes. we have also calculated the fund of hours/week by multiplying the number of hours with the number of classes. we have obtained a total fund of hours/week of 558 in 2005 and 432 in 2006. we can see that this fund decreased from 2005 to 2006. by dividing founds from 2005 to founds from 2004 we will obtain per total a percent of 0,77%, that will help us later for estimating the personal expenditures. we also have calculated an indicator by dividing the number of classes to the number of classrooms. we can see that the number of teachers is the same in 2005 and 2006 (42), and also the number of administrative personal (14). an interesting thing is that although the found of hours decrease the teachers remains the same and the approved sums at liviu rebreanu school the personal approved expenditures in 2005 are bigger in comparison with the approved sums from 2006. table 7 thousands lei expenses 2005 2006 aprouved 2006 request % 2006 estimation 2007 estimation total expenditures 1,634,460 987,400 2,405,000 1,348,464 1,128,247 curent expenditures 1,634,460 987,400 2,405,000 1,348,464 1,128,247 personal expenditures 1,243,460 735,000 1,500,000 0.77 957,464 737,247 material and services expenditures 391,000 250,000 900,000 1 391,000 391,000 transfers 0 2,400 5,000 1 0 0 in the following paragraphs we have made an estimation of all important expenditures in 2006 and 2007. if we compare the total sum estimated by cluj-napoca city hall and the sum estimated by us we will see that the difference is of 1.056.536 thousands lei. with the help of the approved sum in 2005 we will determine the estimated sum for all important expenditures in 2006 and with the help of the sums from 2006 and the indicator calculated before at the fund of hours/week, we will determine the estimations for 2007. so the estimated personal expenditures from 2006 are determined by multiplying the expenditures from 2005 with 0,77. we will obtain in 2006 at the personal expenditures an estimated sum of 957.464 thousands lei. at all the other expenditures we will use an indicator with a value of 1. we have an indicator with the value 1 because the surface used for classes and the total available surface is the same. we will calculate the estimated sum for materials and services expenditures, for subsidies and transfers using this indicator. after the calculations we will obtain for materials and services expenditures a sum of 391.000 thousands lei and for transfers table 6 2005 2006 no. classrooms 22 22 no. classes 31 24 classes/classrooms 1.41 1.09 114 we will not be able to calculate the estimation. the estimation for current and total expenditures is obtained by adding all the estimated components. in 2006 for current a total expenditures we have the same value of 1.348.464 thousands lei. we will estimate also all the important expenditures in 2007 by multiplying the estimated values from 2006 with 0,77. we will obtain an estimated value for total expenditure of 1.128.247 thousands lei, witch is the same with the current expenditure. for personal expenditures in 2007 we have an estimated sum of 737.247 thousands lei. regarding the materials and services expenditures we have an estimated value of 391.000 thousands lei. if we compare the values for total expenditures in 2005, the estimated 2006 and the estimated in 2007 we will see that the total expenditures have a tendency of decreasing, from 1.634.460 thousands lei in 2005 at 1.128.247 thousands lei in 2007. the personal expenditures have the same tendency of decreasing from 1.243.460 thousands lei in 2005 at 957.464 thousands lei in 2006 and at 737.247 thousands lei in 2007. we also have calculated an indicator that will show us how the values will decrease or increase. if we compare the estimated values in 2006 with the approved values from 2005 we will see that all our estimated expenditures from 2006 are smaller than the requested values from 2005. the personal estimated expenditures in 2006 was 957.464 thousands lei and the approved sum in 2005 was of 1.234.460 thousands lei. if we compare the requested sums from 2006 with the approved sum from 2005, the estimated sums from 2006 and the estimated sums from 2007 we will see that all the requested sums are bigger than the others with the exception of transfers. we have also calculated indicators for determining the increase or decrease of the sums. in order to make this calculations we have divided: the estimated sums from 2006 to the ones from 2005, the estimated sums to the approved ones from 2006, the estimated to the requested ones from 2006, the estimated sums from 2007 to the approved ones from 2005, the estimated from 2007 to the approved from 2006 and the estimated sums from 2007 to the requested from 2006. table 8 expenses (percentages) 2006 est / 2005 2006 est / 2006 apr 2006 est 2006 req 2007 est / 2005 2007 est / 2006 apr 2007 est / 2006 req total expenditures 0.825 1.366 0.561 0.690 1.143 0.469 curent expenditures 0.825 1.366 0.561 0.690 1.143 0.469 personal expenditures 0.770 1.303 0.638 0.593 1.003 0.491 material and services expenditures 1.000 1.564 0.434 1.000 1.564 0.434 interest 0.825 1.366 0.561 0.690 1.143 0.469 if we look at table number 8 we will reargued that the smaller value is registered if we divide the estimated sums from 2007 at the requested sums from 2006(0.434). the biggest value is at transfers if we divide the estimated sums from 2006 at the approved sums from 2006 and if we divide the estimated sums from 2007 at the approved sums from 2006(1.564). another very important high school that we will study is nicolae balcescu high school. the high school has the following specializations: philology, mathematics-informatics, nature science. n. balcescu high school is one of the most important from cluj-napoca. the total expenditures are composed from current expenditure, investments, loans, and expenses on loans. at nicolae balcescu high school we can see the fact that we have a total approved expenditure in 2006 (2.433.750 thousands lei) and the requested expenditure (2.805.824 thousands lei), from all budgetary centers and tertiary units. the composition of the current expenditure is the following: personal expenditure, materials and services expenditure, subsidies, transfers and interests. the personal expenditures are formed from: wages expenditures, contributions for state social assurance, displacements expenditures, food tickets expenditures and contributions work and disease assurance. 115 thousands lei table 9 expenses 2005 2006 aprouved 2006 request total expenditures 2,256,381 2,433,750 2,805,824 curent expenditures 2,256,381 2,433,750 2,805,824 personal expenditures 1,861,383 1,919,000 2,275,000 material and services expenditures 394,998 439,850 455,924 transfers 0 74,900 74,900 the components of materials and services expenditures are the following articles (rights with social character, food, medicines and other materials, maintenance expenditures, material and services with a functional character, current reparations, capital reparation, books and publications, other expenditures). the requested values for materials and services expenditures in 2006 are 455.924 thousands lei and the approved materials and services expenditures in the same year are 439.850 thousands lei. if we look at the indicators calculated in table 10 we can observe that if we divide the approved sums from 2006 at the approved sums from 2005, we will see that all percentages are above 100%. if we divide the requested sums from 2006 at the approved ones in 2005 we will see that all percentages are above 100%. we do not have subsidies for this high school. the composition of the subsidies the following articles: subsidies from budget for public institutions, subsidies for products and activities, and subsidies for covering price and tariff differences. we don’t have capital expenditures and financial operations. table 11 year 2004 year 2005 no. of buildings 4 4 surface of building 1 6.350 m2 6.350 m2 surface of building 2 1.489 m2 1.489 m2 surface of building 3 503 m2 503 m2 surface of building 4 108 m2 108 m2 as we can see from table 9 the total approved expenditures in 2005 are 2.256.381 thousands lei, the approved total expenditures in 2006 2.433.750 thousands lei and the requested ones are 2.805.824 thousands lei. the current expenditures are the same with the total ones. the approved personal expenditures in 2005 were 1.861.383 thousands lei, the approved ones increased in 2006 at 1.919.000 thousands lei and the requested ones were 2.275.000 thousands lei. the most important component of the personal expenditures is wages expenditures regarding the material and services expenditures we can say that in 2005 were 394.998 thousands lei, decreased in 2006 at an approved sum of 439.850 while the requested sum in 2006 is 455.924 thousands lei. percentage table 10 expenses 2006 apr/ 2005 2006 req/ 2005 2006 apr/ req total expenditures 107.86 124.35 86.74 curent expenditures 107.86 124.35 86.74 personal expenditures 103.10 122.22 84.35 material and services expenditures 111.35 115.42 96.47 transfers 116 table 12 no. classes no. hours/ week no. of hours/ week 2005 2006 2006 / 2005 2005 2006 2006 / 2005 2005 2006 2006 / 2005 i 4 4 1.00 20 20 1.000 80 80 1.00 ii 4 4 1.00 20 20 1.000 80 80 1.00 iii 6 4 0.67 15 22 1.467 90 88 0.98 iv 4 6 1.50 35 23 0.657 140 138 0.99 v 6 4 0.67 18 28 1.556 108 112 1.04 vi 4 6 1.50 41 27 0.659 164 162 0.99 vii 5 4 0.80 25 31 1.240 125 124 0.99 viii 5 5 1.00 31 31 1.000 155 155 1.00 ix 4 4 1.00 38 38 1.000 152 152 1.00 x 4 4 1.00 38 38 1.000 152 152 1.00 xi 4 4 1.00 34 34 1.000 136 136 1.00 xii 4 4 1.00 32 32 1.000 128 128 1.00 total 54 53 0.98 347 344 0.991 1510 1507 0.99 these maintenance expenditures are formed from expenses with heating, lightning, post and phone, sewerage. another very important component of the materials and services expenditures is current reparations. also there were requested sums for books and publications. if we look at table 11 we will see that nicolae balcescu high school has 4 buildings with different surfaces. the first building is the biggest one with a total surface 6350 m2, and the smaller one is building number 4 with a total surface of 108 m2.the school functions in 4 buildings, some of them are very old: building no 1 is 115 years old, building no 2 is 68 years old, building 3, 26 years old and building no 4 is 78 years old. in the following paragraph we will explain some necessary data: number of classes, number of hours per week and fund of hours per week. we had a total number of classes in 2005 of 54 and their number decreased at 53 in 2006. we have constant number of classes in 2004 and 2005 at the following classes: i, ii, viii, ix, x, xi, xii. in the third grade we had 6 classes in 2005 and now we have only 4, the same thing happened in the fifth grade. in the seventh grade we had 5 classes and now we have 4. in the sixth grade we had 4 classes and now we have 6. regarding the total number of hours per week we can see that in 2005 was 347 and in 2006 are 344. so the total number of hours per week is decreasing. this decreasing is determined by the reduction of the subjects at the classes iii, v, vii. the total decreasing between 2005 and 2006 is of 0,991. like at liviu rebreanu school we have calculated the fund of hours per week and we have obtained in 2005 a total number of hours per week of 1510 and in 2006 1507. this found of hours per week is calculated by multiplying the number of hours with the number of classes. by dividing this fund of hours of each class from 2005 to the one in 2004 we will obtain a value of 0,99 that will be used in the personal expenditure estimation. the number of teachers decreased from 2004 to 2005. if in 2005 were 104 teachers in 2006 there were 99 teachers, so if we divide the value from 2006 to the value from 2005 we will obtain a table 13 2005 2006 no. classrooms 54 53 no. classes 54 53 classes/classrooms 1.00 1.00 table 14 2005 2006 % no. teachers 104 99 95.19231 no of administrative personal 19 16 84.21053 117 percentage of 95,19%. the administrative personal decreased with 3 persons. in 2005 there were 19 administrative personal and in 2006 at nicolae balcescu high school we have just 16 employees. in table 15 there are presented the approved sums from 2005 and 2006, the requested sums from 2006 and the estimations for 2006 and 2007. if we compare these data we can say that we have differences between the estimations and the approved sums. percentage table 15 expenses 2006 est / 2005 2006 est / 2006 apr 2006 est 2006 req 2007 est / 2005 2007 est / 2006 apr 2007 est / 2006 req total expenditures 0.992 0.919 0.798 0.984 0.912 0.791 curent expenditures 0.992 0.919 0.798 0.984 0.912 0.791 personal expenditures 0.990 0.960 0.810 0.980 0.951 0.802 material and services expenditures 1.000 0.898 0.866 1.000 0.898 0.866 transfers if we want to calculate the estimated sums from 2005 we will use the approved sum from 2005 and the indicator calculated before at the fund of hours/week. so the estimated personal expenditures from 2006 are determined by multiplying the expenditures from 2005 with 0,99. we will obtain in 2006 at the personal expenditures an estimated sum of 1.842.769 thousands lei. at the material and services expenditures, subsidies and transfers we will use an indicator with a value of 1. we have an indicator with the value 1 because the surface used for classes and the total available surface is the same. we will calculate the estimated sum for materials and services expenditures, for subsidies and transfers using this indicator. after the calculations we will obtain for materials and services expenditures a sum of 1.861.383 thousands lei. the estimation for current and total expenditures is obtained by adding all the estimated components. in 2006 the total value of the current and total expenditures estimated by us is the same (2.237.767 thousands lei). we will calculate all the other expenditures in 2007 by multiplying the estimated values from 2006 with 0,99. we will obtain an estimated value for total expenditure of 2.219.339 thousands lei, witch is the same with the current expenditure. the personal expenditures estimated for 2007 are 1.824.341 thousands lei. regarding the materials and services expenditures we have an estimated value of 394.998 thousands lei. in the following paragraphs we will make a comparison between the estimated values from 2006 and 2007 and the approved sums from 2005 and 2006. if we look at the data from table 15 we can see that the sums decreased with the exception of the estimated total and current expenditures from 2006. the total expenditures evolved in the following way: the approved total expenditures were 2.256.381 thousands lei, the approved ones in 2006 were 2.433.750 thousands lei, the estimated total expenditures in 2006 were 2.237.767 thousands lei and the estimated total expenditures in 2007 were 2.219.339. the requested sums for total expenditures were in 2006 of 2.805.824 thousands lei. the current expenditures evolved in the same way. the personal expenditures have the same tendency as they had at liviu rebreanu school, but here we have an approved sum in 2005 of 1.861.383 thousands lei. in 2006 we estimated a smaller value of 14.527.260 thousands lei and in 2006 we estimated a value of 14.381.987 thousands lei. if we look at the percentages from table 16 we will see that at subsidies, interest, investments, loans and expenses on loans we don’t have values. the calculations were made in the same way as they were at liviu rebreanu school. 118 we presented how the calculations had to be maid just at liviu rebreanu school and al n. balcescu high school because of some technical issues. the whole study could be made in a phd paper and it would be not possible to make in this paper the calculation for all the budgetary centers and for all the other 39 schools. we just presented the methodology of calculating the budget, in order to make estimation for the next year. further readings adrian mihai inceu, dan tudor lazăr, „finanţe şi bugete publice”, isbn 973-8915-01-5 ed. accent, cluj napoca, 2006 dan tudor lazăr, adrian mihai inceu, “bugetul funcţional (line – item budget) şi metoda buget bază zero (zero base budgeting – zbb)”, revista transilvană de studii administrative, nr. 2(11) 2004, pag. 86-91 dan tudor lazăr, adrian mihai inceu, „metode de elaborare a bugetului local”, revista transilvană de studii administrative, nr.1(6) / 2001, pag.71-76 gianakis, gerasimos a., mccue, clifford p., ”local government budgeting – a managerial approach”, praeger publishers, wesport, 1999 harvey rosen, „public finance”, 6-th ed., ed. mcgraw-hill, new york, 2002 howard a. frank, „budgetary forecasting in local government”, isbn 0-89930-725-6 ed. quorum, westport,connecticut, london, 1993 joseph stiglitz, “economics of the public sector“, 3-rd ed., ed. r.s. means company, usa, 2000 jack rabin, „handbook of public budgeting”, ed. marcel dekker, new york, 1992 musgrave r. & p., „public finance in theory and practice”, ed. mc. graw-hill book company, 1973. dan tudor lazăr, adrian mihai inceu, „specificul principiilor elaborării bugetelor locale”, revista transilvană de studii administrative, nr.1(6) / 2001, pag.66-70 32 abstract the need to cultivate ethical competences and to exercise ethical expertise has become a general feature of the present time. under the positive influence of the development of minimal ethics as a characteristic of post-modern society, important changes are taking place at the level of the organizational culture. the development of ethical codes, the increased importance of ethical commissions bring about the obligation of those university departments which offer programs of specialization in public policies and public administration to propose complex programs in which ethical competences and ethical expertise are developed, as structural elements for professionalization and professional development in the public sector. in this sense, a continuous effort for implementing the features of the deontological codes and of participating in trainings for specializing in the issues of professional ethics for civil servants is required. keywords: ethical codes, professional ethics, competence, ethical expertise, conduct of civil servants. increasing competence – an ethical duty of civil servants sandu frunză sandu frunză associate professor, department of political sciences, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.505 e-mail: frunza@fspac.ro transylvanian review of administrative sciences, special issue, pp. 32-41 33 1. ethical codes – an instrument for optimizing the profession the conduct of civil servants in romania establishes a series of nine principles, with different relevance and variable applicability, which civil servants must respect in their daily activity. among them a central principle is: ‘professionalism, a principle according to which civil servants shall be responsible, competent, efficient, honest and conscientious in pursuing their duties’ (law no. 7/2004, art. 3, letter d). therefore, in the process of professionalization of each individual involved in public sector activities, the educational institutions, that have a role to train professionals in public sector, the organizations in which these professionals are doing their job, and these professionals themselves should prioritize the merging of professional competences with ethical competences and ethical expertise. professional ethics codes are important instruments in accomplishing a favorable ethical context for decisions of optimizing ethics management in public administration. one of the objectives of the code of conduct is the growth of ethical competence and professionalism. this must be an instrument that works in a combination implied by the institutionalization of ethics in public administration. to reach such a goal, an increased effort is necessary in implementing public policies that favor this undertaking. it is concurrently necessary to have ethics management in each institution, with an emphasis on the continuous formation of the personnel through ethical trainings and institutional development in the spirit of the values assumed by each institution in part and the public system as a whole. based on the conclusions of many authors, jeremy f. plant synthesizes a few of the ways to circumscribe deontological codes: (1) codes are guides that help civil servants to distinguish between right and wrong; (2) codes emphasize the ethical standards of the conducts of those in public administration and therefore produce a higher level of trust in the institutions; (3) codes are meant to offer guidelines on interpretation of the situation where different values are conflicting, being an instrument for ethical decision; (4) codes define the ethical conduct of civil servants, strongly correlating professional standards and public action (plant, 2000, p. 311). jeremy f. plant notices that one of the important debates regarding codes in public administration concerns the existence of a confusion about three possible significations we associate with deontological codes and the purposes we attach to those: juridical systems, moral systems or instruments of symbolic communication (plant, 2000, p. 311). beyond such possible confusions, it is important to start with the premise that ethics is a distinctive dimension of the life of organizations and that it is closely related to performance in public administration. bogdan diaconu reveals the importance of ethical codes in close relation to the managerial function and the development of professional ethics: (1) the ethical code as a component of organizational culture. in this sense, the ethical code is the depository of the values of the organization, it does not only set the principles, the norms, the rules that guide conduct and ethical decisions, but also formulates the apotheoses of the organization. the code sets the ethical context where the personal and professional 34 development of individuals takes place; regulates the way to protect shareholders, managers, administrative apparatus employees and organization, seen as responsible subject interests; guides the organization towards various public categories and towards the whole society; develops the image and the prestige of the organization by correlating the interest of the organization with serving public interest (diaconu, 2009, p. 140). (2) the ethical code as an instrument of decision. it concerns the fact that once they are adopted, ethical codes become instruments of decision for all administrative structures and individual options, through a close correlation of the articles of the code and the functioning and internal regulations policies with legal articles. codes are described as instruments of prevention and solving conflicts. consequently, the ethics commission must dispose of a series of clear regulations and a series of ethical or administrative sanctions that should be clearly specified in the text of the code. beyond the general articles, ‘what must be well described, publicly repudiated, discouraged and sanctioned are the immoral practices, especially generalized ones such as bribery, backstairs influence, nepotism, preferential relations’ (diaconu, 2009, p. 142). (3) the ethical code as a management instrument in human resources. because it aims at making decisions and shaping actions in all levels of organizational structures, from the simple employee to the higher level of administration board, the ethical code ‘must guarantee justice and equity in: employment, promotion, internal integration, prize giving, eligibility’ (diaconu, 2009, p. 142). (4) the ethical code as an instrument of branding and marketing. the code has important functions in establishing relevant relations with other institutions, various organizations, and various public categories that must be involved in ethical relations and are loyal to the ethical and responsible principles of the organization (diaconu, 2009, p. 143). these four ways are evoked by bogdan diaconu as forms of a possible optimization of ethics oriented towards the development of professionalism by offering solutions, imposing decisions and generating efficient changes for all those involved: individuals, organizations, various public categories. an important aspect of ethical and efficient action is correlating the deontological codes proposed by the professional associations with the ethical codes of the organizations. starting from a principle oriented position, valentin mureșan considers there is a series of advantages in elaborating an ethical code based on principles: (1) ‘principles include moral values and are largely recognized throughout the world, beyond professional borders’; (2) ‘principles circumscribe the sphere of the moral’; (3) ‘together with principles we have a certain guide to extend the code’; (4) ‘with the largely recognized ethical principles, we have the sense of belonging to a mutual ethos’ (mureşan, 2010). a classical text that tries to operate the principles that must be at the basis of ethical conduct in public administration is that of william c. beyer. he is convinced that those who work in public administration cannot accomplish their mission unless they aim to attain public welfare; he manifests a preoccupation with the ethics that governs their conduct, but also for the terms of their employment, and the condition in which 35 they develop their activity. starting with this, william c. beyer suggests a series of principles that should guide the activity of those working in public administration: ‘(1) he should at all times be courteous, especially in his dealings with citizens who come to him with complaints or for information, assistance or advice. (2) he should give the best that is in him to the work he is called upon to perform. (3) he should deal fairly with all citizens, and should not accord to some more favorable treatment than to others. (4) he should not limit his independence of action by accepting gratuities or favors from private citizens who have business dealings with the government. (5) he should never be a party to any transaction which would require him, as a representative of a department of government, to pass upon the quality or price of goods or services which he, in some other capacity, is offering for sale to that department. (6) if a public servant is asked by his superior to do something which would jeopardize the vital interests of the public, he should first endeavor to dissuade his superior from pressing the request, and if this method proves unsuccessful he should tender his resignation, stating publicly his reason for doing so. (7) a public servant who is charged with the enforcement of a law with which he is not in sympathy should either sub-ordinate his personal views or resign from the service. (8) he should work in full cooperation with other public servants in furthering the ends of government and in promoting public welfare. (9) he should be true to his obligations as a custodian of public property and regard its misuse or waste as serious an offense as the direct misuse or waste of money from the public treasury’ (beyer, 1922, pp. 156-157). all these elements are significant for combining attitudes that are relevant for professionalism in public administration with ethical principles. however, another tendency is also present, to reject the idea that ethics and its validation through ethical codes could offer significant results in pursuing an efficient public activity. these critiques depart especially from the weaker character of the measures of a deontological code in relation to the rules imposed by law. moreover, those that criticize the function mode of codes and the exaggerated importance given to them, claim that deontological codes should actually propose employees the highest standards the profession has, regarding competence as well as ethics (lewis and gilman, 2005, p. 191). ethics management, seen as part of public management, emphasizes the importance of control exercised through ethical codes, legislation, other control forms and mechanisms, understood as external modes of influence of civil servants. in this context, ethical behavior is especially encouraged rather than proposing policies regarding the sanctions imposed for the infringement of the codes of conduct (maesschalck, 2005, p. 96). beyond any ethical minimalism, we must bear in mind that some codes are formalized as laws or juridical regulations. in this case, the infringement of elements of the code can attract sanctions or even conviction to a certain number of years in jail. ‘legislated codes provide legal penalties and protections as necessary and effective constraints on official power, public authority, and the potential for abuse of administrative discretion. 36 administrative standards and procedures assist decision making and managers by providing an operational framework tied to workaday realities’ (lewis and gilman, 2005, p. 191). even if they imply coercion, even if they envisage various types of sanctions, deontological codes are not an inquisitorial instance. they do not come to punish, but to trace the limits of the comfort of the professional activity and the benefits that derive from a mutual ethical conduct in the workplace. they come to clarify on the level of ethical standardization, implication and evaluation. consequently, codes should be regarded not as an instrument of coercion, but more like a structure of ethical standards that offer security to those under the power of an ethical code. it is natural that the employees of an organization know what are the expectations of the organization regarding the norms of conduct, principles and values embraced by the organization, the level of tolerance and the degree of sanctioning in relation to possible infringements of the respective regulations, what is the support regarding solving ethical dilemmas or conflicts, what type of loyalty and what degree of responsibility implies being part of that organization and so on. carol w. lewis and stuart c. gilman consider that we can associate codes with three general objectives and each of these can direct us towards different models of interpretation of the importance of the codes: (1) inside the organization, codes encourage conducts based on a very high ethical standard; (2) they are the instrument of ethical communication with a special effect regarding the degree of the growth of trust in the organization in question from various public categories the organization communicates with and serves; (3) they come to the aid of those faced with making ethical decisions (lewis and gilman, 2005, p. 191). in his turn, joseph f. zimmerman reveals the fact that, in the act of governing, ethical codes have become important instruments for implementing public policies. they follow three objectives: (1) ‘maintaining high ethical standards in government service, (2) increasing public confidence in the integrity of public officials and employees, (3) assisting officials and employees in determining the proper course of action when they are uncertain about the propriety of a contemplated action, thereby preventing them from unwittingly entangling public and private interests’ (zimmerman, 2001, p. 222). thus, codes have a special impact in shaping conduct as well as in making decisions. codes come to establish rules of conduct and ways to perpetually improve them, have the role of making available for the public instruments of ethical standards, of rewards and sanctions, even if, it is true, just as the case of laws, they do not offer any guarantee that once the codes are adopted, they will automatically act upon those that are the aim of the regulations present in the codes in question (lewis and gilman, 2005, p. 192). but, as we notice in the case of laws, applying sanctions for regulation infringement does not derive from the necessity of consciously assuming or not assuming the regulations of the code, but from the fact that they act in the ethical context in question. 37 2. ethical training as an instrument of professional development codes become more and more important for those working in public administration because codes are seen as a result of public expectations regarding the values that professionals in public organizations must promote. therefore, jeremy f. plant reveals that we have, on the one hand, professionalization, which determines ethics to become a daily preoccupation, and on the other hand, a request from the public regarding responsibility and the standards of conduct of professionals in public organizations. codes are seen as part of a training process of civil servants regarding competence, honor, integrity, serving public welfare and so on (plant, 2000, p. 327). thus, codes play an important part in eliminating trust deficit. it is well known that there is a better internal communication within the organizations where individuals are treated with respect and at the same time such organizations manage to build trusting relations with the community easier. trust in relations with the community is based on a complex process of communication, consulting and collaboration, which implies, among others, drafting ethical codes and offering ethical trainings (menzel, 2000, p. 360). an important part of ethics management implies knowing and applying the articles of the ethical codes. this is how the importance of ethics management training programs is revealed. trainings on ethical problems are not only meant to solve the situation that arises because of the ethics deficiency that is created in a professional environment, but also have the role of permanently emphasizing the importance of ethics and to offer punctual solutions in solving the ethical problems that arise, to engage each individual in the process of promoting ethics in the workplace (menzel, 2000, p. 358). those working in public administration are not submitted to the strong control that should come from professional associations, as it happens in other cultural spaces with various professions that have the right to license and to give the right to professional practice in the respective professions. this is probably why at the moment of hiring we do not have imposed rules to verify the fulfillment of all ethical standards, but they are implied as being taken for granted, until the contrary evidence. these standards can be easier verified by the employer rather than the professional association, which greatly diminishes the responsibility the public administration professional has regarding her/ his profession per se, regarding the professional association. concurrently, we can notice that in the case of civil servants ‘training in the application of a given public sector’s code of ethics is typically of minimal duration and relevance, even though it usually provides the primary mechanism for exposing new officials to the core values of the institution’ (whitton, 2009, p. 238). hence, it is imperative that a greater attention must be paid by public institutions to continually train personnel in domains concerning the growth of professional competence, and the acquiring and development of ethical competence has an important role in this matter. valentin mureșan suggests the need for three types of ethical training: (1) conformity training, that has as fundamental purpose the understanding of moral principles and rules and then acting according with these, understood as an adequacy to rules, principles, laws and so on; (2) formation training of moral dispositions, that 38 has as main purpose the introspection of rules, development of virtues, cultivating ethical situational thinking and so on; (3) training for development of moral thinking, that especially concerns the necessary forming of ethical competence and developing abilities and methods of ethical decision (mureşan, 2010). bearing in mind the dose of relativism that a society rebuilt on minimal ethics permits (lipovetsky, 1996; sandu and ciuchi, 2010; sandu, 2012), bearing in mind the increase in deontological codes of professional associations and of various organization that adopt their own ethical code, it is natural that in public administration arises the issue of the necessity of general guidelines and a unified ethical context so that the particular organizational provisions of the deontological codes destined for those working in public administration are drafted. although we live in the age of the decline of duties, although the strong sense of an absolutist moral or of a thorough and unique theory of obligations can no longer function in the new society, we cannot disregard the fact that public administration offers us the ethical context where we can speak of the existence of multiple duties that the various categories of workers in the public system have. beside the general sense of the duties we have regarding ourselves or regarding otherness, from the perspective of ‘a minimal ethics’, a ‘weak ethics’, we can talk about a series of duties those who want to work in public administration have. among these duties we mention: (1) duties to the profession, the organization we are part of, the various categories of public the organization serves; but also, (2) duties to ourselves in the lines of personal development, professional completion, perpetual growth of ethical competence. from the perspective of professional ethics is important to stress on the obligations of civil servants as ethical and juridical duty: ‘the civil servants are required to fulfill with professionalism, impartiality and according to the law, their duties and to withhold any act that could incur prejudices to natural or juridical persons or to the prestige of civil servants body’ (law no. 188/1999, art. 43, paragraph 1). the introduction of the ethical code through the means of a juridical codifying such as the law no. 7/2004 is a new argument to underline the imperative character of the measures of the code, the essential connection between ethical action and the wellfunctioning of institutions (cuceu, 2012), between the quality of the leader as bearer of the organization values in a context in which ‘both marketing and leadership got a new meaning for public organizations’ (ţigănaş et al., 2011, p. 212) and the quality of the legislative content that should be based on the idea that ‘laws are necessary to be constantly adjusted depending on the evolution of crime, the mode of expression, risks and vulnerabilities’ (copot et al., 2012, p. 110). thus, ethical action, ethical expertise or exercising ethical competences is involving both moral and legal or constitutional values (toader and toader, 2012). this juridical manner of exercising ethics in the professional space has as model the medical field. this overlapping of ethical and juridical is done through the tradition of professionals’ practice, but also under the pressure of the international documents ruling the bioethical problems (ioan, 2011; cojocaru, 2012). using that model, in public administration ethical action is overregulated by becoming 39 an action that is voided by any possibility to subjectively choose, and that is found under the pressure of obligation brought by the law. one must depart from the premise that in all democratic societies ‘the formal training of a professional, whether in law, medicine, or ministry, is one of the first and most striking characteristics of the practitioner, a characteristic which decidedly sets him apart from everyone else within his community of service’ (morgan, 2010, p. 116). this concern is all the more important in the context in which we assume that a laicization of ethics is needed, at least when we have in mind the public space (iliescu, 2010; frunză, 2011), in the conditions in which the relation between secularism and resurge of religious tends to become pretty ambiguous in contemporary public attitudes (yildirim, 2010; ciomoș, 2010; herţeliu, 2012). if we accept that universities ‘may be understood as fundamental organizations to any nation even while needing to modernize their approaches to institutional management’ (mainardes, alves and raposo, 2011, p. 140), than it is obvious that universities must contribute to a significant extent to providing a competitive environment in economy, in politics, in administration. one of the ways could be that of developing the system of lifelong learning, which became a central concept in the eu ideal to build a society based on knowledge, communication and ethical values. it is necessary to understand that ‘the lifelong learning concept aiming to equip learners with the skills and competencies’ (popescu, 2012), which should lead both to an increase in professionalism and to an improvement of ethical competences. in this sense, the ethical training practiced in the university programs on public administration should be supplemented with educational programs, postgraduate programs and trainings on ethical topics, with the declared purpose to form ethical competences and to build ethical expertise. no program of university training in public administration can afford not to offer such courses dedicated to specialists in public administration that are already on various steps of their professional careers. this is an important way in which the departments of public administration from universities may participate to the community life. these kinds of elements or more other alike are the basis of the new ethical standards we must have in sight while elaborating institutional strategies and deontological codes. good governing, efficient administration of public affairs implies the fact that in the system we the employees are ‘good people with the character, vision, and courage to do the right thing’ (lewis and gilman, 2005, p. 270). hence the special importance the managerial function has, from an ethical perspective, in drafting, adopting and implementing the ethical codes and all other elements that derive from this. at the same time, the necessity of developing professional completion programs appears as evident, and should be constantly included within these programs of ethical training. 40 references: 1. beyer, w.c., ‘ethics in the public service: proposals for a public service code’, 1922, annals of the american academy of political and social science, vol. 101, ‘the ethics of the professions and of business’, pp. 152-157. 2. ciomoș, v., ‘the deterritorialization of human rights’, 2010, journal for the study of religions and ideologies, vol. 9, no. 25, pp. 17-27. 3. cojocaru, d., ‘the issue of trust in the doctor-patient relationship: construct and necessity’, 2012, revista română de bioetică, vol. 10, no. 3, pp. 3-5. 4. copot, d., vatavu, g., diaconescu,v., diaconescu, r. and rusu, i., ‘juridical protection of the romanian 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(ed.), classics of administrative ethics, boulder: westview press, 2001, pp. 220-237. 136 abstract the importance of borrowing is fundamental for central public administration and it consists in sources of fi nancing budget defi cit and refi nancing government debt. in the last years, a lot of countries had diffi culties regarding the payment of public loans at their maturity due to the burden of government debt to gdp ratio. in this situation, investors lose their confi dence not only in the country that is facing problems, but also in other states that pay their debt at maturity. for this reason, they are careful at any change that affects sovereign rating. from our investigation we found that sovereign rating has a negative infl uence on bonds’ interest rate. as such, decision makers from central public administration should focus on improving sovereign ratings in order to decrease interest rates. keywords: central public administration, sovereign rating, interest rate, fi nancial market. the correlation of sovereign rating and bonds’ interest rate in eu member states*1 emilian-constantin miricescu emilian-constantin miricescu associate professor, department of finance, faculty of finance, insurance, banking and stock exchange, center of financial and monetary research, bucharest university of economic studies, bucharest, romania tel.: 0040-213-191.900 e-mail: emilian.miricescu@fi n.ase.ro * acknowledgements: this work was supported from the european social fund through sectorial operational programme human resources development 2007 – 2013, project number posdru/159/1.5/s/134197, project title “performance and excellence in postdoctoral research in romanian economics science domain”. transylvanian review of administrative sciences, no. 45 e/2015, pp. 136-148 137 1. introduction in contemporary days, the need of the governments to borrow money is generated by the increased demands from citizens to cover the collective needs as most countries had to spend more public money than the revenues collected through mandatory taxes, capital income, external grants and other fi nancial resources (miricescu, 2011). văcărel et al. (2003) highlighted the need for borrowing as many countries around the world are confronted with the problem of public budget defi cit. whole loans borrowed by the government, local public administration authorities and by other public institutions, along with related interest and commissions which were not paid, represent the public debt at a certain time. in terms of public borrowing importance, stroe and armeanu (2004) emphasized that the fi nancing of temporary cash-fl ow problems and the budget defi cit through loans instead of taxes shows some benefi ts, such as: effi ciency, avoidance of social discontent, and relative decrease of fi scal eff ort over time. if interest rates are too high the government debt will increase rapidly. in this context, văcărel et al. (2003) highlighted that the elevated level of interest rates collected on foreign loans contributed to the external debt crisis of developing countries. but moşteanu et al. (2008) explained that because of the serious problems that faced some debtor countries, the paris club was founded within the international fi nancial system that can restructure and even cancel public debt. for romania, sovereign rating has a particular signifi cance, as in june 2014 from the total public administration debt 54.14% was borrowed from the external markets. we consider that an opportunity for central public administration to decrease interest rates is sovereign ratings improving with the purpose of reducing the public debt burden. figure 1 shows that government debt to gdp ratio in the euro area had an increasing trend, starting from 69.2% in 2000 and reaching 93.9% in 2014 q1. government debt to gdp ratio in the european union started from 61.9% in 2000 and reached to 88% in 2014 q1. compared with 2000, the euro area member states increased with 24.7 percentage points (pp) in their debt to gdp ratio at the end of 2014 q1. compared with 2000, the european union member states increased with 26.1 pp in their debt to gdp ratio at the end of 2014 q1. in our opinion, central public authorities should have a suitable management of public debt portfolio in order to bett er fulfi l the citizens needs on long term. figure 2 shows that for 16 member states, government debt to gdp ratio exceeds the ceiling specifi ed by euro convergence maastricht criteria (maximum 60%), and for 12 member states the index complies with maastricht criteria. we fi nd in figure 2 that government debt to gdp ratio in the european union member states at the end of 2014 q1 varies from 174.1% in greece to 10% in estonia. in our view, large government debts lead to large interest expenses in the public budgets, and we study the infl uence of sovereign rating on bonds’ interest rate. 138 69.2% 68.0% 67.8% 68.9% 69.4% 70.1% 68.3% 66.3% 70.1% 79.9% 85.3% 87.3% 90.6% 93.9%92.7% 88 .0 %87.2%85.2%82.5% 80.0% 74.8% 62.5%59.0%61.4% 62.6%62.1%61.9%60.5%61.1%61.9% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 euro area european union figure 1: government debt to gdp ratio in the euro area and in the european union source: our results based on data provided by eurostat 174.1% 123.7% 112.2% 84.3% 49.5% 44.3% 40.3% 38.2% 22.8% 10.0% 20.3% 39.0%40.4%45.6% 58.4% 58.6% 68.0%75.1% 73.5%75.3% 77.3% 78.7% 91.1% 96.6% 96.8% 105.1% 135.6% 132.9% g re ec e it al y po rt ug al ir el an d c yp ru s b el gi um sp ai n fr an ce u ni te d k in gd om h un ga ry sl ov en ia g er m an y m al ta a us tr ia n et he rl an ds c ro at ia fi nl an d sl ov ak ia po la nd c ze ch r ep ub lic d en m ar k sw ed en l ith ua ni a r om an ia l at vi a l ux em bo ur g b ul ga ri a e st on ia figure 2: government debt to gdp ratio in the eu member states at the end of 2014 q1 source: our results based on data provided by eurostat figure 3 shows that government debt to gdp ratio in romania had an increasing trend, starting from 12.6% in 2007 and reaching to 38.4% in 2013. debt interest to gdp ratio in romania also had an increasing trend, starting from 0.7% in 2007 and reaching to 1.7% in 2013. so, government debt to gdp ratio increased faster than debt interest to gdp ratio, as a consequence of sovereign bonds’ interest rate diminution. specialized global rating agencies are standard & poor’s, moody’s investor services and fitch ratings. however, sovereign ratings are also provided by local or regional rating agencies, specialized services from banks, foreign trade agencies and fi nance journals (miricescu, 2011). sovereign ratings split countries in two clusters: (i) investment grade with ratings equal to or above bbb(for standard & poor’s and fitch ratings) and baa3 (for moody’s investor services); (ii) speculative grade with ratings equal to or below bb+ (for standard & poor’s and fitch ratings) and ba1 (for moody’s investor services). 139 12.6% 13.4% 23.6% 30.5% 34.7% 37.9% 38.4% 1.7%1.8%1.6%1.4%1.2%0.7%0.7% 2007 2008 2009 2010 2011 2012 2013 government debt to gdp ratio debt interest to gdp ratio figure 3: government debt to gdp ratio and debt interest to gdp ratio in romania source: our results based on data provided by eurostat table 1: rating scale standard & poor’s aaa aa+ aa aaa+ a abbb+ bbb bbbbb+ bb fitch aaa aa+ aa aaa+ a abbb+ bbb bbbbb+ bb moody’s aaa aa1 aa2 aa3 a1 a2 a3 baa1 baa2 baa3 ba1 ba2 standard & poor’s bbb+ b bccc+ ccc ccccc sd d fitch bbb+ b bccc+ ccc ccccc c ddd dd d moody’s ba3 b1 b2 b3 caa1 caa2 caa3 ca c c c source: our results based on data provided by bran and costică (2003) and rating agencies an earlier version of this paper (miricescu, 2012) was presented and published in the proceedings of the 6th international conference on globalization and higher education in economics and business administration. the paper is organized as follows: section 2 reviews the existing fi nancial literature regarding the correlation between sovereign ratings and the interest rate on sovereign bonds, section 3 presents the database and research methodology used in our study, section 4 analyzes the correlation between sovereign ratings and the interest rate on sovereign bonds for 25 developed and emerging eu member states and section 5 concludes. 2. literature review in recent years, the correlation between sovereign rating and interest rates on bonds was studied in several quantitative papers; almost all the articles emphasize systematic analysis of sovereign ratings (cantor and packer, 1996). sovereign ratings were established by the rating agencies moody’s and standard & poor’s. cantor and packer’s (1996) study was carried out on 49 developed and emerging countries by using a regression analysis having data for the 1987-1994 period. the authors stated that investors in sovereign bonds are excessively pessimistic, when countries with low credit ratings intend to issue government bonds on the international fi nancial 140 market; investors also require high yields on such securities. in order to validate this conclusion, we mention that in july 2014 romania obtained from standard & poor’s an investment grade rating (bbb–) and borrowed money at 4,16% interest rate compared with germany which obtained from standard & poor’s an investment grade rating (aaa) and borrowed money at 1,11% interest rate. min (1998) analyzed determinants of diff erence between government bond yields in emerging economies and the us government bonds yields. the main factors identifi ed as signifi cant in economic terms were: (i) public debt to gdp ratio – positive infl uence, (ii) public debt service to exports – positive infl uence, (iii) net foreign assets to gdp ratio – negative infl uence, and (iv) international reserves to gdp ratio – negative infl uence. according to the author, the impact of sovereign ratings on yield spread of government bonds was high. reisen and von maltz an (1999) examined the impact of changes in sovereign ratings on diff erence between government bond yields having 10 years maturity for 29 emerging economies and the us government bond. the sovereign ratings were established by the rating agencies moody’s, standard & poor’s and fitch. the article was carried out by using a sample panel data over the period 1989-1997. the authors concluded that the spreads of government bond yields had already varied before the change of sovereign ratings, namely the fi nancial market anticipated in advance sovereign ratings’ changes. in our opinion, the changes in ratings are performed usually once a year (if it is necessary), but investors generally include gradually positive and negative perceptions on the issuers into bonds’ price. there are relatively few examples of more than one rating change during a year. according to reisen and von maltz an (1999), when sovereign rating decreased, the negative infl uence on bond yield spreads continued for about 20 days after the announcement of change. we believe that investors have confi dence in opinions expressed by rating agencies, which are brought into the interest rates of sovereign issuers. beck (2001) used a panel data and showed that determinants of government bonds spreads are long-term variables, such as determinants of sovereign ratings and forecasts indicators for economic growth – negative infl uence, domestic infl ation – positive infl uence and international interest rates – positive infl uence. the study was performed on nine emerging countries, including data over the period december 1998 – august 2000. kaminsky and schmukler (2002) examined 16 emerging countries by using a panel data analysis with data over the period 1990-2000. sovereign ratings were established by the rating agency standard & poor’s. the authors concluded that sovereign ratings and outlooks of emerging countries infl uence government bond yields and also the bond yields of nearby countries – which are vulnerable on macroeconomic indicators. the infl uence of sovereign ratings and outlooks on government bond yields are stronger in the period of crisis. the reason for this correspondence is that economic trade increased between nearby countries, and the problems are almost the same. 141 gonzalez et al. (2004) revealed that sovereign ratings have a moderate correlation with interest rate spreads and this correspondence is more evident for downgrades than for upgrades, and may be more signifi cant for equity prices than for bond prices. also, liquidity, taxation and historical volatility are determinants for spreads. the authors explain that the basic rationale for using ratings is to achieve information economies of scale and solve principal-agent problems. powell and martinez (2008) revealed, by taking into consideration sovereign ratings which were established by rating agencies moody’s and standard & poor’s, that a rating model should include: (i) variables of the real sector (economic growth level, gdp per capita, infl ation and unemployment rate); (ii) external sector indicators (external debt, real exchange rate volatility and international reserves), (iii) variables that highlight the political and institutional environment (especially the eff ectiveness of government), and (iv) indicators of public debt and consolidated budget defi cit. the scholars used a regression based on a structured data panel, which showed that sovereign ratings of emerging economies such as brazil, argentina, mexico and chile have a greater impact on the spread of credit default swap than other fi nancial factors such as: the yield of us t-bills and the yield index of us corporate bonds. hartelius, kashiwase and kodres (2008) carried out a study on 33 emerging economies and the us economy with data collected over the period january 1991 – february 2007. the authors used sovereign ratings established by the rating agency standard & poor’s. the scholars found that the main determinants for emerging market spreads are both sovereign rating and the us interest rates. greenidge, drakes and craigwell (2010) explored empirically the causality direction between external debt and sovereign rating by using panel causality tests for 32 developed and emerging countries having data over the period 1998-2008. the authors used sovereign ratings established by the rating agency standard & poor’s, and they concluded that there is a bidirectional causality relationship between external public debt and sovereign rating. the scholars highlighted that sovereign rating is one key element that determine if the lender provides the credit and the interest rate. jaramillo and tejada (2011) emphasized that an investment grade sovereign rating is related to low interest rate spreads on fi nancial markets. based on a panel data analysis over the period 1997-2010 for 35 emerging economies, the researchers showed that sovereign investment grade rating reduces the interest rate spreads against a benchmark with almost 36% from the interest rate spreads involved by the macroeconomic fundamentals of these countries. sahinoz and gonenc (2011) examined for the period 1998-2008 18 emerging market economies in a panel data. the authors concluded that these countries should enhance the economic growth, reduce the public debt to gdp ratio and sustain the institutions’ strength to facilitate recovering the sovereign ratings and to have lower interest rates. canuto, santos and porto (2012) analyzed for the period 1998-2002, 66 countries by using a panel data analysis. the authors used sovereign ratings established by moody’s, standard & poor’s and fitch. the authors emphasized that a high sovereign 142 rating (which involves a low sovereign risk) is the result of high per capita income, high economic growth and a low government debt. thus, a low sovereign risk determines a low interest rate on government bonds. afonso, gomes and taamouti (2014) examined 21 eu countries from january 1995 until october 2011 in a panel data. the authors used sovereign ratings established by the rating agencies standard & poor’s and moody’s and fitch. the authors concluded that rating upgrades do not have any signifi cant eff ect on volatility, but sovereign downgrades increase bonds volatility after two lags. from the fi nancial literature we conclude that sovereign rating has a major impact on interest rates of government bonds, especially in emerging countries which have frequently speculative ratings. in many cases, rating changes performed by rating agencies are already contained in sovereign interest rates. in this case, the interest rate change is small after the press announcement. 3. database and methodology our investigation will be conducted on annual data (end of december of each year), over the period 2001-2013 for 25 countries members of european union by applying a regression analysis. of the 28 european union member states we removed germany, estonia and croatia. we excluded germany because for this country the dependent variable is zero in all cases. according to european central bank, there are no estonian sovereign debt securities that comply with the defi nition of long-term interest rates for convergence purposes, and no suitable proxy indicator has been identifi ed; so we decided to eliminate estonia from our analysis. we excluded croatia from our analysis because for this country there are less data for long-term interest rates. independent variable is sovereign rating (rating) established by the rating agency standard & poor’s as a measure of risks associated to the borrower countries. dependent variable (sp) is the spread between each member state long-term interest rate and germany’s long-term interest rate. long-term interest rate represents a convergence criteria corresponding to sovereign bonds close to 10 years maturity. afonso, gomes and taamouti (2014) used 10-year government bonds taken from reuters for interest rate. we consider germany’s long-term interest rate to be a proxy for riskfree interest rate, as germany has the highest gdp from the eu member states and germany had in many investigated periods the lowest interest rates for sovereign bonds. pungulescu (2013) also used german government bonds as benchmark rate, and she omitt ed germany from the regressions. afonso, gomes and rother (2007) used a linear scale and they grouped the ratings in 17 categories, by putt ing together in the same bucket the few observations below b(as presented in table 2). we analyzed 25 countries that had ratings ranging from aaa to cc, which leads to the following linear transformation, from qualitative variables in quantitative variables (table 3). 143 table 2: linear transformation of ratings rating aaa aa+ aa aaa+ a transformation (i) 17 16 15 14 13 12 rating abbb+ bbb bbbbb+ bb transformation (i) 11 10 9 8 7 6 rating bbb+ b bbelow btransformation (i) 5 4 3 2 1 source: afonso, gomes and rother (2007) table 3: linear transformation of ratings rating aaa aa+ aa aaa+ a atransformation (i) 20 19 18 17 16 15 14 rating bbb+ bbb bbbbb+ bb bbb+ transformation (i) 13 12 11 10 9 8 7 rating b bccc+ ccc ccccc transformation (i) 6 5 4 3 2 1 source: our results based on data provided by standard & poor’s figure 4 shows that sovereign rating correlates with interest rate spread in 2012. figure 4: analysis along with sovereign rating and interest rate spread in 2012 source: our results based on data provided by european central bank and standard & poor’s afonso, gomes and rother (2007) emphasized that one alternative way to overcome the criticism of assuming that the distance between two notches is equal for every combination of sequential notches is to apply alternative transformations besides the usual linear one. the reason why they applied the logistic transformation is that at the middle of the scale, ratings can rise rather quickly, as the sovereigns deliver some improvements. both at the bott om and the top end of the rating scale, the increase of an additional notch is slower, since the improvements are more demanding. 144 we adjusted and applied the logistic transformation described previously, as follows: sr=ln[ratingi/(1ratingi)], where, ratingi = (2 * i – 1)/(2 * n); in our study n = 20 table 4: logistic transformation of ratings rating aaa aa+ aa aaa+ a atransformation (i) 20 19 18 17 16 15 14 sr 3.66 2.51 1.95 1.55 1.24 0.97 0.73 rating bbb+ bbb bbbbb+ bb bbb+ transformation (i) 13 12 11 10 9 8 7 sr 0.51 0.30 0.10 -0.10 -0.30 -0.51 -0.73 rating b bccc+ ccc ccccc transformation (i) 6 5 4 3 2 1 sr -0.97 -1.24 -1.55 -1.95 -2.51 -3.66 source: our results based on data provided by standard & poor’s over the period 2001-2013, as a result of ratings logistic transformation, the rating ranges between -3.66 and 3.66. the independent variable (sr) in our model is related in 2012 to the following countries: (i) 3.66 to germany, luxembourg, netherlands, finland, denmark, sweden and the united kingdom; (ii) 2.51 to france and austria; (iii) 1.95 to belgium and czech republic; (iv) 1.24 to slovenia; (v) 0.97 to slovakia and poland; (vi) 0.73 to malta; (vii) 0.51 to ireland, spain and italy; (viii) 0.30 to bulgaria and lithuania; (ix) 0.10 to latvia; (x) -0.10 to cyprus, hungary and romania; (xi) -0.30 to portugal, and (xii) -1.95 to greece. figure 5 shows that in 2012 the transformed sovereign rating (sr) correlates with interest rate spread (sp), which validated the transformation and the use of sr as independent variable. figure 5: analysis along with transformed sovereign rating and interest rate spread in 2012 source: our results based on data provided by european central bank and standard & poor’s 145 4. empirical results on short run we studied for each year the intensity by which the transformed sovereign rating infl uences the interest rate spread, by using cross-section regression at the same moment in time. cross-section regression is used to highlight the static relation between variables for each year studied separately. from the regression equations for each year, we found that as the transformed sovereign rating (sr) increases, the interest rate spread (sp) decreases and vice versa. however the intensity relation between two variables is diff erent from year to year depending on investors’ risk perception: (i) in 2003, 2004, 2005, 2006 and 2007, sovereign rating had a small impact on interest rate, estimated coeffi cients ranging from –0.32 to –0.54, and the models explanatory power ranging from 24.93% to 40.09%; and (ii) in 2001, 2002, 2008, 2009, 2010, 2011, 2012 and 2013, sovereign rating had a huge impact on interest rate, estimated coeffi cients ranging from –0.43 to –1.95, and the models explanatory power ranging from 50.34% to 73.77%. table 5: cross-section regression results year regression equation adjusted r square signifi cance f 2001 sp = 2.63 – 0.77 * sr (0.25)§ (0.11)§ 66.25% 0.00 2002 sp = 1.48 – 0.43 * sr (0.20)§ (0.08)§ 50.34% 0.00 2003 sp = 1.76 – 0.53 * sr (0.31)§ (0.13)§ 39.09% 0.00 2004 sp = 1.92 – 0.54 * sr (0.33)§ (0.13)§ 40.09% 0.00 2005 sp = 1.37 – 0.40 * sr (0.33)§ (0.13)§ 24.93% 0.00 2006 sp = 1.30 – 0.37 * sr (0.28)§ (0.11)§ 28.90% 0.00 2007 sp = 1.28 – 0.32 * sr (0.22)§ (0.09)§ 34.96% 0.00 2008 sp = 4.02 – 1.01 * sr (0.43)§ (0.17)§ 58.56% 0.00 2009 sp = 4.25 – 1.24 * sr (0.57)§ (0.25)§ 50.36% 0.00 2010 sp = 4.15 – 1.12 * sr (0.46)§ (0.20)§ 55.57% 0.00 2011 sp = 6.85 – 1.95 * sr (0.55)§ (0.24)§ 73.77% 0.00 2012 sp = 4.51 – 1.38 * sr (0.40)§ (0.19)§ 67.82% 0.00 2013 sp = 2.98 – 0.89 * sr (0.25)§ (0.13)§ 66.23% 0.00 §standard error of ols estimators, all estimators show signifi cance at 1% level. over the period 2001-2013, f-values show signifi cance at 1% level. source: our results based on data provided by european central bank and standard & poor’s on the long run, for the entire period 2001-2013 we studied the intensity by which the transformed sovereign rating infl uences the interest rate spread, by using data 146 panel regression (data panel regression is used to highlight the dynamic relation between variables for the entire period of time). according to the data panel regression methodology, the fi rst stage is represented by the stationary analysis, and we chose to use the test im, pesaran, shin both for dependent variable and also for independent variable. im, pesaran and shin (2003) argued that they have developed a simple computational procedure for testing the unit root hypothesis in heterogeneous panels. table 6: im, pesaran, shin panel unit root test variable ips statistic signifi cance level sp level -5.01 0.00 sr level -6.24 0.00 source: our results based on data provided by european central bank and standard & poor’s the sp variable is stationary because the signifi cance level is lower than the threshold of 0.01. the sr variable is stationary because the signifi cance level is lower than the threshold of 0.01. one possible explanation for this situation is the fact that in order to defi ne the quantitative variable sr we carried out the logistic transformation of qualitative variable sovereign rating, after we performed the linear transformation. in our opinion, another possible explanation resides in minor fl uctuations of sovereign ratings for each country, excepting the last periods, when sovereign ratings had rapid changes. table 7: data panel regression results regression equation adjusted r square signifi cance level spt = 3.26 – 0.96 * srt (0.14)§ (0.06)§ 44.41% 0.00 §standard error of ols estimators, all estimators show signifi cance at 1% level. for the entire period 2001-2013, f-values show signifi cance at 1% level. source: our results based on data provided by european central bank and standard & poor’s from the regression equation for the entire period 2001-2013, we found that as the transformed sovereign rating (sr) increases by 1% it determines the interest rate spread (sp) to decrease by 0.96%. the intensity relation between the variables considered as panel data is moderate as the model explanatory power is 44.41%. for the entire period 2001-2013 we analyzed the direction of presumed causality from transformed sovereign rating (sr) and interest rate spread (sp), on the granger causality test. we found a bi-directional causality among transformed sovereign rating (sr) and interest rate spread (sp), as the signifi cance level is lower than the threshold of 0.05. table 8: granger causality test null hypothesis: f-statistic signifi cance level sp does not granger cause sr 5.86 0.02 sr does not granger cause sp 11.16 0.00 source: our results based on data provided by european central bank and standard & poor’s 147 5. conclusions and recommendations comparing the results of the cross-section regression with the results of the panel data regression we found that, in both analyses, the sovereign rating has a strong negative infl uence on bonds’ interest rate, as previous studies found. in our opinion, public decision makers from eu member states must improve sovereign ratings in order to decrease interest rates. thus, central public administration will have money to satisfy bett er the collective needs of the citizens living in their territory. from the regression analysis we found that the correlation between the two indexes is stronger during fi nancial or economic crises, and it is weaker during the periods of economic growth. however an important element of the interest rate is the risk-free interest rate, which increases or decreases independently of sovereign rating. in order to improve sovereign ratings and decrease interest rates, we recommend that public decision makers from the eu member states to increase, for example: (i) gdp per capita, (ii) real gdp growth, (iii) foreign exchange reserves, (iv) political stability, (v) government eff ectiveness, and so on, and to decrease, for example: (i) government debt to gdp ratio, (ii) public budget defi cit, (iii) infl ation, (iv) unemployment, and so on. in the last three decades, the importance of sovereign rating for international investors became fundamental as there are states having problems with the payment of principal loans and interests. references: 1. afonso, a., gomes, p. and rother, p., ‘what “hides” behind sovereign debt ratings?’, 2007, european central bank working paper series, no. 711, pp. 1-65. 2. afonso, a., gomes, p. and taamouti, a., ‘sovereign credit ratings, market volatility, and financial gains’, 2014, european central bank working paper series, no. 1654, pp. 1-52. 3. beck, r., ‘do country fundamentals explain emerging market bond spreads?’, 2001, center for financial studies working paper, no. 2001/02, pp. 1-32. 4. bran, p. and costică, i., economica activităţii fi nanciare şi monetare internaţionale (the economics of international financial and monetary activity), bucharest: economica publishing house, 2003. 5. cantor, r. and packer, f., ‘determinants and impact of sovereign credit ratings’, 1996, frbny economic policy review, no. 2, pp. 37-53. 6. canuto, o., santos, p.f.p. and porto, p.c.s., ‘macroeconomics and sovereign risk ratings’, 2012, journal of international commerce, economics and policy, vol. 3, no. 2, pp. 1-36. 7. gonzalez, f., haas, f., johannes, r., persson, m., toledo, l., violi, r., wieland, m. and zins, c., ‘market dynamics associated with credit ratings – a literature review’, 2004, european central bank occasional paper series, no. 16, pp. 1-36. 8. greenidge, k., drakes, l. and craigwell, r., ‘debt and sovereign credit ratings: evidence from panel causality tests’, 2010, [online] available at htt p://www.ccmfuwi. 148 org/fi les/publications/conference/2010/9_4-craigwell_drakes_greenidge-p.pdf, accessed on september 24, 2014. 9. hartelius, k., kashiwase, k. and kodres, l.e., ‘emerging market spread compression: is it real or is it liquidity?’, 2008, imf working paper, no. wp/08/10, pp. 1-36. 10. im, k.s., pesaran, m.h. and shin, y., ‘testing for unit roots in heterogeneous panels’, 2003, journal of econometrics, vol. 115, no. 1, pp. 53-74. 11. jaramillo, l. and tejada, c.m., ‘sovereign credit ratings and spreads in emerging markets: does investment grade matt er?’, 2011, imf working paper, no. wp/11/44, pp. 1-17. 12. kaminsky, g. and schmukler, s.l., ‘emerging markets instability: do sovereign ratings aff ect country risk and stock returns?’, 2002, world bank economic review, vol. 16, no. 2, pp. 171-195. 13. min, h.g., ‘determinants of emerging market bond spread: do economic fundamentals matt er?’, 1998, the world bank policy research working paper, no. 1899, pp. 1-33. 14. miricescu, e.c., the sovereign rating, bucharest: ase publishing house, 2011. 15. miricescu, e.c., ‘the correlation of sovereign rating and bonds’ interest rate in the eu member states’, in the proceedings of the 6th international conference on globalization and higher education in economics and business administration, 2012, pp. 798-803. 16. moşteanu, t., câmpeanu, e., cataramă, d. and miricescu, e.c., gestiunea datoriei publice (public debt management), bucharest: universitară publishing house, 2008. 17. powell, a. and martínez, s.j.f., ‘on emerging economy sovereign spreads and ratings’, 2008, inter-american development bank working paper series, no. 629, pp. 1-42. 18. pungulescu, c., ‘measuring financial market integration in the european union: eu15 vs. new member states’, 2013, emerging markets review, vol. 17, pp. 106-124. 19. reinsen, h. and von maltz an, j., ‘boom and bust and sovereign ratings’, 1999, international finance, vol. 2, no. 2, pp. 273-293. 20. sahinoz, s. and gonenc, r., ‘determinants of credit ratings, sovereign bond spreads and real interest rates in emerging markets’, 2011, iktisat isletme ve finans, vol. 26, no. 305, pp. 9-35. 21. stroe, r. and armeanu, d., finanţe (finances), bucharest: ase publishing house, 2004. 22. văcărel, i., bistriceanu, g., bercea, f., anghelache, g., moşteanu, t., bodnar, m. and georgescu, f., finanţe publice (public fi nances), bucharest: didactică şi pedagogică publishing house, 2003. 131 abstract this paper studies the impact of vat upon the economic activity in romania. by developing a new mathematical model we offer several dynamic and efficient possibilities for observing the modifications caused by the temporary reduction of taxes upon the personal incomes which suggest that the resulting additional incomes are often saved and less consumed. analyzing several temporary reductions in incomes, the model describes also a scheme regarding the developments of economic growth. based on this scheme, are revealed the different arrangements in which a present economic activity influences a future one. according to the proposed model, it is highlighted that the national income increases as a response to the aggregated demand. keywords: aggregate demand, indirect tax, investments, inflation, output. value added tax impact on economic activity: importance, implication and assessment – the romanian experience mariana mureșan delia david ladislau elek florin dumiter mariana mureșan professor phd, accounting department, faculty of economics and business administration, babeș-bolyai university, cluj napoca, romania tel.:0040-740-162.140 e-mail: mmuresan52@yahoo.com delia david associate professor, faculty of economics, ‘vasile goldiș’ western university of arad, arad, romania ladislau elek lecturer phd, faculty of economics, ‘vasile goldiș’ western university of arad, arad, romania florin dumiter associate professor phd, faculty of economics, ‘vasile goldiș’ western university of arad, arad, romania transylvanian review of administrative sciences, special issue/2014, pp. 131-151 132 1. introduction fifty years ago, the value added tax (vat) was rarely heard outside of france and some specialized handbooks. nowadays, it is found in over 130 countries where it commonly raises 20% or more of all tax revenues. widely adopted in sub-saharan africa and elsewhere, it has been the centerpiece of the tax reform in many developing countries. by any standards, the rise of the vat has been the most significant development in tax policy and administration of recent decades. since the 1960s, vat systems have been progressively adopted around the world. the majority of vat regimes are characterized by a consumption tax base with multiple tax rates, multiple exemptions, and the credit method of tax liability calculation. these vat characteristics have been incorporated in a number of studies on the incidence and economic effects of vat. however, three important vat characteristics have yet to be formalized in applied vat research: multi production, legislated differences in exemption status, and industry-specific differences in the refund ability of vat paid on inputs to production and investment. the need for careful and detailed treatment of these vat characteristics is particularly important in disaggregated general equilibrium models. these models are recognized as well suited for the analysis of the efficiency effects of tax policies. the modeling of vat within a general equilibrium framework raises a fourth issue not yet addressed in the vat modeling literature. even in highly disaggregated models, commodity and industrial definitions are, by necessity, aggregates of hundreds of commodities and industries, each with the possibility of distinct tax rates and exemptions under the relevant vat statutes. previous studies have assumed that a commodity is either exempt or taxed. several decades ago, there have been numerous theoretical and empirical studies that attempted to investigate the relationship between taxation and economic performance and long-term economic growth. the theory of tax incidence or burden has been a central focus of public sector economics. there is a consensus that the analysis of tax incidence should be conducted within a general equilibrium framework. the theoretical tax incidence literature argues that if a tax affects the price of an accumulated factor of production (physical capital, human capital and technology) then this tax is distortionary. an increase in distortionary taxation discourages the economic activities and consequently lowers the growth rate of economic output. recent papers on base broadening of the vat have shown how traditional arguments in favor of a broadly based vat at a low uniform rate can break down if there is an underground economy (piggott and whalley, 2001), household production with market provided inputs (sandmo, 1990), labor (or all factors of production) is internationally mobile (lockwood et all., 2002), or other non-traditional elements appear. there are two the key challenges for tax design that face almost all developing countries. the first is that of dealing with a large informal sector. hard to measure, but put by schneider (2002) at an average of around 40% of the gross national income in these countries, informality represents both a costly narrowing of the tax base and a potentially serious distortion of economic activity. the impact which informal econ133 omy has on the tax policy design made the subject of research for many scientists among which, the most notable ones are piggott and whalley (2001), stiglitz (2003), munk (2008), emran and stiglitz (2005), and, taking a somewhat different perspective, gordon and li (2005). the second challenge is determining the proper degree of reliance on trade taxes. these still account for 20% or (often) more of all tax revenue in many developing countries, so that continuing pressures towards further trade liberalization, combined with pressing revenue needs, raise the question of how reduced trade tax revenue can be replaced from domestic sources (keen, 2008). what is troubling here is the emerging evidence which suggests that many low income countries (though by no means all) experienced difficulties in achieving such replacement in the past (baunsgaard and keen 2005). the effects of fiscal policy on economic growth have been the subject of long debates. with respect to short-term effects, a large body of empirical research, primarily for industrial countries, has been devoted to understanding under which conditions fiscal multipliers can be small (and even negative) (alesina and perotti, 1996; alesina and ardagna, 1998; perotti, 1999). perotti (1999), for example, shows that budgetary consolidations tend to be expansionary when debt is either high or it grows rapidly. alesina et al. (1995) and alesina and ardagna (1998) find that, in addition to the size and persistence of the fiscal impulse, budget composition matters when it comes about differentiating all those private sectors which the fiscal policy is applicable to. fiscal adjustments that rely primarily on cuts in transfers and the wage bill tend to last longer and can be expansionary, while those that rely primarily on tax increases and cuts in public investment tend to be constricted and unsustainable (von hagen and strautch, 2001). the potential effects of fiscal policy on long-term growth have also generated substantial attention (tanzi and zee, 1996). the most recent research studies in the field of endogenous growth suggest that the fiscal policy can either promote or retard both the economic growth and the investments in human and physical capital. the last ones can be affected by taxes while investments can influence the governmental expenditure. hence, the fiscal policy can influence certain variables which the economic growth depends on (chamley, 1986; barro, 1990, 1991; king and rebelo, 1990; barro and sala-i-martin, 1995; mendoza et al., 1997). several empirical studies deal with the relationship between vat and a multilevel production leading to the conclusion that allowance efficiency effects depend on changes of activity across sectors with different rates of net indirect taxation (giesecke and nhi, 2010; de mello, 2009; lazarev and pleshdinskii, 2007). studies conducted by christadl, fetchenhauer and hoezl (2011) examine the potential confirmation bias in price perception in consequence to a real-world event and different explanations for such a bias and suggesting that participants reported price increases that were significantly higher than the official price development and in line with an undifferentiated belief in market price increases. 134 summarizing, the emergence of value added tax stays on the movement of goods. switching to vat has made it possible to avoid cumulative taxation of goods movement. it is a unique tax that it is perceived in a fractionated way, corresponding to the added value for each stage of the economical circuit. 2. the vat evolution and its impact upon the economic activity in romania in developing countries, especially in the case of romania, the studies on the vat emphasize the importance of the conditions under which a vat is fully optimal (even though it is a tax on the informal sector of production which is restrictive): an efficient tax structure requires the development of both the vat and the withholding taxes (pantazi and străoanu, 2011; keen, 2008; zee, 2008). the vat was brought in romania in 1993, its introduction being based on the following considerations: a) there was a need to replace the former tax applied on the commodity flow, and b) the purpose was to increase the resources of the state and to comply with the tax systems existing in the rest of the european countries. at the beginning, the flat tax was 18%. later, the vat system has undergone multiple rearrangements both from the point of view of the taxable operations and the tax subjects as well as from the point of view of the rates. in regards to the vat regime change, we can mention that initially there were two rates, 18% and 9%, which were later increased to 22% and 11%. then, the 19% flat rate was introduced; at the moment its value is 24%. according to the existent tax code from 2014, the standard vat rate in romania is 24% and it applies to the taxation base of those taxable transactions that are not exempted or not subject for the rate reduction. the reduced rate is 9% and it applies to the taxation base of the following services and/or commodities: • services as granting access to castles, museums, memorial houses, historical monuments, etc.; • delivery of textbooks, books, newspapers and magazines, excepting those intended exclusively or primary for advertising; • delivery of prostheses and accessories of such, excepting the dental ones; • delivery of orthopedic products; • delivery of drugs for human or veterinary use; • accommodation in the hotel sector, including the rental lands for camping; and • the delivery of the following goods (valid starting with the 1st of september, 2013): – all bread types as well as the following bakery varieties: baguettes, mini baguettes, mini bread and braided bakery; – white wheat flour, semi-white wheat flour, dark wheat flour and rye flour; and – triticum spelta, common wheat. starting from 2013, the vat applicable to the basic agro-food products was reduced from 24% to 9%. this measure was taken even in other eu member states, such 135 as belgium and germany, and it was meant to ensure the required social protection and the increase of the collection rate for the state budget. also, there is a reduced rate of 5% applicable to the taxation base for the delivery of houses as part of the social policy, including the land on which the houses are built. regarding the impact of vat on the economic activity from romania, we can assess that romania data are striking. in 1999, romania had the lowest effective tax report/tax formal throughout the region. the low income could be explained by the fact that firms were granted exemption from payment, arrears accumulations which were removed from tax obligations (not necessarily evasion). because in romania normalized tax returns are the lowest in the region, we believe that poor collection and exemptions from tax are the key features in explaining the poor fiscal performance recorded. in romania, in the same way as in other developing countries, the level of vat has an important role in terms of economic growth. therefore, it is required for any action regarding the application of a lower or a higher vat rate to be done by taking into account especially the economic situation of romania. at the same time, a high vat rate limits the possibility of consumption and investment, and it generates negative effects on the supply and the demand of economic goods produced by economic agents. the increment of the value-added tax has negative effects on inflation by increasing it and it has a series of inconvenient consequences on the economy. in the context of the economic and financial problems that romania is confronted with it would be appropriate to introduce differentiated vat rates. the application of differentiated vat rates for ordinary commodities and luxury goods would help disadvantaged people during the crisis by removing the damage and the consumption failure. in this sense, we propose a mathematical model capable of supporting the statements above. the objectives of the research are to look particularly at the following paths: • positioning the vat in romania; • presentation of the principles and rules governing the organization of vat in romania; and • formulation of possible solutions to increase efficiency in romanian and in other european economies based on vat. regarding the research methodology, the inductive method was used. we conducted a qualitative research based on observation of some aspects, and also a quantitative one. the main method used for collecting both the data and the historical pieces of information was the observation (the spontaneous and the provoked types). this method applies to the research subject, which in this case is the romanian vat rate, and it is used with the purpose of exposing the evolution of this type of indirect taxation. information was extracted from reports. 136 inductive research is a flexible approach because there is no requirement of pre-determined theory to collect data and information. the researcher uses observed data and facts to reach a tentative hypothesis and to define a theory regarding the research problem. this helps the research to give inductive arguments (mertens, 2009). the proposed methodology which was used has several stages: theoretical foundations of the study, selection of the case studies, conducting exploratory semi-structured interviews, analysis of results, achieving scripting support, and presenting the results. for an efficient symbiosis, in our study we used several research papers and articles with a direct impact on our study, especially regarding: • knowledge and interpretation of reality in the concerned field; • information of management, citizens and the financial authorities regarding the economic and the financial condition, performance achieved, and the efficiency of resource valorization; • identification of new sources of competitive advantage; • foundation of the measures to reduce or improve performance; and • foundation of the development strategies in a dynamic competitive environment. in the present study it was considered as a major objective to ensure the viability under domestic and international competition within the restrictions imposed by fiscal policy. in our opinion, it was important to present and analyze the way in which differentiated vat has a positive impact over romanian economy. in the relationship between supply and demand, although the first analysis would have the decisive role offer, especially in the developed market economy conditions, application itself, since its knowledge, influence offer guiding and stimulating, neglecting the changes in volume, quality and structure of demand, caused by joint action of various factors. in the following chapter we will use a mathematical optimization for the economic adjustment. 3. mathematical optimization for the economic adjustment – comparative study 3.1. description of the economic control model in this article we present a variant of the philips multiplication-accelerator. in this model, the command parameter is represented by the budgetary expenditures which need to be chosen in order to attain a desired level of the gross national product (gnp). the model is leading, ultimately, to the problem of quadratic functional linear regulator. using the known results it is precisely analyzed the stability of the optimal trajectories. the notations will be as following: )(tg the budgetary expenditure at the t moment, )(tz the exports at the t moment, )(tm the imports at the t moment, )(tc the consumption at the t moment, and )(ti the investments at the t moment. 137 there is a necessary gross national product (demand) )( nty correspondent to each choice of the budgetary expenditure )(tg expressed by the following equation: )()()()()()( titctmtztgtyn  (1) the )(ty represents the gnp achieved effectively at the t moment. in general, )(tyn and )(ty quantities are not equal. the evolution of the system is described by the equations: (2), (3), (4), (5), (6) ( ) ( ), ( ) ( ( ) ( )), ( ) (1 ) ( ), ( ) ( ), ( ) ( ) ( ) ( ), n n y t i t i t y t y t c t s y t z t zy t m t my t y t y t            where 0,0,10,0,0  mzs are constant. the equation (2) expresses the fact that the entrance of the )(ti in the system is proportional with the )(ty output variation speed. in the control theory, such an equation has the generic name of ‘acceleration equation’. the v acceleration coefficient represents the investment necessary quantity for gnp’s growth by a unit. the multiplier equation (3) shows that the investment is proportional with the excess between the necessary gnp and the achieved one. it can be assumed that both consumption and exports represent constant shares from the achieved gnp. finally, the imports are a constant fraction from the realized gnp plus the excess between the necessary gnp and the achieved one. by removing ( ), ( ), ( ), ( ), ( )ny t z t m t c t i t from the (1) – (6) equations the equation obtained will be the following: ( ) ( ) ( )y t y t g t  (7) where: , )2( )(       v smz (8) 2, )2(        v (9) knowing that the initial value )0(y = 0y of the achieved gross national product, at the t = 0 moment, there is a )(ty unique solution of the equation (7) corresponding to any )(tg , 0t choice for the budgetary expenditures. 0* g is a random constant value attribute to the budgetary spending. we will name a equilibrium solution (correspondent for the * g value) of the (1) (9) equations a solution of it in which all the functions ( ), ( ), ( ), ( ), ( ), ( ), ( )ny t t t z t m t c t i t g t are constant, * )( gtg  , and the necessary gnp is equal to the achieved gnp: )(tyn = )(ty . 138 hence, in order for the constant sizes ******* g ,i ,c,m ,z ,yyn  to represent a necessary equilibrium solution, the following equations must be checked: .***,**,)1(* ,0* *,***** ymmyzzysc i gcmzgy    by solving this system according to *g , the results are the following: .0**,* *,**, )1( *, * *           ig mzs m m g mzs z zg mzs s c mzs g y (10) let it be: *,)()(*,)()(*,)()( *,)()(*,)()(*,)()(*,)()( ititictctcmtmtm ztztzgtgtgytytyytyty nn   the deviation of ( ), ( ), ( ), ( ), ( ), ( ), ( )ny t y t g t z t m t c t i t from their equilibrium state. it is easy to notice that these deviations satisfy the equations: ( ) ( ) ( ) ( ) ( ) ( ), ( ) (1 ) ( ), ( ) ( ), ( ) ( ), ( ) ( ( ) ( )), ( ) ( ) ( ) ( ). n n n y t g t z t m t c t i t c t s y t vy t i t z t zy t i t y t y t m t my t y t y t                as well as previously, the following differential equation results from the elimination of the ( ), ( ), ( ), ( ), ( ),ny t z t m t c t i t : ( ) ( ) ( ),y t y t g t   (11) where  and  are given by equations (8) and (9). we note by d(t), the exterior commerce balance (in deviation terms) accumulated till the t moment: 0 ( ) [ ( ) ( )] (0). t d t m z d d     it is obvious that d(t) = m(t) – y(t). the results are the following, by expressing the m(t) and z(t) according to y(t) and g(t): ( ) ( ) ( ),d t y t g t   (12) 139 where: ( )(1 ) 1 , . 2 m z s z             (13) the (11) and (12) equations describe the dynamic of the system. considering g(t) the command function and assuming that the initial values of the status variables are known, the minimization for both the global quadratic deviation and command over the  ,0 interval are mandatory. in other words, the problem is considered the following: let’s minimize: 2 2 2 1 20 ( ) ( ) ( )ly t l d t g t dt      (14) by the restrictions: 0 0 ( ) ( ) ( ), ( ) ( ) ( ), (0) , (0) , y t y t g t d t y t g t y y d d           where the constant negative weights are 0,0 21  ll using the notations: , 0 0 ,, )( )( )(,, 0 0 2 1 0 0 0                                l l q d y x td ty txba     the problem (14) can be written as the following: minimize: 0 ( ), ( ) ( ), ( )qx t x t u t u t dt     with the restrictions: 0( ) ( ) ( ), (0) .x t ax t bu t x x   (15) 3.2. the study on the optimal solution the problem is considered the following: minimize: 0 ( ), ( ) ( ), ( )qx t x t ru t u t dt     having the following restrictions: ( ) ( ) ( ), (0) ,ox t ax t bu t x x   where x(t) and u(t) are the dimension vectors n, respectively r, the a,b,q,r matrixes are the type of qrrnrrnnn ,,,,  is defined as the negative symmetric, r 140 is defined as positive symmetric. it is shown that if this problem satisfy the so-called ‘stability condition’, then the optimal command is obtained by the following synthesis form: 1 0 ( ) , tu x r b kx  (16) where the k matrix is a algebraically riccati equation solution: 1 0t tka a k kbr b k q    (17) in other words, the optimal status is the solution of the problem: 1 0( ) ( ) ( ), (0) tx t a br b k x t x x   (18) at the same time, it is noticeable the fact that a sufficient condition for stability is provided by the demand for the (a, b) matrix to be controllable: 1( , ,..., )nrang b ab a b n  (19) the q symmetric matrix can be written as q = hth, where the h matrix is the maximum rank. it was proved that apart from the (19) condition of controllability of the (a, b) pair, the controllability pair condition (at, ht) is satisfied as well: nhahahrang tntttt  ))(,...,,( 1 (20) the riccati algebraic equation (17) admits a k > 0 solution and the optimal status is stabilized: 0)( tx when t . we will apply these results to the problem (15). thereby: ,, 0 0                  ba the following will be obtained: ( , ) .b ab            the controllability condition of the (b, ab) = 2 ranks is satisfied only and only if: .  (21) if according to the expressions (8), (9), (13) ( ) ( )(1 ) 1 , , , , 2, (2 ) (2 ) 2 z m s m z s v v z                           hence, (21) will be written as: 2 2 ( ) ( )(1 ) . (2 ) (2 ) z m s m z s v v               141 we get: 2 ( 2)( ) 0,z m     and the controllability condition turns out into: .mz  (22) we will consider, as until now, that the equation (22) has been verified. further on, we will discuss the controllability condition satisfaction (19) in relation with the l1 and l2 coefficients from the (14) performance function problem and we will describe the optimal solution behavior. case (a). l1 > 0 and l2 >0. matrix        2 1 0 0 l l q admits the decomposition q = hth, where: . 0 0 2 1          l l h it results the following:          000 0 ),( 2 211 l lll hah ttt  . as l1, l2  0, the (h t, at ht) matrix rank is equal to 2 and the condition (20) the optimal status of our problem is the solution for the problem: 0( ) ( ) ( ), (0) tx t a bb k x t x x   (23) where k matrix verifies the ricatti algebraic equation: 0t tka a k kbb k q    (24) moreover, the optimal status is stabilizing: 0)( tx when .t but *,)()(, )( )( )( ytyty td ty tx        so that: 0)(*,)(  tdyty when .t (25) the (b) case where l1 = 0 and l2 >0. (function y(t) does not interfere in the performance index). in this situation: . 000 000 ),( 2 2          l l hah ttt  142 the rank(ht, atht) = 2 controllability condition is satisfied if and only if .0 in this case, the optimal situation is given by the same equations (23), (24) stabilizes. the (c) case where l1 > 0 and l2 = 0. (function d (t) does not interfere in the performance index). in this situation: . 0000 00 ),( 11          ll hah ttt  it results that: the (ht, atht) rank = 1 so, the condition (20) is not verified. we will show that an optimal status of the problem (15) – which doesn’t stabilize – can be built. in this purpose, we are looking for a solution of the riccati algebraic equation (24) as the following: . 00 0        k k taking into account the shape of the a, b and q matrix, the (24) algebraic equation is explicitly written as the following:   . 00 00 00 0 00 0 00 0 00 0 000 0 00 0 1                                                       lkkkk      performing the calculations from the left side of the matrix equation, it is found that:              00 00 00 02 1 22 lkk  . so k is the root of the equation: .02 1 22  lkk  as it follows: 2 1 22   l k   or 2 1 22   l k   . the optimal status is the solution for the problem: 0( ) ( ) ( ), (0) tx t a bb k x t x x   i.e.: 2 0 0 ( ) ( )0 , (0) , (0) . ( ) ( )0 y t y tk y y d d d t d tk                      143 it will be obtained: 2 2 ( ) 0 ( ) 0 0 02 2 ( ) , ( ) . k t k t y t y e k k d t y e d y k k                      for 2 1 22   l k   it results: .01 222  lk  so 0 02( ) 0, ( ) k y t d t d y k          when .t for 2 1 22   l k   it results: .01 222  lk  so: ( )y t   (after as 0,0 00  yy ), ( )d t   (after as 0 02 20, 0 k k y y k k               ) when .t the equations and/or inequality which form the model represent in fact the system, but at the same time the problem which has to be resolved. hence, we can notice that this representation manner offers a decision model. 4. the impact of the vat quota share at micro-level according to the multiplier-accelerator model at economic level the public authorities use fiscal policy for granting finalities vis-á-vis of influencing the economical process, adjusting the business cycle, and removing the economic imbalances. in this context, it is important to assess the main objectives of the fiscal policy throughout the following model which will improve the correlation between the vat and the economic activity, namely: economic stabilization, cyclical adjustment and economy recovery, economic restructuring and economic growth. 144 in this model, the command parameter is represented by the budgetary expenditure which decreases together with the diminishment of the vat for food products, this decrease must be cancelled by the increase of the gnp. to each choice of g (t) budgetary expenditure there is a necessary level of y (t) gnp which corresponds to it and it is expressed by the following equation: y (t) = g (t) + z (t) – m (t) + c (t) + i (t); where: y (t) – the gnp at the ‘t’ moment; g (t) – budgetary expenditure at ‘t’ moment; z (t) – exports at ‘t’ moment; m (t) – imports at ‘t’ moment; c (t) – consumption at the ‘t’ moment; i (t) – investments at the ‘t’ moment we assume that both the imports and exports are constant. the analysis of the vat percent regarding food products in the romanian economic context has been made in accordance with the philips’ accelerator-multiplier model. the modern theories on the consumption function combine the two hypotheses and in the consumption income theory function the factors analysis which determine the income expectations is included, analysis offered by the theory of the permanent income. a simplified version of such a consumption function is as it follows: c = a x a + b x j x yd + b x (1-j) x yd-1 where: yd – is the available work income. it illustrates the role of wealth which has a great influence on the consumption expenses. the equation can approximate pretty accurately the consumption and it is the expression of permanent income estimation implied by it. both theories explain better the total consumption behavior, although there are still several debating aspects as: the excessive sensibility of consumption regarding the current income. in the case the consumers’ expectations are rational, then their projections regarding the permanent incomes must be in compliance with the way the income varies in reality. an increase in the current income cannot be appreciated automatically – it is a long-run process. but by relying on the past experience, it can predict the future. for example, in previous periods an increase of 1 monetary unit is equivalent to 0.25 monetary units of permanent increase and the rest is a temporary gain. j’s dimension represents the proportion in which the current income transforms into permanent income and it is determined on the study of income evolution from the previous period, based on the following consumption function: c = c/ x yp 145 taking into account also the relationships between the current and permanent income, the current income consumption inclination is obtained and it’s equal to c/ x j, measure acquired by the combination of the two theories. in the following section, we will assess the dependence between the demand elasticity, the supply elasticity and the tax repercussions – this will contribute to the comprehension of the taxation pressures problems. figure 1: the effects of the indirect taxes settlement source: by authors at the settlement of a specific tax or subvention upon a good (which hasn’t been taxed) there is a movement of the supply curve to the left side in an appropriate manner; the assessment of a subvention determines the movement of supply curve to the right side. the specific evolution of the demand and supply curves generates balanced intersections which aren’t anything else but the price values. the separate analysis of the indirect tax assessments or the subvention upon prices implies the decryption of their influence upon the distribution of these effects between producer and consumer and the coordination by the state as the institutor and leading entity. the following quotations will be used: t = the indirect tax; o = the supply curve; q = the production; p = the price; and c = the demand curve. according to the demand curve c0, the application of the t indirect tax upon a product will determine a movement in the upward part of the supply curve from the level o0 to o1 due to the price increase from p0 to p1, which corresponds to a lower demand. in consequence, the quantity and equilibrium price before (q0 p0) and after the 146 tax settlement (q1 p1) will be identified, due to the intersection of the demand curve with the supply curve. from the analysis of the generated effects, the following can be noticed: a. a) p1 > p0; q1 > q0; b. the government, through the estimated t indirect tax, will obtain an income equal with the hatched surface (q1*t); c. the assessment of an indirect tax supposed a reallocation of resources. in this respect, in the processed commodity industry on which the tax is settled, a reduction of production takes place from q0 to q1 and the available resources are redirected. the shaded area represents the equivalent freedom from the variable factors to the tax settlement. the more the inelastic is the offer the smaller will be the grey surface. figure 2: the effects of the subsidies granted by the state source: by authors due to granting the s subvention by the government, the supply curve will get down and the effects will be opposite from the previous situation. from the analysis of the generated effects, the following can be noticed: a. p1<p0; q1>q0; b. the government bears the production growth program cost equal to the hatched area (q1 * s); c. for producing the additional quantity from q0 to q1, the subvention beneficiary units will attract the variable producing factors which have the equivalent illustrated by the grey surface. using the demand and supply concept, we determined graphically the changes in the supply and demand elasticity and we represented the different proportions in the tax burden distribution regarding the tax on the business figure. with the purpose of simplifying the next analysis the demand curve segments is represented by some linear lines. the supply curve is represented by s and st and the demand curve by dq. 147 the demand curve equation will have the following form, taking into account the corresponding sales and the volume of the prices: 12 2121 12 12 *** qq pqqp q qq pp p tt       (26) where: q2 and q1 – the sales amounts; p2 and p1 – the correspondent prices. a) taxes and elastical demand b) taxes and inelastical demand c) taxes and elastical demand d) taxes and inelastical demand figure 3: interdependence between taxation and the demand/supply elasticity source: by the authors the elasticity of the demand is determined by the demand curve’s position on the q*p surface, namely after the respective curve angle over the q axis. because the (26) angle inclination is characterized by the k tangent, for the d curve from the a) and b) 148 figures, it will be equal to: 0 12 12     qq pp k t because: 012  tpp and 012 qq or tpp 12  and 12 qq  . if -1<k<0, the demand is inelastic. in figure a) it can be observed that if the demand is inelastic in the correspondent diapason of the prices, then at the entry of the tax on the business figure the price will go upward (from p1 to p2). accordingly, the taxation pressure will be borne by the producer. if the demand is inelastic, according to figure b), then the price for consumer will grow in a considerable manner (from p1 to p1t) and the major side of the taxation burden will be transposed on the buyers. in this sense, the more k will tend to 0, the more elastic the demand will be and the bigger will be the taxation pressure borne by the producer of goods and services. the more k will tend to 1, the more inelastic will be the demand. correspondent, the more will the taxation pressure grow, the more it will be reverberated upon the buyer. in figures c) and d), the supply curve segments were represented from the same consideration as the a) and b) figures and they took the shape of lines. the supply line angle inclination tangent is equal to the coefficient calculated by the formula: 12 12 qq pp k    where: k – the s curve inclination angle tangent; q1 and q2 – different sales volumes which correspond to an offer status; p1 and p2 – the prices which correspond to these volumes of sales. the equation of the s curve represented in the figures c) and d) has the following shape: 12 2121 12 12 *** qq pqqp q qq pp p       the figure c) proves that in the conditions of an elastic offer (0≤k<1) the sales tax produce a sensible growth of prices (from p1 to p2) and because of this, the tax is borne mostly by the consumers. if the offer is inelastic (k>1) as it is presented in figure 3, the price will increase insignificantly (from p1 until p2) and the preponderant part of the tax will be borne by the sellers. 5. conclusions in this article we addressed an economic and mathematical model regarding economic adjustment to determine the optimal solution and to highlight the impact of the vat percentage change on the multiplier-accelerator at economic level. vat has replaced the traditional taxes in the quasi-totality of countries, and it is regarded as ‘neutral’ compared to turnover taxes. in particular, it does not incite to 149 vertical business integration of companies, and has a special plan to promote economic competition. between pure model of vat and tax regulations under that name differences occur. in the first place, regarding vat rate – in fact, particularly across europe – there are three types of allowances: ‘normal’, ‘low’ and ‘zero’. zero rate is for goods and exported services from abroad, on the basis of destination – the exported good is taxed in the country in which is consumed. in the second place, there are the exceptions to the trend over the years to generalize vat for all goods and services. such exceptions concern certain operations (financial), certain categories of legal persons (government, universities) or businesses that do not exceed a certain threshold of turnover. of concrete rules vat, depending on the elasticity of supply and demand, can reach that part of the tax burden which is not passed on the consumers. the assessment of vat tax incidence reduces to the analysis: at first, vat is tantamount to a tax levied only on a bestselling retail stage when we are interested in the effects of the changes in the rate applied to an object; second, incidence of a tax in general balance when we are interested in the effects of simultaneous changes in vat for all goods and services. the romanian households assign a disposable income which is established in the aftermath of fees reduction (especially taxes), either for the current consumption, or for the satisfaction of future consumption needs. according to the consumption peculiar expenditures distribution legislation, gaining maximum satisfaction levels is the equal utilities conditions of each group of consumed goods from each expenditures category designated to consumption. in the emerging and developing countries, which is the romanian case, the dynamics and structure of the consumption expenditures register rates and directions in line with decreasing the real income, while the food expenditures weight reach over 60% from the total amount of the expenditures. references: 1. alesina a. and ardagna s., ‘tales of fiscal adjustment’, 1998, economic policy, vol. 13, no. 27, pp. 487-545. 2. alesina, a. and perotti, r., ‘fiscal adjustments in oecd countries – composition and macroeconomic effects’, imf working paper no. 96/70, 1996. 3. alesina, a., perotti, r., giavazzi, f. and kollintzas, t., ‘fiscal expansion and fiscal adjustments in oecd countries’, 1995, economic policy, vol. 10, no. 21, pp. 205-248. 4. barro, r. and sala-i-martin, x.i., economic growth, new york: mcgraw hill, 1995. 5. barro, r., ‘government spending in a simple 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with subsequent modifications, available in 2014, published in the official monitor of romania no. 112 from 6 february 2004. 114 abstract the present study intends to highlight the way in which the small towns in bihor county, romania are trying to find again their place and part in the upsetting territorial construction, through various mutations of their functions, after the fall of the communist regime. the setup of the territorial planning units (tpus) in the effort to optimize the territorial development through construction of structures of intercommunal cooperation, turned some small towns in bihor county into poles of local development. the question that this study intends to answer is: are these towns capable to assume this role, considering the relict structures inherited from the communist past? in order to answer it, we considered the development potential of the small towns as a tool of assessment and validation of the viability of the poles imposed by the intercommunal construction. thus, we carried out the comparison between the real development poles, highlighted by the analysis of potential, and non-viable development poles, imposed by the intercommunal construction, thus resulting in a typology. the suggested typology identifies three types of development poles: viable, vulnerable and non-viable. applied to other counties as well, this typology can become a tool of assessment of the functionality of the intercommunal construction. keywords: romania, development potential, small towns, poles of development, urban area. small towns and intercommunal construction. case study: bihor county, romania* luminiţa filimon rodica petrea dănuţ petrea claudiu filimon luminiţa filimon lecturer, faculty of history, geography and international relations, university of oradea, oradea, romania tel.: 0040-259-408.160 e-mail: palelumi@yahoo.com rodica petrea professor, faculty of history, geography and international relations, university of oradea, oradea, romania tel.: 0040-744-217.507 e-mail: petrearodica@yahoo.fr dănuţ petrea professor, department of physical and technical geography, faculty of geography, babeş-bolyai university, cluj-napoca, romania tel.: 0040264-405.300 e-mail: dpetrea@geografie.ubbcluj.ro claudiu filimon lecturer, faculty of history, geography and international relations, university of oradea, oradea, romania tel.: 0040-259-408.160 e-mail: filimonpunct@yahoo.fr transylvanian review of administrative sciences, no. 34 e/2011, pp. 114-126 * this contribution represents results from the following reserch project pn ii, te_287, no. 74/2010. 115 1. introduction the urban sector in romania and mainly the small towns inherited a history tributary to the communist regime whose creation they are in fact. the fall of the communist regime in 1989 and the rigors of the adjustment to the market economy generated other mutations in the romanian social-economic system at all levels. particularly, the small towns, especially those developed exclusively on unsuccessful industrial activities, underwent a repositioning both in the national urban hierarchy and in the relations with the neighboring territory. after two decades, the reconversion and revitalization of these settlements continue to be a challenge for the policies of balanced territorial development, through the construction of the intercommunal structures. such structures were set up in 2005 as territorial planning units (tpus) in order to optimize the territorial development. under these circumstances, the small towns turned into poles of local development. the question that the present study is intending to answer is whether the small towns as poles of development are able to assume this role, considering the relict structures inherited from the communist past. in order to answer this question, we started from the already acknowledged methodology to determine the development potential of a town. the results of the study are suggesting a tool of assessing the scientific validity of the intercommunal construction. 2. theoretical support and methodology in the literature, there are several expressions of the idea that small towns may become “hubs” for the rural hinterland and “essential pillars of economic prosperity” (british department of environment transport and the regions, 2000). errington and courtney (2000) stated that small towns may become attractive, at the same time creating the opportunity to encourage and diversify the rural economy. for the towns which assume the role of development centers of rural areas, one must ask how powerful the links between them and their hinterland were, and how these links were affected by the recent socio-economic transformations. also, one should ask if these relations developed uniformly at the level of different types of towns. the continuous globalization, the people’s increased mobility and the emergence of new communication and information technologies facilitate the “flow” of economic development benefits assumed by small towns towards the neighboring rural space. indeed, if the links town-hinterland (murdoch, 2000) would prove weak, the extension of economic activity in a town might lead to an increase of imports and commuter flows from other regions and towns, with relatively small benefits for the rural areas. this is why it is necessary to understand and assess the links between small towns and their surrounding areas before considering them as having a potential for becoming “growth poles” (perroux, 1955) in the territorial development. the development potential of a town is defining for its role in the neighboring territory. in order to identify it, we have used the methodology suggested by ianoş (1987, 2000). 116 “the ascertainment of the hierarchy structures of settlements is a pre-requirement of any analysis in the field of settlement systems, because, depending on the place they have in a ranking which takes into account the geographic location, human potential, economic potential, the political-administrative power and the social-cultural and urbanistic facilities, they build up their own systems or subsystems” (ianoş and humeau, 2000, p. 84). ever since 1987, based on the aforementioned categories, ianoş carried out the hierarchy of the romanian towns on seven levels. in bihor, a county located in the north-west part of the country, one could find: salonta, beiuş and ştei, of rank v, aleşd and marghita, of rank vi, vaşcău and nucet, of rank vii (ianoş, 1987, p. 109). in 2006, in the spatial plan of the north-west region (cocean, 2004, p. 66) in the regional hierarchy of the influence centers, beiuş and salonta rank vi (as towns with zonal influence on 8-16 communes), aleşd, marghita and stei, local influence i, and nucet and vaşcău, local influence ii. valea lui mihai is placed in the category of agricultural towns with areas of influence under consolidation. the recently produced mutations in the urban hierarchy of bihor county triggered changes from the previous studies. the updated hierarchy allowed the ascertainment of the high, average or low development potential of the small towns of bihor county, based on which they can or cannot assume a part in the territorial construction. following the comparison between the real or imposed development poles by intercommunal construction, it resulted in a typology which can become a tool of territorial construction validation. 3. the communist heritage in the characteristics of small towns in bihor county starting with the setting up of the communist regime (1945-1989), the type of country evolution meant its rapid turn into a modern competitive economy. under these circumstances, in the process of social-economic development there appeared profound and irreversible mutations. according to the principles of socialist construction, the development of the country meant extensive industrialization and forced urbanization policies, the heavy industry towns being considered engines of development and the representative type of town being the industrial town. the implementation of these policies triggered the explosive burst of the “socialist-type urban structures” (săgeată, 2002, p. 61), small or medium towns, mostly monofunctional and artificially supported by massive investments in the detriment of the traditional urban centers, thus confusing the natural urban hierarchy and triggering territorial imbalances. the most important part in the setting up of the urban network was played by the political factor which directed investments to certain rural settlements considered as having higher development opportunities, therefore helping their evolution up on the urban ranking scale. the involvement of the political factor due to the centralized development planning was crucial in the distribution of towns by size, the balanced territorial repartition and the setting up of an urban network according to the objectives 117 of the central power. one aim of the urban policy of that period was the fast development of small towns and the increase of their territorial importance (ianoş, 1987). in bihor county, from 1945 to 1989 there were set up six new towns: ştei, nucet, vaşcău in 1956, marghita and aleşd in 1968, and valea lui mihai in 1989. their subsequent evolution followed the general economic trend and mainly the industrialization process, increasing between 1970s-1980s and stagnating between 1980s-1990s. after the fall of communism, the 1990s brought a sharp economic and socio-demographic decline, as a result of the slow process of communist-type industry restructuring and reconversion of the territories affected by deep imbalances. these imbalances are less visible in the case of marghita and aleşd. at present, most of these towns are going through a new restructuring process, aiming at diversifying their economic profile towards the tertiary sector, the most vulnerable being ştei. the towns of nucet, vaşcău and valea lui mihai are the most disadvantaged in this regard. they form a particular category of settlements, assimilated by the urban sector only generally, but inferior when it comes to facilities or urban culture, thus being named socialist-type urban structures (săgeată, 2002). 4. intercommunal construction in bihor county romania’s territory comprises 12,956 rural localities (villages), 320 towns and 41 counties (romanian national institute of statistics, 2010). the rural localities are grouped into 2,861 communes, each one of them comprising an average number of 5 villages under the same administration. the administrative power in romania is divided between state public authorities (central) and authorities of the local public administration (towns, communes, counties). the central authorities are the government and ministries, and the local authorities are the county council, the local council, the mayor and the local public services. one should note that, although the regional level exists (set up by law no. 315/2004 regarding the regional development in romania), its activity is limited, the administrative attributions being divided between institutions from central level and local level (counties, towns, communes). the territorial cooperation in romania is more of an emergent process, the specific legislative framework being insufficient and it was set up relatively late. thus, the territorial collectivities freely associated initially based on the right of the municipalities to free association, this being tangentially mentioned in the updated government decree no. 26/2000, regarding associations and foundations. law no. 215/2001 of local public administration completed by law no. 286/2006 for amending the local public administration law no. 215/2001 improved the framework for the association between the local collectivities by introducing terms such as metropolitan area, urban agglomeration and association of intercommunal development. the association of intercommunal development is defined as “a structure of legal entity cooperation, private, set up according to law by the administrative-territorial units in order to jointly accomplish local or regional projects of development or to jointly deliver various public services”, and the metropolitan area as an “association of intercommunal development 118 based on the partnership between romania’s capital or the first-ranked municipalities and the administrative-territorial units in the near vicinity”. the law mentions the urban agglomerations as well, as “associations of intercommunal development based on the partnership between municipalities, other than the first-ranked ones and towns, together with the localities situated in the area of influence”. although the aforementioned laws allow the territorial collectivities to associate and set up the structures of cooperation, yet, presently, romania does not have a law of intercommunal cooperation. the direct consequence is an unclear view of the structures of territorial cooperation, with multiple configurations (microregions, associations of intercommunal development, metropolitan areas, urban agglomerations), with multiple names (such as the association of cooperation and development of the microregion tăşnad, the rural association of carei and ierului valley, vlădeasa huedin microregion) and different goals from case to case (social-economic development, sustainable local development, the local agenda 21, water supply, sanitation, social public services etc.), this being a hindrance to understand this phenomenon and to draw other territorial collectivities towards the associative process. in bihor county, the emergent territorial cooperation has triggered a number of 24 associations of intercommunal development (manualul asociaţiilor de dezvoltare intercomunitară din românia, 2011), but there are only 2-3 communes for concrete projects firstly related to development of the infrastructure, the oradea metropolitan area being the only valid actor of the territorial development created around the city of oradea, which is the administrative capital of bihor county. the optimization of the territorial development in romania has triggered at the same time a process of imposed territorial cooperation by the process of strategic development run at the level of regions of development. thus, beside the aforementioned configurations of territorial cooperation, based on free association, and functioning according to a rising democracy, another configuration was shaped up through the plans of regional development. limited by a methodology which implies the identification of the municipalities that individualize themselves by a joint cultural identity, relations of economic cooperation, the redevelopment around common poles (planul de dezvoltare al judeţului bihor 2007-2013), these associations named territorial planning units (tpus) intend to accomplish the goal named: the policentric spatial development and a new urban-rural relationship. eleven tpus were set up: seven of these have as poles of development towns of beiuş, ştei, marghita, aleşd, salonta, valea lui mihai, săcueni. other three were set up around rural communes, which function as local centers (tinca, ceica and salard). the oradea metropolitan area is assimilated to this type of structure. actually, since they were not set up based on free association, they appear only “on paper”, without a real functionality. the analysis of the ability of the seven small towns in bihor county to play the part of a pole of development artificially imposed by the setting up of the tpus represent the scientific foundation from which one should establish the viable poles of development. 119 5. the analysis of the development potential of the small towns in bihor county the network of settlements in bihor county is made up of 10 towns, out of which 4 are municipalities, and 90 are communes comprising 429 villages. the small towns of bihor county (salonta, marghita, beiuş, aleşd, valea lui mihai, ştei, săcueni, nucet and vaşcău) are subordinated to the regional center with macroterritorial functions, oradea. lying almost at the basis of the national urban pyramid, with less than 20,000 inhabitants, these towns have a polarization area that extends only to the neighboring communes. the urban tradition is specific for only two towns: beiuş and salonta. the former is mentioned in the documents as having an urban status since the 15th century, while the latter since the 17th century. the other small towns of bihor county gained the urban status only in the 20th century: nucet, ştei and vaşcău (1956), marghita (1967), aleşd (1968), valea lui mihai (1989). in this century, only one town is added on the urban map of bihor county: săcueni, in 2004. during the communist period, in order to report a higher urban population, rural settlements located more than 10 km away were artificially added to the town itself, using various terms such as: component villages or villages belonging to towns (ianoş, 1994). as a consequence, the towns of aleşd, beiuş, marghita, nucet, săcueni and vaşcău administratively include such villages, located at various distances from the town itself, which led to the establishment of large administrative areas, extended especially in the hilly and mountainous areas. the geographical position of small towns is determinant for the position potential and has repercussions on their evolution due to three components: the position within major landform units, the access to existing raw materials and the distance to major communication lines. salonta, valea lui mihai and săcueni are located in the plain area of the county, so the natural factor does not restrict the opportunity for these towns to extend. for the towns located at the contact of landform units (aleşd, beiuş, marghita, ştei and vaşcău), less opportunities exist for extending their built-up space. the most obvious restrictions are to be found at nucet, due to the direct neighborhood with the mountain edge (petrea, 1998). position also influences the functional economic profile of these towns, as a result of their access to the natural resources provided by the territory. in this respect, it must be mentioned that all small towns depend on regional raw materials, and not on local ones, that are insufficient for their urban development. the towns of aleşd, beiuş, salonta, săcueni, ştei, vaşcău and valea lui mihai are located along international important highways, european roads that facilitate the transport of people and merchandise, with direct implications in their economic development. in the case of marghita and nucet, the main roads are represented by national roads, linked to the european ones. the town of marghita is favorably located at the shortest distance from the future motorway, which will connect city of braşov, located in the center of the country, with the border with hungary, passing through bihor county. the towns of valea lui mihai, săcueni and salonta are also cross-border 120 figure 1: the small towns of bihor county points with hungary (figure 1). the railway network provides an advantage for the towns of aleşd, salonta, săcueni and valea lui mihai, which benefit from the presence of international or national railway lines. the towns of beiuş, marghita and ştei are linked to the national railway network by means of secondary rail lines. by taking into account all these factors, one can notice a difference between the small towns of bihor county according to their position potential. salonta is higher-ranked, followed by aleşd, valea lui mihai and săcueni. other small towns are lower-ranked. the demographic potential after 1990, the demographic component of small towns was more affected than other types of towns. in order to highlight the role of small towns of bihor county in the intercommunal construction, we analyzed several features: the population number, the age structure and the active population. the demographic size allows the ranking of these towns according to their human potential into four different categories: above 15,000 inhabitants, between 10,001 and 15,000, between 5,000 and 10,000, and below 5,000 inhabitants. thus, in 2002, the town of salonta had the highest human potential (18,077 inhabitants), followed by marghita with 15,346 inhabitants. the towns of beiuş and valea lui mihai were 121 in the second category, with more than 10,000 inhabitants. three towns were in the third category: aleşd, săcueni and ştei, while the towns of nucet and vaşcău, with less than 5,000 inhabitants, lay at the bottom of the ranking. the quality of the demographic potential, with direct implications in the social and economic development, is highlighted by its age structure and the weight of the active population out of the total population. the percentages of 7% and 12% of elderly population are considered thresholds for demographic rejuvenation or demographic aging, respectively (vert, 2001) (figure 2). from this point of view, none of the small towns of bihor county fits in the category of towns with a “young” population. the closest to this category are the towns of ştei and marghita. at the other end, the towns of vaşcău and salonta present an advanced process of demographic aging, followed by nucet, valea lui mihai and săcueni. the young population of bihor county has a similar weight to the one generally registered in romania. the highest weights of the young population out of the total population are recorded in the towns of aleşd, săcueni and marghita, while the lowest one is in vaşcău (figure 2). the high weight of the adult population (over 60%) has an important role in the relations with the neighboring territory. thus, the towns of aleşd, marghita, beiuş and ştei are suppliers of labor force for many of the industrial units located in the neighboring villages. the highest weight of the active population (over 36%) is recorded in the towns of aleşd, beiuş, marghita and salonta, whereas the town of nucet has the lowest one, 25.7%. source: authors’ calculations based on bihor county department of statistics, 2005 figure 2: the degree of demographic aging in the small towns of bihor county thus, from a demographic point of view, the most important part is played by the towns of salonta and marghita, followed by aleşd and beiuş, which benefit from a high weight of the active population and an important percentage of young population having an economic value for the future. the most disadvantaged are the towns of nucet and vaşcău. 122 the economic potential of the small towns of bihor county and implicitly their economic role in the territory is highlighted by the functional profile, the number of existing economic units and the number of economic units to every 1,000 inhabitants. the economic profile of these towns suffered numerous changes compared to what they represented when they received the urban status. the change of the economical and political system, after the fall of communism, triggered a major change in role that these towns played in the territory. the economic function, predominantly industrial, suffered greatly, towns being compelled to readjust “under way”. the dependence on several large industrial units specific for the towns of ştei, nucet and vaşcău, and their difficult restructuring generated many economic and social problems. in the town of ştei, the place of the formerly acknowledged branches (mining, machinery manufacturing) was taken by european food corporation. in this case, one notices a high dependence of the labor force on this unit, which fact may generate social and economic problems on the long run, given the possibility of an involution. in salonta, marghita, beiuş and aleşd, the urban tradition and the more complex functional profile, led to an easier adjustment to market economy, the disappeared economic units being replaced by units of light or food industry. the weight of the active economic units on activity sectors highlights the changes in the economical system of these towns after 1990. thus, the weight of the industrial sector diminished in favor of the tertiary one (figure 3). the commercial function of these towns is traditional for aleşd, beiuş and salonta, as they all have “markets” sought over by the population of their area of influence. regarding the number of active economic units, the small towns of bihor county have a total number of 2,293 units, respectively 15.9% of the total economic units in bihor. the highest number of economic units (figure 3) is to be found in marghita, salonta, beiuş and aleşd with more than 340 units, nucet and vaşcău fewer than 50. source: authors’ calculations based on bihor county department of statistics, 2005 figure 3: the small towns of bihor county: the economic units 123 the average number of economic units to 1,000 inhabitants (24), specific to small towns, is higher than the county average of 18 units/1,000 inhabitants. the highest number of economic units per 1,000 inhabitants is recorded in the towns of beiuş and aleşd, in the top of the ranking, having a value of more than 30 units, followed by ştei, salonta and marghita (25-30). the lowest number is registered in the two towns of nucet and vaşcău with only 14 units per 1,000 inhabitants. as a result of the analysis, it comes out that salonta, marghita, beiuş and aleşd have real potential for development, ştei, săcueni and valea lui mihai are in a process of economic restructuring, while vaşcău and nucet are affected by economic decline. the socio-cultural and urbanistic potential unfortunately, the present socio-cultural and urbanistic infrastructure has not undergone major changes as opposed to the ones in 1987. the socio-cultural and urbanistic facilities, in accordance with the demographic dimension and the level of development highlight the positioning of beiuş, salonta, marghita and aleşd in front of other smaller towns. nucet and vaşcău have a degraded and short infrastructure, incompatible with their urban status. table 1: the socio-cultural infrastructure of bihor county small towns towns high schools museums law court hospital aleşd 1 1 1 beiuş 3 1 1 1 marghita 2 1 1 nucet 1 săcuieni 2 1 1 salonta 2 1 1 1 ştei 2 2 valea lui mihai 1 1 vaşcău total towns 13 3 4 9 source: bihor county department of statistics, 2005 following the analysis on the development potential of the small towns of bihor county a hierarchy has been established, ranking them into three categories: towns with high development potential, towns with average development potential, and towns with low development potential. the first category, comprising towns with an important development potential, includes beiuş and salonta, which benefit from the urban tradition, also reflected by a better socio-economic, urbanistic and built-up level of development. they are followed by aleşd and marghita. ştei and valea lui mihai are in the second category. in the third category are nucet, săcueni and vaşcău, with a low development potential, which are important only for their component villages. 124 6. results and discussions the aforementioned hierarchy highlighted the small towns as real poles of development. as opposed to this hierarchy, by the intercommunal construction in bihor county, a series of small towns without perspective were imposed as poles of development of the tpus. by comparing the real poles of development, highlighted by the analysis, with the non-viable poles of development, imposed by the intercommunal construction, we suggest a typology that scientifically validates or not the tpus. its final goal is to highlight the disparity between the real and imposed poles of development, thus explaining the reason why some of the tpus remained dysfunctional structures of territory. thus there have been identified the following types of poles of development: • the viable type represented by the small towns with higher potential of development, real poles of local development, also asserted by the intercommunal construction: beiuş, salonta, aleşd and marghita; • the vulnerable type represented by the small towns with average potential of development, which have difficulties in being a pole of development given by the intercommunal construction ştei and valea lui mihai; and • the non-viable type represented by the small towns with low potential of development, unable to assume the role of pole of development imposed by the intercommunal construction: săcueni. applied to bihor county, the typology highlights the political assertion of a much higher number of tpus around towns that cannot assume their part as poles. applied to other counties as well, the typology can become a tool of assessing the functionality of the intercommunal construction. 7. conclusions the results of the present study confirm the fact that the territorial role of small towns of bihor county is conditioned by their evolving dynamics and by the manner of integration of external aggressions represented both by the planning policies of the communist period and later by the rigors of the market economy. some communist-type urban structures experience great difficulties in the process of urban reconversion and remodeling than the traditional towns. although these structures are territorially expressed from a demographic, economic, socio-cultural and political-administrative point of view, it is very difficult for them to assume any role in the process of intercommunal construction as their power of attraction is limited and manifests itself sequentially. the performed analysis highlights, especially in the case of nucet and vascău, a progressive decline which can ultimately lead to ruralization. when it comes to ştei and valea lui mihai, the ability to become a development pole is limited due to the previously shown vulnerability. a particular situation is represented by the youngest town of săcueni, imposed as a development pole, although its potential 125 is low. other towns capable of fully assuming their role as local development poles given by the setting up of the tpus are salonta and beiuş (traditional towns whose relationship with the adjacent territory is spontaneous and bilateral) and marghita, respectively aleşd (communist-type towns, which due to favorable factors, prove to be viable development poles). in the actual configuration, the intercommunal construction in bihor, with the 11 tpus and some other non-viable development poles, is non-functional. to supply for its functional deficiencies and out of practical reasons, the territorial collectivities have freely set up other structures of co-operation such as the intercommunal development associations, thus doubling the intercommunal construction acknowledged by a higher authority. the implementation of some tools of scientific validation, such as the type shown in this study, could improve and guarantee the functionality of this territorial construction. the suggested model can also be applied to other counties facing similar issues. references: 1. benedek, j., ‘relaţiile oraş-spaţiu. abordare teoretică’, 1998, studia universitatis “babeşbolyai”, geographia, xliii, 1, pp. 97-112. 2. benedek, j., ‘urban policy and urbanization in the transition romania’, 2006, romanian review of regional studies, vol. ii, no. 1, pp. 51-64. 3. bihor county department of statistics, anuarul statistic al judeţului bihor (statistics yearbook of bihor county), 2005. 4. british department of environment transport and the regions, rural white paper: our countryside: the future – a fair deal for rural england, london, 2000, [online] available at http://archive.defra.gov.uk/rural/documents/policy/ruralwp/rural.pdf, accessed on april 1, 2011. 5. cocean, p. (ed.), planul de amenajare a teritoriului regiunii de nord-vest, cluj napoca: presa universitară clujeană, 2004. 6. cucu, v., oraşele româniei, bucureşti: editura ştiinţifică, 1970. 7. errington, a. and courtney, e., ‘the role of small towns in the local economy and some implications for development policy’, 2000, local economy, vol. 15, no. 4, pp. 280-301. 8. filimon, l., chiriac, c., petrea, r. and filimon, c., ‘population mobility and its implications in territorial reconversion. a case study: the crişul repede valley territorial planning unit’, 2009, analele universităţii din oradea, seria geografie, tom xix, pp. 163-170. 9. filimon, l., ţara beiuşului. studiu de geografie regională, phd thesis, cluj-napoca: babeş-bolyai university, 2007. 10. government ordinance no. 26/2000 regarding associations and foundations, published in official monitor no. 39 from january 31, 2000. 11. ianoş, i. and humeau, j.b., teoria sistemelor de aşezări umane, bucharest: editura tehnică, 2000. 12. 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published in official monitor no. 408 from july 24, 2001. 20. law no. 51/2006 regarding the community services of public utilities, published in official monitor no. 51 from march 8, 2006. 21. manualul asociaţiilor de dezvoltare intercomunitară din românia (manual of the associations for intercommunal development from romania), 2011, [online] available at http://www.dezvoltareintercomunitara.ro/baza-de-date.html, accessed on september 1, 2011. 22. murdoch, j., ‘networks – a new paradigm of rural development?’, 2000, journal of rural studies, vol. 16, no. 4, pp. 407-419. 23. perroux, f., ‘note sur la notion de “pole de croissance”’, 1955, economie appliquée, no 1-2, pp. 307-320. 24. petrea, r., blaga, l., filimon, l., chiriac, c., olău, e.p., nemeş, v. and marusca, a., unitatea teritorială de planificare valea crişului repede – studiu preliminar, oradea: editura universităţii din oradea, 2009. 25. petrea, r., dimensiunea geomorfologică în dezvoltarea şi estetica urbană a oraşelor mici din dealurile de vest (sectorul dintre barcău şi crişul negru), oradea: editura universităţii din oradea, 1998. 26. petrea, r., olău, e.p. and nemeş, v., ‘aleşd: issues of organization, town planning and geospatial integration’, 2009, analele universităţii din oradea, seria geografie, tom xix, pp. 133-140. 27. planul de dezvoltare al judeţului bihor 2007-2013 (development plan of bihor county 2007-2013), [online] available at http://www.cjbihor.ro/index.php?act=dezvoltare, accessed on april 1, 2011. 28. romanian national institute of statistics, 2010, [online] available at https://statistici. insse.ro/shop/, accessed september 1, 2011. 29. săgeată, r., ‘structurile urbane de tip socialist – o individualitate geografică?’, 2002, analele universităţii din oradea, seria geografie,tom xii, pp. 61-69. 30. ţucra, n., vaşcău. comună – oraş – ţinut. monografie, oradea: brevis, 2000. 31. vert, c., geografia populaţiei, timişoara: mirton, 2001. 217 abstract gender equality in public institutions is a sensitive topic considering the vast efforts of european countries to overcome the problems raised by gender inequality, gender segregation and gender discrimination in the labor market. in order to measure gender equality in public institutions and to identify the most important gender related organizational issues a questionnaire was built, tested in 2010 in one public institution, and then applied at national scale to public servants (both women and men) from local public institutions. the questionnaire focuses on gender stereotypes, sexual harassment, gender discrimination (in hiring, promotion, pay and benefits, evaluation, promotion and task distribution practices in institution) and occupational mobility. keywords: public institutions, gender equality, discrimination, organizational culture, gender stereotypes, occupational mobility. gender equality in the romanian local public institutions* sorin dan şandor felicia cornelia macarie simona claudia creţa sorin dan şandor associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: sandor@polito.ubbcluj.ro felicia cornelia macarie associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-263-233.419 e-mail: cornelia.macarie@yahoo.com simona claudia creţa assistant professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-263-233.419 e-mail: monacreta@yahoo.com transylvanian review of administrative sciences, no. 34 e/2011, pp. 217-228 * this paper is part of a larger project no. 2254/pnii/idei/2008, ”the impact of gender on orga-nizational culture of public organizations. study of the presence of women in top public organization’s management”; financed by the romanian national council for research in higher education (cncsis). 218 1. gender equality at the workplace gender stereotypes are general beliefs regarding characteristics attributed to men and women in society. a growing body of literature research suggests that managers and other organizational agents have stereotypes associated with gender and once the perceivers have developed such stereotypes, they will use them to categorize continuously (some researchers suggested that this is quite an automatic process). there is an overwhelming amount of research regarding gender stereotypes in different cultures. some studies based on women’s and men’s characteristics showed that they are quite opposite. williams and best (1990) found in their study that women are perceived as superstitious and sentimental in all 25 countries they studied, while men are forceful, independent and adventurous. regarding women managers, vincenza priola (2004) concluded in a study based on interviews with managers and academics that there are some stereotypes associated with women managers’ activities: care and support, communication skills, multiple tasks commitment, and team work predilection/bias. unfortunately, people are not aware of their stereotypes, so they do not accept that stereotypes may affect their decisions. according to fiona wilson (2005) women do not necessarily feel that they are appreciated differently but men consider them as having different and sometimes inferior qualities. women are seen as something else when they are “measured” against male norms and standards. the two groups are supposed to have different (but complementary) types of values. marshall identified two male and female values groups that define the organizational cultures and these values are qualities to which both men and women have access to, even if, through social learning and social roles, the two groups of values are gendered (marshall, 1994, p. 351). male values are self-assertion, separation, control, focused perception, classification, rationality, trusting out, contractual arrangements and female values – interdependence, merging, acceptance, awareness of patterns, wholes and contexts, emotional tone, personal perception and containing. another issue refers to gender segregation in employment – horizontal, vertical or hierarchical. horizontal segregation represents a predisposition to occupy positions in different sectors (an under or over representation of one group in various sectors) while vertical segregation refers to a predisposition to hire women and men in different positions in the same sector, which may lead to an under-representation of women in management positions (hierarchical segregation). according to the study “evolution of occupation on the romanian labour market in a 2010 perspective” (pîrciog et al., 2006) 35.9% of romanians connect their occupation with gender (industry is considered a masculine sector while services are considered feminine), stereotypical assessments being made by women and men, no matter what their positions are (executive or management). occupational segregation leads ultimately to differences between women’s and men’s remuneration; feminine occupations are less paid than masculine occupations and even during the last years there has been a sensible diminution of these gaps (between 1994 and 2004 from 21% to 14%). 219 in 2004, 66.4% of women had less than average earnings due to their jobs in specific “feminine” sectors. in state sectors, in predominantly masculine areas (police, army and transport) the salaries are higher than in feminine areas (health, education and public administration). at eu level there is still a gender pay gap (in 2007 – 17.6%) whilst in romania, this gap has been changing between 2002 and 2008 (2002 – 16%, 2006 – 7.8%, 2007 – 12.7%, and 2008 – 9%). this gender pay gap was larger in financial intermediation (32.2%) and health and social works (24.3%), and smaller in transportation, storage and communications (9.9%) and construction (5.5%). in the sectors with larger pay gaps, the workers are predominantly women and in sectors with smaller gaps, the workers are mainly men. in 2008 the smallest pay gaps were in italy (4.9%), slovenia (8.5%), belgium (9%) and romania (9%); also portugal, poland and malta had small pay gaps. on the other hand, the countries with the highest pay gaps were the czech republic (26.2%), austria (25.5%), germany (23.2%) and greece (22%). 2. gender equality in romania beverly dawn metcalfe and marianne afanassieva (2005) consider that political and economic transition is a re-masculinisation process in which gender hierarchies and gender power relationships in central and eastern europe private and public sectors are reaffirmed. romania’s country profile regarding gender equality and attitudes shows us a contradictory picture. undp’s gender-related development index 2009 shows a very low gender disparity in basic human development (women reaching 99.9% of the general achievements); thus romania came fifth in the world. undp’s gender empowerment measure 2009 – a measure of the degree to which women take an active part in economic and political life – places romania only 77th out of 155 countries. a conservative gender view (according to the world values survey 2005), is that romania is closer to traditional values than most other european countries and furthest from a culture of trust and tolerance, which is very likely to explain the contradictions. we know little about the way in which this view is translated into barriers towards women empowerment. there are four major ways in which people are gender discriminated at the workplace, namely hiring, pay and benefits, promotion, and firing. according to the euro barometer – discrimination in the eu (2006), 23% of romanians and 33% of the european citizens (eu 25) consider that being a woman represents a disadvantage. in the same study, 40% of europeans and 32% of romanians think that there is gender discrimination. what is important is that a small part of the respondents considered discrimination to be more important than in 2001 (27%, respectively 26%). 72% of romanians consider that we need more women in leading positions (77% in the eu) and more women members of parliament (64%, 72% in the eu). there are still 11% of romanians and 16% of europeans that are against specific measures for implementing (gender) equality of opportunities at work. 220 the level of discrimination in romania is very hard to assess. different researches provided different results. when individuals are asked about their own experience with discrimination, the rate of discrimination is rather low. according to the european working conditions survey 2010, only 4.0% of men and 5.6% of women in romania were discriminated at work1, better figures than that of the average for the eu (5.6% and 6.9%). a study conducted by a trade union (universitatea bucureşti, 2010, p. 15) found that 9% of the employees have had an experience of being discriminated2. another estimate is that 3.8% of employees and 7% of the total number of women were discriminated (blocul naţional sindical, 2009, p. 33). the results are different when we take a look at the general perception. 49% of employees and 37% of the employers believed that discrimination is fairly common at workplaces (universitatea bucureşti, 2010, p. 6), the most common being against women and women with small children, and mostly related to program hours and payment. public institutions are in a slightly better position than private companies due to the fact that working hours and payment are more strictly regulated. yet, the perception about discrimination is higher than that of those coming from the private sector (81% compared to 42%) and 29% of the public sector employees declared that they witnessed cases of discrimination at their workplace compared with only 9% of those coming from the private sector. when discussing about gender discrimination (blocul naţional sindical, 2009, p. 39) 21.3% of the workers considered that women and men are treated equally (women tending to agree with this statement more than men and people from the public sector more often than those from the private sector) and that gender discrimination, even if in a much lesser degree than discrimination based on age and health status, is frequent (9.27%) or seldom (38.44%), 52.29% considering that it never happens. the most common way to assess gender inequality is to analyze the income gap. in the case of romania the data from the 2009 statistical yearbook shows that women situation has improved in the last years. starting with a very low gap (men gaining 1.03 times more than women), since 2007 they are in the lead, in 2008 men gaining only 89% of women’s income. this is in line with the existing literature on the differences between public and private wages which shows that women are better paid in the public sector than in the private one (fernàndez-de córdoba et al., 2009). the difference between the individual and the general perceptions of discrimination (in general or gender based) can be influenced by three different factors. first, there are problems in reporting discrimination, many people are embarrassed to recognize such problems. second, the perception about discrimination might be formed indirectly, by hearing or witnessing such situations rather then being subjected to them. third, 1 possible discrimination factors include age, racial, nationality, gender, religion, disability and sexual orientation. 2 possible discrimination factors include age, racial, gender, small children, disability, physical aspect and political opinions. 221 people perceive discrimination in very different manners – they may not perceive a specific situation as discriminative while others will. people with more education perceive more discrimination than those with lesser education (which may explain also why employees from public institutions saw more cases of discrimination than those from the private sector). 3. methodology in order to identify the most important gender related organizational issues a questionnaire was built and applied in a public institution to public servants (both women and men). the questionnaire was divided in 5 dimensions, respectively: • stereotypes measured as the extent to which personal traits (27) are considered to belong to one category or another; • sexual harassment (from indecent comments to sexual favors demands); • discrimination (hiring, promotion, pay and benefits, evaluation, advancement and task distribution practices in institution). another set of questions regards the individual perception of his/her position at workplace; and • occupational mobility. the questionnaire was tested in 2010 in one public institution (şandor et al., 2010) and applied by mail at national scale in may-june 2011. local public institutions (city halls from the county seats, county councils and prefectures were addressed) to each of them a specific number of questionnaires (based on their size) was submitted. out of 41 counties we got answers from 17 prefectures, 19 county councils and 14 city halls – a 40.65% response rate from the institutions. the total number of cases is 938, 41.4% from city halls, 40.9% from county councils and 16.7% from prefectures. 27.1% of our respondents are men and 72.9% women; 9.1% are less than 30 years old, 31.6% are between 30-39, 36.3% are between 1.03 1.01 0.91 0.89 0.8 0.85 0.9 0.95 1 1.05 2005 2006 2007 2008 figure 1: gross wage report (m/f) in the public administration and defense sector 222 40-49 and 23% are over 50; 17.5% held managerial positions, 78.6% rank and file positions, and 3.9% other type of position; 25.3% were hired in the institution less than 5 years ago, 27.2% between 5-9 years ago, 23.7% between 10-15 years ago, and 23.8% work in the institution more than 15 years; 6.1% have a high-school diploma, 1.7% have a post-hs diploma, 35.1% are bachelors, 56.6% have a master degree and 0.5% a phd; 18.6% have studies in law, 26.7% in economics, 10.6% in other social sciences, 29.1% technical, and 9.8% other type of studies. 4. gender equality in the romanian local public institutions public servants admit that gender conditions differ in romania. most of them consider that men are faring better than women (more than half of them). 27,18% 26,85% 34,03% 8,73% 3,20% men 's condition is much better than women's condition men 's condition is better than wo men's co ndition men 's condition and women's co ndition are the same women's co ndition is better than men's condition women's co ndition is much better th an men's condition figure 2: gender differences in romania the situation is different when it comes to gender conditions in the institution – 25.30% think than men are faring better, 13.71% think that women are doing better, while 60.89% consider that both are doing the same. women feel that they are doing worse than men, but this is not influencing the way in which they consider their own situation. we have here a situation in which there is a general perception of inequality in the institution not felt at the individual level. one possible explanation is related to the fact that the perception about inequality inside the institution is influenced by the perception of discrimination in romania (the relationship is significant, gamma=0.55). 4.1. stereotypes at the workplace we tried to measure the existence of gender stereotypes in institutions indirectly (we did not ask about the exact work roles and positions of both sexes but asked their opinions regarding personal traits that belong either to men or women). the means obtained, in ascending order (the lower – belong to men, the higher – belong to women, 3.00 – belong equally to both sexes) show us that there are few traits reclaimed for a specific gender. in the table below, the means of the values obtained for each gender are presented with the difference between male and female opinions and their level of significance. 223 table 1: personal traits and gender personal traits mean difference (m-f) significance 1.. physical resistance 2.38 -0.49 *** 2. aggressive 2.46 0.23 *** 3. authoritarian 2.59 0.08 4. courage 2.66 -0.57 *** 5. logical thinking 2.79 -0.50 *** 6. individualism 2.83 0.15 * 7. objectivity 2.91 -0.26 *** 8. good co-worker 2.93 -0.11 * 9. psychical resistance 2.95 -0.45 *** 10. intelligence 3.00 -0.26 *** 11. competitive 3.13 -0.31 *** 12. kindness 3.25 -0.17 ** 13. dedicated to work 3.25 -0.35 *** 14. good subordinate 3.27 -0.37 *** 15. goal oriented 3.36 -0.41 *** 16. ambition 3.40 -0.21 *** 17. perseverance 3.40 -0.33 *** 18. empathy 3.43 -0.19 *** 19. communication skills 3.47 -0.36 *** 20. creativity 3.47 -0.76 *** 21. prudence 3.52 -0.41 *** 22. patience 3.62 -0.59 *** 23. intuition 3.65 -0.61 *** 24. conscientiousness 3.73 -0.50 *** 25. dedicated to family 3.93 -0.42 *** 26. pay more attention to details 3.97 -0.49 *** 27. emotional 3.98 -0.18 *** 28. sensibility 4.07 -0.25 *** *– significant at 0.05, **– significant at 0.01, ***– significant at 0.001 from this table we may conclude that men are considered to be more physically resistant and aggressive, and women are considered to pay more attention to details, more sensible, dedicated to family, conscious, intuitive, patient and prudent3. we can see that there are significant differences between men’s and women’s perceptions, only the authoritarian is seen in the same way by both genders. the differences are bigger for traits like creativity, intuition, patience, courage, logical thinking and conscientiousness – traits which are claimed by each gender. the larger number of women in our sample made many traits to appear more characteristic to women, so we tried to see how women and men see these personal traits4. 3 we presented only those traits with values of at least ±0.50 away from the theoretical mean (3.00). 4 we presented only those traits with values of at least ±0.50 away from the theoretical mean (3.00). 224 table 2: personal traits as seen by each gender personal traits according to men personal traits according to women personal traits mean personal traits mean physical resistance 2.02 aggressive 2.40 courage 2.24 … logical thinking 2.43 communication skills 3.56 … prudence 3.63 pay more attention to details 3.61 creativity 3.68 dedicated to family 3.63 patience 3.78 emotional 3.85 intuition 3.82 sensibility 3.88 conscientiousness 3.86 emotional 4.02 dedicated to family 4.04 pay more attention to details 4.10 sensibility 4.14 men seem to think that most traits belong equally to both sexes, whilst women claim more traits for themselves. men stereotypes are fewer. they appear to think that courage and logical thinking are more common to men (better for leadership?), and also more physical resistant (maybe confounded with strength), women being more careful with details (more characteristic to routine work), sensible and emotional (maybe less fit for work under pressure) and dedicated to their family (lower commitment?). women see only one trait as specific to men – aggression. they see their gender with qualities needed to fulfill their duty (such as prudence, conscientiousness, patience, paying attention to detail), better in inter-human relations (communication skills, sensibility, emotional) but also fit for complex tasks (creativity and intuition). dedication to family is another specific trait claimed by women. in general we can see that women are more willing to claim some traits to their own gender (the average on all 28 traits is 3.03 for men and 3.35 for women), indicating that stereotyping might be more common to women than to men. shared stereotypes are related to women being more careful, dedicated to family, emotional and sensible – with women tending to agree to that more than men. data showed us a high degree of gender equality in local public institutions. there is a clear different perception of each gender personal traits – figure 3: gender stereotypes 225 27 out of 28 personal traits and their link to a specific gender being seen in a different way. respondents saw an average of 12 traits as being not specific to any gender, 2.5% seeing all of them as being non-gender specific and 0.7% considering them all as gender specific. 4.2. sexual harassment when asked if they have heard, in the last 5 years, of sexual harassment cases at their workplace our respondents answered as follow: table 3: frequency of sexual harassment situations situation never very seldom seldom often very often some employees heard inappropriate comments coming from their colleagues. 41.6% 33.4% 17.6% 5.4% 1.9% promises were made to some employees in exchange for sexual favors. 92.8% 4.4% 2.5% 0.2% 0.1% superiors asked for sexual favors. 92.9% 4.3% 2.3% 0.4% 0.1% some employees have had to accept unwanted gestures. 82.2% 12.9% 4.1% 0.6% 0.2% some employees offered sexual favors in return for some benefits. 89.9% 6.4% 2.4% 0.9% 0.4% the difference between men’s and women’s responses is significant but very small, men reporting more situations of sexual harassment. there is no significant difference between different institutions. the most common harassment situations mentioned refers to inappropriate behavior, comments or gestures, from some employees and the least is the situation in which a superior asks for sexual favors. even if such cases seem to be rare, there are still practices of sexual harassment in institutions. according to our knowledge no formal complaints of such treatment were made, which may give some leeway for the continuation of such practices. 4.3. discrimination we asked our respondents to tell us if they have heard, in the last 5 years, of any situations in which staff – men or women – were gender discriminated against in their institution. table 4: frequency of discrimination situations by type never very seldom seldom often very often hiring 79.9% 12.7% 5.4% 1.6% 0.1% tasks distribution 64.7% 21.9% 10.0% 3.0% 0.4% evaluation 73.3% 13.5% 8.9% 3.3% 0.9% advancement in rank 75.9% 11.1% 8.5% 3.8% 0.8% promotion 69.8% 13.9% 10.7% 4.6% 1.0% bonuses 67.8% 12.5% 9.7% 6.7% 3.3% 226 the situation seems to be quite idyllic, with most of the responses having no knowledge of any case of discrimination. still, some discrimination was perceived and some respondents had heard about discrimination cases of every type. hiring in public institutions is less perceived to be subject to discrimination because it is a formalized procedure (based on competition) and due to that our respondents obviously succeeded in getting hired. bonus awarding is the most frequent type of discrimination due to the fact that it is a less transparent procedure, which may be subjective, and may easily generate suspicions. in 2010 due to budgetary constraints many types of bonuses were cut and in consequence the differences between discrimination regarding bonuses and that regarding promotion, tasks distribution, advancement and promotion are small. women and men tend to see the situation in the same way and the differences between responses are not significant. we also tried to check the claim by opre and opre (2005) that women are faring worse in men dominated environments. the gender of the supervisor influences only evaluation and bonuses, but in a small measure (eta squared being 0.007 and 0.012). the composition of the office (mostly male, women or an equal distribution) is influencing advancement in rank and bonuses, but also in a small measure (eta squared of 0.013 in both cases). there are significant differences between different types of institutions; the prefectures report less discrimination situations than city halls and county councils, while public servants from city halls complain more about task distribution. we tried to look at possible gender discrimination in another way, asking our respondents about their work relations and their perceived role in the institution and if there were some specific differences between men and women. we did not find gender based differences regarding most of the indicators – appreciation of work results, opinions, expertise, equity regarding rewards, work conditions, tasks distribution. there are significant but small differences regarding autonomy (men having more autonomy than women – averages of 3.63 and 3.36) and access to information (where women stand better – 4.09 compared to 3.81). these results may indicate that treatment for all employees is similar for both categories. we found that there were discrimination cases (see table 4) but we could see that our respondents considered themselves to be treated in a similar manner regardless of gender. there are two possible explanations for our findings – either they have just heard about such cases, or the victims are both men and women. 4.4. occupational mobility we asked our respondents to rate their chances of occupying different positions in institutions (horizontal or vertical mobility). public servants are more optimistic with respect to their chances of horizontal mobility (74.8% consider that they may have a similar position in another office, and 68.4%, more important duties) compared with 53.9% who consider they have the opportunity to obtain a superior position. there are no significant differences between women’s and men’s perceptions of 227 their opportunities to change positions, indicating that women are not denied some occupations or that they are confronted with a glass ceiling. 5. conclusions data showed a high degree of gender equality in local public institutions. there is a clear different perception of each gender personal traits – 27 out of 28 personal traits and their link to a specific gender are being seen in a different way. on average, respondents saw 12 traits as being not specific to any gender, 2.5% seeing all of them as being non-gender specific and 0.7% considering them all as gender specific. the existence of such stereotypes may be the foundation for discrimination practices. the results of our research showed small amounts of cases of sexual harassment, discrimination in hiring, promotion, pay and benefits, evaluation, advancement and task distribution in the institutions or occupational mobility. the individuals’ perceptions of their position at the workplace are not influenced by gender. apart from gender stereotypes local public servants (men or women) see the dimensions of gender equality in a similar manner. some of the responses are hard to believe (like the large majorities who never heard of cases of discrimination5) indicating a possible social desirability bias. further data analysis showed that man and women are seeing things alike for themselves – results hard to find in the case of one gender being discriminated. the fact that women earn more than men in public administration, even if it may be determined by the fact that in some well paid public institutions the percentage of women is greater, is also a good indication of gender equality. the general climate of general gender equality is one that allows further improvement in this area. specific cases of discrimination should be addressed and their number reduced, but this could not happen without a more thorough analysis of the existing laws and with the involvement of public servants. having a good organizational climate based on equal treatment is the most important type of need public servants have (creţa and şandor, 2010) and gender equality might influence the organizational climate in a serious manner. references: 1. blocul naţional sindical, ‘raport de cercetare privind discriminarea de gen în piaţa muncii’ (gender discrimination in the labor market – research report), 2009, [online] available at www.egalitatedesansa.ro/uploads/users/documents/prezentare_raport. pdf, accessed on august 1, 2011. 2. creţa, s. and şandor s.d., ‘deciziile în domeniul salarizării în sectorul public’, 2010 revista transilvană de ştiinţe administrative, no. 3(27), pp. 30-40. 3. european commission, ‘euro barometer – discrimination in eu. country report – romania’, 2006, [online] available at http://www.mmuncii.ro/pub/imagemanager/ images/file/rapoarte-studii/200307eurobarometru.pdf, accessed on june 25, 2011. 5 the results are similar to those from universitatea bucureşti (2010). 228 4. european foundation for the improvement of living and working conditions, ‘european working conditions survey 2010’, [online] available at http://www.eurofound.europa. eu/surveys/ewcs/index.htm, accessed on july 21, 2011. 5. eurostat, ‘combating poverty and social exclusion’, 2010, [online] available at http:// epp.eurostat.ec.europa.eu/cache/ity_offpub/ks-ep-09-001/en/ks-ep-09-001-en. pdf, accessed on november 13, 2010. 6. fernàndez-de córdoba, g., pérez, j.j. and torres, j.l., public and private sector wages interactions in a general equilibrium model, european central bank, working paper series no. 1099, october 2009, [online] available at http://www.ecb.int/pub/pdf/scpwps/ ecbwp1099.pdf, accessed on july 21, 2011. 7. marshall, j., ‘developing women managers’, in mumford, a. (ed.), gower handbook of management development, 4th edition, hampshire: gower publishing limited, 1994, pp. 350-365. 8. metcalfe, b.d. and afanassieva, m., ‘gender, work, and equal opportunities in central and eastern europe’, 2005, women in management review, vol. 20, no. 6, pp. 397-411. 9. opre, a. and opre, d., ‘the gender stereotype threat and the academic performance of women’s university teaching staff’, 2010, journal for the study of religions and ideologies, vol. 5, no. 14, pp. 41-50. 10. pîrciog, s., ciucă, v. and blaga, e. (eds.), ‘evolution of occupations on romanian labor market in 2010 perspective’, 2006, [online] available at http://www.mmuncii.ro/pub/ imagemanager/images/file/rapoarte-studii/230407studie.pdf, accessed on june 22, 2011. 11. priola, v., ‘gender and feminine identities – woman as managers in a uk academic institution’, 2004, women in management review, vol. 19, no. 8, pp. 421-430. 12. şandor, s.d., creţa, s.c. and macarie, f.c., ‘measuring gender equality in public institutions – an exploratory study’, paper presented at the 18th nispacee conference, warsaw, 2010. 13. undp, gender empowerment measure 2009, [online] available at http://hdrstats. undp.org/en/indicators/125.html, accessed on june 22, 2011. 14. universitatea bucureşti, barometrul de incluziune socială (social inclusion barometer), 2010 [online] available at www.fsenordest.ro/biblioteca/23.08.2010/barometrul_de_ incluziune_sociala_populatie_si_grupuri_vulnerabile.pdf, accessed on july 15, 2011. 15. williams, j.e. and best, d.l., measuring sex stereotypes: a multi-nation study, newbury park, ca: sage publications, 1990. 16. wilson, f., ‘caught between difference and similarity: the case of women academics’, 2005, women in management review, vol. 20, no. 4, pp. 234-248. 17. world value survey 2005, http://www.worldvaluessurvey.org/wvs/articles/folder_ published/survey_2005, accessed on june 22, 2011. 201 abstract in the present study the authors try to emphasize the interdependent relations that are established between space and poverty, as well as the modalities through which poverty policies can be optimized and implemented at the territorial systems level in accordance to the polycentric development model. the fi rst goal of the study is to understand the way in which the complexity of the territory, in its structure and relations, infl uences in unequal ways the territorial pattern of poverty and development. the concept of territorial poverty that we use in the present study transcends the usual connotation of poverty as a simple lack of different kind of resources towards the incapacity of the system to offer a wide range of impulses and solutions to the encountered problems and thus induce a state of underdevelopment. the second goal is to understand in which ways the polycentric development theory can play a role in reducing poverty. in this sense the authors created a poverty index, and based on this index a polycentric development model was created for the north-eastern region. this polycentric development model has direct implications for policy makers, as it highlights the areas that require the most attention and the development pole that should infl uence its development. by taking into consideration the results of this study, the next logical step for policy makers is to implement the necessary measures by considering the relations between the development pole and the underdeveloped area that is under its infl uence area. in this respect tailor-fi t policies and measures can be applied in the effort to reduce poverty levels. keywords: territorial management, poverty, polycentric development strategy, space-indifferent and space infl uenced, territorial disparities. spatial profile of poverty. case study: the north-eastern development region in romania*1 andrei schvab radu pintilii daniel peptenatu daniela stoian andrei schvab phd., researcher, interdisciplinary centre for advanced research on territorial dynamics, university of bucharest, bucharest, romania e-mail: a.schvab@gmail.com radu pintilii lecturer, department of human and economic geography, faculty of geography, university of bucharest, bucharest, romania e-mail: pinty_ro@yahoo.com daniel peptenatu associate professor, department of human and economic geography, faculty of geography, university of bucharest, bucharest, romania e-mail: peptenatu@yahoo.fr daniela stoian phd., researcher, interdisciplinary centre for advanced research on territorial dynamics, university of bucharest, bucharest, romania e-mail: d_stoian@yahoo.com * acknowledgement: this work was supported by the projects posdru/159/1.5/s/133391, posdru /89/1.5/s/58852 and ub 1322/2013 project. transylvanian review of administrative sciences, no. 45 e/2015, pp. 201-216 202 1. introduction poverty and underdevelopment are evidently a social phenomenon as human individuals are the essential part and the key element in its structure and relations. but this fact doesn’t minimize the spatial aspect in the implication of poverty. in the last decades at eu level an ever more important focus has been put upon cohesion, generally, and on territorial cohesion, specifi cally, by reducing poverty (european commission, 2010; 1999). the leipzig charter (2007), the esdp (1999) and the territorial agenda of the eu 2020 (2011) stipulate that the main method for achieving a balanced territorial development should be based upon a polycentric urban structure. this fact refl ects the importance given to the territorial aspect in enhancing cohesion (indirectly said, this means also a reduction of poverty). in this light an important aspect in the relation between territory and poverty is given by understanding the way in which the confi guration of the territorial system, its structure and relations infl uence, in diff erent ways, the territorial distribution of poverty. knowing these types of relations and patt ern is an essential condition for the optimization and implementation of antipoverty policies at a territorial level. one of the fi rst steps needed in order to link poverty and territory is to understand the way that poverty is conceptualized in relation to space. the att empt to analyze space as a structure enhancing or, on the contrary, blocking fl ows in the dissipation of various phenomena and processes is not ungrounded at all. space may thus be interpreted as a dissipative structure (system) (prigogine and stengers, 1984) and as an optimally open thermodynamic system (ianoş, 2000). moreover, space has emerging properties (kasinitz , 1999), more than the sum of the individual att ributes of the people living there. the present article tries to individualize the most pauper areas inside this region, revealing thus the priority areas for structural and functional regeneration as part of a polycentric development model. the authors set a theoretical framework that we consider capable of integrating space as an important factor in generating poverty or enhancing cohesion. after that, a general quantifi cation of poverty is made at eu level, revealing the most pauper regions in eu. as the indicator that sets the general frame is available only at regional level (nuts 2) and at county level (nuts 3) a more detailed index is elaborated in order to reveal the inside dynamics (at lau 21, the lowest administrative unit possible). in the next section we compare the results from the poverty index with the theoretical polycentric development model (the poverty index, the polycentric index and model 1 in eurostat terminology lau means local administrative units. lau 2 is the smallest administrative unit in an eu country. in the case of romania these are: communes, towns and municipalities. lau 2 units put together form a lau 1 unit, which is the county (the equivalent of the french department or the german kreiss). 203 are calculated based on our own methodology and statistical data). according to the principles behind the polycentric development, this is the necessary framework that induces balanced development. in the discussion section we underline the role and infl uence of space upon the territorial distribution of poverty. in the fi nal section of the paper we summarize the main fi ndings and draft some policy recommendations in this regard. 2. conceptualizing space in relation to poverty and underdevelopment roughly, there are two distinct ways to perceive the involvement of space in various matt ers such as regional and economic development, or, in the particular case of the present study, to reduce poverty in relation to polycentric development. in this respect, two assumptions can serve as starting points: a) space does not have an active role in the conceptualizations of socio-economic processes (saunders, 1989). b) space has an active role in the conceptualizations of socio-economic processes (massey, 1984; brenner, 1999; harvey, 2009). the point of view expressed by saunders and his followers (1989), stating that space is a stage, a framework, where various phenomena and socio-economic processes unfold, produces space-indiff erent theories and conceptualizations. on the opposite side, those who believe that space is an agent, part of the system, which contributes to those phenomena and socio-economic processes, produce space-infl uenced theories and conceptualizations. the diff erences between the two approaches are very important as, in the former view, space is outside the system, and it does not directly interfere in the relations between the components. in the latt er view, space is a component of the system, interacting, more or less vigorously, with the other components, bringing its contribution to the emergence of a new status-quo, of new structures, relations and functions. however, there are also sociologists who acknowledge the importance of space, its dynamic role in structuring society, as well as the role of space in the dynamics of social and economic processes. in this respect, a special att ention is given to the role of public policies concerning the territorial systems’ dynamics. a series of actions, like decentralization, regionalization and the reduction of political infl uences in the administrative system, are considered solutions for the optimization of territorial systems’ functionality (mora and țiclău, 2012). if t he space-infl uenced conceptualization is considered as the best-suited approach to the goal pursued, the result of this conceptualization is to understand space as a complex, dissipative, discontinuous structure, discretionary and heterogeneous in the reactions it has with the phenomena and processes that act upon it. one may consider that these few elements presented are conclusive in order to enable a conceptualization of space as an important agent in the genesis, dynamics, perpetuation or reduction of poverty. 204 3. defi ning poverty (processes that generate poverty and underdevelopment) poverty has been – and still is – measured in countless ways so that the defi nition of poverty may be unequivocally considered arbitrary (o’boyle, 1999; unwin, 2007). in relating space and poverty, the scientifi c literature also mentions the term of place poverty (powell, 2001), but the author of that concept only endows it with the meaning of absence of public and community services, so that this concept doesn’t fi t the purpose of the present study. postmodernist scientists understand poverty, and its emergence, as a social form induced by the processes of economic development (yapa, 1996; kay, 2009). this perspective is highlighted also by economists, who att ribute an ideological side to it: poverty is a consequence of the absence of economic growth, of free trade and a free market and therefore of the absence of democracy. sachs (2005) considers that the most important eff ects of modern economic growth have been the rise of living standards and a bigger gap between the rich and the poor. in other words, economic growth failed to unlock poverty off its path-dependency. the same conclusion was reached by a team of researchers led by lobao, who, at the end of a study meant to show whether macro-level policies and theories in the united states during 1970-1990 managed to cut down inequities at the local level. the authors draw the conclusion that inequities at local level and their social determinants modifi ed litt le despite the ford-inspired reorganization (lobao, rulli and brown, 1999). the current situation of under-developed regions is not exclusively the result of these spaces not being in geographic proximity (torre and rallet, 2005) of economic concentration centers, but also the result of the fact that these territories were produced as distant (removed) from centers of power. furthermore, even the central spaces are not homogenous, as they feature severe discontinuities in the large-scale distribution of income levels (rigg et al., 2009). another important aspect is that the tools elaborated to tackle such specifi c problems, like master plans and territorial development strategies (national spatial planning strategy, county spatial planning strategy, general urban plan, zonal urban plan and other master plans) only enhance ambiguity and reduce the impact of decisions assumed by planers, policy-makers and the community. in this regard dragoș, neamțu and cobârzan (2012) consider that the implementation level could be enhanced by including a general procedural administrative law. authors such as harvey (2009), gotham (2003), unwin (2007), rigg et al. (2009), yapa (1996), shrestha (1997) see the problem of reducing poverty or leveling social inequities by cutt ing down territorial disparities, by means of a confi guration of the space so that administrative and economic relations avoid path dependency and lock-in. one of the main ideas that stand out from the 2009 world development report (wdr) is that a proper territorial confi guration can improve effi ciency, lower the 205 costs of transactions and thus stimulate economic growth (world bank, 2009). it is the view that comes closest to taking into consideration the importance of space in the matt er of poverty and underdevelopment. according to espon 1.1.1, espon grosse and other offi cial eu strategies (leipzig, esdp, territorial agenda of eu 2020, europe 2020 strategy), the polycentric development model can be one of the proper territorial confi gurations mentioned in the wdr report. however, we must eventually mention the words of de castro (1977), who reached the conclusion that poverty is a universal phenomenon, unbound either by space or by time. although poverty is universal, it acts with discrimination, ‘favoring’ the most vulnerable areas. the north-eastern development region in romania is such an area that proves the precariousness of regional development policies in a space where the relations deepening the state of poverty grow increasingly strong. in order to assess the intensity of the poverty phenomenon, the present study began with an analysis of indicators at eu scale, in order to frame the phenomenon of poverty into context and in order to realize that this phenomenon tends to expand and cover an increasing number of regions. one of the most relevant indicators (distribution of gdp per capita) ranks north-east moldova region among the most backward in europe (figure 1). figure 1: european gdp per inhabitant 2009 (pps/inhabitant), percentage of eu 27 average source: eurostat the simple analysis of eurostat data reveals the fact that the north-eastern development region (romania) registers the second lowest gdp per capita (compared to the eu 27 average) distribution values in the entire european union. similar 206 low values are found in the two regions of the neighboring state, bulgaria, a country that joined the european union the same year as romania did. 4. methodology once that the theoretical frame is set, the focus is shifted upon measuring poverty and modeling a polycentric frame that should optimize and enhance territorial cohesion (this implies also reducing poverty). why is it important to highlight intra-regional disparities? because seen from a mezzo-scale (the regional level in this case), the region is seen through average values and the extreme situations remain hidden under this value. going deeper, at micro-scale (lau 2 level), a heterogeneous dynamic is revealed, with very strong disparities. this fact is essential since the territorial drivers of development have to be individualized as well as the lagging territorial units. the central idea of the polycentric approach is to transfer development from the development pole to the underdeveloped territories. this is why, it is important to reveal the heterogeneous dynamics existing at lau 2 level. north-eastern development region will be analyzed by developing a poverty index in order to reveal the detailed dynamic of poverty at a lower territorial level (lau 2). the fi rst hypothesis is that poverty is not homogeneously distributed inside the north-eastern development region, territorial disparities are very strong inside the region and thus poverty levels fl uctuate widely, with signifi cant diff erences between diff erent counties but also between rural and urban areas. the second hypothesis is that there is a strong correlation between the poorest areas inside the region and the polycentric network; this fact means that territories (mostly rural) outside the big cities’ infl uence area are less developed. the authors choose to develop a poverty index because the poverty rate used by eurostat has no available data at lau 2 level. at european level statistical data and indicators from the statistical offi ce of the european commission (eurostat) were studied and used. this poverty index is not commonly used at the lowest level of administrative units. this index was calculated by means of four criteria that group several relative indicators, which describe demographic, economic, infrastructure and living standards matt ers in the analyzed area. among the demographic indicators, we used the ratio of population with stable residence, the ratio of high school graduates, as well as the ratio of the population aged 65 and over. the economic criterion is comprised by the ratio of industry workers of the overall number of employees, the ratio of unemployed in the overall active population, as well as the ratio of people employed in agriculture of the overall active population. the infrastructure criterion incorporates the indicators that concern the ratio of pharmaceutical establishments as well as television subscriptions per 1,000 inhabitants. the living-standard indicators groups: the ratio of the habitable area matched against the overall number of inhabitants, in order to highlight the number 207 of sqm per inhabitant, the number of patients per physician and the ratio of arrivals and departures in a particular territory compared to its overall population. the indicators were aggregated using the following formula (ianoş, 1997, pp. 103-110): gdi = 50 +14(i1+i2+i3-……….-in-1-in)/n; where, gdi = the value of the general poverty index, i1..........in = the indicators used in the analysis, n = the overall number of the indicators analyzed. we also conducted an analysis of the intensity of the connections between the system of sett lements’ components, using fi ve criteria: size and demographic att ractiveness, economic power and competitiveness, polarization capacity by means of higher-tertiary sector services, the number of lower-rank towns within the area of infl uence, territorial representativeness and the outlooks for supporting the consolidation of the regional system of sett lements. aggregating these indicators resulted in a polarization capacity index (for the whole table see annex 1), which was then used to rank the development poles of the north-eastern development region. table 1: polarization capacity index of the main cities of the region development poles county polarization capacity index category iași iași 53.83 national development pole bacău bacău 52.29 regional development pole suceava suceava 52.27 regional development pole vaslui vaslui 51.93 regional development pole piatra neamț neamț 51.81 regional development pole botoșani botoșani 51.72 regional development pole a polycentric system was designed, depending on the polarization capacity index. this system comprises development poles and directions of polarization. based upon this frame, a territorial management mechanism can be created in order to increase the level of development by transmitt ing indispensable information required by the system. the cartographic representations in the present study were created using the arcgis 9.3.1 platform, which used the statistical data supplied by local, regional, national and supra-national statistics bureaus (national statistics bureau and eurostat). 5. main fi ndings the changes in the political regime in romania, in late 1989, brought about an amplifi cation of the interand intra-county imbalances, upon the emergence of ever more obvious territorial disparities between cities and their surrounding rural areas. these territorial disparities are, for the most part, brought about by certain decisions of a political, economic and social nature. although the economic decline was quite obvious in certain regions of the country, several economic decisions were made and passed down from central authority, with the goal of raising the number of workers 208 in industry. this excessive industrialization process gradually led to a deterioration of the rural space. the north-eastern development region territory coincides (mostly) with that of the ancient historical province of moldavia, consisting of six counties (suceava, botoşani, bacău, iaşi, neamţ and vaslui). the county seats of the six counties making up the region are among the biggest cities in the development region, which earned over time the status of regional development poles (see table 1). figure 2: territorial distribution of the poverty index in ne development region in figure 2 we can easily see the role that urban sett lements play in developing this region. cities and municipalities are the economical drivers of the process of development, but this development is severely localized, it is not a generalized one. this is because the eff ects of development, with very small exceptions, stop at the fi rst ring of surrounding territorial administrative units. also, we have to emphasize the fact that siret valley acts as a major dividing axis between development and underdevelopment. more than 80% of the least developed administrative units are eastwards from this axis. taking into consideration the criteria that created the polycentric index, the city of iaşi is the main polarization pole of the region, being a strong higher education, cultural and industrial centre in the region. for several centuries, it was the capital of the province. nowadays, in romania’s polycentric development strategy, it is a hub of national importance. even though iași is the main development pole and economic engine of this region, its direct territorial infl uence upon the development of its surrounding rural 209 area is limited to the second, and in some cases, third line of communes surrounding it. because of its fragile economy (severe decline of industry that triggered rural exodus and from there international migration), iași is not capable to fi rmly structure the other territorial administrative units and induce them development. the role of pașcani city in inducing development is limited and discontinuous (more developed communes stand together with the most poor ones). this mixture of more developed and poor communes, so close to a development pole, is a clear indicator of the lack of territorial cohesion and malfunctioning of what should have been polycentric development. the city of bacău is an important industrial centre, a centre that stands out by its capacity to win over the most numerous foreign investments. as a development pole, and fi rst rank city, it is included in the inter-regional category. just like in the case of iași city, bacău manages to off er development impulses only on limited distance (the fi rst ring of communes). the city is not capable of inducing generalized development across siret valley. suceava and piatra neamţ, two county seats stand out, in particular, because of the touristic function they developed over time, as genuine points of departure towards natural and cultural tourist att ractions. the two cities induce a more generalized development into their infl uence areas, but still, the distribution of developed and less developed administrative units refl ect a small polarizing capacity. the cities of botoşani and vaslui developed predominantly along agricultural and trade lines. in terms of intraregional development, they are important light industry, textile industry and processing industry centers. these two cities have very limited capabilities to transfer development to their surroundings; in fact, they struggle to keep their local economies in a functioning state. the above-mentioned urban areas, relatively bett er developed and with relatively higher living standards, stand in strong contrast with the rural areas, which feature higher poverty-index values (see figure 2). using the polarization capacity index, a model for polycentric development was created, which comprises those territorial systems that should be capable, thanks to their functional complexity, to dissipate development into the subordinated territorial systems. a hierarchical polycentric network spanning the north-eastern development region was designed, centered on the city of iaşi, a city of the magnitude of a national development centre, a genuine driving engine for that region. the value of the polycentric index of the city of iaşi is 53.83 (see table 1), followed at big distance by the 5 regional development poles, with values ranging from 51.72 to 52.29 (bacău, suceava, piatra neamţ, botoşani and vaslui), and the additional intraregional development poles, with values ranging from 51.55 to 51.58 (vatra dornei, rădăuţi, dorohoi, fălticeni, hârlău, paşcani, tg. neamţ, bicaz, moineşti, comăneşti, oneşti, roman, buhuşi, bârlad). the polycentric network is rounded up by a signifi cant number of growth poles and growth centers (table 1 and figure 3). 210 the structure of the development pole network is the result of the industrialization process, dominant before 1990, and of the post-1990 development of certain functions, such as the university function, which pushed certain cities ahead (suceava). figure 3: model of polycentric network in north east development region the detailed analysis of the polarization capacity of towns in the north-eastern region highlights the intensity and directions of the relations between the components of the polycentric network, as well as the way one could intervene with a view to developing those relations, by means of a spatial projection of the process of decentralization. the functioning of the polycentric network in this region is conditioned by the creation of an institutional network, a means to convey information from the level of supra-territorial systems to the local level, ensuring the reconfi guration of decision-making impulses at the level of each decision-making authority, so that it would endow development strategies with specifi city. the economic rehabilitation of pauper territories is also conditioned by the status and functionality of the development poles correlated with a national development strategy. a special economic status of the development poles in the proximity, or inside these problematic territories, contributes to an increase of informational impulses towards the emerging surrounding areas and this action leads to a development process together with the development pole (although the rates of development are 211 not equal between the pole and the emerging area). studies showed that there is a direct connection between the economic dynamics of the development pole and the surrounding area lagging behind (peptenatu et al., 2012). 6. discussions poverty is not evenly distributed inside the north-east development region; strong territorial disparities are present in one of the poorest european regions, so this means that some areas inside this region are even more underdeveloped than the regional average. this is an important aspect because it is an evidence of the lack of effi ciency in the present development policies and strategies. more importantly than this, the urban system of the region doesn’t work as a polycentric network, as conceptualized in the european spatial development perspective (european commission, 1999). territorial cohesion is very weak and this will generate signifi cant social and economic tensions (this fact is already evidenced by the high international migration rate). comparing the polycentric network and the poverty index map reveals a correlation, in the sense that the poorest regions are peripheral and away of the infl uence of big cities. some exceptions are present, but can be explained if specifi c geographical aspects are taken into consideration (the poor accessibility in tutovei hills and central moldavian plateau). still, the results show that the cities, and especially the county residence cities, are not capable to polarize the territory by inducing them development. in many cases their development infl uence stops at the fi rst round of administrative territorial units that surrounds them. regarding policy implications, the confi rmation of the second hypothesis emphasizes the need to enlarge the urban system of the region, but this can only be achieved through developing local economies. new urban centers have to emerge, but this should be done based upon their economic profi le and not thorough administrative appointments. polycentric development requires also strong relations between the composing cities and equitable distribution of national funds and investments. strong concentrations of capital, only in already developed centers, will increase the territorial disparities and will decrease its territorial cohesion. the confi guration of space by creating geographical proximities and organized proximities (torre and rallet, 2005) and by defi ning peripheral and central spaces, in terms of the distance from both economic power centers and from political power centers (rigg et al., 2009), structures poverty territorially. many times it is associated with the periphery, but poverty manages to fi nd a place to manifest in centers, too (near iași and bacău). as cojanu et al., (2011) proved, compared to the national context, counties deemed to be developed at the level of the north-eastern region (such as iaşi and bacău) rank at the end of the national classifi cation according to the index created by the above-mentioned authors. one may assert that poverty is more strongly att racted by certain spaces than by others, acting with discrimination. 212 7. conclusions the added-value of the present study is given by the fact that it off ers decisional support to policy makers by revealing detailed profi les of developed and underdeveloped areas. this study off ers policy makers a scientifi c tool to base their decisions upon. the results of this study points out to policy-makers that they should take into consideration that development and poverty are heterogeneously scatt ered across the region. also, territorial specifi cities should be taken into account when trying to manage the relations between development poles and underdeveloped areas. the methodology of individualizing poverty and linking it to a polycentric development model can be extrapolated and applied to the other development regions in romania, and not only. but policy and decision-making should be strictly tailored to the local and regional particularities of the territorial systems. all present conclusions and recommendations are derived only from the present case study. all extrapolations to other cases (other development regions) should be handled with caution and only after understanding the particularities of the relations, structure and functioning of that particular territorial system. this study establishes a conceptual framework that can be used when viewing poverty from a geographical perspective in relation with the territory. the conducted analysis revealed that it is not advisable to conceptualize and regard space as a stage where economic and social processes unfold. on the contrary, it was demonstrated that the best way to regard space is more as an active component of the system. the concept of poverty may be approached from several angles but, in the present study, only those approaches were reviewed that were considered the most important in highlighting the evolutions within a region considered relatively homogeneous. as far as the uneven development of the various regions of the country is concerned, the industrial development policy during the time of centralized-economy gradually led to an accentuation of economic fractures, especially those between rural and the urban areas. despite the noticeable overall rise of the gross domestic product value and quality of life, compared with the number of inhabitants inside the north-eastern development region and compared to the other development regions in romania, the level of poverty remains the highest in the country and even in the european union, in close competition with a region in bulgaria. the adaptive capacity of territorial poverty, in the north-eastern region, remained, at best, at a constant level compared to the other regions of the country. the lock-ins within the system are severe enough that, no matt er the policies enforced, be they during the centralized economy, or during the transition-type economy, the territorial poverty of the north-eastern development region steadily remained at highest levels. territorial poverty in this area is in an advanced state of path-dependence, which is fuelled by decisions taken over time, concerning the overall territorial development policies that only deepened the development gap inside the region and in comparison to other regions. 213 the analyzed territorial system managed to reach a level where it proves capable to remain inert to development policies that try to interfere with that state of path-dependence in which it fi nds itself. in other words, the relations between the components of the system reinforce each other (positive feedback), keeping the region locked into a stability zone characterized by high levels of territorial poverty. from the present study as well as from the world development report 2009 the authors can conclude that the existing disparities and the state of poverty is an eff ect of the economic development process that acts discriminately. as long as territorial systems that manage such problems regarding poverty and disparities don’t succeed in applying laws, rules and good practices in an equal and equitable manner, those territorial disparities and the territorial poverty will deepen further. the positive feedbacks will cumulate becoming a circular causality (myrdal, 1957) leading the territorial system into lock-in. as the authors pointed out throughout this study, north-east development region shows the signs of deepening in a state from which it cannot break despite all the territorial development policies that underwent since the 60s. the approach of disparities and poverty that emerge at the level of territorial systems requires an integrated, interdisciplinary view in order to elaborate territorial management strategies capable of dealing with challenges imposed by the proliferation of poverty, environmental degradations, pollution and economic restructuring (braghină et al., 2010; 2011; peptenatu et al., 2010; 2012; peptenatu, pintilii and drăghici, 2011; peptenatu, merciu and drăghici, 2012). as stated before, the study is based upon using a multi-criteria poverty index that includes all the development perspectives: economic, social, environmental and infrastructural. using this integrative poverty index, a clear image at the basic territorial units’ level is unfolded, thus making it simpler to policy makers to 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view or denial of historical integrity? the poverty of yapa’s view of poverty’, 1997, annals of the association of american geographers, vol. 87, no. 4, pp. 709-716. 34. torre, a. and rallet, a., ‘proximity and localization’, 2005, regional studies, vol. 39, no. 1, pp. 47-60. 35. unwin, t., ‘no end to poverty’, 2007, journal of development studies, vol. 43, no. 5, pp. 929-953. 36. world bank, world development report 2009: reshaping economic geography, washington dc: world bank, 2009. 37. yapa, l., ‘what causes poverty?: a postmodern view’, 1996, annals of the association of american geographers, vol. 86, no. 4, pp. 707-728. 216 annex 1 polarization capacity index table 2: ranking of different types of growth poles in ne development region development poles county polarization capacity index category iași iași 53.83 national development pole bacău bacău 52.29 regional development pole suceava suceava 52.27 regional development pole vaslui vaslui 51.93 regional development pole piatra neamț neamț 51.81 regional development pole botoșani botoșani 51.72 regional development pole târgu neamț neamț 51.58 intraregional development pole fălticeni suceava 51.57 intraregional development pole rădăuți suceava 51.57 intraregional development pole vatra dornei suceava 51.57 intraregional development pole pașcani iași 51.57 intraregional development pole onești bacău 51.57 intraregional development pole roman neamț 51.57 intraregional development pole dorohoi botoșani 51.56 intraregional development pole hârlău iași 51.56 intraregional development pole buhuși bacău 51.56 intraregional development pole bîrlad vaslui 51.56 intraregional development pole bicaz neamț 51.55 intraregional development pole comănești bacău 51.55 intraregional development pole moinești bacău 51.55 intraregional development pole huși vaslui 51.50 local development pole gura humorului suceava 51.39 local development pole târgu ocna bacău 51.38 local development pole slănic moldova bacău 51.36 local development pole solca suceava 51.32 local development pole negrești vaslui 51.30 local development pole podu iloaiei iași 51.28 local development pole murgeni vaslui 51.25 local development pole darabani botoșani 51.25 local development pole câmpulung moldovenesc suceava 51.21 local development pole dărmănești bacău 51.20 local development pole săveni botoșani 51.16 local development pole roznov neamț 51.13 local development pole siret suceava 51.00 local development pole ștefănești botoșani 50.95 local development pole flămânzi botoșani 50.94 local development pole târgu frumos iași 50.94 local development pole sascut bacău 50.89 growth pole tibana iași 50.82 growth pole pângărați neamț 50.81 growth pole băltătești neamț 50.80 growth pole podu turcului bacău 50.75 growth pole rădăuți-prut botoșani 50.74 growth pole untitled 189 abstract public-private partnership (ppp) is a means for the public sector to complete infrastructure projects by using the skills and the experience of the private sector. in many cases, ppp may also mean that the private sector finances public infrastructure investments. ppps can present difficult and complex contractual issues for both the public and the private sector partners. the goal of this paper is to emphasize and to analyze the advantages and the risks posed by the publicprivate partnerships starting from the presentation of the experience acquired by the actors involved in the construction and the use of the channel tunnel. in addition, the paper aims to analyze the situation of the ppps in romania. taking into consideration that, in the context of accession to the european union, an increase in the number and importance of the ppp projects was observed at the level of several member states, the interest of the romanian local public authorities in ppps is prefigured to increase in the next period. the final part of the paper analyzes the causes of the reluctance manifested by the romanian local authorities in using private resources to accomplish public investments. advantages and limitations of the public private partnerships and the possibility of using them in romania daniela pârvu cristina voicu-olteanu daniela pârvu lecturer, department of economic theory and finances, faculty of economic sciences, university of piteşti, piteşti, romania tel.: 0040-744-217879 e-mail: ddanapirvu@yahoo.com cristina voicu-olteanu argeş county council, argeş, romania tel.: 0248210056 e-mail: voltcristina@yahoo.com transylvanian review of administrative sciences, 27e/2009 pp. 189-198 190 introduction the public institutions’ role is to provide services to the citizens in order to the increase their living conditions. the goals of the public sector reform are to transform administration into a “service” responsive to the requirements of the market-type mechanisms and to the public interest, to make citizens act as private “customers”, to size in a genuine way the public need, to decrease the public expenditures and increase the quality of public services. the studies showed that the public sector “generates” weak performances, the public services are not innovative and not flexible enough, they are over regulated, too slow and are not consumer or citizen-oriented. moreover, the organizational structures characteristic to the public sector, reflected in the hierarchical organization and the bureaucratic structures, are rigid. the traditional public services are stable and rigid, while the practices used in the private sector are innovative, flexible, and they adapt and change over time. there is definitely a need to apply the theories and the practices used in the private sector to the public sector in order to increase the quality of the public services, to reduce the budgetary allowances for the public services, to become citizen-friendly, and to increase the efficiency and the effectiveness of the public sector. the “best practices” promoted by the developed countries might be considered models to be followed by other countries. however, we have to be aware that “these best practices” are specific to a cultural, economic and social context, and when they are followed by a different country, some adjustments are required. there is no unique solution, no single model that can be followed. however there is a form of “association of decisions and public and private means within the framework of the same system of action, aiming to comply simultaneously the consumers’ and citizens’ expectations”, which is known as public-private partnership (matei, 2006). public-private partnership describes a government service or private business venture, which is funded and operated through a partnership between the government and one or more private sector companies. in some types of ppp, the government uses tax revenues to provide capital for investment, and it jointly runs the operations with the private sector or it contracts out the service to a private company. in other types (notably the private finance initiative), private sector provides capital investment on the strength of a contract with the government, which is responsible to provide agreed services. the contributions of the government to a ppp may also be in kind, which is the case of the transfer of existing assets. in the case of projects that are aimed at creating public goods, such as infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, in order to make it more attractive to the private investors. in some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by providing guaranteed annual revenues for a fixed period of time. in the new romanian legislative framework, the term “public private partnership” was replaced with “public works concessions” and “service concessions”, which are particular forms of the broader concept. still, the concept of “public private partnership” remains valid for any transaction that transfers the general responsibility for delivering 191 a public service from the contracting authority to a private company. in other words, this change is merely semantic. internationally, these types of concessions are considered specific types of ppp structures. the concept of the ppp is broader than just public works concessions and services. advantages and risks of ppps a public-private partnership is a contractual agreement between a public agency (federal, state or local) and a private sector entity. through this agreement, the skills and assets of each sector (public and private) are shared in delivering a service or facility for the use of the general public. in addition to sharing the resources, each party shares the potential risks and rewards in the delivery of the public service and/ or facility. sectors where ppps have been used successfully are transportation, water/ wastewater management, urban planning, infrastructure and utility development, financial management and education. the public-private partnership projects are long-term partnerships (typical projects have the duration between 20 and 40 years). another distinctive feature of the ppp projects is the fact that the private partner carries the risk for the invested capital, not the public sector, as it is the case of projects based on outsourcing. ppp projects enable the risk to be optimally spread, and each subject of the partnership to take the risks they are able to manage best. another specific characteristic is that, differently from other types of projects where the public sector enters into co-operation with the private sector, the outputs of this co-operation are defined from the beginning. therefore, on one side, the public sector exactly specifies the type of the service the private sector has to provide, its quality, the price and the control mechanisms. on the other side, the private sector implements the entire project by ensuring its funding and maintenance (tetřevová, 2006). the basic implementation condition of a ppp project is its ability to achieve, from the point of view of the public sector, a greater benefit in relation to the expenditures, compared with the situation when the public sector implements the given project by itself, using its own forces and from its own sources, i.e. respecting the principle of value for money. the most important advantages of ppp projects for the state are (valdimarsson, 2007): transfer of risks is the most important driver when the state looks at the advantages of ppp projects. in ppp projects, there is a possibility to transfer most or all of the risks to the private entity (for a price). risk and opportunity go hand in hand. the private entities can and want to explore opportunities, even though they involve risks. minimizing the government by outsourcing non-core activities is another important advantage. one of the state’s objectives is to reduce the government and move as much as possible of its tasks over to the private sector. possibility for multiple uses of the facilities. the state is not stimulated to explore this possibility, since it does not compete on the market. the possibility 192 for the private sector to use the facilities in multiple ways represents another advantage of ppp. constant cash flow. the state budget is formed of fixed budgets for each ministry. major investments are temporary modifications of the budget of a ministry, and this problem can be difficult to deal with within the budgetary process. avoiding major investments by having a constant cash flow is an important driver when the state looks at the advantages of ppp. quicker execution of a project (once contract is signed). the advantages and risks of ppps projects can be synthesized as follows: table 1: advantages and risks of ppp advantages risks possibility for smaller investments limited influence of public authority over the investment possibility for conducting other public investments increase of the prices charged to the users of the infrastructure savings to the budget reduction of bargaining position of public authorities transfer of new technologies high transaction costs sharing the risk poorer quality of the services more competition on market limited accessibility to services more competition on market decrease of employment in the public sector guarantee of the services for a longer term financial risk for public partner decrease of the political influence in economy opportunity risk for public partner more transparency in the economy political risk for private partner source: brzozowska, 2006, p. 24 successful ppps are characterized by comprehensive planning, clear contractual rules and contingencies, competitive procurement and credible contract enforcement. issues of an investment project of public interest carried out through a public-private partnership. the case of the channel tunnel ever since its appearance, the concept of public-private partnership has aroused keen interest. at the international level, the interest for the promotion of the public-private partnership is directed towards three main courses: – investing in infrastructures; – increasing the efficiency of the financial resource usage; – better commercial usage of the invested funds. however, carrying out an investment project of public interest through publicprivate partnership may generate many problems both for the public authorities, as well as for private investors. “the channel tunnel” investment project represents an eloquent example in this respect. connecting the united kingdom to continental europe, the channel tunnel is one of the largest privately financed transport projects in the history. crossing the english 193 channel through the tunnel, which links the united kingdom and france, takes only 35 minutes as compared to the 75 minutes-crossing by ferry. the organization of the project was based on a concession contract stipulating that the project was to be financed without resorting to financial or commercial public funds or to public guarantees. the concession was initially decided for a period of 55 years, but it was later extended to 65 years. the concession contract was awarded to eurotunnel (a group of ten building companies and five banks), but the actual construction was carried out by the consortium transmanche link based on its own project. eurotunnel was not able to review or substantially modify the project, and was thus forced to control and manage the project costs and configuration in the best possible way, during the seven-year construction programme. this proved to be a very difficult issue, mainly because the english and french authorities established an institution: the independent safety authority, who imposed significant constraints on the project leading to many expensive requirements for the project. one year before starting the construction (1988), the channel tunnel construction and equipment costs were estimated to 2.7 billion gbp. in june 1993, the total financing requirements were estimated to 4.9 billion gbp, the initial budget being exceeded by more than 80%. in may 1994, the financing requirements reached 10.1 billion gbp. the channel tunnel project was mainly financed through bank loans from a great consortium of over 100 european and japanese banks. due to major financial difficulties, eurotunnel did not allocate sufficient financial resources in order to place at the future clients’ disposal an attractive and competitive service able to be commercially operational. although the completion of the construction stage had been planned in the summer of 1991, the passenger transport services started in december 1994. subsequently, these services had to overcome a number of technical and operational problems. consequently, instead of creating a strong positive impact on the market by launching trustworthy, completely operational services that should have been better than those of its competitors (the ferries), the launching performed by eurotunnel was an embarrassing failure with a postponed and gradual opening of irregular and often defective services, with delays and long waiting times. the channel tunnel offers three services: – a rail loading and unloading service for motor vehicles (cars, buses, and trucks); – a passenger transport service operated by the british, french and belgian railway authorities; and – rail goods transport services operated by the british, french and belgian railway authorities. the rail usage contract represents the only source of income for the eurotunnel company. the authorities that operate the goods and passenger transport services pay a fixed amount of taxes depending on the volume of traffic passing through the tunnel. there is a minimum taxation level, a mechanism meant to ensure a guaranteed level of cash flow to eurotunnel in the first 12 years of operation. 194 the public authorities believed that the benefits from international and local transports would result in reducing the traveling period and in increasing the transport capacity (thus eliminating the local train overcrowding), while other benefits would result from creating new jobs. both the forecasts related to the goods traffic as well as those related to the passenger traffic were mainly overestimated. although the cornered share of the traffic across the channel (competing with the air and naval transport) was correctly forecast, the intense competition and low tariffs led to low incomes. the traffic across the channel as a whole was overestimated. when the decision was made, a number of 16.3 million passengers were forecast for the eurostar trains in the opening year. in 1995, the first year of complete functioning, the real number was 2.7 million passengers. the volumes of goods going through the tunnel were sporadic, and they decreased in 1997 due to the closing caused by a fire broken out in a freight train. the total volume of goods has increased in time, indicating a replacement of the naval transport by the tunnel. the tunnel reached and exceeded the market share forecasts made in 1980 for the transportation of goods through eurotunnel, but the forecasts for 1990 and 1994 were overestimated. the forecasts for the transportation of goods for the first year were of 7.2 million gross tones, nevertheless, the number for 1995 was 1.3 million gross tones, and in 2001 it increased to 2.4 million tones. the main lessons to be learned from this short description of the history of a publicprivate partnership are the following: – forecasting the incomes obtained from the new investment projects is subject to great uncertainty. forecasts should be validated independently especially in the case of public-private partnerships and tested with pessimistic scenarios; – the capital invested in a project should reflect the risks of the respective project. the public investors should make sure that the structure of the capital for the proposed business is appropriate for the risks implied by the project. if the risk/ capital ratio is too low, the project will not be financially robust and the incomes will be lower than expected. moreover, the risk exposure of a low investment can discourage the shareholders from the private sector to take decisive action for the problems of the business. anyway, the impact of continuing with a too low risk capital will probably generate appeals to the public sector for increases in the financial support. if the market does not want to subscribe sufficient capital, it gives a clear signal related to the risk of the project, the consequences of which must be considered by the departments in question; – the contractual arrangement should reflect the long-term approach of the project assets. in the case of the channel tunnel, there was a weak link between the general contractor (transmanche link) and the operator (eurostar). consequently, the former manifested little interest in keeping costs and financial requirements under control and handed to the operator a project with extremely severe conditions. both, i.e. the general contractor as well as the operator, as separate entities, should have had their own shares of risk during the whole period of the project. 195 the situation of the ppps in romania the legal framework applicable to ppps can be found in the laws applicable to work and service concession contracts, i.e. government emergency ordinance no. 34/2006, and in the methodological norms concerning the assignment of work concession contracts and of service concession contracts (government decision no. 71/2007). however, it is necessary to distinguish between contractual ppp (cppp) and institutional ppp (ippp). whilst the cppps are created based on exclusively contractual relationships (concession contracts), the ippp imply the participation of the private partner together with the public one in a joint capital entity (a joint venture or a business enterprise). according to a survey performed by price waterhouse coopers (2008), at the european level, approximately 60% of the ppp-type projects are concluded in the form of concession contracts. in comparison with other countries in the european union, in which the ppp projects have frequently been used for the fulfilment of various investment objectives, in romania, the ppp projects are still in the preparation phase. for example, in the next period, according to the intentions of the ministry of transportation and of the romanian highway and national road company, the following projects will be completed through ppps: the comarnic-braşov highway section, the sibiu-piteşti highway, the ploieşti – buzău – focşani highway, the iaşi – roman – târgu mureş highway, a number of expressways and a bridge over the danube river at brăila. in the previous period, the ppp component (more specifically the service concession) was noticed in various stages of the implementation of projects financed from the ispa (instrument for structural policies for pre-accession) programme: 6 domestic waste management projects in piatra neamţ, bacău, galaţi, argeş, dâmboviţa and teleorman, and one water management project at the regional level in craiova (stan, 2008). unlike romania, in poland and slovakia for example, 48, and respectively 13 ppp projects were completed in infrastructure sectors in the period 1990-2006 (see table 2). table 2: ppp projects in infrastructure sectors in poland (and slovakia) within 1990-2006 energy telecommunication transportation water and sewage total projects number 19 (6) 13 (3) 8 (1) 8 (3) projects value in mil. usd 2 981 (4 460) 23 365 (3 592) 1 845 (42) 71 (14) source: tomova, 2008, p. 67. romania’s delay in implementing ppp projects can be explained by the following reasons: the lack of laws in this field (due to the fact that the law provisions cover exclusively the period up to the finalization of the tender by which the company that will make the investment is selected), the lack of experience of the public authorities that should initiate these projects, and the difficulty of completing these ppp projects. 196 the fact that there are structural funds that can be accessed until 2013 and used until 2015, provide an easier financing alternative for public investments, but, in the same time, it represents an obstacle in the way of implementing ppp projects. in order to prove the viability of this idea, we are proposing a case study based on a real situation within the argeş county council, characterised by the following elements: a. the object of the investment project: the rehabilitation and expansion of a space dedicated to the establishment of a multifunctional business support centre. within this centre, display spaces dedicated to companies will be set up with the purpose of supporting the research, development and innovation activities, as well as spaces dedicated to the provision of business consulting services. b. life period: 20 years. c. financing alternatives: alternative 1: accessing funds through the regional operational programme, priority axis 4, major field of intervention 4.1. in this situation, the co-financing granted through the european regional development fund is of 50% of the eligible expenses of the project, the remaining expenses should be covered through the contribution of the county council, which would be the beneficiary. because, according to the cost estimates of the feasibility study, the value of this investment will be 45 millions lei, the argeş county council will have to bear costs for 22.5 million lei. the project will not generate incomes during these 20 years. alternative 2: concession. in this case, the project will imply three participants: the argeş county council in its quality of concession holder, the company (companies) to which the contract is granted, referred to as conceder that will perform the rehabilitation and expansion works and will be entitled to obtain incomes by renting the spaces within the centre, and the investor (a commercial bank or a group of banks), that will grant the conceder the loan necessary for the completion of the investment project. the current lack of cash in the banking system will probably create some difficulties within the financing process. the resources invested by the argeş county council will be represented by the royalty paid to the conceder during these 20 years. it represents the amount by which the conceder will cover the negative cash flows. if the joint venture contracts a bank loan in the amount of 45 million lei, with a fixed interest rate of 8% per year, for a 20-year period, it will generate an annuity of more than 4.5 million lei for the debtor. taking into account that not even the most optimistic hypotheses can prove that the conceder will obtain a net benefit of more than 2 million lei per year from the provided services, the large amount that will be paid by the county council as royalty during the project life (double as compared to the case in which the project would be financed by accessing european funds) does not justify the use of the ppp. 197 conclusion there are multiple advantages of the public-private partnerships: various solutions for the private financing of public projects, decreasing costs for the central or local administrations, use of private know-how and management within public projects, increased efficiency in the project development, a shorter implementation period, technical innovation and a higher quality level of the provided services. however, the highest interest is represented by the fact that part of the project risks is transferred to the private partner: along with the construction risk, the private partner can also take over the exploitation risk or the availability risk. the main risk of a ppp consists in the fact that, in the absence of a careful regulation and monitoring of the procedure used for the selection of the private partner and of the completion of the ppp-type projects, such projects can become a risky means of “devouring” the national resources. moreover, the scarce experience of the central and local authorities in this field represents a serious impediment, because the ppp project preparation process is complex and long. the great challenges imposed by the adjustment to the market economy and by romania’s integration into the european union (the transport infrastructure rehabilitation; the water supply, waste recycling; environment protection; insufficient funds; government aid monitoring; ensuring a loyal and predictable business environment) are as many reasons to use the public-private partnership as a way of cooperation among the public sector, the public project launching authority and the private sector that owns funds and competitive management. from the point of view of the romanian local public authorities, currently, it is much more profitable to finance public investments by accessing resources through the european regional development fund than through a ppp (with the exception of investments in infrastructure, in the case of which the conceder’s benefits may be higher as compared to the investments in other public interest fields of activity, with a similar value). nevertheless, after 2013, the interest in ppp projects will definitely increase. references 1. anderson, g. and roskrow, b., the channel tunnel story, london: e&fn spon, 2002. 2. brzozowska, k., advantages and threats of public – private partnerships in larger infrastructure projects, warszawa: cedewu.pl, 2006. 3. davies, p. and eustice, k., delivering the ppp promise. a review of ppp issues and activity, london: pricewaterhousecoopers, 2005. 4. government emergency ordinance no. 34 from 19/04/2006 regarding public works concessions and service concessions, published in the official monitor no. 418 from 19/05/2009 with the following amendments. 5. matei, l., ‘empirical approaches of the public-private partnership in the services of public utility’, 2006, theoretical and applicative economics, no. 10 (505), pp. 3-14. 6. price waterhouse coopers, ‘building new europe’s infrastructure: public private partnerships in central and eastern europe’, 2008, [online] at http://www.pwc.com/ gx/en/engineering-construction/new-europe-infrastructure/index.jhtml. 198 7. stan, l., prospective look over ppps in romania, ppp summit, viena, 2008, [online] at http://discutii.mfinante.ro/static/10/mfp/ppp/prospective_look_over_ppps_romania. pdf. 8. tetřevová, l., ‘theoretical and practical aspects of ppp projects’, 2·6, vadyba/management, no. 3–4 (12–13), pp. 105-110, [online] at http://www.leidykla.eu/fileadmin/vadyba/1213/105-110.pdf. 9. tomova, a., ‘3p projects in v4 countries’, international conference proceedings “firm and competitive surroundings”, žilina, 2008, pp. 480-488. 10. united nations economic commission for europe, guidelines on private public partnerships for infrastructure development, ece/trade/none/2000/8. 11. valdimarsson, ó., ‘ppp in iceland from the viewpoint of the public sector’, fm conference in iceland, 27–28 august 2007, [online] at http://www.nfn-fm.no/files/ 070828ppp%20in%20iceland%20from%20the%20viewpoint%20oskar%20valdimarsson. pdf. 70 abstract the aim of this paper is to identify the factors that influence the unequal distribution of fdi inflows and that foreign investors identify as significant in making investment decisions regarding croatian regions. panel data analysis was applied: static (random effects) and dynamic analysis. the results show that positive and significant influences on fdi have: education, infrastructure, the manufacturing industry, dummy variables for areas of special state concern and capital city region, while negative statistically significant influences are: unemployment and dummy variable for border regions with the eu. the basic conclusion is that fdi inflows follow the development path of the croatian regions (with the highlighted agglomeration effect) and that efforts in creating preconditions for economic growth will, at the same time, have an impact on attractiveness of a particular region for foreign investments. keywords: fdi, regional determinants, croatia, panel data analysis. regional determinants of foreign direct investments in croatia ines kersan-škabić lela tijanić ines kersan-škabić professor, faculty of economics and tourism ‘dr. mijo mirković’, juraj dobrila university of pula, pula, croatia tel.: 00385-52-377.028 e-mail: letijan@unipu.hr lela tijanić postdoctoral researcher, faculty of economics and tourism ‘dr. mijo mirković’, juraj dobrila university of pula, pula, croatia tel.: 00385-52-377.028 e-mail: letijan@unipu.hr transylvanian review of administrative sciences, special issue/2014, pp. 70-89 71 1. introduction financial globalization is characterized by capital movements that in the last thirty years have become increasingly liberalized (especially among developed countries and european transition countries) and which in 2012 reached $1.35 trillion despite the turmoil in the global economy (unctad, 2013). in the group of developing countries which represents half of the total foreign direct investments (fdi) are the countries of central and eastern europe and of southeast europe. these countries are competing with each other in attracting fdi, and their successes are dependent on a number of economic and political factors. there are a number of different types of location-specific advantages that characterize motifs for fdi: resource-seeking, market-seeking, efficiency-seeking or strategic asset-seeking. efficiency-seeking fdi implies a production movement to places where there are lower input costs. in this way a firm can improve its competitive position. market-seeking investment aims at achieving foreign market proximity and it determines whether it is better to export to a particular market (that incurs transportation costs) or to move production to this market and in this way supply this market. in the literature relating to fdi, there is a lot of research on the determinants of fdi inflows and such analyses were done mainly at the country level or groups of countries. these studies explain the dependency of fdi on market size, market growth, barriers to trade, wages, production, transportation and other costs, political stability, psychic distance, the host government’s trade and taxation regulations affected the location decisions (dunning, 1992; dunning, 1993; kinoshita and campos, 2002; markusen, 1998; markusen and venables, 1998; brainard, 1997; blonigen, 2005). far less research relating to the determinants of the attractiveness within a particular country has been carried out. every country has areas/regions that are lagging behind the average level of economic development and all such regions aim to create conditions for economic growth and employment that could result in convergence to the most developed parts of their countries. to reach this goal it is crucial that regions open their economies and connect with foreign partners, as this is the only way they can access new technologies, knowledge, and a wider market which are preconditions for their future development (balasubramanyam, salisu and sapsford, 1996). at the same time it is important to point out that while fdi cannot solve the problems of a region, it can serve as a supplement to other measures to stimulate the economy. why are some regions more attractive than others within the same macroeconomic, institutional and legal framework? regions differ from each other in many characteristics, such as: size (area and population), economic development, and the sectors (industries) that dominate in their economies. in the case of small countries, foreign investors are probably not drawn to the market of individual regions but the countries and geographic areas to which a certain country belongs. wage levels can vary slightly among regions within a country. economic development and the effectiveness of institutions are usually monitored at the country level although there are differences in the functioning of institutions within a country. the legal framework is often pref72 erential (tax exemptions or reduced tax rates) for investments in less attractive and less developed areas, but in the main this does not result in greater investment. the capital city effect can also be observed, where the high concentration of population and activities are attractive to foreign investors. croatia, as a small southeast european country needs foreign investments in the expectation that they will act as a push-factor to the domestic economy. according to data from croatian national bank (2014), croatia received 24.2 billion euros in the period from 1993 till the end of 2012, which is a very large amount of fdi in per capita terms – 6,049 euros. about 90% of total investments in croatia come from the eu-27. in the group of central and east european countries only three countries: estonia, the czech republic, and hungary have received a greater amount of fdi per capita. the aim of the empirical study in this paper is to identify the determinants of fdi in croatian nuts 3 regions1 that could be of interest in attracting fdi on a regional level in croatia in the future, looking from the side of foreign investors in the eu and abroad, as well as from the perspective of croatian national and regional policy makers. fdi in croatia is mostly directed towards the service sector, with a predominance of the financial sector (banking and non-banking) with 34% of the total investment which together with the insurance and tourism sector represent the biggest share of fdi. there is also evidence of unequal distribution of fdi among croatian regions. a huge proportion of fdi is located in city of zagreb (72% of total fdi), followed by primorje-gorski kotar county (6.5%) and split-dalmatia county (5%) (croatian national bank, 2013). it should also be pointed out that fdi in croatia is prevailingly brownfield investments with only a modest amount of greenfield investments. in croatia there is a uniform law for the promotion of foreign investment that provides greater benefits for investors in less developed counties (tax benefits) and the benefits depend on the amount of investment and the number of new jobs created. incentive measures are regulated by the act on investment promotion and enhancement of the investment environment (official gazette of republic of croatia, no. 111/12 and 28/13). in the framework of regional development it is useful to consider the incentives that are connected with the county’s development. the first incentive concerns the county unemployment rate: if the unemployment rate is 10-20% (over 20%) the incentive for capital expenses is a cash grant in the amount of 10% (20%) of the eligible costs of investment for: construction of a new factory, production facility 1 nuts is the nomenclature of territorial units for statistics of the european union. the nuts of croatia were defi ned during the accession of croatia to the european union, codifi ed by the croatian bureau of statistics in early 2007. the regions were last revisited in 2012. the three nuts levels are: nuts-1: croatia; nuts-2: 2 regions (non-administrative), and nuts-3: 21 counties (administrative). more about the defi nition of regions in the eu can be found in s�voiu, dinu and manea (2013). 73 or tourist facility and the purchase of new machines, i.e. production equipment.2 the second regional incentive concerns the city of vukovar and areas of special state concern and they are focused on the implementation of reduced profit taxation.3 the hypothesis of this paper is that there are many factors, such as workforce characteristics (level of education, labor costs), the geographical position of the region (close to the eu market), and the development of the region that affect the attractiveness of the croatian regions to foreign investors. therefore, this paper aims to contribute to the existing literature in several ways. at the beginning of our study, we found two papers that explore the regional determinants of fdi inflows in croatia (škuflić and botrić, 2009; derado, škudar and rakušić, 2011). škuflić and botrić (2009) applied econometric analysis, where the analysis was performed in the period up to 2007, however, croatia recorded the highest fdi inflows in 2008 (over 4 billion eur). we will show what determined the total foreign investments in croatian regions in the period 2000 to 2010 and we will make several models where we will use different panel data estimators. we will apply panel data analysis to find out which of the variables have a significant positive or negative influence on fdi flows among croatian regions. static and dynamic analysis will be carried out. the analysis will include relevant and accessible information in a way that the obtained models will give the best possible explanation of fdi determinants in the croatian regions. the paper is organized as follows: the following section presents the literature review, the third section describes the data, the methodology of analysis and presents the results and the final section gives the concluding remarks. 2. literature review location determinants are very broad concepts and they include traditional factors such as natural resources availability (prices, infrastructure), the size of the market (living standards, wages, production costs), the macroeconomic environment (inflation, unemployment, interest rates, gdp growth rates) and institutional factors (property rights, fdi incentives, bilateral trade/investment agreements, taxes, etc.). a comprehensive framework of fdi attractiveness has been made by dunning (1992) who 2 max. amount 0.5 million eur (1 million eur) with the condition that the part of investment in the machines/equipment equals at least 40% of the investment and that at least 50% of those machines/equipment are of high technology. 3 in the city of vukovar profi t taxpayers paid profi t tax rates reduced by 75% in the period from 2011 to 2013, and reduced by 25% in the period 2014 till 2016. from 2017 the tax payers should pay profi t tax in the amount prescribed by the applicable tax rates. tax incentives in accordance with the act on the areas of special state concern depend on the classifi cation of areas in three groups where the fi rst group has the incentives as the city of vukovar, and second and third group had applying reduced tax rates (reduction of 25% or 15%) till the end of 2013. 74 introduced the eclectic paradigm (also known as the oli paradigm). jordaan (2005) points out that modern theory includes macro and microeconomics determinants in seeking to give a complete picture of the location of fdi. the type of fdi is connected with the development stage of the host country. this explains why most fdi inflow in developing countries is resource (natural resources, raw materials, or low-cost inputs such as labor) and market-seeking. manea and pearce (2001) highlight the importance of knowledge-seeking as a motive for fdi. furthermore, some authors (kinoshita and campos, 2002; menghinello, de propris and driffield, 2010, pelegrin and bolance, 2008) emphasize the agglomeration effect of existing fdi – the self-reinforcing effect of fdi stock. fdi is found to agglomerate more often than regular financial investment partly because fdi is a long-term capital investment that is irreversible in the short term. institutional development is also important in the attractiveness framework (north, 1991; globerman and shapiro, 2002; pournarakis and varsakelis, 2004; bevan and estrin, 2004; rodrik, subramanian and trebbi, 2004). institutional weaknesses, frequent changes in laws and inefficiency of public administration, may cause a weak inflow or the absence of fdi inflows. the inclusion of institutions in relation to fdi inflows is particularly important for developing countries, because developed countries have strong institutional frameworks conducive to business development and market forces. all these factors are determinants of fdi inflows into the country or group of countries. which aspects of the regional determinants need to be highlighted in order to attract fdi in a country? what are the underlying factors that foreign investors identify as significant in making investment decisions regarding a region? foreign investors do not only seek access to raw materials and cheap labor, their conduct and business (investment) decisions also depend on the market and efficiency-seeking indicators such as: market size, supportive financial and business services, accessibility to international markets and access to domestic political and business elites. this type of fdi tends to be located in national capitals and a few highly developed regions within host economies and in that way they reinforce the existing spatial asymmetries in production structures and capabilities (guimaraes, figueiredo and woodward, 2000; cantwell and iammarino, 2001; resmini, 2008). this is especially the case with fdi in banking, financial, and service types of investments that are located in capital cities thus increasing their primacy in the domestic economy. in addition, most of the researches on regional location advantages have been conducted in large countries (mostly china, but also the united states, india, russia and turkey), and only rarely are studies conducted in smaller countries. fu (2008) found that fdi intensity is positively associated with innovation efficiency in the host region and fdi has a significant positive impact on the overall regional innovation capacity in china. chen (2007) has concluded the opposite – the impact of fdi and regional innovation capability is weak. inward fdi might have the crowding-out effect on innovation and domestic r&d activity. mai (2002) found that the infrastructure, local 75 market size and quality of labor force are the main determinants of local fdi inflows in vietnam while government policy does not have any influence. as a consequence fdi has been allocated unequally among the regions and in this way increases the development gap between rich and poor regions. researches on european countries (and their regions) have been conducted by menghinello, de propris and driffield (2010) on italian industrial districts; bronzini (2007) on italian industrial and service sectors; villaverde and maza (2012), and rodríques and pallás (2008) on spain, hansoon and olofsdotter (2013) on the eu15; and dimitropoulou, mccann and burke (2013) on the uk. most of these papers highlight the impact of agglomeration and the concentration of activities on the attractiveness of the region, but they also identify some other important factors in the attractiveness of the regions: economic potential, educated work force, labor costs and competitiveness. market size can be important, but villaverde and maza (2012) found that it is not a relevant variable. in considering the case of croatia, it is certainly valuable to examine the studies conducted in european countries in transition where we would call attention to gauselmann, knell and stephan (2011), chidlow, salciuviene and young (2009), hilber and voicu (2010) and gauselmann and marek (2012). boudier-bensebaa (2005) confirms that labor availability, demand conditions (where variable manufacturing density is also included), and agglomeration economies all have a significant and positive influence on the inward fdi attracted by hungarian counties. carstensen and toubal (2004) have shown that the traditional determinants such as market potential, low relative unit labor costs, a skilled workforce and relative endowments have significant and plausible effects. they determine the negative influence of relative unit labor costs, the positive influence of skill ratio, the positive influence of market potential and the negative influence in trade costs as the determinants of fdi in central and eastern european countries. babić and stučka (2001) found that openness had a negative and statistically insignificant influence on fdi in cee6 countries (czech republic, slovakia, poland, hungary, slovenia, and croatia). they explain that either sign could be expected in the case of trade openness. the importance of knowledge-seeking factors alongside market (and agglomeration) factors act as the main drivers for fdi inflow into the mazowieckie region (including warsaw) in poland, while efficiency and geographical factors encourage fdi in the other regions of poland according to chidlow, salciuviene and young (2009). the impact of agglomeration is significant as a major pull factor in attracting foreign investment (gauselmann, knell and stephan, 2012; hilber and voicu, 2010; chidlow, salciuviene and young, 2009). hilber and voicu (2010) found that the main determinant in the attraction of fdi inflows are external economies from service agglomeration, while in countries dominated by investment in the industry the following are of importance: the educational structure of the region (knowledge-seeking factors), market size and agglomeration factors (chidlow, salciuviene and young, 2009). some authors (gauselmann, knell and stephan, 2011; chidlow, salciuviene 76 and young, 2009) highlight the importance of wages to attract fdi, especially in less urban areas. other economic and technological characteristics of the region are also important (gauselmann, knell and stephan, 2012). cheng and kwan (2000) estimated the effects of the regional determinants of fdi and found that a large regional market, good infrastructure and preferential policy had a positive effect while wage cost had a negative effect on fdi. they found that the effect of education was positive but not statistically significant while there was also a strong self-reinforcing effect of fdi on itself. in the case of croatia two researches should be highlighted. škuflić and botrić (2009), using granger causality tests, analyzed fdi determinants on the county level (for the first time in croatia) and they confirmed that the proportion of highly-educated workforce, export orientation and a higher share of domestic investment in the county are positive factors for foreign investors in croatia. they determined that coverage (the coverage of goods imports by goods exports at the county level) does not granger cause fdi. derado, škudar and rakušić (2011) show strong positive correspondence between the performance of local economies (sales, labor productivity, export and net-wages) and the amount of inward fdi. 3. methodology different methods can be used to evaluate the effect of fdi and its determinants. grozea-helmenstein, helmenstein and slavova (2009) analyze the attractiveness of 61 nuts 2 eu regions as fdi locations. the authors applied a new method for the benchmarking of regions (based on the solution of a non-linear and non-convex optimization problem) in order to analyze the location quality and competitiveness in an international framework with particular emphasis on austrian (all border) regions and the border regions in the neighboring countries. they present three different benchmarking indices to analyze the attractiveness of the regions as locations for foreign direct investment. the granger causality test is used in mentioned work of škuflić and botrić (2009). škuflić, rkman and šokčević (2013) use the promethee4 multi-criteria decision making method to analyze fdi attractiveness in six southeast european countries (including croatia) as well as the eu 27. the analysis in this paper focuses on the impact of different fdi determinants on regional fdi by using panel data analysis which is described below. considering the fact that the database for this investigation involves two dimensions: a cross-sectional and time-series, based on hsiao (2003) we have panel data, so panel data analysis will be used (this methodology has not been previously used in the analysis of fdi on a regional level in croatia only on a national level as can be seen in babić and stučka (2001), bogdan (2010), etc.). hsiao (2003) describes the advantages of panel data, which confirms the benefits of using this kind of analysis.5 detailed ad4 preference ranking organization method for enrichment evaluations. 5 besides other advantages, ‘by utilizing information on both the intertemporal dynamics and the individuality of the entities being investigated, panel data analysis is bett er able 77 vantages (and challenges) of using panel data analysis can be found in baltagi (2005) and hsiao (2007). in analyzing the determinants of fdi in croatian nuts 3 regions panel data analysis is also performed because data on the regional level are available for a short period (the analysis is applied from 2000 to 2010), while at the same time it is necessary to analyze the determinants of fdi on the regional level. villaverde and maza (2012) recognize that just a small number of papers have been devoted to the study of fdi at the regional level. this is also the case in croatia. random effects specification (re) is used in the empirical estimation of fdi determinants in this analysis because we wanted to include time invariant variables in modeling (that was also confirmed with tests6 presented in the next section). as mateev and anastasov (2010, p. 287) explain, re allows the estimation of the impact of time-invariant variables on dependent variable and actually provides more efficient estimates if the region-specific effects are not correlated with the other explanatory variables. this is confirmed in lessmann (2013). the random effect model is also used in bevan and estrin (2004) in analyzing the determinants of fdi in european transition economies. the feasible generalized least square method (fgls), allowing for group-wise heteroscedasticity and panel specific error autocorrelation was also employed in this study to take into consideration proven problems of heteroscedasticity and autocorrelation. the same method was used in aristovnik (2006) based on beck and katz (1996) and in menghinello, de propris and driffield (2010) to deal with the stated problems in modeling. the functions for panel-type set of data will be estimated based on maddala (2008) as random effect model: yit = αi + β’xit + uit (1) i refers to random effect, xit is vector of independent variables (presented in table 1 below) for region i at time t. namely, variables have two subscripts: i = 1, 2, ..., n (n refers to number of regions that is 21 and t = 1, 2, …, t (t refers to year from 20002010). uit are called idiosyncratic errors. it is assumed that i and uit are independent and identically distributed with mean zero and variance 2ó , 2uó . in order to capture the dynamic effect and to overcome the limitations of static panel analysis (explained in carkovic and levine (2002)) as well as with the purpose of testing the robustness of the results from static panel analysis, dynamic panel analysis is performed. dynamic panel analysis is also applied in cheng and kwan (2000), in the previously mentioned work of carkovic and levine (2002), campos and kinoshita (2003), carstensen and toubal (2004), aragones, salgado and rios (2012), aleksynska and havrylchyk (2013), and others. to control in a more natural way for the eff ects of missing or unobserved variables’ (hsiao, 2003, p. 5). 6 hausman test and breusch-pagan lagrangian multiplier (lm) test for random eff ects. 78 campos and kinoshita (2003, p. 12) ‘assume that it takes time for fdi to adjust to equilibrium or the desired level’ so they ‘relate current fdi stock to past fdi stock along with other explanatory variables’. following their approach the dynamic panel model that is estimated takes the following form: itutiit ititxityity ++= ++−= γηε ελδ 1 (2) yit refers to dependent variable (that is also included with time lags), xit is vector of independent variables (presented in table 1) for region i at time t (as it is described below the relation (1)), εit is error term that includes country specific attributes and time-specific attributes. the basic dynamic panel data model that is used in this analysis relies on arellano and bover (1995), blundell and bond (1998) system gmm (generalized method of moments) estimator. namely, the inability to control for some of the elements (that are not included in the model) which can affect the dependent variable leads to potential endogeneity. ‘the lagged dependent variable is by construction correlated with time-invariant elements in the error term’ (stojčić, 2012, p. 428), while determinants of fdi included in our modeling can also be correlated with error. the potential endogeneity problem can be overcome by applying dynamic panel gmm estimation. one of the possible dynamic estimators is the mentioned system gmm estimator. ‘the system gmm equation uses first-difference equations instrumented by lagged levels and level equations instrumented by the first differences’ (faustino and vali, 2013, p. 25). besides other advantages of system estimator (more in roodman, 2009b) it can include time-invariant variables which are necessary in our analysis. two-step estimator is applied because it is robust to heteroscedasticity or cross-correlation (more in stojčić, 2012), with the use of windmeijer’s (2005) correction for the standard errors which is also explained in roodman (2009b). after the estimation the relevant diagnostics are checked. 4. data collection and empirical analysis the database for performing the empirical analysis was formed by taking the findings of the literature review into account (that is the results of similar researches of determinants of fdi) as well as the data availability at the regional level in croatia. fdi stock is used as dependent variable as in campos and kinoshita (2003) and boudier-bensebaa (2005), botrić and škuflić (2006). the definition and expected sign of the variables that are used in this analysis are presented in table 1. as can be seen from the table above the independent data chosen for empirical analysis refer to labor market conditions, demand conditions and agglomeration effects (as in boudier-bensebaa, 2005) or it can be grouped as economic potential, labor conditions and competitiveness factors according to villaverde and maza (2012) who also include variables that refer to market size; but in this analysis due to a possible multicollinearity between the variables that refer to market size and labor conditions 79 table 1: definition of variables that are used in empirical analysis and expected impact variable defi nition expected impact dependent variable fdi fdi stock (in kn, defl ated with country-level defl ator) independent variables educ share of employees with higher education in the total number of employees + ulc real unit labor cost (average annual wages per county expressed in kn divided by labor productivity (real gdp expressed in kn per employee)) +/open openness (sum of import and export over gdp, in %) +/infr density of road network (in m/km2) + ino patent applications (by county of origin) + manuf number of employees in manufacturing industry + unemp unemployment rate, in % +/dum1 dummy variable that refers to the border regions with the eu (dum1=1 for border regions) +/dum2 dummy variable that refers to the areas of the special state concern (dum2=1 for counties in which the share of population in the areas of the special state concern in total population is > 20%) +/dum3 dummy variable that refers to region where the capital city (zagreb) is situated (dum1=1 for capital city region, that is county of zagreb=1) + source: authors; databases used in the analysis: croatian bureau of statistics (2001a, 2001b, 2002a, 2002b 2003a, 2003b, 2004a, 2004b, 2005a, 2005b, 2006a, 2006b, 2007a, 2007b, 2008a, 2008b, 2009a, 2009b, 2010a, 2010b, 2011a, 2011b, 2012a, 2012b, 2013), croatian national bank (2013), official gazette of republic of croatia (no. 86/08, 57/11 and 51/13), state intellectual property office (2005-2011). those variables were not chosen as input variables.7 the chosen variables from table 1 can also be seen in the framework of the research in škuflić and botrić (2009) as resource-seeking motives for fdi and efficiency-seeking motives (besides market-seeking). a dummy variable that refers to areas of special state concern is based on the research of boudier-bensebaa (2005) who discusses the role of taxes and incentives in attracting foreign firms and liu, daly and varua (2012) who observe the significance of government incentives in attracting fdi. the question here is whether or not fiscal policies have an effect in attracting foreign firms, whether subsidies and incentives can offset and overcome the weakness or lack of comparative advantage of a particular location (boudier-bensebaa, 2005, p. 620). fiscal incentives can be seen in the act on the areas of special state concern (official gazette of republic of croatia, no. 86/08, 57/11 and 51/2013).8 škuflić and botrić (2009) have emphasized that fiscal incentives could have a heterogeneous influence on regional dispersion of fdi. it is possible that border regions with the eu (another dummy variable in the model) will 7 namely, villaverde and maza (2012) use also factor analysis to get rid of collinearity problems in the regression analysis that can be one of the implications for future researches of fdi determinants in croatian regions where some additional variables in the other categories will be included. 8 as well as in act on investment promotion and income tax act. 80 absorb higher levels of fdi; however, foreign investors usually base their decisions on other determinants so it is possible that the influence of this variable will be insignificant or even negative. a dummy variable that refers to capital city region is also included in modeling. the main reason for doing this is because a huge amount of fdi is absorbed in the county of zagreb, which boudier-bensebaa (2005) call the capital city effect. ‘previous analysis has indicated that fdi at the national level during the period 1993-2008 in croatia was under the significant influence of the fdi structure and dynamics in one region, north west croatia’ (where the capital city/county of zagreb is located), ‘which accounted for more than 80 per cent of overall fdi’ (škuflić and botrić, 2009, p. 20). some time periods are missing for some of the regions in the sample so the analysis is performed on an unbalanced panel. the data used in the empirical analysis are taken from the croatian national bank, the croatian bureau of statistics and the state intellectual property office. the aim of the study is to investigate the determinants on a regional level therefore nuts 3 (county) level in croatia is chosen because most of the data are available for that level and because this level also satisfies the requirements of the definition of region (homogeneity, functionality, etc.). the estimation is based on three regression models that differ with respect to the used panel data estimator. twenty-one croatian nuts 3 regions were included in modeling. the results are presented and explained in more detail in the next section. 5. empirical results and discussion based on the literature review and the methodology of the research outlined above, panel data analysis is performed in order to estimate the influence of the chosen variables on fdi stock in the croatian nuts 3 regions. that will ensure encryption of the significant determinants of fdi in croatian nuts 3 regions. the results of the static models are presented in table 2 (models (1) and (2)) while the results of the dynamic panel data analysis can be seen in table 3 (model (3)). table 2: estimation results for regional determinants of fdi in croatia using static panel models (re and fgls) dependent variable: fdi stock explanatory variables model (1)re model (2) fgls constant 16.41275(0.000)* 17.98236 (0.000)* educ 0.0427415(0.000)* 0.0388495 (0.000)* ulc -0.1872809(0.173) -0.0758487 (0.280) open -0.0025873(0.098)*** -0.0019995 (0.003)* infr 0.3270354(0.029)** 0.1462898 (0.000)* ino 0.0024278(0.075)*** 0.0002531 (0.612) 81 explanatory variables model (1)re model (2) fgls manuf 0.1507819(0.038)** 0.1329138 (0.000)* unemp -8.72e-06(0.038)** -0.0000107 (0.000)* dum1 -0.0487118 (0.324) 0.0251495 (0.607) dum2 0.0457892 (0.475) 0.0025151 (0.959) dum3 0.7985582 (0.000)* 1.025017 (0.000)* r-squared 0.87 wald chi2(10) prob > chi2 7819.38 (0.0000) 541.57 (0.0000) number of obs. 222 222 hausman test chi2(6) prob > chi2 6.50 (0.3700) breusch and pagan lm test for random effects chi2(1) prob > chi2 26.87 (0.0000) time effects prob > chi2 0.9515 modifi ed wald test chi2 (21) = 4233.68 prob > chi2 = 0.0000 wooldridge test f (1, 20) = 106.207 prob > f = 0.0000 breusch-pagan lm test of independence chi2(210) = 392.136pr = 0.0000 pesaran’s test of cross sectional independence 7.987pr = 0.0000 notes: standard errors in model (1) are cluster robust. model (2) allows for group-wise heteroscedasticity and panel specific error autocorrelation. p values are reported in parentheses; *, **, *** indicate significance at the 1%, 5% and 10% levels respectively. all variables except dummies and ratios are in logs. source: author’s estimation table 3: estimation results for regional determinants of fdi in croatia using two-step dynamic panel system gmm estimator dependent variable: fdi stock explanatory variables model (3)gmm lag fdi stock 0.7470919 (0.000)* educ 0.0077144 (0.020)** ulc -0.1632054 (0.138) open -0.0002429 (0.855) infr 0.0688801 (0.063)*** ino 0.0007522 (0.137) manuf 0.0893533 (0.055)*** 82 explanatory variables model (3)gmm unemp -9.36e-06 (0.063)*** dum1 -0.0496836 (0.038)** dum2 0.0532588 (0.040)** dum3 0.5313577 (0.002)* constant term 3.74002 (0.000)* number of observations 202 number of groups 21 number of instruments 19 ar(1) -1.90 prob > chi2 = 0.057 ar(2) -1.30 prob > chi2 = 0.192 sargan/hansen j statistics chi2(6) = 1.73 prob > chi2 = 0.943 wald test chi2(12) = 263856.03 prob > chi2 = 0.000 notes: p values are reported in parentheses and are obtained with windmeijer’s corrected robust standard errors; *, **, *** indicate significance at the 1%, 5% and 10% levels respectively. all variables except dummies and ratios are in logs. year dummies are included. estimations are obtained using the order xtabond2 (roodman, 2009b). source: author’s estimation in model (1) hausman test (more in maddala, 2008) confirms the appropriateness of using random effects over fixed effects. breusch and pagan lagrangian multiplier test (detailed in baltagi, 2005) also confirms that random effects models are preferable in model (1) over pooled regression. testing for time-fixed effects imply that no time fixed effect is needed in the model. the wooldridge test signifies autocorrelation and modified wald test detects heteroscedasticity following greene (2000) (so the standard errors are cluster robust). according to the breusch-pagan lm test of independence (breusch and pagan, 1980) there is cross-sectional dependence in the model while according to pesaran’s test (pesaran, 2004) of cross sectional independence there is also cross-sectional dependence. random effect estimation (in model (1)) implies that statistically significant (at the 1, 5 and 10% of significance level) determinants of fdi in croatian nuts 3 regions are education, infrastructure, innovations and number of employees in manufacturing industry. negative, statistically significant influences are openness and unemployment. unit labor costs and dummy variables that refer to border regions and areas of special state concern do not have statistically significant influences based on this model. it is also determined statistically significant capital city effect. according to feasible generalized least square regressions (model (2)) the results differ from the random effects models in that innovations are not significant. the tests for autocorrelation (ar(1), ar(2)) present no evidence of model misspecification in model (3). ‘the presence of first-order autocorrelation in the differenced 83 errors does not imply that the estimates are inconsistent, but the presence of second-order autocorrelation would imply that the estimates are inconsistent’ (mateev and anastasov, 2010, p. 288). the result of the sargan/hansen test confirms that the overidentifying restrictions are valid because the null hypothesis cannot be rejected, that is also explained in roodman (2009a). the number of instruments is lower than the number of groups. results of the wald test imply that in this analysis the null hypothesis that the variables jointly have no explanatory power is rejected. additional tests were also performed. based on difference in hansen test for validity of subsets of instruments for the levels equation and for the lagged dependent variable, steadystate assumption is satisfied, system estimator should be preferred to difference one and the model does not suffer from cross-sectional dependence (more can be found in sarafidis, yamagata and robertson, 2009). model (3) is used as relevant for final conclusions because it relies on dynamic nature that is not included in static models which can lead to misspecification. in model (3), statistically significant determinants of fdi with a positive influence are education, infrastructure, the manufacturing industry, while unemployment has a negative and statistically significant influence. unit labor costs, openness (with negative influence) and innovations (with positive influence) are not statistically significant regional determinants of fdi in croatia. it should also be noted that in model (3) statistically significant (with a negative influence) is the dummy variable that refers to border regions so it can be concluded that based on the given results (on the sample of croatian nuts 3 regions) border regions have been less attractive for fdi. it can be assumed that investors base their decisions on other determinants and that the proximity to eu countries is not a significant determinant. the insignificant influence of the dummy variable of border regions with eu countries can be seen in the light of the work of casi and resimi (2011) who state that regions neighboring with ‘national champions’ will probably see a reduction in their attractiveness. dummy variables that signify regions of special state concern and capital-city effect are statistically significant and have positive influence on fdi. that is especially important if we take a look on the effectiveness of fdi measures directed towards inducing fdi and the difference between capital-city region and other regions in attracting fdi which was explained in the theoretical part of this paper. the results can be compared with the results of previous studies (e.g. cheng and kwan, 2000; babić and stučka, 2001; carstensen and toubal, 2004; boudier-bensebaa, 2005; rodríques and pallás, 2008; škuflić and botrić, 2009). in a few cases it can be observed that some of the effects on a regional level coincide with the effects on a national level. it is also important to highlight some of the constraints and implications for future research. namely, most regional data are published with a time lag and regional deflators are not available. ‘the positioning of individual regions, especially those in the midst of a process of profound economic restructuring (for instance the regions of the new member states) can be substantially different when using more recent data’ 84 (grozea-helmenstein, helmenstein and slavova, 2009, p. 288). the data on the structure of fdi on the regional level and some other determinants of fdi that can be used in the research are limited which is also the case if we want to get firm-based data on fdi in the observed regions. it could also be useful to include different indicators of fdi as dependent variables. even though this study is just the start of trying to manage the regional determinants of fdi it can contribute to the identification of regional determinants of fdi in croatia. as casi and resimi (2011) conclude, once the ‘regional’ components of factors attracting fdi have been identified, more effective fdi promotion policies can be implemented at the regional level. 6. conclusions the results of the study have confirmed the hypothesis that different determinants have significant influence on regional fdi inflows in croatia that is on the attractiveness of the croatian regions to foreign investors. in accordance with that, the following factors have a positive and significant influence on fdi inflows: education, infrastructure, the manufacturing industry. it is interesting to note that the dummy for regions of special state concern is significant which can signify the effectiveness of the numerous incentives for foreign investors in those regions. obviously they did result in significant inflows of foreign capital. negative, statistically significant influences are: unemployment and also dummy variables for border regions with the eu. it is important that the capital city effect is also found in croatia, this confirms the hypothesis about the agglomeration economies but also that fdi follows the development path of croatian regions – so the capital city is the most developed nuts 3 region and the location of the main branches of many firms especially banks and insurance which take a huge part of fdi inflows in croatia. the contribution of this study is threefold. as it was mentioned before, the analyses of regional determinants of fdi in croatia are very rare (only two researches that deal with the mentioned question are found). in this paper panel data analysis is conducted for the first time in analyzing the regional determinants of attractiveness of fdi in croatian nuts 3 regions, where several (static and dynamic) models have been estimated in order to test the robustness and compare the results between the models. in comparison with the previous researches of regional determinants of fdi in croatia our analysis also includes dummy variables in modeling to test the significance of closeness with the eu, the importance that the areas of the special state concern have in attracting fdi on regional level as well as the possible influence of agglomeration effects of the economic activity which can be important for future policy implementation. some of the constraints and implications for future research are also highlighted: regional data are published with a time lag, the need to include more recent data, different indicators of fdi as dependent variables as well as the data on the structure of fdi on the regional level, firm-based data on fdi 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criteria. regarding potential factors explaining adjustments, while none of the economic policy variables considered was found relevant in explaining either diversity or materiality, all technical accounting variables analyzed explained materiality, although only ga accounting basis explained diversity. the research shows that changing ga reporting basis into accruals reduces adjustments’ materiality and diversity. therefore, in order to improve the quality of government finance statistics (gfs), it is highly recommendable to achieve a ga system harmonized across europe, such as ipsass or epsass, allowing only very few options and imposing the accrual basis in both budgetary and financial systems. also relevant is the need to strengthen the role of control and auditing in the ga reporting process (by supreme audit institutions and external private firms), in order to avoid accounting discretion. keywords: budgetary reporting, national accounts, adjustments, accounting basis, public deficit, central government. exploring determinant factors of differences between governmental accounting and national accounts budgetary balances in eu member states susana margarida jorge maria antónia jorge de jesus raul m.s. laureano susana margarida jorge assistant professor, faculty of economics, university of coimbra, coimbra portugal centre for research on public policy and administration (neapp), university of minho, braga, portugal tel.: 0035123-979.0577 e-mail: susjor@fe.uc.pt maria antónia jorge de jesus accounting department, iscte business school, university institute of lisbon (iscte – iul), bru-iul, lisbon, portugal tel.: 00351-21-790.3957 e-mail: antonia.jesus@iscte.pt raul m.s. laureano assistant professor, quantitative methods for management and economics department, iscte business school, university institute of lisbon (iscte – iul), bru-iul, lisbon, portugal tel.: 0035121-790.3467 e-mail: raul.laureano@iscte.pt transylvanian review of administrative sciences, special issue/2014, pp. 34-54 35 1. introduction the maastricht convergence criteria for eu member-states are assessed on the basis of a harmonized reporting system of national accounts (na) supported by the european system of national and regional accounts (esa). esa offers guidance, tables and procedures for countries to report to eurostat, namely within the scope of excessive deficits procedure (edp). a ‘full accruals basis’ of accounting is implicitly used for the recognition of most financial flows. nevertheless, public sector data reported for the convergence criteria are derived from (micro) governmental accounting (ga) systems, according to the rules in practice for each country. despite all having some kind of accrual accounting, this is not yet harmonized between countries, and in some cases, not even within a given country. additionally, in many countries, budgets and budgetary accounting are still cashbased (lüder and jones, 2003; blöndal, 2003; van der hoek, 2005; anessi-pessina, nasi and steccolini, 2008). therefore, when reporting to eurostat for the purpose of deficit assessment, countries start from the so-called ‘working balance’ (deficit/surplus) in ga and make adjustments to obtain the final deficit/surplus in na for convergence evaluation. these adjustments result from conceptual differences between the two accounting systems (ga and na), among which some concern accounting principles, such as recognition criteria – cash versus accrual basis (keuning and van tongeren, 2004). in spite of recent ga reform trends in eu member states, moving from cash to accruals, differences still remain due to the existence, in some countries, of two different accounting bases in ga – accrual basis for financial accounting and modified cash basis for budgetary accounting. this is particularly relevant since the data from ga to na are based on budgetary reporting (van der hoek, 2005; martí, 2006; barton, 2007). since in some countries the ga ‘working balance’ is already accrual-based while in others it is still cash-based, the adjustments to be made range from highly diverse and material, to a reduced number and of low magnitude (jesus and jorge, 2015). the literature review (keuning and van tongeren, 2004; martí, 2006; sterck, 2007) and documental sources (ipsasb, 2005; 2012) additionally identify other specific issues concerning differences between ga and na that raise the need for adjustments when translating data from one system into the other. particularly interesting are the findings of an exploratory study pointing out the materiality of those adjustments as well as their diversity, questioning the reliability and comparability of the final budgetary balances reported by eu member-states within the edp requirements, hence raising doubts about na data accuracy and reliability to assess the maastricht treaty convergence criteria (jesus and jorge, 2014; 2015). following this line of investigation, this paper addresses the relationship between budgetary balances (after budget accomplishment) according to both ga and na, namely assessing whether there are sufficiently significant differences and exploring what may explain those differences. accordingly, it aims to achieve the following 36 general objectives: • to analyze whether both materiality and diversity of ga-na budgetary balance adjustments reflect the conceptual differences between the two systems, considering the adjustments’ magnitude and categories reported by eu member states; • to identify potential factors that might explain the adjustments’ (i.e. ga-na budgetary balance differences) materiality and diversity. the assumption underlying this research is that since, in principle, eu member states have to comply with deficit limits and other restrictions concerning the stability and growth pact, accounting management discretion might be used to manage the reported deficit by means of managing ga-na budgetary balance adjustments. therefore, some literature on earnings management, particularly by public sector organizations (eisner, 1984; christensen and mohr, 1995; petersen, 2003; stalebrink, 2007; anessi-pessina and steccolini, 2009a, 2009b) seems to be useful as a conceptual framework for this study. in fact, if the main issue to be analyzed concerns what leads eu member-states to report more or less material and more or less diverse ga-na adjustments in their budgetary balances, factors pointed out as a possible explanation of variability across countries might be seen as ‘incentives’ to use some accounting creativity in order to report a more convenient position in terms of edp. the use of accounting discretion has been studied within the literature on earnings management, which is particularly rich concerning the private sector, but still very scarce in the public sector (stalebrink, 2007; anessi-pessina and steccolini, 2009a). in any case, the general idea is that earnings management occurs when decision-makers within organizations resort to some creativity by means of accounting discretion to manage/change the reported financial performance/position. the main intention is to signal a certain situation to stakeholders, by not reporting the accurate picture. in the public sector, authors such as eisner (1984) and petersen (2003) addressed practices to measure, manage and report budgetary deficits which, although in the usa context, seem somehow related to some of the ga-na budgetary balance adjustment categories analyzed in this study. eisner (1984) refers, among others, to off-budget items and credit extension, contingent expenditure and not systematically accounting for investment assets. petersen (2003) explains that deficit reductions tend to be achieved by practices other than raising taxes or reducing spending, namely by changing the assumptions underlying the budget, altering the timing and recognition of various flows, or even redefining what constitutes revenue and expenditure. he also refers to techniques contributing to an apparently balanced budget, such as: over-estimation of revenues, internal borrowing, assets sales, acceleration of revenue and delays in spending, and anticipated future savings. ga-na budget balance adjustments regarding the recognition of certain operations, the concepts of budgetary revenue/expenditure and the accounting basis, might find some relation to the above-mentioned ‘creative’ practices. stalebrink (2007) and anessi-pessina and steccolini (2009a) were pioneers in developing studies that address possible determinants of earnings management in public 37 sector organizations, using rather similar independent variables – the former in the context of swedish municipalities and the latter in italian public health-sector organizations. among several determinant factors, those authors use: change of administration/ceo, organizational eligibility for bailout funds, operating revenues as a proxy for organization size, organization’s operating margin, change in total debt, organization’s administrative/resource capacity and changes to the organization’s assets. nevertheless, these determinants are at the organizational level and hence not applied to the context of this research. therefore, it can be said that the scarce literature regarding the public sector, and particularly in the field of ga and na, does not address the topics of this study. this might be an opportunity for this paper to be innovative, but it also creates difficulties in identifying the possible determinants of ga-na budgetary balances differences, despite the above-mentioned framework of accounting management discretion. however, it is empirically observable that some factors are able to determine those differences and they can be classified into two groups: those related to economic policy and those regarding technical-accounting issues. henceforth, this paper is organized as follows. section 2 presents the systems of ga and na, highlighting their purposes, main differences and how they relate. subsequently, section 3 addresses the main categories of adjustments needed when translating information from one into the other, in terms of edp reporting procedures. section 4 addresses the methodology, starting by presenting the research questions, formulated from an exploratory perspective; furthermore, the sample, variables, statistical procedures and models associated with the empirical study are described. section 5 presents and discusses the main findings. finally, section 6 summarizes the main conclusions, contributions and limitations. 2. governmental accounting and national accounts in the last decades, under new public management (npm) trends, ga has undergone considerable reform processes whose main common features must be underlined, as identified by authors such as brusca and condor (2002) and benito, brusca and montesinos (2007): (i) adoption of the accrual basis with a progressive approach to business accounting; (ii) a trend towards harmonization of accounting systems between different levels of government; and (iii) a move to approach ga and na, so that adjustments, reclassifications and eliminations are easier and safer. one important discussion emerging from these reforms concerns the introduction of the accrual basis in budgetary accounting systems. however, many international studies have shown that most countries adopting the accrual basis in ga have not introduced it in their budgetary systems, namely concerning budget preparation and reporting of budgetary performance (lüder and jones, 2003; bastida and benito, 2007; sterck, 2007; benito and bastida, 2009). additionally, van der hoek (2005) distinguishes between budgeting and reporting systems. while the former are connected to mixed cash/commitment accounting bas38 es, reporting systems are mostly linked to modified or full accrual accounting, with different practices and degrees of implementation across countries. consequently, the lack of harmonization is a great problem in ga systems, namely among eu member states. on the other hand, national accounts (na) is the first internationally harmonized reporting system, aiming to calculate key aggregate indicators (gross domestic product (gdp), volume growth, national income, disposable income, savings and consumption) so that the whole national economy might be evaluated, including comparison with other countries’ aggregates (bos, 2008). concerning eu countries, all member states are obliged to adopt the european system of national and regional accounts (esa) in preparing their na. one of the specific purposes of this system is to help control european monetary policy, namely national aggregates such as gdp, deficit and debt. esa is therefore the harmonized conceptual framework for eu member states’ na in order to obtain accurate values for the ratios established in the eu treaty and required by the edp protocol to assess and monitor the budgetary discipline of eu member states under the european monetary union emu (benito and bastida, 2009). one question that might be raised concerns knowing whether the current ga systems in eu countries are able to meet esa requirements, namely relating to data provided by sector s.13 – general government sector (ggs), established in the edp protocol as the institutional sector in na that supports macroeconomic aggregates – deficit and debt – according to which the convergence criteria of the maastricht treaty are evaluated. consequently, the relationship between ga and na is an important issue mainly concerning ggs data to na, since they are obtained from ga, whose diversity and divergences from macro accounting systems may question the relevance, reliability and comparability of the aggregates that sustain the financial decisions of eu member states (benito and bastida, 2009). several authors, such as cordes (1996), jones and lüder (1996), montesinos and vela (2000) and jones (2003), emphasize the main differences between the two accounting systems, such as: (i) divergences related to the definition of the reporting entity; (ii) differences related to the moment of recognizing transactions, which occur on a ‘full accrual basis’ in the na perspective1, and on a 1 nevertheless, the esa general recognition criterion was later modifi ed regarding taxes and social contributions, allowing member states to recognise them according to three diff erent methods, thus becoming an exception to the accrual basis regime: (i) accrual basis – recognition when the tax-generating factor occurs (e.g. in the year income tax relates to); (ii) adjusted cash basis – recognition of taxes under cash basis sources, considering when possible a time adjustment so that the amounts received can be att ributed to periods when the economic activity generating the fi scal obligation occurs; and (iii) cash basis – when it is not possible to apply any of the other methods. 39 modified cash or modified accrual basis in the ga perspective; and (iii) differences related to the measurement of recognized transitions, which na considers to be market price while in ga historic cost (acquisition or production cost) is preponderant. regarding differences between ga and na, the international public sector accounting standards board (ipsasb) developed a working program concerning the convergence of ipsass with na systems, starting in january 2005 with a research report aiming to identify differences in financial reporting provided by statistical-based accounting systems (na) and the financial information reported under the ipsass (ga) (ipsasb, 2005). more recently, the ipsasb issued a consultation paper (ipsasb, 2012), which describes the relationship between ipsass for accrual-based financial statements and government finance statistics (gfs) reporting guidelines, reviewing progress since the ipsasb’s last gfs harmonization initiative and identifying possible further opportunities to reduce the differences. topics causing differences between the two reporting systems were classified as: resolved if countries adopt updated ipsass (e.g. ggs reporting is solved by ipsas 22); opportunities to reduce differences (e.g. reporting entity definition, inventory measurement, presentation of financial statements, including classification and aggregates, measurement of assets, liabilities and net assets/equity) and differences that will remain in any case, due to the different objectives of the two systems, and therefore have to be managed in between (e.g., recognition criteria, measurement of assets/liabilities, particularly market value versus historical cost). 3. adjustments from ga to na considering the first objective of this research, this section addresses the practical consequences of the conceptual differences identified. as keuning and van tongeren (2004) explained, the conceptual differences between the two accounting systems (ga and na) imply making adjustments and corrections based on estimations of ga data to determine macroeconomic ratios such as deficit and debt, which has consequences for their reliability and comparability. according to the inventories of sources and methods each eu member state discloses (hereafter called ‘inventories’), conceptual differences give rise to the need to make adjustments from ga data into na. the main adjustment categories are related to: (i) cash/accrual adjustments for taxes, social contributions, primary expenditure and interest and (ii) reclassification of some transactions, namely capital injections in state-owned corporations, dividends paid to ggs entities, military equipment expenditure and eu grants (jesus and jorge, 2010). regarding cash-to-accrual adjustments, related to different recognition criteria, the inventories describe the adjustments each country makes in order to transform cash-based data into accrual-based data, considering issues like taxes and social contributions and other receivables, interest and primary expenditure. the analysis of the inventories allows observing that procedures are not harmonized between countries, 40 both in terms of the issues adjusted and the way the adjustments are made (jesus and jorge, 2014; 2015). as for reclassification adjustments, the procedures described in the inventories are similar and concern: (i) capital injections in state-owned corporations – analyzing whether they meet the requirements of a financial transaction (not considered in the deficit/surplus) or of a non-financial transaction, considered in the deficit/surplus)2; (ii) dividends paid to ggs – according to esa mgdd, each transaction is analyzed in order to determine whether the whole amount received from dividends can be considered as income with a positive impact on the deficit; (iii) military equipment expenditure (time difference adjustments regarding time of payment and time of delivery) and eu grants (time adjustments to assure the neutrality of community grants). the adjustments’ quantitative impact may be measured through the edp reporting notifications each country is obliged to send to eurostat twice a year3. from those edp notifications, table 2a provides data related to central government (cg) deficit/surplus reported by eu member states, explaining the transition from cg accounts budgetary execution balance (ga) into cg final deficit/surplus (na). table 2a is based on central government accounts (cga) budgetary execution deficit/surplus, designated as ‘working balance’, which represents the balance between all revenue and expenditure. this table shows data adjustments to reach the final deficit/surplus – net borrowing/lending of central government sector (s.131), according to na requirements. the ‘working balance’ concerns mostly budgetary execution deficit/surplus of the state sub-sector (s.13111), as the deficit/surplus of other cg entities is disclosed as a whole in a separate item. however, in some countries the ‘working balance’ is cash-based while in others it is reported under accrual or mixed (when countries use cash for some transactions and accruals for others) bases. therefore, table 2a shows the various adjustment categories from the cg ‘working balance’ in ga into cg deficit/surplus in na. it can be observed that some of those categories are related to the conceptual differences identified in section 2 and some are not. table 1 demonstrates that relationship. 2 according to the rules of the esa manual on government defi cit and debt (mgdd), it is necessary to analyse whether state-owned corporations are profi table in order to decide whether it is expectable that ggs may obtain future income (fi nancial transaction – without impact on defi cit/surplus) or whether a capital injection was made to cover accumulated losses (capital transfer – with impact on the defi cit/surplus). 3 according to edp requirements, eu member-states are obliged to prepare the reporting of government defi cit and debt levels twice a year: 1st notifi cation in april (n), covering planned data (year n), estimated data (year n-1), half fi nalised data (year n-2) and fi nal data (years n-3 and n-4); 2nd notifi cation in october (n), only diff ering regarding year n-1 data, which are already half-fi nalised. 41 table 1: adjustment categories and conceptual differences between ga and na adjustment categories conceptual differences a. financial transactions included in the ‘working balance’ recognition criteria differences b. non-fi nancial transactions not included in the ‘working balance’ not related c. accounting basis adjustments c.1. differences between interest paid and interest accrued c.2. other accounts receivable c.3. other accounts payable recognition criteria differences d. balance (net borrowing or net lending) of other cg entities* d.1. ‘working balance’ (+/-) of entities not part of central government d.2. net borrowing (+) or lending (-) of other central government bodies defi nition and scope of reporting entity under ga and na preparation and disclosure of consolidated fi nancial statements e. other adjustments relationship between government and government business enterprises and other reclassifi cations of specifi c transactions * as explained, the budgetary balance of other entities not included in the state sub-sector is reported separately for all those entities and added to the state defi cit/surplus (‘working balance’). source: authors’ findings 4. methodology 4.1. research questions the literature on the relationship between ga and na is scarce and, as presented above, mainly addresses the relationship and the conceptual differences between the two systems regarding recognition and measurement bases. all in all, it is acknowledged that differences exist because the purposes and users of both ga and na systems are different. therefore, it is also recognized that adjustments are needed and sometimes unavoidable. empirical evidence (jesus and jorge, 2014; 2015) has highlighted the magnitude in terms of weight in each country’s deficit, as well as the diversity of those adjustments, especially within the eu context. these studies also show non-harmonized procedures to reach the na final balance, indicating reliability and comparability problems. regarding the second study focused on five eu countries (jesus and jorge, 2015), the analysis reveals each country discloses different cash-to-accrual adjustments and different treatment procedures to convert ga data into na. yet, so far no attempt has been made either to discuss factors that might explain the magnitude or diversity of such adjustments, or to develop quantitative analyses thereof. however, questions might be raised, laying the foundation to justify this exploratory research: • do the magnitude and diversity of ga-na balance differences (adjustments) reflect the conceptual differences between the two systems? • which category of adjustments accounts more to the magnitude of ga-na budgetary balance adjustments? • are there economic policy issues that might explain the magnitude and diversity of ga-na budgetary balance adjustments? e.g.: – is it possible that each country’s economic growth affects both the materiality and diversity of adjustments to be made? 42 – what about the ga budgetary balance sign (deficit/surplus) as a result of each country’s budgetary accomplishment? – does inclusion in the euro-zone make a difference in explaining both the materiality and diversity of adjustments to be made? – does fulfillment of the maastricht treaty criteria4 explain both the materiality and diversity of adjustments to be made? • are there technical-accounting issues that might explain the magnitude and diversity of ga-na budgetary balance adjustments? e.g.: – is it relevant the fact that the ga budgetary balance (‘working balance’ as the starting point for na budgetary balance) is cash-based or accrual-based? – what about the sign of the na budgetary balance (deficit/surplus) as a result of adjustments? – is the sign of the total adjustments, as representing the positive/negative impact of adjusting the ga budgetary balance due to conceptual differences between the two systems, important for the adjustments’ materiality and diversity? while the first two questions relate to objective 1 presented in the introduction, the others come under objective 2. the following sections will try to answer these questions, making an original contribution towards understanding which factors might explain the differences between budgetary balances of ga and na, as well as taking a quantitative approach for the first time. by doing so, this research also tries to fill gaps in the literature. 4.2. research design and sample this research is of a clearly exploratory character, as an attempt is made to develop an inductive explanation for different magnitudes and diversity of ga-na adjustments, using the above mentioned possible factors. additionally, it is positivist since it seeks to describe certain phenomena, while keeping researchers independence; it applies quantitative tools, adapting methods used in exact sciences to social sciences in order to find causality relationships (davila and oyon, 2008; moreira, 2009). central government data are used, gathered from both edp reporting notifications (tables 2a) and eurostat statistics. the sample consists of all 27 eu member states, for the years 2007 to 2010 (eurostat, 2012), with a total of 108 observations. table 2 presents descriptive information about the sample for each year. over the period, mean and median values of budgetary balances both in ga and na generally decrease, with a slight increase in 2010. na budgetary balance is, on average, lower (higher average deficit) than ga balance, except in 2008. both balances (ga and na) are, on average, significantly negative over the period, while showing very high dispersion – standard deviations range between approximately 15,000 mil4 according to article 104 of the maastricht treaty concerning budgetary discipline, convergence criteria are public defi cit and public debt. the former cannot exceed 3% of gdp, while the latt er cannot exceed 60% of gdp. 43 lion to 46,500 million euro in ga balance, and between approximately 16,000 million to 45,500 million euro in na balance. 2009 is the year when the range between maximum and minimum values is widest, for budgetary balances both in ga and na, approaching 200,000 million euro. table 2: sample characterization 2007 2008 2009 2010 mean -4,299.31 -14,729.78 -25,451.71 -23,297.77 sd 15,076.93 27,528.16 46,540.84 41,747.07 minim um -54,273.69 -97,699.97 -192,002.81 -164,137.88 median -631.91 -3,461.16 -7,080.00 -8,509.87 maxim um 25,905.00 14,615.95 9,730.00 911.00 mean -6,137.99 -11,916.54 -26,216.41 -25,067.83 sd 15,773.21 23,837.50 45,488.13 40,085.93 minim um -54,872.16 -98,974.19 -194,814.64 -166,520.76 median -524.71 -3,025.00 -7,825.00 -7,405.12 maxim um 12,147.00 8,570.32 -116.00 -78.00 mean -1,838.68 2,813.25 -764.69 -1,770.06 sd 3,838.74 18,461.21 10,698.14 11,364.22 minim um -13,878.00 -12,132.00 -29,619.00 -29,313.00 median -289.66 -275.72 -143.51 -85.00 maxim um 2,220.00 89,503.00 17,745.00 36,775.00 total obs: 108 (current eu at 27 x 4 years) year ga -working balance (million euros) na edp b9 of central government (million euros) magnitude of ga-na difference (million euros) statisticbudgetary balances source: authors’ findings the magnitude of the ga-na difference, i.e. total amount of adjustments, shows a higher mean in 2008 while positively impacting on the balances. in 2007 and 2010 the mean values become closer, negatively decreasing the balances (increasing deficits). median values of this difference are much higher (less negative) than mean values, except in 2008, when the median is negative and the mean is positive. again, throughout the period the dispersion around the mean values of ga-na differences is very high, especially in 2008. 4.3. variables in this study, the two dependent variables used to measure the materiality and diversity of adjustments are: • 100 i i i i ga balance na budgetary balancemateriality na budgetary balance    materiality is always a positive number representing the weight of difference (either positive or negative) in na budgetary balance (%). • idiversity is the total number of adjustments from cg ‘working balance’ in ga into cg deficit/surplus in na. diversity in theory ranges from 0 (no adjustments made) to 8 (all types of adjustments made). the eight adjustment categories are those referred to in table 15. 5 for categories c and d, the subcategories were considered. 44 in order to answer the research questions related to objective 1, the independent variables used were the weight of each adjustment category (a, b, c, d and e, in table 1) in the na budgetary balance, both in absolute value and in percentage. for instance, for the first category a: financial transactions included in the working balance: 100 i i i adjustment amount of category a weight of category a na budgetary balance   for category d: balance (net borrowing or net lending) of other cg entities: 1 2 100 i i i i adjustment amountcategory d adjustment amountcategory d weight of category d na budgetary balance    additionally, to answer the research questions related to objective 2, the following independent variables were used, classified into three dimensions: • economic policy variables: euro-zone (country belongs to the euro area: yes/no); gdp % change from the previous period; economic growth (the sign of gdp % change from the previous period); ga budgetary balance sign (deficit/surplus); meeting both convergence criteria (yes/no); deficit/surplus fulfillment (yes/no); • technical-accounting variables: na budgetary balance sign (deficit/surplus); ga accounting basis (cash, accrual or mixed); and the sign of total adjustments (representing the positive/negative impact of adjusting ga budgetary balance); • control variables (variables characterized as being constant, unchanged and usually explaining the dependent variable): natural logarithm of the population (as a proxy of the country’s size); and gdp per capita (as a proxy of the country’s wealth). 4.4. statistical analyses and models the data analysis starts with a brief description of the dependent variables: gana adjustments’ materiality and diversity. to find out which category of adjustments has the greatest contribution for the magnitude of ga-na budgetary balance adjustments; for materiality, the following empirical regression model is used: 0 1 1 2 2 3 3 4 4 5 5i ii i i i imateriality x x x x x              , where kx ( 1,2,...,5k  ) are the five adjustment categories (a to e), j ( 0,1,...,5j  ) are the six parameters to be estimated, and i is the error term. although various regression models can be used to analyze a panel data sample, the ordinary least squares (ols) regression was applied as this study is exploratory. for reassurance, a model including year dummies was also estimated but the results (not reported) showed that those variables were not significant. so the year is not relevant in explaining the dependent variables. for the second objective, to identify potential factors that might explain adjustments’ materiality and diversity, the relationship between each independent variable 45 and both dependent variables was analyzed, firstly using descriptive statistics. as in the previous objective, two ols regressions were then applied, one for materiality and another for diversity. the general model is: 'i i iy x      , wherey is the dependent variable, 'ix is the vector of independent variables,  and the vector are the parameters to be estimated, and i is the error term. in order to introduce qualitative variables in the model, so called ‘dummy variables’ were created (variables that take on values of 1 and 0, 1 meaning something is true). for the binary variables (x1, and x5 to x10) the reference category is 0. for the accounting basis (x2 and x3) the reference category is mixed (both systems)6. 5. findings and discussion to facilitate the discussion, results are presented considering the sequence of the objectives established in the introduction. 5.1. materiality and diversity of ga-na budgetary balance adjustments tables 3 and 4 present descriptive statistics concerning the materiality and diversity of ga-na budgetary balance differences (adjustments). as explained, while materiality is represented by the weight of ga-na budgetary balance differences in the na balance, diversity is represented by the number of adjustment categories. concerning materiality, during the whole period adjustments were on average more than 100% of the na balance, although the values were highly dispersed (standard deviation around 370%), ranging from 0% to 3,115%. the median value for the whole period indicates that 50% of observations show materiality values above 27%, while 5% of observations demonstrate materiality values above 216%. the statistics for the whole period are affected mostly by those of 2007 and 2008, which seem to inflate the average values. there is a clear change in 2010, where materiality’s mean and median values significantly decrease, as well as dispersion, which is considerably reduced. this might relate to the fact that 2010 data are not yet final, so possibly still not including all adjustments. regarding diversity, over the period the average number of adjustments tends to be very high, with a total mean of six categories and without relevant variability across the years. half the observations are equal to, or below this value, while the other half is spread between six and eight categories. the maximum of eight categories empirically shown throughout the period 2007-2010, when considering the adjustment types 6 the multicollinearity problem was checked and since the entire variance infl ation factor (vif) indicator is under 5, it is assured that all independent variables are not highly correlated. the regression model was found to be signifi cant (tested with anova f-test), meaning that at least one partial regression coeffi cient is not zero and so the associated independent variable does explain materiality and diversity. 46 table 3: ga-na adjustment materiality by year (%)7 2007 2008 2009 2010 total mean 124.47 184.38 62.99 33.65 101.37 standard deviation 395.99 592.40 186.50 43.38 368.36 minim um 0.50 1.29 0.02 0.22 0.02 percentile 05 1.09 2.98 0.49 0.66 1.09 percentile 25 16.14 16.02 7.76 3.70 13.01 median 28.62 32.10 22.29 19.21 27.34 percentile 75 66.47 113.82 36.24 41.11 52.97 percentile 95 202.20 352.95 148.92 118.64 216.17 maxim um 2087.84 3115.32 983.99 186.84 3115.32 note: current eu at 27 year source: authors’ findings table 4: ga-na adjustment diversity by year 2007 2008 2009 2010 total mean 5.96 5.85 5.96 6.04 5.95 standard deviation 1.13 1.17 1.13 1.26 1.16 minim um 2 2 2 2 2 percentile 05 4 5 5 4 4 percentile 25 6 5 6 5 6 median 6 6 6 6 6 percentile 75 7 6 6 7 7 percentile 95 7 8 8 8 8 maxim um 8 8 8 8 8 note: current eu at 27 year source: authors’ findings in tables 2a (including sub-categories), reflect most of the diversity of adjustments highlighted in section 3, namely those concerning recognition criteria differences between ga and na, one relevant conceptual difference identified in section 2. there is a minimum of two adjustments (curiously made by one single country – the uk) in the period. to complement the analysis, and referring to the five main categories of adjustment (without considering sub-categories), table 5 presents the results of the regression analysis trying to assess which of those categories contributes most to explaining total adjustment’s (ga-na budgetary differences) materiality. the results show that 98% of the variance of materiality is essentially explained by the weight of only three categories of adjustments, since the other two (x2 and x5) are not statistically significant. while both the weight of adjustments concerning financial transactions included in the working balance and concerning balance of other cg entities are significant at 1% significance level, the weight of accounting basis adjustments is significant at 10% level. all the significant categories present a positive 7 all materiality values have been transformed in positive, using mathematical modulus (absolute value). 47 table 5: adjustment categories and materiality independent variables coefficient std. error standardized coefficient t-statistic constant 7.698 5.831 1.320 x1 absweight financial transactions included in the working balance 1.026 0.016 0.836 62.568 *** x2 absweight non-financial transactions not included in the working balance 0.064 0.293 0.003 0.217 x3 absweight accounting basis adjustm ents 0.214 0.116 0.039 1.847 * x4 absweight balance (net borrowing or net lending) of other cg entities 0.703 0.026 0.488 27.065 *** x5 absweight other adjustm ents -0.150 0.123 -0.019 -1.218 adjusted r-squared 0.982 f statistic (df:5,102) 1,192.53 *** std. error of regres s ion 48.928 notes: dependent variable is the m ateriality of the ga-na budgetary balances adjustm ents (absolute and %). total obs: 108. *** significant at the 1% level; ** significant at the 5% level; * significant at the 10% level. source: authors’ findings relationship with ga-na (total) adjustments’ materiality. therefore, it may be concluded that, for the period 2007-2010, not all adjustments when transforming ga into na data were empirically confirmed as material. focusing on the three statistically significant variables the results (not reported) show that the mean values go above 100% for those more significant ones: for the weight of adjustments of financial transactions included in the working balance (x1) the average reaches almost 159% in 2008, while for the weight of adjustments concerning balance of other cg entities (x4) the average reaches 124% in 2007. for the weight of accounting basis adjustments (x3) the average over the period ranges from 18% in 2009 to 35% in 2007. the dispersion of values is much lower for this variable (x3 – 66%) than for the other two (x1 – 300%; x4 – 256%). for the whole period, while in x1 the values range from 0% to 3,015%, in x4 they range from 0% to 2,657%; the two maximum values being clearly outliers. 5.2. potential factors explaining adjustments’ materiality and diversity tables 6 and 7, in relation to ga-na adjustments’ materiality and diversity, show the descriptive statistics of both qualitative and quantitative variables in the regression analysis, including control variables (population and gdp per capita). throughout the period 2007-2010, cases of a deficit in na balance predominate. materiality’s mean values are much higher in countries and years where the na balance is positive (surplus). however, dispersion around the mean is similar in both cases and very high. regarding diversity, the dispersion around the mean is also similar in cases of both deficit and surplus, but very low. regarding ga accounting basis, cash basis prevails. both materiality and diversity’s mean values are higher in these cases, followed by those of a mixed (cash plus accruals) basis. materiality values are much more scattered when cash basis is used than when accrual or mixed bases are applied. between 2007 and 2010 a negative sign in ga-na budgetary balance difference prevailed. materiality’s mean values are, however, much lower and much less scattered in these cases than otherwise. there are no important differences concerning diversity. 48 table 6: materiality and diversity by qualitative independent variables mean sd median mean sd median deficit 87 46.7 114.1 22.7 6.0 1.2 6.0 surplus 21 328.0 776.5 66.5 5.8 0.7 6.0 accrual 8 25.0 37.9 13.6 3.5 1.6 3.5 cash 77 117.4 432.9 27.3 6.3 0.9 6.0 mixed 19 67.6 94.3 27.7 5.7 0.6 6.0 negative 73 45.2 54.7 27.4 5.9 1.2 6.0 positive 35 218.5 632.3 25.7 6.1 1.0 6.0 no 40 72.2 165.8 22.9 5.9 1.3 6.0 yes 68 118.6 447.1 27.6 6.0 1.1 6.0 no 44 61.9 150.0 31.8 6.1 1.5 6.0 yes 64 128.5 461.8 26.4 5.8 0.8 6.0 deficit 88 91.1 346.9 23.3 5.9 1.2 6.0 surplus 20 146.8 458.9 36.5 6.1 0.9 6.0 no 69 30.9 50.9 18.7 6.0 1.2 6.0 yes 39 226.1 593.7 57.8 5.8 1.0 6.0 no 59 23.7 24.1 18.7 6.1 1.3 6.0 yes 49 194.9 534.3 38.5 5.8 1.0 6.0 total obs: 108 except for accounting basis (cyprus is not available). accounting basis independent variables count materiality diversity surplus na (no/yes) sign of ga-na difference economic growth euro area convergence criteria accomplishment deficit/surplus accomplishment surplus ga (no/yes) source: authors’ findings in the period under analysis, cases of economic growth prevail. on average, materiality, as well as dispersion, is much higher in countries and years of economic growth than otherwise. no relevant differences are found regarding diversity. most countries belong to the euro area. while materiality of ga-na differences is higher among these countries (despite high dispersion levels), diversity tend to be slightly higher in non-euro countries. in the period 2007 to 2010, deficits in ga balance prevail. however, concerning materiality, mean values are higher in countries and years where the ga balance is positive (surplus). diversity also tends to be slightly higher in situations of surplus. concerning the maastricht treaty convergence criteria, most countries do not meet either of them. the same occurs when considering the deficit criteria alone. on average, materiality is much higher in countries and years where the maastricht treaty requirements are achieved, although much more dispersed than otherwise. the opposite is found regarding diversity, but only a slight difference is observed. median values confirm the analysis made using mean values, only for the sign of the na balance (technical-accounting variable), the sign of the ga balance, economic growth, convergence criteria accomplishment and deficit/surplus accomplishment (economic policy variables). table 7: pearson correlation between materiality and diversity and quantitative independent variables independent variables population -0.080 -0.325 *** gdp per capita (m illion euros) 0.188 * -0.137 gdp % change from previous period 0.074 -0.002 *** significant at the 1% level; ** significant at the 5% level; * significant at the 10% level. total obs: 108. materiality diversity source: authors’ findings 49 correlation coefficients show that, in the period 2007-2010, population (as a proxy for each country’s size) does not seem to be relevant in differentiating the materiality of ga-na budgetary balance adjustments, although it is significantly and negatively correlated with diversity (1% significance level), as smaller countries tend to make and report more adjustments. gdp per capita is not significantly correlated with adjustments’ diversity between 2007 and 2010, but it is positively correlated with materiality (10% significance level), meaning that materiality increases slightly for countries and years with higher gdp per capita. the % of change in gdp is correlated with neither adjustments’ materiality nor with their diversity. the above description is complemented by multivariate regression analysis (tables 8 and 9), intended to offer further enlightenment on the possible determinants of adjustments’ materiality and diversity. table 8: determinants of ga-na adjustments’ materiality independent variables coefficient std. error standardized coefficient t-statistic constant -772.547 517.218 -1.494 x1 surplus na (1-yes/0-no) 202.891 113.823 0.210 1.783 * x2 accrual (1-yes/0-no) 180.143 170.786 0.129 1.055 x3 cash (1-yes/0-no) 274.373 118.229 0.322 2.321 ** x4 gdp % change from previous period 0.608 9.653 0.008 0.063 x5 econom ic growth (1-yes/0-no) -18.639 96.809 -0.024 -0.193 x6 euro area (1-yes/0-no) 56.925 83.954 0.075 0.678 x7 surplus ga (1-yes/0-no) 30.057 98.082 0.032 0.306 x8 sign of ga-na difference (1-positive/0-negative) 209.043 82.532 0.258 2.533 ** x9 convergence criteria accom plishm ent (1-yes/0-no) 192.445 148.631 0.247 1.295 x10 deficit/surplus accom plishm ent (1-yes/0-no) -42.951 132.433 -0.057 -0.324 x11 ln(population) 22.083 30.381 0.082 0.727 x12 gdp per capita (m illion euros) 5415.111 3268.444 0.223 1.657 adjusted r-squared 0.139 f statistic (df:12;91) 2.382 ** std. error of regression 348.213 total obs: 104 (cyprus not present). *** significant at the 1% level; ** significant at the 5% level; * significant at the 10% level. notes: dependent variable is the materiality of the ga-na budgetary balances adjustm ents (abs and %). source: authors’ findings while explaining materiality, the variables show a relatively weak explanatory power (in the regression, adjusted r-squared equals 0.139). only three out of the twelve variables in the analysis (including control variables) are statistically significant. the sign of the na budgetary balance and the sign of the ga-na difference (total of adjustments) are statistically significant, at 10% and 5% level respectively. therefore, countries having a surplus in na as well as a positive sign in total adjustments (positive impact) tend to have considerably more materiality than those having a deficit or a negative sign in ga-na difference (on average 203% more and 209% more respectively). 50 table 9: determinants of ga-na adjustments’ diversity independent variables coefficient std. error standardized coefficient t-statistic constant 5.950 1.343 4.429 *** x1 surplus na (1-yes/0-no) -0.153 0.296 -0.051 -0.519 x2 accrual (1-yes/0-no) -2.405 0.444 -0.556 -5.422 *** x3 cas h (1-yes/0-no) 0.550 0.307 0.209 1.792 * x4 gdp % change from previous period 0.001 0.025 0.005 0.042 x5 econom ic growth (1-yes/0-no) 0.195 0.251 0.082 0.775 x6 euro area (1-yes/0-no) -0.308 0.218 -0.132 -1.410 x7 surplus ga (1-yes /0-no) -0.179 0.255 -0.061 -0.702 x8 sign of ga-na difference (1-positive/0-negative) -0.041 0.214 -0.016 -0.190 x9 convergence criteria accom plishm ent (1-yes/0-no) 0.124 0.386 0.051 0.321 x10 deficit/surplus accom plishm ent (1-yes/0-no) -0.448 0.344 -0.194 -1.303 x11 ln(population) -0.006 0.079 -0.008 -0.080 x12 gdp per capita (m illion euros) 8.497 8.489 0.113 1.001 adjusted r-squared 0.389 f statistic (df:12;91) 6.472 *** std. error of regression 0.904 total obs: 104 (cyprus not present). *** significant at the 1% level; ** significant at the 5% level; * significant at the 10% level. notes: dependent variable is the diversity (num ber of adjustm ents). source: authors’ findings the use of cash basis in ga is also significant (at 5% level) to explain adjustments’ materiality. consequently, countries using a cash accounting basis tend to have, on average, 274% more materiality than those using a mixed accounting basis. since accrual basis was not found to be significant, this seems to indicate that adjustments’ materiality in countries/years using a mixed accounting basis is not significantly different from that in countries/years using an accrual basis in ga. the model considered to explain ga-na adjustments’ diversity presents considerable explanatory power, as adjusted r-squared equals 0.389. nevertheless, only two out of the twelve variables considered are statistically significant. these two variables relate to the accounting basis: the use of cash basis (compared to a mixed accounting basis) increases the adjustments’ diversity at 10% significance level (on average, 0.5 more adjustments), while the use of accrual basis (also in relation to a mixed accounting basis) decreases the adjustments’ diversity at 1% significance level (on average, 2.4 fewer adjustments). as mentioned, most ga-na conceptual differences are associated with recognition criteria, in which accounting basis adjustments are the critical issue. so it is expected and confirmed that countries already reporting in an accrual basis in ga make, on average, fewer adjustments into na than those reporting in cash or mixed ga bases. 6. conclusions and recommendations this paper is essentially an exploratory study about the potential factors explaining materiality and diversity of ga-na budgetary balance adjustments, among eu member states. in particular, it had two main objectives. 51 regarding objective 1 (to analyze whether both materiality and diversity of gana budgetary balance adjustments reflect the conceptual differences between the two systems), two research questions were considered: a. do the magnitude and diversity of the ga-na balance differences (adjustments) reflect the conceptual differences between the two systems? b. which category of adjustments accounts more for the magnitude of ga-na budgetary balance adjustments? as for question a) the study confirms that conceptual differences identified in the literature are reflected in the adjustments eu member states make when translating ga data into na. this happens particularly concerning differences related to recognition criteria, since most ga-na adjustments arise due to these differences. nevertheless, in answer to question b), the study also proved empirically that only three main adjustment categories are statistically significant in explaining their materiality: financial transactions included in the ‘working balance’, accounting basis adjustments, and balance (net borrowing or net lending) of other cg entities. while the first two are associated with recognition criteria, the third is linked to both definition and scope of the reporting entity under ga and na, and preparation and disclosure of consolidated financial statements. concerning objective 2 (identifying potential factors that might explain the adjustments’ materiality and diversity or ga-na budgetary balance differences), the research questions were: a. are there issues of economic policy (e.g. economic growth, ga budgetary balance sign, inclusion in the euro-zone and accomplishment of the maastricht treaty criteria) that might explain the materiality and diversity of ga-na budgetary balance adjustments? b. are there technical-accounting issues (e.g. ga budgetary balance accounting basis, sign of na budgetary balance, and sign of the total adjustments) that might explain the magnitude and diversity of ga-na budgetary balance adjustments? as for question a), none of the variables taken as economic policy proxies were found to be statistically relevant in explaining either adjustments’ diversity or their materiality. regarding question b) all technical-accounting variables considered were found to be relevant in explaining materiality, although only the ga balance accounting basis was important in explaining diversity. therefore, the results show that only technical-accounting issues are relevant in explaining ga-na adjustments. these results offer some implications for policy making, namely regarding eu budgetary discipline, where transparency and quality/reliability of gfs are critical. if technical-accounting issues affect the materiality of ga-na budgetary balance adjustments, special attention should be given to the definition of rules and policies for both ga and na systems, as well as to how their data should relate. bearing in mind the main ideas underlining the earnings management approach, eu policy-makers should reduce the possibilities for countries to use some creativity by means of accounting discretion in managing their reported deficits, when managing ga-na 52 budgetary balance adjustments. consequently, a major recommendation to the standard-setting bodies in the eu can be derived from this paper, which is to impose in all eu member states the adoption of accrual accounting in both budgetary and financial accounting systems. furthermore, while presently embarking on a ga european harmonization process, special attention should be given to the adoption of standards such as ipsass, since they allow a great degree of estimations and judgments, again creating room for accounting discretion. so while a harmonized accounting system in ga is urgently required, using an ipsass or epsass approach, this should allow very few options regarding recognition and measurement criteria, in this way avoiding ga-na adjustments and consequently increasing the quality of the information reported in both reporting systems. some possible actions may also include strengthening auditing and control over ga reporting, enhancing the role of supreme auditing institutions and/or external private firms in certifying public sector accounts. in na, policy-makers must consider the possibility of assessing the convergence criteria in reporting for edp purposes on the basis of data in final status, already including all ga-na adjustments to be made. all in all, this paper represents an original contribution to understanding which factors may affect the differences between ga and na budgetary balances, as well as to policy making – it is important to underline that keeping adjustments’ materiality (amount) and diversity as low as possible is relevant to assure the reliability of aggregates for eu convergence assessment. another central contribution is its originality in terms of the methodological perspective, since this research is the first to consider a quantitative approach to the topic of ga-na adjustments. nevertheless, some limitations can be pointed out. the main limitation is the use of independent explanatory variables never tested before and without literature support, since as far as we are aware, no research has been developed on this subject. if this is indeed a limitation, it is also an opportunity to make some contribution to theory, and to continue exploring potential determinants of ga-na adjustments’ materiality and diversity. acknowledgment: this paper was presented at the xvii annual conference of the irspm, “public sector responses to global crisis: new challenges for politics and 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(eds.), contabilidade e controlo de gestão. teoria, metodologia e prática (accounting and management control. theory, methodology and practice), lisboa: escolar editora, 2009. 29. petersen, j.e., ‘changing red to black: deficit closing alchemy’, 2003, national tax journal, vol. 56, no. 3, pp. 567-577. 30. stalebrink, o.j., ‘an investigation of discretionary accruals and surplus-deficit management: evidence from swedish municipalities’, 2007, financial accountability and management, vol. 23, no. 4, pp. 441-458. 31. sterck, m., ‘the impact of performance budgeting on the role of the legislature: a four-country study’, 2007, international review of administrative sciences, vol. 73, no. 2, pp. 189-203. 97 abstract the paper deals with the system of support for projects co-fi nanced through european union funds (structural funds and the cohesion fund) which were applied in the czech republic during the programming period 2007-2013, both from the point of view of the process of applying for such support and from the point of view of project implementation. the authors aimed to analyze and evaluate the system from the point of view of the project organizers, identify the problem areas in this system, and propose measures to improve it, which could be usable for specifi cation of the conditions for the programming period 2014-2020. the paper fi rst characterizes the system of support for projects co-fi nanced by eu funds applied in the czech republic during the programming period 2007-2013. next, it discusses the outcomes of a questionnaire survey focused on the evaluation of project organizers’ satisfaction with the selected areas of applying for support and project implementation, and on the proposal of possible measures to improve both the system of making an application and project implementation. finally, the paper specifi es the measures to be taken to eliminate the problem areas in the system of support for projects co-fi nanced by eu funds. keywords: project, european union funds, system of support, project implementation rules. the system of support for projects co-financed by eu funds in the czech republic jana kostalova libena tetrevova michal patak jana kostalova ph.d. candidate, department of economy and management of chemical and food industry, faculty of chemical technology, university of pardubice, pardubice, czech republic tel.: 0042-466-037.789 e-mail: jana.kostalova@upce.cz libena tetrevova associate professor, department of economy and management of chemical and food industry, faculty of chemical technology, university of pardubice, pardubice, czech republic tel.: 0042-466-036.661 e-mail: libena.tetrevova@upce.cz michal patak assistant professor, department of economy and management of chemical and food industry, faculty of chemical technology, university of pardubice, pardubice, czech republic tel.: 0042-466-036.299 e-mail: michal.patak@upce.cz transylvanian review of administrative sciences, no. 45 e/2015, pp. 97-115 98 1. introduction the european union (eu) fi nances the fulfi llment of its agricultural, fi shing, and regional policy through investment and structural funds. investment funds include the european agricultural fund for rural development (earfd) and the european maritime & fisheries fund (emff), which are purposefully intended to support agriculture and commercial fi shing. structural funds are comprised of the european regional development fund (erdf) and the european social fund (esf), and are intended to support disadvantaged regions. the erdf helps develop the economy in the form of infrastructural projects with a very wide focus, while esf is intended to support activities in the area of employment and the development of human resources. apart from these funds, the eu also has the cohesion fund (cf), which is intended to support the development of countries rather than individual regions (european commission, 2014). the paper focuses on the system of fi nancing projects in the czech republic (cz) within the context of eu regional policy application, i.e. fi nancing from structural funds and the cohesion fund. currently, the implementation of projects with the support of structural funds and the cohesion fund (together they are called eu funds) represents an important opportunity for all economic entities in the cz, as well as in other eu countries. during the programming period (pp) 2007-2013, €26.69 billion were allocated to the cz on the basis of the national strategic reference framework (nsrf) approved by the european commission (ministry of regional development, 2007a). the nsrf specifi ed the basic strategic targets and 22 operational programs (ops) through which these targets were to be met (ministry of regional development, 2007d). the priority axes and support areas were specifi ed within each op, and the applicants were approached through individual calls to prepare data and draw up applications for funds for particular projects. the ops within which the applicants could obtain support in the cz during the pp 2007-2013 can be divided into four basic groups: regional ops (central bohemia, central moravia, moravia-silesia, north-east, north-west, south-east, south-west), thematic ops (transport, environment, enterprise and innovations, research and development for innovations, human resources and employment, education for competitiveness, integrated operational programme, technical assistance), ops intended for the capital city of prague (prague – competitiveness, prague – adaptability), and ops relating to european territorial cooperation (cross-border cooperation czech republic-bavaria, cross-border cooperation czech republic-poland, cross-border cooperation czech republic-austria, cross-border cooperation czech republic-saxony, cross-border cooperation czech republic-slovakia) (ministry of regional development, 2007c). the system of support for projects co-fi nanced through eu funds was designed in cz to arrange for the process of applying for support and for project implementation within the ops. to be able to assess the quality of this system, it is necessary to ob99 tain feedback, particularly from the project organizers, based on their experience with submitt ing applications and solving practical problems during project implementation. in this way, it is possible to identify potential problem areas in this system and propose measures leading to their elimination. 2. research objectives and limiting factors the research aims are: to analyze and evaluate the system of support for projects co-fi nanced through eu funds (from the point of view of the organizers) applied in cz during the pp 2007-2013, both from the point of view of the process of making an application and from the point of view of project implementation; and, on the basis of the performed evaluation, to identify the problem areas in this system. the next objective is to propose measures to be taken to improve the system of support in the area of making an application for support and in the area of the implementation of projects co-fi nanced through eu funds in the cz, which would be usable for the specifi cation of the conditions for the pp 2014-2020, and to verify their usability from the point of view of the project organizers. it is possible to see a limiting factor in the fact that the assessed pp has not yet been completely fi nalized. projects falling within the pp 2007-2013 can be implemented until the end of june 2015; the subsequent fi nancial sett lement with respect to eu funds should be performed by the end of 2015. however, the pp 2014-2020 is already being intensively prepared, and thus it is desirable to use feedback from the previous pp, even though such feedback will only be fi nalized after the new pp has already begun. 3. literature review and hypotheses the processes of fi ling applications and subsequent project implementation are specifi ed by rules defi ned by the eu and the institutions authorized to provide funds at the national level. in the cz, the general rules for drawing funds are defi ned by the ministry of regional development (ministry of regional development, 2007b). the detailed implementing decrees – the calls, methodology, handbooks, newslett ers, etc., which the applicants and subsequently project organizers have to comply with – are specifi ed by the ministries responsible for individual ops and, for the regional ops on the level of regions, by the authorities of regional councils. for orientation in particular problem areas, it is also possible to draw on other available sources, e.g. marek and kantor (2009), mikusova merickova and stejskal (2014), tauer, zemankova and subrtova (2009), which assist in the phase of writing an application for a contribution or in project implementation. another document specifying the conditions for project implementation is a so-called decision on the provision of a grant, or an agreement on fi nancing, which specifi es the provision of the grant and defi nes the conditions of the provision and the grant recipient’s obligations. the applicant and subsequently the project organizer also have to comply with the general legislative rules and also have to take account of any internal rules and methodologies the respective organization is governed by. generally, the processes of drawing up applications and project im100 plementation are also aff ected by the level of awareness of the project management (ernst  young, 2013; kratky et al., 2012). to obtain support from eu funds, it is necessary to take several steps (ministry of regional development, 2007b). first, it is necessary to become acquainted with all the above documents. next, it is necessary to create a project plan; to determine a suitable op, the priority axis, and the area of support; and to draw up a project support application, including the required annexes in accordance with the currently eff ective call. subsequently, the application is evaluated by the provider and the support is either granted or refused; if granted, the project is implemented. project implementation itself is then aff ected by the conditions set by the given op. the project implementation period is based on the applicant’s schedule and can last several months or several years. projects implemented in the fi rst part of the pp (2007-2010) can take a maximum of 3 years to complete (the n+3 rule). projects implemented in the second part of the pp (2011-2013) must take no longer than 2 years (the n+2 rule) in order for all projects to be completed by 2015 (ministry of regional development, 2009b). project implementation runs in phases, in so-called monitoring periods, during which the project objectives approved in the decision to provide the grant are gradually fulfi lled. at the end of each monitoring period, the recipient draws up a monitoring report giving detailed information about the course of the respective monitoring period, including the achieved values, the socalled monitoring indicators, which refl ect the quantitative fulfi llment of the project outputs. the monitoring report is sent to the support provider for approval together with a potential application for the partial release of funds to reimburse fi nancial costs (ministry of regional development, 2009a). the process of approving a monitoring report runs parallel with the next monitoring period. at the end of the project implementation period, the fi nal monitoring report is submitt ed and, upon its approval, the project is accomplished and its accounts are sett led and all the remaining justifi ed expenses are reimbursed. for some projects, depending on their focus, the following period is a period of so-called sustainability, within which the support recipient has to ensure the application of usable project outputs (ministry of regional development, 2009c). within the individual monitoring periods, the recipient is obliged to proceed in compliance with strictly set rules and deadlines. for instance, the running monitoring reports have to be sent within 1 month from the end of the monitoring period, and the fi nal monitoring report has to be sent within 2 months from the end of the project (ministry of education, youth and sports, 2014; ministry of labour and social aff airs, 2014, ministry of environment, 2014). on the other hand, there are no strict deadlines within which the support providers’ representatives are obliged to evaluate the support application, to approve the monitoring report or the fi nal monitoring report, or to perform the fi nal rendering of accounts. there are very detailed rules for project fi nancial management, which include the conditions for the qualifi cation of individual types of costs, the obligatory processes 101 for documenting costs and their monitoring, the conditions for changing the budget, and the rules for selecting outside suppliers, e.g. in the guidebooks of ministry of education, youth and sports, ministry of environment and ministry of labour and social aff airs. the fi nancial management rules also include rules for the reimbursement of project support and for fi nancial sett lement of the support (ministry of education, youth and sports, 2014; ministry of labour and social aff airs, 2014). the discussion of the problems concerning the rules specifying the conditions for drawing funds from eu funds and the evaluation of this system runs both at the national level, e.g. jac (2008, p. 38), brown and zimmermannova (2012), and at the international level, e.g. katsarova (2013), both from the point of view of the project organizers, e.g. lnenicka (2013) and venclik (2013), and from the point of view of the providers (european commission, 2013; ministry of regional development, 2012). as for the national level, the abovementioned authors cite the existence of too many ops, the high bureaucratic load, insuffi cient promotion of the opportunities available, insuffi cient communication with the applicants and the project organizers, an insuffi ciently transparent evaluation process bordering on corruption and deceptive practices, a project monitoring system with low information ability, and also insuffi cient administrative capacity on the side of the state administration (brown and zimmermannova, 2012, p. 12). at the international level, the authors discuss, for example, insuffi cient coordination among the involved institutions, insuffi ciently independent fi nancial audits (bachtler and gorzelak, 2007, pp. 319-320), the impact of the economic crisis on the ability of national budgets to co-fi nance, the need for the simplifi cation and rationalization of the application and implementation processes at the national and regional levels (european commission, 2013, p. 3), and the absorption capacity of the new member states of central and east europe (katsarova, 2013, pp. 4-6; hapenciuc, moroşan and arionesei gaube, 2013, p. 271). support provider’s representatives at the national level are aware of the importance of feedback for the identifi cation of potential mistakes in the system of support for projects co-fi nanced through eu funds. thus, they performed, just after the fi rst half of the 2007-2013 pp, a survey among project organizers. this research was conducted by the ministry of regional development (2012) in june and july 2011, and was aimed at the current needs and the experience of both the applicants and recipients, and of the implementation structure entities. the research involved 3,122 respondents. this research resulted in conclusions regarding the evaluation of the system of providing grants from eu funds. the respondents saw the main problems of the system in the fragmentation and disunity of the information sources, in the unsuitability of the calls, and in the frequent changes in the information relating to the process of making applications. another problem was seen in the system of evaluating applications, where the applicants criticized the variable levels of expertise of the project evaluators, the limited transparency of the process of evaluating applications, and the very long periods of project evaluation. the organizers also faced problems due to the failure to meet due dates for refunding the costs. 102 the research of the ministry of regional development (2012) and the discussion at the national level (brown and zimmermannova, 2012) imply that certain problems of the given system were identifi ed by the project organizers as early as in the course of the fi rst half of the pp. on the basis of the outcomes of this research and the personal experience with the implementation of projects co-fi nanced through eu funds, the following hypotheses were tested to assess the conditions of the set system of support for projects co-fi nanced by eu funds in the cz from the point of view of the project organizers. h1: organizers of projects co-fi nanced through eu funds in the cz are, within the system of support for these projects, the least satisfi ed with the quality of information sources. h2: organizers of projects co-fi nanced through eu funds in the cz see as the most benefi cial measure for improving the system of making an application the unifi cation of both basic and detailed rules across ops. h3: organizers of projects co-fi nanced through eu funds in the cz see as the most benefi cial measure for improving project implementation system the decrease in the administrative demands of the projects. 4. data and methodology to obtain the project organizers’ viewpoint, we prepared and performed a research in the form of a survey, in which the respondents were asked about their experience with the process of making the applications for support and with the implementation of the approved projects, particularly aiming to identify the problem and problem-free areas of implementation with respect to these projects. the main part of the questionnaire focused on evaluating the system of making an application and on the implementation of the approved projects. at the same time, the respondents were off ered possible measures designed to improve the system of preparing projects, making applications, and implementing projects. simultaneously, they had the chance to add their own opinions concerning the problems in question. the questionnaire also included an identifi cation part, where the respondents were asked to identify their organization, the project, and the sector of their organization, to describe the relationship of the respondent to the project, and to identify the op through which the project was fi nanced. the respondents were chosen from the database of projects undertaken within the pp 20072013, published as of 6 february 2013 by the ministry of regional development (2013), which included, to date, 40,908 approved projects. using the random number generator in microsoft offi ce excel, each project was assigned a random number, and the data was then put in number order, from which the fi rst 500 projects were selected (1.2% of the total number of projects). all projects have, on the basis of the rules governing the provision of eu-funded support, the obligation to present themselves to the public through, for example, the internet; some ops have a database of all the implemented projects, including the contact information of the project 103 organizers. these sources were used to obtain the contact information of the organizers of individual projects, or of any other persons specifi ed as project contact persons. the questionnaire was published on the internet using the lime survey application from april 10 to april 30, 2013, and representatives of all the randomly selected projects were approached by email in two waves. 171 completed questionnaires were returned, i.e. the rate of return was 34.20%, and, among these, not all respondents answered all questions. with respect to the identifi cation of respondents and projects, a total number of 152 respondents identifi ed 88 projects (57.89%) from the public sector, 27 projects (17.76%) from the nonprofi t sector, and 37 projects (24.34%) from the private sector. the survey involved 106 project managers or coordinators (80.92% of the respondents), 13 fi nance managers (9.92% of the respondents), and 12 persons whose positions within the project were of another character (9.16% of the respondents). the obtained data were subsequently processed using ibm spss statistics software and analyzed using the tools of exploration analysis. the validity of the hypotheses was verifi ed at a signifi cance level of 5% by means of friedman and wilcoxon signed ranks tests. 5. making an application, project implementation, and their rules from the project organizers’ perspective in the questionnaire, the respondents were asked to evaluate the system of support for projects co-fi nanced through eu funds and to assess the proposed measures for improving this system, or to extend the proposed measures with their own ideas. 5.1. evaluation of satisfaction with selected areas of making an application and project implementation the questions aimed to evaluate the level of satisfaction with the system of support for projects co-fi nanced through the eu funds and off ered the organizers the possibility of commenting on the processes of making an application and project implementation in 10 defi ned areas. the perceived satisfaction level was evaluated by the respondents using a fi ve-point scale (1 = satisfi ed; 5 = dissatisfi ed). table 1 shows the evaluation of the respondents’ satisfaction with the system in all 10 identifi ed areas (id). in most of the identifi ed areas, the median value of the satisfaction was in the middle of the applied scale (id 2, 3, 6, 8, 9, and 10). in the other four identifi ed areas of the system (id 1, 4, 5, 7), the respondents expressed a higher rate of satisfaction. the diff erent att itudes of the respondents in the evaluation of their satisfaction with particular areas of the system were verifi ed through the friedman test (at a signifi cance level of 0.05), and it is possible to consider them as statistically signifi cant. for the purpose of discovering particular pairs of system areas that were evaluated diff erently, the data were tested using matched-pairs post-hoc tests (the wilcoxon signed-rank test). for the results of the post-hoc tests, see table 2. 104 table 1: evaluation of the organizers’ satisfaction with the selected areas of making an application and project implementation id identifi ed area m ed ia n m od e frequencies point scale 1 2 3 4 5 1 quality of information sources 2 2 freq. 13 80 53 20 5 % 7.60% 46.78% 30.99% 11.70% 2.92% 2 scope of requirements concerning the processing of project applications and annexes 3 3 freq. 9 34 77 40 9 % 5.33% 20.12% 45.56% 23.67% 5.33% 3 system of monitoring reports with respect to its administrative load 3 3 freq. 13 45 50 46 15 % 7.69% 26.63% 29.59% 27.22% 8.88% 4 system of monitoring reports with respect to the monitoring indicators 2 2 freq. 18 70 51 18 12 % 10.65% 41.42% 30.18% 10.65% 7.10% 5 recommended minimum and maximum project duration 2 2 freq. 45 82 33 7 2 % 26.63% 48.52% 19.53% 4.14% 1.18% 6 deadlines for evaluation of project applications 3 4 freq. 12 41 47 56 13 % 7.10% 24.26% 27.81% 33.14% 7.69% 7 deadlines for processing monitoring reports 2 2 freq. 30 80 49 7 3 % 17.75% 47.34% 28.99% 4.14% 1.78% 8 deadlines for the evaluation of monitoring reports 3 3 freq. 15 38 54 43 19 % 8.88% 22.49% 31.95% 25.44% 11.24% 9 deadlines for fi nal project evaluation 3 3 freq. 14 48 66 30 11 % 8.28% 28.40% 39.05% 17.75% 6.51% 10 project fi nancial management rules 3 3 freq. 13 46 68 35 7 % 7.69% 27.22% 40.24% 20.71% 4.14% source: own processing on the basis of the respondents’ answers table 2: wilcoxon signed ranks test results tested paira z asymp. sig. (2-tailed) tested paira z asymp. sig. (2-tailed) tested paira z asymp. sig. (2-tailed) 1 2 -5.604b .000 2 9 -1.554c .120 5 6 -8.348b .000 1 3 -4.802b .000 2 10 -2.176c .030 5 7 -2.482b .013 1 4 -.703b .482 3 4 -4.879c .000 5 8 -8.103b .000 1 5 -5.635c .000 3 5 -7.986c .000 5 9 -7.354b .000 1 6 -5.144b .000 3 6 -.614b .540 5 10 -7.562b .000 1 7 -3.655c .000 3 7 -8.057c .000 6 7 -7.613c .000 1 8 -4.790b .000 3 8 -.622b .534 6 8 -.190c .849 1 9 -2.939b .003 3 9 -1.847c .065 6 9 -2.822c .005 1 10 -3.962b .000 3 10 -1.933c .053 6 10 -2.314c .021 2 3 -.426c .670 4 5 -5.949c .000 7 8 -7.935b .000 2 4 -5.077c .000 4 6 -4.361b .000 7 9 -6.962b .000 2 5 -8.593c .000 4 7 -4.342c .000 7 10 -6.451b .000 2 6 -.912b .362 4 8 -4.448b .000 8 9 -3.165c .002 2 7 -7.867c .000 4 9 -2.321b .020 8 10 -2.299c .021 2 8 -.578b .563 4 10 -3.202b .001 10 9 -.018b .985 note: a post-hoc testing based on wilcoxon signed ranks test, b based on negative ranks, c based on positive ranks source: own processing on the basis of the respondents’ answers 105 table 2 implies that the respondents were least satisfi ed in the following areas: the scope of requirements concerning the processing of project applications and annexes, the system of monitoring reports with respect to its administrative load, the deadlines for evaluation of project applications, and the deadlines for evaluation of monitoring reports (id 2, 3, 6 and 8). the respondents were most satisfi ed with the following areas: the recommended minimum and maximum project duration and the deadlines for processing monitoring reports (id 5 and 7). on the basis of this fact, it is possible to disprove hypothesis h1. the assessment of the organizers’ satisfaction with the selected areas of submitt ing applications and project implementation was also analyzed from the point of view of the respondents’ affi liation with individual sectors (private, nonprofi t, public). table 3 shows the outcomes of the median test. table 3: median test results id 1 2 3 4 5 6 7 8 9 10 median 2 3 3 2 2 3 2 3 3 3 chi-square .999 .241 .454 2.977 .306 1.820 .139 1.035 1.386 6.273 df 2 2 2 2 2 2 2 2 2 2 asymp. sig. .607 .887 .797 .226 .858 .403 .933 .596 .500 .043 source: own processing on the basis of the respondents’ answers table 3 shows that it was not possible to demonstrate statistically signifi cant differences between individual sectors, and, thus, it is possible to consider the respondents’ satisfaction with the selected areas of submitt ing applications and project implementation as independent of the sector the respondent comes from. 5.2. measures for improving the system of fi ling applications and project implementation the respondents were also off ered proposals on how to improve the system of fi ling in applications. as for the proposed measures, they could choose from more options and also add their own comments or propose diff erent measures. figure 1 shows the preferences for individual proposed measures. maximum unifi cation of basic and detailed rules across ops was preferred by the largest number of respondents (108 respondents, or 61.40%), which proves hypothesis h2. a signifi cant proportion of the respondents preferred the measures specifying quicker and more detailed feedback when evaluating a project (88 respondents, or 51.46%) and the presentation of unambiguous and defi nite evaluation criteria (81 respondents, or 47.37%). by contrast, only 21 respondents (12.28%) preferred the introduction of synchronization in the schedule of calls. nevertheless, one of the comments on this question recommended the publishing of a long-term plan of calls across all ops in such a way that applicants can bett er schedule the preparation of applications. the question regarding the measures to improve the system of fi ling applications was also analyzed from the point of view of the respondents’ affi liations with indi106 vidual sectors (private, nonprofi t, public). for the preferences of individual measures with respect to the respondent’s sector, see figure 2. figure 2: measures for improving the system of fi ling in applications – differentiation by sector source: own processing based on the respondents’ answers figure 1: measures for improving the system of fi ling in applications source: own processing based on the respondents’ answers 107 with respect to possible measures to improve the system of fi ling applications, respondents from individual sectors displayed diff erent att itudes. respondents from the public sector preferred the measure proposing maximum unifi cation of the basic and detailed rules across ops. respondents from the private and non-profi t sectors preferred quicker and more detailed feedback when evaluating a project. there was a signifi cantly diff erent view regarding the measure proposing the possibility of fi ling an appeal and establishing an independent review, which was substantially more preferred by respondents from the nonprofi t sector. to this question, the respondents had the possibility of suggesting more measures to improve the system of fi ling project applications. most proposals suggested a simplifi cation and bett er arrangement of the rules in order to ensure a clear and unifi ed structure with respect to making applications that focused more on project outputs and less on formal details. the respondents also recommended that applications and signatures should be acceptable in electronic form. another recommended measure was to decrease the number of ops. the respondents also recommended increasing the number of evaluators and choosing experts in the given fi eld for this activity. the respondents also proposed ideas that could lead to improvements in the system of project implementation. they could choose from the already proposed measures, adding their own comments, or propose their own measures. figure 3 shows the respondents’ standpoints on individual proposed measures. figure 3: measures for improving the project implementation system source: own processing based on the respondents’ answers most respondents (132, i.e. 77.65%) were in favor of simplifying the project implementation rules, which disproved hypothesis h3. nevertheless, the administrative load and instability caused considerable problems to organizers, as 121 respondents 108 (i.e. 71.18%) preferred measures to decrease administrative requirements and to stabilize the rules during the pp. supplementing the project implementation system with the possibility of fi ling an appeal and requesting an independent review was the least preferred measure (46 respondents, i.e. 27.06%). the issue regarding measures to improve the system of project implementation was also analyzed from the point of view of the respondents’ affi liations with individual sectors (private, nonprofi t, public). for the preferences of individual measures with respect to the respondent’s sector, see figure 4. figure 4: measures for improving the project implementation system – differentiation by sector source: own processing based on the respondents’ answers with respect to possible measures to improve the system of project implementation, respondents from individual sectors displayed diff erent att itudes. respondents from the private and public sectors preferred the measure proposing the simplifi cation of project implementation rules. respondents from the nonprofi t sector mostly preferred a decrease in project administrative requirements. they also preferred the measure proposing quicker and more detailed feedback from all project evaluation procedures more than respondents from the other sectors, which was apparently related to complications resulting from the obligation to fund projects from the respondents’ own sources before fi nal accounts were sett led. in their comments, the respondents proposed more measures to improve the project implementation system. in most cases, they required the simplifi cation of the system of tendering, which, in the respondents’ opinion, complicated project implementation. the other proposed measures concerned the work of the staff on the side of the support providers. they emphasized the need to enhance the competency of workers on the side of the support providers as well as the eff ectiveness of project audits. the respondents also suggested greater utilization of the feedback obtained from the 109 project organizers. another proposal was for more frequent training of project organizers, not only at the beginning of the project, but also during its implementation, focusing on examples of both good and bad practices. the comments also included recommendations concerning the validity of the rules; the proposals recommended limiting the application of retroactive procedures in which an accomplished project was evaluated on the basis of newly established rules or required to apply a new rule retroactively. 5.3. the respondents’ overall evaluation and assessment of the system of support for projects co-fi nanced by eu funds in the evaluation of their satisfaction with particular areas and in the overall evaluation of the whole system at the end of the questionnaire, the respondents had the chance to comment on the project support system and mention any other potential issues and problems relating to the system of support for projects co-fi nanced through eu funds. the respondents made overall comments on the following areas and mentioned particular problems within them: – administrative demands (creation of duplicate documents, both in electronic and paper form; extensive annexes and in many cases not related to the application; growth of administrative requirements over the course of the pp; more extensive requirements concerning the documentation of projects with a smaller budget than those concerning the documentation of projects with a bigger budget; problematic and administratively demanding implementation of changes to a project, or the impossibility of making such changes; the too detailed and too formal design of working reports substantiating the work done; problems with completing working reports with the correct formulations of activities without being in contravention of the rules of dividing costs into direct and indirect ones; obligatory project promotion, which is too robust and expensive); – methodological documents and handbooks (methodological texts, handbooks and other documents that are too extensive, complex, non-uniform, and poorly arranged; frequent issues with new specifying rules and new versions of templates for monitoring projects; rules that are too strict and too binding; the obligation to comply with diff erent wordings of handbooks for projects from one op, but initiated in diff erent periods within the pp; the impossibility of being knowledgeable about all potential problems without the help of specialists); – evaluation of applications for project support (low transparency of the process of evaluating applications; diverse expertise of the evaluators; long delays in receiving feedback from the evaluation of applications); – competency of workers on the side of the support providers and communication with project organizers (insuffi cient knowledge and experience of workers on the side of the support providers, particularly in the area of project management; diverse approaches to solving the same problem by diff erent workers on the side 110 of the support providers; unwillingness to accept responsibility for answers to organizers’ questions; formal and arrogant approach of support providers’ workers; low level of support from support providers during implementation, and an absence of cooperation with organizers, building a rather antagonistic relationship; formal communication and answers to particular questions in the form of quotations from handbooks only; a large turnover of support providers’ staff resulting in regular changes of contact persons in the communication between organizers and support providers; failure to inform organizers about changes of contact persons on the side of the support providers); – procedures in monitoring project implementation and conducting audits (extensive and gradually increasing requirements concerning the scope of monitoring reports and their annexes; diverse requirements concerning the scope of monitoring reports in diff erent op; long periods waiting for feedback with respect to the assessment of monitoring reports and audits; absence of binding deadlines for support providers to hand over feedback, unlike the binding character and strict enforcement of deadlines on the side of project organizers; sending comments on monitoring reports in a multi-round system, where more and more new comments, or comments relating to another project, are added; the low information value of the monitoring indicators, which insuffi ciently characterize the progress of the project; the complex structure of the monitoring indicators and unclear methodology concerning their calculation; the complex controlling mechanism involving a number of entities, whose mutual coordination is insuffi cient; the non-uniformity of procedures in the performance of project audits; a formal audit prevailing over the audit of the material aspects of projects; a restrictive approach which off ers litt le constructive help in terms of the principle of prevention); – conditions of conducting tendering procedures (problematic and administratively demanding legislative regulation of tendering procedures; complications in the form of time delays and threats to the fi nancing of projects in the case of no tenders being received, only one proposal being received, or the fi ling of a motion for a review of the contract owner’s practices by the offi ce for the protection of competition; complications resulting from procurement outside of the period during which the item is needed, but in the period when it is possible to arrange administration of a tendering process; complications resulting from the obligation to unite similar purchases across the organizer’s organization, which usually prolongs the process of procurement; excessive emphasis on the assessment of proposals from the point of view of the price, which subsequently leads to the delivery of goods and services of lower quality); and – project fi nancial management (complicated and administratively demanding fi nancial management of projects, including the duplicate monitoring of some data; more detailed and stricter rules and methodologies than those required by the legislation in this area, in some cases in contradiction to the legislation; lack of practical instructions concerning the fi nancial management of projects; too high limits 111 for budgets within the calls, leading to a useless increase in costs due to observance of the limit; too detailed budgeting at the time of making an application regardless of the potential specifi cations during implementation; complicated system of altering budgets; because of the long periods required for the assessment of monitoring and fi nal reports, it is necessary to fi nance projects temporarily from one’s own resources or other sources; discrepancies between costs already approved in a particular monitoring report and the same costs approved retrospectively in a later controlling step or monitoring report, or at the end of the project; strict and complex sanctioning of even small administrative mistakes). in general, the respondents evaluated the support providers’ approach as inhibiting or preventing an active approach on the part of the applicants and organizers to the projects and, on the other hand, in spite of all the detailed and binding rules, leaving space for the abuse of fi nancial sources. however, the comments also suggested that the situation improved over the course of the pp. 6. proposed measures in view of the large number of problem areas, it was necessary to propose measures that would eliminate, at least partially, the above problems. for the next pp, the following changes to the rules governing the provision of support for projects co-fi nanced through eu funds are recommended: – to decrease the number of ops and standardize information sources, rules, and procedures within them; – to synchronize individual methodologies with the valid legislation; – to decrease administrative demands in the area of project documentation, both at the stage of drawing up applications, and at the stage of reporting on projects, both throughout the project and at the end; – to use to the maximum extent electronic tools for communication and for submitting applications and related documentation; – to apply pressure to observe the triple constraint of projects (in the pp 2007-2013, projects were defi ned in terms of the substance and quality of their outputs, their proposed time schedules, and their proposed budgets; however, there was no pressure to achieve the eff ective combination of these factors.); – to create a transparent and unambiguous system for evaluating applications for support, providing a maximum amount of available information, extensive feedback, and the possibility of independent assessment; – to evaluate projects within all phases of the process of support from the point of view of eff ectiveness, economy, and effi ciency, i.e. to use fi nancial assessments of projects as well as social and economic assessments; – to evaluate fi nished projects by placing a greater emphasis on qualitative outputs, rather than on quantitative outputs; 112 – to extend the minimum and maximum limits for project budgets to enable smaller entities to undertake projects with smaller budgets and, on the other hand, to enable the initiation of more complex projects covering several areas of support; – to introduce the possibility of using project incomes to completely or partially reimburse the provided funds in order to increase the possibility of obtaining future funding repeatedly; – to stabilize working teams on the side of the support providers and to work towards increasing the qualifi cations and skills of these workers; – to create conditions for partnership, based on mutual confi dence, between representatives of the support provider and the applicants or project organizers; and – to use the principle of prevention to a larger extent. this research addressed only briefl y the problems connected with the fi nal evaluation of projects. this makes way for further research in the form of a detailed survey of organizers of fi nished projects. 7. conclusion the performed research implies that the system of support for projects co-fi nanced by eu funds applied in the cz within the pp 2007-2013 was, from the point of view of the organizers of these projects, connected with a number of problems. according to the project organizers, the areas causing the largest problems within the phase of drawing up an application for project support and during the project implementation phase include: the scope of requirements concerning the processing of project applications and annexes, the system of monitoring reports with respect to its administrative load, the deadlines for evaluation of project applications, and the deadlines for evaluation of monitoring reports. thus, hypothesis h1 was proven to be false. as for the proposed measures to improve the system of fi ling in support applications, the project organizers would most welcome unifi cation of the basic and detailed rules across ops, quicker and more detailed feedback when evaluating a project, and the presentation of unambiguous and defi nite evaluating criteria. thus, hypothesis h2 was proven to be true. in the case of the system of project implementation, the organizers would most appreciate the simplifi cation of project implementation rules and their stabilization within the pp. thus, hypothesis h3 was proven to be false. overall, during the pp 2007-2013, the project support system improved as the conditions gradually stabilized (the frequency of changes in the rules decreased). on the other hand, more and more new methodologies and rules tightening the project implementation process and increasing the range of documents required for monitoring reports were introduced. in view of the number of problem areas specifi ed in the paper, it is possible to state that the system applied in the given pp did not lead to problem-free project implementation and decreased the eff ectiveness of the utilization of allocated funds. 113 in general, it is necessary to make greater use of feedback received from project applicants and organizers and to fi nd inspiration in the rules of other public support programs; in addition, foreign experience should also be taken into consideration. for these reasons, the system of support for the following pp should be modifi ed according to the measures proposed in the paper. references: 1. bachtler, j. and gorzelak, g., ‘reforming eu cohesion policy. a reappraisal of the performance of the structural funds’, 2007, 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p://www.strukturalni-fondy.cz/cs/infor mace-a-dokumenty/glosar/m/monitorovaci-zprava, accessed on april 15, 2014. 21. ministry of regional development, mrd cz, ‘programmes 2007-2013’, 2007c, [online] available at htt p://www.strukturalni-fondy.cz/en/fondy-eu/programy-2007-2013, accessed on march 20, 2014. 22. ministry of regional development, mrd cz, ‘the national strategic reference framework’, 2007d, [online] available at htt p://www.strukturalni-fondy.cz/getmedia/ d477657e-61de-4e5a-98cc-e9afeb07ec62/nsrf_en_170707_bez_zmen_db_fi n-tabulka. pdf, accessed on march 20, 2014. 23. ministry of regional development, mrd cz, ‘udržitelnost projektu’, [project sustainability], 2009c, [online] available at htt p://www.strukturalni-fondy.cz/cs/infor mace-a-dokumenty/glosar/u/udrzitelnost-projektu, accessed on april 15, 2014. 24. ministry of regional development, mrd cz, ‘zjednodušení procesů při čerpání evropských prostředků v období 2014+’, [simplifi cation of processes within drawing eu115 ropean funds in the period 2014+], 2012, [online] available at htt p://www.strukturalni-fondy.cz/cs/fondy-eu/narodni-organ-pro-koordinaci/novinky/zjednoduseni-pro cesu-pri-cerpani-evropskych-prostr, accessed on february 13, 2014. 25. tauer, v., zemankova, h. and subrtova, j., ‘získejte dotace z fondů eu’, [get grants from the eu funds], brno: computer press, 2009. 26. venclik, m., ‘the basic problems of drawing funds and project management in the programming period 2006-2013 in the czech republic’, (in czech), in zdar nad sazavou: quo vadis pm 2013, 23-24 october 2013, spolecnost pro projektove rizeni, 2013, [online] available at htt p://quovadispm.cspr.cz/2013/program, accessed on february 10, 2014. 91 abstract the paper presents the results of an international comparative survey of stakeholders from four european countries (the czech republic, germany, poland and romania). the aim was to identify and classify the ‘success factors’ of brownfields regeneration and to detect significant convergences and divergences concerning the drivers and barriers of regeneration processes in different geographical and institutional contexts. the existence of ecological burden or site contamination, overall regeneration costs and clarified ownership relations are considered the most important factors of regeneration internationally. especially in romania but also in poland, the factors at national level (legislation, incentives, and foreign direct investments) are perceived to be more influential than in the czech republic and germany, where a stronger emphasis is put on the location factors (whether a brownfield is located in rural, urban or inner city area) and transport links. physical attributes such as the site’s area and terrain are also considered among the most significant factors in romania. while representatives of public administration emphasized more the importance of legislation, state incentives and general localization, the investors and developers highlighted local factors (landscape protection limits, place marketing, and previous use of brownfields). the emphasis on political and geographical factors increases with the level of experience of stakeholders, while the emphasis on site specific factors decreases with the length of experience. keywords: brownfields, regeneration, success factors, perception, stakeholders. assessing success factors of brownfields regeneration: international and inter-stakeholder perspective bohumil frantál (corresponding author) josef kunc petr klusáček stanislav martinát bohumil frantál scientific worker, department of environmental geography, institute of geonics, academy of sciences of the czech republic, brno, czech republic tel.: 00420-545.422.720 e-mail: frantal@geonika.cz josef kunc visiting researcher, department of environmental geography, institute of geonics, academy of sciences of the czech republic, brno, czech republic petr klusáček scientific worker, department of environmental geography, institute of geonics, academy of sciences of the czech republic, brno, czech republic stanislav martinát scientific worker, department of environmental geography, institute of geonics, academy of sciences of the czech republic, brno, czech republic transylvanian review of administrative sciences, no. 44 e/2015, pp. 91-107 92 1. introduction the issue of regeneration and redevelopment of underused, derelict and often contaminated lands and premises or so-called brownfields (alker et al., 2000) remains one of the greatest challenges for urban planners, developers and local governments. generally, brownfields have received increasing political credence in recent decades, since vacant agricultural or natural developable lands become less available, more expensive and more protected in densely populated areas. the increasing number of projects and research platforms demonstrates the increasing interest of policy makers, too (see the summary reports on activities, products and tools developed by previous brownfield projects by tölle et al., 2009 or frantál et al., 2012). however, the redevelopment has not been as effective as expected in many regions and it is still constrained by many barriers and associated with several dilemmas (alexandrescu et al., 2014; frantál et al., 2013; ganser and williams, 2007; payne, 2013). significant differences among national legislative, economic and procedural contexts also raise questions about the functionalities and effects of would-be ‘universal’ solutions and tools being produced by those projects. many previous studies have investigated and conceptualized drivers and barriers of brownfields redevelopment – whether on the basis of stakeholder surveys (alberini et al., 2005; letang and taylor, 2012), interviews with experts (adair et al., 2000; de sousa, 2000, 2003), assessments of a limited number of local case studies/sites (coffin and shepherd, 1998; dixon, 2007; dixon, otsuka and abe, 2011; nijkamp, rodenburg and wagtendonk, 2002), or spatial analyses of differences in the distribution of existing and redeveloped brownfields (frantál et al., 2013; frantál et al., 2015; longo and campbell, 2007; novosák et al., 2013). however, the absolute majority of these surveys and analyses were case studies concerning just few sites or groups of stakeholders from one city or a specific region within one country. if there is an international comparison of results reported, it was made post factum and was not verified by the usage of consistent survey methodologies. also, very few studies aimed at exploring differences between the priorities and barriers concerning brownfield redevelopment as perceived by decision-makers (experts, planners, and local governments) and preferences and barriers as perceived by stakeholders (investors, developers, and local citizens) (see e.g., brill, 2009 or kunc et al., 2014). in this paper, the authors present selected results of international comparative survey carried out in 2012 with different groups of stakeholders from four countries: the czech republic, germany, poland, and romania. the main objective of the survey was to identify and classify success factors of brownfields regeneration and to detect significant convergences and divergences concerning the drivers and barriers of regeneration processes in different geographical, institutional and social contexts. confronting perceptions and experiences of specific groups of stakeholders (urban planners and other experts, representatives of public administration, land owners, investors and developers) from countries with different political and economic back93 grounds may help to better understand the complexity and multidimensionality of brownfield regeneration processes and to create a vision for change across the different constituencies, stakeholder groups, and administrative boundaries which constitute the scope of urban planning and decision making processes and land use policy. 2. success factors of brownfields regeneration: theoretical and methodological foundations according to a general definition, a factor is anything that contributes to a result or a process. in the context of brownfields regeneration, the ‘success factors’ are considered facts (conditions, circumstances, actors, agencies) that are determinants and contributors to successful regeneration of brownfields. they are the causes of the fact that some brownfields have become objects of concerns of investors, politicians, experts or other actors, they have been prioritized as the most critical, urgent or profitable to invest money, time and energy, they have been regenerated and newly used, while other sites are out of attention, they stay neglected and derelict, or the process of their regeneration has not been successfully completed. in the existing brownfield literature, the success factors are alternatively called determinants, drivers, criteria or site parameters. the survey, identification and classification of factors which are significant for a successful regeneration process are required as a key precondition of the assessment of brownfields redevelopment potential, their effective prioritization, and marketing. many success factors are more or less complex phenomena that can be expressed in general terms (e.g., spatial peripherality) as well as in number of measurable indicators (e.g., distance from the city centre, proximity to main road network, etc.). it has been suggested by previous studies (bacot and o´dell, 2006; de sousa, 2000, 2003; dixon, otsuka and abe, 2011; filip and cocean, 2012) that among the crucial success factors for redeveloping brownfields are decontamination and regeneration costs and acceptable return rates for investors, government incentives, focused urban development policy and political leadership, strong place branding, and local stakeholders’ involvement and collaboration. it has been also demonstrated, however, that – in addition to general legislative, political and economic factors acting at national or regional scales – local geographical factors play an important role (frantál et al., 2013). brownfields do not exist by themselves, independently or in a vacuum, but they are products of the interrelationships between places and social and ecological processes (bjelland, 2002). brownfields are placed and rooted in a certain geographical space and time, which is hierarchically and functionally structured. therefore, brownfields have to be perceived in their spatial context and we should take into account when assessing them not just their site-specific attributes (such as the level of ground contamination or property relations) but also contextual factors acting at higher hierarchical levels (heberle and wernstedt, 2006). it is not possible to say a priori which of the general factors, location factors or site specific factors are the most important ones; to identify and analyze the relative im94 portance of each of them is a task for comprehensive research. the studies from the us, canada and uk (adair et al., 2000; de sousa, 2000) demonstrated that the primary reason why the private sector invests in some regeneration areas is the perception of achieving some target rates of return. conversely, the principal reasons for non-investment include the negative image of the locality or neighboring environments, lack of capital (funding), and the perceptions of bureaucratic grant regimes (adair et al., 2000). similarly, coffin and shepherd (1998) identified four key barriers to regeneration including legal liability, limited information, limited financial resources, and limited demand for the properties. in many cases even good conditions for prosperity of a locality and for brownfields regeneration may not be utilized if there are subjective problems and barriers, such as a weak local political involvement, deficit of information, bad communication and cooperation of stakeholders. with respect to the existing literature discussed above – even despite of the prevailing terminological, conceptual and methodological divergences – we can argue that there is a partial consensus in two aspects regarding the success factors of brownfields regeneration: first, the multidimensionality, which means that factors form certain dimensions or groups according to the spatial level (i.e., national, local and site-specific factors) and/or according to factors’ character (i.e., political, economic, environmental, social and other groups of factors). second, the relativity, which means that different individuals or groups of stakeholders within one country or across countries may perceive and assess different factors as important or irrelevant based on their personal or collective concerns, experiences or values (i.e., intraand interstakeholder group variance). therefore, the process of exploring and classifying success factors presupposes the following two key phases: first, the stakeholder segmentation, which means a segmentation of the general public to specific categories of stakeholders (see e.g., doak and dixon, 2005); second, the factors determination, which means an identification and categorization of specific factors and their measurable indicators. it is hypothesized that some factors being relevant in most geographical contexts can be identified (there are some basic factors generally agreed upon by the majority of previous studies even though sometimes different terms were used for their description). various research strategies and methods can be applied for the identification and classification of factors, including spatial-statistical analysis, expert choice (e.g., the delphi method) or more complex surveys. the strategy of our research involved a combination of both qualitative and quantitative methods. on the basis of existing literature review and information obtained by exploratory preliminary researches we created a standardized questionnaire form including a set of relevant factors and barriers respectively, which may potentially affect brownfields regeneration; each single factor and barrier were then assessed and rated by respondents on a ten-level rating scale. 95 3. geographical context of the study developed countries such as the us, great britain, france or germany have longterm experience with the problems of brownfields, which had already emerged during the 1970’s as a result of massively declining mining, heavy industries and textiles. in comparison, in post-socialist countries such as the czech republic, poland or romania, brownfields appeared in large quantities only after the collapse of socialism and the return to a market economy, with the restructuring of traditional industries, and following globalization trends during the last decade of the 20th century. in our comparative survey, germany is the representative of developed economies with a highly skilled labor force, a large capital stock, high level of innovation and longer experience with deindustrialization processes, urban renewal and brownfields regeneration. the czech republic is regarded as one of the most developed, industrialized and prosperous (gross domestic product at purchasing power parity per capita) economies of the countries in central and eastern europe (world bank, 2014). the czech republic entered eu together with poland in 2004. the czech republic is one of the most successful transition economies in terms of attracting foreign direct investment (annual fdi per capita have been twice higher than in poland and thrice higher than in romania) (world bank, 2014). romania has entered the eu in 2007. it is still regarded as a laggard in exploiting the european structural funds (also because of unexecuted transformation of public administration and decentralization of power, and higher levels of corruption, see mihailescu, 2012). besides the historical factors affecting the evolution of brownfields in different countries, it is argued that also internal geographical factors affect the actual situation and patterns of redevelopment. most countries encourage brownfield regeneration as a means of sustainable development but they define ‘brownfield’ differently (tang and nathanail, 2012). oliver et al. (2005) identified significant regional trends amongst conceptualizations of brownfields, which reflected the national policy strategies regarding land regeneration and development in western europe, eastern europe and the scandinavian countries. these authors documented how population density and economic competitiveness at a country level determine the perception of what brownfields and derived regeneration priorities are (i.e., definitions and policies) – from pure contamination problem focus to development potential gaining understanding (cf. oliver et al., 2005). furthermore, we can say that even the conceptual delimitation and definition of brownfields is a dynamic element and has been changed and modified in the course of time (see table 1). a conceptual diversity still prevails concerning the brownfield definition across european countries (nicole brownfield working group, 2011). this international diversity of definitions and approaches then goes hand in hand with the problem of availability and comparability of data, including official statistics, inventories and registers of existing brownfields, documentations of successful regeneration case studies, etc. mapping and inventorying of brownfields have not been centrally organized in most countries; detailed inventories with specific information about the 96 location and are not available, they are inconsistent, or otherwise methodologically problematic (frantál et al., 2013, p. 7), and registers owned by private companies and consortia of owners are often protected or provided only with limited descriptive information, without any possibility of publication. altogether 2,355 brownfield sites were identified on the basis of the national ‘search study on location of brownfields in the czech republic’ provided by the czechinvest agency within the period 2005-2007. these brownfields covered an area of approximately 10.3 thousands of hectares with circa 14% of built-up areas (1,412 hectares). the database comprised brownfield sites with an area greater than 1 hectare from all regions of the czech republic excluding the capital prague. however, the actual total number of brownfields in the czech republic is much higher; last estimations are working with numbers between 8.5-11.7 thousands of brownfield sites, which cover an area of 27-38 thousands of hectares. in germany, many guidance documents, manuals or directives for most diverse tasks in the frame of brownfield regeneration have been provided by different institutions (e.g., european land and soil alliance, federal environmental agency, federal ministry of statistics, etc.); however, there is no offitable 1: definitions of ‘brownfield’: divergences in time and among countries country defi nitions based on the responses of clarinet and cabernet network members summarized by oliver et al. (2005) defi nitions based on the responses of timbre project members summarized by frantál et al. (2012) czech republic sites that have been affected by the former uses of the site and surrounding land; are derelict and underused; may have real or perceived contamination problems; are mainly in developed urban areas; and require intervention to bring them back to benefi cial use. (source: czech brownfi eld regeneration strategy) properties (lands, objects, areas), that are underused, neglected, and can be contaminated. they are relics of industrial, agricultural, residential, military or other activities. they cannot be appropriately and effectively utilized without the regeneration process. (source: national strategy for brownfi eld regeneration, ministry of industry and trade, 2008) germany inner city buildings not under use. inner city areas for redevelopment and refurbishment. (source: federal environment agency berlin) no legally fi xed or a common defi nition. various defi nitions are used in different contexts. instead of brownfi elds, legislative focus is on precaution that must be taken to avoid the occurrence of harmful changes to the soil – i.e. on potential contamination. poland degraded areas due to diffuse soil contamination – high density of landfi ll sites. (source: ministry of environment) no offi cially agreed defi nition. there are many defi nitions used in different legislative documents, e.g.: ‘areas designed for recultivation include degraded or desolated grounds, such as closed dumps, dumping grounds, depressions (hollows), post-industrial areas, post mining areas, post military training ground, for which the administrative bodies approved recultivation projects.’ (source: report no. dz. u. nr 38, poz. 454, ministry of regional development, 2011) romania polluted lands (soils). (source: ministry of waters and environment) no offi cial defi nition of brownfi elds. the term is related to contaminated sites which are defi ned as ‘geographically defi ned area, bounded to surface and depth, polluted with biological or chemical substances.’ (source: government decision no. 1408/2007 regarding the investigation and assessment modalities of the soil pollution) source: authors’ compilation 97 cial national database of brownfields. for example the länder-arbeitsgemeinschaft bodenschutz (state working group on soil protection) under the ministerium für umwelt und verbraucherschutz (ministry of environment and consumer protection) provides data on number of sites suspected of being contaminated and contaminated sites in germany. similar data are provided by the federal environmental agency. the federal environmental agency estimated the potential number of brownfield sites at about 362,000 (oliver et al., 2005). in poland also any central brownfield database does not currently exist. ministry of environment of poland estimates 3,230 potential brownfield sites; however, that number seems to be undervalued (frantál et al., 2012). only in the regional database of silesia voivodship have been recorded about 700 sites. a similar database was prepared for małopolskie voivodeship including an inventory of potentially degraded areas and areas which were qualified as priority degraded. all these databases are not open-sourced. apart from these databases, registers of degraded and contaminated areas are developed by regional directorate of environmental protection. similarly, in romania there is not any official inventory of contaminated sites. national environmental protection agency (nepa) manages a database made according to governmental decision no. 1408/2007 regarding the investigation and assessment modalities of soil and subsoil pollution, which is a register of holders or owners of land, on which sites of potential contamination exist. nepa has collected a database of circa 2,200 contaminated sites; for 800 objectives of this inventory there are punctual analytical data showing the presence of significant contaminations. 4. research procedure in the first phase, a preliminary explorative research using qualitative methodologies (questionnaires with open questions, semi-structured interviews and focus groups) was realized during several workshop sessions with stakeholders, organized in 2012 in all countries. respondents were asked to answer open questions dealing with determinants and barriers of the brownfield regeneration process. the aim was to obtain as detailed and comprehensive set of factors related to the process of successful regeneration as possible. the acquired set of factors includes both the wider geographical characteristics of the area where brownfields are located (affiliation to region, peripherality of area, socio-economic potential of area, etc.), the attributes of specific sites (size of the site, type of previous use, extent of contamination, ownership structure, etc.), and also general (country-specific), local or procedural factors which are difficult to measure and quantify (e.g., national policy, engagement of local politicians, stakeholders awareness, and lack of information, communication and cooperation of stakeholders during the planning process, etc.). the following table (table 2) summarizes a categorized list of 25 success factors of brownfield regeneration that were reported by respondents within our exploratory research. the factors are subdivided into three subgroups in respect to spatial levels and several categories according to their character (political, economic, etc.). 98 table 2: inventory of success factors identified within preliminary research general factors specifi cation national policy (legislative, regulative and control tools) political availability and quality of information (about existing sites, tools, best practices, etc.) information availability of fi nancial incentives (grants, subsidies, funds, tax allowances, etc.) economic foreign direct investments economic general public opinion (political engagement, adoption of innovations, etc.) social/cultural location factors general localization (regional location within a country) geographical specifi c localization (location within a local spatial-functional structure) geographical concentration of other brownfi elds in the locality (site competition) geographical transport links (proximity to arterial road network, railway, airport) geographical physical conditions of the area (terrain, subgrade properties, etc.) physical landscape protection limits environmental economic status of the locality (unemployment rate, entrepreneurial activity) social/economic social status of the locality (social structure and cohesion of the local community) social/cultural place marketing (local development strategy, land-use plan, place marketing) social/economic local involvement and collaboration of stakeholders social/cultural site specifi c factors the size of the brownfi eld area technical type of the previous use (industrial, agricultural, military, etc.) technical type of the expected future use (quality and feasibility of the project) technical extent of the built-up area and technical conditions of buildings technical attractiveness of the site and objects (historical and architectural value) social/economic ecological burden (extent of the contamination of soil and groundwater sources) environmental infrastructure networks (water supply, sewerage, electricity, etc.) technical property relations (structure of property owners, availability for selling) social/economic price of the land and property economic regeneration costs and return-time of investments economic source: authors’ survey as the result of preliminary research a questionnaire form with closed questions and standardized rating scales for the assessment of factors according to their significance was created. the questionnaire form was translated into czech, german, and romanian languages. the distribution of questionnaires was realized via electronic mail (the project partners provided email addresses of potential respondents in their countries), and face-to-face, as a printed version during sessions of several workshops and seminars organized in all countries in the scope of the project. the sampling of respondents was made with respect to gain a balanced structure of the sample according to various groups of stakeholders and countries (see table 3). in our survey we have detected significant differences among countries in the average number of years of stakeholders’ involvement in the brownfield issues (see table 4). it is evident that brownfields are the object of attention of politicians, experts and researchers for much longer time in germany than in all other surveyed countries. 99 table 3: the structure of survey sample country stakeholder group state administration local government investor, developer academic, researcher expert, consultant not-specifi ed total czech republic 18 24 6 36 17 0 101 17,8% 23,8% 5,9% 35,6% 16,8% ,0% germany 12 5 8 14 15 5 59 20,3% 8,5% 13,6% 23,7% 25,4% 8,5% poland 9 17 1 28 12 1 68 13,2% 25,0% 1,5% 41,2% 17,6% 1,5% romania 33 27 8 12 30 9 119 27,7% 22,7% 6,7% 10,1% 25,2% 7,6% total 72 73 23 90 74 15 347 20,7% 21,0% 6,6% 25,9% 21,3% 4,3% 100% source: authors’ survey table 4: average number of years of stakeholders’ involvement in brownfield problems country stakeholder group state administration local government investor, developer academic, researcher expert, consultant total czech republic 5 5 6,5 4,5 10 6 years germany 15 11 18 12 14 14 years poland 8 8 8 7 6 7 years romania 6 3 8 11 8 6,5 years source: authors’ survey 5. results the main objective of the questionnaire was to classify the ‘success factors’, i.e. the factors that have a decisive influence on the fact that only some brownfields have been successfully regenerated and newly used, while others stay idle and derelict, or the process of their restoration has not been successfully completed. the factors have been assessed by stakeholders according to their perceived importance for successful regeneration in the context of their country, using a ten-level rating scale (where 0 means ‘no influence’ and 10 means ‘very strong or predominant influence’). the mean values were counted for each specific factor and were ranked according to their significance for each country. the results are summarized in table 5. existence of ecological burden on site (i.e. the extent of soil or groundwater contamination) and overall regeneration costs are considered the most important factors for a successful regeneration of brownfields in all four countries. clarified ownership relations and availability of site for sale and development are the third crucial success factor (actually, it is regarded as the most important factor in the czech republic). for germany, the czech republic and poland, also the specific localization of brownfields (i.e., whether they are located within rural, urban or inner city areas) and transport links (e.g., proximity of a brownfield to highway, airport or railway) are among the key factors. actually, most of successfully regenerated brownfields are located 100 in inner parts of large cities (capitals or regional metropolises) with a high economic potential and rapid return on investment for developers (it can be called the ‘capital city factor’). table 5: top fifteen most important success factors in each country czech republic germany factor mean score factor mean score property relations 8.7 regeneration costs 8.3 regeneration costs 8.5 ecological burden on site 7.9 ecological burden on site 7.8 specifi c localization 7.6 specifi c localization 7.6 property relations 7.4 transport links 7.6 transport links 7.4 project of the future use 7.5 price of the land and property 7.1 price of the land and property 7.5 project of the future use 7.0 infrastructure networks 7.2 landscape protection limits 7.0 availability of fi nancial incentives 7.2 local involvement and collaboration 6.9 landscape protection limits 7.1 availability of fi nancial incentives 6.8 attractiveness of the site 6.8 place marketing 6.6 local involvement and collaboration 6.5 type of the previous use 6.3 place marketing 6.5 concentration of other brownfi elds 6.3 general localization 6.5 attractiveness of the site 6.2 economic status of the locality 6.3 national policy 6.1 poland romania factor mean score factor mean score regeneration costs 8.4 ecological burden on site 9.2 availability of fi nancial incentives 8.0 availability of fi nancial incentives 9.0 ecological burden on site 7.8 regeneration costs 8.9 specifi c localization 7.7 project of the future use 8.6 property relations 7.6 national policy 8.5 landscape protection limits 7.2 landscape protection limits 8.2 transport links 7.2 the size of the brownfi eld area 8.0 price of the land and property 7.2 place marketing 7.9 attractiveness of the site 7.2 information availability 7.8 local involvement and collaboration 7.0 foreign direct investments 7.8 project of the future use 7.0 physical conditions of the area 7.7 infrastructure networks 6.9 infrastructure networks 7.7 place marketing 6.8 attractiveness of the site 7.6 extent of the built-up area 6.7 property relations 7.5 national policy 6.7 local involvement and collaboration 7.5 source: authors’ survey especially in romania but also in poland, the factors at the country level, such as national policies, legislation, availability of financial incentives and foreign direct investments are perceived to be more influential than in the czech republic and germany. in romania, stakeholders also stressed an importance of availability and quality of data and information about existing sites (there is so far no official and open-sourced database of existing brownfields in romania), tools, technologies, and best practice 101 examples of regeneration. other national specificities include for example facts such as the factor of existing infrastructure networks on brownfield sites is not significant for germans (the investors receive subsidies for projects on brownfields which do not dispose of existing infrastructure) but is very important in other countries. on the other hand, the factor of concentration of more brownfields in a locality, which causes a local competition of sites, was perceived as much more important in germany than in other countries. in general, we can say that the site specific or physical parameters of brownfields (the size and physical conditions of brownfield sites, extent of a built-up area, type of the previous use) are not as important (except the extent of contamination) for successful regeneration as the specific localization of brownfields, attractiveness of sites for investors, market-price of the land, availability of financial incentives and a return time of investments (including regeneration costs). a bit of a specific situation is in romania where the physical and technical attributes of brownfields are among the most crucial ones. it is related to the fact that in romania just ‘contaminated lands’ are considered as brownfields. in this sense, the factors of size and topography have to be seriously considered. as concerns the ‘soft factors’, the quality and sustainability of a project of the future use, local involvement and collaboration of all stakeholders (politicians, investors, public), and place marketing are perceived as very important in all four countries. table 6: factors with most significant differences in perceived importance among countries factor czech republic germany poland romania eta foreign direct investments 0 –– + + 0,607 physical conditions of the area – 0 0 + 0,456 national policy – – + ++ 0,446 information availability 0 – 0 ++ 0,430 financial incentives – – 0 + 0,429 size of brownfi eld area 0 0 0 + 0,393 ecological burden 0 0 0 + 0,355 concentration of brownfi elds – + 0 + 0,355 project quality and feasibility 0 – 0 + 0,353 infrastructure networks 0 – 0 0 0,305 notes: (+) indicates a significantly higher importance of the factor within a country, (-) indicates a significantly lower importance of the factor within a country, (0) the importance is about the mean value counted for all countries; the values of the coefficient of association (eta) are statistically significant at 0,01 level. concerning the inter-stakeholder variability, the differences of perception and assessment of factors are not as marked as differences among countries. there is an agreement among experts, researchers, politicians and developers about two most crucial factors which are interconnected: extent of contamination and overall regeneration costs. then, for investors and developers in germany and the czech republic the most important factors are the specific localization of a brownfield site, transport accessibility, landscape protection limits of development, and also existing infrastruc102 ture (for the czech case). representatives of local governments also highlighted the importance of involvement and collaboration of stakeholders in the planning process. on the other hand, developers and politicians in romania (and partly also in poland) emphasized over local factors a need of supportive national policy, financial incentives and foreign direct investments. while representatives of public administration generally emphasized more the importance of legislation, state incentives and general localization of brownfields (regional divergences in economic development potential), investors and developers highlighted local geographical factors (specific location of brownfields, landscape protection limits, local place marketing) and also the original use of brownfields. table 7: factors with most significant differences in perceived importance among stakeholders factor stateadministration local government investor, developer expert, researcher eta type of previous use 0 0 ++ 0,414** general localization + ++ 0 0 0,279* physical conditions of the area 0 0 – 0 0,257* place marketing 0 0 + 0 0,245* landscape protection limits 0 0 + 0 0,236* national policy + 0 0 notes: (+) indicates a significantly higher importance of the factor within the stakeholder group, (-) indicates a significantly lower importance of the factor within the stakeholder group, (0) the importance is about the mean value counted for all groups of stakeholders; the values of the coefficient of association (eta) are statistically significant at **0,01 level or *0,05 level. we have detected significant differences even according to the level of stakeholder’s experience measured as number of years of involvement in the brownfield problems. the emphasis on political factors (legislative and regulatory tools) and geographical factors (localization, transport links, landscape protection limits) increases with the level of experience of stakeholders, while the emphasis on site specific factors (physical conditions of the area, previous use of brownfields) decreases with the length of stakeholders’ experience. we can argue that the process of brownfields regeneration is generally limited by many barriers which can vary in terms of character and extent. in an additional question of the survey, the respondents were asked to assess specific types of barriers according to their degree of influence in the conditions of their country, using a ten-level rating scale (where 0 means ‘no influence’ and 10 means ‘very strong or predominant influence’). it is evident from table 8 that in all countries the economic factors are regarded the most obstructive barriers for brownfield regeneration. then the legislative, procedural-administrative and political barriers are also very important. the legislative barriers are stressed especially in romania. generally, in romania all types of barriers were assessed by higher scores (as more influential) than in other countries. specifically in germany the information and know-how barriers were voted as the second most obstructive barriers in the country. 103 table 8: the assessment of regeneration barriers in different countries barriers mean score (ranking) in country total czech rep. germany poland romania economic 8,8 8,6 (1) 8,6 (1) 8,7 (1) 9,1 (1) legislative 7,1 6,2 (4) 6,1 (4) 6,9 (3) 8,5 (2) procedural-administrative 7,0 6,4 (2) 6,5 (3) 7,0 (2) 7,9 (3) political 6,7 6,3 (3) 5,9 (5) 6,5 (4) 7,6 (6) information and know-how 6,5 5,5 (6) 6,6 (2) 5,6 (5) 7,7 (5) technological-ecological 6,2 5,6 (5) 5,3 (6) 5,4 (6) 7,8 (4) social-cultural 5,5 5,1 (7) 5,2 (7) 4,7 (7) 6,6 (7) source: authors’ survey 6. conclusions while some experts and researches have emphasized that brownfields regeneration is a highly individual process (i.e., each project is specific and no generalization is possible), our survey demonstrated there are some ‘common themes’ that appear to be useful in understanding successful regeneration in a wide range of contexts. the crucial international factors governing brownfields regeneration are (i) the existence of ecological burden on site (i.e. the extent of soil or groundwater contamination), (ii) overall regeneration costs and return time on investment, and (iii) clear ownership relations and availability of site for sale and development. our findings from four european countries with different political and economic backgrounds and a different level of experience from brownfields redevelopment are in accordance with previous studies from the usa, canada, japan and great britain (cf. adair et al. 2000; coffin and shepherd, 1998, de sousa, 2000; de sousa, 2003; dixon, otsuka and abe, 2011). however, we have also detected significant differences concerning the importance of specific factors among surveyed countries and as concerns the perspective and experience of specific stakeholder groups. these findings raise legitimate questions about the functionalities and effects of would-be ‘universal’ solutions and tools being provided by some international projects financed by the european commission. it seems that while in developed economies such as germany or the czech republic the main current problem of brownfields regeneration lies in effective assessment and prioritization of existing brownfield sites (to distribute available public resources to those locations and sites where publicly (co-)financed regeneration is required (i.e., locations where market forces are considered to be weak and display low levels of market efficiency), the first steps in romania should be in improving the general legislative framework concerning regeneration of contaminated lands and in providing detailed and valid inventory of existing brownfields with all relevant information to spur potential foreign investors and stimulate redevelopment processes. the private sector is opportunity driven and invests in areas where it is comfortable and where returns are achievable commensurate with the risk taken (usually it is easier to develop projects on greenfields) – in this respect, grant regimes should be used as tools to lever investment. 104 another practical problem is to differentiate between different stakeholders’ concerns. our survey detected, for example, that representatives of public administration generally emphasized more the importance of national legislation, state incentives and general localization of brownfields (arguments about some economically less-favored regions), investors and developers stressed more the importance of local geographical factors, such as specific location, landscape protection limits, and local place marketing (there are often not available relevant and detailed information about existing brownfields being available for sale and development). our survey confirmed the findings of brill’s previous study (2009) that there are significant differences among the perceived priorities of decision makers (state and local governments) and stated desires and experiences of stakeholders concerning drivers and barriers of brownfield redevelopment. similarly, yount and meyer (1999) emphasized (according to interviews with developers and lenders in the us) that effective policies and programs need to be framed within an understanding of the different needs of smaller and larger redevelopments. while market forces were equally significant inducements for both types of regeneration projects, important needs of small developers were not met: they were less likely to receive government subsidies, had greater difficulty accessing private capital, and lacked information about processes associated with remediation, while developers of large projects were more likely to benefit from public financing and were able to mobilize a network of supportive organizations to help them manage barriers to project completion. in this respect, it is very important to 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tadych, j., jasińska, m. and supporting team, ‘report about concepts and tools for brownfield redevelopment activities’, wp 3, output no. 3.1.1 of the cobraman project, bydgoszcz, poland, 2009, [online] available at http://www.cobraman-ce.eu/portals/0/cm%20outputs/3.1.1_report%20 about%20concepts%20and%20tools%20for%20brownfield%20redevelopment%20activities.pdf.pdf, accessed on november 15, 2014. 31. world bank, ‘world bank open data per countries’, 2014, [online] available at http:// data.worldbank.org/, accessed on november 15, 2014. 32. yount, k.r. and meyer, p.b., ‘project scale and private sector environmental decision making: factors affecting investments in smalland large-scale brownfield projects’, 1999, urban ecosystems, vol. 3, no. 2, pp. 179-193. 168 abstract the slovak approach to decreasing healthcare costs is based on a changed interpretation of the concept of ‘a minimum network of providers’. this study describes the changes made in the healthcare system in slovakia in order to keep it affordable. it shows how the initial interpretation of a minimum network as an assurance for general access to healthcare services slowly changed into a cutback making the minimum network an upper limit for healthcare. the study argues that the complexity of the network made for non-transparent policies, in which consultation was nearly absent and vertical power became dominant, despite the semi-independence of actors in the network. this observation runs counter to the network theory suggestion that in complex networks, with semi-independent actors, vertical power becomes useless. keywords: healthcare coordination, semi-independent institutions, networks. coordinating healthcare under a pluralistic health insurance system: the case of slovakia juraj nemec david spacek michiel de vries juraj nemec professor, matej bel university banska bystrica, slovakia and masaryk university brno, czech republic david spacek (corresponding author) assistant professor, department of public economics, faculty of economics and administration, masaryk university brno, czech republic tel.: 0042-549-497.963 e-mail: david.spacek@econ.muni.cz michiel de vries professor, radboud university nijmegen, netherlands and masaryk university brno, czech republic transylvanian review of administrative sciences, no. 45 e/2015, pp. 168-184 169 1. introduction there is a generally shared agreement among experts that healthcare is at least in part a collective good that cannot be solely the individual responsibility of the citizens. arguments supporting state intervention are based on the allocative activities and redistributive functions of government (stiglitz , 2000; maly, 1998). feldstein (1993) argued that healthcare is an impure public good; subject to information asymmetry, externalities, uncertainty, and complexity. because of information asymmetry, the most important factor limiting individual demand for health services is the inability to pay for such services individually, while from a social perspective, the general opinion, at least in developed europe, is that all people are eligible for basic healthcare services, independent of their ability to pay. this opinion is demonstrated in, for example, the european charter of social rights. however, there are increasing diffi culties in keeping healthcare aff ordable. in addition to contextual developments, such as the greying of society, the cost increase in healthcare is caused by the complexity of its network. as in all networks, this one is characterized by tension between the goals of each level involved in coordination of inpatient care and the presumed goals of the network as a whole, a strong resource dependency between the organizations involved, a complex of incentives that varies among the organizations involved and is contradictory from the perspective of the network of organizations, transaction costs that are largely determined by extensively monitoring and evaluating the performance of each of the constituting organizations, and opportunistic behavior among each of the organizations involved. theories on inter-organizational relations are concerned with explaining the nature and consequences of specifi c types of relationships among organizations and the coordination thereof. the relationships may be defi ned in terms of their structure, i.e. alliances, partnerships, and networks, although many other connotations also exist (cropper et al., 2008). overviews of theories in inter-organizational relations are found in van de ven (1976), galaskiewicz (1985), oliver (1990), barringer and harrison (2000) and cropper et al. (2008). however, while theorizing about the coordination and management of networks is still concerned with questions such as how to govern such complex networks in practice (kenis and provan, 2007), some governments have opted for a pragmatic solution that is, simply reducing the complexity of the network. this is, of course, easier said than done, and especially in healthcare it could have serious negative consequences. nevertheless, this was the solution of the slovak government, as well as the hungarian government, in order to make the healthcare system manageable and aff ordable. the goal of this paper is to analyze the way in which slovak central and regional governments accomplish the task of optimizing the network of inpatient health services in slovakia, and to evaluate the eff ects of this change on healthcare services. the paper focuses on this pragmatic solution, compared to the multitude of theoretical 170 suggestions to coordinate complex networks, by presenting a case study of slovakia, where ‘healthcare network’ is rather decentralized: most healthcare providers are privately owned establishments, and most healthcare fi nance is in the hands of a network of at least formally competing public and private health insurance companies. the slovak solution to the issue of physical access is largely based on an interesting coordination tool: the ‘minimum network of providers’. in the core part of this paper, we investigate how this minimum network has been defi ned in the subsystem of inpatient care (specialized hospitals excluded), and closely examine the policy implementation aspects. our focus is on how the minimum network of inpatient care has been achieved through the coordinated activities of the state, at both the central and regional levels. before that, we present an overview of the developments in complex network management theories (in our case such complex network is the network of coordination and delivery bodies described in the later text), of which it is remarkable that simplifying the complexity of networks seems to have never been considered. the fi nal part of the paper displays current results in the area, analyses the pros and cons of intervention, and presents several important observations on the policy-making and implementation capacities of the slovak government, and on the complexity of coordinating pluralistic service-delivery systems1. the main method used to draft this paper is the secondary analysis of existing data and information. brief interviews with regional politicians, administrators and academic experts helped to frame the text. 2. developments in complex network theories the fi rst systematic studies about networks, networking, and building coalitions in organizations are from the late 1950s and 1960s (dill, 1958; levine and white, 1961; evan, 1965, 1966). this classical research described interactions between people across organizations who aim to create networks for gett ing things done and for exchanging information. these interactions often go beyond the formal structure of the organization and are assumed to accomplish more than could be accomplished by only going through formal channels. to create a network is seen as a rather simple task; it involves simply identifying people who could be helpful in the process of achieving the desired objectives, establishing their reliability, and then actively seeking their cooperation. literature on this subject shows that a shared aim, i.e., ‘gett ing things done in an organization’ is involved in creating alliances i.e., ‘gett ing agreement on a course of action with other people and joining forces to get things done’ (armstrong, 2006; bolman and deal, 2003). according to evan (1965), social science research had previously been concerned primarily with networks understood as intra-organizational phenomena. during this time, the theory and methodology impeded research 1 the preparation of this paper was co-fi nanced also by the czech grant agency project gacr p403/12/0366. 171 on inter-organizational relations. to solve this problem, evan suggested two methodological tools that could prove useful in the development of empirical research on inter-organizational relations: graph theory and input-output analysis. the fi rst tool was developed in research dealing with network visualization; the second is known as transaction cost economics [tce], focusing on control phenomenon in inter-organizational relations. during the 1980s and 1990s, scholars and practitioners (perrow, 1992) described a growing interest in the networks and multi-organizational relations that are usually created to solve the complex problems that occur mainly in the private sector but also in the public sector. a network was defi ned as a ‘group of more or less independent organizations that have a relatively stable and long-term cooperation’ (grandori and soda, 1995 apud jacobsen and thursvik, 2002). the core position was that networking can essentially support and promote projects, programs, ideas, and sharing knowledge (nohria and eccels, 1992; alter and hage, 1993; borgatt i and foster, 2003). provan, fish and sydow (2007) scrutinized contemporary articles dealing with inter-organizational networks in industry. according to their study, it would be an exaggeration to say that empirical studies have successfully created a theory about networks. the research on networks and inter-organizational relations instead constitutes fragmentary empirical studies focused on some important aspects of a network, but not examining the whole network. in organizational life, everybody talks about networks, but provan, fish and sydow (2007) argued that researchers are still unable to eff ectively defi ne this phenomenon. according to them, researchers who focus on business and business relations even avoid the concept of networks. instead, they talk about ‘partnerships, strategic alliances, inter-organizational relationships, coalitions, cooperative arrangements or collaborative agreements’. other scholars interested in resource dependency theory (e.g., pfeff er and salancik, 2003), transaction cost economics (e.g., williamson, 1991) or investigating inter-organizational contracts (e.g., ariño and reuer, 2006) often pay att ention only to organizations and social relations between concrete actors involved in cooperating on behalf of their organizations, which cannot be perceived as research on networks as a whole (provan, fish and sydow, 2007). 2.1. the coordination of network complexity how networks are managed is a crucial aspect of network analysis. classic theory (for a summary, see for example kickert, klijn and koppenjan, 1997) suggests that hierarchy and steering is needed to manage a network. this theory is currently disputed, because there is a dilemma involving trust and governance in which too much governance steering and state responsibility can be costly and redundant because of the justifi ed trust, but too litt le steering can be as costly because of inadequate safeguards in reducing opportunistic behavior (discussed for example in groeneveld and van de walle, 2011). those responsible often try to minimize the second failure and therefore opt for steering even though it can be redundant and costly. theoretical ar172 guments for ‘massive’ state interventions in modern healthcare systems are widely accepted by the current logistics of healthcare systems in developed countries, and to a large extent in developing countries as well: normally the state is responsible or co-responsible for all the most important aspects of healthcare delivery, specifi cally for fi nancing (accumulating and distributing resources), quality, and access assurance. the ways in which such ‘state responsibility’ is executed vary signifi cantly among countries. some common models can be identifi ed. for example, bjorkman and altenstett er (1998) identify four main forms of ‘managing’ healthcare services: – a state-dominated, general-taxation-based model (tax revenues fi nance a major part of health services and a single public body is responsible for managing the most important aspects of healthcare delivery); – a state-dominated, social-insurance-based model (compulsory health-insurance revenues fi nance a major part of health services and a single public body is responsible for managing the most important aspects of healthcare delivery); – a pluralistic, social-insurance-based model (compulsory health-insurance revenues fi nance a major part of health services, several independent health-insurance companies reimburse services, and the state has a coordinative function); and – a market-based model, where the role of the state is marginalized, and access depends very much on the ability to pay, though some social assistance programs may support access by vulnerable groups. the boundaries among all these models are unclear. in practice, all real healthcare systems represent some kind of mixture. even the diff erence between taxation-based revenues and health-insurance revenues is somewhat artifi cial; for example, vostatek (2010) argues that social insurance can also be perceived as a form of taxation. according to kenis and provan (2007) shared network governance will be most eff ective for achieving network-level outcomes when trust is widely shared among network participants (high-density, decentralized trust), when there are relatively few network participants, when network-level goal consensus is high, and when the need for network-level competencies is low. lead organization network governance will be most eff ective for achieving network-level outcomes when trust is narrowly shared among network participants (low-density, highly centralized trust), when there are a relatively moderate number of network participants, when network-level goal consensus is moderately low, and when the need for network-level competencies is moderate. network governance by a network administrative organization will be most effective for achieving network-level outcomes ‘when trust is moderately to widely shared among network participants (moderate-density trust), when there are a moderate to high number of network participants, when network-level goal consensus is moderately high, and when the need for network-level competencies is high’ (kenis and provan, 2007, p. 13). 173 many governments cannot, or at least do not, wait for the fi nal answers. this was the case in slovakia. the government opted for a much simpler solution in coordinating the complex healthcare system: reducing the complexity of the network through the principle of a ‘minimum network of providers’. the results are described in the next sections. 3. coordinating changes of the network providing inpatient healthcare in slovakia the slovak republic was established on 1 january 1993 as a result of the friendly dissolution of czechoslovakia, following the major changes after the 1989 ‘velvet revolution’. the process of reforming the slovak healthcare system started immediately after the velvet revolution in 1989. important changes were introduced, especially privatization and the shift from fi nancing healthcare through general taxation to pluralistic social health insurance. at the same time, there was a focus on maintaining universal access and ensuring a ‘basic package’ for all citizens, regardless of their ability to pay. privatization is now nearly complete, except at the hospital level. the administration of the slovak healthcare system can be described as decentralized and based more on coordination than direct management. this is due to the existence of several independent or semi-independent actors on the ‘supply’ side of the healthcare market, as described below. a: the state: represented especially by parliament, by central, regional, and local governments, and by a specifi c agency: the healthcare surveillance authority. the parliament is responsible for the legislative base for healthcare and it makes decisions about resources by sett ing the level of insurance premiums. the ministry of health (central government) is responsible for health policy development and implementation, which involved several diff erent types of activities, especially defi ning the network of health establishments, coordinating central healthcare programs, and establishing and managing teaching hospitals and other specialized units (but has only general regulatory power in relation to the hospitals managed/ licensed by the regional governments). the ministry of health is also responsible for medical staff training and for the categorization of medicines. the healthcare surveillance authority was established in 2004 as a part of agencifi cation in slovakia (nemec, sagat and lawson, 2012). its main tasks are to supervise the provision of healthcare and public health insurance and to arbitrate between actors. almost fully independent regional self-governments are responsible for regional hospitals (regional or sub-regional hospitals, which may not provide complex inpatient services). by 2003, all these hospitals had been transferred to regional governments or converted into non-profi t bodies. regional governments are tasked with the maintenance of a minimum network of healthcare providers in their regions, including the licensing of all local and regional providers. municipalities have limited responsibilities in the local network of providers. 174 b: health insurance companies: in healthcare fi nancing, slovakia switched to the ‘bismarck’ system of social health insurance, where independent health insurance companies are responsible for collecting, distributing, and managing the bulk of fi nance. soon after the start of slovakia’s pluralistic health insurance system, 13 health-insurance companies were established. however, most of them later exited the market because of mergers or bankruptcies. as of 2014, only three health-insurance companies are still in existence in slovakia: one public shareholder company, vszp, with about 65% of the market, and two private health insurance companies, dovera with about 25% of the market, and the smallest company, union. health insurance companies are responsible for collecting insurance premiums and paying for the services provided to their clients, the insured. the companies must conclude contracts with establishments belonging to the minimum network, but not with other establishments. in this way, they are able to infl uence the size and structure of the network of health service providers. c: healthcare providers (outpatient and inpatient care). this paper concerns only hospital inpatient care – the network of hospitals in slovakia consists of teaching hospitals (13 hospitals in 2014), managed directly by the ministry of health, and of regional hospitals. regional hospitals have, as the result of the 2004 reform (for more see nemec et al., 2013), very diff erent ownership forms, may belong to regional self-governments, and may be established as independent non-state, non-profi t organizations; some of them are fully privatized bodies. 3.1. ‘minimum network’ of hospital inpatient healthcare in slovakia the main principle of the slovak healthcare system is that it guarantees universal and equal access to all health services, regardless of the patient’s residence or ability to pay (in practice, however, this principle is impossible to achieve). legislation includes important elements to guarantee physical access to all types of healthcare services, and hence requires a ‘minimum network of healthcare providers’. such minimum networks should be established in outpatient and inpatient care and for emergency services. this section of the paper describes how the interpretation of this ‘minimum network’ slowly changed from being a lower boundary to becoming an upper limit for the number of healthcare providers. the healthcare act (576/2004) defi nes the minimum network for inpatient and outpatient care as ‘a minimum number of publicly accessible providers on the territory of a regional self-government set by the number and structure of providers necessary to eff ectively guarantee accessible, continual, and permanent professional healthcare, refl ecting the number of inhabitants, the geographic and demographic specifi cs of the region, the mortality and morbidity indicators of the territory, migration, and state security’. the law on emergency services (579/2004) stipulating that every citizen has the right to emergency service within 15 minutes regulates access to emergency care (for more, see nemec and kolisnichenko, 2006). 175 the healthcare act established the principle that a certain minimum number of providers should be available in a given territory, but it does not explain this issue in details. in particular, it does not defi ne ‘minimum network’ any more concretely, and it does not set clear responsibilities for establishing and maintaining ‘minimum networks’ – it fails to defi ne the roles of the ministry of health, regional self-governments, or other actors. in such a situation – unclear legislation and the existence of several independent actors – eff ective coordination is the only available tool to fulfi ll this task. based on the 2004 healthcare laws, the original focus of ‘minimum networks’ was to ensure physical access to health services for all inhabitants. however, the issue of the ‘minimum network in inpatient care’ was not addressed with any concrete action by the ministry of health or by the regional self-governments. the legal statement that everybody should have a certain minimum level of physical access to health services remained almost a purely political proclamation for a long period, possibly because of changes in the government: after one year of implementing the 2004 set of healthcare reform goals, the right-wing government of prime minister dzurinda was replaced by the left-wing government of prime minister fico (for more, see nemec et al., 2013). over the years, a general dearth of resources, in combination with an excess supply of inpatient facilities, led to a change in the slovak government’s att itude. table 1 illustrates the key economic aspects of the slovak healthcare system, especially the permanent imbalance and increasing debt. table 2 shows the main network indicators. on the revenue side, huge increases are seen in the health insurance premiums and table 1: financial resources for healthcare in slovakia, in millions (eur) 1995 20 00 2005 2008 2010 health insurance companies expenditures 500 880 2,400 3,300 3,400 direct state budget expenditures 280 390 400 100 200 direct payments by consumers 45 150 700 1,000 1,100 total 825 1,420 3,500 4,400 4,700 per cent of gdp 5.7 6.1 7.2 6.5 7.3 balance of hc system (expenditures/revenues) -0.5 -7.9 -2.0 -3.1 -2.7 source: bjorkman and nemec (2013) table 2: health resources in slovakia in comparative perspective 1995 2000 2005 2008 2010 doctors/ 1000 inhabitants slovakia 3.2 3.3 3.7 3.9 3.5 doctors/ 1000 inhabitants hungary 5.1 5.2 5.0 5.0 5.0 doctors/ 1000 inhabitants slovenia 2.1 2.2 2.4 2.4 2.4 doctors/ 1000 inhabitants oecd x x x x 3.2 hospital beds/ 100 000 inhabitants slovakia 691 636 772 736 652 hospital beds/ 100 000 inhabitants hungary 897 818 790 720 710 hospital beds/ 100 000 inhabitants slovenia 574 540 483 459 457 hospital beds/ 100 000 inhabitants oecd x x x x 360 source: bjorkman and nemec (2013); oecd statistics 176 direct payments; on the resource side, an increase in employment in the health business is seen, as an increased number of hospital beds, which is twice the international standard. the tables show that reducing the complexity of the network in order to cope with increasing defi cits and visible ineffi ciencies of the system became an urgent task for the government (fi gures from 2010 show immediate success in terms of capacities). under these circumstances, the ministry of health started to re-interpret the original intention of ‘minimum network’ principle, and to assure access to health services in a rather diff erent way. the ministry decided to publish secondary legislation on the ‘minimum network’ with another real aim, namely the optimization of the network. the ‘minimum network’ principle changed from a principle to assure access to a principle to maximize access and to decrease the number of small hospitals and the number of hospital beds. in late 2007, the government of the slovak republic published a government decree defi ning the minimum network for inpatient care. in this phase, the focus was mainly the protection of state-owned hospitals – the norm defi ned the 34 state-owned hospitals in their existing structure as representing the minimum network. with the international fi scal crisis, the issue of optimization became more urgent in terms of the need to decrease excessive capacities. in 2011, the government signifi cantly amended its decree on the minimum network. as a result, new central data on the minimum inpatient network were published by the ministry of health with a focus on signifi cantly decreasing the existing capacities. before describing the processes on the central and regional levels, we need to note an important process characteristic, namely that the process did not refl ect good governance principles, especially regarding transparency, predictability, and consultations. the ministry of health never revealed how it calculated the minimum network of inpatient care. it also did not consult with regions, despite the fact that regional establishments are the core part of inpatient care and regions are responsible for regional hospitals. in addition, the ministry of health was expected to provide implementation guidelines for the regions in order to help them transpose the broad legal defi nition of the minimum network into practice. it delivered no guidelines beyond the detailed data from 2007 and 2011 that characterized the minimum network as the existing network. 3.2. establishing the minimum network of inpatient hospital healthcare in slovakia the core actors engaged in the establishment of this minimum network are the ministry of health, relevant public hospitals, the public health insurance company vszp, and the private health insurance companies dovera and union. from a management/coordination point of view, the ministry of health is the founder and coordinator of the academic hospitals and nominates the directors of all such hospitals. in performing its function, it has both horizontal and vertical power. the ministry also has informal vertical power in relation to the public health insurance company vszp 177 (via its representatives on the board of this public shareholder company), but it needs to combine this vertical power with horizontal coordination tools. with regard to the private insurance companies, only horizontal tools can be used. the optimization of the hospital network was a two-step process. first, the network of ‘central level’ hospitals was defi ned as the set of state-owned hospitals under the authority of the ministry of health with a full range of services. the second step addressed the network of small hospitals under the authority of regional self-governments. at the central level, the task of optimizing the network of hospitals (the offi cial task in the creation of the ‘minimum network’) was much simpler than within the regions. the task was just to choose which hospitals to include into the central network – by providing them with the status of academic hospitals. under these conditions, the ministry of health proposed a minimum network of academic hospitals (on the basis of regional and population data) and implemented it relatively quickly and without signifi cant confl icts, because all of the insurance companies accepted this network without complaints. the current network is relatively well balanced as follows: 1. three children teaching hospitals – one in each of four nuts ii2 regions (bratislava serving to west slovakia): bratislava, banska bystrica, kosice. 2. three major ‘university’ teaching hospitals – one in each of four nuts ii regions (bratislava serving to west slovakia): bratislava, martin, and kosice. 3. seven ‘faculty’ teaching hospitals in all major cities of slovakia, where university academic hospitals are not located – trnava, nitra, and trencin in west slovakia, zilina and banska bystrica in central slovakia, and presov in east slovakia. one specifi c specialized neurosurgery teaching hospital is in nove zamky (west slovakia). the changes at the regional level were much more complicated for several reasons. although the ministry of health sets the norms for the minimum network, regional self-governments are formally responsible for it. table 3 shows the heterogeneity of the hospital structures at the regional level. public hospitals are established by the self-governing regions, private for-profi t and not-for-profi t hospitals are regulated by the self-governing regions. the public health-insurance company vszp and the private health-insurance companies, such as dovera and union, all three are headquartered in bratislava, which is far away from most regions. second, the self-governing regions have hardly any vertical tools to ensure the minimum network. most of the hospitals in their territories are either ministry of health institutions or independent private bodies. because the self-governing regions themselves own only a few hospitals in their area, all other lines of coordination are horizontal for them, except for the opportunity to ask the ministry to act on their be2 self-governing regions are nuts iii in slovakia, in this case nuts ii level bett er refl ects the problem. 178 half in relation to the health-insurance companies. table 3 indicates the structure of hospitals in slovakia when main changes started. table 3: regional hospitals in slovakia (2009) ownership western slovakia central slovakia eastern slovakia bratislava total tt tn nr bb za po ke public hospitals 4 4 2 2 5 3 1 1 22 other hospitals owned by non-profi t or private organizations 4 8 6 14 5 21 11 14 83 abbreviations of regions: tt – trnava, tn – trencin, nr – nitra, bb – banska bystrica, za – zilina, po – presov, ke – kosice. source: ministry of health third, the fact that self-governing regions were asked just to decrease the number of existing hospitals and beds in the region in a way prescribed by the ministry, instead of being enabled to implement their own independent regional healthcare policies, presented an issue. under these circumstances, the relative policy-making freedom of the self-governing regions was reduced to the painful task of closing some hospitals. the banska bystrica region can serve as an example of what happened on the regional level. before the fi nancial crisis, the region started to evaluate the network of hospitals. the university-level advisers suggested that the region should use two core criteria for sett ing the minimum network: the average yearly number of hospitalizations in the region, and the physical access of the patients (travel time by public transport). the underlying criterion for the minimum network was the level of hospitalizations in diff erent districts of the region. experts calculated the level of physical access according to two criteria: the percentage of citizens able to access the nearest hospital within 60 or 120 minutes and the average travel time per citizen. the core problem was that the ‘optimal network’ modeled according to these criteria diff ered signifi cantly from the network of hospitals that existed before the 2007 ministry of health’s fi rst ordinance on the minimum network. as a result, the areas with more hospitals would have to close one or more hospitals. however, the regional assembly never took a formal vote on the proposed minimum network, for both political and technical reasons. initially, the fact that there were actually more hospitals than in the minimum network was not perceived as a problem by the banska bystrica regional government. the situation changed after 2008 due to strong pressure from the central government. consequently, the minimum network became more of an order from the central government than a decentralized objective to be achieved by the regions. the ministry used its indirect vertical connections with the public insurance company vszp, which agreed to refl ect the proposal for the minimum network in its reimbursement system (vszp did not continue to conclude contracts with hospitals outside the minimum network). the private companies later adopted the same approach, by which the 179 ‘redundant’ regional hospitals lost most of their revenues. with insuffi cient revenue (revenues from insurance companies represent a major part of hospital income, direct payments are rather limited, and subsidies from state and regional budgets are normally not provided for running expenditures), smaller hospitals closed down or merged with the dominant hospital in the area. within a few years, the total number of regional hospitals in this region halved. it decreased from 16 to 8 (5 non-profi t and 3 for profi t). although the goals of optimization were achieved, the issues regarding costs and benefi ts of such change need to be discussed. this is the focus of the next section. 4. discussion the ‘minimum network’ of inpatient hospital care in slovakia presents an interesting case in the worldwide perceived need to reduce healthcare costs and for the study of complex networks. as to the consequences for network theory, the slovak case indicates that even in complex networks, vertical power remains crucial and can be used by semi-independent actors in the network to accomplish changes that they cannot accomplish on their own. in this case, the vertical power of the national ministry was ‘gratefully’ awaited and accepted by the ‘independent’ regions, to avoid a situation in which they themselves would be blamed for the reduction of the healthcare network (the regional authorities have the actual legal power to dismiss/dismantle public regional hospitals and may not issue licenses for private ones). furthermore, this situation indicates that the eff ectiveness of such processes of change (the eff ectiveness in terms of results from the changes is evaluated later in this text) does not depend on the quality of the process in terms of good governance practices. as it was argued above, transparency, consultations, and predictability were mostly absent during the process of change, and it appears that most of the key players were not too disappointed about the lack of good governance (for some explanations, see vesely, 2013). as to the eff ects of the changes, we discuss some aspects of the policy process below and evaluate the provisional short-term outcomes. first, as to the process, both the ministry and the regions were expected to set transparent rules for building the minimum network. although the medical community repeatedly requested clarifi cation, this did not come about at any time in the entire history of this process of transition. second, certain originally interesting and potentially positive ideas were considerably adapted in the implementation process to achieve completely diff erent goals from those originally intended. the initial purpose of establishing the minimum network of inpatient care was to ensure general access to healthcare. in reality in the later phase, because of fi scal constraints, the ministry sought to reduce the number of hospital beds under the heading ‘minimum network’ (by defi ning upper limits for the provided healthcare capacities – hospitals, wards, beds). this is an interesting example of how original intentions are transformed over time. the goal to optimize the 180 network was att ained relatively successfully, because the legal defi nition of a ‘minimum network’ was imprecise, and diffi cult to put into practice, especially as there were no implementation guidelines. this allowed the change from the original intention to the new one (from a guarantee of physical access to a means of optimizing the network to reduce the fi nancial costs of the healthcare system). third, regional self-governments with very limited vertical implementation powers were expected to set their own rules and to establish a ‘minimum network’ on their territory. this did not happen during the fi rst phase, because there was a risk of diffi cult political fi ghts at the regional level. the regions had to rely on the vertical power of the national ministry, and the optimization of the network on the basis of relations between the ministry and vszp was in the end the best choice for all of the regions. the inhabitants of smaller cities were, of course, unhappy to lose their small hospitals, but there were no major protests. partly this can be explained by the fact that many of these hospitals were closed because of bankruptcy, framed as a private sector failure, instead of as being caused by administrative decisions of regional self-governments. fourth, the study provides certain policy lessons from the point of view of public-private partnerships. the ownership mix among insurance companies is expected to be a source of competition, resulting in improved services. however, with the dominant role of one of the insurance companies, vszp, in the system, and the strong position of the state in vszp, real competition does not exist: two remaining companies just followed the decision of vszp to stop contracting with some facilities, as ‘ordered’ by the ministry of health. the structure of hospitals is another issue on this topic. in certain dimensions, and especially for the quality of non-medical services, such as accommodation or food, privately-owned hospitals perform bett er. private or non-profi t ownership often also implies budgets that are more constrained and need bett er fi nancial management systems. however, there are several risks with such an ownership mix. high-quality coordination and regulation are necessary for ensuring the balance of public and private interests. private hospitals may go bankrupt or limit the scope of their activities. for example, they may only provide ‘lucrative’ health services. if this happens in areas where there are no alternate capacities, access can be endangered. the slovak solution, of a basic network of public teaching hospitals complemented with a network of private non-profi t and for profi t establishments, might be a good one. finally, this case documents the high coordination capacity of the ministry of health of the slovak republic during the process of optimizing the hospital network in the country. it is diffi cult to assess why the ministry was so successful in this particular case and encountered non-resistance from all of the main actors (including patients). overall we can conclude that, taking into consideration the fi nancial crisis, the ministry basically adapted to the changing conditions of the fi nancial market by changing its concept of a minimum network. it is very diffi cult to measure if the processes of optimizing the network positively or negatively aff ected the quality of ser181 vice (a uniform central system for evaluating patient satisfaction does not exist in slovakia); however, our opinion is that except for the non-transparency of the process, the optimization of the network of hospitals in slovakia represents a positive example of a concrete public policy. the most obvious benefi ts concern the fi nancial consequences of decreasing the number of small hospitals and the number of hospital beds in slovakia, thus slowing the unsustainable growth of health capacities in the country and stabilizing the level of indebtedness of the healthcare system (tables 1 and 2). from an expert viewpoint, this change had another positive short-term eff ect: it enabled a higher quality of care because of the greater specialization in larger hospitals. the closing of hospitals may deliver several negative eff ects, but we may argue that in this case, the negative eff ects are minimal, if any. the optimization of the hospital network did not signifi cantly reduce access to healthcare services. at the level of academic hospitals, there is almost no change in the maximum travel times of patients in need of specialized care. at the regional level, the example of the banska bystrica region shows that in all areas except one, citizens can reach inpatient care within 60 minutes by public transport (hrckova and kuvikova, 2011). the optimization also did not infl uence waiting lists in a negative way. a recent study on waiting lists in slovakia (muzik and szalayova, 2013) documents that waiting list for certain indications do not depend on physical capacity constraints (table 4), but on fi nancial resources available and spending priorities of insurance companies. partly because of the public att ention to this issue in the media in slovakia, provoked by the publication of the preliminary results of this study, additional resources were invested to decrease the number of patients waiting for treatment in early 2013 (see table 4). table 4: waiting lists in slovakia (number of patients per insurance company) date všzp dôvera union total 30. 04. 2013 7 778 2 709 124 10 611 31. 10. 2012 14 242 2 937 160 17 327 31. 03. 2012 16 310 3 074 157 19 541 31. 10. 2011 7 888 2 943 102 10 933 31. 10. 2010 6 476 2 539 160 9 175 source: muzik and szalayova (2013) the last potential negative side eff ects of this change, namely the increase of local unemployment, also did not appear. table 5 presents data from the banska bystrica region, where half of the small hospitals closed in 2010-2012. the impact of closing hospitals on unemployment within the profession was marginal if any, since it was easy for unemployed professional staff from the closed hospitals to fi nd new positions. 182 table 5: the number of unemployed in banska bystrica region – sector n (healthcare, veterinary services) xii 2007 xii 2008 xii 2009 2010 2011 april 2012 675 672 1143 1128 1062 1066 source: http://www.upsvar.sk/statistiky/nezamestnanost-stvrtrocne-statistiky a potential lesson from this situation relates to the future consequences of the minimum network. making the minimum hospital network equal to the actual network creates certain access risks. under such conditions, existing providers represent a highly monopolistic structure. this may infl uence their behavior, and raises a very important question: what if some of them close down? decreasing the number of hospitals may be easier than replacing the missing capacities. if there is no supply of potential new operators willing to enter the healthcare market, regional self-governments will struggle to establish new capacities on their own. the risk of long-term shortfalls in capacities is high, especially in slovak conditions, where the reimbursement rates from health insurance companies barely cover the actual hospital costs. the concept of a minimum network of inpatient healthcare is an interesting healthcare policy instrument. formally, it seems to be a very positive att empt to guarantee equal access to high-quality healthcare services. however, in reality several implementation problems may generate important future risks. it is still too early to draw any defi nitive conclusions, as short-term results may diff er from long-term results, as often happens in public policy-making and implementation processes. although the short-term results of this coordination exercise are predominantly positive, the long-term eff ects may be diff erent, especially since a monopolistic supply structure has been created. 5. conclusions this study described a change made in the healthcare system in slovakia in order to keep it aff ordable. it showed how the initial interpretation of minimum network as an assurance for general access to healthcare services slowly changed into a cutback, making the minimum network an upper limit for healthcare. it argued that the complexity of the network made for non-transparent policies, in which consultation was nearly absent and vertical power was dominant. this observation runs counter to the network theory suggestions that in complex networks, with semi-independent actors, vertical power becomes useless and agreements must be reached by consultations and horizontal coordination. although we are the last to promote the bad practices seen in the healthcare reform in slovakia in this regard, it is striking to see that the semi-independent actors ‘gratefully’ accepted the use of vertical power by the central government and the ambiguity and obscurity with which it acted during the process of closing down hospitals and reducing the healthcare network. it is also striking 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resources. the italian legislator, following the new public management (npm) guidelines, introduced private principles and instruments in the public field to improve the efficiency, effectiveness and financial stability of state enterprise. in particular, one of the main innovations introduced in this field regarded the recognition of the principle of distinction between politics and administration and the transfer from a bureaucratic model based on norms to a managerial model based on performance. the reform has the aim of changing the traditional “weberian bureaucratic” approach of the italian public administration, in accordance with the npm principles. this reform process regarded also other european countries that have undergone profound changes. as well as italy, the reform process in these countries was based on the principles of npm which proclaims: an increased focus on results in terms of efficiency, effectiveness and quality of service by setting standards of productivity; an orientation towards citizens-consumers in terms of service quality and customer satisfaction; the introduction of market mechanisms; a more strategic focus on the reinforcement of strategic capacity. this paper is underpinned by an analysis of the regulation introduced by the reform of the italian public administration to observe whether its main objectives have been really achieved. it is also based on a comparative analysis of the effects produced by reforms in italy and in other european countries. lastly this work aims to verify if it is possible to individuate a framework of convergence based on the principles of new public management. the introduction of new public management principles in the italian public sector marino calogero marino calogero phd candidate, department of management, faculty of political sciences, university of palermo, palermo, italy tel: 0039-328-1721560 e-mail: calomarino@unipa.it transylvanian review of administrative sciences, no. 30e/2010 pp. 30-54 31 1. introduction this paper deals with italian public administration reform, carried out over the past decades on the basis of “new public management” principles. this innovation is geared towards the introduction into the public sector of private management instruments, with a view to improving efficiency, effectiveness and financial stability. these efforts aim to correct the structural deficiencies in the italian system, which have generated inefficiency in public management and an improper allocation and use of resources. in particular, these innovations have affected several aspects of the public administration system, changing governance rules, introducing deregulation and a new perspective on the citizen’s roles and rights, implementing privatization and externalization, making provision for institutional decentralization, changing decisional processes and organizational models and reforming accounting systems. these innovations also have the aim of prompting a shift from a bureaucratic model based on norms to a managerial model based on performance. this reform process in public administrations involved many other european countries that have undergone profound changes; in these countries the reform process was also based on the principles of “new public management”. this does not mean that a complete uniformity of application has been found; on the contrary, in this regard, it is possible to highlight differences between one country and another. this paper is based on an analysis of the reform process carried out in the italian public sector to verify the results achieved. it also analyzes the administrative evolution in european countries to see whether it is possible to single out a convergence, in the various european public administrations, towards certain common principles inspired by new public management ideas. 2. new public management and the modernization of public administration the public administration, in the last twenty years, has undergone profound changes linked to the altered socio-economic context of modern post-industrial societies. previously, public organizations had an organizational and managerial structure on the lines of a bureaucratic model and did not possess the necessary capacity to deal with the new needs of the citizens. the rising complexity, the lack of financial resources and european politico-economic integration required a process of modernization in public administration. this process has affected: a) the managerial perspective, taking public systems in the direction of new principles and instruments to be used in the process of organizational, managerial and information system innovation; b) the political perspective, leading the public sector towards new forms of legitimization; and c) the juridical perspective, prompting the public sector to acknowledge the socialeconomic changes in society by introducing a new legal framework to suit the new conditions. 32 the above-mentioned reform process was especially based on the principles of new public management. 2.1 new public management principles the arrival of new public management has represented, over the last twenty years, one of the most significant events for the study and practice of public administration in most industrialized countries. this could be seen as an epochal evolution in the way the public sector is conceived, although doubts still exist regarding the components, the central characteristics and the definition itself. in fact, the initials npm represent a “wide-scale formula”, to which various meanings are attributed. these range from the general idea of “modernization of the public sector” to the narrower meaning of rationalization of the public administration. the npm makes claims to being universal; in fact, initiatives of the npm type are common enough throughout the ocse countries and have reached most commonwealth countries, not to mention the ex-communist countries (borins, 1998; hood, 1991; 1995a, pp. 166-170). this does not mean that a complete uniformity of application has been found. on the contrary, in this regard it is possible to highlight differences between one country and another, since the profiles for modernization range from complete openness towards market forces and privatization (great britain), to a radical re-planning of the public sector in line with the model of the private sector (new zealand); from cases of rapid advance towards managerial running, to cases of coexistence with residual links with more traditional forms of bureaucratic government in accordance with pre-defined rules (japan, germany, austria) (naschold, 1996, p. 19 ). a greater impact of npm-type ideas has also been noted in anglo-saxon contexts (though with internal differences) when compared to eastern regions of continental europe (ferlie et al., 1996, pp. 15-20). this could quite reasonably be due to the long tradition based on the predominance, in most european countries, of a school of thought of a juridical nature with regard to the public administration. npm should not be understood as a continual, uniform push towards a common public sector model; if anything it might be seen as a global change permitting differentiated local solutions, i.e. a widespread shift, as regards convergence, towards a limited variety of new and more uniform ways of government by the public administration. in other words, the “global” movement is rendered compatible with a certain number of differentiated models, which, in their individual cases, reflect the way in which the following variables combine and interact: • specific components introduced within each model and the order of priorities assigned to them; • the speed of the reform movement (which depends on the vitality and degree of convergence of the guiding forces); • the internal and external conditions determining the context in which the process of modernization has to develop; and • the approach taken in order to complete each model. 33 in spite of the above-mentioned observations, which aim to mitigate assumptions about the universality or globalization of npm, it is, at the same time, possible to try to extrapolate a table for general reference. the basic features of the npm ideas might be synthesized into three fundamental elements (osborne and gaebler, 1993, p. 277): 1. re-definition of the boundaries between state and market through privatization and externalization. 2. re-formulation of the macro-structure of the public sector by delegating state functions (at the lower organizational level) within the macro-structure (this phenomenon could be denominated institutional decentralization or external decentralization). 3. re-definition of operational rules characterizing the way in which the public sector carries out its functions and achieves its goals. this third component might be considered as characterized by seven main sub-components: a. toning down of the ties conditioning the public sector as compared to the private sector. this phenomenon includes the transformation of state economic bodies into limited companies and might, generally speaking, be called formal privatization; b. re-structuring of activities/businesses in the public administration, so that they are operating “on a commercial basis”, i.e. in a state of equilibrium between costs and revenue (corporatization); c. state competition (internal market); d. devolution of functions and competences from the centre towards outermost units or the lowest organizational levels within every entity in the public sector (this phenomenon might be called internal decentralization); e. re-definition of the administrative machinery replacing the bureaucratic model with the managerial one, shifting from the organization formally structured and law-oriented, to management and efficient breakdown of public resources, according to the new economic role of the state’s functions (matei, 2009b, p. 146); f. deregulation of the functioning of economic and social systems; and g. re-definition of citizens’ roles and rights. 3. the modernization process in the italian public sector modernization of the public sector in italy started later and at a slower pace than in other countries (such as the united kingdom, australia and new zealand) and has only started to speed up in the last decade. in particular, it has impinged on several aspects of the public administration system, mainly by: • changing the governance rules, through a redistribution of powers between the different levels of government; • reforming the political system through the adoption of the majority system and, finally, considering the third sector as a relevant social actor; and • introducing deregulation and a new perspective on citizens’ roles and rights. 34 deregulation initiatives have only been activated on a wide scale in the last few years. in terms of deregulation the idea is to carry out a swift thinning-out of existing legislation (notable for its size, detail and confusion). the process, which has only just been activated, is based principally on the following elements: • it aims to involve the various levels of government (state, regions, local enterprise); • the parliament must establish areas of activity, where the greatest priority needs to be given to deregulation; • the parliament retains its function of approving certain basic norms, which it is thought might be better decreed at the national level; • the remaining activity of deregulation (assuming it is necessary) and its implementation will be delegated to state administration, to independent supervising and regulating authorities, to the regions and local bodies, in relation to their respective institutional competences; and • a great number of proceedings, pertaining to a vast range of branches of activity, were instigated following the initiation of simplification and thinning-out procedures. particular emphasis is given to structural reform of administrative procedures, so that these are guaranteed to businesses, organizations or individual citizens: • swiftness and certainty of reply in answer to requests for information or supply of services; • greater responsibility on the part of public employees (to whom pecuniary sanctions might be applied, so that in the event of a delayed or unmotivated execution of a procedure the citizen might be compensated); and • transparency of administrative operations. the juridical problems of deregulation are contiguous to measures in which issues of an essentially operational/managerial nature are made evident. here we are referring, on the one hand, to the wholesale adoption of service-charters geared towards facilitating access to services and information and stimulating social control of public management and its performance. on the other hand, the reforms we are taking into consideration are openly aiming to boost the citizen’s participation in the defining processes of these charters and in monitoring the results. again, so that these arrangements might be effective, it is necessary to introduce well-devised operative mechanisms and adopt managerial tools aiming to foster quality of service, involvement of the client and achievement of results. a primary initiative in the reformulation of regulations relating to administrative procedures, in terms of better information, opportunity for access to services and transparency, was carried forward through law no. 241/1990. 3.1 implementing privatization and externalization the privatization process started at the beginning of the 1990s, with the formal privatization of the “casse di risparmio” and all other public banks (law no. 218/1990). 35 the privatization process proceeded slowly, in spite of the critical importance for the nation of its two major goals, i.e.: • contributing to the development of the financial system and the stock market; • contributing to the re-balancing of public financing, whose deficit was already a very serious problem in the early 1990s. naturally, the process was (and continues to be) accompanied by a heated debate over the “classic” questions of more convenient ways of launching the said privatization (anselmi, 1994; berti, 1998; bianchi, 1994; clarich, 1994): • the options between a model resembling either that of the public company (british experience) or the “noyau dur” (french experience); • recourse to the golden-share model with the objective of the state’s maintaining special rights of control of privatized public services; • the decision to institute supervising and regulating authorities for public services. the law regarding privatization (no. 474/1994) chose to favor the public company model (although in several important instances the alternative “noyau dur” was applied). the golden-share solution was eventually adopted and was followed by the decision to institute independent supervising and regulating authorities for public services. as opposed to privatization, the externalization (which consist on the delegation of public services supply to private market) came about, and continues to be verified, without any explicit legislative reform. above all, this is affecting local bodies (including local health units – “aziende sanitarie locali”) as it is indirectly demonstrated by the gradual reduction in expenditure on personnel as compared to that on purchasing goods and services. this evolution is, moreover, partly and more specifically caused by the recurring restrictions on taking on personnel imposed on local authorities by decisions at the intermediate level. 3.2 decentralization decree no. 59/1997 and the constitutional reform in 2001 introduced a sort of “administrative federalism”, in other words, the most wide-ranging delegating by the state, of functions, to the regions and local administration. the principle of subsidiarity was affirmed as a basic criterion regulating relations between the various levels of government. only a very limited number of functions were to remain under the direction of state administration. in their turn, regional administrations were forced to delegate to local bodies all those functions that might be better exercised at the local level, in line with the same principle of subsidiarity. this fundamental decision was supported by the ordaining of a certain number of operational criteria as guidelines for the delegation of functions (globality, efficiency, economy). together with substantial privatization and externalization, institutional decentralization aims to guide public administration towards the idea of a “light-weight” state. 36 3.3 public accounting system reforming accounting systems, ranging from legitimacy preventive controls to controls based on the evaluation of management performance. the 1990s witnessed important changes in the structure of public sector accounting. the fundamental stages were: • reform of the health system, approved in 1992, entailing the adoption of economic accountancy on the part of local health units (“aziende sanitarie locali”) and the abandoning of financial accountancy (marcon and panozzo, 1998); • wide-ranging reform of the local authorities carried forward in successive phases starting in the early 1990s, led to important changes in the accounting system of local bodies, including the introduction of a performance budget (denominated executive management plan) based around certain objectives, programs and resources (marcon, 1996; 1997). another aspect was the adoption of “economic” (= economic/patrimonial or general) accountancy, side-by-side with, and backed up by traditional financial accountancy; • reform of state accounting system (1997). among other things, this deals with re-planning the budget structure in accordance with the organizational structure, which is organized in such a way as to open the way towards a budget crafted for centers of responsibility. another cardinal aspect is the differentiation between content and structure in the balance, in agreement with the informational needs of the principal actors (parliament, on the one hand, ministers and managers on the other), analogically with the balances of local bodies. the framework is completed by the introduction of instruments of managerial control (as a system of analytic accountancy on the part of the cost-centers) and a link between resources/results and the management’s budget goals. taken as a whole, the above-mentioned series of accounting reforms reflects the strategic change that is characterizing the public sector’s decision-making processes. in fact, the acceptance of a new relationship between politics and administration and the principle of managing for results, requires a transformation in accounting information. in the previous set-up the decision-making processes were of a centralized type and controls were of a legal-formal type, whereas the basic function of the budget was one of authorization. on the contrary, the new set-up is characterized by decentralized responsibility, wide-ranging delegation of authority to management and the adoption of efficiency-effectiveness checks. on the other hand, as regards control-system initiatives the synthesis of the most significant initiatives of an npm type taking place in italy over the last twenty years has greatly emphasized the emergence of new instruments and mechanisms of government (among the various aspects). first of all, the entire italian public administration was hit by a change in the philosophy and functions of checking. under these labels the elements can be grouped as follows: 37 • shift from preventive checks of legitimacy to subsequent checks for results; • the adoption of the principle, on the basis of which, results of the assessment process should influence the allocation of public resources, in accordance with a system of prizes and sanctions based on merit. consequently, a change in checking objectives was introduced, as well as a change in the actual nature of the checking instruments utilized. the shift from traditional monitoring of expenditure to monitoring of costs, output and outcome, belongs within this category, as do adopting a system of assessing performance and adopting periodic reports on efficiency, effectiveness and economizing. 3.4 decision-making processes changing decisional processes and organizational models, through the introduction of those operating mechanisms needed to bring about more performance-oriented management in public administration (bianchi, 2004). the main innovation introduced in this field regarded the transfer from a bureaucratic model based on norms to a managerial model based on performance, the privatization of the employee relationship in the public sector, and, lastly, the recognition of the principle of distinguishing between politics and administration. in particular, greater autonomy was provided to the executive body in contrast to the political sphere. at the same time, it grants politicians the power to carry out timely and regular evaluations regarding the efficiency, efficacy effectiveness and financial stability of management action. lastly, it would like managers to be involved in proposing strategic objectives. the reform, therefore, has the aim of creating a system which combines the principles of function separation and strategic interaction. the new relationship between politics and administration necessitated providing politicians with orientation skills and public executives with managerial skills in order to avoid political interference and to fully achieve managerial accountability in the sphere of management (marcon, 1996; 1997; mussari, 1994). in fact, one of the main goals of the reform was to give public managers the same powers as to private company managers. consequently, it was necessary to ensure that the management group had greater managerial autonomy from the political bodies, bearing in mind that before the reform politicians had the power to influence managerial action considerably. this often occurred because power was officially sanctioned to the political authorities so that they had the authority to substitute managers during the execution of their managerial functions. with regard to this, the new regulation has eliminated this power and aimed to recognize greater managerial autonomy. this is the principal element which distinguishes the old conception of public administration from the new. in fact, the previous decision-making process was plainly managed by politicians, while executives could not be rendered accountable for their activities. the new model, on the other hand, envisages public executives 38 with greater managerial autonomy, and at the same it implies that managers have full responsibility for results achieved in the execution of their duties. the innovation was first implemented through legislative decree no. 29/1993, which stipulated a clear distribution of skills between politicians (orientation competencies) and executives (management competencies) and modified the hierarchical relationship between them through the elimination of powers which allowed politicians to influence managerial activity. the objectives of the reform were finally implemented by the legislative decree no. 80/1998, which extended the innovations to all managerial positions, and by the legislative decree no. 165/2001, which coordinated and regulated all provisions concerning public employees. the reform, therefore, introduced the principle of functional separation to regulate the relationship between politicians and public managers. 4. the current state of the reform in italy everything described in the previous paragraph justifies our affirmation that during the last twenty years the italian path to modernization of the public sector has been taking advantage of the entire “system of instruments” of an npm type. the various elements making up the whole npm structure have entered the italian context in a more or less wholesale fashion and at several levels. certain aspects regarding the motivations, temporal development, range and impact of the various initiatives have already been dealt with, but ulterior consideration does now seem appropriate. firstly, privatization entered the picture at a later date and more gradually when compared to other components; in fact, it is seen as a controversial issue, since it gives rise to political conflict in both left and right-wing parties, because of internal philosophies favoring the type of public sector with a significant position in the economy; this is without counting political movements inspired by catholic solidarity, and which strongly support state intervention. the need to streamline the public sector is widespread, because of enormous state expenditure and public debt (messori, padoan and rossi, 1998, p. 118). secondly, a toned-down version of corporatization was introduced (borgonovi, 2005). in most cases the costs incurred by those utilizing the services do not reflect the principle of total cost, as postulated by the expression “management on a commercial basis”, which defines the concept of corporatization in rigorous fashion. this means that most “corporatized” public bodies continue to be widely financed by taxpayers and this also continues to hold true, though in decreasing mode, in sub-sectors (such as health units and local bodies) where the process of corporatization has advanced on a wider scale. thirdly, competition is still in its initial stages and only makes its presence felt in particular cases, such as certain partly-privatized public services and health organizations (following the introduction of the principle of patient mobility compensation). 39 fourthly, a fresh surge of institutional decentralization is now breaking ground under the previously-mentioned label of “administrative federalism”; but there are still great expectations of further development, witnessed by the on-going debate regarding fiscal federalism and federalism plain and simple. in fact, it is constitutional reforms that occupy end-of-century prime time in political debate. it is difficult to foresee the final outcome and implementation times, since these reform schedules group together not only the theme of institutional decentralization, but also particularly complex questions, such as: overhaul of the electoral system in a more decidedly majoritybased direction; overhaul of form of government (adoption of a presidential system is one of the fundamental options); modification of norms governing judiciary power and the functioning of justice. the same considerations with regard to privatization and institutional decentralization are applied to initiatives such as: deregulation, re-definition of the role of citizens’ rights and accountancy reform at the state level. in all these cases: a) the reform process has only recently begun; b) the impact is therefore still limited; c) and there is strong pressure for further development. fifthly, the reform did not completely accomplish the principle of functional separation between politicians and public managers. this principle was formally adopted in italian legislative reform (art. 4 decree no. 165/2001, expressly entrusts public managers with all managerial competences; art. 14 prohibits politicians from interfering in a manager’s activities), but the new regulation also contains rather vague aspects, which might contribute to preventing the actual application of the abovedescribed principle (marino, 2009). in particular, it introduces a complex series of instruments that could provide political authorities with the power to influence an executive’s actions, these are: • regulation of the managerial role; the first influencing element is represented by the power of nomination of top managers and general managers, a power which the law (art. 19 par. 3 and 4) grants to political authorities. these powers can directly affect the managers in their activities, considering that the politicians can, at their discretion, assign and confirm managerial posts. in this hypothesis managers could be influenced in their managerial choices by politicians who have the power to confer the role on them. the regulation provides a further influencing aspect, which is represented by the term of duration of the appointment (art. 19 par. 2). the limited duration of the position might prevent managers from remaining impartial from political bodies. in fact, managers with a short-term appointment might be subject to severe pressure from politicians having the power to re-confirm their appointment. • career progression of professional executives; the normative (art. 23, par. 1 leg. decree no. 165/2001) states that only managers who have held a general managerial position or equivalent duties for at least three years, may be incorporated on the higher managerial level. when management is organized on 40 two levels (as in the case of the ministries) it may exercise a political influence, because the choices made by the political bodies might affect an executive’s career development. a position conferred by politicians (who have the power to confer top manager and general manager positions) might have direct consequences on the manager’s career progression (merloni, 2006). • the spoils system; the spoils system is a mechanism that allows politicians who have won elections to choose which persons to assign to top managerial posts (e.g. general secretary or head of ministry department). more specifically, the normative (art. 19 par. 8 leg. decree no. 165/2001) states that the top management appointments (general secretary and head of department) will terminate 90 days after the new government has taken office, without any need for justification because of the new government. when managers are linked to politicians in this way, it is very unlikely that administrative action will respect the principle of impartiality (art. 97). • the improper use of external management; the vague formulation of art. 19, par. 6 have allowed politicians to widely use this opportunity to boost the number of fiduciary positions. external management represents an instrument for introducing the spoils system in the public sector, and it has permitted executives to join the upper managerial level as a result of their personal affiliation to political bodies. • organization restructuring; the leg. decree 300/1999 assigns the adopting of organization restructuring to public sources, such as government regulations and ministerial decrees. this possibility is often exploited by political authorities to operate the systematic removal of managers, the phenomenon being called a “disguised” spoils system (merloni, 2007). the new regulation introduced by the reform, therefore, has not fully accomplished its aim, because it has provided instruments that may be used in the public administration to reduce managerial autonomy and to allow politicians to gain influencing powers over a manager’s activities. lastly, a few initiatives are distinguished by more significant advances. these include: formal privatization, re-definition of the administrative machinery and internal decentralization. in fact, almost all public economic bodies have been transformed into limited companies. the intervention in the administrative machinery is distinguished by the wholesale adoption of the principle of budget delegation: from the political organizational level to the managerial level (and further down the scale the organizational level as far as local public bodies). moreover, the internal decentralization issue is distinguished by the wholesale adoption of operational mechanisms for planning and checking; these aim to ensure that managerial operations connected with acquisition and employment of resources are carried out in the light of the principle of economic rationality (pursuit of efficiency and effectiveness). in the light of the above considerations it is possible to affirm that new public management 41 principles have strongly affected the reform process in italy leading the italian public sector towards the modernization of its previous structure. this is certainly a profound change, probably destined not to find its equal in other countries in the npm movement, and above all, in countries of western-central europe. 5. administrative evolution in european countries the united kingdom is seen as the progenitor of new public management in europe. during the ’80 margaret thatcher shifted power from the intermediate centers of power, which had been created by the political powers and the administrative body as a whole (unions, local bodies, professional groups), moving the responsibility for state-reform towards the centre. the white-collar unions were sized down considerably and top managers with permanent contracts were placed in charge of administrative agencies (rhodes, 1997). the previously-nationalized industries and public services were nearly all privatized. even more emphasis was placed on the characteristics of pragmatism and managerial ability, which were however already present in britain’s administrative organization. with the change of government from conservative to new labor in 1997, the role of market rules in the public services went from offering discipline and guaranteeing the monetization of the effects of competition, to being the source of innovation and renewal in the public services. public contracts and public procedures of supplying money were inspired more by collaborative methods than strictly competitive ones. in many respects scandinavian countries can be treated as a whole, with holland often being grouped together with them (torres, 2004; preforms, 1998). scandinavia and holland are linked by the fact that their administrations place great care on the needs of their citizens and there is a continuing tradition of consultation and negotiation between public and private authorities (torres, 2004, p. 101). the direction of administrative reform in these nordic countries is one of radical political decentralization and administration, in the context of a public sector that remains pervasive and a state that is committed to providing welfare (which has only been sized down to a slight extent). however, scandinavian public administration remains strongly legalistic (jorgensen, 1996). sweden has several public agencies, whose independence is guaranteed by the constitution. the ministries do not have direct responsibility in the agencies’ decisions and therefore they cannot oppose their decisions. checks are carried out by administrative jurisdiction and the ombudsman. in denmark and norway, on the contrary, public agencies are subject to direct ministerial control. norway and sweden differ from denmark in that they have politically nominated secretaries of state and elections every four years. in denmark, the prime minister can decide when to call general political elections. these differences bring about different relationships between politicians and civil servants. in norway and denmark, during the 1980s, a system of management was introduced based on the definition of goals and verification of results (christensen and laegreid, 1998). all the nordic countries adopted excellent initiatives for verifying administrative performance. among scandinavian countries 42 denmark is often seen to be in the vanguard of decentralization (preforms, 1998). compared with sweden, denmark has a more pragmatic and liberal style, whereas sweden has a long tradition of official policy analysis and diagnosis of administrative problems, with strong ties between academia and actual practice. in the netherlands, institutional tradition has always aimed to involve civil society in the supply of services and local-level decision-making (kickert, 1995). norway and finland lag behind denmark, sweden and the netherlands, but the reform dynamics are similar. in the german-speaking world (austria, germany and switzerland), the administrative model is still the classic weberian one (torres, 2004). the public sector has a distinct profile that clearly places it outside the social and economic sphere. administrative practice is linked to the rechtsstaat doctrine and is strongly legalistic. relationships between offices function through detailed directives, organized in line with a strict hierarchy. the public employer-employee relationship is characterized by permanent contracts, job security and non-transferability of post of work. the parties recruit their managerial class from the actual ranks of public administration (torres, 2004, p. 101). new public management philosophy, based on contracting and managerialism runs into institutional, cognitive and normative obstacles in the german administrative tradition. an overall reform-bill is further complicated by the federal structure of these countries, where each region holds the reins of its own administrative policies and there is a strong tradition of local autonomy (wollmann, 2001, p. 167). in germany and austria there has not yet been an extensive application of the instruments for checking accrual-accounting balances and performance indicators. the introduction of contractual instruments of common law as a normal method for managing public activity is still in the embryonic state. in switzerland the status of civil servant is open and the interchange with the private sector is quite good (schedler, 1997). however the salary levels and the rigid salary scheme make it difficult to attract certain specific types of worker (e.g. programmers and financial managers). at intermediate or regional levels of public administration, the influence of consultants from the private sector has been decisive in the introduction of typical new public management solutions. the countries of southern and eastern europe are influenced by the french administrative model, founded on the centrality of administrative law and the supply of services at the same level throughout the country, through the workings of the central apparatus of the state. the management of public finances is still mainly centralized, in spite of a recent tendency towards federalism or fiscal regionalism (torres, 2004, p. 104). in romania, for example, the reform process has followed two directions. on one side, the romanian system has been characterized by a conservationism that aimed at avoiding changes founded on modern principles that could address the needs of the present romanian society (androniceanu, 2006, p. 95). on the other side, a series of changes took place in the romanian administrative system during the last years. 43 they concerned: the reform of civil service, which aims to improve the management of civil service and to develop the life long learning of civil servants (andrei et al., 2009, p. 2); the decentralization process and the reform of local public administration; the improvement of public policy formulation process; the simplification and improvement of the decision making process. moreover, the reform has provided a series of changes at local level that reflect the npm influences and it has established a new model of civil servant, that must become a “change agent” and bring a new mentality in the romanian public administration. however, the full adoption of the npm principles and values in a country like romania has to be preceded by a systematic process of preparation and adjustment of the public administration that adapt them to the social, economical, political and cultural environment. in france the public sector has been affected by competition. market principles and the individual assessment of performance are difficult to impose in a context of heavily unionized public employment (guyomarch, 1999, pp. 177-185). spain represents a particularly interesting example for other reasons. until 1975 the country was governed by an authoritarian regime, which, on the contrary to the rest of europe, greatly limited the spread of the welfare state and administrative structures. with the fall of francoism the democratic regime tried to close the gap, and between 1975 and 1995, public sector expenditure went from 24.4% to 45.5% of gnp. therefore, spain found itself combating a rapidly expanding public sector, whilst throughout europe, new public management called for a containing or reduction of public spending. in more recent times, the spanish government has introduced many of the new public management instruments, but with no great results (torres and pina, 2004, p. 446). wide-scale administrative decentralization and greatly reinforced unions have, without doubt, made the road to change more complicated. adopting occasional measures, without the introduction of a complete reform packet, has been another cause of the reformers’ significant failure. in spain too, privatization has not been accompanied by incentives to be competitive. managerialism has advanced slowly, and responsibility for actual management has not been clearly defined. the public finance system is still centered exclusively on correctness and formal ties in management, rather than on checking the results. administrative management is strictly separated and it is difficult to establish retribution systems based on individual performance, just as it is difficult to attribute responsibility functions to external personnel recruited ad hoc (torres and pina, 2004, pp. 453-456). to conclude this brief summary it should be noted that the rush for reform that has involved the public administration set-up throughout europe is multiform. so far the road to reform has been laid down by the intervention philosophies of new public management. the reforms carried out in nordic countries and holland might represent an alternative to the model for modernizing the public sector based exclusively on the actual character of the market, accessible above all to german-influenced countries and the mediterranean area, where a certain bureaucratic spirit has been 44 maintained in the recruitment and training of civil servants. in these countries the civil servants are, and will remain, professionals in law and are by nature reluctant to take decisions. in nordic europe and the netherlands the predominance of jurists was greatly reduced in the second half of the 20th century. southern european countries introduced various measures aimed at raising the quality of public services. for this reason they have based themselves on directives of the european foundation for quality management (efqm), which lays down goals regarding leadership, attention towards employees and citizens, collaboration with other bodies and institutions, development of performance indicators and checking of results. as regards the other elements in new public management, more closely linked to competition (such as the providing of public services based on competitive bargaining and emphasis on the private management style), the three great continental-european models (nordic-scandinavian, germanic, southern european) need to question the role of the public sector in society, and therefore strong resistance or refusal will presumably be encountered. only sweden, and to a certain extent finland and holland, seem to have embarked on concrete initiatives in this sense. 6. directions of convergence in spite of the different ways in which npm principles have been received in various european countries it should be noted that, from the analysis of the administrative reforms carried out over the last few years it is possible to single out convergence in the various european public administrations towards certain common principles inspired by npm ideas. by convergence we mean specifically the introduction of guide-lines laid down by npm into the public administration of various nations. international convergence of public administrations is also favored by the increasing importance of the international arena, and therefore by the diminished capacity of governments to isolate themselves economically and politically from global pressures. these pressures manifest themselves through international markets and organizations such as the european union. convergence and internationalization of national public sectors develop in certain principal directions inspired by the actual principles of npm (peters and pierre, 1998). • thinking up new instruments for checking and allocating responsibility. changes the role of elected representatives, something which is usually downsized. political leadership is less strongly-linked to an elective public office and begins to be more dependent on political entrepreneurship. political leaders take on key responsibility in developing networks and “consortiums” of public and private resources. the only role of a traditional type left to politics is that of establishing goals and priorities. • streamlining of the separation between public and private. it is necessary to close the gap that has been created between the state and the rest of society. anybody operating on the market, under strong pressure, has developed sophisticated models of management and allocation of resources. public bureaucracies have 45 long remained cut off from any type of pressure. this has resulted in disorganization and neglect, inefficiency, obsession with procedure, indifference towards the needs of the consumer. new public management theories maintain that efficient management techniques are the same in every sector, and should not therefore be differentiated in accordance with the public or private nature of the organization (peters, 1996). • greater emphasis on competition. the idea of exploiting competition to create greater efficiency and more attention to the client in the public sector is a clear demonstration of the penetration of the principles of company-oriented derivation. the introduction of competition has had important consequences: it requires a loosening of political control over functioning of services and the attribution of wide-ranging decisional discretion at all levels of the organization. thanks to the creation of an internal market for all services, the competition consents each organizational unit to evaluate its costs in a much more accurate way. • greater emphasis on checking results. the checking of results was introduced through the use of indicators such as customer-satisfaction, or introducing private actors or volunteers in the production and supply of public services, in order to boost adherence to the rules of good administration and adaptation to citizens’ demands. • creation of new management tools and techniques. according to the theories of new public management managing by pointing in a certain direction is the key task for the public sector (rhodes, 1997, p. 49). this entails establishing priorities and setting goals. the lowest common denominator of these intervention policies is a state that, if not yet minimal, is certainly more streamlined, less costly and potentially more efficient than the weberian state. the intervention policies can be translated into specific reform measures in three categories: a) market-based; b) participative; and c) deregulation-based. a) market reforms market reforms include: introduction of the agency model, which attempts to keep administration away from political decisions; payments linked to merit for public employees; the creation of an internal quasi-market, separating suppliers from purchasers in the public sector; bargaining based on achieving goals, especially in recruiting other managers; adoption of accrual accounting instead of cash-based accounting, emphasizing the importance of disposable capital and costs of future outlay; revision of every administrative program on the basis of cost-benefit analysis; 46 creation of “single desks” in all cases where it is possible to eliminate duplication of competences (merusi, 2002). a.1. the agency model in the european countries agencies are executive units that operate at arms’ length from the national government (ministries). they are in charge of policy implementation, for example the payment of benefits, regulation and inspection, doing research and/or offering training, registration, licensing, and so on (pollitt et al., 2004). because they are part of the central government, they can operate in a more business-like fashion: for instance with respect to financial management (e.g. using an accruals accounting system) and in personnel decisions. agencies are found in many countries, including norway, denmark, netherlands, finland, sweden, belgium, italy and the uk (pollitt et al., 2004). despite the similarities in the label, there are big differences in practice. for example if we compare the next steps agencies in the united kingdom and the agencies in the netherlands we find that the preference for the agency model in these two countries has different origins: in the uk agencies were the answer to insufficient managerial autonomy, while in the netherlands they were seen as a less controversial alternative for another, highly autonomous type of executive body. this difference in origin is reflected in significant differences in the timing and pace of agency creation, their numbers and their design. the dutch copied the english agency model – which explains why dutch agencies are from a later date – but adapted it to the dutch legal administrative system and rules of ministerial accountability. for example, in the uk the government can establish next steps agencies without new legislation, but dutch agencies need the approval of parliament. nevertheless, there are interesting similarities, for example in the way in which agencies are controlled by their parent departments, through quasi-contracts, performance measurement and liaison officers. however, it would be an overstatement to conclude that executive agencies in these two countries are the same. furthermore, if we compare the agency model working in scandinavian countries we find that sweden is endowed of several public agencies whit a great independency granted by the constitution. ministries do not have direct responsibilities in the decision of the agencies and, therefore, the political bodies cannot affect their decisions. control is carried out by administrative court and by the ombudsman as well. in denmark and norway, on the contrary, the agencies are submitted to a direct ministerial control. in the light of the above considerations it is possible to affirm that the agency model has found different forms of application in these countries, even if it is regulated in the different countries by some common principles inspired to new public management idea. b) deregulation deregulation is based on the assumption that many of the rules laid down within public bodies for managing personnel and the budget are useless and should be 47 eliminated. there are various similarities with market reform, but the central element in this case is different. deregulation can predict: a change in the rules of financial management, so as to consent agencies to decide in greater autonomy; the attribution of greater autonomy to single administrative units with regard to supply agreements and contracts; the elimination of rigid controls over employment, promotion and dismissal of public employees (peters, 1997). c) reforms of a participative nature reforms of a participative nature aim to improve the quality of services by involving workers from the sector and consumers (often called “clients”) in decision-making. participation reforms include: citizens’ procedural rights in dealings with institutions; quality management; decentralization, which devolves responsibility for projects to outside bodies; citizens’ charters or service charters, which stipulate the minimum quality levels to be expected from the services provided. we shall now analyze several of these reforms of a participative nature in more detail, and with the aid of examples. c.1. the ombudsman and the defense of good administration among the tools for fostering quality in administrative activity, the ombudsman stands out in the latter part of the last century as the institution with the greatest capacity for international diffusion (mortati, 1974). today there is an ombudsman or an analogous authority at the national level in more than 100 countries throughout the world, without counting the ombudsman instituted at the local level. the institution of the ombudsman, better known in italy under the title “difensore civico” (civic defender), originated in sweden in 1809, and after more than a year’s incubating period started to spread throughout scandinavia and subsequently the rest of the world. the basic characteristics of the ombudsman are today those of a “complaints office” for the citizen dissatisfied with the treatment of the public administration. through informal powers and the moral persuasion that it possesses (recommendations to public administration, official relations with parliament, faculty of proposing reforms) the ombudsman can often resolve controversies through negotiation between administration and private parties (cominelli, 2005), and can put itself forward as an institution to reform other institutions. the limited costs and reduced operational times have turned the ombudsman into a practical alternative to administrative jurisdiction (leino, 2004, p. 364). although the ombudsman exists at regional and local levels, only italy and germany of the 25 members of the european union do not have an ombudsman at the national level. in 1995 the european union nominated the first eu ombudsman (named “mediatore europeo”, i.e. european mediator, in the italian versions of the treaties), which could officially deal with complaints made by eu citizens about eu institutions. in the first ten years of activity the eu ombudsman has seen the number of complaints quadruple and has had many decisions overturned, as well as administrative practices that do not fully respond to the canons of good administration. 48 the institution of the ombudsman has had considerable success in state organizations and its reach is today also spreading to international organizations. it is a flexible tool and a permanent source of administrative reform proposals. the eu ombudsman has managed to put so much pressure on the charter of nice and the constitution that the right to good administration has been incorporated, and various institutions have been compelled to take into consideration the possibility of a binding “good administration code” for their employees. the best road for the ombudsman to take consists in keeping an eye over quality in administration, not from a legalistic point of view, but fostering a culture of service in the administrational sector (tomkins, 2000). while this might not present a problem for the nordic administrative culture, difficulties arise with the german, french and southern european administrative models. the ombudsman adapts to whichever institutional and cultural context it might find itself in, and modulates its operations by following the central idea of change and good administration. specifications as to what constitutes “good administration” crop up ever more frequently in national regulations and paradoxically stem from a compilation of cases of poor administration. c.2. service charters for the citizen citizen’s charters are an experiment arising out of a uk government initiative launched in 1991 with the aim of implementing a ten-year program to improve public services. the citizen’s charter proposed to set standards of quality in the providing of services, to assess the validity of performance and in the final analysis, to encourage improvements in quality through pressure applied by public opinion. the standards laid down in the charter were of either a quantitative type (e.g. maximum waiting time) or qualitative type (e.g. respect for an individual’s privacy and dignity), and in cases of infringement compensation was envisaged. in subsequent years other countries followed the example of the citizen’s charter: among these there were france, belgium, portugal, italy and spain (torres and pina, 2004). the italian initiative was launched in 1993 and the major difference from the uk model was that there was still no provision for a standard (as regards services) applicable at the national level, the faculty to fix its own minimum standards being left in the hands of the individual bodies. apart from this, very few italians knew about the service charters, at least initially, because they were poorly advertised, and so adoption of the charters was delayed by many months or even years. a survey carried out in 1998 by the electricity and gas authority revealed that knowledge of the charters on the part of the citizen varied from sector to sector, and even in the most virtuous sectors the figure never rose above 10%. in electrical services the quality standards had been set directly by the operators, with very ambitious goals. compensation in the event of disservice was only awarded on request, and seeing the lack of information regarding standards, in the vast majority of cases compensation was never even claimed. 49 little attention has been devoted to the launching phases and evaluation of the results of the service charters. in the united kingdom, implementation of the project was entrusted to a permanently operational task force endowed with excellent resources. the committee responsible for supervising the service charters in italy did not have a permanent staff and was made up of three part-time experts. however, the most significant element of differentiation when compared to other experiences was that in applying the standards of quality practically in italy these were confused with a formalized right to a certain level of performance. on the other hand it was observed that the best way of rendering the charters more effective was, rather than create binding obligations for the service-supplying body, to create moral obligations of responsibility and accessibility in dealings with citizens. one of the advantages of the service charters in the united kingdom was to succeed in improving quality without being necessary to initiate great legislative reforms. the legislative provisions that set down new laws risk constituting an obstacle to development of the most flexible and responsive public services. in the united kingdom, the results of the assessment did not only serve to impose sanctions, but also, and principally, to create higher expectations. the differences in the link between “rights” and “action” are often related to the cultural context. in the common law profile, the service charter represents a verifiable tool inspired by new public management. goals to be reached, rather than juridical aspects, are indicated; these objectives are laid down from above in order to maximize public attention of consumers and managers. in the public law profile, the service charter tends to confuse standards of quality with rights, and ends up creating additional guarantees, which often actually turn out to be rather ineffective in the administrative system (lo schiavo, 2002, p. 695). 6. the application of the ombudsman and citizens charters in the european countries: profile of convergence the ombudsman and citizens charter have found different forms of application in the european countries. in sweden the main assignment of the ombudsman is to contribute to remedying deficiencies in legislation. if, during the course of their supervisory activities, reason is given to raise the question of amending legislation or of some other measure by the state, the ombudsmen may then make such representations to the parliament or the government. the general framework is that the holder of the office is appointed by the legislator. he is independent of both executive and judiciary and is empowered to inquire into administrative and executive acts. his normative function is to safeguard the interests of citizens by ensuring administration according to law, discovering instances of maladministration and eliminating defects in administration. in finland, denmark and norway the ombudsman has little formal power towards public authorities other than the rights to investigate, inspect and to demand adequate information. compensating for the lack of binding and formal powers, the interaction 50 between the ombudsman and the national parliament has proved a dynamic tool in denmark in the transformation of ombudsman opinions into action and compliance. in spain, whenever the ombudsman receives any complaints regarding the operations of the justice administration, it shall forward them to the citizen’s rights ministry in order to investigate its veracity and adopt necessary measures in accordance with the law, or pass it on to the general council of the judiciary. the spanish ombudsman is also authorized to interpose any unconstitutionality and protection appeals. it may also initiate habeas corpus proceedings. in romania through its recommendations, the ombudsman notifies the public administration authorities with respect to the illegality of the administrative acts or deeds (including silence) or the late issuing of the acts. the ombudsman is entitled to perform its own investigations, to request the public administration authorities any information or documents necessary for the investigation, to hear and take statements from the leaders of the public administration authorities. the above description shows the different features and assignments that the ombudsman has in each european country, although the principles and goals which inspire this tool are the same for all countries and consist in the protection of the citizens against the abuses of public administration. regarding citizen’s charters it is necessary to highlight that in the european union almost all member states are doing considerable work in the policy area of improving service quality. in belgium, for instance, in 1992 was published the public sector customer charter. the aim of this charter is to improve the legitimacy of the state and the common good. the ultimate goal of the belgian charter is the improvement of public interest. in the same year france introduced the public service charters as well. the strategic goal of this policy was the improvement of the relationships between administrative services and the users of such services. in portugal the approval of the quality charter in 1993 marked the consolidation of quality in the portuguese public administration. this was a deliberate attempt by government to generate confidence in a system of public administration that enjoyed little public support. in 1997 ireland introduced the initiative of quality customer service in order to improve the service standards. italy adopted the service charter in 1994 in response to the need to improve service quality and the relationships between the citizens and administration. in the same direction greece introduced the citizen’s charter, which is a specific action with similar operational purposes as the above mention policies or initiatives. also, the service charter logic was introduced into finish public policy based on a customercentered approach to develop the quality of public services. from the above brief description we may conclude that the decade of 1990 is the period of the growth of citizen’s charters. most of the member states of the european union designed and implemented policies focused on the improvement of public services delivery. although there are differences between them either on their 51 institutional basis, the strategic goal is the same between all of them. the european citizen’s charter shares a common idea – that is to specify in advance service targets which must be met. the objective of the public services is to serve the citizen – customer. with the adoption of citizen’s charter the citizen is considered as a customer with demands and expectations. citizen’s charters are a clear trend towards a cross-system policy convergence. individual administrative systems, at least in the dimension of the relationships between citizens and public services, are looking to resemble one another. actually, the idea of citizen’s charters has been transferred among the member states of european union, although there are some differences between the citizen’s charters. under this profile we may argue that a policy learning approach is a realistic one consideration of the expansion and widespread diffusion of citizen’s charters within the framework of european union. at this point we have to underline that such super-national configuration contribute to the learning process. it is unavoidable that policy makers in one country seeks to learn lessons from policies that are designed, implemented and appeared to be successful elsewhere. besides, it is well know that european union has not a common policy on how to deliver public services or on how to structure the relationships between citizens and public services. instead, european union looks like a forum, which facilitates the exchange of policy ideas. in accordance with the above considerations we can conclude citizen’s charters are examples of policy convergence given that they have been established across a range of european countries. 7. conclusions in the light of all the above we might conclude that the principles of npm have had a great influence on the processes of reform and modernization in the italian public administration. in particular, from a comparative analysis with other european countries it emerges that italy is one of the countries that has been most stimulated by the npm guidelines. however, it should be stressed that the npm principles have influenced reform movements in most of the world. this does not mean that a complete uniformity of application has been found. in fact, to this end it is possible to highlight differences between one country and another. in particular, every administrative tradition has reacted differently in accepting or refusing the various types of reform. changes in the public sector certainly depend on differing cultural variables that impinge on the circulation of ideas and policies. for example, a greater impact of npm-type ideas was also discerned in anglo-saxon contexts when compared with eastern regions of continental europe. this can be reasonably put down to a long tradition based on the predominance in most european countries of a juridical-type school of thought in public administration. anglo-american culture has shown itself to be particularly inclined towards market reform, whereas german culture has opposed it forcibly. on the other hand 52 scandinavian administrative tradition has proved to be receptive towards injections of managerial quality. deregulation reform has been carried out more frequently in australia and the usa than in europe. the most common reforms have been those of a participative nature, followed by internal deregulation in public bodies. nevertheless, in the light of what has been documented here, it is also possible to identify (in spite of national differences) an administrative convergence of reform movements carried out in the various european states on the road to adopting several common principles, clearly inspired by the npm, which have facilitated the birth and implementation of the process of modernization of european public administrations. references: 1. andrei, t., matei, a., tusa, e. and nedelcu, m., ‘characteristics of the reforming process in the romanian public administration systems’, 2009, transylvanian review of administrative sciences, no. 25e, pp. 13-31. 2. androniceanu, a. and şandor, a., ‘new public management impact on the romanian public administration’, 2006, administraţie şi management public, no. 6, pp. 93-99. 3. anselmi, l., ‘interesse pubblico, criteri di economicità e privatizzazioni’, 1994, azienda pubblica, no. 2, pp. 381-391. 4. berti, l., affari di fine secolo: le privatizzazioni in italia, roma: ediesse, 1998. 5. bianchi, c., sistemi di programmazione e controllo per l’azienda regione, milano: giuffrè, 2004. 6. bianchi, m., ‘difficoltà e fallimenti delle privatizzazioni in italia: considerazioni e casi di patologia organizzativa’, 1994, azienda pubblica, no. 2, pp. 345-379. 7. borgonovi, e., principi e sistemi aziendali per le amministrazioni pubbliche, 5th edition, milano: egea, 2005. 8. borins, s., ‘lessons from the new public management in commonwealth nations’, 1998, international public management journal, vol. 1, no. 1, pp. 37-58. 9. clarich, m., ‘i contesti istituzionali delle privatizzazioni tra progetto e realtà’, 1994, azienda pubblica, no. 2, pp. 189-195. 10. christensen, t. and laegreid, p., ‘administrative reform policy: the case of norway’, 1998, international review of administrative science, no. 64, pp. 457-475. 11. cominelli, l., il mediatore europeo, ombudsman dell’unione. risoluzione alternativa delle dispute tra cittadini e istituzioni comunitarie, milano: giuffrè, 2005. 12. guyomarch, a., ‘public service’, ‘public management’ and ‘modernization of french public administration’, 1999, public administration, vol. 77, no. 1, pp. 171-193. 13. ferlie, e., ashburner, l., fitzgerald, l. and pettigrew, a., the new public management in action, oxford: oxford university press, 1996. 14. hood, c., ‘a public management for all seasons?’, 1991, public administration special issue on “the new public management”, (edited by r. a. w. rhodes), vol. 69, no. 1, pp. 3-19. 15. hood, c. ‘emerging issues in public administration’, 1995, public administration, vol. 73, no. 1, pp. 165-183. 53 16. jorgensen, t.b., ‘from continental law to anglo-saxon behaviorism: scandinavian public administration’, 1996, public administration review, vol. 56, no. 1, pp. 94-103. 17. kickert, w.j.m., ‘public governance in the netherlands. an alternative to angloamerican managerialism’, 1995, public administration, vol. 75, no. 4, pp. 731-752. 18. leino, p., ‘the wind is in the north. the first european ombudsman (1995-2003)’, 2004, european public law, vol. 10, no. 2, pp. 333-368. 19. lo schiavo, l., ‘quality standards in the public sector: differences between italy and the uk in the citizen’s charter initiative’, 2000, public administration, vol. 78, no. 3, pp. 679-698. 20. marcon, g., ‘il controllo di gestione nel nuovo ordinamento finanziario e contabile degli enti locali’, 1996, azienda pubblica, no. 2, pp. 273-309. 21. marcon, g., ‘italy’s local government budget reform: a managerial drive bounded by bureaucratic hysteresis’, 1997, 25-26 september, esrc/cima workshop, edinburgh. 22. marcon, g. and panozzo, f., ‘reforming the reform: changing roles for accounting and management in the italian health care sector’, 1998, the european accounting review, vol. 7, no. 2, pp. 185-208. 23. marino, c., ‘on the relationship between the political and managerial levels in the italian public administration reform’, 2009, transylvanian review of administrative sciences, no. 28e (special issue), pp. 246-262. 24. matei, a. and matei, l., the systemic acquis of public administration, 2009, [online] available at http://ssrn.com/abstract=1503410, accessed on april 25, 2010. 25. matei, l., romanian public management reform. theoretical and empirical studies, vol. 1, bucureşti: editura economică, 2009. 26. merloni, f., dirigenza pubblica e amministrazione imparziale, bologna: il mulino, 2006. 27. merloni, f., ‘distinzione tra politica e amministrazione e spoils system’, in merloni f. (ed.), l’amministrazione sta cambiando?, milano: giuffrè, 2007. 28. merusi, f., le leggi del mercato: innovazione comunitaria e autarchia nazionale, bologna: il mulino, 2002. 29. messori, m., padoan, p.c. and rossi, n., proposte per l’economia italiana, roma: editori laterza, 1998. 30. mortati, c., l’ombudsman: (il difensore civico), torino: utet, 1974. 31. mussari, r., il management delle aziende pubbliche: profili teorici, padova: cedam, 1994. 32. naschold, f., new frontiers in public sector management: trends and issues in state and local government in europe, berlin: walter de gruyter, 1996. 33. osborne, d. and gaebler, t., reinventing government: how the entrepreneurial spirit is transforming the public sector, new york, plume, penguin books usa inc., 1993. 34. peters, b.g., the future of governing: four emerging models, lawrence, kansas: university press of kansas, 1996. 35. peters, b. g., ‘policy transfers between governments: the case of administrative reforms’, 1997, west european politics, vol. 20, no. 4, pp. 71-89. 36. peters, b.g. and pierre, j., ‘governance without government? rethinking public administration’, 1998, journal of public administration research and theory, vol. 8, no. 2, pp. 223-244. 37. pollitt, c., talbot, c., caulfield, j. and smullen, a., agencies: how governments do things through semi-autonomous organizations, basingstoke: palgrave/macmillan, 2004. 54 38. preforms, r., ‘reshaping the democratic state: swedish experiences in a comparative perspective’, 1998, public administration, vol. 76, no. 1, pp. 141-159. 39. rhodes, r.a.w., understanding governance. policy networks, governance, reflexivity and accountability, buckingam: open university press, 1997. 40. schedler, k. ‘the state of public management reforms in switzerland’ in kickert, w.j.m. (ed.) public management and administrative reform in western europe, rotterdam: elgar, edward publishing, inc., 1998. 41. tomkins, a., ‘transparency and the emergence of a european administrative law’, 2000, yearbook of european law, no. 19, pp. 217-256. 42. torres, l., ‘trajectories in public administration reforms in european continental countries’, 2004, australian journal of public administration, vol. 63, no. 3, pp. 99-112. 43. torres, l. and pina, v., ‘reshaping public administration: the spanish experience compared to the uk’, 2004, public administration, vol. 82, no. 2, pp. 445-464. 44. wollmann, h., ‘germany’s trajectory of public sector modernization: continuities and discontinuities’, 2001, policy & politics, vol. 29, no. 2, pp. 151-170. 43 the present research is coming to deal with a constant need within the present-day romanian institutional framework: building a model for social impact assessment of programs and projects mainly for the public field. social impact assessment (sia) refers to the quantification of the net effects of a program upon groups, communities and upon the society in general. the objective of this study is to scan the most recent literature in the field, and to identify a social impact assessment model that can be used to assess a program financed from public money. the present study highlights useful information regarding the theory and practice of social impact assessment. social impact assessment – the state of art raluca gârboan teaching assistant, department of public administration, faculty of political, administrative and communication sciences, babeş-bolyai university, clujnapoca, romania transylvanian review of administrative sciences, 17 e/2006, pp. 43-50 i. foreword social impact assessment (sia) is a specific type of evaluation extremely useful in project planning and management, a research technique and a public policy instrument successfully used all over the world by those responsible with institutional and organizational management, with the coordination of projects and programs financed from public or private founds. high public officers, politicians, managers, institutions’ or organizations’ leaders, program directors and project coordinators etc. use the sia in order to notice in time the effects of the interventions they implement or they intend to implement. the aim is to see in time and mitigate the unwanted effects on the groups of people, on communities and on society, as well as to encourage the positive elements of the impact. in short, sia is used in order to minimize losses and maximize the benefits of the interventions upon small or large social groups. ii. background people have tried to foresee the effects of their actions since ancient times. predicting and assessing the consequences of change on society has been part of the political landscape since the oracle of delphi (backer,1997: xi) the roots of sia, as most recently investigated by christopher barrow, “lie, in part, in research carried out since 1950s by anthropologists and sociologists who feared that proposed developments might have serious negative side-effects…”(barrow, 2004:2) as 44 a specific concept, sia originated with the 1969 national environmental policy act of the usa (nepa)(vanclay,2003). sia has been promoted side by side with the notion of environmental impact assessment, and they had a parallel evolution. the impact of induced social change upon man is perhaps most succinctly outlined by c. p. wolf in his description of the curious transposition by which culture has come to dominate nature: the problem of social impact assessment is not so much what we are doing to the environment; it is what we are doing to ourselves through the medium of environment by technological misapplications. (c. p. wolf 1974, p. 3). iii. the actual knowledge stage in the area on international level presently, the knowledge stage in the area on international level is extremely advanced, in spite of the relatively short time (35 years) passed since the first systematic approaches in the field have appeared. the essential contributions comes from the academic research (closely in touch with the practitioners from local and central governments in numerous states, from the non-profit sector (that finances different interventions with impact on individuals, on groups, on communities and societies), and from the international organizations, which, in their turn, implement a series of programs and projects in numerous states and communities (the european union commission, the european bank for reconstruction and development (ebrd), the world bank (wb), united nation development programme (undp), the organization for economic co-operation and development (oecd), the united states agency for international development (usaid) etc.) concerning the technical issues, the methodology used, there is a certain agreement among professionals. social impact assessment involves the use of sociological research methods, both quantitative (statistical) and qualitative (observation, interview, case-studies, etc). for social impact, a varied methodology has been developed, according to the socio-economic, cultural and organizational context, according to the nature of the intervention, the necessary variables to be measured, the available budget, and also according to the research capacity and a series of other factors involved. out of the most recent publications in the field, a catalogue of the research designs for impact assessment can be presented, according to the intervention assignment, the type of controls used, and the data collection strategies (rossi et al., 1999, p.261). therefore, randomized experiments, quasiexperiments, simple analysis before and after intervention, cross-sectional studies for non-uniform programs, panel studies: several repeated measures for non-uniform programs and time-series: many repeated measures, can all be included in sia toolkit. 1. the academic research the academic research have a sound impact on the actual knowledge stage in sia field through researchers such as christopher barrow, frank vanclay, hank becker, rabel j. burdge, allan dale, nicholas taylor, marcus lane, bryan hobson and colin g. goodrich, and many others. they promote the study of sia theoretically and practically through the many publications in the field, through the iaia-international association for impact assessment, and inside this, through numerous activities such as teaching, organising workshops, conferences, discution lists, editing professional publications, through permanently updating the domain web site: www.iaia.org . a special feature of recent contributions is the stress placed on the practical applicability of the information proposed. that is why, a good part of the newly-appeared publications focus on definitions, justification, and they come with methodologies that, followed step by step, lead to the practical implementation of sia. a recent example in this way is the book of christopher barrow: “social impact assessment: an introduction”, published in 2004, at oxford university press. endowed 45 with more practical aims then theoretical ones, sia has at least three generally accepted objectives: to inform about changes in norms, believes, perceptions, values and their effects, to anticipate possible impacts of actions both negative and positive, to suggest development alternatives to avoid. in short, it is meant to reduce or mitigate problems and maximize benefits. (barrow, 2004:3) another example is the contribution of rabel j. burge, “a community guide to social impact assessment”, 3rd edition, 2004. the guide is a tool for practitioners at all levels —social scientists, agency employees, community leaders, volunteers—to complete social impact assessments (sia’s) efficiently and effectively. the guide is a how-to manual that provides the users with a step-by-step process easily followed by persons with minimal social science training. burge organizes the information into three sections: the first part (chapters 1 to 6 ) he provides the background, a short history, the conceptual model, the sia scoping process and an explanation as to how to obtain data to measure sia variables. the second part (chapters 7-11) corresponds to the five categories of sia variablespopulation change, community and institutional arrangements, communities in transition, individual and family impacts and community infrastructure needs. in the final part of the book (chapters 12-13) rabel j. burge provides worksheets for summarizing sia variables, and how resulting data may be used in the sia mitigation/enhancement process of the respective programs/projects under analysis. still in 2004, rabel burge publishes another book, the concepts, process and methods of social impact assessment, that comes to complete the guide we have presented above. this book develop the sia concept, presents the different sia processes and methods, some case studies recently done, describes the link between sia and public participation, and in the end presents sia in an international context. frank vanclay is situated in the same paradigm. together with other authors from iaia, he published in 2003, international principles for social impact assessment. “today, the objective of sia is to ensure that the developments(or planned interventions) that do occur maximize the benefits and minimize the costs of those developments, especially those costs borne by the community”(vanclay, 2003:1). he mainly refers to externalities, costs that are not properly taken into account. the decision makers, regulatory authorities and developers fail to consider them partly because they are not easily quantifiable and identifiable (vanclay, 2003). vanclay also brings into attention the importance of the participatory process in order to get better consideration to what appropriate development for a community may be. vanclay acknowledges that there is a significant difference between assessing a social impact in fairly different environments from the perspective of the degree of development. also, it is stated that for the less developed countries, there is little methodology developed for social impact assessment. (vanclay, 2003) this is the explanation, at least in part of the duplication in the scientific literature on international level, duplication that i will bring into attention a bit later. at the same time, this explains the precarity of the romanian literature in the field, that i shall approach in the second part of the study (the actual knowledge stage in romania). c. nicholas taylor, c. hobson bryan and colin g. goodrich publish in 2004 social assessment: theory, process and techniques. what is new in their approach the strategic use of sia: strategic application of social assessment also occurs in the development and implementation of programs and policies (taylor et al. 2004:16). the authors, experienced practitioners, hold numerous lectures and trainings in the field for public, private, non-profit national and international organizations. this too is a handbook explaining sia implementation step-by step. even if they arise from a vast array of sources, directions and experiences, the papers that were reviewed have the following typical structure: 1. definitions of sia 2. identifications of key impacts of particular activities in particular environments 46 3. identification of existing tools 4. development of new tools 5. development of routinized procedures for performing sia 6. identification of methods to integrate sia with other planning or decision-making efforts a four step model could be identified at the crossroad of all presented approaches: a) the first step is a descriptive one. it refers to the program being analyzed and tries to answer as completely as possible questions like: what was the scope of the program? who are the stakeholders? how many beneficiaries were involved? what were the resources used? which was the distribution on services? what were the time and place coordinates? what were the results of the program? b) the second step refers to the impact assessment methodology. the questions it tries to address are: what was the methodology used?(detailed approach) how were the participant and nonparticipant sample selected? how was the control group identified? what is the profile of the participants and of non-participants? c) impact assessment results are being underlined. it answers questions like: what was the impact of the program? what were the net results (if possible)? (establishing the confounding factors). what are the results of the impact? d) conclusions and recommendations section highlights the main findings of the social impact assessments, the learned lessons and the main future directions of action. results indicate that few individual efforts involve all these topics. certainly, every author focuses mainly on certain issues. it is significant that despite these differences in substance, the similarity in definitions, tools, and checklists was surprisingly high. this consistency points to some consensus regarding needs and methods, but also suggests some duplication which stress a real need to contextualize the methodology according to coordinates such as: geographical location, historical background, the type of culture etc. the duplication is partially explained by the fact that this assessment tool has been used predominantly by entities from the developed countries, having a certain type of culture, a democratic tradition, with a clear and established (predictable, less dynamic) organizational and institutional culture. the so called developing countries, in transition towards a democratic regime, with a huge dynamic of the institutional organization, such as romania, or the less developed countries, still under a totalitarian regime and with a rudimentary organization of the institutions didn’t benefit from a research infrastructure in sia field. the international institutions and organizations have implemented the only research of this kind here and the national characteristics and the national interest have not always been considered. 2. international organisations the commission of the european union, the european bank for reconstruction and development (ebrd), the world bank (wb), the international monetary found (imf), the organization for economic cooperation and development (oecd), the united states agency for international development (usaid) etc. use sia to guide their investment and intervention projects in different geographical areas and fields of activity. the world bank uses sia at large scale. with an entire department engaged in impact assessments, wb makes such studies for each of the projects it finances. wb experts assess the social impact following rigorous methodologies, clearly stated, on the web site of the wb there are presently 134 documents that can be accessed and that contain elements of sia calculation. there are made available to the public the methodology, the data collection and their sources, and, selectively, 47 certain impact studies organized according to the type of impact and to the country where it has been studied. numerous sia studies are catching the eye due to their diversity of methods and of the projects under investigation. a series of handbooks are being presented, that explain the methodology and processes involved by a sia. among the most significant is judy bakers’ evaluating the impact of development projects on poverty: a handbook for practitioners, directions in development, world bank, washington, d.c edited in 2000. in sourcebook for poverty reduction strategies, world bank, washington d.c., appears during the same year monitoring and evaluation written by prennushi, g., g. rubio, and k. subbarao . an impressing series of articles written by wb experts among who we can mention james j. heckman, jeffrey a. smith, nancy clements, christopher taber grossman, jean baldwin karen fulbright-anderson, anne c. kubisch and james p. connell and many others. the distinctive feature consists in the fact that the vast majority of studies are made on wb projects focused on the fight against poverty. therefore, considerable stress is placed upon the economic dimension of the social impact. it is quite natural, considering the mission of the wb is fighting the poverty. otherwise, here is no major distinction between the tools used by wb and those built by the academic community. still, the wide geo-political and cultural area of action is obvious in the methodology used by the wb and especially in the diversity of variables and tools. recently, the eu commission published a guiding catalogue of indicators that should be considered in sia. among these, there are: social cohesion (social integration, poverty or extreme poverty dimensions, the risks of poverty or social exclusion, geographical social cohesion, long term unemployment, the accessibility of services of general interest), employment quality (occupational health and safety arrangements, the rights of the workers, labor market organization, the balance between personal and professional life, employment opportunities, integration through employment, etc) social protection and social services (levels of social protection, accessibility etc.), consumer interests, education, social capital, liveable communities, fundamental human rights, etc. barrow stressed the link between sia and sustainable development. “increasingly, sia and related fields like strategic environmental assessment (sea), are being explored as aids to achieving sustainable development” (barrow, 2004:2). 3. the non-governmental organizations (ngo) the non-governmental organizations, especially the grant makers are usually interested in sia. the main donors developed their own toolkit for sia. for instance, ford foundation, usaid, rockefeller as well as others have made public their instruments for social impact assessment, accompanied by numerous case-studies. one of the goals is, for sure, the accountability of their actions. it is worth mentioning though, that their social impact assessment is in perfect agreement with the methodology specific to the academic research and to international organizations. certainly, the research methods and techniques for social sciences need not to be reinvented. but their application is in accordance to the interests of the financing entities and to the cultural background of the researchers who conceive the instrument and effectively realize the research. iv. the present knowledge stage in romania studies regarding the social impact have been published in romania since 2002. these are mostly the contributions of the researcher or the co-operators of the research institute for quality of life (iccv). be it about books, specific chapters, articles, papers presented on the occasion of conferences or research works conducted for a third party, most of the romanian contributions approach only adjacently the social impact assessment issue. 48 in 2002, s. ilie has written about formal and informal incomes of the romanian households in a book coordinated by rainer neef and m. stãnculescu: the impact of informal economies in eastern europe, ed. ashgate u.k. in the same volume, the study households economic strategies between state, market and the informal economies by m. stănculescu appears. both papers bring information for social impact assessment, but not methodological issues specific to the social impact. in 2003, it is published at editura institutul european, a bilingual edition of impactul pre-aderării. politici de coeziune si dezvoltarea regională economică si socială a româniei/pre-accesion impact studies. eu cohesion policy and romania's regional economic and social development having m. stanculescu among the authors. again, the romanian contribution is limited to data provision and making analysis indirectly connected to the social impact assessment. in quality of life in romania and in politica socială. studii 1990-2004, published at expert editing house, ioan marginean identifies certain social indicators useful for an impact analysis. little works or research published are directly approaching the issue. and this happens when third parties, usually international institutions (mostly the european commission or the world bank) request it. havinh m.s. stanculescu among its authors, toward country led development. a multi-partner evaluation of the comprehensive development framework. findings from six country case studies: bolivia, burkina, faso, ghana, romania, uganda, vietnam makes direct references even if short ones to the social impact, through the variables analysis. it is also worthy mentioning d. chiriac and c. huma who published impactul socio-economic al fenomenelor naturale dezastruoase în românia inundatii, alunerări de teren, secetă a 62 pages study in probleme economice vol. 2021/2002 cide, where issues of sia methodology are approached in the context of socio-economic development analysis. some papers presented to conferences, debates and workshops are worth to be noticed, where the authors refer, among other issues to social impact. it is the case of s.vonica rădutiu, impactul integrării europene asupra fortei de muncă din românia si tările candidate, masă rotundă despre politicile sociale. seminar la universitatea lucian blaga, sibiu , 7-8 iunie 2002 and of d. chiriac, influenta habitatului asupra calitătii vietii populatiei din românia 2001 2003. ecologizarea localitătilor indicatori de calitate a vietii, sesiunea anuală de comunicări stiintifice a i.c.c.v, 29 februarie 2002, i.c.c.v., bucuresti. in 2003, the city of cluj-napoca hosts the debate the impact of european enlargement on cluj community. the goal of the research that fundamented the debate was to reveal socio-economic and institutional changes generated by the pre-accesion process that romania experienced, and that involves reaching a certain degree of convergence between the cluj community and the eu. even if research methods and techniques specific to social sciences are applied, the methodology of social impact assessment is still intuitive, in a stage more or less of educated guess. this is because, at that time as now, there is no such methodology at hand for the romanian researchers. none of the imported methodologies cannot be taken without further adjustments. their design of sia models is specific to the societies that produced them. the specific feature is that they apply only to an institutional framework where there are planning and monitoring activities for all programs and actions. at this time, in the public field, the plans and the strategies, if any, are more or less formal. and the issue of monitoring and other evaluation types is out of the question, most of the time. still another premis of foreign methodologies is the existence of a legal framewok in the field, that regulates and requests periodic monitoring and evaluation for the activities. in romania, so far, we lack this type of legislation. and still, we need impact assessments to anticipate the effects of our actions and to mitigate the unwanted effects or, on the contrary, to encourage the positive ones. the variables analised by foreign research need to be adjusted and re-evaluated. in international handbook for social impact assessment (2003), vanclay and his cooperators note this shortage and are trying to build an instrument that can be applied internationally. this is still a 49 mission impossible, considering the low degree of convergence worldwide, and the still huge sociocultural, political and economical differences around the world. there is an initiative convicted to a high degree of generality. the need is still here: vanclay acknowledges that there is a significant difference between assessing a social impact in fairly different environments from the perspective of the degree of development. also, it is stated that for the less developed countries, there is little methodology developed for social impact assessment. presently, there is no metodology for social impact assessments adapted to romanian realities and particularities. v. trends worldwide, the trend is to associate sia to the sustenable development. vanclay links directly sia with the sustainable development issue. this way, he defines sia as „ the philosophy towards development and democracy (that spots) the development patologies (e.g. harmful impacts) development gols (like the poverty reduction) and the development process (e.g. participation and capacity building) ”(vanclay,2002:388) as noted before, barrow too noted the link between sia and sustainable development “increasingly, sia and related fields like strategic environmental assessment (sea), are being explored as aids to achieving sustainable development” (barrow, 2004:2). methodologically speaking, sia is conceived as the process of analyzing and managing the intended and unintended consequences on human environment of planned interventions (policies, programs, plans, projects) and any social change processes invoked by those interventions so as to bring about a more sustainable and equitable biophysical and human environment. references 1. ***(2000)social assessment and agricultural reform in central asia and turkey, world bank publications, isbn: 0821346784 2. barrow, c. j. 2003. social impact assessment: an introduction. london: arnold. isbn: 0-340742186 3. barrow, christopher (2001)-social impact assessment: an introduction, oxford university press usa isbn: 0340742186 4. becker, henk a. 1997. social impact assessment: method and experience in europe, north america, and developing world. ucl press limited, london. isbn: 1-85728-347-3 pb 5. becker, henk a. and frank vanclay. eds. 2003. the international handbook of social impact assessment. cheltenham, colchester, united kingdom: edward elgar publishing. isbn: 1 84064 935 6 6. burdge, rabel j. 2004. a community guide to social impact assessment: 3rd edition (social ecology press, po box 620863, middleton wi 53562) isbn 0-941042-17-0. www.dog-eared.com/socialecologypress/ 7. burdge, rabel j. 2004. the concepts, process and methods of social impact assessment. (social ecology press, po box 620863, middleton, wi 53562) isbn 0-941042-35-9. www.dog-eared.com/socialecologypress/ 8. burdge, rabel j. guest editor. 2003. the practice of social impact assessment. impact assessment and project appraisal, 21(2&3): 84-234 (two issues). order http://www.scipol.demon.co.uk/ 9. chiriac d., c. humă, impactul socio-economic al fenomenelor naturale dezastruoase în românia inundaţii, alunerări de teren, secetă (62 p.), probleme economice vol. 20-21/2002 cide 10. dale, alan, taylor, nick, marcus, lane (2001). social assessment in natural resource management institutions. csiro publishing. po box 1139, collingwood, victoria, 3066 australia. 312 pp. isbn: 0 643 06558x go to www.publish.csiro.au/books/ 11. marginean, ioan (2004)-politica socială. studii 1990-2004, expert 12. rossi, p. h., h. e. freeman, m.w. lipsey (1999), evaluation, a systematic approach, sage 13. stanculescu,m. (coautor)(2003)pre-accesion impact studies. eucohesion policy and romania's regional economic and social development (bilingv),institutul european (ed.) 50 14. stanculescu,m. (coautor)( 2003)-toward country led development. a multi-partner evaluation of the comprehensive development framework. findings from six country case studies: bolivia, burkina, faso, ghana, romania, uganda, vietnam, ibrd, the world bank washinghton usa 15. stanculescu,m, r. neef, editori, the social impact of informal economies in eastern europe, ed.ashgate u.k. 16. vanclay, frank (2003) the international handbook of social impact assessment: conceptual and methodological advances, edward elgar publishing isbn: 1840649356 17. white, robert (ed.) (2004) controversies in environmental sociology, cambridge university press, isbn: 0521601029 145 abstract michigan state university (msu) held a focus group in detroit, michigan, usa in 2012 with members of the urban agriculture movement. the session included business persons involved in growing and selling food, members of the health system, community group members and city government. the purpose was to identify the full range of sectors of society involved in the food system, to identify the perceptions of the food system among the city population, test eight sustainability competency areas developed by msu faculty as concepts and as they related to urban food systems, and to discover what kinds of decision support tools were needed to foster sustainable food systems in detroit. the focus group session was video and audio recorded, the tapes transcribed and coded to identify common themes and responses to the competency area concepts. the competency areas presented were: ecological integrity, community well-being/social justice, economic vitality, aesthetic quality, civic responsibility, systems interdependence, critical thinking, and personal growth. participants indicated that they considered sustainability a value that people in urban agriculture shared, but that people struggled with how to move forward toward sustainability. focus group participants were able to identify some aspect of each of the eight competency areas that they perceived people in urban agriculture, and the broader city resident population already recognized, or engaged in without recognizing that they were doing something that could lead to more sustainable outcomes. however, participants perceived that a sustainable metropolitan food system remains a somewhat elusive goal to achieve for people engaged in pursuing urban agriculture in detroit due to a negative perception they expressed that many of the city’s population holds for growing food in the city, and in general for goods produced in the city. information gained from the focus group and subsequent focus groups with members of the different urban agriculture sectors will be used to help develop university and partner organization education programs, to identify other research needs, and to help people developing school and other youth education programs in sustainability. keywords: sustainability, urban agriculture, focus group, detroit, food systems. eight areas of competency in decision making for sustainability in metro food systems* john d. warbach christine geith andrea sexton t essa kaneene john d. warbach (corresponding author) professor and associate director, michigan state university land policy institute, mi, united states of america tel.: 001-517-884.0795 e-mail: warbach@msu.edu christine geith assistant provost of michigan state university, executive director, msuglobal and co-director of the msu metroag innoversity program, mi, united states of america andrea sexton master student, health & risk communication candidate, michigan state university college of communication arts & sciences, department of communication, mi, united states of america tessa kaneene master student, harvard university graduate school of design, department of urban planning & design, ma, united states of america transylvanian review of administrative sciences, special issue, pp. 145-157 * acknowledgements: the authors gratefully want to thank the participants of the focus group, who devoted time and careful thought to the session. we also want to thank kahlil ligon and darnell adams of the detroit lower east side action plan and the warren conner development corporation for their assistance in recruiting focus group participants and making physical arrangements. thanks also go to the michigan state university team that developed the eight sustainability competency areas. these include geoffrey habron, terry link, laurie thorp and others. tessa kaneene and andrea sexton expended considerable hours doing the transcriptions of the focus group audio recordings, and performing the coding. 146 1. introduction how does a business, community organization or local government make decisions about how to plan for the future, start or grow a business, or develop their community and successfully incorporate such a big concept as sustainability? sustainability is a term frequently used by government officials, stakeholder groups and citizens, but for which there is not a common understanding, and certainly not a common commitment to implement. for some, their understanding of sustainability may be narrowly focused on economic security, and with a time horizon of just a few years (warbach et al., 2004). for others, the term implies multi-generational well-being and resilience to major shifts in society and/or the climate and natural disasters. one widely circulated definition is: ‘meet the needs of the present without compromising the ability of future generations to meet their own needs’ (world commission on environment and development, 1987). however, it is probably less important that people and organizations agree on a definition of sustainability than that they develop the ability to competently deal with how natural systems of the earth operate, and how people relate to each other and the planet. progressive city and national governments around the world are working to apply strategies to build sustainable environments (droege, 2008; newman, 2010; harris and padawanji, 2010; kellidaikurichi, anand and tay, 2010; ley and newton, 2010). many cities see sustainability as key to new economy success (newman, 2010). they are finding that sustainability can be achieved through patterns and forms of urban development that create a strong and appealing sense of place (newman, 2010), and that operate as functional and efficient ecosystems which raise competitiveness and quality of life, thereby attracting and retaining the best talent. environmental aesthetics, broadly defined to include both the sensory experience (sight, sound, smell, feel) of the environment and the meaning people make of it (emotional, spiritual and valuedriven) shape our health beliefs and our overall well-being (hale et al., 2011). the practice of urban planning, which has historically been largely proscriptive, regulatory and a contributor to sprawl is being transformed to be strategic, flexible, integrative, partnering, and aimed at developing new spatial forms, especially in countries outside the u.s. (un habitat, 2009). the leaders and residents of sustainable cities understand and make efficient use of circular urban metabolism, recognition of the benefit of natural and urban systems working synergistically, in which they use local energy, water, food and fiber resources, are carbon neutral, and are dense but not congested (lehmann, 2008). sustainable cities provide the technology and communications systems to grow businesses and social systems (corey and wilson, 2010), they are healthy and beautiful, and people from all backgrounds feel welcome, recognizing that there are systems in place to support them and their endeavors. leaders and residents need to understand that the next generation of cities should be financially sustainable. for a community, organization or business to truly move toward sustainability, its leaders, citizens and organizations need to have the information and decision tool 147 support to make competent decisions in the multiple elements of sustainability (energy, water, food, land, waste, transportation, shelter and others). to achieve multi-generation sustainability, youth need to develop the knowledge and skills, including how to obtain knowledge not yet discovered, to competently make decisions as adults. if society is going to meet the needs of the present without compromising the ability of future generations to meet their own needs, it will require wholeness and balance among: a) social equity, b) economic vitality, c) ecological integrity and d) aesthetic understanding. faculty at michigan state university (msu) believe that in order to achieve these outcomes students should achieve proficiency in 1) critical thinking; 2) systems thinking; 3) personal awareness and development (knowledge of self); and 4) civic engagement, as well as the above mentioned social, economic, ecological, and aesthetic dimensions (link et al., 2008). students at msu requested more sustainability learning opportunities. in response, faculty at msu developed a sustainability specialization that structured opportunities to optimize learning in sustainability, through direct experiences that expose them to the social, economic, environmental and civic processes involved in sustainability, and by making sense of it in practical and personal ways (link et al., 2008). faculty of msu identified eight global sustainability competency areas to serve as the learning structure for msu’s sustainability specialization. these eight competency areas are: 1. ecological integrity – knowledge of basic ecological principles and the ability to apply ecological science to current issues. 2. community well-being/social justice – equitable sharing of benefits of sustainability strategies. 3. economic vitality – knowledge of how to apply economic systems to the equitable benefit of society. 4. aesthetic quality – recognition of the basic human value of beauty and understanding of how to apply it to communities. 5. civic responsibility – the use of knowledge of the responsibilities of citizens and communities in dialogue, decision making and capacity building on local, regional and global issues. 6. systems interdependence/thinking – ability to recognize multiple systems and feedback loops at play in an issue and understanding of the need to incorporate multiple groups, perspectives and institutions in decision making. 7. critical thinking – the ability to recognize, invite and consider a full range of evidence, strengths and weaknesses across different modalities recognizing uncertainty, biases and assumptions; and using that range in capacity building and the decision making process. 8. personal growth (personal development and self-awareness) – understanding one’s personal values and those of others related to issues, and being provided the opportunity for growth and capacity building. we can look at community planning in relation to renewable energy as an example of applying the competency areas. when a community seeks to embrace locally-produced 148 renewable energy, is biomass a feasible option? is suitable land available? what portion of total energy needs can it provide? will it displace local food production? what ecosystem effects will result? will all segments of the community benefit? will it enhance the beauty of the community or detract? does it provide for learning opportunities for children and adults? are all interests included in the exploration of the concept and decision? msu is taking the suite of eight competency areas beyond courses for university students to assist with decision making in the community. it is doing so to help provide more concrete direction to individuals, businesses, government and organizations wanting to pursue sustainability goals, but not knowing what to do beyond recycling, installing energy efficient light bulbs, and better insulating buildings. society faces the problem of enlarging the concept of sustainability out of local context and into buzzwords and universal approaches and products to solve problems. however, resilience, redundancy and innate wisdom, applied locally and in context are vital to real sustainability (dahlberg, 1993; delind, 2011). the eight competency areas provide a framework for local, contextual and place-based civic and individual sustainability decision making, by making critical thinking, systems thinking, personal awareness and development (knowledge of self) and civic engagement, conscious elements of the process of addressing social, economic, ecological, and aesthetic dimensions of the plans individuals and groups make for the activities they pursue. as michigan state university works to help individuals, businesses and government in decision making for sustainable development, it is doing so through the coordination of faculty research, outreach and technical assistance by msu extension (field educators and faculty), and partnerships with stakeholder groups and state and local government. one important area of sustainability is food. how do we feed several billion more people in the future, especially considering that most of the world’s population will be concentrated in cities, and it may be increasingly difficult and costly to move large quantities of food the great distances food markets now reach, and that water to grow food in some parts of the world may be scarce, as more people claim water for domestic use. a sustainable food system is critical to making appealing and supportive places. if our regions are to recover economically, and the people in them experience a good livelihood, health and wellbeing in the 21st century, regions will have to attract and retain talented, entrepreneurial, educated and energetic people (glazer, 2010), and to lift up people and communities that have been left behind. to do that, a 21st century sustainable built environment will have a unique signature of neighborhoods, public spaces, public systems such as schools, culture and heritage, and green infrastructure to which people will form attachments (knight, 2010), and around which a workable, efficient, socially engaging and just, and beautiful built form can be arranged. infrastructure and social systems will be focused on supporting this place, resulting in a smaller ecological footprint, but a bigger identity. people will have the institutional and social support to grow a robust economy. the strength of using food as a placemaking theme is that it is a commonality that brings people together to achieve their common goals, 149 and it relates to the basic human needs of sustenance and connection with nature. a focus group held in detroit in the summer of 2012 identified the importance of food and growing food in the sense of place of detroit. the project for public spaces has worked with detroit’s eastern market to develop food marketing placemaking concepts for the market area. through a memorandum of understanding (mou) between msu and the city of detroit, an innovation cluster is being developed to address how technology in food, energy, water, and land can be applied to growing healthy food, in greater quantities in and near metropolitan areas, where population growth is expected to concentrate in the future across the globe (http://news.msu.edu/story/msu-city-of-detroit-plant-seedfor-urban-food-system-innovation/). 2. method and initial research findings with the help of the detroit lower eastside action plan (leap), warren connor development corporation, a focus group session was held by msu with people growing food, helping others grow food, business owners involved in growing and processing food, and local government. the information will be used to help develop msu extension community and business education programs, to identify other research needs, and to help people developing school and other youth education programs in detroit and other areas. the focus group was held in detroit in august, 2012, following msu institutional review board approved procedures. there were eight participants, individuals representing themselves and various stakeholder groups, the private sector, and government in the lower eastside community. the format for the focus group was as a discussion session, with a facilitator asking for opinions based on knowledge and experiences related to growing food in the city. focus group questions sought to identify a full range of sectors of society involved in the food system, test the eight sustainability competency areas as concepts and as they related to urban food systems, and to discover what kinds of decision support tools were needed to foster sustainable food systems in detroit. the following observations about the different sectors directly involved in urban agriculture, and the city population more broadly, were derived from the focus group discussions about the eight sustainability competency areas. sectors the focus group identified as being directly involved in urban agriculture include urban growers, processors, retailers, banks, government, health organizations and agencies, philanthropy, community groups, and urban agriculture related nonprofits. ecological integrity. ecological integrity is viewed as important by many of the public and private sectors involved in the food system in detroit. however, ecological integrity was interpreted by participants as environmental quality and safety, such as if food is grown locally and organically, and whether the food is grown in uncontaminated soil, and thereby safe to eat. a general perception reported by participants is that residents believe that farming is not an appropriate activity for inside the city, with the view that 150 farming requires heavy equipment, spraying and raising animals. participants indicated that this perception has policy makers cautious about the city moving forward with urban agriculture – crafting zoning ordinance provisions to permit, with constraints, urban agriculture, and selling or leasing city-owned land for growing food. participants also reported that the environmental concern is multi-faceted. for example, banks want people to be safe in the community, and not exposed to hazards. however, they also want to make sure that the food system businesses they lend to do not fail because of food contamination. a grower may use fabric crop row covers to keep insects out because they do not want to use pesticides, but neighbors may complain about the appearance. participants perceived that the philanthropy sector assumes that efforts to ensure environmental quality, and learning opportunities related to the environment, are criteria of any project they fund. community well-being/social justice. participants indicated that some groups within the city have an expansive understanding of what social justice and community wellbeing can mean, but also believe that their city still has a long way to go in fully understanding the concept and how to operationalize it. for some in the focus group, community well-being meant making existing health systems available to and work for all members of society, a standard that is not currently met. for others, it meant that people understood the importance of healthy food, and being able to obtain healthy food. where food is grown is important – both that it is local and therefore in some ways better, or that growing it in the neighborhood is not an imposition on the neighborhood. where food is available was very important to community well-being as well as whether the food system could be improved to better serve social justice rather than to deny it. not being able to obtain good food at good prices close to where people live was seen as unjust by participants. the food system, including how land is allocated for urban agriculture, and how retailers operate was reported not to be at all transparent. residents reported wanting more information on why some vacant parcels are being made available for growing food and others not. they want to know why prices for food can be so high while the quality so poor. participants reported that if residents feel that they benefit from food being grown in the neighborhood, perhaps even on a large scale, or that jobs were created, there would be much greater support for those activities. economic vitality. the concept of economic vitality had a wide range of interpretations among participants. economic vitality was recognized as involving multiple sectors of society, including banks, retail and wholesale businesses, customers, the philanthropic community as well as being related to geography. participants noted that the economy, including the food-related economy was doing poorly, in part due to poor perception, poor community relations, an outdated mindset of economic success, and a lack of access to good information. participants perceive that banks lend to businesses, but need to weigh investment risk, with some locations being perceived to pose greater risk, such as in detroit, compared to the more wealthy suburban areas. retail businesses require a minimum customer population, and many areas of the city have lost a significant number of households. the city is home to a number of different ethnic and racial 151 groups, and there had been a history of conflict in the retail sector. people of one group were made to feel unwelcome in the grocery store run by someone from another group. a concerted effort by nonprofit groups to educate store owners, managers and employees has reduced the perception that stores discriminate. theft is also perceived as a problem, but a focus group participant involved in food retail explained that theft in detroit groceries is not higher than in other locations, and most is the result of employees rather than customers or burglaries. focus group participants were critical of those in government, business or residents who only pursue manufacturing as the route to restored prosperity. incentives were granted to a large food employer to locate in the city, when many small businesses in many locations in the city could have become established if incentives were distributed, and provided as many jobs and economic stimulus across more of the city. resident members of the focus group explained that individuals also measure value, not just the banks and businesses. they look to whether a business is going to provide jobs, and add to property values of the neighborhoods. aesthetic quality. aesthetics was primarily associated with visual quality. focus group participants used terms like beautification and physical appearance. however, they also presented the idea of freshness of food as having an aesthetic benefit. aesthetics, almost uniquely, was associated with other sustainability competency areas. for example, the focus group said that while people might initially see an urban farm as ugly, with more knowledge, they might appreciate it for the fresh tomatoes they could have to feed their families. visual appearance was cited as very important, but primarily important to residents who are or expect to be neighbors of urban growing activities. there could also be a difference of opinion on how a building or landscape should look between residents and government or a corporation, a reason the group suggested that residents be consulted in the design of new buildings and urban growing operations. the focus group also established that if a building or landscape appears to function well, using an expression like ‘engineered well’, there is greater aesthetic appreciation for residents. civic responsibility. the group saw ensuring a successful and sustainable urban agriculture economic sector in detroit as a shared responsibility of all sectors of society. however, the mechanisms for involving all sectors in meeting this shared responsibility are not all worked out. cross-sector discourse was identified as essential for real progress, but resident involvement was emphasized. focus group participants were adamant that the location of farms and gardens, what they grow, what they look like, and how neighborhood and family values are affected and measured need consultation with the community. they also said that community members have the responsibility for communicating what they think to government and the other sectors of society. according to focus group members, the community has not yet figured out what social justice looks like. retailers do listen to customers, but are more responsive when consumers organize and do such things as letter writing and boycotting products and stores. systems interdependence/thinking. thinking and working with interdependent systems in mind does occur to an extent in detroit and in relation to urban agriculture. 152 in part it depends on the scale of a project. if one person is putting in a vegetable garden on their property, they simply go ahead and do it without consultation with others, including government. if there is a proposal for a community garden or small urban farm, then many players become involved. focus group participants cited a problem with food system literacy as a barrier to people thinking about systems interdependence. focus group participants talked about the regional economy as being a system, and that increased complexity in the regional economy is a potential outcome of an expanded food system. a sustainable food system, according to focus group participants, must include good information about how food is grown in cities and the benefits of doing so, something that is currently lacking in the detroit metro region. critical thinking. focus group participants indicated that although city residents would generally be confused if they were asked what the concept of critical thinking means, or if they engage in it, they do it all the time. participants reported that much of the critical thinking that goes on around the food system in detroit is through storytelling and in informal settings. they reported that people in the community listen to each other and make decisions based on what they learn from others, especially neighbors. they then voice their support for or opposition to urban agriculture activities within their neighborhoods and city, in community meetings or to their elected representatives. the focus group participants stressed that there are information gaps. many people are learning and acting on misinformation. participants indicated that more accurate information is needed on how and where urban farming would take place, its benefits, how government policy affects urban farming, the long-term prospects for urban farming, and how neighbors can be involved. the focus group noted the need for common terminology related to growing food in the city. personal growth (personal development and self-awareness). focus group members associated personal growth with education that covered many topics, not just those highlighted in k-12 school curriculum, and with people learning how to gain new knowledge, and learning for the sake of learning. they said that the more highly educated are more willing and capable of learning, and it is the responsibility of all sectors of society to support education. participants perceived that if more people had knowledge about urban farming, and many of the myths could be dispelled, more people would be willing to support it. the focus group frequently mentioned that there are pervasive perceptions among the residents about detroit and farming that educational opportunities should be made available to address. these perceptions include the idea that anything outside detroit is better for you, farming is red barns, chickens and pigs, and people should not try to promote something reminiscent of the tenant farming lifestyle detroit residents’ ancestors escaped mississippi, alabama and arkansas to come to a better life in detroit, and new ideas such as urban farming are being imposed on detroit from outsiders. participants indicated that if people in detroit can see the many ways urban farming can produce good food for them, and jobs, they will be willing to support it. the focus group also said that good food is not just a concern for lower income people, that people with higher income levels also do 153 not avail themselves of good food, and so there is an important educational need for healthy eating for all of the city’s residents. the focus group talked about fostering ‘learning adventures’ related to urban farming. business persons who are already established and have been able to obtain bank funding can be teachers, and can show city residents, other business owners and banks that urban food growing can be a vital part of the city future. 3. discussion of findings sustainability remains a somewhat elusive concept for people engaged in pursuing urban agriculture in the major metropolitan area of detroit, michigan, usa. a focus group held in august, 2012, with participants from public and private sectors, business, health and government, was presented with the concepts of eight sustainability competency areas and asked to respond with their interpretation of those competency areas and how they applied to the urban agriculture system. a secondary purpose of the focus group was to identify a vocabulary associated with the urban agriculture movement in detroit that could be used to improve dialogue between researchers and practitioners. the competency areas presented were: ecological integrity, community well-being/social justice, economic vitality, aesthetic quality, civic responsibility, systems interdependence, critical thinking, and personal growth. participants indicated that they considered sustainability a value people in urban agriculture shared, but that they all struggled with how to move forward toward sustainability. focus group participants were able to identify some aspect of each of the eight competency areas that they believed people in urban agriculture, and the broader city resident population already recognized, or engaged in without recognizing that they were doing something that could lead to more sustainable outcomes. ecological integrity was interpreted as environmental safety. many sectors of society are concerned about whether food is being grown in contaminated soils, and if so, this could mean that some urban agriculture businesses may not be viable. residents and government are concerned about pesticide and other chemical use in farming, and believe that the favorable ecological approach is organic farming. there appeared to be community-wide buy-in to the concept of social justice, and groups are working on it, but it was evident that city residents, community groups and government have a long way to go to figure out how to more fully implement a social justice agenda. the social fabric of the city has gone through dramatic change for over fifty years, with many people leaving, a large disenfranchised population left without the financial and educational resources to build a new economy, new groups moving in through international immigration, and huge legacy costs in infrastructure and employment-related benefits sapping the potential for the city to adequately invest in its people and infrastructure. the group saw economic vitality as multi-dimensional. to them, economic vitality had as much to do with the recognition of value – benefit to the community and the way a venture was organized and managed, as it did with profitability. there was disagreement within the group over the impact of resident income levels, a reason often 154 cited as why there are few full-service groceries in detroit. some believed there were enough people with enough income to support more food-related businesses in the city, but that people thought they had better choices outside the city. blight and decaying infrastructure may fuel the perception that the business climate is poor. retail businesses require a minimum customer population, and many areas of the city have as few as 2-5 households on blocks that used to have 50 households. dozens of groceries went out of business in the city, leading to research suggesting more than half the population lives in a ‘food desert’. a food desert is defined as an area where people have difficulty obtaining healthy, affordable food. although there was a long period in which retail food businesses have been reluctant to reestablish groceries in the city because there are not enough people with high enough income to support the stores, progress has been made in that a number of small groceries and one large one have either located in the city or have plans to do so. unfortunately, many people in the city receive public assistance, generally once a month at the beginning of the month. as a result, some businesses do well the first week of the month, but not so well in the following weeks. it also limits the amount of refrigerated space retailers will devote to perishable milk, fruit and vegetables if people only purchase those products once a month. aesthetic quality was an oft-cited issue, with complaints about the sometimes ragged appearance of urban farms, and the broad perception of agriculture as red barns, chickens and pigs as a visual image that just did not fit urban living. detroit suffers blight on an unprecedented scale, with vast areas growing as prairie or early succession forbs, grasses, shrubs and trees, with most of those species not associated with ornamental residential and commercial landscapes, which are often a preferred aesthetic. where ornamental plant species still exist on vacant lands, they are not well maintained. we hear from multiple sources that residents would prefer buildings on vacant land rather than fields and unkempt plants. vegetable gardens present a different visual appearance than a typical residential landscape, and that may be part of the difficulty residents have in accepting urban food growing on a larger scale – it changes how they envision a city should look. establishing a viable urban agriculture economic and social sector is a complex civic endeavor. many groups within the city are working to support urban agriculture as a health improvement strategy, a strategy to diversify and grow the economy, and as a productive use of vacant properties. government sees its civic responsibility as ensuring that agriculture, perceived as primarily rural activity, fits into an urban setting. a recurring theme of the focus group was that consultation with residents was essential to moving urban agriculture forward. resident organizing is fairly common in detroit, and appears to have an effect on decision making in the public and private sectors. community organizations have an impact on how government responds, and whether and where action is taken by government in the city, at least to the extent government has the capacity to respond. the concept of systems interdependence was interpreted by the focus group as primarily involving social systems. there was no mention of natural systems. all sectors of society are currently involved in urban 155 agriculture, especially philanthropy, government, nonprofit greening groups, food security (emergency food support) groups, neighborhood block groups, banks and businesses. social interdependence becomes a factor when urban agriculture raises above the level of an individual property owner growing a vegetable garden, to a neighborhood group establishing a community garden on city-owned property, a farmer growing organic vegetables on a single vacant lot for commercial purposes, or a business seeking hundreds of acres of vacant land to grow crops. the concept of systems interdependence should be thought of as an aspect of sustainability literacy. the fact that it is missing from the vocabulary of so many working in urban agriculture limits the scope of thinking and action that people and groups will pursue to optimize the benefits of urban agriculture being viewed as interdependent among sectors and the physical environment. focus group participants talked about the regional economy as being a system, and that increased complexity in the regional economy is a potential outcome of an expanded food system. this would include integrating technology, developing and growing new crops, using vacant land and abandoned buildings in growing and processing food, new branding and distribution to markets, and measuring response from customers. according to the focus group, nearly everyone engages in critical thinking, but they would not characterize it as such. in detroit, people learn from each other through story-telling and personal experience. focus group members suggested that education to dispel negative myths about urban agriculture should involve ‘learning adventures’ in which people tour urban farms and indoor growing facilities so they can tell their neighbors about them. lack of common and understandable terms appears to be a part of the problem in moving to debunk myths and change a poor general perception of urban food growing. urban food growing can be a platform for school children to learn about different professions, such as soil science, agriculture, food sciences and other sciences. personal growth and critical thinking are strongly related, and personal growth should occur through educational opportunities designed to help people to overcome negative perceptions. it would help to have a more highly educated population, but experiential learning, in which people get first-hand knowledge of urban agriculture, could foster more positive feelings about growing food in the city. one area in which personal growth was seen as important is in the cultural stigma associated with farming. a large segment of the detroit population is descended from people who ‘escaped’ farming – often tenant farming, to take manufacturing jobs in detroit, and a better life. many residents need to grow beyond that association if urban agriculture is to become sustainable in detroit. 4. conclusions focus group participants confirmed that at least a small group of people active in the urban agriculture movement in detroit recognize how the eight sustainability competency areas relate to their efforts in that movement. they also indicated that others in each of their sectors probably would also recognize that relationship. however, an 156 understanding of the full scope of what sustainability is, and how people involved in urban agriculture can successfully develop sustainability practices (ecological, social, economic, aesthetic, and continual learning) is limited. the focus group participants asked for additional conversation opportunities. this was somewhat unexpected as many of them have been working in the urban agriculture movement as long as ten years. the research team will attempt to grant this request in two ways. 1) the research team has proposed a series of drill-down focus groups to explore the eight sustainability competency areas in more detail with specific urban agriculture sectors, such as growers and processors, food sellers, community wellbeing (health, social justice, government, philanthropy), and education. 2) michigan state university extension and msu global are developing a web-based knowledge network where people can learn more about the sustainability competency areas and share stories. references: 1. corey, k.e. and wilson, m.i., ‘benchmarking it cities’, in kallidaikurichi, s. and yuen, b. (eds.), developing living cities: from analysis to action, singapore: world scientific press, 2010, pp. 127-123. 2. dahlberg, k., ‘regenerative food systems: broadening the scope and agenda of sustainability’, in allen, p. (ed.), food for the future, new york: john wiley and sons, 1993, pp. 75-102. 3. delind, l.b., ‘are local food and the local food movement taking us where we want to go? or are we hitching our wagons to the wrong stars?’, 2011, agriculture and human values, vol. 28, no. 2, pp. 273-283. 4. droege, p., ‘urban energy transition: an introduction’, in droege, p. (ed.), urban energy transition: from fossil fuels to renewable power, elsevier science, 2008, pp. 1-14. 5. glazer, l., michigan’s transition to a knowledge-based economy: first annual progress report, michigan future, inc. 2010 and the university of michigan, [online] available at http://www.michiganfuture.org/new/wp-content/uploads/2010/06/mifutureprogressreport10final.pdf, accessed on december 10, 2012. 6. hale, j., knapp, c., bardwell, l., buchenau, m., marshall, j., sancar, f. and litt, j.l., ‘connecting food environments and health through the relational nature of aesthetics: gaining insight through the community gardening experience’, 2011, social science and medicine, vol. 72, no. 11, pp. 1853-1863. 7. harris, j. and padawangi, r., ‘environmentally sustainable cities’, in kallidaikurichi, s. and yuen, b. (eds.), developing living cities: from analysis to action, singapore: world scientific press, 2010, pp. 155-189. 8. kellidaikurichi, s., anand, p. and tay, d., ‘achieving sustainable cities’, in kallidaikurichi, s. and yuen, b. (eds.), developing living cities: from analysis to action., singapore: world scientific press, 2010, pp. 259-282. 9. knight soul of the community, detroit soul of the community, 2010, john s. and james l. knight foundation, gallup, inc. 2010. 10. lehmann, s., ‘sustainability on the urban scale: green urbanism – new models for urban growth and neighborhoods’, in droege, p. (ed.), urban energy transition: from fossil fuels to renewable power, elsevier science, 2008, pp. 409-430. 157 11. ley, a. and newton, p., ‘creating and sustaining livable cities’ in kallidaikurichi, s. and yuen, b. (eds.), developing living cities: from analysis to action, singapore: world scientific press, 2010, pp. 191-229. 12. link, t., habron, g. and thorp, l., sustainability specialization proposal, michigan state university internal document, june 2008. 13. newman, p., ‘resilient infrastructure cities’, in kallidaikurichi, s. and yuen, b. (eds.), developing living cities: from analysis to action, singapore: world scientific press, 2010, pp. 77-106. 14. un-habitat (united nations human settlements programme), ‘planning sustainable cities: policy directions’, global report on human settlements, 2009, abridged edition, earthscan, london: sterling, va, [online] available at http://www.rrojasdatabank.info/ plansustcities1.pdf, accessed on december 10, 2012. 15. warbach, j.d., nicholls, s., bristor, t.f.y., holecek, d.f., martin, l.a. and herbowicz, t.i., overcoming impediments to smart growth: finding ways for land development professionals to help achieve sustainability, michigan travel, tourism, and recreation resource center at michigan state university, and planning & zoning center, inc., 2004, [online] available at http://www.tourismcenter.msu.edu/publications/12-01-04.pdf, accessed on december 10, 2012. 16. world commission on environment and development, report of the world commission on environment and development: our common future, 1987, united nations. 144 abstract this paper examines the evolving state of employment of older japanese people. since the rapid increase in population aging, employment options, such as re-employment, are favored over inflexible retirement age extension. in order to meet these needs, the japanese government has created new employment policies. this study shows newer models for the re-employment of the aging population in japan. specifically, it shows that employment practices promoting balance between flexibility and security (i.e., flexicurity) provide successful alternatives to the re-employment of older people. data are drawn from longitudinal research on employment conditions among older people conducted by the japanese government. using this data, the probability of being employed and wage rate is analyzed, including the degree of change that each factor has on the probability of older people being employed. results indicate that super-aged societies, like japan, should promote labor markets that balance flexibility and security for re-employing older people. keywords: old workers, reemployment, flexicurity, super-aged societies, japan. flexicure employment of older people in super-aged societies yoonseock lee yoonseock lee assistant professor, faculty of public administration, keimyung university, daegu, south korea tel.: 0082-(0)53-580.5396 e-mail: yoonslee@paran.com transylvanian review of administrative sciences, no. 44 e/2015, pp. 144-160 145 1. introduction japan has become a super-aged society on an unprecedented global level. according to the estimates published by the national institute of population and social security research (2012), the working-age (ages 15 to 64) population ratio in japan is expected to decline by 12.9 percentage points from 2010 to 2060 because of the effects of the aging population and a falling birth rate. meanwhile, the elderly population ratio is expected to increase consistently from 23.0% to 39.9% in 2060 (an increase of 16.9 percentage points). however, employment of older people in japan is a different issue compared to western countries. in japan, there is a mechanism in which people can have a lifelong career or simply work for a long period of time – rather than retiring from the labor market in early old age – to obtain personal fulfilments through work. in 2005, the japanese government published the 6th international study on living and consciousness of senior citizens (white paper on labor and economy, 2005), stating that 40.3% of japanese respondents in their 60s said that the ideal retirement age is around 65, while 31.3% said it is around 70. more than 80% of respondents reported that 65 or older is the ideal retirement age. compared to other countries surveyed, such as the united states, germany and sweden, the ideal retirement age for japanese is higher than the ideal age reported in most countries1. given these circumstances, japan has implemented a variety of labor market policies to accommodate the aging population. unlike other oecd countries, japan did not introduce an early retirement program during past economic downturns, and it has still not done so during the current recession and period of increasing unemployment rate. in the past, japan’s retirement age system stated that employment would be terminated when a worker reached the age of 60. given the increased average life expectancy and the corresponding growth of the older population, there was a desire to extend the retirement age because people wanted to continue working past the age of 60. japan enacted the law concerning stabilization of employment of older persons, and has subsequently amended it several times since the law was enacted in the 1970s. specifically, the law was amended in 2004 to mandate companies to do one of the following items: 1) eliminate the mandatory retirement age; 2) increase the mandatory retirement age to 65; or 3) implement a program for re-employment after retirement. a survey was jointly conducted in 2008 by nippon keizai shimbun (nikkei inc.) and joongang ilbo (joonang media network) on the employment of older people among 211 japanese and south korean companies to determine the effects of this new amendment. according to the results, 95.2% (n = 119) of the japanese companies offered a re-employment program for retirees while only 2.4% (n = 3) had 1 south koreans also report an ideal retirement age of 65. source: laborsta by international labour organization (ilo). labour statistics portal by oecd for information on france and south korea. for more details, see: htt p://www.mhlw.go.jp/wp/hakusyo/ roudou/05/dl/02-02b.pdf. 146 extended their mandatory retirement age since 2005. of the remaining companies that had not yet extended their retirement age, only 9.2% planned to do so in the future (lee, 2011). these results indicate a significant shift in the direction of elderly employment policies in japan. specifically, there is a movement away from the stabilization of employment for the aged population and towards an approach that emphasizes the flexible nature of employment for the elderly. in japan, reemployment programs that allow balancing of the flexibility and security of work are becoming more prevalent. in this study, i analyzed the effect of reemployment as a new alternative for employment in the super-aged society as well as the effect of female employment aiming to utilize female human resources and promote the male-female joint participation in the labor market. as an analytical concept, i have used ‘flexicurity’ of labor, which is popular in europe. the concept of flexicurity was systematized by wilthagen (1998) in the netherlands. the european union defined it as ‘an integrated strategy for enhancing, at the same time, flexibility and security in the labor market’ (european commission, 2007), and announced flexicurity as their future strategy (european union, 2007). specifically, flexicurity includes hiring/termination flexibility (external-numerical flexibility), work hour flexibility (internal-numerical flexibility), a variety of employment possibilities (functional flexibility), wage flexibility, employment security within the same company (job security), security in employment possibilities within the labor market including job change (employment security2), income security3, and work-life balance security (combination security; wilthagen and tros, 2004). further, i have analyzed other flexicurity factors using a three step process. first, using the inductive model, i analyzed the probability of employment in order to verify the specific personal factors that improve the employment security. second, the wage function is estimated to verify the form of employment that improves income security. however, because the wage rate variable used in this study is only applicable to employed individuals, it is likely to cause sampling bias for women with a lower employment rate than men. therefore, i have used heckman 2sls (two stage least squares) estimation model, which controls factors such as retirement experience that influence the reservation wage, to conduct the estimation. finally, a marginal structural model analysis is performed in order to verify the impact that the form of employment improving income security has on employment security. because work-life balance security around work and household chores pertains especially to women’s employment, it was analyzed throughout the entire process. 2 because employment security is related to the overall employment security in the labor market and leads to proactive labor market policies and active life for older people, it can be said that it is a higher concept than job security, which is centered on the internal labor market. heyes (2011) also prioritized ‘security in the labor market’ over job security. 3 although wilthagen and tros (2004) included the concept of income security during the period of unemployment, this paper defi nes income security mainly based on wages. 147 2. literature review in this paper, i discuss the types of re-employment from the perspective of flexicurity and analyze how the probability of being employed and wage rates in a super-aged society are affected by the japanese government. i also discuss how re-employment is viewed as a new potential countermeasure for businesses. through his analysis of industries and occupations, hutchens (1988) demonstrated that the employment opportunity is limited among older people; however, he did not analyze the limitation of employment opportunity among women and disabled individuals. in addition, the internal labor market theory that has supported the existing japanese retirement system was theoretically based on deferred compensation (lazear, 1979). however, heywood et al. (1999) explained that delayed compensation more effectively deters shirking among young workers than among older workers. in addition, daniel and heywood (2007) presented weaker evidence that firms, which require greater specific human capital, also hire a smaller share of older workers. recent studies by heywood, jirjahn and tsertsvardze (2010) have also demonstrated the significant role of deferred compensation and internal labor markets as a negative predictor of hiring older workers. regarding the flexicurity concept, previous studies have examined whether it can be applied to countries other than the netherlands and denmark. the one that analyzed spain – the country with serious segmentation of labor market similar to japan – is interesting. according to golsch (2003), the spanish labor market is highly segmented with ‘insiders’ in permanent positions, and ‘outsiders’ (unemployed and inactive) and work-insecure employees on temporary posts. in other words, it indicates that the job insecurity does not seem to play a role for women. however, the subjects of this study are only young people aged 16-38. in another study, kahn (2012) provided an analysis of the employment of new entrants (disproportionately women, youth and immigrants). according to this study, making labor markets more flexible reduces demand-side barriers faced by these groups, at the expense of higher levels of economic insecurity for incumbents and higher levels of wage inequality. through their research on older people in taiwan, chang and yen (2011) found that part-time employment is significant and positively associated with life satisfaction, while elderly with full-time employment have lower life satisfaction. according to heyes (2011), the economic crisis has demonstrated the dangers inherent in prioritizing ‘security in the labor market’ over job security. ultimately, the course of the recovery from the jobs crisis will depend on the policy choices of the governments. these will in turn be influenced by political and social struggles and the nature of accommodations reached within other countries and at the international level. therefore, it suggests that studies and discussions are required at the international and policy levels in each country. studies that analyzed the labor market in relation to the governance include hobbs and njoya (2005). they identified how reflexive governance approach has influenced regulatory developments at the european level, and illustrated the 148 potential significance of this approach for the regulation of employment relations in the uk. this review therefore suggests that a reflexive approach for regulating employment relations presents many positive opportunities, but the hopes invested in such an approach remain to be fulfilled yet. another study on flexicurity is the one by muffels and luijkx (2008). according to this study, using comparative panel data for 14 european countries, they create dynamic outcome indicators for flexibility and employment security to assess the differences across countries and welfare regimes in balancing the two. the findings, that human capital investments promote upward mobility, also support the notion of the ‘flexible employment relationship’. however, there is a limit that says our analyses were restricted to male transition patterns. in this study, i have analyzed whether the concept of flexicurity can be applied to the labor market in a super-aged society by considering older men and women in east asia – particularly japan – and derive recommendations for policy. 3. data and identification strategy 3.1. data in this study, i examined the effect of longitudinal factors on employment of older people by drawing on data collected by the japanese government. in particular, i used data from the 1988, 1992, 1996, 2000, and 2004 survey on employment conditions of older persons, conducted by japan’s ministry of health, labor and welfare (mhlw). these surveys targeted older individuals between the ages of 55 and 69 with the goal of understanding the actual state of employment and unemployment among older people, their attitudes toward work, and the employment conditions and plans for older people at business locations. overall, these surveys aimed to provide useful information for the development of employment and work measures for older people in the future. this study examined older people after the retirement, from ages 60 to 69. the latest data was not included in this study because it takes a long time to obtain the data from the japanese government agency. ‘choosing to work’ and ‘wage rate’ are the dependent variables. choosing to work is based on the survey question ‘did you work to earn money?’ and ‘yes’ was coded as 1, while ‘no’ was coded as 0. wage rate is the hourly wage calculated by dividing monthly income by hours worked. intention to continue working is based on the question ‘do you wish to continue doing your current job in the future?’ which was asked only to current workers. ‘i would like to quit working’ was coded as 0, and all other responses were coded as 1. gender, age, health condition, retirement experience, non-work/pension income, pension income, number of household members, size of the last employer before retirement, job type before and after the retirement, current occupation, and dummy fiscal year were used as explanatory variables. pension income is the actual sum of the pension income. for the data in the survey years, when ‘self’ was included in the number of household members, an adjustment was made by subtracting ‘self’. for the survey years before 1996 when the question 149 about ‘whether the job type of respondent was the same before and after the retirement’ was not asked, the variable same job type before and after the retirement was created by comparing the current and prior job types. in this case, the data was coded as 1 when the job types were the same. current occupation was categorized into the following groups: white-collar, blue-collar, service, and agriculture; forestry and fisheries were excluded4. the reason for using each variable in accordance with the specific analysis process is as described below. in the first step using the induction model, the need and direction for redesigning the employment system and social security system were analyzed. the social security systems in east asia, including japan, are weaker compared to the ones in developed countries in europe because of the security provided by family where traditionally children look after their retired parents (shinkawa and pempel, 1996). however, whether such logic still applies to japan’s super-aged society must be verified. the probability of employment among older people based on the number of household members is analyzed to determine whether the intention to work and the probability of employment decline due to children’s support depend on the number of household members. in particular, the probability of employment and the wage rate among people with relatively low income – women, employees at small-scale workplaces, and blue-collar workers – were analyzed, and the need for redesigning the employment system and social security system was examined to present directions. in the second step, the wage function estimate and specific redesigns of reemployment system were analyzed. in order to redesign the employment policy and system to allow people to attain fulfilment through work by having a lifelong career or work on long-term basis, i need to examine how the reemployment system should be practiced in japan. there are legal systems related to the employment of older workers such as those at retirement age. such forms were created partly due to the so-called firm-specific human capital; that is, they were created because working for one company for a long period of time enables the worker to learn company-specific techniques. also, the recruiting expenses increase for the company because it is expensive to train new workers. the opportunity cost for the worker increases as well because it is difficult to get a new job at another company. japan’s lifetime employment system and the resulting mutual trust between the company and workers had created a virtuous cycle of trust. however, new aspects have emerged recently due to the changes in the lifetime employment system and retirement age. therefore, using the wage rate5, 4 white-collar jobs include government employees, offi cers, managers, professionals, and offi ce workers. blue-collar jobs include craftsmen, machine and equipment operators, and manual labor. service jobs include services, sales, and so on. 5 recent research also showed that the gap between worker’s marginal productivity and wage is not so large and the traditional method using wage as a proxy variable for productivity can be used as a fi rst-order approximation. see kodama and odaki (2012), ‘a new ap150 which is a proxy variable for labor productivity, this paper verifies whether revitalizing the occupational labor market that can balance the flexibility and security – rather than turning workers to the external labor market where the existing internal labor market-like reemployment in the same company and the accumulated older human resources cannot be utilized – will lead to the best outcome for japan which has become a super-aged society. in the third step, marginal structural model analysis, the effect each factor, including market wage rate, has on the probability of employment among older people was verified. in particular, i verified whether the employment forms that were demonstrated in the second step of wage function estimate to increase income security would also have a positive impact on employment security. the following section provides an analysis of the probability of being employed and wage rates, which are variables commonly used to assess if companies are re-employing older people. 3.2. methodology the detailed equation of the reduced form is shown below as follows: [formula 1] [formula 2] where: : gender, age, health condition, retirement experience, non-work/pension income, pension income, number of household members, size of the last employer before retirement, job type before retirement, and dummy fiscal year; denotes whether one is employed or not; denotes the wage rate; i(a) represents the indicator function; if a is true, i (a) will show 1, if not true, it will show 0. is not observed; it only indicates the direction (sign). is observed only when is 1. the heckman two-step estimation is used because while there are many men of productive age who work, the employment rates are lower among older people, especially among women, compared to men of productive age. the estimation is used in order to resolve sample selection bias that could affect the employment rate due to retirement experience and pension income. the instrumental variables used to identify formulas 1, 2, and 3 were the following: health condition, retirement experience, non-work/pension income, pension income, and number of household members. the variable number of household members proach to measuring the gap between marginal productivity and wages of workers’, rieti discussion paper series 12-e-028 for more information. 151 was used because although an increased number of family members to be supported would motivate people to work and affect the probability of being employed, it would not affect wage. the other variables were used in accordance with parsons (1980). i assume that the error terms and take a bivariate standard distribution of the analysis is started with the estimation of formula 1, followed by the calculation of the inverse mills’ ratio to be incorporated in formula 2. detail is shown in formula 3. [formula 3] : japan: gender, age, size of the last employer before the retirement, and dummy fiscal year; south korea: gender, age, education level, and dummy fiscal year. here, refers to the standard error of and refers to the correlation between and . is inverse mill’s ratio, the variable that determines whether selectivity exists. when this variable is significant, the null hypothesis ‘there is no selectivity in the wage function’ can be rejected to interpret that the wage function has selectivity. φ is the standard normal probability density function, and φ is the standard normal cumulative distribution function. in addition, a wage equation that takes sample selection bias into consideration will be estimated in order to see the effect of having the same job type and employer before and after retirement on the wage rate. the structural equation calculates a new estimated wage rate based on the estimation results of formula 3, and then incorporates it in formula 1 in order to show the impact of wage rate. 4. empirical evidence and implications in order to explore the determinants of re-employing older people, the authors regressed formulas 1 and 2 of the reduced form related to the probability of being employed, and then calculated the wage equation for the changes in workplace and job type related to re-employment. model 1 shows the analysis of the wage rate change when the job type is the same before and after retirement. model 2 shows the estimation results for the wage rate when the employer is the same before and after retirement. below, the survey data was divided by age groups so that the analysis could be performed. table 1 shows that the estimation results of the inverse mills’ ratio by age group and gender are statistically significant, indicating there were sampling biases in terms of the variables working/not working. if ols estimates are conducted without mak152 ing corrections, the results will have sampling bias. in this case, a two-step estimation was conducted. table 1: reduced form (age 60–69) age 60-64 age 65-69 probability of employment wage equation probability of employment wage equation gender (male =1) 0.825 0.461 0.553 0.525 (0.032)** (0.042)** (0.031)** (0.062)** age -0.027 -0.020 -0.059 0.005 (0.009)** (0.012) (0.009)** (0.018) health condition (poor = 1) -0.717 -0.853 (0.028)** (0.027)** retirement experience (yes = 1) -0.010 -0.146 (0.028) (0.028)** non-work/pension income (in 10k yen) -0.008 0.001 (0.002)** (0.002) pension income (in 10k yen) -0.043 -0.023 (0.003)** (0.003)** number of household members 0.009 0.025 (0.008) (0.007)** size of the last employer before the retirement (reference = less than 30 employees) 30 to 299 employees -0.141 -0.012 -0.173 -0.157 (0.034)** (0.043) (0.033)** (0.063)* 300 employees or more -0.029 0.082 -0.236 -0.029 (0.036) (0.043)# (0.036)** (0.067) job type prior to the retirement (reference = blue-collar) white-collar 0.174 0.680 0.144 0.952 (0.031)** (0.038)** (0.031)** (0.057)** service 0.246 0.285 0.144 0.517 (0.035)** (0.045)** (0.034)** (0.069)** dummy fi scal year (reference = 1988) 1992 -0.304 0.127 -0.023 0.272 (0.049)** (0.056)* (0.051) (0.094)** 1996 -0.338 0.296 -0.027 0.467 (0.050)** (0.058)** (0.052) (0.096)** 2000 -0.469 0.538 -0.153 0.602 (0.055)** (0.070)** (0.055)** (0.107)** 2004 -0.291 0.363 -0.198 0.392 (0.049)** (0.056)** (0.052)** (0.099)** inverse mills ratio 0.121 0.096 (0.062)# (0.097) _cons 2.375 1.497 4.147 -0.122 (0.567)** (0.734)* (0.583)** (1.189) log-likelihood -7039.381 -9705.944 -7248.463 -8745.277 chi2 1975.229 1668.119 r-square (pseudo r-square) 0.123 0.100 0.103 0.087 observation 11615 5980 11996 4578 note: # p < 0.1, * p < 0.05, ** p < 0.01, figures in brackets ( ) are standard errors 153 the overall sample population shows that the probability of being employed is significantly higher among men as opposed to women, and that the probability decreases as age increases. furthermore, while a prominent gender effect appeared among samples in their early 60s, the age effect was largely seen among those in their late 60s. the probability of being employed decreases when health condition is poor or when the respondent had retirement experience. it similarly declines as non-work/pension income or pension income increases. interestingly, the number of household members was not significant. the results of the estimations conducted separately for men and women are similar to the overall results; however, while the increased number of household members positively affected the probability of being employed among men, it had a negative effect on the probability of being employed among women. therefore, i can conclude that men are more likely to be breadwinners than women, and moreover, that the capability of children to support their fathers is not very high in japan. in addition, the results indicate that the smaller the size of the last employer before retirement, the smaller the probability of being employed and the lower the wage rate. the probability of being employed and the wage rate are both higher for those who had a blue-collar job before retirement compared to white-collar workers and service workers. when the dummy fiscal year variables are included, i can see a trend that the probability of being employed decreases and the wage rate increases over time. while it has been pointed out that because east asia, including japan, has social securities provided by family6, the conclusion drawn from the induction model indicates that there is a positive effect on being employed as the number of male household member increases, and parents are working to support unemployed family members rather than being supported by children. because the traditional family security is no longer functioning, it is necessary to redesign the social security and employment systems. it also indicates that various measures, such as vocational training and job referral, are required for older people especially in the classes including women, workers in small-scale workplaces, and blue-collar workers because their probability of employment and wage rate are low. in order to determine what form of re-employment after retirement has a positive effect on wages for older workers, an analysis was conducted using two-stage least squares in order to correct sampling biases. estimations were run by including the employer variable (same employer before and after the retirement) and the job type variable (same job type before and after the retirement), and excluding the variables that affect only the probability of being employed but not the wage rate. the most notable result of the analyses shown in table 2 is that the wage rate is higher if the re-employment occupation is the same as the occupation before retirement. among those with the same job type, the wage rate becomes even higher if the 6 shinkawa and pempel (1996) indicated that families in japan play a more important role in the sectors of unemployment and personal social services relatively to those of western countries. 154 worker was re-employed by a different company as opposed to being re-hired by the same company. the results of the long-term data analysis in these estimates indicate that, of all forms of re-employment, being re-employed in the same type of job by a different company allows for a balance between flexibility and security, and importantly, provides the largest positive impact on wage increase. table 2: estimated wage equation (age 60–69) age 60-64 age 65-69 model 1 model 2 model 1 model 2 gender (male = 1) 0.520 0.464 0.439 0.392 (0.066)** (0.066)** (0.099)** (0.098)** age -0.021 -0.026 0.010 0.002 (0.017) (0.017) (0.025) (0.025) size of the last employer before the retirement (reference = less than 30 employees) 30 to 299 employees 0.123 0.109 0.101 0.033 (0.073)# (0.073) (0.105) (0.104) 300 employees or more 0.230 0.188 0.242 0.187 (0.070)** (0.070)** (0.103)* (0.102)# job type prior to the retirement (reference = blue-collar) white-collar 0.606 0.613 0.794 0.870 (0.052)** (0.051)** (0.080)** (0.079)** service 0.339 0.272 0.554 0.585 (0.068)** (0.067)** (0.105)** (0.103)** dummy fi scal year (reference = 1988) 1992 0.039 0.062 0.031 0.006 (0.071) (0.071) (0.109) (0.110) 1996 0.111 0.182 0.202 0.212 -0.076 (0.077)* (0.113)# (0.115)# 2000 0.549 0.677 0.459 0.535 (0.094)** (0.096)** (0.137)** (0.138)** 2004 0.311 0.427 0.203 0.278 (0.078)** (0.084)** (0.129) (0.133)* same occupation before and after the retirement (= 1) 0.144 0.330 (0.048)** (0.072)** inverse mills ratio 0.226 0.179 0.188 0.264 (0.087)** (0.086)* (0.143) (0.141)# same employer before and after the retirement (= 1) -0.107 0.007 (0.053)* (0.079) _cons 1.295 1.783 -0.692 -0.007 (1.044) (1.026)# (1.660) (1.645) log-likelihood -4972.877 -4778.065 -4068.380 -3942.881 r-square 0.097 0.100 0.087 0.085 observation 3055 2985 2163 2120 notes: 1) the estimate is for those who have experienced retirement and are currently employed. 2) # p < 0.1, * p < 0.05, ** p < 0.01, figures in ( ) are standard errors as a conclusion from the wage function estimate, i found that, in redesigning the employment policy and system to enable people to attain fulfilment through work by having a lifelong career or work on long-term basis, reemployment in the occupation155 al labor market improves employment security related to employment possibilities within the labor market than turning workers to the external labor market where the existing internal labor market-like reemployment within the same company and the accumulated older human resources cannot be utilized. however, this tendency was not observed among women; it indicates that women’s career does not command a premium as much as men’s career because women’s career is interrupted by early retirements due to marriage and childcare. as mentioned above, i found that being re-employed by a different company with the same type of job positively affects wage rates for older workers. however, if this result had a negative impact on the probability of being employed, then the benefits for older people decrease even with a positive impact wage rate. in this section, therefore, i analyzed the effect of wage rate on the probability of being employed. i also examined the marginal effect of the probability of being employed in order to specifically confirm the degree of change each factor has on the probability of being employed. the analysis was performed below by dividing the survey data according to age groups. the results are shown in table 3. findings show that, although the probability of being employed becomes higher as the wage rate increases among many of the age groups, the opposite pattern was observed among women in their early 60s (-0.236, p=0.101). based on this, i can see that the substitution effect of wage rate is generally higher than the income effect in japan. i can also see that, of all re-employment types for older people, being re-employed by a company with the same type of job generally has a positive outcome for older workers. the conclusion from the marginal structural model analysis is that the employment form demonstrated in the second step of wage function estimate to increase income security also has a positive impact on the employment security. however, opposite tendency was observed among women, suggesting the state of japanese labor market where women in managerial or professional positions with high wages are more likely to be terminated and/or less likely to be re-hired than men. one of the previous studies that provide a theoretical description of the retirement age system is lazear (1979). according to his theory of deferred compensation contract, employers pay young workers less than their productivity, and pay older workers more than their productivity in order to provide incentives to work. moreover, lazear’s theory states that employers force workers to retire when they reach the predetermined breakeven point between their productivity levels and wages. the theory of human capital outlined by becker (1962) explains the retirement age system by arguing that companies only pay for employees to learn firm-specific skills because there is no incentive for them to pay for employees to develop general skill training. the theories outlined in these studies explain how the labor market in japan is closely related to long-term employment and seniority-based wages. yet these theories were developed many years ago, and there is a limit to how well they explain the dynamics of today’s labor markets. there is a need for more theoretical discussions about the re-employment of older people, which is a new form of employment in japanese society. 156 table 3: structural & marginal analysis: age 60-69 age 60-64 age 65-69 probability of employment marginal effect probability of employment marginal effect estimated wage rate 0.260 0.103 0.161 0.062 (0.046)** (0.033)** gender (male = 1) 0.701 0.274 0.466 0.173 (0.035)** (0.033)** age -0.023 -0.009 -0.060 -0.023 (0.009)* (0.009)** health condition (poor = 1) -0.729 -0.284 -0.861 -0.309 (0.028)** (0.027)** retirement experience (yes = 1) -0.016 -0.006 -0.148 -0.057 (0.028) (0.028)** non-work/pension income (in 10k yen) -0.008 -0.003 0.001 0.000 (0.002)** (0.002) pension income (in 10k yen) -0.044 -0.017 -0.024 -0.009 (0.003)** (0.003)** number of household members 0.008 0.003 0.025 0.009 (0.008) (0.007)** size of the last employer before the retirement (reference = less than 30 employees) 30 to 299 employees -0.145 -0.058 -0.150 -0.057 (0.034)** (0.033)** 300 employees or more -0.052 -0.021 -0.234 -0.089 (0.036) (0.036)** dummy fi scal year (reference = 1988) 1992 -0.342 -0.136 -0.066 -0.025 (0.049)** (0.052) 1996 -0.417 -0.165 -0.102 -0.039 (0.051)** (0.054)# 2000 -0.600 -0.234 -0.242 -0.090 (0.056)** (0.055)** 2004 -0.382 -0.151 -0.261 -0.098 (0.053)** (0.054)** _cons 2.079 4.205 (0.572)** (0.583)** log-likelihood -7053.423 -7250.495 chi2 1947.145 1664.055 pseudo r-square 0.135 0.103 observation 11615 12611 note: # p < 0.1, * p < 0.05, ** p < 0.01, figures in ( ) are standard errors the employment system and practices in japan have developed in relation to the retirement age system that is centered on seniority wages and oriented toward the internal labor market. the internal labor market refers to the process by which labor resource allocation and price formation work together within a corporate organization. the labor resources that enter a company are limited to young employees such as new college graduates, while employees who leave the company are limited to those who have reached the mandatory retirement age. this system limits contact with the exter157 nal labor market, and internal promotions through on-the-job training and continuation of employment are often practiced. these corporations adopt a seniority-based wage system, raising wages in stages based on internal training and promotion. in this way, the retirement age system is strongly connected to the internal labor market. on the other hand, the external labor market is a labor trading system based on the price mechanism; companies are not involved in the development of individual skills and capabilities. one example of employment practices in this market is when employees leave their current employers for another company or a different line of work. cases such as re-employment and job changes where existing occupational training and technical qualifications could be utilized in the new job are referred to under the term ‘occupational labor market’ in this paper. until recently, japan’s traditional employment systems and practices promoted an extremely inflexible labor market; however, this labor market is now changing because there are attempts to make the labor market more flexible. this is not to say that traditional labor market systems and practices in japan have completely fallen by the wayside. while some changes have occurred, there are also inflexible aspects that continue to persist. it is necessary, therefore, to analyze how the re-employment of older people can provide balance between the security and flexibility of employment in these new labor markets. 5. conclusions this article investigates the determinants of re-employing older people with a flexicurity concept. the analysis of this study verified whether japanese reemployment system can create flexicurity of labor by using a process involving three formulas. first, the probability of employment was analyzed using induction model in order to verify whether personal factors improved employment security. the results indicated that the probability of employment was significantly higher for men compared to women. the probability declines with deteriorating health condition or with retirement experience. similarly, the higher the non-work income and/or pension income, the lower the probability becomes. however, number of household members is partly significant. the results of separate estimations for men and women were not much different from the overall result. however, while age among men was not significant, and there was a significant positive impact as the number of male household members increased, the number of female household members had a negative impact. in other words, it shows that securing a job is difficult for women and they play only a supporting role rather than being the breadwinner for the family because their wages are low even if they work. the probability of employment declines as size of the last employer before the retirement becomes smaller, but the wage rate rises as the size becomes larger. when job type before the retirement is white-collar or services, both the probability of employment and wage rate become significantly higher compared to blue-collar. analysis of dummy fiscal years shows that the probability of employment is decreasing over time 158 while the wage rate is increasing. it suggests that various measures such as vocational training and job referral are required for older blue-collar workers at small companies. in addition, the results of the wage function estimate to verify what form of employment actually increased income security demonstrated that the wage rate increases if the occupation before and after the retirement is the same. if the employer before and after the retirement is the same, the wage rate declines. the wage rate probably increases because when choosing the same occupation after the retirement, one would find a job with higher wages and long-term career. in the case of having the same employer, wage rate declines probably because lower wages were offered upon reemployment. the fact that the wage rate increased upon finding a job within the same occupation implies that the occupation-specific human capital was enhanced. since finding a job within the same occupation was possible, i can say there is flexibility, and from workers’ perspective, there is security. these results suggest the possibility for the reemployment system in japan to improve employment security within the labor market by providing job security within the same company and realize flexicurity for the entire labor market. however, this trend was not prominent among women. it suggests that women’s career does not command a premium as much as men’s career because women’s career is interrupted by retirements due to marriage and childcare. the government and companies need to consider measures such as childcare support to prevent career interruption. finally, even if the same-occupation reemployment at a company in the same industry had a positive impact on the wage rate, the employment security would still decline if it has a negative impact on the probability of employment. therefore, the degree of change that various factors – including the labor market wage rate – have on the probability of employment for older people was analyzed. as a result, while the probability of employment turned out to be higher for the entire sample population when the estimated wage rate was higher, opposite trend was observed among women in their early 60s. because managerial or professional jobs that reflect longer careers tend to earn higher wages, it suggests the condition of the japanese labor market where women with such jobs are more likely to be terminated and/or less likely to be reemployed than men. it is necessary to design policies for women who often have part-time or contract jobs and struggle to develop their careers. using data of japan, a super-aged society where long-term employment policy for older people is implemented, this study examined what chronological outcomes were obtained through the types of elderly reemployment. as a conclusion, i can see that the employment of older people in japan will move toward reemployment that can balance the flexibility and security of employment rather than rigid extensions of the retirement age that have been done during the era of population aging and aged society. it became clear that of all reemployment measures, the revitalization of the occupational labor market that can balance the flexibility and security is particularly 159 needed. therefore, information exchange among workers and matching job profiles via social network as well as vocational skill development are required. acknowledgements i sincerely thank dr. sung-ho cho at the korea institute for health and social affairs for his helpful comments and thoughtful support. references: 1. becker, g.s., ‘investment in human capital: a theoretical analysis’, 1962, journal of political economy, vol. 70, no. 5, pp. 9-49. 2. chang, h. and yen, s., ‘full-time, part-time employment and life satisfaction of the elderly’, 2011, the journal of socio-economics, vol. 40, no. 6, pp. 815-823. 3. daniel, k. and heywood, j.s., ‘the determinants of hiring older workers: uk evidence’, 2007, labour 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(ed.), the privatisation of social policy? occupational welfare and the welfare state in america, scandinavia and japan, london: macmillan press, 1996, pp. 117-134. 21. wilthagen, t., ‘flexicurity: a new paradigm for labour market policy reform?’, research unit labour market policy and employment, wissenschaftszentrum berlin für sozialforschung (wzb), 1998, [online] available at http://www.econstor.eu/bitstream/10419/43913/1/24640552x.pdf, accessed on january 31, 2014. 22. wilthagen, t. and tros, f., ‘the concept of ‘flexicurity’: a new approach to regulating employment and labour markets’, 2004, transfer, european review of labour and research, vol. 10, no. 2, pp. 166-186. 183 abstract destinations and cultural resources that are used and respected by both residents and tourists are the ultimate goal of sustainable tourism development. the sustainable tourism as an emerging paradigm seems to enhance the existing conceptual frameworks on tourism planning and development by making the residents its focal point. in that sense, opinions and attitudes of residents on the protection of cultural heritage and the possibilities of tourism development in their environment are very important. the danube region in serbia is recognized as a region of high quality natural characteristics and cultural resources which gives an outstanding opportunity for tourism development. the purpose of the study is to examine the current state of the heritage management in the danube region in serbia and to outline the tourism development potentials of the area. the objective of the study is to examine the role of the local communities in these aspects. the methods used in the study were a public opinion survey, a focus group interview of 12 experts and the evaluation of the sustainable cultural tourism development indicators. the results have shown that local population in the danube region in serbia has, in general, a positive opinion and initial enthusiasm when it comes to tourism development, but their role is marginalized in the process. this is the key proposition to start an initiative for the local communities to actively participate in tourism development. keywords: community participation, cultural heritage, tourism, sustainable development, danube region. community role in heritage management and sustainable turism development: case study of the danube region in serbia*1 aleksandra terzić ana jovičić nataša simeunović-bajić aleksandra terzić researcher, department of social geography, geographical institute ‘jovan cvijić’ of the serbian academy of sciences and art, belgrade, serbia tel.: 00381-64-260-4013 e-mail: a.terzic@gi.sanu.ac.rsr ana jovičić phd student, department of geography, tourism and hotel management, faculty of science, university of novi sad, serbia nataša simeunović-bajić assistant professor, faculty of culture and media, megatrend university, belgrade, serbia e-mail: nsimeunovic@megatrend.edu.rs * acknowledgement: this study is part of scientifi c project geography of serbia (47007) fi nanced by the ministry of education, science and technology of the republic of serbia. transylvanian review of administrative sciences, special issue/2014, pp. 183-201 184 1. introduction the role of the local community is especially important in the development of the sustainable tourism that ‘is deliberately planned from the beginning to benefit local residents, respect local culture, conserve natural resources, and educate both tourists and local residents’ (steck, 1999, p. 4). this role needs to be accordant with the triple bottom line approach that was initiated by elkington (1998); this means that all activities and practice of the sustainable tourism are directly connected to all three aspects of organizing a local community environmentally, socially (culturally), and economically. the ideal development of sustainable tourism could not harm the local community in any of these aspects. ‘it means running a business, an organization, or a government in such a way that it doesn’t destroy the resources – natural, cultural, or economic – on which it depends’ (bien, 2006). therefore, the local community should benefit and not have its role marginalized. the cooperation between all sectors is necessary so that the local stakeholders can be included. however, serbia was a centralized socialist country for decades, with the maximal role of the central government and the minimal role of the local authorities. this centralistic tradition has been changing at a very slow pace in spite of the eu accession process. this is the reason why managing heritage and tourism development in serbia is still centralized and local residents as significant stakeholders have not yet been acknowledged and fully included. however, the non-governmental organizations and academic sector make efforts to start a debate about the greater role of the local community, which becomes an important factor for sustainable cultural tourism. since tourism services mostly depend on local institutions and participation of local citizens, ‘support and pride in tourism development are especially important in the case of cultural tourism where the community is part of a product’ (cole, 2008, p. 58). the main objectives of the research are to examine and evaluate: (1) the perceptions of residents concerning the state of heritage in the danube region in serbia; (2) the perceptions of residents concerning the information level, participation opportunities and the effects that tourism development projects have on the local community; and (3) sustainable cultural development indicators, with special focus on estimating the levels of resident participation and their role in the tourism development process. the results of the research should enable in depth view into the current situation in serbia regarding the high level of centralization of the decision-making process in the development of tourism, as well as the extreme level of marginalization of the community’s role in this process. the structure of this study is divided in several subsections. the literature review section is focusing on the role of the local communities as important stakeholders in the sustainable tourism development process. it also outlines the need for measuring the attitudes and perceptions of residents in the process of tourism development. the next section is dedicated to describing the current situation in the cultural tourism development process in the danube region in serbia and outlining the necessity for sustainable development. this is followed by methodological issues, including the 185 detailed explanation of the survey process and the sustainability indicators evaluation method. the results of the survey and the evaluation process were then presented and discussed, after which the general conclusions were extracted, problems outlined and the proposal of possible solutions given. 2. literature review tourism and culture are recognized as two strong drivers of growth all around the world, especially in europe, primarily through economic development and employment (prentice, 1994). however, they have a crucial role in fostering understanding and preserving the richness and diversity of regional cultures, as well as greater valuation of a common heritage. the fast growing tourism development has recently made heritage protection and sustainability a major concern (timothy and boyd, 2003). it is believed that heritage tourism is often used as a strategy to assist heritage resource conservation and to improve sustainable local development, but in practice it is rarely properly applied. this is especially obvious in the underdeveloped countries (du cros, 2001; mckercher, ho and du cros, 2005). a balance among resource conservation, tourism development and local community well-being becomes a big challenge in the economically oriented world (bjeljac et al., 2013). the berlin declaration (1997) made a strong normative point by suggesting that tourism should be developed in a way so that it benefits the local communities, strengthens the local economy, employs the local workforce, and wherever ecologically sustainable, uses local materials, local agricultural products and traditional skills. mechanisms, including policies and legislation, should be introduced to ensure the flow of benefits to local communities (choi and sirakaya, 2005). many studies in the tourism field focus especially on the estimation of local communities’ reactions in the process of tourism development. these studies have examined residents’ attitudes toward tourism and the impacts tourism can have on a community (perdue, long and allen, 1990; ap, 1992; lankford, 1994; andereck and vogt, 2000; gursoy, jurowski and uysal, 2002; mcgehee and andereck, 2004; andereck et al., 2005; dyer et al., 2007; wang and pfister, 2008; anderleck and nyaupane, 2011). opinions and attitudes of residents on certain parts of cultural heritage in their environment are very important since they create local perspective for the evaluation of possibilities to involve geographically limited territory into wider social, cultural and tourism flows. there are also studies on the factors that influence the reactions of the local residents in tourism development, including economic support, length of stay in the community, quality of life and other issues. these seek to identify the social, political, economic and environmental implications of tourism development, taking into account the manner in which the reaction of the local population can be understood and taken into account in order to contribute as much as possible to the support of the sustainable tourism development. they suggest that it is not only important to involve the community in the development process in order to gain the support for tourism industry, but its sustainability also remains a goal. if this goal is 186 to be achieved, some measures must be carefully introduced to the local population, making possible to exploit opportunities within the tourism development. moreover, attitude and impact studies are often concerned with tourism-related community changes and the associated level of support for tourism development. there is also an assumed connection between community characteristics and life satisfaction that has an important impact on the general attitude of residents towards tourism development. finally, and most importantly, the perceived benefit of tourism to an individual and its impact on resident’s attitudes towards tourism development has been established (mcgehee and andereck, 2004; andereck et al., 2005; wang and pfister, 2008). residents who perceive greater levels of personal benefit from tourism are more supportive of tourism development than those who do not feel they receive benefits (anderleck and nyaupane, 2011). the existing literature suggests that residents should be the major actors in the tourism development process since they are directly affected by it (ap, 1992; gunn, 1994; choi and sirakaya, 2005). sustainable tourism as an emerging paradigm seems to enhance the existing conceptual frameworks on tourism planning and development by making the residents its focal point (choi and sirakaya, 2005). local governments, developers and community residents have been known to overlook or dismiss the importance of the surrounding environment and aspire only to maximize economic growth. for tourism to be truly sustainable, it needs to protect local and national culture, improve social and individual well-being, and conserve/ preserve the surrounding environment (figure 1 and figure 2). evidently, sustainable tourism can reduce adverse impacts on the environment by reinforcing the management capability, implementing education and training programs and by developing monitoring systems (choi and sirakaya, 2005). it can also be stated that in underdeveloped destinations, without the publicly received acceptance for implementation of these measures, the tourism industry can gradually lose the support of the local community, which would jeopardize the sustainability of the destination in the future. it was observed that negative perceptions of the population regarding the tourism development, starting with a limited and non-existent possibility of figure 1: dimensions of sustainable tourism source: xiang and wall, 2005. figure 2: sustainable destination management – conceptual framework source: destination management and quality programme (undated) 187 participation can slow down the development process and eventually reduce the number of visitors. cultural/heritage tourism has been growing at a great speed with the value of heritage being more and more recognized by various parts of society including governments, the tourism industry, visitors, and the local people. the principles for understanding the cultural/heritage tourism are defined as (xiang and wall, 2005): (1) it is based on cultural or natural heritage resources; (2) it provides a special visitor experience particularly of the unique cultural, natural or historical attractiveness of a certain site; (3) it undertakes an educative role in cultivating awareness of heritage conservation in both the visitors and the heritage managers and owners, including the local residents. also, it contributes financially to the conservation of heritage resources; and (4) it generates economic benefits for local communities and helps them to sustain their life traditions and cultural identities which are an integral part of the heritage environment. sustainability of heritage resources cannot be achieved without the direct involvement of the local community. the physical state of resources is directly connected to the local community participation; if heritage is respected, used and managed by locals, it has better chances to be restored and protected. the sustainability of tourism is also highly influenced by the role of local communities, as the information, services, interpretation, safety, visual effects of the local environment, poverty indicators and overall attitudes of residents towards tourists have a great impact on visitor experiences. moreover, if during the development of tourism, sustainability aspects concerning resident community well-being are ignored, there is a great chance that other aspects of the development process will be questionable. the sustainability aspects which concern in particular the local community include the following: decent livelihood opportunities; numbers of tourism businesses owned and operated by the locals; local communities’ share of profits from tourism; training of locals to acquire competence and skill for participating in heritage conservation and heritage tourism; respect for local intellectual property; locals’ accessibility to heritage as tourism resource and use of tourism facilities; local community participation in decision making relating to tourism development of heritage resource (involvement in the planning, research and decision-making process, community satisfaction with tourism practice and heritage conservation, etc.) (xiang and wall, 2005). 3. the tourism development process in the danube region in serbia the concentration of cultural resources in the danube region in serbia is a great potential for the development of product offerings in the sector of the cultural/heritage tourism. the total area of the danube region in serbia is 13,693 km2 (15.5% of the territory of the republic). the serbian part of the danube catchment area comprises 381 settlements with population counting about 1,996,060 people (26.6%). demographic characteristics of the population show diverse national and religious structure, with the domination of the serbian population (85.7%), hungarians (2.4%), montenegrin 188 (1.6%), croats (1.5%), bosnian (1.1%), romani (1.1%), slovaks, romanians, bulgarians, albanians (terzić, 2014). the danube region is also regarded as the economically strongest part of the country. its natural characteristics refer to over 50 nature based resources (two national parks, 12 nature reserves, three nature parks, one protected wood) as well as cultural characteristics (over 658 registered cultural resources). the danube region gives outstanding opportunities for the development of attractive tourism product. it could be based on diversity of tourist offer represented in multinational and multicultural space. compared to the neighboring countries as direct competitors in this type of tourism, the danube area in serbia in proportion to its size has a sufficient number of high value cultural resources. the cultural heritage in serbia is registered and referred as most commonly tangible material heritage (as a monument or archaeological site) of special cultural or historical significance. based on recognition of their exceptional value, cultural and tourism potentials, several tourism development projects were initiated, in order to promote the cultural/heritage tourism in this region. among a great list of projects, the cultural projects ‘roman emperor’s path’ and ‘fortresses along the danube’ were launched by the ministry of culture of serbia with support from unesco. 3.1. tourism attractiveness the danube river catchment area is recognized as one of the most important factors of the economic, urban, cultural and historical development of the republic of serbia. the danube region in serbia is in fact, recognized as quick-win tourist product and defined by several national strategic plans. different studies point out that natural and cultural charact eristics of the danube region give outstanding opportunities for the development of attractive tourism products. this is concluded from the fact that in this area the greatest number of high quality natural and cultural attractions and large urban centers such as belgrade and novi sad are located. moreover, the best traffic connectivity is achieved in this area (roads, railways, airport, river ports), as well as the greatest number of accommodation facilities and tourist services. in 2009, along the danube, through serbia passed 799 cruising ships with 56,000 tourists registered in belgrade (simović, 2011). the research conducted on international visitors on danube cruises (386 anonymous passengers) has shown that during the visit to serbia they liked the most ‘interesting architecture’ (27.2%), ‘history and cultural heritage’ (25.3%), ‘hospitality and open minded people’ (18.7%), and ‘national folklore and traditions’ (11.6%), only about 17.2% respondents gave the answers focused on nice landscapes, nature, climate, panoramas (simović, 2011). similar results were recorded in previous studies in this region, conducted by stanojlović, ivkov-džigurski and dragin (2010). the development of tourism in this area is also outlined as a strategic priority, which is in line with the official european danube strategy. the danube region in serbia is considered to be suitable for tourism development and perceived as great potential for creating attractive tourist products on the international level (terzić, 2014). 189 figure 3: territorial coverage of the danube region at national level source: ec (undated) however, the state government still failed to affirm the sustainable and cultural/heritage tourism, based on which the overall tourism development should be set (stanojlović, ivkov-džigurski and dragin, 2010). 3.2. heritage management the protection and preservation of the cultural heritage in serbia is in a transitional phase. there are many problems in this area, especially connected to the extreme long-term economic crisis, starting from 1990s and still lasting. in this long period, there was a constant problem in lack of financing and avoiding the responsibilities of the governmental institutions. there was also a problem referring to lack of knowledge in management practices and alternative ways of financing and fundraising. moreover, the level of preservation and conservation differs significantly from one site to another. in larger towns cultural resources are mostly conserved, reconstructed, revitalized and used for public and tourist purposes (stanojlović, ivkov-džigurski and dragin, 2010). on the other hand, the isolation of heritage sites from larger settlements is followed by poor infrastructure, uncontrolled and illegal constructions, demolitions and excavations. the lack of cultural programs and interpretation makes these sites unappealing to the public. this situation is often followed by the ignorance of the local communities caused by low standard of living and low educational level of the majority of residents. 190 the need for starting the sustainable heritage management in serbia changed the old views of heritage, focusing on ‘revitalization’ instead of ‘conservation’. thus, the heritage sites are renewed, their original vision is restored, their old function outlined, and they become kept and used in contemporary society. in this context, the conservation is placed in line with the urban and regional development, with defined marketing strategy, in order to create the way of using the chances for social, cultural and economic synergy (dragićević-šešić and stojković, 1998). this is regarded as a sustainable approach only if the heritage in the process keeps its original characteristics and values (terzić et al., 2014). the task that is given to management is to develop suitable community-oriented use of heritage site (using the cultural animation and tourism economy models). the rehabilitation of cultural heritage is one of the main tasks of the preservation of cultural identity of the region. the use of this potential through the promotion of cultural tourism is a factor of the sustainable development (council of europe, 2008). 3.3. stakeholders in the cultural tourism development process although significant efforts have been undertaken to find adequate approaches and to modernize the legal and administrative systems in order to protect the cultural assets, there was no significant outcome. there were several attempts to integrate conservation into the planning process and to achieve greater cooperation between heritage protection and urban/tourism planning. however, by involvement of several jurisdiction levels and a great number of defined stakeholders, it only becomes more difficult to protect heritage sites. if we reconsider the ‘global’ problem of jurisdiction distribution between different sectors, we should take insight into the government organization on the national level. there are 18 ministries in serbia and each ministry has its own jurisdiction over the management of economic fields to which they are devoted. in this particular case, regarding cultural tourism development, there are several ministries that should be engaged in some parts of development activities: ministry of culture and information (sector for cultural heritage, sector for cultural production and creative industry, sector for information), ministry of economy (sector for tourism, sector for tourism inspection), ministry of regional development and local government (sector for regional development, sector for local government, sector for investment in infrastructure projects), etc. besides, the local government has the jurisdiction over the distribution of ownership between public and private entities within their municipalities. key stakeholders should be identified early in the process of tourism development, mapped and analyzed in terms of their interest and potential influence over the process. the analysis should be used as a basis for the communication plan and for determining the level of direct engagement and role that each stakeholder may have in the process. the local communities are not usually involved or consulted in the decision-making process (previous research has shown that the citizens’ participation is not a vital part of democratic processes in serbia, as only 3% of the citizens in the local 191 governments are influential on political decisions making processes) (vukelić, 2009). if this continues, along with the tourism development, it will surely bring to further marginalization of resident population. only if the local communities take direct part in the process, pushing through the local government and institutions that need to be involved, more positive outcomes can be expected. the ideal type of direct participation includes constant public debates in order to make decisions on issues related to common interest. the sustainable development is not possible without cooperation and consolidation of activities of all these levels, which is at the moment ‘mission impossible’ in serbia. 4. methodology there is no research on public opinions concerning heritage protection or tourism development process undertaken by governing bodies in serbia. in this study, several methods were applied in order to indicate the role of the local community in the protection of heritage and sustainable development of tourism in the danube region. this study used quantitative data gained from survey on public opinions and qualitative data gained from focus group survey by obtaining professional opinions on sustainable cultural/heritage tourism development in the danube region in serbia. we performed a two phase research in order to reach more closely the research objectives. the first phase of the research activities included the survey on public opinion of residents of several settlements in the danube region in serbia. the face to face survey included 150 respondents, chosen among residents of the municipalities in the danube region in serbia and was conducted in june – september 2011. the survey process was based on the random selection of respondents, but the situation in the field showed that people directly involved in tourism (museum curators, tourist agencies’ employees, hotel and restaurant employees and local government officials, which filled in 33 questionnaires) and people with higher education degrees were more willing to respond to the survey. the survey started with questions on general demographic characteristic of the respondents (place of origin, age, gender, educational level, income); the next section of the survey included questions regarding heritage in the danube region (attractiveness of the cultural resources, perception of the current state of the heritage management and observed problems) and the third section included general attitude of the locals towards tourism development. at the end, the respondents were asked to measure the residents’ level of information and involvement in the tourism development process that is ongoing in the area. a total sample size of 150 respondents was completed, but 24 questionnaires were excluded as invalid. after sorting out the invalid questionnaires, data were coded, computed and analyzed using the statistical package for social sciences 19.0. the second phase of the research included the focus group survey, undertaken during the workshops organized by the ministry of culture of the republic of serbia. the participants were directly invited by the ministry in order to take direct part in the project ‘fortresses along the danube’. the workshops took place in july 2011 in bač, 192 novi sad, belgrade, smederevo and kladovo. the main topic was ‘the development of cultural route fortresses along the danube – cultural and tourism aspects’. on this occasion, the authors took the chance to interview the participants (stakeholders) in order to determinate the sustainability level of the cultural tourism development process in the danube region. the evaluation is based on the panel discussion (focus group) and the survey of 12 experts (tourism organizations, museums, heritage protection centers, ngos, local community representatives). the questionnaire included general demographic information of the respondents (age, gender, origin, educational level, affiliation), the second part included a list of sustainability indicators defined by xiang and wall (2005) (30 questions divided in three sections considering heritage management, tourism appeal and community participation, shown in table 8). the indicators were applied to a likert scale (1-5), with mark 1 defining the worst situation (strong disagreement) and mark 5 defining the best situation (full agreement), considering the standards defined by personal perceptions of the respondents. the average mark is calculated for each indicator, based on estimation of a set of sub-indicators. according to the general score obtained, development sustainability is defined as low 10-25, medium 26-40, and high 41-50. qualitative data shows how the region is seen from professional viewpoints and measures all the aspects needed in the tourism development process for achieving sustainability. quantitative data, gained from the public survey, show how the cultural resources in the region are perceived by residential communities, their opinions on tourism development, current problems and the level of their knowledge and participation in the tourism development process. by comparing the results, we can perceive the realistic situation considering the development potentials and the role local communities have in the process at the moment. 5. results 5.1. perceptions of residents regarding the state of heritage in the danube region in serbia within the survey conducted, the following social-demographic characteristics of the respondents were analyzed: gender, age, educational level and residence (table 1). among 126 respondents (20 – 60 years of age), age and gender distribution was almost equal. among them most respondents were generally highly educated (university and postgraduate) with a share of about 70.6 %. significantly high share of educated respondents is the consequence of the largest respondent group originating from the university centers (belgrade – 13.5% and novi sad – 19.8%). the respondents employed in organizations directly or indirectly involved in development projects in the area contributed to achieving more positive results of the survey. in order to determine the current situation of the heritage sites and tourist resources within the danube region, according to the survey analysis several problems were singled out from a greater number of indicators: the lack of conservation and mana193 table 1: socio-demographic characteristics of the respondents demographic characteristics number (%) residence place number (%) 126 (100%) gender apatin 3 (2.4) male 55 (43.7) sombor 7 (5.6) female 71 (56.3) bač 2 (1.6) age bačka palanka 5 (4.0) under 20 2 (1.6) sremski karlovci 2 (1.6) 21-30 65 (51.6) inđija 3 (2.4) 31-40 28 (22.2) stara pazova 4 (3.2) 41-50 15 (11.9) belgrade 18 (14.3) 51-60 13 (10.3) smedrevo 8 (6.4) over 61 3 (2.4) veliko gradište 7 (5.6) educational level donji milanovac 4 (3.2) high school 37 (29.4) kladovo 14 (11.1) undergraduate university 62 (49.2) other settlements 24 (19.1) postgraduate university 27 (21.4) source: authors’ findings gement, the low quality of infrastructure and signalization, the low quality of accommodation and tourist services, the lack of on-site interpretation and animation, the lack of tourist offers and marketing and small number of cultural events (table 2). the respondents singled out several factors as the main reasons for this situation: the lack of finances, the lack of governmental and public care, the non-existence of management plans, the lack of experts, the lack of consciousness and care of the local communities. the answers were equally distributed among the respondents without significant differences according to gender, age or educational level, according to the pearson chi-square test. table 2: problems of heritage sites from locals’ perspective what is the biggest problem for heritage sites located in the danube region of serbia frequency percentage bad level of conservation and management 37 29.4 bad infrastructure and signalization 25 19.8 low quality of accommodation and services 15 11.9 lack of on-site interpretation and animation 27 21.4 lack of tourist offer and marketing 15 11.9 small number of cultural events 7 5.6 source: authors’ findings the respondents were also given an opportunity to express their opinions and give recommendations on how to improve the current situation. in general, responses included suggestions such as: reparation and restoration of the buildings, lightening the area, cleaning the area, placing benches and trash-cans, placing the information tables and signs, creating a parking space, opening shops and workshops, organizing cultural events, etc. there were significant differences between the general positions of respondents according to their residential area; the population of larger towns had more 194 optimistic opinions (belgrade, novi sad, kladovo, smederevo and veliko gradište), while others were more reserved considering the heritage management aspects and possibilities for tourism development. 5.2. potential of cultural tourism development from residents’ perspective the population of serbia has generally been open-minded considering the possibilities for the development of tourism within their municipalities. generally, they think that the creation of the cultural tourism products is a proper way for the revitalization of cultural heritage and creation of tourist attraction in the danube region in serbia. based on the given responses on tourist attractiveness of the danube region in serbia, it can be concluded that the region is considered as generally very attractive for tourism development, with 92.1% of positive answers (table 4). if we consider the overall attractiveness of the municipalities included in the research, as place of living and tourist destination, most respondents (74.7%) gave positive response, with the domination of negative opinions among the residents from smaller municipalities and villages (apatin, bač, ram, donji milanovac, kladovo). similar results were obtained for the question on attractiveness of the heritage sites in the danube region where 93.7% of the respondents gave positive answers. table 3: descriptive statistics on resident opinions towards tourism development potentials items descriptive statistics n min max mean±sd i strongly disagree i disagree i am not sure i agree i strongly agree the danube region in serbia has tourist potential. 126 3 5 4.55 ± 0.640 0 (0%) 0 (0%) 10 (7.9%) 37 (29.4%) 79 (62.7%) heritage in the danube region has tourist potential. 126 3 5 4.49±0.616 1 (0.8%) 0 (0%) 11 (8.7%) 37 (29.4%) 77 (61.1%) source: authors’ findings in table 3, mean value, standard deviation, minimum and maximum scores for questions defined as continuous variables are defined. 5.3. residents’ perception on levels of awareness and involvement of the local community in tourism development process if we want to examine the level of awareness and involvement of the local community in development projects within the municipalities or region, we can generally say that the awareness and involvement of the residents is very low. according to the survey results, 40.5% of the locals are not aware of development projects within their municipalities, 33.3% of them are partly informed about these projects, while only 26.2% of the respondents were well informed on this matter. the information was obtained from newspapers and direct contact with tourist organizations and ngos. however, only a small number of residents are directly involved in such projects, and most of them are employees of public institutions (organizations) that have responsibilities for these sites. moreover, the residents do not have great expectations 195 from tourism development, expressing some key issues: employment possibilities, more tourists, hotels and restaurants, new events in town, traffic jam and noise, higher prices of goods and services, etc. besides, the opinions on contribution of such projects to the local community welfare are divided. while 46.6% of the respondents believe that such projects do not contribute to the local community, 24.3% of them believe that the projects may have some contribution to the community, about 29.1% of the respondents stated with great confidence that these projects have a definite contribution to the local community (mostly government and institutional representatives, owners of accommodation facilities, restaurants, shops, etc.). it can be concluded that even if residents can only speculate what tourism development brings, they are open-minded and welcoming all the activities that can improve the current situation. 5.4. evaluation of sustainable cultural development indicators: expert survey in order to ensure the sustainable development of tourism, some principles must be ensured. the assessment of the sustainable cultural tourism development is made on the basis of a set of indicators on three levels – sustainability of heritage resources, sustainability of tourism and sustainability of local community, with great number of sub-indicators in order to determine to which level of sustainability they belong (table 4). in order to determine to which extent real sustainability was ensured in the development plans for the danube region in serbia, the evaluation was undertaken within the survey process. figure 4: assessment of sustainable tourism for the danube region in serbia source: authors’ findings 196 sustainability indicators show to which extent the participation of local communities in the tourism development process is ensured and the extent to which their role is perceived as important from the developer’s perspective. according to the results of the study represented in figure 4, we have divided the responses into four territorial aspects in order to provide the better insight into the actual differences present in the area. the respondents evaluated the sustainability indicators for great urban destinations (belgrade and novi sad), destinations within the upper danube area in serbia, destinations in the lower danube area and the danube region in serbia in general. the heritage preservation and management in the area have been regarded as quite bad, ranging from medium to low level of sustainability, with an average score of 26.2 points (max 50). tourism attractiveness of the danube region is in better position ranging from medium to high level of sustainability (38 points). the situation is regarded as relatively positive only within large urban conglomerations of belgrade and novi sad, based on the high tourist attractiveness of destinations and higher levels of heritage protection and community involvement. this is the result of a lack of proper management of cultural resources in serbia as well as the total absence of community involvement in the protection of cultural heritage, which are in formal jurisdiction of governmental institutions. according to the results, in the whole danube region (and in serbia in general) the level of community involvement in the tourism development process is very low (with average score of 23). decent livelihood opportunities for resident communities, on which the sustainable tourism development depends on, were not ensured (average mark 2.5). moreover, the local communities’ share of profits from tourism is rather small (with average mark 1.5). according to the results the local community’s participation in the decision making process is totally absent (table 4). 6. further discussions if we want to further explain the current situation in serbia by defining the role of local communities in protection of cultural heritage and tourism development, we can only say that the future is not bright if great changes do not happen fast. it is very important to determine the role of cultural heritage in the daily life of locals; if we exclude the importance of cultural property in the two largest urban centers in serbia, belgrade and novi sad, the cultural heritage of other settlements in serbia, especially in the rural areas, play only a marginal role (stanojlović, ivkov-džigurski and dragin, 2010; terzić, 2014). it should be noted that the results show that the local population is aware of the problems and the potential of cultural tourism development. they are also quite aware that they are marginalized in the development process. given that the existing system of management is highly centralized, they are emphasizing the responsibilities of public institutions and highlighting their own inability to participate in the process. moreover, based on the assessment of sustainability indicators, it is evident that the key stakeholders (representatives of public institutions, local authori197 table 4: assessment of the sustainability indicators of cultural tourism development sustainability indicators belgradeand novi sad upper danube* lower danube ** mean sustainability of heritage resource conservation 31 28.6 22.99 26.17 resource integration and authenticity 4.0 4.0 4.5 5.00 condition of existing cultural and natural heritage resources 3.0 3.0 2.0 3.00 condition of the resource environment 4.0 3.0 3.4 3.50 laws and institutional guarantee for conservation 3.0 3.5 4.0 3.50 respect for local heritage and intellectual property 3.0 3.0 1.0 2.00 participation of local communities in conservation 3.0 2.0 1.0 2.00 resource and environmental education 3.0 2.0 1.0 2.00 monitoring mechanisms 3.0 2.0 1.5 2.17 defi ned jurisdiction and management system 3.0 1.5 1.5 2.00 share of tourism revenue to fi nance conservation 2.0 2.0 1.0 1.00 sustainability of tourism (quality visitor experience) 41.5 30.5 26.2 38 development of competitive quality tourism products 4.0 3.0 2.0 4.00 information availability for tourists 4.0 2.0 1.5 3.00 quality of guides and interpretations 4.0 2.0 1.5 3.00 tourist purchase of local commodity 4.5 3.0 3.0 4.00 frequency of tourist-local interactions and attitudes 4.5 3.0 3.5 4.00 tourist perception of the authenticity 4.0 3.5 3.5 4.50 safety for tourists 4.0 4.5 4.5 4.50 extent of use of transport 4.0 3.0 3.0 4.00 methods of waste disposal 4.0 3.0 1.0 3.00 architectural style and material used for building 4.5 3.5 2.7 4.00 sustainability of local community (tourism-related) 28 24.5 20.5 23 decent livelihood opportunities 3.0 2.0 2.0 2.50 poverty incidences and alleviation in tourist areas 3.0 4.0 4.0 4.00 number of tourism businesses owned by the locals 3.0 4.0 3.5 3.00 percentage of locals employed by tourism businesses 2.0 3.0 3.0 3.00 local communities’ share of profi ts from tourism 2.0 2.0 1.0 1.50 training for locals to acquire competences 3.0 1.5 1.0 2.00 locals’ accessibility to heritage and tourism facilities 4.0 3.0 3.0 3.00 local community participation in decision making 2.0 2.0 1.0 1.00 resettlement and compensation 2.0 1.0 1.0 1.00 educational opportunity of the local people 4.0 2.0 1.0 2.00 ties, non-governmental organizations, etc.) are also aware that the local community is marginalized. they agree that local community participation is not ensured and that community interests in the development process are often overlooked, but there are no initiatives to resolve this problem and to mitigate its consequences from either side. furthermore, when forming the cultural tourism product, sustainable development is possible only within destinations with high or medium value in all defined aspects. the cultural destinations that have low level of conservation, low or medium quality of tourist experiences (with small market appeal) and lack of direct involvement of local community in the development process cannot be considered sustainable. this indicates that at the moment, regarding the policies and practices in the development process in serbia, the local community has only a marginal role. this leads 198 to the identification of a certain degree of frustration of the local population caused by the marginalization of their role and interests. by disregarding the overall attractiveness of the danube region as a tourist product with great development potential, the terms of sustainability are not achieved. however, the survey results show that local population in the danube region in serbia has in general a positive opinion and initial enthusiasm when it comes to tourism development. this is the key precondition to start an initiative for the local communities to actively participate in tourism development projects. 7. conclusions the attractiveness of the danube region and the sensitivity of the natural and cultural resources, as well as social-demographic aspects of the region require fast change in the regional management. there is a need to change general stands of the government towards more responsibility and actions in order to achieve sustainable development of cultural tourism in the danube region in serbia. ensuring the attractive living area and well-being of the residents, along with having representative and well-preserved natural and cultural heritage, leads to the increase of tourism attractiveness of the area. destinations and attractions used and respected by both residents and tourists are the ultimate goal of the sustainable tourism development. the partnership and rational planning of the cultural tourism development is based on networking and cooperation between stakeholders in different levels – governmental institutions, heritage protection, tourism business and local communities (de rojas and camarero, 2008). the long-term competitiveness and sustainability of the tourism sector should be ensured. it should be done through legislative measures and strengthened by multi-level cooperation, ensuring local and regional benefit brought along with new investments in the danube region. the research has shown that the residents are aware of the problems referring to the protection of cultural heritage and the potentials for the sustainable cultural tourism development, but such awareness is not sufficient in this case. the main issue is the possibility of participation of members of the local communities in decision making processes related to cultural heritage and cultural tourism. the opinion of the local community members is very important for functioning of this community. however, the process of the citizens’ participation should include several phases: informing, consulting, suggesting and decision making (vukelić, 2009). the lack of inter-sector cooperation and distance from responsibility of different subjects in processes of government are a direct consequence of ambiguity and inconsistency among normative, legislative and regulatory frameworks. therefore, deficiencies in the area of cultural heritage preservation and problems in the creation of the platform for sustainable tourism development are present. our research showed that local government did not satisfy even the basic level of informing the citizens, so those initiatives are very rare examples of direct involvement of citizens in the work of the local government. hence, the attention should be directed to communication strategies between the local 199 authorities and the local community members. it is the first step for the citizens to participate in decision making processes referring to the cultural heritage management in order to provide the basis for sustainable tourism. from this perspective, the following suggestions can be directed to the local authorities as important steps: – need for more transparency in the work of local governments; – ensuring the communication system between local governments, public institutions and local communities; – continuous surveys with the members of the local communities; – making long term strategies in the area of promotion of cultural/heritage tourism 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(eds.), readings in community organization practice, englwood cliffs, n.j.: prentice-hall, 1975. 33. xiang, y. and wall, g., ‘heritage conservation and local communities: pressing issues in the developing countries’, proceedings of the 3rd sino-korea international tourism conference, august 2005, weihai, china. 68 abstract experiential learning challenges are magnified when service learning is applied to study abroad courses or an international audience. in these settings, students have to deal with cultural differences, academic nuances and distance learning. despite these challenges, michigan state university is one of the top us universities when it comes to commitment and participation in international programs. this paper is a reflection on international cooperation programs that are focused on experiential learning and service based activities, designed to enhance students’ theoretical understanding of planning. this paper discusses study abroad as a strategy for fostering partnerships, linking scholarship with practice, linking teaching, research, and outreach through active learning. keywords: community service learning, partnership, practicum, experiential learning. experiential learning within the context of international partnerships and study abroad programs zenia kotval patricia machemer jeff keesler zenia kotval professor, urban and regional planning faculty, school of planning, design and construction, michigan state university, east lansing, mi, united states of america tel.: 001-517-353.9362 e-mail: kotval@msu.edu patricia machemer associate professor, urban and regional planning faculty, school of planning, design and construction, michigan state university, east lansing, mi, united states of america tel.: 001-517-353.9047 e-mail: machemer@msu.edu jeff keesler graduate student, school of planning, design and construction, michigan state university, east lansing, mi, united states of america tel.: 001-989-277.3109 e-mail: keesler2@msu.edu transylvanian review of administrative sciences, special issue, pp. 68-80 69 1. introduction leaning is a continuous process grounded in experience. (kolb, 1984) throughout history, most university-level scholarship was reserved for a few, aristocratic individuals and set in educational hubs, such as athens. would-be scholars would travel to athens to hear the various arguments from various schools of thought. eventually, the scholars would reach the level of orator and would begin teaching themselves, before returning to their native land to share what they had learned. in the renaissance period, universities in the european mainland continued the greek traditions of higher education, while adding new traditions of their own at schools like le sorbonne, oxford, and cambridge, to name a few. colonization brought the university to north america with harvard and william and mary being early institutions. universities proliferated in the early us, however, scholarship remained a dream of the wealthy, land-owning class, not usually available to the common person, until the late 19th century. according to ernest boyer (1990), scholarship in american higher education may be traced through three distinct yet overlapping phases. the first phase was in the 17th century, when colleges were focused on individual character development and teaching civic and religious leadership skills. in this phase faculty were often valued more for their religious commitment rather than scholarly abilities. in the mid-19th century, an important paradigm shift in us university-level education was taking place. the focus of many new universities became less about religious studies and character development, and focused more on the sciences. specifically, the 1862 land grant college act provided land and funding to states to develop their own ‘state university’. the land grant college act did two important things. first, it meant that state universities’ missions would be teaching skills for practical applications of the sciences. secondly, it meant that a university-level education was open to individuals from all socioeconomic levels, as well as even the most rural of communities. no longer did an individual have to travel far from their home to one of the us educational centers of the time (e.g., boston, nyc, philadelphia) to receive a university education. this resulted in universities that had previously been devoted to moral and intellectual development of the aristocratic elite, being able to focus on service in their mission. by the late 1800s, the focus of higher education in the us was practical utility. this shift in focus was indicative of universities taking on the practical needs of a growing nation. a third phase was a return to basic research. once established, new universities quickly began to focus on performing research, publication in scholarly journals, and graduate education. professor’s promotion and tenure now depended on conducting research and publishing results, while emphasis on teaching undergraduates and service decreased. this important shift in university-level education spread to all institutions in the us and became their research mission. the shift from teaching professor to research professor was further advanced by the development of the national science foundation (nsf) in 1950. the creation of nsf gave research grants to professors and 70 allowed universities to require that their professors secure their own funding, through such grants. this is still the dominant perspective today. many feel that the intense focus on gaining grants, conducting research, and securing publications has disconnected the academy from real world problems, ironically at a time when societal concerns are more complex than ever before. harland (1998) discusses problem-based learning as an approach to group learning where the practitioner acts as a tutor who guides the groups to establish ends (p. 219). in problem-based learning, the set of problems need to be worked out within a group of students to meet desired ends. donald schon’s seminal work the reflective practitioner (1983) highlights the nature of reflective practice and its constraints. according to schon, the divergence of research and practice exacerbates the practitioner’s dilemma and tempts the practitioner to force practice situations into a mold derived from research (p. 308). technical rationality, the dominant model of professional knowledge, is the ‘positivist epistomology of practice’ (schon, 1983) aimed at applying the achievements of science and technology to the well-being of mankind. from the perspective of technical rationality, professional practice is a process of applied problem solving. schon (1983) notes that problems of choice or decision are solved through the selection from available means best suited to establish ends (pp. 39-40). but with this emphasis on problem solving, we ignore problem setting – the process by which we define the decision to be made, the ends to be achieved, the means that may be chosen. in the real world problems do not present themselves to the practitioner as a given – they must be constructed. often public policy and community planning problems are ‘messy’ with confused and conflicting ends that cannot be resolved by the use of any particular technique derived from applied research. practitioners are in a dilemma of ‘rigor or relevance’. wiewel and lieber (1998) illustrate the dichotomy of scholarship and practice through their assessment of theories about the community planning process. they state that planning theorists fall within two camps. the first group advocates planning as a rational, structured process and that knowledge of specific urban regimes lead to action (technical rationality) (feldman, 1995). the second group sees community planning as a pragmatic, incrementalist or communicative model where situations are confusing and it is impossible to start out with a fixed goal and plan the intermediate strategies to reach the goal (innes, 1995). in the education of community planners, however, the rational planning model still dominates despite the growing recognition that professional practice rarely reflects that model (baum, 1996). alternative theories such as ‘disjointed incrementalism’ (braybrooke and lindblom, 1970) seem more appropriate to professional practice in urban and regional planning. theories such as disjointed incrementalism lead to the notion the planning process is oriented toward building relationships, taking advantage of strategic opportunities and should remain fluid (wiewel and lieber, 1998). one can then assume that service based learning is considered a worthwhile pedagogical strategy that involves students working in communities with the goal 71 of integrating theoretical or textbook learning. it exposes students to the complexities and uncertainties in practice situations that cannot be duplicated in traditional lecture courses and it enhances academic learning by involving students in community service activities (roakes and norris-tirrell, 2000). the ability to work with community members in developing a plan that suits the needs of a community requires the ‘meshing’ of academic knowledge and social skills. experiential learning teaches students at a higher integrative and creative level and can be a humbling experience (guth, 1995). nothing is as illustrative of this point as when the community members reject the findings of a team of untested students. moreover, given the diversity of student skills and knowledge base, these courses can be difficult to structure. students can get confused when reality does not mirror theoretical constructs and have a difficult time dealing with real people with diverse backgrounds with different, often conflicting, needs. for example, most urban faculty promotes the idea of residential clusters as a means of saving land. as a result of the theoretical focus on residential clusters, most students tend to embrace the idea as having great merit. however, the selling of the idea of cluster to most american communities is no easy task and is frequently turned down at the town council meetings for reasons, such as the citizens did not like residential clusters. for the instructor, it is challenging to accept a different role, one of coach or guide with less control or power, and to teach the power of perception or attitude formation in a classroom setting. the challenges and frustrations are experienced by both faculty and students alike. 2. urban and regional planning profession the urban and regional planning profession demands the training of practical planners who have some experience with community development, citizen participation modules, and conflict resolution skills. community outreach in curricula provides needed exposure to practical applications of textbook lessons and exposure to group dynamics, community clients, and complex problems. the recognized need for practical training in any planning curriculum is most often addressed through community outreach-based courses such as studios, practicums, study abroad programs, and in lectures interwoven into seminar courses. the basic structure of all of these classes typically supports teams of students working with a particular community on a specific activity. these outreach courses, however, pose some of the greatest teaching and learning challenges in the entire curriculum (wiewel and lieber, 1998; dalton, 1986; vakil, marans and feldt, 1990). even though the need for experiential learning is accepted and understood, these practice-based courses often lack the same distinction in academia as theory-based courses and need constant justification. 3. international cooperative framework one way to reconnect scholars and professors to the real world is through study abroad. study abroad provides opportunities for active and experiential learning. this paper discusses study abroad as a strategy for fostering partnerships, linking scholarship with practice, linking teaching, research, and outreach through active 72 learning. in addition to these important phases in university education, inexpensive air travel has had an enormous impact on global higher education. prior to the 1940s, study abroad still largely had to be done by ship, often requiring weeks of travel. international air travel has enhanced education by allowing individuals to immerse themselves in different cultures and ways of thinking simultaneously. it would not be all that uncommon for an individual to speak at a conference in europe one day and in the us the next day. also, students who would normally not have had the socioeconomic background to afford to study abroad now can do so with relative ease. 4. different forms of international exchange conferences, workshops and seminars attending an international conference or workshop is a great way to do an international exchange. while conference stays are often short, they still offer a chance for interaction with a diverse group of professionals, and for a short-term immersion in a different culture. conferences can lead to a sharing of ideas. thoughts from other practicing professionals on a particular topic can be a huge resource of new ideas to put into practice when the individual returns home. in some cases there will be great differences among the practices of professionals due to differing governmental systems, social norms and educational structures, however, smaller aspects may be able to be utilized in practice. research collection and writing in addition to conferences and workshops, professionals conducting international research are often required to travel to one or more countries to gather data. these trips should also include making scholarly contacts in other countries. depending on the research area, it might be necessary to travel and form strong international contacts within a discipline. professional exchanges and short tours professional exchanges are beneficial to individuals who are visiting a foreign country, as well as for the host university. professional exchanges and short tours are usually semester long endeavors, or for multiple weeks. a well-planned short tour to a foreign country might involve working alongside a foreign professional, site visits, or meetings with representatives from government, business, or other industries. these international exchanges provide the individual with more immersion into the country and culture than a conference would. one might begin to get a sense of what living in that country would be like. short tours allow for seeing a different view of a country than an attendee of a workshop or conference would. short tours can be a more indepth study of the country and its practices, due to their nature being more focused and specific. they can also be tailored to the specific needs of the visiting professional or small group. often, small groups are ideal for visiting seminars and short tours. participants in small group short tours get to know one another, can work in teams, 73 and are more mobile than a large group (clark and wareham, 1998). extended trips are usually more successful when a common language is shared, but this is an obstacle that can be overcome by using an interpreter who is fluent in both languages. faculty exchanges: three types short courses can be beneficial to students and professionals who might want the perspective of studying in a foreign country, but may have time or financial constraints that do now allow a semester or year-long study abroad experience. short courses can also be more intensive than semester long course, offering individuals an in-depth learning experience in select topics. often, short courses offer individuals opportunities for field studies, case studies and other examples of interest. fellowships are unique in that they are often funded by governments, foundations, and other private organizations, as well as by universities. the range of organizations that offer fellowships relates to the vast range of topics that can be studied both nationally and internationally. the fulbright program is probably the most recognized distributor of fellowships. senator j. william fulbright, the program’s founder, said, ‘international education exchange is the most significant current project designed to continue the process of humanizing mankind to the point, we would hope, that nations can learn to live in peace.’ the u.s. fulbright scholar program is administered by the council for international exchange of scholars (cies) through a cooperative agreement with the u.s. department of state’s bureau of educational and cultural affairs. since the program’s inception in 1946, more than 250,000 professionals have studied, taught or conducted research abroad. each year, more than 800 grants are awarded to individuals who will study or conduct research in 140 countries. invited presentations are another way for professionals to experience a country, while engaging in educational discourse with a host university. visiting professionals may give lectures, presentations, or may meet casually with small groups to discuss their area of expertise. through this short-term discourse, the host university and the visiting scholar may share a number of new ideas with each other. overall, the experience can be beneficial for both parties. student exchanges students may see international degrees as a way to get ahead in today’s workforce. today’s employers often look for international experience when seeking applicants and employees. a foreign language is also a huge asset to anyone seeking a job. universities also often look favorably on foreign students studying, as foreign tuition is often assessed at a higher rate than in-state or in-county tuition. committing to a twoor four-year curriculum at a foreign university can sometimes be a difficult undertaking for students. as such, certificate programs are a good way to gain some international experience and education without such a long time commitment. certificate programs are offered by many universities in many areas, ranging from a film studies program at cambridge university in the uk, to a certificate in health science at the university of 74 sydney in australia. a wide range of options exist for those students seeking certificates in their field of study. while student exchanges are most common in secondary schools, they are becoming increasingly common at colleges and universities as well. exchanges are a great way to truly get a glimpse of the world in which others live. students typically live with a host family, allowing for total immersion in the culture. exchanges can last for an academic semester, a year, or for just a summer. they can also work both ways, allowing the students to literally swap families, or a student can choose to live with a host family without hosting their own student. as studying abroad is becoming increasingly affordable, and more colleges and universities are building international experiences into their curriculums, more students are choosing to complete semesters, school breaks, or summers abroad, learning with other students from their home university. home university faculty generally teach study abroad courses with guest lectures from faculty at universities in the host country. it is thought that students who choose to study abroad will gain enhanced academic, personal, professional and cultural skills. students planning to study abroad are urged to prepare for their trip by learning as much as they can about their host country before they leave, so they are as prepared as they can be when they arrive in a different country with different cultures and customs. 5. experiential learning in an international cooperative framework experiential learning challenges are magnified when service learning is applied to study abroad courses or an international audience. in these settings, students have to deal with cultural differences, academic nuances and distance learning. in these situations participants benefit from ‘multi-actor orientation’. multi-actor orientation is ‘a participatory approach to learning, which emphasizes a wide range of backgrounds in the learning community’ (livingstone and lynch, 2000). despite these challenges, michigan state university is one of the top us universities when it comes to commitment and participation in international programs. this article focuses on experiential learning and service-based activities, designed to enhance students’ theoretical understanding of community planning and development. choosing partners and building a successful program implementing and maintaining an international program means choosing interested partners and very motivated colleagues carefully. due to the combination of structured long-term planning and the need for short-term flexibility, the communication between the involved people must be very efficient. faith and trust in each other’s capabilities are also important requirements. but the more ‘unofficial’ relation is also a relevant aspect. going along with each other easily, short paths of communication and fast clarification, all this only works if a good relation between the partners exists. beside the demand of social skills, different professional backgrounds are necessary. spatial planning and urban development are interdisciplinary tasks and therefore 75 demand varied experiences in different fields as urban design, landscape planning and urban economic development. on the basis of these different professions, interesting topics for research and teaching could be developed including an on-going exchange of ideas. 6. recommendations based on challenges and opportunities based on experiences gained from teaching the course for several years, and from the experience of others teaching similar courses, we would like to share some recommendations for improving and strengthening the practicum course experience. understand and articulate the importance of the experiential learning and the study abroad program clearly. although a majority of community planning and development educators strive to create good practicing planners, few of us articulate the purpose of our courses in our syllabi. urban and regional planning affects all aspects of a society – economic, social, political, and cultural – yet in many educational institutions, the focus is on the importance of theoretical work over practical experience. students realize that, too often, greater emphasis is given to theory and not practice. in fact, some professional programs de-emphasize the importance of practice by offering additional academic courses in lieu of fieldwork. in contrast, forty years ago the core of community planning was practice. the curriculum allowed the student to gain perspective from the eyes of various direct, active players in urban and regional development (vakil, marans and feldt, 1990) and workshop (as it was frequently called) was the fundamental part of planning curricula. practice oriented courses enhanced planning theory, communication, and mediation skills which were better taught in an applied sense than by conventional lecture and seminar formats (dalton, 1986). study abroad programs can be an exercise in self-confidence, team building, conflict resolution, understanding of multicultural concepts in planning and development and, above all, a forum for the practical application of planning theory. study abroad programs can give students hands-on experience in the field of planning and development. furthermore, interaction with those community organizations, serving as the client, facilitates the integration of public service into the classroom (alonso, 1986). ideally, this form of cooperative learning serves as a learning tool by building communication skills and connecting theory with practice. the importance of these learned skills for an effective practitioner are outlined in the planning accreditation board (pab) requirement for accredited professional programs, for example. furthermore, students entering a university program educating community planning and development professionals come from a wide variety of disciplines such as geography, public administration, anthropology, economics, architecture, civil engineering, natural sciences, and sociology. students may not necessarily have any training or practice in dealing with urban planning problems. moreover, those that are from the arts, social sciences and even natural sciences are typically more familiar with ‘description’ than ‘prescription’. they have had few opportunities to collect information, analyze the data, and make recommendations for a specific action. 76 students need to know that one never has all the information required, that local values are important, and that ‘all politics are local’. experiential learning is intended to help students build on their past experiences, apply new knowledge, and gain confidence to make meaningful decisions. structure the course and its relationship to the entire curriculum such that it reflects its unique characteristics. courses should ‘set clear learning objectives and carefully plan and select the experiences they intend students to have’ (lonergan and andresen, 1988). some university programs do longer study abroad programs that last an entire semester. some professional programs require all students to engage in some international experience and have endowments to support the students that take part in these experiences. the international program is clearly defined and articulated in the curriculum, such that every student understands that they will be expected to participate. the urban and regional planning program at msu does not mandate that every student participate in an international experience, however, opportunities to participate in one or two study abroad opportunities are always available and strongly encouraged and financially supported. this makes a huge difference in the participation rate for the programs. foster good client relationships to ensure good community projects and effective working partnerships. in addition to the organizational partnerships important for international exchanges, it is also critical to find projects that lend themselves to short-term brainstorming of ideas and presentation of themes and design alternatives. in this way, the students are engaging directly with people in the community who are in need of some specific project for their city. engaging directly with community members allows the projects to be more practical and useful to the actors involved. the client receives a tangible product produced by the students with guidance, and the students gain working knowledge of the subject, working with international teammates, presenting ideas and concepts using graphic arts, and working directly in their community. encourage healthy group dynamics and foster transferable skills. advantages of small-group learning include teamwork, analysis and synthesis, interpretation and problem solving, and the development of transferrable skills (brown, 1999). one of the cornerstones of experiential learning is the ideal of cooperative, peer learning in a small-group setting. the potential for teamwork, deep learning through closer interaction between students and teachers (gibbs, 1992; higgitt, 1997), and greater student responsibility and accountability for constructing knowledge (yabes, 1996; black, 1994) are seen as critical elements of active learning. furthermore, opportunities to combine discipline specific subject skills with practical, transferable skills are seen as an integral part of experiential learning. subject skills are not necessarily the same ones used in a variety of career-oriented situations such as, skills in teamwork, communication, self-management, self-motivation, leadership, social interaction and personal development. ‘these skills are just not taught by conventional note-taking and reading. instead, they must be developed through experiential learning: guidance and demonstration reinforced by practice’ (haigh and kilmartin, 1999, p. 205). 77 given the potential and opportunities presented by small-group learning, it is imperative that groups be structured with care. learning will only occur when the group functions in a cohesive and efficient manner. when the positive interdependence needed to link group members is absent, the team will falter and the learning experience, as well as the project, will be compromised. managing group dynamics poses many challenges ranging from the size and composition of the group to expectations and grading. devoting time to teaching communications skills and the importance of teamwork is critical. students often have difficulty working in groups, managing and scheduling time, and taking responsibility or being accountable to peers. effective groups are based on five basic principles. these are interdependence, face-to-face interaction, individual accountability, teamwork and social skills, and group processing (johnson, johnson and smith, 1991). encourage greater faculty involvement to seamlessly link theoretical and practical instruction. often, professors do not see involvement in practice-based courses as providing tangible reward in terms of merit salary and promotions. more weight is given to research publications than outreach activities in merit considerations. as such, in several programs, fieldwork is delegated to a practicing planner who may not hold a university appointment. the rationale for hiring professional planners for these courses is typically quite sound. the professionals know how to plan in a realistic way. unfortunately, however, there are several potential secondary impacts. first, a course taught by a guest not a professor could alter the perceptions and expectations of the importance of the course in the minds of the students. secondly, it unnecessarily separates theoretical knowledge (that taught by professors) from the practical training (taught by practitioners). this is particularly worrisome for those of us who believe the link between theory and practice is essential. one way to overcome this is to team-teach the course. complementary skills of faculty and practitioners could create a good dynamic in class. nonetheless, it is essential that regular faculty become involved in the practicum experience. by doing so, they are able to stay in touch with professional practice, are able to test their ideas and are able to demonstrate the importance of the course in the curriculum. they need not be the instructors of record or the ‘studio masters’. they can offer learning modules, provide pinpointed practical lectures or even serve as guest critics. students often have a difficult time linking theory and coursework to practical problems encountered in the field. they are not experienced researchers and need guidance in fieldwork objectives, social interaction, and dealing with multiple publics (fuller, rawlinson and bevan, 2000). lectures by different faculty members that focus on various aspects students might encounter in the field, such as ethical dilemmas and dealing with disadvantaged groups, along with subject specific content and study of analytical techniques can be advantageous (may, 1999). in all cases, it is important to insure that there are seamless connections between non-studio and studio instructors and courses. 78 7. conclusions it is evident that service-based learning, that involves students working in communities with the goal of integrating theoretical or textbook learning, is a worthwhile pedagogical strategy. bridges (1993) says ‘students should not merely be able to make choices intellectually but be able additionally to pursue them practically by acting in and upon a competitive social world’ (p. 43). service-based learning exposes students to the complexities and uncertainties in practice situations that cannot be duplicated in traditional lecture courses and it enhances academic learning by involving students in community service activities (kent, gilbertson and hunt, 1997). the ability to work with community members in developing a plan that suits the needs of a community requires the meshing of academic knowledge with social skills during practicum. practicum fosters a higher level of integration and creativity. however, given the diversity of student skills and knowledge base, these courses can be difficult to structure. students can get confused when reality does not mirror theoretical constructs and have a difficult time dealing with real people with diverse backgrounds with different, often conflicting, needs. experiential learning is an essential part of community planning and development education and should remain in the curriculum of degree-granting programs. practicum courses and practice oriented study abroad programs can be valuable teaching vehicles that help students increase their knowledge and confidence through the provision of a needed service to communities. experience shows that these courses provide a mechanism for substantive learning and the integration of techniques with theory. the result is graduates who are better planners. students learn valuable lessons through cooperative learning and assist community organizations in the process. experience gained and skills learned in practice-oriented work provide students with valuable tools when dealing with actual community problems. if we understand the present and historic perceptions of practice-based courses in our curriculum and consciously work to educate our peers and students on the importance of these courses, its structure and its implications, we could promote their status and need in professional programs. furthermore, if we understand theories of cooperative learning, service-based learning and group dynamics, we can better teach the courses and insure that they are 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1990, journal of planning education and research, vol. 10, no. 1, pp. 61-69. 29. wiewel, w. and lieber, m., ‘goal achievement, relationship building, and incrementalism: the challenges of university – community partnership’, 1998, journal of planning, education and research, vol. 17, no. 4, pp. 192-306. 30. yabes, r., ‘cooperative learning in planning education’, paper presented at the acspaesop joint international congress, toronto, canada, 1996. 58 abstract this article is a follow-up to one published in december of 2012 (hamlin and lazar, 2012). global trade and related transportation are changing dramatically. trends are diffi cult to follow, but important in the effect on cities, countries and continents. over the past two decades, rising energy prices, rising wages, environmental concerns and other factors have produced a shift back to ocean shipping as an important transportation mode. while slower than other modes, ocean freighter transport can be lower in cost and create lower carbon emissions. these advantages continue to improve as container freighters are becoming larger. the purpose of the article is to look more closely at the public and private sector response in the key romania port of constanţa. the fi rst part will lay out the current situation. the second will update and evaluate the eastern european responses to the current situation, looking closely at the port of constanţa. keywords: co ntainers, port of constanţa, shipping industry, transportation modes, canals and sea routes. europe’s southeastern gateway: romania’s public policy respose to changing patterns of world shipping roger e. hamlin roger e. hamlin professor, urban and regional planning department, school of planning, design and construction, michigan state university, east lansing, usa tel.: 001-517-353.8743 e-mail: hamlin@msu.edu transylvanian review of administrative sciences, no. 45 e/2015, pp. 58-75 59 1. introduction this article is a follow-up to one published in december of 2012 (hamlin and lazar, 2012). global trade and related transportation are changing dramatically. trends are diffi cult to follow, but important in the eff ect on cities, countries and continents. as indicated in the previous research, few countries are on top of what is happening even though these trends are critical to their economic future. the public policy response to these trends is diffi cult because infrastructure costs are high and the immediate benefi t to the general public is not always clear to them. over the past two decades, rising energy prices, rising wages, environmental concerns and other factors have produced a shift back to ocean shipping as an important transportation mode. while slower than other modes, ocean freighter transport can belower in cost and create lower carbon emissions. these advantages continue to improve as container freighters are becoming larger. some container ships now carry 20,000 standard shipping containers (teu) per ship, more than double the volume of just a few years ago. these advantages are only available to some countries. even affl uent countries that had good seaports are fi nding that their facilities are rapidly becoming out of date. just a few seaports are able to accept the largest ships. only a few ports in north america and europe accept the next smaller-sized ships, and those ports are often congested. the two most important canal systems of the world, panama and suez, are upgrading but behind, and some of the great inland waterways, such as the st. lawrence seaway and danube river require improvement just to handle ‘handoff ’ traffi c. not keeping up with this ship size escalation could cause a country or a whole continent to fall behind economically, and could be the basis for the redistribution of world wealth (hamlin and lazar, 2012). the ‘great recession’ of 2008-9, the large drop in oil prices in 2014, and economic slowdowns in several large economies including china, brazil and russia during 2015 have created shockwaves in the shipping industry. these shocks have made large infrastructure investments more diffi cult for both the public and private sectors. total shipping volume dropped dramatically, came back slowly and changed in composition. however, ship sizes continue to increase and long-term trends may still strongly infl uence the world economic balance of power. where does romania stand in the new global shipping war? the purpose of this article is to update the information found in an article published in 2012 and follow-up on the implications of changing trends. it will also look more closely at the public and private sector response in the key romania port of constanţa. the fi rst part will lay out the current situation. the second will update and evaluate the eastern european responses to the current situation, looking closely at the port of constanţa. 60 2. the current situation the fi rst step is to describe general shipping trends. then the article will look in more detail at trends in the components of the maritime shipping industry. the current status of containerization will be followed by a discussion of current ship characteristics and the shipbuilding industry. then we must look more closely at the canals, ports, inlandwaterways and other hinterland infrastructure needed to handle those big ships. 2.1. global shipping industry the maritime shipping industry has been growing steadily for decades, largely the result of containerization. growth has consistently exceeded world gdp growth. in the years just prior to the fi nancial crisis of 2008-09 the shipping industry was expanding rapidly along with global trade. the economic and fi nancial crisis of 2009 dramatically eff ected total shipping volume. since then, ‘the slow global economic recovery has continued to impact the overall shipping industry’ according to svein engh, group head and managing director, cit maritime finance.‘ broadly speaking, global trade is not growing at the same level that it had been growing for the last number of cycles. that means that time charter rates in the shipping sector have not improved dramatically’. although he says, ‘certain aspects of the industry are doing bett er than others’ (javali, 2015). confl icting indicators portend the situation in 2015. some claim the industry is making slow but solid gains but with shifting market emphasis, as well as changing fi nancing and organizational structures. some claim the industry is experiencing chronic over capacity that may last for some time1. the slowing chinese economy is seen as a major cause. according to offi cial chinese statistics, the economic growth rate for china has dropped from double-digit gains in gdp to 7.4% gdp growth in 2014. the fi rst quarter year-over-year gdp growth rate for 2015 was offi cially 7.0%. so, as the world economy continues to struggle to recover from the global 2009 slowdown, china represents a new drag on those recovery eff orts more than fi ve years later. perhaps more importantly, china trade is declining. china’s monthly trade data for march of 2015 indicated that exports fell from a year ago by 15% in us$ terms, compared to expectations for a rise of more than 8%. imports meanwhile fell 12.7% from march of 2014. this negative trend continued in april of 2015 (china’s export numbers, bbc, 2015). also important are the housing and infrastructure sectors in china. housing prices have been falling in nearly every metropolitan area in china. overcapacity is causing construction to slow down. likewise infrastructure investment is slowing, much of that carried out by local governments who raise capital by selling land to develop1 in february 2015, for example, the baltic dry index (bdi) dropped to its lowest level since the creation of the index in 1985. the bdi is the global benchmark for freight rates for ships carrying raw materials (lakshmi, 2015). 61 ers and/or going into debt, much of the debt in the shadow-banking sector. a combined tightening of credit standards along with a national crackdown on corruption have caused local governments to be more cautious about investing in infrastructure. all of these factors lead to less steel production and less coal and iron ingots imported from places like australia as the energy and raw materials for steel production. the chief executive of the world’s largest container-shipping group recently warned that global trade growth could slow this year in spite of low oil prices as chinese, brazilian and russian economies disappoint. milne (2015):‘i’m personally more towards the low end of that [estimates of global trade]’. søren skou, maersk line’s chief executive, told the financial times on march 1, 2015: ‘growth from a historical perspective is quite sluggish’. his comments have weight as maersk’s predictions are seen as a good indicator of future global trade. 2.2. containers inter-modal containers are large metal boxes used to transport freight. built to standard dimensions, containers transfer easily between transport modes. freighter or train capacity is often expressed in twenty-foot equivalent units or teus, referring to 20’ long containers (containerization, 2012; container standards). containerized shipping has existed for more than 60 years (world shipping council, undated) but grew rapidly in the 15 years prior to the global slowdown. containerization grew over the decades because of the substantial reduction in cost it allows at the break-of-bulk point. this growth has been cited as a cause of long-term growth in world trade. historically, oceans and waterways were the preferred mode of transportation, particularly for heavy freight. the break-of-bulk point, where men carried goods from one mode of transportation such as ships to another mode on land,was so labor intensive that the world’s great cities typically formed near good harbors. and, routes of internal land transport often developed to feed into those points. as world wage levels rose, these labor-intensive methods of transferring goods between modes became too expensive. containerization has released the shipping world from this impediment, while liberalization of longshoremen labor contracts has allowed containerization to accelerate. goods not regularly containerized include dry bulk goods such as corn and coal, and liquids such as oil. even these categories are experiencing increased containerization with the advent of tanker containers and infl atable rubber liners for containers called bladders (global security.org, undated). a variety of types of containers make up the world inventory. historically, dry containers comprised about 93%. the other 7% is split between insulated refrigeration containers and tank container (diff erent from tanker ships). reefers make up approximately 6.25% of the global fl eet. tank containers, for transporting various liquids, occupy the remaining 0.75% (drewry maritime research, 2014). increases in terrorism and other security issues have also improved the relative cost advantage of containerization. containers can be inspected and sealed at their 62 origin and remain sealed, electronically monitored and tracked until they reach their destination (lick and hamlin, 2012). a disadvantage is the weight of the container, but use of new composite materials can reduce container weight. a second disadvantage is the need to dead-head empty containers or just to dispose of or reuse containers for other purposes. demand for container shipping dropped dramatically after the great recession, and has been slow to recover. container demand rose by about 4 per cent in both 2013 and 2014 (milne, 2015). maersk line, the danish group that ships about 15 percent of the world’s seaborne freight, expects it to increase 3 to 5 percent in 2015 (milne, 2015). container demand used to expand at up to 10 percent a year before the fi nancial crisis, but mr. skou, ceo of maersk, said those days were behind the industry. he said, in a recent interview, that increase in demand would more closely mirror global gdp growth in the future, much like shipping volume in general (milne, 2015). 2.3. ships container ships are described in terms of their container capacity. container ships are divided into seven major size categories: (1) small feeder, (2) feeder, (3) feedermax, (4) panamax, (5) post-panamax, (6) new panama, and (7) ultra-large (hayler and keever, 2003).the word ‘panamax’ refers to the maximum size of a ship that is able to pass through the panama canal. as can be seen by the listing, several categories are too large to fi t in the existing canal, and cannot dock at many existing ports. in 2000 the global container ships fl eet numbered over 6,800 vessels (global security.org, undated, container types). more than 70 percent of these were built to carry ocean-going containers. this world-wide fl eet had a capacity of about 6 million teus in 2000. according to drewry maritime research, prior to 2009 annualized fl eet growth had been more than 10% (drewry maritime research, 2014). despite the slowdown in trade, the global container fl eet reached 32.9 million teu in 2012, or nearly fi ve times the 2000 fi gure. continued growth in the fl eet is, in part, an issue of lag time. ship orders take so long to fi ll that levels of commitments continued after the fi nancial crisis. growth in the overall container equipment fl eet was under 5% in 2012 and slower in 2013, ultimately refl ecting the impact of weaker trade growth and liner effi ciency gains in overall equipment demand (drewry maritime research, 2014). in terms of the number of containers each can hold, ship size has grown rapidly in the last decade and a half. nearly 3/4th of the fl eet in 2000 consisted of ships with under 1,000 teu capacity. but, super post-panamax vessel of 4,500 teu, were already growing rapidly as a portion of the total (global security.org, undated, container types). at the end of 2003 about 100 container ships in use already had a capacity of 8,000 teu. the samsung shipyard was building a container ship with a capacity of 9,200 teu for use in 2005. samsung delivered a 9,600 teu ship in 2006. that size increased to 15,000 in 2010 and the maximum size is now 20,000 teus (schumacher cargo.com, undated). 63 korea’s daewoo corporation built the world’s largest ship for mærsk line. the ship cost about us$190 million, and holds 18,000 teu containers. the ship design is called the triple e. to understand how much is carried by a single container ship of this size, if the same number of containers were loaded on a train, the train would be 110 km long (martin, 2011; hamlin and lazar, 2012). the claim is that superior economies of scale enable the new ships to exceed the record for both fuel effi ciency and co2 emissions. in 2012, maersk planned to put ten such ships into service between 2013 and 2015 (martin, 2011). however it did not order any new ships after 2011. despite maersk ceo mr. skou’s recent warning of slow economic and shipping growth, maersk recently ordered from daewoo new ships for the fi rst time since 2011 when it bought 20 triple e’s from daewoo in may 2015. the 20 new ships are triple es modifi ed to hold 20,000 teus (wilmington, 2015). world trade and shipping volumes have fl uctuated in the last decade, but one trend remains clear. new container ships are gett ing much larger. it seems that in good economic times freighter lines are willing to use excess cash to invest in bigger ships to improve capacity. in diffi cult economic times, they want to use bigger ships to increase effi ciency (kremer, 2013). 2.4. canals and sea routes the advent of the mega-ship also aff ects shipping routes. most container shipping is within asia. there, ship size and port capacity are growing rapidly. the greatest volume of intercontinental shipping, historically, has been between north america and europe. yet, the shipping routes from asia to the north american west coast are expanding in volume with a high percentage of that trade being one-way from asia. shipping from asia to europe can follow one of two routes, depending on the capacity of the world’s two most important canals, panama and suez. both canals have challenges. the only alternatives are (1) to pass around the southern tips of south america or africa, which can add weeks to the journey, or (2) a much more expensive overland route, typically by rail. panama. the panama canal is still the preferred route for east asians but this is being challenged as ships get larger. the panama canal has been so important that, as mentioned earlier, ship size categories are based on whether they can pass through that canal. however, an ever increasing number of ships are larger than the old panamax size. the size of a panamax vessel is limited by the size of the panama canal’s locks. the ‘post panamax’ category has historically been used to describe ships with larger hulls. the panama canal is currently being enlarged at an expense of over $us 6 billion. the multi-billion dollar project will expand the canal’s capacity, both in volume and ship size. completion of the project was projected for approximately 2014 (panama canal authority, 2006). while the project has been delayed and is over budget, it is now expected to be completed in 2016. 64 panama is so important that the expansion project is causing some changes in terminology. the ‘new panamax’ size category indicates the ship-size that will be able to pass through the new third set of locks currently being built (united nations conference on trade and development, 2010).the new locks can accommodate a ship with approximately 12,000 teus (panama canal authority, 2006). the panama project may also greatly impact trade patt erns. not only will east asian ships be more likely continue to use panama rather than suez to get to europe, they may also want to ship directly to customers on the u.s. east coast rather than to the west coast with a rail transfer. however, the new york/new jersey port is congested and needs upgrading of transfer capacity. other ports such as halifax, norfolk and baltimore are looking for ways to get in the big-ship game (see ports below) (financial times, 2015). nevertheless, when the panama canal project is completed, it will still not accommodate the largest ships currently in use. even this multi-billion dollar expansion will only accommodate ships 1/2 to 2/3rds the size of those soon to be built. some say that the new panama canal will be out of date the day it opens. suez. for the growing economies of south asia, the suez route to europe is most likely. suezmax is also a term describing ship sizes. it refers to ships capable of passing through the suez canal. the term is primarily used to classify tankers. since the canal has no locks, the most serious limiting factors are the maximum depth below waterline, and height due to the suez canal bridge. a few supertankers fi lled to capacity are too deep to fi t through. they have to transfer part of their cargo to other ships or to a pipeline terminal before passing through (hamlin and lazar, 2012). the suez might have limitations with respect to the new mega container ships. also, once ships get to the mediterranean sea, they may face a 10 to 20 day trip around europe to the west and north to get to ports that can handle the larger ship size and cargo volume. the ‘new maritime silk route’ proposed by china would also increase east asian shipping volume going west to europe. in a speech in 2013, xi jinping of china announced the intention to create a maritime silk road, along with the asian infrastructure investment bank (aiia) (yale, 2015). these initiatives have gained traction as well as controversy in the succeeding years but clearly represent a ‘look west’att itude on the part of the chinese and the initiative’s partners. the indian ocean and the suez are destined to become more important for transport to europe (want china times, 2015). 2.5. ports obviously, with ship size increasing rapidly sea ports must be built to accommodate the larger ships. and, with the increase energy and cost effi ciency off ered, servicing larger ships could be important to a city or country’s competitive advantage. the costs and time lags associated with building port facilities is much greater even than for the ships themselves. 65 container ports are dominated by asian ports, with 7 of the top 11 in china. western nations are far behind in both port capacity and amount of trade. european ports that make the list are rott erdam (#10), antwerp (#14), hamburg (#15) and bremen/ bremerhave (#23). north american entries are los angeles (#17), long beach (#18), and new york/new jersey (#20). other north american and european ports in the top 50 are: valencia, spain; flexstowe, uk; algeciras, spain; gioiatauro, italy; savannah, us; and vancouver, canada. listed ports can handle the panamax ships, but not necessarily the newest mega-ships. going farther down the list, ports might only be able to deal with smaller ships. norfolk, va has low teu volume but deepwater larger ship capacity (allen, 2012). halifax is developing its deep water port to handle 18,000 teu ships, but does not currently make the top 10 in volume. ‘all of the consequences of [ship] size might not be immediately obvious for naval architects looking for optimum carrying capacity or for ship owners seeking to reduce costs’, says diana illing, ihs maritime & trade consultant. ‘not only must ports upgrade the size of their ship bays, but other preparations must be made. one issue plaguing many ports is draught. at hamburg, for example, one of europe’s most active and infl uential cargo hubs, restricted draught has always been a limiting factor – 12.8 meters (about 42 feet) during low tide and 15.1 meters (about 50 feet) during high tide’(illing, 2015). air draught, the height of the ship and its antennae above the water is also a limitation. bridges that cross the mouth of a bay are sometimes too low for the big ships. this is somewhat of a problem in halifax and baltimore, for example (allen, 2012). halifax, one of the deepest ports on the north american east coast can handle 18,000 teu ships, but must increase the height of the bridge crossing the mouth of the bay to allow full access (illing, 2015). the breadth of ultra large container ships creates another limitation. the combined beam of two ships plus a safe separation zone between them represents the required channel width to allow two ships to pass in a channel. ships carrying 18,000 teu’s are too wide for two-way traffi c on the elbe channel that serves hamburg, for example. requiring one-way traffi c while a large ship passes down the channel would create long waiting times and congestion for other port users (illing, 2015). variability of delivery volume is another problem faced by ports. this means that when mega ships arrive, servicing them can overtax local facilities. unloading a mega ship creates demand for suffi cient intermediate storage space, for example. this refers not only to space for containers but also plug-ins for cooling and refrigerated containers, and tank storage for liquid bulk or dry bulk storage (illing, 2015). investment in more freight handling equipment will be necessary. onward forwarding and distribution of cargo becomes a logistical challenge. the capacity to load so many containers on to trains and trucks is a concern, and moving freight into the hinterland mayrequire additional rail and road capacity in and out of a port. one train can only carry about 240 40-foot containers. about 20 double-stacked trains of maximum size would be required to move the containers from one 18,000 teu ship. the 66 larger the container ship, the more time is required to load or unload, but the time schedule for a container ship is tight (global security.org, undated, container types). an additional issue is ‘handoff ’ capacity to feeder ships, smaller ships that transport containers from the big ports to smaller costal or up-river ports. the speed of the inter-ship transfer is critical. ships must line up side-by-side and have cranes sort and transfer containers. if only a few ports on a continent are able to handle the biggest ships, they may become hubs and will need to transfer containers to feeder ships in much greater volumes. some ports that have a long history of being major ports may not be able to upgrade facilities to accept the largest ships. such ports might fi nd increasingly that they are sending and receiving containers to/from other ports on feeder ships. the new mega-hubs must have more and bett er handoff facilities. these transfers require not only physical facilities but also other technologies to maintain internal security, track inventory and deal with border-crossing bureaucracies related to customs, immigration and terrorism threats. these soft infrastructures are both a signifi cant part of port costs and a more ongoing issue requiring constant update. they also contribute to a demand for advanced technologies in the port city and the establishment of trade, transportation and communication technology hubs (lick and hamlin, 2012). mega-ships have an impact on the status of ports that can’t handle them. shippers might relocate their business to ports that can be served by mega-ships. with ultra large container ships arriving in rott erdam, for example the most economic choice might be to send hamburg-bound containers on a feeder ship or some of the traffi c may be transferred by road or rail depending on the distance. this would challenge ports’ top-tier status, their inclusion on a main haul itinerary, and their place in a hub and feeder networks, says diana illing. ports that have invested to prepare for the new vessels stand to benefi t. the apm terminals facility at pier 400, los angeles, handled three mega-ships simultaneously between feb. 22 and march 7, 2015, representing a combined total of 34,465 moves in that period, and fi lling 28 double-stacked railroad trains. this author witnessed many of those containers crossing the mojavi desert by rail in early march. intermodal container rail traffi c for inland destinations is a major component of west coast containerized cargo volumes (illing, 2015). ‘trade volumes are forecast to continue growing, and the global new building order book includes a substantial number of mega-ships. this has implications for port infrastructure in approach channels, quayside handling, and hinterland infrastructure and logistics. ports need a clear vision of trade developments, equipment and staffi ng issues, and hinterland infrastructure in their communities. it is likely that port authorities will be pushed towards mergers to achieve the scale needed to meet the demands of mega-ships’ predicts diana illing2 (illing, 2015). 2 diana illing, an ihs maritime & trade consultant, can be contacted at diana.illing@ihs.com. this commentary was originally published in ihs maritime fairplay, a sister publication of joc.com within ihs maritime & trade. 67 in the early history of urban development break-of-bulk points at seaports lead to the location of many of the world’s great cities. more recently, the airport has become a catalyst for both industrial development and high-tech ‘aerotropolis’ services. now, the elevated importance of sea freight in modern trade is providing an impetus for modern technological development and local economic growth near seaports again, including high-tech logistics centers, often with a closely associated aerotropolis (lick and hamlin, 2012). 3. europe’s southeastern gateway southeastern europe has the advantage of a long coastline with many natural harbors (nott eboom, 2012). southeastern europe also has many port cities that are competing for the distinction of gateway to europe. in the port of rijeka, croatia, for example, the adriatic gate container terminal (agct) recently serviced a 10,000 teu container ship. the vessel is part of the 2m alliance of two of the world’s largest shipping companies, maersk and mediterranean shipping. the alliance connects rijeka and the far east, deploying fi fteen vessels with capacities of 9,600 to 11,300 teus. other gateway ports include italian ports in the north adriatic and the thessaloniki region of greece (nott eboom, 2012). the north adriatic region has established the north adriatic port association (napa), for example, to try to become a gateway region. in addition to rijeka, this association includes trieste, italy, which has a port 18 meters deep and able to handle very large ships. but, at 1.8 million teus in 2012, napa members still only handle a fraction of the volume of the multi-port gateway region of hamburg-le havre (poledica, 2014). some would argue that one single port would have diffi culty becoming a continental gateway. they might argue that the economics favor a multi-port region, with each port playing a specialized role. one port might handle the largest ships and hand off cargo to smaller ships and rail lines that operate between member ports. some ports in the system might specialize in dry bulk or tanker shipping and each would have a diff erent confi guration of access to the hinterland (noteboom, 2010; gilman and williams, 1976). 3.1. constanţa: favorable location constanţa seaport in romania is an example of a port city that has the potential to increase its importance because of the shifting patt erns of trade and transportation (hamlin and lazar, 2012). constanţa is located at the western end of the black sea. with a natural harbor, constanţa has welcomed ships since at least the sixth century b.c. (bloomberg.com, 2014). constanţa’s att ributes facilitate the connection of other black sea ports to central european markets using pan european corridors. as such, the port at constanţa hopes to be europe’s link to the black sea basin that also serves the ukraine, georgia, bulgaria, russia, and turkey. and, with growing asian-european trade and im68 provements to the suez, constanţa might be well located to connect european and asian markets. it could be a key link between europe and the rapidly growing economies of south and east asia through the suez canal, saving shippers the multi-day trip around europe to north sea ports like rott erdam and bremenhaven. furthermore, with the expanding panama canal, constanţa could be a black sea hub, providing access between east asia and the black sea basin through the panama canal (hamlin and lazar, 2012). the port city is at the junction of major trade routes, including routes connecting the transcaucasus, central and eastern europe and asia and the far east. constanţa might also be a gateway to western europe saving time and fuel compared to routes going from the suez to northern european ports. according to the ‘co2 reduction’ report issued by the european gateways platform, signifi cant savings in co2 emissions would be achieved if goods destined for central and eastern europe entered through constanţa, rather than northwestern europe. constanţa port’s favorable geographic position is emphasized by its connection with two paneuropean transport corridors, as defi ned by the european commission. ‘its position as a “core port” in the revised eu ten-t network, its pro-active implication in the strategy for the danube region, and its favorable location make constanţa port more and more att ractive to investors’, says valeriu nicolae ionescu, ceo of n.c. maritime ports administration s.a. constanţa, (in forward of 2013 annual report: port of constanţa). ten-t network is the trans-european transport network policy and program (european commission, mobility and transport, 2015). according to european commission policy, constanţa is a part of two ten-t corridors, the orient/east-mediterranean corridor that connects the german ports bremen, hamburg and rostock via the czech republic and slovakia, with a branch through austria, further via hungary to the romanian port of constanţa’s, and the rhine-danube corridor, that connects strasbourg and mannheim via two parallel axes in southern germany, one along main and danube, the other one via stutt gart and munich, and with a branch to prague and zilina to the slovak-ukrainian border, through austria, slovakia and hungary to the romanian ports of constanţa’s and galati (european commission, 2014). traceca (transportation corridor of europe caucases and asia) – is a policy linking europe to the caucasus and to central asia (2013 annual report, constanţa port). the 21st century ‘silk route’ policy has been a name for a loose set of ideas and projects to connect asia and europe. one part of it sees constanţa as an end point of a transportation link between east asia and central and eastern europe. traceca is a key link both conceptually and physically in a silk road policy. more recently, china has added more specifi city and perhaps money to a 21st century silk road with two connected initiatives, (1) the asian infrastructure investment bank and (2) china’s belt and road initiative. the china belt and road initiative has two parts, (a) the maritime silk road and (b) the overland transportation link. 69 the 21st century maritime silk road, offi cially announced march 28, 2015, is designed to go from china’s coast to europe through the south china sea and the indian ocean in one route (shaohui, 2015). the overland link includes the world’s longest rail route, 13,000 kilometer from yiwu, china to madrid, span (ridgewell, 2015; yale, 2015). certain other att ributes of constanţa recommend it as a hub port for the black sea and beyond. first, the port has three elements of eff ective intermodal transportation (inland waterways, (black sea danube canal), railways and roads/motorway infrastructure). also, the facilities for servicing all type of vessels, containers, tankers and others are in place3. 3.2. can constanţa take advantage of its locational and other advantages? the european gateway project has plans, looking at the port at constanţa as a black sea-danube river handoff point to feeder containerships and to other modes that could carry goods to inter-modal terminals in countries such as romania, serbia, hungary, austria and germany. according to some, constanţa already has the largest throughput volume of dry bulk, primarily grain, from easter europe to the middle east (bloomberg.com, 2014). in 2020, the shipping volume is forecasted to be 1.47 million teus. however, dry bulk shipping volume represents only about 10 percent of the total volume destined to or from central and eastern europe. and while the dry bulk capacity is important, some claim that constanţa is lagging in containerization. important container shipping lines are utilizing constanţa seaport as a distribution port for the black sea region. in the past decade, constanţa seaport has been serving freight fl ows from austria, bulgaria, hungary, the republic of moldova, slovenia, slovakia, ukraine and serbia. according to romanian authorities, the port of constanţa off ers the largest terminal handling capacity in the black sea basin. based on 2010 statistics, the container throughput approximated 600,000 teus. constanţa ranked 25th among the european ports in this regard and, in the top 10, in eastern europe. this volume increased between 15 and 20 percent during 2011 to approximately 700,000 teus4. total traffi c increased 9% in 2013 compared with 2012 or 55.138 million tones (annual report, port of constanţa, 2013). yet, the percentage increases described above come off of a very slow year in 2009-2010. in fact constanţa has been slower than other ports such as the north adriatic cluster to come back from the slow years of the great recession. the largest container vessel calling on the constanţa port has a capacity of approximately 9,000 teus. this is smaller than the ships using the north adriatic and only half of the size of the largest ships now in use world-wide. the largest container terminal, located in the southern part of the port of constanţa, operated by dp world, 3 information provided by the romanian ministry of transportation and infrastructure, 2011. 4 ibidem. 70 has an area of approximately 60 hectares with an estimated annual capacity of 1.5 to 2 million teus5. constanţa’s location is a disadvantage in two ways. first, the overland distance to the center of europe is much greater than it is for the north adriatic ports. and, the rail and highway systems in romania need substantial up-grading to act as an eff ective link to the center of europe. second, its geopolitical location makes constanţa a more isolated port. it is not a part of a major gateway cluster such as the north adriatic or those of northwest europe. according to the multiport theory mentioned above, this could be a long-term disadvantage. 3.3. the constanţa gateway plan while constanţa has many natural advantages, it faces many challenges. this attempt at an eastern gate to european trade and transportation hopes to create a new competitive advantage for the region and promote manufacturing and trade in general. yet, success requires careful planning and the capacity to move forward with local and romanian funds and private money, not just waiting for eu funds. also a part of the project would be a high-tech logistics hub for the east side of europe. creating an advanced multi-modal freight facility and logistics hub requires a multi-faceted plan. basic questions to be answered are: what do constanţa and europe need to do to accomplish this lofty goal? what is the status of the constanţa port as it relates to the new larger ships and changing patt ern of global trade? what is the status of the handoff facilities at constanţa? what work needs to be done to the canal shortcut through the danube delta? what expansion of the danube’s capacity is required? what is the quality of the rail and highway connections between constanţa and the center of europe? can constanţa become a high-tech logistics hub? a joint taskforce presented a white paper in april of 2010 to the romanian government that was to act as a roadmap and work plan to guide implementation. the joint taskforces consisted of experts from representative romanian ministries and other public entities (e.g., constanţa port authority) and experts from the european gateway platform foundation6. in order to accomplish the targets and goals, port of constanţa, with consistent support from romanian ministry of transportation and infrastructure, must elaborate a strategy for future developments which should integrate with the national transportation strategy. so far only some of the proposals of the white paper have been implemented. 5 information provided by the romanian ministry of transportation and infrastructure, 2011. 6 the dutch-romanian chamber of commerce established the romanian gateway association which developed a white paper with recommendations. the degree to which the romanian gateway association continues to be active is not clear. 71 3.4. current projects several projects are either in progress or to be started in the near future. the port can accommodate the current panamaxships, but, as mentioned previously, ship sizes continue to increase rapidly, and the panama canal is increasing its ship size capacity. the port of constanţa strives to secure bett er alongside-access conditions for most of its inner port basins to promote effi cient intermodal transfer (truck and rail). one of the important projects in railway traffi c is the enhancement of railway capacity in the river-maritime area of constanţa seaport and the connections to the rest of europe. the local project consists of the construction of a systematized railway complex. in the fi rst phase, the railway lines serving current operators will be executed based on traffi c estimates for the year 2020. the project costs an estimated 17.6 million euros. as a part of ten-t several projects eff ecting constanţa port or its hinterland are being funded. the budapest – arad – timiş oara – calafat rail upgrade and the arad –brașov–bucuresști–constanţa rail upgrade are key projects connecting the port to the hinterland (european commission, mobility and transport, 2014). also, the rail bott leneck between timiş oara and sofi a is being addressed (european commission, mobility and transport, 2014). projects to improve port transportation infrastructure are also in progress including work to improve inter-modal connections at constanţa port (european commission, mobility and transport, 2014) as well as the development of roads and bridges connecting port operation areas with national transportation systems. the limited access highway from bucharest to constanţa has been completed. the danube river – black sea canal is operational and being maintained at its current level. projects designed to provide bett er sailing conditions on the danube all through the year are also in the works. the 2012 blockage of the danube’s freight transport illustrated a severe problem. equally important are several projects expanding constanţa’s role as a logistic hub. creation of a state-of-the-art information and logistics hub is a complicated entity that showcases the interaction of science-based technologies with human systems. governments are involved because of concerns at such locations for both security and taxation. private systems must track inventories, time and related costs, and billing and shipping instructions, to name a few. the interaction of real time data bases, government policy, law and profi t orientation are all areas that cross sectoral and technical lines. a major maritime port can fall behind quickly if it does not employ the latest information-age technologies as a part of a high-tech port and logistics hub. 4. summary, conclusions and policy implications the shipping industry is recovering slowly from the global great recession of 2009-2010, in part, because the world economy is recovering slowly. container shipping has been one of the slowest segments of maritime shipping to recover. tanker shipping has done bett er. 72 despite the respite, global trends both inside and outside the shipping industry are in place. long-term energy price trends, improved handoff infrastructure and technologies, and security concerns are elevating ocean shipping as a more important transportation mode. notwithstanding the deep drop-off of container volumes and the slow recovery, ships are still increasing in size rapidly. as has been said, in poor economic times ships become bigger to gain effi ciency and in good economic times they grow to increase capacity. maersk,the world’s largest maritime shipper, is continuing to buy triple-e’s, the world’s largest ship, and is often modifying them to hold up to 20,000 teu’s. this trend is having far reaching eff ects on all aspects of global transportation. the trend has implications for the major cities of the world and can dramatically impact the economies of whole countries and continents with implications for the world economic order. few countries are in tune with what is happening. not keeping up with this ship size escalation could cause a country or a whole continent to fall behind economically. the two major canal systems of the world, panama and suez, are in need of the major upgrades, some of which are underway. major canals are expanding to accommodate larger ships at enormous cost in time, money and environmental impact. yet, even after a multi-billion dollar investment, the panama canal will be far too small for the largest ships when it is complete in 2016. nicaragua has given permission to a chinese investor to build a competing canal designed to accept larger ships. the status of the panama and suez canals has great eff ect on the shipping routes and therefore selection of ports. the status of the central american canal connection has strong infl uence on east asia to europe shipping as well as ports on the east coast of the us. at present, mainly asian seaports are able to accept the largest ships being built. halifax, nova scotia can now accept a ship of 18,000 teu’s. only a few other ports in north america and europe such as new york, los angeles/long beach and rotterdam are able to handle the next sized ships, and those ports are congested. many ports are att empting to deepen their approaches and expand quays, cranes and storage capacity to accommodate mega ship arrivals. electronics and communication infrastructure are also in need of modernization. advanced communication is critical to tracking cargo, dealing with customs, improving safety and maintaining security. some of the great inland waterways, such as the st. lawrence seaway and europe’s two major rivers require expansion just to handle ‘handoff ’ traffi c, and rail lines, highways and other hinterland transport are often inadequate to handle the load of a mega-ship. the concept of continental gateway also becomes salient with the renewed importance of ocean freight. secondary cities can emerge as major players in global trade if, (1) they are located on the edge of a continent, (2) they have a good deep-water port, (3) they build good inter-modal transfer facility, and (4) they obtain the technological expertise to develop a logistics hub. one place in eastern europe that has that poten73 tial is constanţa, romania. currently the largest port on the black sea, constanţa is eff ectively near the mouth of the danube river, and has rail and highway connections to the rest of europe. by using the port at constanţa ships coming from asia, through the suez can save more than ten days travel time and cost and co2 emissions by unloading in constanţa rather than rott erdam. has constanţa risen to the challenge of becoming the southeastern gateway and hub for europe? constanţa is doing very well as a port link for grain shipment to the middle east and as a hub for black sea traffi c. but, it can only handle container ships ½ the size of the largest vessels, and the rail and highway links from constanţa to the rest of europe are underdeveloped. to take advantage of the signifi cant locational advantage, constanţa and other similar gateways must rapidly upgrade quays to handle lager boats, improve cranes for transfer to black sea ships, river vessels, rail and truck. they must develop stateof-the-art information and logistics hubs that eff ectively interface the real time information concerns of government, regional security, inventory, safety, large-scale physical infrastructure. they must also improve storage capacity at the port. all of this is extremely costly. who will pay for it? (drew maritime research, 2015). private sector sources must be part of the picture. shipping lines that are buying or leasing the mega ships will want and need the port facilities and associated infrastructure required to handle them. rail lines also have a major stake, and private investment capital can be att racted if they see a growth opportunity. but with their money they will make the decision as to which ports receive the att ention. an enlightened public sector should also be involved to promote the interests of its citizens and to insure that facilities are developed that enhance the community. the cost of port upgrades is so expensive that a partnership between the public and private sectors is necessary. global transportation is changing rapidly. how well this situation is handled could have consequences for the economic status of an entire nation for decades to come. references: 1. allen, g., ‘the race to dig deeper ports for bigger cargo ships’, national public radio, 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november 8, 2014. 28. wilmington, r., ‘south korea’s daewoo lands big maersk ulcs order’, journal of commerce, 2015, [online] available at htt p://www.joc.com/maritime-news/contain er-lines/maersk-line/south-korea’s-daewoo-lands-big-maersk-ulcs-order_20150508. html, accessed on may 16, 2015. 29. world shipping council, ‘history of containerization,’ undated, [online] available at htt p://www.worldshipping.org/about-the-industry/history-of-containerization, accessed on november 8, 2014. 30. yale, w., ‘china’s maritime silk road gamble: the msr is designed to pacify neighboring countries threatened by china’s territorial claims. but will it work?’,the diplomat, april 22, 2015, [online] available at htt p://thediplomat.com/2015/04/chinas-ma ritime-silk-road-gamble, accessed on april 22, 2015. 23 abstract the paper discusses the post-communist development and evolution of the regionalization process in romania. in the first part, we distinguish between two periods of regionalization: the preparation period for the eu accession, and the post-accession period. it turns out that the process of regionalization was oriented to eu criteria and expectations, which are in turn low in what it concerns the establishment of regional development institutions and of different territorial levels of the nuts system. a radical change into this question was introduced very recently, at the beginning of 2013, when different regionalization projects have been launched by political parties and academics as well. therefore, in the second part of the paper our main aim is to analyze the latest regionalization projects and scenarios, emphasizing one of the most controversial questions of this process related to the ethno-cultural diversity of the country and to the question of székelyland. keywords: romania, regionalization, administrative-territorial reform, regionalism, székelyland. recent regionalization discourses and projects in romania with special focus on the székelyland józsef benedek hunor bajtalan józsef benedek (corresponding author) professor, department of world and regional economics, faculty of economics, university of miskolc, miskolc, hungary tel.: 0036-465-65200 e-mail: regbenjo@uni-miskolc.hu hunor bajtalan phd. student, faculty of geography, babeș-bolyai university, cluj-napoca, romania transylvanian review of administrative sciences, no. 44 e/2015, pp. 23-41 24 1. introduction the question of regionalization has received large academic attention in very different contexts (jones, goodwin and jones, 2005; costa-font and rico, 2006; zhang and wu, 2006; lentz et al., 2007; máté, néda and benedek, 2011; hammond and tosun, 2011; ertugal and dobre, 2011). there are different perceptions of the question whether the state can influence the regional development and, if yes, which are the proper strategies and instruments to do it. the most recent examples of the british and spanish devolution are related to the general concept of state modernization and recognition of ethno-cultural and regional diversity. but in detail, the question is not viewed only as a political one, it is also related to high expectations of better tailored public policies and an improved economic governance as well (rodríguez-pose and gill, 2005). other authors consider that regions are a significant scale of governance for the implementation of public policy, like natural resource management (lockwood et al., 2009). in addition, with no exception the asymmetric regionalization in europe is characteristic for countries with significant ethnic minorities (belgium, spain, uk, italy, finland), which means that the ethnic dimension plays an important role in shaping the regional structures of these countries. the process of decentralization and of the establishment of regional governments in these countries is well-documented (keating, 1998; baldini and baldi, 2014; guinjoan and rodon, 2014), while the outcome of the asymmetric regionalization is evaluated very differently, from the socalled failed federalization (baldini and baldi, 2014) to successful reform of federalism (cappelletti, fischer and sciarini, 2014). in this broader framework the debates about the regionalization and the reshaping of the administrative-territorial units in romania come into a new light. it can be seen as a part of a general decentralization process started 25 years ago, after the fall of communism. the post-communist reworking of the public administration has created stronger institutions at county level and at the level of localities, while the discussions about the role of the development regions – created in 1998, was hindered by the ethnic question raised from the autonomy projects of the hungarian community and fears of territorial segregation. former president of romania, traian băsescu, together with the then ruling democratic liberal party (pdl) initiated a regionalization project in 2011, which failed at that time, but recently, in 2013, the former government coalition usl (social-liberal union, formed by the social-democrat party and the national liberal party) has picked up the topic again. the regionalization discourses and projects developed by different actors are referring to both new administrative-territorial divisions at regional level, as well as to the decentralization of administrative competences from the state level to the regional level. the main issue addressed by this article is the emergence and evolution of the post-communist regionalization process in romania, focusing on the highly sensitive question of the székelyland. we want to demonstrate that the intensity, the forms and institutional arrangements of the regionalization are strongly embedded in specific national contexts. we assume that the eu integration process, historical heritage, eth25 no-cultural diversity and the institutional framework are the main factors influencing different regionalization projects and discourses in romania. until very recently, just a handful of empirical researches have been undertaken on this topic. our investigation is uncommon in the romanian contemporary context; therefore the main empirical material is original and exploratory. the article proceeds as follows: in the next section, we present the role of the eu integration to explain the establishment of a regional level, represented by the development regions. in the third section, we focus on the evaluation of the regional debate after the eu accession. the fourth section presents different scenarios for a new regionalization, while section five discusses the ethnic dimension of the regionalization. the final section concludes by discussing the limitations and implications of the regionalization process in romania. 2. regional policy and the ‘weak’ regionalization in the eu pre-accession period during the romanian political, economic and social transition period the evolution of the relations between the state and sub-national territorial units in romania followed the above presented international trends. the construction of the regional level, together with the majority of the cee-region, stood in close relationship to the eu enlargement process of the country and to the implementation constrains of the eu pre-accession funds (keating and hughes, 2003). the institutional framework for the regional policy has been established in the law no. 315/2004, which sets the goals, the institutions, and the instruments for regional development. according to it, the main goals of the regional policy in romania are: the reduction of regional disparities; the institutional preparation for the accession to structural funds; the connection of sectoral economic policies to the regional level; the support of the inner-, international-, and interregional cooperation. territorially, a regional level has been created, by grouping the 41 counties according to several criteria in eight development regions, equivalent to the eu nuts ii level. these regions lack legal status which means that they are not real administrative-territorial units. they have a framework function for the establishment, implementation and evaluation of regional development policies, as well as a technical function as basic territorial units for the collection of specific statistical data according to the eurostat regulations. the new nuts ii regions were implemented by creating a new institutional network for their administration: the national council for regional development (ncrd), the regional development councils (rdcs) and the regional development agencies (rdas). two basic problems are emerging from the implementation of this law (benedek and horváth, 2008). at first, the criteria for area designation are heterogeneous and not consequently applied. this problem is not related specifically to romania, it is linked to the weak regulations at the eu level. compared to the eu average, the romanian development regions are too large in terms of their total population and surface. one of the regions is culturally very heterogeneous (southeast) and in sev26 eral cases the county representatives demand the reassignment of their county due to economic interdependence with counties assigned to other regions. in addition, in two counties where the hungarians are the majority of the population (harghita and covasna) there is a growing claim for territorial autonomy, the political representatives of the hungarian minority proposing a distinct development region for these two counties (csutak, 2007). eu countries comparable in size with romania but with stronger decentralization have a greater number of both nuts ii and nuts iii regions, according to their internal constitutional arrangements (spain has 18 nuts ii units and 52 nuts iii units, while italy has 20 nuts ii regions and 103 nuts iii areas). the 1993 structural fund regulation provided for greater flexibility in area designation, enabling nuts units to be subdivided, an opportunity not used in romania. also, the implementation of eu competition policy enables member states to target assistance at specified labor market areas, another possibility not being taken into consideration in romania. the second main problem is related to the fact that the development regions in romania do not have financial and legislative competencies. they fulfill two main functions: a statistical function and an implementation function for the eu cohesion policy. it means that they have no executive or legislative powers, and are subordinated to the governmental level which distributes the financial resources to them. the regionalization was top-bottom oriented and it is the result of consulting a very limited number of actors. 3. the regional debate after the eu accession from 2007 the territorial reorganization of the state was put back on the political agenda by former state president traian băsescu and the then ruling party (pdl), in early 2011. this time, however, in contrast to the debate of the early 1990s, the main catalyzing forces behind the initiative were more pragmatic. on the one side, stood romania’s brief experience as an eu member state, with the lowest absorption rate of eu funds during 2007‒2013, while, on the other hand, there were the inefficiencies of an oversized and highly centralized public administration, the ‘fat man’ as called by the president himself (zachmann, 2013). these inefficiencies, especially during the austerity measures implemented as a result of the 2007‒2008 global financial crisis, became untenable. in these circumstances, a thorough administrative-territorial reform was proposed, with the transformation of the eight development regions into administrative-territorial entities, although without the drafting of a concrete policy proposal. at a certain point, however, the political debate lost these initial objectives and considerations and began to shift toward ethnical aspects of the regionalization, especially in the case of székelyland. as a consequence of a heated debate, and without a clear support from the coalition partner dahr (democratic alliance of hungarians in romania), there is no surprise that the reform proposal disappeared as vehemently from the public space, as it became to dominate it. at the same time, we have to mention that the pdl’s strong support for the proposal was also coming from internal, politi27 cal considerations. due to the heavy austerity measures, the party was quickly loosing political ground to its main opponents, therefore, with the implementation of a thorough administrative-territorial reform, it tried to shake up territorial politics and maintain key, influential positions in the new regional level administrations. mainly from the above mentioned considerations, during the 2012 legislative elections the need to reorganize the state structure based on the principles of subsidiarity and decentralization was promoted by the majority of the political spectrum. in this respect we have to mention that there was a clear contrast between the proposals elaborated by the representatives of the hungarian community, who plead in favor of an autonomous region for székelyland (432/2009 draft bill, 2009; hcp, 2009; dahr, 2012; hppt, 2012), and those representing the romanian majority who clearly denied any initiative to organize the new administrative-territorial structure based on ethnical principles. from the electoral race ‒ mainly as a result of the post-crisis discontent wave ‒ the usl came out with two-thirds majority and initiated a very controversial process towards the administrative-territorial reorganization of the state. from the very beginning, the reform was highly questionable, especially if we take into consideration that romania was in the middle of a negotiation and accreditation process for the next mff (2014‒2020) of the eu, and the coalition wanted to push through the reform process in one year, during 2013. at the same time, both the permanent representation of romania to the eu, as well as the national institute of statistics (insse) informed the commission in february 2013 that, in the framework of the nuts 2013 revision process, romania will not propose any changes to the current nuts system (nuts 2010) (european commission, 2013). therefore it is not a surprise that the government discretely supported a very similar approach to the one proposed by the pdl, to transform the current development regions into administrative bodies with judicial personality, because they were the ones that had the experience and the infrastructure to manage future eu challenges and expectations. in these circumstances, the government initiated a series of public consultations in almost every major city of romania. however, the process dubbed by the press ironically as the ‘regionalization caravan’ (agerpress, 2013) in the absence of a clear, scientifically grounded policy proposal was more a campaign to promote the government’s concepts and legitimize the reform process itself. given the political frictions and internal tensions within the ruling coalition, adding to this the superficiality and hasty preparation of the reform process, not to mention the lack of public support for a constitutional revision that was necessary, there is no surprise that the initiative of the coalition ended up in failure. as a movement of last resort, the coalition tried to materialize some aspects of the reform proposal through a decentralization draft bill, according to which several central governmental functions would have been decentralized, better to say deconcentrated to county level institutions, however, without transferring their funding from central authorities. the initiative can be regarded as a compromise between the center and local, county level ruling elites who feared that the government-initiated regionalization process could lead to the diminishing 28 of their rights and influence. however, the hastily adopted superficial bill by governmental responsibility was immediately attacked by the pdl at the constitutional court (ccr). the ccr decided unanimously, backed by a 106 page motivation that the government’s decentralization bill clearly violated the constitution, mainly with regard to the principle of local autonomy and the constitutional regime of the property (ccr, 2014). in addition to the political debate on the topic of how to regroup the counties into a different regional model, proposals also came from other stakeholders such as academics, representatives of local authorities and the civic society (săgeată, 2006; benedek, 2008; academia advocacy, 2013; otiman, 2013; szabó, 2014). but no coherent paper was delivered in order to reorganize the administrative divisions of the country. the question is highly sensitive. the existing system was established in 1968, and in the meantime at the level of the counties different kind of public institutions became strongly embedded in the territorial framework, and the sub-national political representations and interests have been shaped on this level. despite the existence of strong regional identities in different historical regions of romania, a low intensity of political regionalism has evolved (benedek, 2008). as a consequence, there is little pressure from inside on devolution and decentralization. two factors had a huge contribution to this situation. first, the law of political parties makes the registration of a regional party very difficult, and second, until the end of 2012 the programs of the main political parties did not reflected questions related to regionalization. among the parliamentary parties, only the dahr had a larger chapter regarding the issue of regions (dahr, 2011). the program of this party speaks about the need to change the present nuts ii regions, because certain economic, historical and geographical aspects have not been taken into consideration when they were set up. therefore, in 2007 the issue of reorganizing the nuts ii regions came back on the political agenda, as it was included in the debates of the electoral campaign for the european parliament. dahr presented a proposal for the reorganization of the nuts ii regions, but the political dialogue was hindered by the widespread stereotypes related to the fear that more regional power will lead to separatism and active regionalism (jordan, 1998; benedek, 2008). 4. scenarios for the administrative and territorial reform the general attitude towards the administrative-territorial reorganization can be regarded as a positive one, being supported not just by the ruling coalition, but also by the majority of the population. according to a recent nation-wide representative survey (ires, 2013), 50.9% of the romanian population has a good or very good opinion about the process of regionalization and decentralization, 1.8% has ambiguous feelings, and 40.4% has a bad or very bad opinion. on the personal side, 47.9% of the respondents think that the process of regionalization would be beneficial for them, 35.7% stating that the process would have a negative impact, while 14.2% are undecided. 29 therefore we can conclude that the recent administrative-territorial reform initiated by the former ruling coalition (usl) had a somewhat solid base of support. this is hardly surprising given the fact that during the last parliamentary elections the major players of the political spectrum from the left to the right included the reform into their political programs. at the same time, the current debate about the necessity of a thorough administrative-territorial reform emerged long before, mainly after romania’s accession to the eu. in this respect, the emergence of the necessity was strongly correlated with the existence of an inefficient, oversized and highly centralized administrative system (popescu, 2005). this recognition was only reinforced by the incapacity of the state to successfully manage non-refundable eu resources and the spillover effects of the 2007‒2008 global recession. in this general context and on the basis of the existing institutional framework and regionalization projects developed by political parties or academic institutions we have identified the following future scenarios of the territorial reorganizations: a. the preservation of the existing situation (status quo scenario) is promoted by the romanian government (rg), which has recently initiated a draft project for decentralization, after failing in the reorganization of the development regions into administrative-territorial units (rg, 2013). it is highly possible because of the low costs, the relatively low conflict risks, the absence of a serious inner pressure for further regionalization, excepting the hungarian minority, and because the high level of the commitment of the government for what we call ‘a decentralized status quo’. it means that the state will remain organized into two administrative-territorial levels (counties, communes/cities), according to the constitution, but with some measures for decentralization. b. the radical change of the administrative-territorial structure of the state. theoretically, such a change can be achieved in two ways: by modifying the number of the counties, more exactly by increasing the number of the existing counties (iordan, 2003); and by transforming the development regions into administrative-territorial units (cocean, 2013). both modalities imply exactly the opposite of the threats mentioned by the first scenario: high costs and high conflict risks which would be unavoidably generated by such reorganization. in addition, it necessitates the change of the constitution. but the existing constitution limits the possibilities of its revision, as according to article 152 ‘the provisions of the present constitution concerning the national, independent, unitary and indivisible character of the romanian state, the republican form of government, the integrity of the territory, the independence of justice, political pluralism and the official language cannot form the object of a revision.’ the inner territorial units are not sovereign and there is only one group of institutions at the highest level of the centralized state. this scenario implies the change of the functioning mechanisms of the existing institutions, by the decentralization of certain state functions and resources. transforming the existing development regions into administrative units needs a new set of laws 30 regulating the distribution of functions and resources between different territorial levels. it would enable a compromise which is necessary for the application of the principle of subsidiarity – which tends to increase the number of territorial units in order to bring decision closer to the citizens – and the principle of efficiency, which tends to create larger units in order to increase the economic efficiency of public services. c. the change of the territorial structure of the development regions, increasing the number of the existing nuts ii units (săgeată, 2013; csutak, 2007; covăsnianu, 2011; otiman, 2013; benedek, török and máthé, 2013). it can be a kind of ‘third-way’ alternative, because it implies lower levels of costs and risks than the second scenario. in addition, there are two more relevant factors for this scenario: an eu regulation which sets a maximal population threshold for the nuts ii regions, the development regions north-east and south-west having more inhabitants than this threshold; and the high gdp per capita growth rate of bucharest, which is situated well above the 75% eligibility threshold for qualifying for the objective no. 1 concerning the funding from the structural funds. the nuts regulation has served as a guideline during the negotiations of romania for the eu accession. the fundamental approach of the eu is to keep the regional classification as stable as possible in order to avoid breaks in statistical time series. therefore, in accordance to the regulation, the frequency for updating the classification is limited to every three years. an exception to this limit is permitted in the case of a complete administrative-territorial reorganization. since june 2003 no reorganization has taken place in the member states. in the case of romania, the commission preferred to maintain the regional classification to ensure comparable regional statistics for the preand post-accession periods. the report from the commission on the implementation of the nuts regulation from 4.06.2007 reinforces that the primary purpose of the nuts regulation is to serve as a framework for regional statistics. the intention to ensure the stability of this system is still prevailing, the commission taking a restrictive approach. d. the establishment of a székelyland autonomous region based on the principle of asymmetric regionalisation. as mentioned earlier in this paper, we can find several european examples where the co-option of ethnical minorities into shaping regional structures did not lead to the fragmentation of state structures, but on the contrary to the peaceful consolidation of majority – minority relations. therefore, there is the theoretical possibility of the establishment of a regionalized state administration based on the principle of asymmetric autonomy and consociationalism similarly to models adopted by italy, spain, the united kingdom or belgium. at the same time, there are also several functional models that have evolved under unitary state structures, for example the case of the swedish speaking communities’ autonomy in finland (weller and nobbs, 2012). considering the issue of székelyland from the 1990s onwards, more than 15 draft proposals appeared on the establishment of an autonomous region for székelyland 31 (bognár, 2006). although there is a wide consensus among the representatives of the hungarian community that székelyland should constitute a separate administrative-territorial unit with a high degree of autonomy, yet regarding the details and the approach to the issue there are several differences. in this respect, the dahr generally has a more articulated opinion being largely open to compromises by promoting a step by step approach. according to their proposals (432/2009 draft bill, 2009), the székelyland region should be based on the current county structure, composed of haghita, covasna and mureș counties. on the other side, the smaller hungarian parties, namely the hcp (2009), but especially the hppt (2012) have a more radical approach by proposing the reorganization of the current county structure and the establishment of regional units based on bottom-up initiatives and regional identities. in the near future, however, any possibility towards the establishment of a territorial autonomy for székelyland is highly improbable, since the representatives of the romanian majority exclude the ethnical dimension from the regional discourse. the official approach towards regions is a more pragmatic one, strongly connected to the modernization of state administration, the establishment of multi-level governance where functional regions are the key players of the eu cohesion policy. 5. the ethnic dimension of the regionalization: the ‘székelyland’ question one of the main driving forces behind the ‘regional debate’ in romania is the hungarian minorities’ project for decentralization and ethnic-based territorial autonomy (kocsis, 2013). in this context, the aim of the following case study is to present the székelyland question in the perspective of a possible ‘regional reform’. it is the only region in romania where hungarians form the majority of the population, and therefore it is the target region of territorial autonomy projects. 5. 1. székelyland and székely people a diverse cultural and historical heritage, a strong regional identity and the experience of almost six centuries of self-governance gives to the area nowadays known as székelyland an obvious specificity in the territorial structure of romania. it encompasses a historical region of 12,500 km2 located in eastern transylvania, mainly in the mountainous regions of the eastern carpathians. from an administrative-territorial standpoint, the majority of the region belongs to harghita, covasna and mureș counties, where the majority of the population declare themselves as ethnic hungarians. according to the 2011 romanian census from 1,237,746 ethnic hungarians living in romania 611,391 are concentrated in the above mentioned three counties. 84.8% of the population of harghita county, 73.6% of covasna and 37.8% of mureș county declare themselves as ethnic hungarian (székelys) (kiss and barna, 2012). while the origin of the székelys is still subject of the scientific debate (lászló, 1999; egyed, 2006), there is a wide acceptance among the historians that their settlement to the eastern frontiers of transylvania, into the area today known as székelyland, begins with the 11th and 12th centuries. their military commitment in return to the privi32 leges and collective freedom guaranteed by the hungarian king leaves an imprint not only on the characteristics of their society, but also on the specificities of the geographical space, from an administrative-territorial standpoint being organized into specific administrative-territorial units called ‘seats’, similarly to the transylvanian saxons (germans). the székelys, under the various political circumstances, managed to maintain until 1876 their specific self-organization and territorial structure, when they are finally integrated after almost six centuries into the newly established hungarian administrative system of counties (‘vármegyék’). the first world war ended with important consequences for the székelys, which found themselves in the position of an ethnic minority. the new government’s attitude towards the acquired territories was not of historical reconciliation and understanding, but rather one of cultural homogenization (livezeanu, 1995). later, after the second world war, even the stalin’s imposed hungarian autonomous province and soviet ethnic policy principles between 1952 and 1968 were not anything else than a showcase of an ‘exemplary’ treatment of the minority (bottoni, 2008). 5.2. opinions and attitudes on the territorial reform in székelyland as mentioned earlier in this paper, the question of regionalization and administrative-territorial reform has become one of the most controversial and debated issues of the socio-political discourse in the last years. a central element of this debate is related to the ethno-cultural diversity of the country, with a large hungarian minority, which forms the majority of the population in the székelyland region. we concluded that in order to argue for the administrative-territorial reform generally in romania, and particularly in székelyland, questioning the attitude of the hungarian population in relation to the topic can be of significant importance. 6. methodology in the autumn of 2011, during a transversal investigation, we carried out an exploratory survey research in order to get an insight into the opinions and attitudes of the hungarian students about the question of administrative-territorial reorganization and regional identity. we have chosen the hungarian student population not only for practical reasons but also for the fact that some authors found out a strong association between the distribution of knowledge about one’s nation and the educational level. the fact that more respondents are able to name national symbols is an indication of a more efficient national socialization (csepeli, 1997; veres, 2015). with other words, we have chosen a sub-population which is able to articulate the discourse about a very complex and technical question such as regionalization and regional identity, and which was easy to access. taking into consideration these aspects, and the shortness of the available resources, we chose the method of computer-assisted web interviewing (cawi). in order to get an insight into the opinions and attitudes about the regionalization and administrative-territorial reform, we took a sample of the hungarian student community from the cities of cluj-napoca, gheorgheni, miercurea ciuc, 33 oradea and târgu mureș through the mailing lists of various educational institutions, namely the babeș‒bolyai university, the sapientia hungarian university of transylvania, the partium christian university, and the hungarian students union of cluj napoca and oradea. considering the chosen method, it is obvious that in the case of our research we cannot speak of statistical representativity, neither in the case of the hungarian university students of transylvania, nor in the case of the population of székelyland. however, considering the opportunities available at our disposal and the absence of an in-depth analysis of the issue, the research can be interpreted as an exploratory investigation and, in this context, the results brought by it can take to a new level the debate of administrative-territorial reform. our survey was entitled ‘székelyland as a region’ and a multivariable online questionnaire composed of 25 questions was set up using an online, free survey and questionnaire service called kwiksurveys. the main advantage of the chosen method was that the data acquisition was really fast and easy, in just a matter of a few weeks we got around 500 respondents, from which, after careful analysis of their status of completion and integrity, we managed to extract 437 valid, usable questionnaires, which in comparison to the target group of our research was quite high. in this context, our research is a compass in the ever widening ‘regional, territorial debate’ in romania from the perspective of the hungarian student population of romania. in the following lines we will synthesize the most important aspects of our results. 7. results taking into consideration the target group of our survey, it was obvious that the ethnic composition of our sample will be quite homogenous, where 96.4% declared themselves as ethnic hungarians, 3.1% as romanian and 0.5% of different nationality. the average age of our respondents was 24.17, while the origin of our respondents reflects very well the spatial distribution of the hungarians in romania, because the counties harghita, covasna and mureș contribute with 60.5% to the hungarian students in our sample, while on the second place is cluj with 16.9%, and on the third satu mare with 6.3%. with regard to the administrative-territorial dimension of our research we used several indicators to measure the opinions and attitudes of our respondents about the current administrative-territorial structure of romania and the so called ‘regional or territorial debate’. our initial hypothesis was that given the fact that a profound administrative-territorial reorganization has far more outreaching consequences than just a simple change in romania’s political map, therefore the public should be widely interested in the topic. our assumption has been proven right to some extent, because as the results from table 1 show, 26.6% of our respondents stated that they are very interested, while 49.4% of them being somewhat interested in the topic. regarding the opinion about the current administrative-territorial structure of romania the results show a differentiated picture. only a minority of the respondents – 5.6% had a definitely positive opinion, 35.6% having a somewhat positive opinion, 34 while 30.5% of them stated to have a definitely negative attitude. apart from this, it is much more interesting to emphasize the significant, 19.2% rate of the ‘don’t know’ responses to our question, which is very probably due to the fact that although the topic is a very widely debated one in our society, an important amount of the subjects in the lack of information is not ready to take a position, or judge the situation (see table 1). table 1: interests and opinions about the current administrative-territorial structure of romania and about a potential administrative-territorial reform of the state (n=437) interest in the ‘regional/territorial debate’ opinion about the current administrative-territorial structure of romania very interested 26.6% defi nitely positive 5.6% somewhat interested 49.4% somewhat positive 35.6% not very interested 15.5% somewhat negative 30.5% not at all interested 2.9% defi nitely negative 9.1% no response / don’t know 5.6% no response / don’t know 19.2% total 100% total 100% to get a more detailed view about the perception of the administrative-territorial debate in our sample, we used a list of preliminarily defined statements and we asked our respondents to indicate their level of agreement with each of them on a fourpoint likert-type scale. from the results synthesized in table 2, we can conclude that 79.7% of our respondents are not satisfied with the current administrative-territorial structure of romania, and definitely feel the need for change. nearly half of the respondents think that romania’s current administrative-territorial structure doesn’t correspond to the needs of a sustainable regional policy (table 2, n2), and the actual number of counties makes it difficult to implement cross county projects and nationwide collaborations (table 2, n1). in light of these results, it is striking that the majority of our respondents, 69% of them, still supports the current county system, without any further change (table 2, n5), while only 33.3% agree on the necessity of a profound administrative-territorial reform and the reorganization of the current county system (table 2, n3). it is also interesting that 64.4% of our respondents agree with the table 2: frequency and average values of some of the statements concerning the question of administrative-territorial reorganization in romania (n=437) n statement 1. strongly agree % 2. agree % average 1 there are too many counties, therefore it is diffi cult to implement cross county collaborations and nationwide development projects. 14.2 34.9 2.52 2 the current administrative-territorial structure of romania doesn’t corre-spond to a sustainable regional development policy. 21.6 37.1 2.31 3 the current county system should be eliminated and larger administra-tive-territorial units or regions should be established. 9.4 23.9 2.31 4 the current development regions have very restricted roles. 22 42.7 2.24 5 counties shouldn’t be eliminated, instead we have to reorganize the cur-rent development regions above the county level. 24.4 44.6 2.19 6 profound administrative-territorial reorganization would reduce bureaucra-cy and result in a more effi cient administrative system. 13.8 37.2 2.54 7 the current administrative-territorial system should not be changed 3.7 16.6 3.20 8 a romania divided into larger administrative-territorial units, namely re-gions, would generate better economic conditions for local communities. 18.2 46.2 2.30 35 statement that a romania divided into larger administrative-territorial units than the counties would create better economic conditions for local communities (table 2, n8). in order to verify the perception about future administrative-territorial reorganization, through the use of a control question, we asked our respondents again to state their opinion on the issue. as we can see from the results presented in table 3, the majority of our respondents, namely two-thirds of them, feel the necessity for change, meaning maintaining the current county system, while reorganizing the existing development regions. even though the results from the overall outlook on the issue of administrative-territorial reform in romania were quite surprising, the question of székelyland in the context of a possible administrative-territorial reorganization was even more intriguing. our preliminary assumption was that the hungarians have a strong desire for a separate székelyland administrative-territorial unit. table 3: frequencies of certain methods of administrative-territorial reorganization of romania (n=437) n method % 1 i would keep the current administrative-territorial structure of the state with the existing development regions without any interference or change. 7 2 i would abolish the current county system and i would establish larger administrative-territorial units. 22.7 3 i wouldn’t abolish the current county system, but i would reorganize the existing development regions. 70.3 the results presented in table 4 exceeded even our preliminary expectations, 83.4% of our respondents stated that given the specific historical, cultural and nonetheless ethnical situation of the region, székelyland should constitute a separate administrative-territorial unit (e.g. region) in a future administrative-territorial reorganization of romania (table 4, n1). 81.4% of our respondents stated that the starting point for the establishment of such unit should be the ethnical homogeneity, the hungarian/ székely majority (table 4, n2). at the same time, 78.4% of our sample thought that a distinctive székelyland administrative-territorial unit (e.g. region) would indeed bring table 4: frequency and average values of some of the statements concerning the issue of székelyland during a possible administrative-territorial reorganization of romania (n=437) n statement 1. strongly agree % 2. agree % average 1 based on the specifi c cultural, historical, and ethnical heritage székelyland should defi nitely constitute a separate administrative-territorial unit (e.g. region) in a probable administrative-territorial reorganization of romania. 48.8 34.6 1.72 2 at the establishment of the székelyland administrative-territorial unit the determining criteria should be the ethnical composition, the hungarian/ székely majority. 36.9 44.5 1.90 3 székelyland as administrative-territorial unit (e.g. region) would bring the decisions and initiatives to the local level, thus laying down the foundations of a prosperous region. 33.2 45.2 1.98 4 székelyland as administrative-territorial unit (e.g. region) with stronger administrative powers would determine the overall, long-term survival of the hungarian/székely culture. 35.9 41.9 1.96 5 at the establishment of a székelyland administrative-territorial unit (e.g. region) we shouldn’t be frightened to constitute a common unit with a county with romanian majority, but strong economic background. 13.6 24.6 2.81 6 none of the above mentioned concepts solve the problems of székelyland, the only solution is ethnic territorial autonomy. 10 13 3.13 36 the decisions and initiatives closer to the local level, therefore laying down the foundations of a prosperous region (table 4, n3), while 77.8% of them thinks that this status could be the foundation for the long-term survival of the hungarian/székely culture (table 4, n4). only 38.2% of our respondents would put aside the fundamental principle of ethnic homogeneity in the name of the economic prosperity of székelyland (table 4, n5). this isolation is probably due to past, not always harmonic experiences, and the fear from further impairments in the rights of the minorities. the most reassuring result of our research is that only a small fraction of our respondents think that apart from ethnic territorial autonomy, there is no other solution to the question of székelyland (table 4, n6). this picture is in opposition with some romanian mainstream media, which compares the autonomy movement of székelyland to the secession process of kosovo or to the case of basque country in spain (giurescu, 2010). without any historical precedents, or any radicalization from the székelys, the aforementioned comparisons are nothing else than just pure speculations over a recently heated debate in our society. to analyze the regional identity, the characteristics and spatial extent of székelyland, we asked our respondents to outline and define the region. first of all, we enumerated a set of preliminarily defined characteristics and we asked our respondents to rate each one of them on a likert scale from 1 to 10 based on how much it represents székelyland for them. the results are showing that székelyland appears as a cultural, nonetheless ethnical region, defined mainly by its hungarian speaking székely community, strong regional identity and specific cultural and historical heritage. more interesting is the shape of the future székelyland as imagined by the respondents in case of an eventual administrative-territorial reorganization of romania. for more than 90% of our respondents the székelyland administrative-territorial unit would be formed from the core of the historical székelyland, from current harghita, covasna and mureș counties, where they built an ethnic majority. considering the scenarios outlined in section 4, as well as the results of the survey, we can conclude that the most desired outcome of the regionalization process would be the establishment of the administrative-territorial székelyland autonomy (scenario b, radical change of the administrative-territorial structure), or at least the preservation of the current situation, without any further losses in the rights of the minorities (scenario a, status quo scenario). 7.1. opinions and attitudes of the romanian population about the regionalization and territorial autonomy of the székelyland while the hungarian minority, mainly in székelyland, demanded territorial self-organization, more precisely administrative-territorial autonomy, the majority of the romanians opposed any form of self-determination. officially, the government concluded the question of székelyland by adopting a ‘functional’ approach to the establishment of the new administrative-territorial units, opposing any proposal that tried to establish homogeneous regions based on historical-cultural or ethnical crite37 ria. thus, the government has a contradictory position because, on the one side, it accepts the principle of subsidiarity, yet on the other side, refuses any type of bottom-up oriented approaches to the question of székelyland. on a societal level, the romanian society is opposed to the administrative-territorial autonomy of székelyland. in a recent nationwide representative poll, 48.9% of the respondents considered that the ethnical separation of the hungarian minority could constitute a risk to the overall regionalization process in romania. other concerns are related to the situation of the romanian population living in the székelyland, which represents 15.6% (95,376 persons) of the total population. it constitutes a minority in two counties (harghita and covasna), but has a slight and growing majority in mureș county (kiss and barna, 2012). on the basis of the public statements and press releases of the well organized romanian community, through its representative associates and stakeholders we could get the overall sense and opinion about the administrative-territorial reform in székelyland. generally, as reflected by the press communicates of the civic forum of the romanians from covasna, harghita and mureș (fcr-chm, 2008), the romanian minority has a somewhat ambiguous, yet strong negative attitude towards the territorial autonomy and the establishment of a ‘székely’ development region. this is mainly triggered by the fear of ethnic discrimination of the romanians in the székely counties. the majority of the local romanian elite thinks that, given the fact that the hungarian minority constitutes only 6,5% of romania’s population, it has achieved quite a lot in terms of minority rights. in their opinion, the ‘so called székelyland’s autonomy de facto exists, only de jure we are speaking of separate counties’ (communicate of the fcr-chm, 2008). however, even if it is often downplayed by the hungarian stakeholders, the attitude of the romanians living in the analyzed region will play a central role in the debates about the future of the székelyland. the eu will not assume any active role in this process, because it does not have any binding legislation on the status of ethnic minorities for the member states. as it is stated on the website of the european commission, ‘the commission has no general power as regards minorities, in particular it has no power over issues relating to: the recognition of the status of the minorities; their self-determination and autonomy; the regime governing the use of regional or minority languages. in this respect eu countries retain general powers to take decisions about minorities’. however, there are several european recommendations and principles on the rights of the minorities, adopted by the majority of the member states of the european union, as well as by romania. in this respect we would like to highlight the recommendation no. 1201/1993, which is again, not binding for the national legislation. 8. conclusions and discussion issues the rapid transition to democracy and market economy, the eu integration process and, after 2007, the eu membership have created a good opportunity for romania in order to establish the institutional framework for regional development. the worldwide economic crisis in 2008 had put in new light the relation between state 38 and economy, on the one hand, and between the state and the sub-national territorial levels, on the other hand. it is expected that the global trend towards state decentralization and devolution will be followed by a period marked by state interventionism and the centralization of the administration and resources. in 2013 many competing scenarios for regionalization and territorial-administrative reform have been launched. our study has revealed the fact that the regionalization project of the hungarian minority, aiming at maintaining the existing county system and creating a székelyland development region, has blocked and ethicized the discussion about the reorganization of the sub-national administration. although ethnic diversity does not necessarily conduct to radical or extremist views, romanian political parties have a tendency towards populism, looking to enhance their political capital by getting involved in debates about controversial issues (ipp, 2003). under these circumstances, the fundamental issue is how will the political stakeholders negotiate the regionalization process in order to maintain their voting basis? it is also worth to be mentioned that the territorial reorganization of the state is not simply a technical question. it may have substantial influence on the forms and intensity of regionalism. the area designation for the purposes of the regional policy (development regions) had instrumentalized existing economic disparities. therefore an important question for the future is: will the instrumentalization of economic disparities have any consequences on regionalism? as expected, there is a growing importance of the regional agendas in romania as well, but we are skeptical in what concerns the change of the existing governance structures. the exciting fundamental question is, therefore, how the romanian society will continue to develop its regional shape, which regionalization type will be applied and in what way, and which internal and external constraints will be decisive for the direction adopted in the long run. many further questions are related to this, namely that of democracy (formal or substantial) and that of the structure and role of the state (centralized, or different forms of the decentralized modern state). it is a basic question if the state will enforce the regional level or not, and the problem becomes a dilemma if we think that the romanian state had never experienced decentralized political systems and more regional power is feared to lead to separatism and active regionalism (jordan, 1998), juxtaposed on the claims of the most active regionalist group constituted by the hungarian community from romania. references: 1. academia advocacy, ‘regionalizarea româniei ‒ între pericole și oportunități’, public hearing, 28 march 2013, [online] available at http://advocacy.ro/audiere/audiere-publica-regionalizarea-romaniei-intre-pericole-si-oportunitati, accessed on august 18, 2014. 2. agerpress, ‘viceprim-ministrul liviu dragnea discută la tulcea despre descentralizare și regionalizare’, 24 may 2013, [online] available at http://www.agerpres.ro/politica/2013/05/24/viceprim-ministrul-liviu-dragnea-discuta-la-tulcea-despre-descentralizare-si-regionalizare-18-07-54, accessed on august 18, 2014. 39 3. baldini, g. and baldi, b., ‘decentralization in italy and the troubles of federalization’, 2014, regional and federal studies, vol. 24, no. 1, pp. 87-108. 4. benedek, j. and horváth, r., ‘romania’, in baun, m. and marek, d., (eds.), eu regional policy after 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(ed.), asymmetric autonomy and the settlement of ethnic conflicts, philadelphia: university of pennsylvania press, 2012. 48. zachmann, s. and boghiceanu, a., ‘traian băsescu dă startul la angajări: „omul gras a pierdut 200.000 de bugetari”’, adevărul, 26 april, 2013. [online] available at http://adevarul.ro/news/politica/traian-basescu-declaratii-presa-ora-1830-1_517a8e d8053c7dd83f4cb73b/index.html, accessed on august 18, 2014. 49. zhang, j. and wu, f., ‘china’s changing economic governance: administrative annexation and the reorganization of local governments in the yangtze river delta’, 2006, regional studies, vol. 40, no. 1, pp. 3–21. 109 abstract world trade and transportation are changing dramatically. energy prices and transport sustainability concerns are reinvigorating ocean freighter shipping. an ever-increasing portion of trade is in containers, and container ships are getting larger quickly. many ports, nations and continents are not keeping up with ship size increases putting them at a trade disadvantage. major canals and seaways must also upgrade or be rendered obsolete, causing a change in the pattern of world trade. ports have to do more than expand vessel size limits. port regions must also invest in infrastructure that improves multi-modal access to the port and augments hand-off of containers to smaller seaway ships, trains and trucks. with heightened security and evolving emphasis on flexible and efficient logistics, ports must become high-tech logistics hubs with improved real-time data about port throughput. constanţa, romania provides an example of an attempt to respond to this rapid change. near the danube delta, on the black sea, constanţa offers a potential southeastern gateway to europe for the black sea, the eastern mediterranean and beyond. ships from asia, entering via the suez canal can easily access constanţa, and thus save more than ten days of shipping time for destinations in southeastern europe compared to shipping through rotterdam or hamburg. but constanţa needs to make all the improvements mentioned above. universities have several roles in this endeavor, including identifying and forecasting trends, providing the technical knowledge to develop high-tech logistics hubs, pursing publicprivate partnerships for infrastructure development and offering training. keywords: containerization, logistics hub, multi-modal handoff, danube, constanţa, romania. europe’s southeastern gateway: responding to rapidly changing patterns of world shipping. the university’s role roger e. hamlin dan t. lazăr roger e. hamlin professor, urban and regional planning faculty, school of planning, design and construction, michigan state university, east lansing, mi, united states of america tel.: 001-517-353.8743 e-mail: hamlin@msu.edu dan t. lazăr associate professor, public administration department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.505 e-mail: lazar@fspac.ro transylvanian review of administrative sciences, special issue, pp. 109-125 110 1. introduction world trade and related transportation are changing dramatically, and few countries are in tune with what is happening. rising energy prices are creating a shift back to ocean shipping as a more important transportation mode. ocean freighter transport is considerably slower than other modes, but can be substantially lower in cost per volume and can create lower carbon emissions. these relative advantages continue to improve not only because energy prices are rising but because freighters are becoming larger. some asian container freighters can now carry nearly 20,000 standard shipping containers (teu) per ship, more than double the volume of just a few years ago. yet, this efficiency advantage is only available to some countries. even those that felt they had good seaports are finding that their port facilities are rapidly becoming out of date. at present, only a few asian seaports are able to accept the largest ships. only a few ports in north america and europe such as new york, los angeles/long beach and rotterdam are able to handle the next smaller-sized ships, and those ports are quite congested. the two major canal systems of the world panama and suez are in need of the major upgrades, some of which are now underway, and some of the great inland waterways, such as the st. lawrence seaway and europe’s two major rivers require expansion just to handle ‘handoff’ traffic. not keeping up with this ship size escalation could cause a country or a whole continent to fall behind economically. it could be the basis for the redistribution of world wealth. where does romania stand in the new global shipping war? what role do universities play in making sure that their country stays on top of rapidly changing situations? the purpose of this article is to answer these questions. the first part will lay out the current situation. the second will evaluate the eastern european and north american responses to the current situation. 2. the current situation to describe the current situation, some basics about freighter transportation are necessary. the first step is to describe the current status of containerization followed by a discussion of current ship characteristics. then we must look more closely at the seaports, canals and waterways needed to handle those ships. 2.1. containers containerization is a method for transporting freight that uses large metal boxes called inter-modal containers. built to certain standard dimensions, containers transfer easily from one mode of transport to another. containers may be transferred from container ships to smaller container ships, to special rail flatcars or to semi-trailer trucks, without being opened. overhead gantry cranes can move containers between modes with very little physical human labor. large ships pull into quays with railroad tracks and/or truck lanes along side of the ship. giant gantry cranes roll on their own rails parallel to the quay (http://en.wikipedia.org/wiki/containerization). 111 containerized shipping has now been around for nearly 60 years (world shipping council, 2012). containerization has grown steadily over the decades because of the substantial reduction in cost it allows at the break-of-bulk point. this growth has been cited as a cause of growth in world trade. as world wage levels have increased, more labor-intensive, manual methods of transferring goods from one mode to another have become prohibitively expensive in most developed and emerging economies, but containerization has released the shipping world from this obstacle. the only goods not regularly containerized are bulk goods such as coal, and liquids such as oil. even these two categories are experiencing increased containerization with the advent of tanker containers and inflatable rubber liners for containers. some car manufacturers have containerized the transport of new cars, with the potential for transporting up to four family cars in a 45-foot container (global security.org, 2012). the type of commodities that can be transported in a container is almost limitless. therefore, the container market is expected to grow faster than world trade and the world economy in general. the terrorism events of 9/11/01 also increased the potential relative cost advantage of containerization. in addition to labor cost reductions, containers have offered the potential of higher security. containers can be inspected and sealed at their origin. they can remain sealed and electronically monitored and tracked until they reach their final destination, no matter what mode of transport they are on or country border they cross. to fully utilize this advantage will require much greater international cooperation, but the technology is in place and nearly every country is looking to balance security considerations with efficiencies. some energy and cost disadvantages to containerization also exist but are, in most cases, offset by savings. one disadvantage is that the weight of the container must be added to the shipping weight. some are working on the use of new composite materials to reduce container weight. a second disadvantage is the need to dead-head empty containers from low demand origin locations (high destination demand) to high demand origin locations (low destination demand). the dead-head problem is acute at present between the u.s. west coast and china with excess volume flowing east across the pacific. the cost of dead-heading empty containers is great enough that many containers arriving on the west coast of the u.s. are discarded and the material is recycled rather than sending a container back across the pacific. finding a composite material that is strong, light and easily recyclable would greatly resolve the dead-head problem. many organizations are looking for alternative uses for the huge number of discarded containers, such as turning them into buildings. containers come in standard sizes so as to easily fit in various-sized ships, on rail cars and as truck trailers. five standard lengths are 20-ft., 40-ft., 45-ft., 48-ft., and 53-ft. the united states commonly uses 48-ft. (15 m) and 53-ft. (rail and truck). the u.s. is able to use the larger containers because railroad gages are larger and highways accommodate larger trucks. freighter or train capacity expressed in twenty-foot equivalent units (teu, or sometimes teu) is common (world shipping council, 2012, container standards). 112 2.2. ships ocean freighter ships are built to accommodate standard containers, with wide beams like bulk ships. container ships are described in terms of their container capacity. ‘container ships are divided into seven major size categories: (1) small feeder, (2) feeder, (3) feedermax, (4) panamax, (5) post-panamax, (6) new panama, and (7) ultralarge’ (hayler and keever, 2003). the word ‘panamax’ refers to the maximal size of a ship that is able to pass through the panama canal (discussed later). as can be seen by the listing, several categories are too large to fit in the existing canal. ‘by 2000 the global container ships fleet numbered over 6,800 vessels’ (global security.org, 2012, container types). more than 70% of these were built to carry oceangoing containers. this world-wide fleet had a capacity of nearly 6 million teus in 2000. the size of ships in terms of the number of containers they can hold has grown rapidly in the last decade and a half. nearly 3/4th of the fleet in 2000 consisted of smaller ships with under 1,000 teu capacity. but, super post-panamax vessel of 4,500 teu and larger, were already growing rapidly as a portion of the total. by the end of 2001, about 10% of the global fleet could carry more than 4,500 teus (global security.org, 2012, container types). by the end of 2003 about 100 container ships with a capacity of 8,000 teu were already in use. the samsung shipyard was building a container ship with a capacity of 9,200 teu for use in 2005. samsung delivered a 9,600 teu ship in 2006. that size increased to 15,000 in 2010 and the maximum size is now in the 20,000 teu range (schumacher cargo logistics, 2012). figure 1 is a scatter gram showing ships built up to march 2009 and their size in teus. the chart shows the acceleration in size. the line indicates the largest container ship operating at any point in time. since few container ships have been scrapped, this chart also gives a visual indication of the current percent of ships by size. the chart makes some trend predictions for the future (points on the right side of the chart), but those predictions have already been outstripped. korea’s daewoo corporation plans to construct the world’s largest ship for maersk line. the ship will cost us $190 million, and hold 18,000 teu containers, 2,500 more than the previous largest. to get a sense of the amount carried by a single container ship of this size, if the same number of containers were loaded on a train, the train would be 110 km long (gizmag, 2012). maersk claims that superior economies of scale will enable the new ships to surpass the industry record for both fuel efficiency and co2 emissions per container moved. maersk plans to put ten such ships into service between 2013 and 2015 with a further 20 ships optioned (gizmag, 2012). the increase in the maximum size of container ships does not mean that the demand for small feeder and coastal container ships has decreased. ships with capacities of less than 2,000 teu accounted for more than 50% of the number of ships delivered from 1995 to 2005. 113 2.3. container ship ports obviously, with ship size increasing rapidly sea ports must be built to accommodate the larger ships. and, with the increased energy and cost efficiency offered, servicing larger ships could be important to a city or country’s competitive advantage. the costs and time lags associated with building port facilities are much greater than for the ships themselves. below is a list of the world’s 50 busiest container seaports (2010), providing the total number of actual teu (in thousands) transported through each port annually. as can be seen, container ports are dominated by asian ports, with 7 of the top 11 in china. this list also approximates the order of ports by maximum ship capacity as measured by teus per ship or maximum dead weight. western nations are far behind in both port capacity and amount of trade. european ports that make the list are rotterdam (#10), antwerp (#14), hamburg (#15) and bremen/ bremerhave (#23). north american entries are los angeles (#17), long beach (#18), and newyork/new jersey (#20). other north american and european ports in the top 50 are: valencia, spain; flexstowe, uk; algeciras, spain; gioia tauro, italy; savannah, us; and vancouver, canada; zeebrugge, belgium and la havre, france recently dropped off the list. ports on this list can handle the panamax ships, but not necessarily the newer ones of greater size. going farther down the list, ports might only be able to deal with smaller figure 1: ships built up to march 2009 and their size in teus source: article based on a paper written by knut a. dohlie and first published in the dnv container ship: update no. 3. 2009. republished as ‘the future of the ultra large container ship’, motorship, june 18, 2010. illustration © mercator media 2012. 114 ta bl e 1: l ist in g of w or ld p or ts b y co nt ai ne r t ra ffi c co nt ai ne r t ra ffi c (in th ou sa nd t eu s) : ra nk po rt co un try 20 10 [1 ][2 ] 20 09 [3 ] 20 08 [4 ] 20 07 [5 ] 20 06 [6 ] 20 05 [7 ] 20 04 [8 ] 1 sh an gh ai ch in a 29 ,0 69 25 ,0 02 27 ,9 80 26 ,1 50 21 ,7 10 18 ,0 84 14 ,5 57 2 si ng ap or e si ng ap or e 28 ,4 31 25 ,8 66 29 ,9 18 27 ,9 32 24 ,7 92 23 ,1 92 21 ,3 29 3 ho ng k on g ch in a 23 ,6 99 20 ,9 83 24 ,2 48 23 ,8 81 23 ,5 39 22 ,4 27 21 ,9 84 4 sh en zh en ch in a 22 ,5 10 18 ,2 50 21 ,4 14 21 ,0 99 18 ,4 69 16 ,1 97 13 ,6 15 5 bu sa n so ut h ko re a 14 ,1 94 11 ,9 54 13 ,4 25 13 ,2 70 12 ,0 39 11 ,8 43 11 ,4 30 6 zh ou sh an ch in a 13 ,1 44 10 ,5 02 11 ,2 26 9, 34 9 7, 06 8 5, 20 8 4, 00 6 7 g ua ng zh ou ch in a 12 ,5 50 11 ,1 90 11 ,0 01 9, 20 0 6, 60 0 4, 68 5 3, 30 8 8 q in gd ao ch in a 12 ,0 12 10 ,2 60 10 ,3 20 9, 46 2 7, 70 2 6, 30 7 5, 14 0 9 du ba i ua e 11 ,6 00 11 ,1 24 11 ,8 27 10 ,6 53 8, 92 3 7, 61 9 6, 42 9 10 ro tte rd am ne th er la nd s 11 ,1 40 9, 74 3 10 ,7 84 10 ,7 91 9, 65 5 9, 28 7 8, 28 1 11 ti an jin ch in a 10 ,0 80 8, 70 0 8, 50 0 7, 10 3 5, 95 0 4, 80 1 3, 81 4 12 ka oh siu ng ta iw an 9, 18 0 8, 58 1 9, 67 7 10 ,2 57 9, 77 5 9, 47 1 9, 71 4 13 po rt kl an g m al ay sia 8, 87 0 7, 30 9 7, 97 0 7, 12 0 6, 32 6 5, 54 4 5, 24 4 14 an tw er p be lg iu m 8, 47 0 7, 30 9 8, 66 3 8, 17 6 7, 01 9 6, 48 2 6, 06 4 15 ha m bu rg g er m an y 7, 91 0 7, 00 7 9, 73 7 9, 89 0 8, 86 2 8, 08 8 7, 00 3 16 ta nj un g pe le pa s m al ay sia 6, 54 0 6, 00 0 5, 60 0 5, 50 0 4, 77 0 4, 17 7 4, 02 0 17 lo s a ng el es us a 6, 50 0 6, 74 8 7, 85 0 8, 35 5 8, 47 0 7, 48 5 7, 32 1 18 lo ng b ea ch us a 6, 26 0 5, 06 7 6, 35 0 7, 31 6 7, 28 9 6, 71 0 5, 78 0 19 xi am en ch in a 5, 82 0 4, 68 0 5, 03 5 4, 62 7 4, 01 9 3, 34 2 2, 87 2 20 ne w yo rk /n ew j er se y un ite d st at es 5, 29 0 4, 56 1 5, 26 5 5, 29 9 5, 09 3 4, 78 5 4, 47 8 21 da lia n ch in a 5, 26 0 4, 55 2 4, 50 3 4, 57 4 3, 21 2 2, 66 5 2, 21 1 22 la em c ha ba ng th ai la nd 5, 19 0 4, 53 8 5, 13 4 4, 64 2 4, 12 3 3, 83 4 3, 52 9 23 br em en g er m an y 4, 89 0 4, 57 8 5, 52 9 4, 91 2 4, 45 0 3, 73 6 3, 46 9 24 ja ka rta in do ne sia 4, 72 0 3, 80 0 3, 98 4 3, 90 0 3, 28 0 3, 28 2 3, 17 0 25 to ky o ja pa n 4, 28 0 3, 81 0 4, 27 1 3, 81 8 3, 96 9 3, 59 3 3, 35 8 115 26 m um ba i in di a 4, 28 0 4, 06 1 3, 95 3 4, 06 0 3, 29 8 2, 66 7 2, 36 1 27 va le nc ia sp ai n 4, 21 0 3, 65 3 3, 59 3 3, 04 3 2, 61 2 2, 41 0 2, 14 5 28 (s ai go n) vi et na m 4, 11 0 3, 56 3 3, 10 0 2, 53 2 2, 53 2 2, 12 2 1, 86 8 29 co lo m bo sr i l an ka 4, 08 0 3, 46 4 3, 68 7 3, 38 0 3, 07 9 2, 45 5 2, 22 1 30 li an yu ng an g ch in a 3, 87 0 3, 02 1 3, 00 1 2, 00 1 1, 30 2 1, 00 5 n/ a 31 je dd ah sa ud i a ra bi a 3, 83 0 3, 09 1 3, 32 6 3, 06 8 2, 96 4 2, 83 6 2, 42 6 32 sa la la h o m an 3, 49 0 3, 49 0 3, 06 8 2, 60 0 2, 39 0 2, 49 2 2, 22 9 33 po rt sa id eg yp t 3, 48 0 3, 30 0 3, 20 2 2, 12 7 2, 12 7 1, 52 2 86 9 34 yi ng ko u ch in a 3, 34 0 2, 53 7 2, 03 0 1, 37 1 83 8 63 4 n/ a 35 fe lix st ow e uk 3, 30 0 3, 10 0 3, 20 0 3, 30 0 3, 00 0 2, 70 0 2, 71 7 36 yo ko ha m a ja pa n 3, 26 0 2, 55 5 3, 49 0 3, 40 0 3, 20 0 2, 87 3 2, 71 8 37 m an ila ph ilip pi ne s 3, 25 0 2, 81 5 2, 97 7 2, 80 0 2, 63 8 2, 62 5 2, 69 8 38 su ra ba ya in do ne sia 3, 04 0 1, 14 0 39 kh or f ak ka n ua e 3, 02 0 2, 75 0 2, 11 2 1, 85 0 1, 73 0 1, 92 9 1, 81 9 40 g io ia ta ur o ita ly 2, 85 0 2, 85 7 3, 46 8 3, 44 5 2, 90 0 3, 16 1 3, 26 1 41 sa va nn ah us a 2, 83 0 2, 35 6 2, 61 6 2, 60 4 2, 16 0 1, 90 2 1, 66 2 42 al ge cir as sp ai n 2, 81 0 3, 04 2 3, 32 4 3, 15 2 3, 25 7 3, 18 0 2, 93 7 43 ba lb oa pa na m a 2, 76 0 2, 01 2 2, 01 1 2, 16 7 98 8 66 3 44 sa nt os br az il 2, 72 0 2, 25 2 2, 67 5 2, 53 3 2, 20 8 2, 24 0 1, 88 3 45 ba nd ar -a bb as ira n 2, 59 0 2, 20 6 2, 00 0 1, 72 3 1, 40 8 1, 29 3 n/ a 46 du rb an so ut h af ric a 2, 55 0 2, 11 0 2, 56 0 2, 51 1 2, 33 4 1, 95 5 1, 71 7 47 na go ya ja pa n 2, 55 0 2, 11 3 2, 81 7 2, 89 0 2, 74 0 2, 47 0 2, 30 4 48 (is ta nb ul ) tu rk ey 2, 54 0 1, 83 5 2, 26 2 1, 94 0 1, 44 6 1, 18 6 49 ko be ja pa n 2, 54 0 2, 24 7 2, 43 2 2, 43 2 2, 41 3 2, 25 0 2, 17 7 50 va nc ou ve r ca na da 2, 51 0 2, 15 2 2, 49 2 2, 30 7 2, 20 8 1, 76 7 1, 66 5 so ur ce : t he j ou rn al o f c om m er ce (2 01 2) 116 ships. norfork, va has low teu volume but deep water larger ship capacity (allen, 2012). halifax is developing its deep water port to handle larger ships, but does not currently make the top 10 in volume. not only must ports upgrade the size of their ship bays, but other preparations must be made. in several major ports, bridges that cross the mouth of the bay are too low for the big ships. this is somewhat of a problem in halifax and baltimore, for example (allen, 2012). also the capacity to load containers on to trains and trucks quickly is a concern. one train can only carry about 240 40-ft. containers. about 20 double-stacked trains of maximum size would be required to move the containers from one 18,000 teu ship. the larger the container ship, the more time is required for loading and unloading, but the time schedule for a container ship is very tight, since the demand is high (global security.org, 2012, container types). another issue is ship ‘handoff’ capacity to feeder ships. smaller ships can be used to transport containers from the big ports to smaller costal or up-river ports. but, again, the speed and efficiency of the inter-ship transfer process is critical. often ships need the capacity to line up side-by-side and have gantry and quay cranes sort and transfer containers. for all of these transfer strategies the required infrastructure includes not only physical facilities but also other technologies to maintain internal security, track inventory and deal with border-crossing bureaucracies related to customs, immigration and terrorism threats. these soft infrastructures are both a significant part of port costs and a more ongoing issue requiring constant update. they also contribute to a higher demand for advanced technologies in the port city and can lead to the establishment of a trade, transportation and communication technology hub there (lick and hamlin, forthcoming). in the early history of urban development break-of-bulk points at seaports lead to the location of many of the world’s great cities. more recently, the airport has become a catalyst for both industrial development and high-tech ‘aerotropolis’ services (lick and hamlin, forthcoming). now, the elevated importance of sea freight in modern trade is providing an impetus for modern technological development and local economic growth near seaports, including high-tech logistics centers, often with a closely associated aerotropolis. 2.4. sea routes and major canals using very large ships also affects routes as well as origins and destinations. most container shipping trade is between asian nations. this is where ship size and port capacity are growing most rapidly. the greatest intercontinental shipping is probably between north america and europe. however, the shipping routes from asia to the west coast of north america are growing rapidly with a high percentage of that trade being one-way from asia. this one-way pattern is creating a significant dead-head problem in both containers and ships. 117 the los angeles and long beach ports are able to take some large ships but both ports are very congested. vancouver is trying to prepare itself to compete. a major problem with asian shipping to the west costs is the break-of-bulk cost to get goods on trains and trucks. for goods going to the eastern half of the us, a fast but costly trip by train or truck is necessary. asia-europe shipping can go in one of two directions, depending on the capacity of the world’s two most important canals, panama and suez. both routes have problems. for the growing economies of south asia, the suez route is most likely. the suez has less ship-size limitations because it has no locks, but might have limitations vis-à-vis the new ship sizes. furthermore, once ships get to the mediterranean sea, they may face a 10 to 20 day trip around europe to the west and north coast to get to ports that can handle the larger ship size and cargo volume. the port at constanţa would be well positioned for the south asia-to-europe shipping if it were able to handle the large ships and develop better inland handoff capacity. figure 2: the asia-europe route source: the maersk line the panama canal is still the preferred route for east asians but this is changing as ships get larger. the panama canal is so important that, as mentioned earlier, ships are put in size categories based on whether they can pass through that canal. however, an ever increasing number of ships are larger than the old panamax size. the size of a panamax vessel is limited by the size of the panama canal’s locks. the ‘post panamax’ category has historically been used to describe ships with larger hulls. 118 however a multi-billion dollar project is now underway to expand the canal’s capacity, both in volume and ship size. completion of the project is projected for approximately 2014 (panama canal authority, 2006). the panama canal expansion project is causing some changes in terminology. the ‘new panamax’ size category indicates the ship-size that will be able to pass through the new third set of locks currently being built (united nations conference on trade and development, 2010). the new locks are being built to accommodate a ship with an overall length of 366 meters and much greater width. such vessels will have a total capacity of approximately 12,000 teus (panama canal authority, 2006). yet, even this multi-billion dollar expansion will only accommodate ships 1/2 to 2/3rds the size of those soon to be built. suezmax is a term describing ships capable of passing through the suez canal. the term is primarily used to refer to tankers. since the canal has no locks, the most serious limiting factors are the maximum depth below waterline, and height due to the suez canal bridge. a few supertankers filled to capacity are too deep to fit through. they either have to transfer part of their cargo to other ships or to a pipeline terminal before passing through. alternatively, they must travel around cape agulhas. the canal depth was increased in 2009 from 18 to 20 meters. suez canal bridge causes a maximum head room of 68 meters. similar terms of malaccamax and seawaymax are sometimes used for the largest ships capable of fitting through the strait of malacca and saint lawrence seaway, respectively1. the panama project may also greatly impact trade patterns. not only will east asian ships more likely continue to use panama rather than suez to get to europe, they may also want to ship directly to the u.s. east coast rather than to the west coast with a rail transfer. however, the new york/new jersey port is congested and needs upgrading of transfer capacity. other ports such as halifax, norfork and baltimore are looking for ways to get in the big-ship game. 2.5. inland waterways the st. lawrence seaway in canada and the us connects the great lakes to the atlantic ocean via the st. lawrence river. it moves ships between the great lakes with a series of locks that compensate for the different lake levels. in the 1950s and 1960s the st. lawrence seaway was considered one of technological wonders of the world. it facilitated trade within north america and was responsible for gary, in becoming a world steel center. in fact, it promoted the growth of many of north america’s great cities such as toronto, detroit, cleveland and chicago. chicago, more than 1,400 kilometer from the atlantic ocean developed a strong ocean-ship seaport and a rail hub serving the entire continent. now, the increase in ship size means that true ocean freighters may no longer be able to use the seaway. instead ocean freighters will have to pull into an atlantic 1 see (http://en.wikipedia.org/wiki/seawaymax) (http://maritime-connector.com/wiki/ seawaymax/) and (http://en.wikipedia.org/wiki/malaccamax) for more information. 119 port such as halifax and hand off cargo to feeder ships that can use the great lakes seaway, or handoff to rail lines. this has created the need for a new kind of port to both accommodate the huge ocean ships and facilitate the handoff as efficiently as possible. in europe the problem is more difficult since the major river systems are smaller than the st. lawrence and the rail gage is narrower, allowing for small containers on rail cars. 3. gateways and transportation & logistics hubs: responding to the rapidly changing current situation a variety of cities and countries are attempting to redefine themselves as continental gateways or logistics and transportation hubs to capitalize on the emerging patterns of trade and transportation. halifax, nova scotia, for example, is attempting to be a canadian gateway to the country’s principal populated areas and to the mid-western us. halifax currently acts as a handoff point for great lakes feeder ships and rail lines. halifax has a long history as a major port even as a small city. the shape of the large provincial peninsula with a well-protected bay and a deep water harbor causes it to be a prime candidate to take advantage of both suez and new panama traffic from europe and asia. the halifax port authority is currently promoting several expansion projects. somewhat surprisingly, halifax is partnering with the state of michigan in the us to look at these issues even though the two locations are more than 1,400 kilometers away from one another. in addition to the obvious seaway and great lakes connection, a main trunk line of the canadian national railway (cn) runs from halifax to chicago through michigan. it also runs through the largest population and industrial centers in canada, and then through a large tunnel under the st. clair river that connects two of the great lakes at the sarnia – port huron border crossing. this rail line with the large tunnel is the only meaningful rail entrance to the midwestern u.s. from canada that can accommodate double-stack container trains. most north american rail companies feel that trains must be double stacked to be adequately efficient. the detroit river tunnels, for example, connecting detroit and windsor, ontario, cannot accommodate double-stacked trains2. an organization called the great lakes international trade and transportation hub (glitth) is working to maximize the benefit of the potential halifax gateway for the economic benefit of the great lakes regions of both the u.s. and canada. 3.1. europe’s eastern gateway the black sea main commercial ports are: samsun and trabzon (turkey), batumi (georgia), burgas and varna (bulgaria), constanţa and mangalia (romania), odessa and sevastopol (ukraine), novorossiysk and sochi (russia). a few of them have access 2 an effort is currently underway to finance an expansion of the tunnel connecting detroit, mi with windsor, ontario according to a presentation made bywilliam muir of the continental rail gateway organization to the great lakes international trade and transportation hub, november 1, 2012. 120 to european gateways: samsun and trabzon (via istanbul – corridor iv), burgas and varna (corridor viii, corridor iv via sofia, corridor vii via rousse on danube), odessa (corridor ix and corridor v via kiev) and constanţa (corridor iv, vii and corridor ix via bucharest). being eu member countries, romanian and bulgarian ports have competitive advantages over other ports in the black sea region. they enjoy a special status in terms of no custom duties with other eu member states and the prospect of schengen integration will enable the two countries to benefit from the free movement of goods between eu member states with regard to land transportation – roads and railway. 3.2. constanţa: favorable location constanţa seaport3 in romania is another example of a port city that could take on new importance because of the shifting patterns of trade and transportation. constanţa is located at the junction of major trade routes. these include routes connecting the transcaucasus, central and eastern europe and asia and the far east. constanţa could also be a gateway to western europe saving time and fuel compared to routes going from the suez to northern european ports. the favorable geographic position of constanţa seaport is emphasized by its connection with two pan european transport corridors, as defined by the european commission. they are corridor vii, the danube and corridor iv, road and rail links. also, according to the ‘co2 reduction’ report issued by the european gateways platform, significant savings in co2 emissions could be achieved if the flow of goods destined for central and eastern europe entered europe through the port of constanţa, romania. ‘calculating over a period of ten years, if the transport is (re)routed via romania, the saving for europe is on average €74 million per year’, a press release, issued by a dutch-romanian supply chain and logistics expert company, informs. in 2020, the forecasted 1.47 million teu represents only about 10% of the total volume destined for central and eastern europe. the report analyses both total external costs and the co2 emissions consequences of re-routing traffic flows from asia to central and eastern europe to a direct entry into the markets via romania. already, important container shipping lines are utilizing constanţa seaport as a distribution port for the black sea region. in the past decade constanţa seaport has been serving freight flows from austria, bulgaria, hungary, the republic of moldova, slovenia, slovakia, ukraine and serbia (ilie, 2012). 3.3. the european gateway project the european gateway project is engaged in plans similar to those of halifax, looking at the port at constanţa, romania as a black sea-danube river handoff point 3 according to world port rankings 2010 constanţa port is ranked 18th in europe and 84th in the world’s busiest ports by cargo tonnage (http://aapa.files.cms-plus.com/statistics/world%20port%20rankings%202010.pdf). 121 to feeder containerships and to other modes that could carry goods to inter-modal terminals in countries such as romania, serbia, hungary, austria and germany. according to romanian authorities, the port of constanţa offers the largest terminal handling capacity in the black sea basin. based on 2010 statistics, the container throughput in 2010 approximated 600,000 teus. constanţa ranks 25th among european ports in this regard, and in the top 10 in eastern europe. this volume increased between 15% and 20% during 2011 to approximately 700,000 teus4. the largest container vessel calling on the constanţa port has a capacity of approximately 9,000 teus, about 1/2 the size of the world’s largest container vessels. the largest container terminal, located in the southern part of the port of constanţa, operated by dp world, has an area of 42 hectares. this will equal approximately 60 hectares when current work is completed, with an estimated annual capacity of 1.5 to 2 million teus. the total quay length is 1,500 meters with a railway shunting area, and a river barge operation facility. dp world has five gantry cranes and two quay cranes.5 certain attributes of constanţa recommend it as a hub port for the black sea and beyond. first, the port has all three main elements of effective intermodal transportation (inland waterways, black sea danube canal, railways and roads/motorway infrastructure). also, the facilities for servicing all type of vessels, containers, tankers and others are in place6. 3.4. the constanţa gateway plan constanţa’s attributes facilitate the connection of other black sea ports to central european markets using pan european corridors. as such, the port at constanţa hopes to be europe’s link to the black sea basin that also serves the ukraine, russia, georgia, bulgaria and turkey. and, with growing asian-european trade and improvements to the suez, constanţa might be well located to connect european and asian markets. it could be a key link between europe and the rapidly growing economies of south and east asia through the suez canal, saving shippers the multi-day trip around europe to north sea ports like rotterdam and bremenhaven. furthermore, with the expanding panama canal, constanţa could provide better access between east asia and the black sea basin through the panama canal. like the great lakes example, this attempt at an eastern gate to european trade and transportation hopes to create a new competitive advantage for the region and promote manufacturing and trade in general. also a part of the project would be a high-tech logistics hub for the east side of europe. 4 information provided by the romanian ministry of transportation and infrastructure, 2011. 5 information provided by the romanian ministry of transportation and infrastructure, 2011. 6 information provided by the romanian ministry of transportation and infrastructure, 2011. 122 creating an advanced multi-modal freight facility and logistics hub requires a multifaceted plan. basic questions to be answered are: what do constanţa and europe need to do to accomplish this lofty goal? what is the status of the constanţa port as it relates to the new larger ships and changing pattern of global trade? what is the status of the handoff facilities at constanţa? what work needs to be done to the canal shortcut through the danube delta? what expansion of the danube’s capacity is required? can constanţa become a logistics hub? in april 2010 a ‘white paper’ was presented to the romanian government which was to act as a roadmap and work plan for a joint taskforce to work out these details, potential consequences, implementation elements and actions required to develop, implement and realize the key building blocks of a trade, transportation and logistics hub and gateway. the joint taskforces consists of experts from representative romanian ministries and other public entities (e.g. constanţa port authority) and experts from the european gateway platform foundation7. in order to accomplish the targets and goals, port of constanţa, with consistent support from romanian ministry of transportation and infrastructure, must elaborate a strategy for future developments which should integrate with the national transportation strategy. 3.5. current projects several projects are either in progress or to be started in the near future. the port is already capable of accommodating the current panamax ships, but, as mentioned previously, ship sizes are increasing rapidly, and the panama canal is increasing its ship size capacity. the port of constanţa strives to secure better alongside-access conditions for most of its inner port basins to promote efficient intermodal transfer (truck and rail). one of the important projects in railway traffic is the enhancement of railway capacity in the river-maritime area of constanţa seaport. the project consists in the construction of a systematized railway complex. in the first phase, the railway lines serving current operators will be executed based on traffic estimates for the year 2020. the project costs an estimated €17.6 million. important transport hub of traceca corridor, constanţa seaport has to carry on the already initiated projects in order to consolidate the efficient connection status in the complex logistics chain. projects to improve port transportation infrastructure are also in progress with regard to the development of roads and bridges connecting port operation areas with national transportation systems. the limited access highway from bucharest to constanţa was recently completed. the danube river – black sea canal is operational and being maintained at its current level. focus is also given to projects expected to secure better sailing conditions on the danube all through the year. the 2012 blockage of the ship travel illustrated a severe problem. considering the natural position and 7 the dutch-romanian chamber of commerce established the romanian gateway association which developed a white paper with recommendations. 123 the existing links to south east and central europe markets port of constanţa can play best the role of logistic hub. 4. university role what is the role of a community-oriented university in this kind of situation? universities have several paths of involvement as illustrated by the halifax – michigan example of glitth. first, university researchers should be tracking global trends in issues such as world trade patterns so as to be able to alert private sector and governmental sources of these trends. the shipping example shows how changes in one small aspect of global activity, ship building, might have far reaching consequences on national and continental economic development. second, in the high-tech-information age, development and usage of the most advanced technologies often comes from universities. creation of a state-of-the-art information and logistics hub is a complicated entity that showcases the interaction of science-based technologies with human systems. governments are greatly concerned at such locations about security and taxation. private systems must track inventories, time costs, billing and shipping instructions to name a few. the interaction of real time data bases, government policy, law and profit orientation are all areas that cross sectoral and technical lines in a way that only universities can view objectively. university-developed economic development strategies can also increase the degree to which a logistics hub can attract and spin-off other economic development such as new manufacturing and new service businesses related to trade, transportation, security and information. 5. summary, conclusions and policy implications global transportation is changing rapidly. few countries are in tune with what is happening. rising energy prices, improved handoff technologies, and security concerns are elevating ocean shipping as a more important transportation mode. at present, only a few asian seaports are able to accept the largest ships being built. only a few ports in north america and europe such as new york, los angeles/long beach and rotterdam are able to handle the next sized ships, and those ports are quite congested. the two major canal systems of the world, panama and suez, are in need of the major upgrades, some of which are underway, and some of the great inland waterways, such as the st. lawrence seaway and europe’s two major rivers require expansion just to handle ‘handoff’ traffic. not keeping up with this ship size escalation could cause a country or a whole continent to fall behind economically. the concept of continental gateway also becomes salient with the renewed importance of ocean freight. secondary cities can emerge as major payers in global trade if, (1) they are located on the edge of a continent, (2) they have a good deep water port, (3) they build good inter-modal transfer facility, and (4) they obtain the technological expertise to develop a logistics hub. one place in eastern europe that has that potential is constanţa, romania. currently the largest port on the black sea, constanţa is effectively at the 124 mouth of the danube river, and has rail and highway connections the rest of europe. by using the port at constanţa ships coming from asia, through the suez can save more than ten days travel by unloading in constanţa rather than rotterdam. to take advantage of the locational advantage, constanţa and other similar gateways must rapidly upgrade quays to handle lager boats, improve cranes for ‘alongside’ transfer to black sea ships, river vessels, rail and truck. they must develop state-of-theart information and logistics hubs that effectively interface the real time information concerns of government, regional security, inventory, safety, large-scale physical infrastructure. universities have a role in tracking world trends such as those discussed in this paper and are really the only institutions that can provide objective analysis and technical assistance to systems that cross lines between the public and private sectors and sciencebased and human technologies. references: 1. allen, g., ‘the race to dig deeper ports for bigger cargo ships’, national public radio, january 5, 2012, [online] available at http://www.npr.org/2012/01/05/144737372/the-raceto-dig-deeper-ports-for-bigger-cargo-shipps, accessed on october 22, 2012. 2. ‘containerization,’ [online] available at http://en.wikipedia.org/wiki/containerization, accessed on november 8, 2012. 3. dohlie, k.a.‚ ‘the future of the ultra large container ship’, december 17, 2009, dnv container ship: update no. 3, [online] available at http://www.dnv.com/industry/maritime/publicationsanddownloads/publications/dnvcontainershipupdate/2009/3-2009/ thefutureoftheultralargecontainership.asp, accessed on july 23, 2012. 4. ‘egypt’s suez canal h1 revenues, traffic up; upgrade helps’, july 26, 2010, reuters africa, thomson reuters, [online] available at http://www.reuters.com/article/2010/07/26/ ozabs-suezcanal-egypt-idafjoe66p09p20100726, accessed on november 9, 2012. 5. global security.org, ‘global ship types’, [online] available at http://www.globalsecurity. org/military/systems/ship/container-types.htm, accessed on november 8, 2012. 6. ‘global ship standards’, [online] available at http://en.wikipedia.org/wiki/ containerization#container_standards, accessed on november 8, 2012. 7. hayler, w.b. and keever, j.m., american merchant seaman’s manual, centerville: cornell maritime press, 2003. 8. ilie, e., ‘constanţa, important ‘commercial gateway’ in the eurasian platform’, april 24, 2012, railwaypro, [online] available at http://www.railwaypro.com/wp/?p=8790, accessed on july 30, 2012. 9. lick, d. and hamlin, r.e. ‘public-private partnerships for promotion of cross-border trade and transportation’, 2013, the canada-united states law journal, forthcoming. 10. panama canal authority, ‘proposal for the expansion of the panama canal: third set of locks’, 2006, [online] available at http://www.acp.gob.pa/eng/plan/documentos/propuesta/acp-expansion-proposal.pdf, accessed on november 10, 2012. 11. rodrigue, j.p., ‘the growth of transport systems’, hofstra university, department of global studies and geography, [online] available at http://people.hofstra.edu/geotrans/ eng/ch3en/conc3en/shipsize.html, accessed on november 8, 2012. 125 12. schumacher cargo logistics, ‘cargo shipping container sizes’, [online] available at http://www.schumachercargo.com/shipping-container-sizes.html, accessed on november 8, 2012. 13. ‘the future of the ultra large container ship’, june 18, 2010, motorship, [online] available at http://www.motorship.com/news101/ships-and-shipyards/the-future-of-theultra-large-container-ship, accessed on august 8, 2012. 14. the journal of commerce, vol. 13, no. 29, august 20-27, 2012, [online] available at http:// www.jocdigital.com/08202012/08202012/1/1#&pageset=21, accessed on august 6, 2012. 15. ‘the triple-e maersk container ship will be the world’s largest and most efficient’, gizmag, [online] available at http://www.gizmag.com/triple-e-maersk-worlds-largestship/17938/picture/130648/, accessed on november 8, 2012. 16. the world shipping council, ‘history of containerization’, [online] available at http:// www.worldshipping.org/about-the-industry/history-of-containerization, accessed on november 8, 2012. 17. united nations conference on trade and development, ‘trade and development report, 2010: employment, globalization and development’, 2010. 18. willoughby, w.r., the st. lawrence waterway: a study in politics and diplomacy, madison: university of wisconsin press, 1961. untitled 172 abstract the danish parliamentary ombudsman occupies a central position as a watchdog over public authorities within the national context. the statutory and functional powers of the institution are wide and the ombudsman enjoys an a priori sympathy from e.g. parliament and the media. in addition, there are no specialised administrative courts in denmark and the ombudsman is thus unrivalled on the legal scene as the primary specialist protector of good administration. nevertheless, the ombudsman subscribes to a narrow scope of focus in the protection of citizens’ rights. in practice the ombudsman often limits his review to the compliance by authorities of national law and in particular of general procedural requirements. the rights of citizens are only actively protected by the ombudsman as far as certain parts of general administrative law in concerned. the current strategy of selected preferences of the danish ombudsman leaves european union rights of citizens largely unidentified and unprotected. the danish ombudsman is a watchdog with teeth but with discerning taste buds. as to eu law, the ombudsman is reserved and has no appetite at all. the danish ombudsman – a national watchdog with european reservations michael gøtze associate professor research centre of legal studies on welfare and eu market integration faculty of law, university of copenhagen tel.: + 45 35323178 email: michael.gotze@jur.ku.dk transylvanian review of administrative sciences, no. 28 e si/2009 pp. 172-193 173 1. introduction the danish parliamentary ombudsman is one of the oldest ombudsman institutions in the world and occupies a central position as a watchdog over public authorities within the national context. the statutory and functional powers of the institution are wide and multilevel and the ombudsman institution in practice often enjoys an a priori sympathy from e.g. the national parliament and the danish media. in addition, there are no specialised administrative courts in denmark and the ombudsman institution is thus traditionally unrivalled on the legal scene as the primary specialist protector of good administration. nevertheless, the danish ombudsman institution subscribes to a narrow scope of focus in the protection of citizens’ rights vis-à-vis public administration. in practice the ombudsman often limits his review to the national authorities’ compliance of purely national law and in particular to the compliance of a range of general procedural requirements. thus the rights of citizens are only actively protected by the ombudsman as far as certain parts of general administrative law is concerned. the limited horizon in the control and thinking of the ombudsman leaves the european union rights of citizens largely unidentified and unprotected. the danish ombudsman is a watchdog with teeth but with discerning taste buds in practice. as to community law the danish ombudsman is a watchdog with reservations. the primary object of the following article is the danish context but it also embraces a number of aspects which are of interest to the understanding of ombudsmen in general. the article sets out with an analysis of the danish ombudsman model. this section describes the normative competences, the functional flexibility and the de facto alliances of the influential danish ombudsman (section 2). this point of departure is contrasted with an analysis of the strategy of selected preferences in the ombudsman’s practice on citizens’ rights (section 3). the sparse and cautious inclusion of community law is addressed as a specific manifestation of the ombudsman’s general tendency to a narrow legal gauge (section 4). a range of explanations for this strategy are discussed in the final parts of the article (section 5 and 6). 2. the danish ombudsman context – a variety of powers and alliances historically, the danish parliamentary ombudsman (folketingets ombudsmand) was incorporated into the amended danish constitution of 1953 reflecting a need for an improved protection of the individual citizen against public authorities (the danish ombudsman, 1995, the danish ombudsman, i-iii, 2005, gammeltoft-hansen, 1996). the danish courts did not suffice as a control body in this respect. the economic reconstruction of danish society after world war ii necessitated a powerful state and an administrative apparatus with extensive powers. the public administration grew immensely in size and parliament enacted an increasingly number of regulations providing administrative authorities and agencies with both numerous and discretionary powers. as a legal counter-measure to this development, the danish ombudsman institution was established. the act creating the office of the parliamentary ombudsman 174 was passed in 19541 and the first ombudsman – a distinguished professor of criminal law took office in 1955. the act has been amended most recently in 1996 and 2009. 2.1. the danish ombudsman as a primus/prima inter pares the danish ombudsman belongs to the tradition of scandinavian ombudsman institutions. although there are a number of similarities between the various institutions, they also show considerable individuality. the swedish ombudsman is the oldest in the world dating back to 1809 (wieslander, 1994). the general framework is that the holder of the office is appointed by the legislator and enjoys independence of both the executive and the judiciary. the task of the institution is to inquire into administrative decisions and to safeguard the interests of citizens by ensuring administration according to the law, discovering instances of maladministration and eliminating defects in administration. subsequent ombudsman institutions were created in finland in 1920, in denmark in 1955 as mentioned above and in norway in 1962 (kucsko-stadlmayer, 2008).2 scandinavian ombudsmen are generally divided into two basic models: the disciplinary authority model (swedish-finnish model) and the quasi-administrative court model (danish-norwegian model). a characteristic of the classical swedishfinnish model is the power of the ombudsman to act as a prosecutor and to bring criminal charges or disciplinary proceedings against individual public officials. the focus of the disciplinary ombudsman is the correct behaviour of the public employees, not the decisions of public authorities. in practice, however, the swedish and finnish ombudsmen are inclined to express criticism or to put forward recommendation and not to exercise their formal powers. as for areas of normative focus, both the swedish and the finnish ombudsman today have a statutory duty to supervise the enforcement of the fundamental rights and freedoms of citizens. in sweden this explicit scope of control was established in 1974 whereas the emphasis in the finnish ombudsman system on fundamental rights was a result of a constitutional elaboration of the fundamental rights provisions in 1995. the intention is to bring these rights closer to the level of practical application and to enhance their influence on daily administration in finland. characteristic of both sweden and finland is, moreover, that they have established a number of specialised ombudsmen institutions with specific legal competences, e.g. the data protection ombudsman, the equality ombudsman, the ombudsman for minorities and the children’s ombudsman. arguably, the danish-norwegian ombudsman model functions to some extent as an administrative quasi-court reviewing public authorities as such and assessing general principles on good administration. at the outset, however, the danish ombudsman 1 the ombudsman act no. 203 of 11 june 1954 with subsequent amendments. 2 see [online] on sweden at www.jo.se (justitieombudsmannen), finland: www.ombudsman.fi (eduskunnan oikeusasiamies), denmark: www.ombudsmanden (folketingets ombudsmand) and norway: www.sivilombudsmannen.no (stortingets sivilombudsman). 175 was designed as an equivalent to the swedish prosecutor model but the danish institution has evolved independently. the danish ombudsman has never exercised his original possibilities of initiating criminal or disciplinary proceedings and the focus of both the danish and norwegian ombudsmen has been decisions of public institutions rather than the behaviour of individual civil servants. upon the revision of the danish ombudsman act in 1996 the disciplinary powers of the ombudsman were omitted due to this long-standing practice. as opposed to the defined role of the swedish and finnish ombudsman, the danish ombudsman enjoys a more autonomous role in developing legal principles of good administration. there is no statutory duty in the danish ombudsman act to include e.g. the fundamental rights of citizens. in sweden and finland decisions of public administration can be appealed to regional administrative courts and a supreme administrative court. no such possibilities exist in denmark. denmark has no administrative court but only a system of ordinary courts of law (gøtze and rytter, 2000). the ordinary danish courts review all kind of cases concerning private law, public law and criminal law. thus, the overall institutional structure of the danish control system per se provides the ombudsman institution with a primary position as a specialist in administrative law. moreover, the ordinary danish courts until recently mostly reviewed private law cases and conversely only a few public law cases leaving normative space for the danish ombudsman’s assessment and development of legal principles. for the time being, however, the court system as a whole receives an increasing number of administrative cases and this may, in the long term, change and perhaps limit the position of the danish ombudsman. according to the danish court system, the present amount of public law and private law cases is some 70 % and 30 % respectively of the total amount of civil law cases. despite the danish ombudsman institution’s historical affinity to the other scandinavian ombudsmen, the institution today stands out as far as its conceptual and intellectual impact on general administrative law is concerned. apart from his practice on general administrative law the danish ombudsman produces extensive academic literature on administrative law matters. in addition, almost all literature in english on the danish ombudsman stems from the ombudsman institution itself. coupled with the fact that all danish standard textbooks massively draws on the practice and theoretical concepts of the danish ombudsman, this paves the way for an influential national ombudsman. the current danish ombudsman holds the position of the primus inter pares among scandinavian ombudsman institutions. 2.2. normative omnipotence and functional flexibility the danish ombudsman institution is normatively omnipotent within public law and the institution is empowered to examine and to deal with all aspects of public law. the danish ombudsman act is open-ended and largely discretionary containing only few normative and clear-cut limitations of the scope of the ombudsman’s review of public authorities (general administrative procedures act no. 473 of 12 june 1996 with subsequent amendments). if the ombudsman institution has the ambition to 176 harbour an expansive normative role, the ombudsman act is rarely a hindrance. as to the fundamental formal boundaries of the ombudsman’s current competence it follow from the act that the ombudsman cannot review the acts or the behaviour of the danish parliament, the courts of law and private institutions. another basic characteristic of the danish ombudsman is his functional flexibility. compared with courts of law the ombudsman operates in a much more informal framework and is given vast freedom in his selection of cases. generally, the existence of only minimum legal barriers to the ombudsman is an inherent element of the ombudsman model. the actio popularis principle gives anybody the right to lodge a complaint and there is no requirement of material interest in the case (gammeltofthansen, 1998). there are only a few formal requirements that must be adhered to, such as a requirement that attempts should have been made to resolve conflicts within the system of administrative recourse before the ombudsman is involved in the case. the majority of the danish ombudsman’s cases are complaint cases. some 3700 of an annual total of 4000 cases are complaints from citizens. it is free of charge to lodge a complaint which in itself makes the ombudsman more accessible to citizens than the court system. the open track system combined with the ombudsman’s functional flexibility give the ombudsman a good prognosis for receiving cases concerning all aspects of citizens’ rights. however, this open access does not mean that all complaints are dealt with. in practice, the danish ombudsman relies on a selection of complaints and it is up to him whether a complaint affords adequate grounds for investigation. about 75 % of all complaints are rejected by the ombudsman primarily due to the fact that the citizens have not exhausted administrative redress. with this reduction, this annual amount of complaints that are treated on their merits is some 1000 cases. the ombudsman’s selection policy revolves around complaints that deal with general principles in administrative law and with issues of general interest. the majority of the admitted complaints deal with administrative decisions (l’actes administratifs or verwaltungsakten) which represent a distinct area of focus of the danish ombudsman. as for the substantive areas of public authorities the complaints tend to fall within e.g. social law, employment law, education law, health law, environmental law, taxation law, local government law and criminal law. a specific field of interest for the ombudsman is the right to access to documents. the opinions of the ombudsman are per se soft law opinions in the sense that the public authorities are not legally obliged to comply with them. this is a wellknown characteristic of most ombudsman institutions. as to the statutory catalogue of ombudsman actions the danish ombudsman act states that the ombudsman “may express criticism, make recommendations and otherwise state his view of a case” (article 22 of the ombudsman act). although the ombudsman is deprived of formal sanctions, he is given wide freedom in the wording of critical opinions. the opinion of the ombudsman is phrased in the first person singular (“i state as follows …”) stressing the fact that the opinion is given by the ombudsman personally. the ombudsman 177 expresses his opinion on behalf of parliament and this has a ceremonious impact. the written opinion of the ombudsman is often attached to thorough summaries of the facts of the case and with relatively thorough legal arguments in order to convince the recipient authority of the justification of the ombudsman’s opinion. if an authority refuses to comply with a recommendation by the ombudsman, the ombudsman may recommend that the complainant be granted free legal aid as to bringing the case before a court of law (article 23 of the ombudsman act). the percentage of cases that ends up with a critical ombudsman opinion is typically some 20 %. the percentage is considerably higher with regard to ombudsman cases concerning local authorities. a significant embodiment of the ombudsman’s functional flexibility is his investigation powers. the ombudsman can choose to act as a “nosy detective” by exercising his powers to instigate a specific or general investigation on his own initiative. these powers are not incumbent on the courts of law. although the proactive cases of the ombudsman constitute a smaller part of the total bulk of cases, they form a potent part of the normative work of the institution. the general experience is that even the prospect of being involved in an ombudsman investigation means a loss of prestige for the public authority in question. in conjunction with the negative press coverage that an investigation may generate, an ombudsman investigation on his own initiative often lead to improvements by the public authority even if the ombudsman has not reached any conclusions. in addition, the ombudsman can perform inquisitorial activities during an investigation and authorities are obliged to furnish the ombudsman with the relevant information. also the obligation to contribute to an ongoing ombudsman investigation can in itself produce positive changes at a preliminary stage. the wide powers and the following alliances of the ombudsman have in large measure compensated for the ombudsman lack of formal sanctions. most of the ombudsman’s critical or advisory opinions are adhered to by the responsible public authority (passemiers, reynaert and steyvers, 2009). the exact percentage of adherence is not known but it is traditionally stated in the ombudsman’s academic writings that the figure is high. 2.3. alliance with parliament the interplay between the danish ombudsman and the national parliament (folketinget) is an important prerequisite for the traditional stronghold of the ombudsman institution. the interplay is complex and is only partly regulated in the danish ombudsman act. the most interesting parts of the interplay result from an informal scheme of cooperation. the danish ombudsman act contains explicit provisions on the election and dismissal of the ombudsman. the general notion is that parliament acts as an employer vis-à-vis the ombudsman personally concerning the initial and the final stages in the ombudsman’s term of service. thus, the ombudsman is elected by parliament after each general election in a majority vote and can be dismissed by parliament if the ombudsman ceases to have the confidence of parliament. there are only a few written 178 requirements as to the qualifications of the ombudsman but in practice it is considered of particular importance that the candidate can be regarded as party political neutral. there is no fixed ombudsman term in danish law as opposed to e.g. swedish and finnish law. as to the dismissal procedure, there are no specific grounds for dismissal in the danish ombudsman act and it is left to parliament to define the concept of a lack of confidence. so far the dismissal procedure has never been activated and the vast majority of the political parties have consistently supported the ombudsman. the present danish ombudsman was re-elected in 1987, 1988, 1991, 1994, 1998, 2001, 2005 and 2007. he has held the ombudsman office both under mainly conservativeliberal led and social democrat governments. the backing of parliament reflects itself not only in the formal election of the ombudsman but also in the fact that the parliament presumably supports and shares the general legal values of the ombudsman such as the right to good administration. the fact that the ombudsman acts according to a political and parliamentary mandate is a fundamental feature of the ombudsman model. the ombudsman performs his task of overseeing public administration as the official and trusted representative of parliament. however elusive the presumptive support by the parliament might be, it contributes to the strength of the danish ombudsman. the concrete parliamentary actions in the wake of an ombudsman investigation or a final ombudsman opinion revolve around the system of standing committees in parliament. when the ombudsman deals with state authorities, he ultimately deals with a minister of government acting as the head of the administrative authority. a well-established practice in denmark is parliamentary intervention with regard to the responsible minister by means of a consultation in the relevant parliamentary committee. the committees are the workshops of the parliament and all major decisions are prepared in the relevant committees. for the time being the danish parliament has 25 standing committees and the working sphere of a committee roughly corresponds to that of a ministry. important standing committees are the labour market committee, the european affairs committee, the defence committee, the municipal affairs committee, the economic and political affairs committee and the foreign affairs committee. at the opening of each parliamentary year and after general elections, parliament appoints mps to sit on the committees. the individual political parties are represented according to the number of seats which the parties have obtained in the parliament. thus, the committees politically mirror parliament itself. the task of the committees is primarily linked to the reading of bills. in addition, the committees follow the general development within their spheres of competence and this is where the political support for the ombudsman comes into play. the committee may ask a minister to appear before the committee in order to answer questions according to the consultation procedure. such consultation frequently takes place in an open meeting. a releasing factor of a consultation with a minster is the ombudsman’s investigations. if the ombudsman has expressed criticism as a response to a citizen’s compliant, the 179 committee subsequently asks questions as to the remedies and proposed actions of the minister acting as head of the executive. the result of the consultation is almost invariably that the minster decides to follow the recommendations of the ombudsman in order to avoid additional political pressure. the tendency towards appeasement is enhanced if there is press coverage of the case. functioning as a sword of damocles, the mere prospect of a consultation procedure is sometimes in itself a sufficient means to ensure compliance. today, there is an increasing usage of the consultation procedure and the annual amount of questions asked is some 700. there is no official tracking of the amount of questions initiated by the ombudsman. in a highly media exposed ombudsman case from 2008 concerning the right to family reunification under the eu law on the free movement of persons, the danish integration authorities made substantial alterations, during the ombudsman’s actual preliminary investigation, to the danish guidelines on the scope of the right to family reunification. the minister of integration was consulted by the parliamentary legal affairs committee with a view to the ombudsman investigation and the minister decided “voluntarily” to change the practices. the investigation by the ombudsman is a result of inter alia the judgement of 25 july 2008 of the european court in case c-127/08, metock, and of european parliament and council directive 2004/38/ec of 29 april 2004 on the right of citizens of the union and their family members to move and reside freely within the territory of the members states (annual parliamentary ombudsman report, 2008, p. 238). it can be noted that the danish parliament only rarely acts on a general legislative level as a result of ombudsman complaints. the legislative process is not perceived as the most effective response to an acute problem involving a citizen and a public authority. at a specific level, however, the parliament quite frequently decides to pass legislation that extends financial subsidies and grants to the public authority that has been the object of an ombudsman investigation. together with the financial intervention by the parliament, a critical opinion by the ombudsman turns into a positive change for the responsible authority in the shape of extended resources. no matter how ominous an ombudsman investigation might be perceived by an authority at a first glance, the ombudsman’s activities – especially his inspections of prisons and mental hospitals – have relatively often drawn the attention of the parliament to the problems of the authorities. a parliamentary metamorphosis sets in and the outcome of the ombudsman’s case is to the benefit of the public authority. 2.4. alliance with the media a further – and no doubt – crucial reason for the de facto power of the danish ombudsman is the tendency to “ombudsmania” that characterizes danish media. although it is rarely stated in legal discussions, the alliance between the ombudsman and the press has been a conditio sine qua non to the success of the danish ombudsman. frequently, the sympathy of the media lies with the citizen who is allegedly wronged by public administration and this phenomenon in itself nourishes the perception of 180 the ombudsman as a guardian of good administration. in fact, the ombudsman and the press are mutually dependant in the sense that the ombudsman acts as the press ombudsman when handling complaints from journalists regarding the right to obtain access to documents from public authorities. it is interesting that the ombudsman in practice gives cases on access to documents a high priority and that a considerable part of the published ombudsman opinions deal with this particular legal topic. as to his general role as a media hero it is an advantage to the danish ombudsman that there is only one ombudsman and that the reference in the press to the ombudsman is thus unambiguous. the term “ombudsman” is legally protected by the danish ombudsman act in order to avoid a watering down. the swedish model is different in this respect due to the existence of special ombudsman as mentioned above and due to the fact that the tasks of the swedish ombudsman is carried out by four ombudsmen/ombudswomen in specific supervisory areas. the power of the joint forces of the danish ombudsman and the press is illustrated by a highly political ombudsman case from 2007 in which the danish ombudsman confronted the danish prime minister (annual parliamentary ombudsman report 2007, p. 347). the ombudsman uttered harsh criticism of the prime minister for refusing to give an interview to a journalist from a tabloid newspaper. the intended topic of the interview was the danish government’s decision to participate in the iraq war in 2003. initially, the prime minister ignored the recommendation of the ombudsman. after having written a so-called open letter to the prime minister, published in the danish press, the ombudsman persuaded the prime minister to comply with his recommendation and to accept the controversial interview with the journalist. the danish ombudsman’s habitual heroic status in danish press by far overshadows the coverage of e.g. the european ombudsman. to danes the danish ombudsman simply epitomizes the idea of ombudsman and the international ombudsman perspective has generally a peripheral status in denmark. the right of danish citizens to lodge complaints with the european ombudsman is very rarely exercised. according to the european ombudsman office, a total of only 95 danish complaints were lodged with the european ombudsman from 2003 until 2007 representing a considerably lower percentage of complaints than the one would expect taking the relative size of the danish population into consideration (european ombudsman, 2008, and e.g. heede, 2000). 2.5. traditional alliance with academia a final alliance that i want to touch upon in this panorama is the ombudsman institution’s ties to academia. the ties are clearly reflected in the recruitment of ombudsmen and in the fact that among the four danish ombudsmen so far, three candidates have had academic career profiles as professors or doctors of law in criminal law, administrative law or the law of criminal procedure. the current danish ombudsman – appointed in 1987 is no exception. 181 the distinct academic profile of the institution is further enhanced by the multilevel academic activities of the ombudsman as an institution and as a person. in addition to legal writings the ombudsman and his executive staff are involved in teaching in numerous contexts. it is difficult to overestimate the importance of the academic and educational activities of the danish ombudsman when consolidating the authority of the institution. the writings of the ombudsman have extensively been incorporated into other standard textbooks on administrative law resulting in a unique academic environment surrounding the danish ombudsman. since danish law textbooks on general administrative law are in large measure inspired by ombudsman writings, it is hardly surprising that the concepts of the ombudsman play a pivotal role. an interesting aspect is that the ombudsman’s approach to european union law is echoed in almost all danish textbooks resulting in a general administrative law culture that is still predominantly and overtly national. 3. danish ombudsman in practice – a strategy of selected preferences an outline has been provided above of the general ombudsman’s context in denmark and what the danish ombudsman is in principle capable of achieving as far as protecting citizens’ rights is concerned. we now turn to the practice of the institution. so far, the ombudsman has primarily operated within a rather narrow framework and has adhered to a strategy of selected preferences with a predominant focus on national procedural requirements. 3.1. national and general administrative law judging from the published opinions of the danish ombudsman institution it is a fundamental characteristic that the institution consistently concentrates on national legislation and on national legal principles and concepts. the range of legislation examined by the ombudsman comprises a number of specific acts within the competences of the ombudsman such as immigration law legislation, social law legislation, environmental law legislation, employment law legislation and criminal law legislation. in practice, however, the dominant focus of the ombudsman is general administrative law legislation and principles, i.e. legislation and principle that apply to most public authorities and in most public law sectors. in action, the ombudsman is first and foremost a specialist in general administrative law. 3.2. consistent procedural preference as to areas of specific focus within general administrative law, the original anticipation in the preparatory works to the danish ombudsman act was that the ombudsman institution should review especially compliance with substantive principles of law such as legality, equality and proportionality. only to some degree, however, has the danish ombudsman realised this original intention. over the years, a distinct priority of the danish ombudsman has been his enforcement and development of 182 procedural requirements relating to the processing of an administrative case such as the obligations to make a prior hearing, to give reasons and to investigate the facts of case. thus, this tendency in the actual review of authorities is a further narrowing of the national and general focus of the ombudsman. the preference for formalities and technicalities over substance and content is basically due to the fact that the danish general administrative procedures act from 1985 deals only with procedural matters (act no. 571 of 19 june 1985 with subsequent amendments). the act is a codification of existing procedural requirements and the codification conversely excludes substantive principles. the scope of the danish general administrative procedures act is much narrower than e.g. the european code of good administrative behaviour of the european ombudsman comprising both substantive and formal requirements. the european code of good administrative behaviour was approved in september by the 2001 by the european parliament (nassis, 2009; craig, 2006). in addition, the danish general administrative procedures act is a minimum protection act and on that backdrop the ombudsman has taken a dynamic and teleological approach to the interpretation of some of its specific provisions. on a number of occasions, the ombudsman institution has widened and expanded the scope of the rights in the act in order to protect citizens. the result is that, today, the act can only be interpreted in close combination with the case law of the ombudsman. at a practical and operational level, moreover, the executive’s non-compliance with procedural requirements can arguably be more easily scrutinized by the ombudsman on the basis of the documents of the case than the non-compliance with substantive requirements such as e.g. anti-discrimination requirements. as in many other countries the review by danish ombudsman is normally based on written material and correspondence between the ombudsman and the authorities and this fact has promoted a normative proceduralisation. unlike the courts the ombudsman does not have the powers to hear witnesses and directly evaluate the credibility of the persons involved. another practical and strategic reason for the ombudsman’s preference for a procedural review is arguably the fact that the ombudsman can more easily voice his criticism of technicalities and formalities than substantive matters. by formulating a technical criticism the ombudsman avoids the more stigmatising and confrontational criticism that is inherent in a substantive overruling of a public authority. finally, there is no doubt that the current ombudsman institution has an intellectual preference for procedural requirements. the normative activism by the ombudsman with regard to the danish general administrative procedures act has not been unchallenged by the courts, however. in particular in the field of employment law, the ombudsman’s approach has given rise to debate. in a number of cases, the ombudsman has put forward a specifically dynamic interpretation of the act preventing the usage of bilateral agreements on resignation concerning public employers and employees. according to the ombudsman such agreements cannot be made and the employer must comply with the administrative law requirements of e.g. the right of the employee to a prior hearing. the interpretation 183 of the ombudsman implies a more rigid labour market in the public sector than in the private sector which is contrary to a number of general labour market regulations. with a view to this, in 2004 the danish supreme court explicitly overruled the ombudsman and allowed agreements on resignation also within the public sector. subsequently, the danish ombudsman has suggested that parliament might take legislative action in order to clarify the matter. this still remains to be done (decision of 16 november 2004 of the danish supreme court, in the danish weekly law journal (ugeskrift for retsvæsen, 2005, p. 616). 3.3. predominant state perspective in most cases the ombudsman deals with public authorities within the central administration. historically, the primary competence of the ombudsman was until 1997 the state branch of the danish public administration and this tradition is fundamentally still upheld in large parts of ombudsman practice. the strategic advantage of focusing on state authorities is closely linked to the parliamentary support mentioned above. by activating the parliamentary committees the ombudsman has traditionally been very efficient in enforcing his opinions and recommendations vis-à-vis state authorities. from 1997 onwards the ombudsman has full competence in general to review and control local government. this shift in the focus of the ombudsman act has led to an increase in the amount of local cases lodged with the ombudsman but the institution frequently still prefers to direct its attention to authorities within danish central administration. the local perspective is no doubt a challenge to the danish ombudsman institution. a general structural reform of the entire system of danish local government from 2007 giving the 98 municipalities and five regions more powers calls for more focus and more intensive ombudsman focus on local and regional cases. 4. the ombudsman’s european reservations as a consequence of the predominant national and procedural strategy, the danish ombudsman rarely embarks upon a review of the compliance by public authorities with community law such as the treaties, regulations, directives and the case law of the european court of justice (ecj). from a normative point of view, however, it can be stressed that that the ombudsman has an obligation to assess and enforce all existing legislation. this is explicitly stipulated in the danish ombudsman act which proclaims that the ombudsman shall asses whether any authorities or persons falling within his jurisdiction have acted or act in contravention of “existing legislation” or commit other errors or derelictions in the discharge of their function (article 21 of the ombudsman act). there is no doubt that the principle of the supremacy of community law and the doctrine of direct effect apply in danish law and that community law forms part of existing legislation (craig, 1999, pp. 177-214, steiner, 2006, pp. 69-114, and kaczorowska, 2009, pp. 290-345). as to the total quantitative importance of secondary eu-law in current danish law it is estimated by the danish justice department that about 20 % of the acts that are enacted in the danish parliament today are based on european sources of law. 184 in the specific ombudsman context, moreover, it is worth noting that the danish ombudsman act presupposes an equally close scrutiny of eu rights as national rights. this is unambiguously emphasized in the preparatory works to the ombudsman act (committee report no 1272 from 1994 on the ombudsman act, p.113). “so far, the ombudsman has been quite reluctant to include rules of ec law, now eu law, in the basis for his decisions. this reluctance cannot, in the opinion of the committee, be maintained. an ever increasing proportion of current law in denmark – and in other eu countries – is regulated by rules originating from the bodies of the eu. these can be rules that apply directly in denmark and therefore have to be used by danish authorities. bur they can also be acts passed by the folketing or departmental orders issued by a minster for implementations of decisions made by the bodies of the eu. in the opinion of the committee, the use of eu law by the institution of ombudsman should be planned as follows: if a questions relating to eu law is decisive for the ombudsman’s decision in a case he is considering and which is also being considered by one of the community courts at the same time, the ombudsman should stop considering the case or at least postpone any decision on the case until the court in question has spoken … in all other cases, eu law should simply be included in the basis for the ombudsman’s decisions when rules of eu law – including the judgements of the eu courts – are of importance” (report no 1272 from 1994 on the ombudsman act, p. 295). thus, there is no doubt that the range of broad competences given by the danish parliament to the ombudsman institution is not only a prerogative but also an obligation 4.1. unused functional potential instrumentally, the ombudsman has of a number of possibilities at his disposal that can ensure and enhance the enforcement of eu law. so far, the ombudsman has refrained from using this potential in this field. for instance, the right of the ombudsman to select appropriate cases among the total bulk of complaints provides the institution with an unique possibility to focus on suitable european cases. in addition, the ombudsman enjoys a considerable autonomy in the legal assessments in so far as he can revise and expand the complaint themes of the citizens – for instance as far as relevant eu law is concerned – if he sees a need for this. as opposed to this, a court is to a large degree prevented from inferring with the claims that the parties put forward. nonetheless, there is no example of the ombudsman making an active intervention concerning community law. furthermore, the powers of the ombudsman to initiate cases can potentially contribute to the enforcement of eu law regardless of the number and nature of complaints. they are, however, rarely used by the ombudsman in this field. finally, the lengthy reasoning in the ombudsman’s opinions can be seen as an argumentative potential. the fact that the ombudsman does not hand down a decision dealing only with the case at hand but can also take a general approach to the legal problem that the case involves has great potential in terms of eu law. if the citizens’ awareness of their community rights is basic or 185 non-existent, the mere voicing by the ombudsman of european sources of law can be a contribution. 4.2. a minimalistic case law the danish ombudsman’s case law on community law is limited. as far as the official ombudsman registrations are concerned, the danish ombudsman has until now (december 2009) dealt with only four cases on european union law. the register on the homepage www.ombudsmanden.dk has three entries on eu law: “miscellaneous”, “implementation” and “european institutions”. the four cases are found in the annual parliamentary ombudsman reports 1989 p.148, 1991 p. 65, 1990 p. 58 and 2000 p. 142. they are described in the following. this is the total of ombudsman opinions with community law perspectives in the entire pool of published ombudsman cases from the danish accession to the european communities in 1973 until now. as mentioned above, the danish ombudsman nowadays submits some 1000 cases on their merits every year and with a view to this, a total of four opinions in more than 35 years of ombudsman practice – comprising perhaps 30.000 cases is modest to say the least. as a contrast, it can be noted that the danish supreme court from january 2009 to december 2009 has embarked upon an assessment of european union law in a total of 8 decisions. the amount of european supreme court cases is recorded on the homepage of the supreme court since 2009. with a view to this, the danish supreme court is considerably more active than the danish ombudsman in the european field. this significant discrepancy is in itself surprising due to the fact the danish ombudsman and the courts of law are supposed to assess their (public law) cases on the basis of a similar understanding of the concept of existing law. the unpublished cases of the danish ombudsman do not alter the general impression of a limited european case law. since 2004 the ombudsman has implemented an internal registration of cases with european union law aspects and the bulk of cases within this registration have been included in my analysis of the ombudsman’s case law. as to the right of access to document it can be noted that the danish ombudsman in three unpublished opinions – all from 2004 has assessed parts of regulation 1049/2001 on access to documents.3 these cases are the sole contributions by the ombudsman to the understanding of the regulation – for instance article 5 of the regulation on collaboration between national and european authorities which has direct application and is binding in its entirety. 4.3. no equivalence in argumentative patterns it follows from community law that national authorities such as the ombudsman, the courts and public authorities – must apply community law with respect to the 3 regulation (ec) no. 1049/2001 of the european parliament and of the council regarding public access to european parliament, council and commission documents, [2001] o.j. l 145/43. see on the regulation e.g. driessen, 2005. 186 principles of equivalence and effectiveness. community law is enforced through national authorities but community law imposes these two main limitations on the national competence concerning judicial protection. it goes without saying that the principles are relevant also to the danish ombudsman in relation to the protection of citizens’ european rights. the principle of equivalence requires that community law actions cannot be treated less favourably than comparable actions derived from purely domestic law. in peterbroeck v belgian state the ecj stated as follows: “(…) the court has consistently held that, under the principle of co-operation laid down in … the treaty, it is for the member states to ensure the legal protection which individuals derive from the direct effect of community law. in the absence of community rules governing a matter, it is for the domestic legal system of each member state to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individual derive from the direct effect of community law. however, such rules must not be less favourable than those governing similar domestic actions nor render virtually impossible or excessively difficult the exercise of rights conferred by community law”.4 the principle of effectiveness demands that national remedies and procedural rules cannot render the exercise of community law rights virtually impossible or excessively difficult (see onhartley, 2007: 226-229, and wyatt and dashwood, 2006: 205-234). inspired by the principle of equivalence, in particular, the ombudsman’s protection of purely danish law and community law is outlined in the following. in order to have the fullest basis for such an analysis i have included a number of borderline opinions that can be said to involve eu law although they are not officially recorded in that capacity by the ombudsman institution.5 in general, the criteria for the official recording by the ombudsman of cases on community law have not been clarified by the ombudsman in e.g. his annual reports. the recurrent patterns are relatively simple: as to purely danish cases the ombudsman typically enforces the selected elements of danish law by means of both reactive and proactive instruments and the ombudsman quite often concludes by voicing criticism of the public authority in question. in danish cases the ombudsman voices criticism in some 20 % of cases. as the enforcement of community law, however, the patterns differ. the danish ombudsman is reactive in his inclusion of european law aspects and he very rarely voices criticism. if the ombudsman considers a critical conclusion as to the application and interpretation of community law, moreover, he seems more open to forgive errors by administrative authorities if they concern community law than if they concern danish law. especially in the 2008 ombudsman case on the right to family reunification under eu principles of free movement of 4 case c-312/92, para. 12. 5 the border line opinions are the annual parliamentary ombudsman report 2008 p. 238, 2007 p. 239, 2006 p. 578, 2006 p. 529, 2006 p. 379, 2005 p. 507, 2003 p. 309 and 2000 p. 410. 187 workers the ombudsman explicitly considered the repetitious confessions and mea culpa statements of the involved authorities as a mitigating factor (annual parliamentary ombudsman report 2008, p. 238) a final distinct pattern is that the ombudsman only assesses the compliance of eu law by state authorities. to elaborate the european side of this comparative analysis, it can be noted that the original initiative to include european law is typically taken by the complaining citizen. the ombudsman limits himself to reacting to complaints from citizens in which an explicit reference to eu law is made. if community law rights are included in the case, however, the ombudsman requests the public authority to make a legal analysis and presentation of the relevant community law. for his part, the ombudsman is reluctant to embark on a substantial assessment of eu law. an official explanation for the ombudsman’s reluctance and caution is the presupposed role of the ecj. according to the danish ombudsman institution, the ecj enjoys a kind of right of “exclusivity” to assessment of eu law, precluding the ombudsman from entering the scene. this explanation was first introduced by the ombudsman in the 1980s and has since been incorporated into several opinions. in a case from 1989 concerning the danish tax authorities the ombudsman received a complaint from a danish citizen employed at the european commission. the citizen’s claim was that he was not subject to – relatively strict danish tax legislation and that his legal status in that respect is to be assessed on the basis of community rules. during the case the citizen was assisted by a lawyer who provided the ombudsman with a statement on the relevant points of law. although the ombudsman’s opinion is somewhat ambiguous, the conclusion is an explicit reservation as to the ombudsman’s general suitability to include and assess ec law. the ombudsman encouraged the citizen to refer the case to the courts of law. according to the ombudsman the courts are more appropriate to deal with eu law due to the fact that the courts – as opposed to ombudsmen – are empowered under article 234 ec (formerly article 177) to request the ecj to give a preliminary ruling on the ec points of law (annual parliamentary ombudsman report 1989, p. 148). it can be noted that the final statement in the case was formulated very broadly by the ombudsman. the ombudsman seemed to take the opportunity to herald a general position. this general stance towards the assessment of community law was in large measure followed by a case from 1991. the ombudsman received a complaint concerning adoption from a german citizen and his danish wife. having been rejected by the danish authorities as adoptive parents to adopt a 4-year old child from columbia, the german citizen proceeded to adopt the child in germany under more liberal german adoption legislation at the time. the european perspective arouse because the german citizen applied for family reunification with the child under danish law. the application was rejected by the danish immigration authorities, however, with a view to the fact that the german adoption is not valid in denmark. in his legal assessment the ombudsman embarked on an initial legal analysis of the relevant community rules on residence at the time and he disagreed with the danish authorities as to the 188 interpretation of the right of residence under eu-law. nevertheless, the ombudsman repeated his reservation as to his suitability to asses community law and repeated his lack of competence to ask the ecj for preliminary rulings. even though the ombudsman initially uttered some criticism, he seemingly concluded otherwise by repeating his general reservation as to community law (annual parliamentary ombudsman report 1991, p. 65). a final element in the recurrent patterns of the danish ombudsman is the fact the he very rarely corrects the interpretation of relevant eu law by an authority. this can be illustrated by a case from 1990. a danish journalist lodged a compliant in relation to a rejection of access to a draft ec directive concerning public procurement. the responsible danish authorities referred to ec principles of confidentiality as part of the reasons for their decision to deny access. substantively, the danish authorities argued that internal commission rules exempt the draft directive from the right of citizens to access to documents. in his investigation the ombudsman did not pursue the european points of law but displayed an explicitly reserved approach to the matter. the ombudsman simply decided to take it for granted that the interpretation by the danish authorities of the relevant ec rules on confidentiality was correct. consequently, no criticism was voiced as to european law (annual parliamentary ombudsman report 1990, p. 58). there is one example of a clear-cut ombudsman criticism, however, namely a case from 2000. a british citizen represented by legal counsel lodged an extensive complaint with the ombudsman in 2000 as a result of an administrative rejection of his residence in denmark. having lost his job due to illness the citizen applied for residence under ec secondary legislation at the time. the ombudsman undertook a legal analysis of the relevant european rights and he expressed distinct criticism towards the responsible authority. his recommendation was that the case be re-evaluated and that residence be granted. the moment when the ombudsman’s opinion was published, the authorities duly complied. the case from 2000 is interesting also because it is one of the very few examples of a legal interplay between the danish ombudsman and the european ombudsman. although the european ombudsman apparently does not provide the danish ombudsman with more than a seemingly basic examination of the case, the reference in itself generates a thorough initial assessment by the danish ombudsman (annual parliamentary ombudsman report 2000, p. 142). in general, it is surprising that the proposal by the european ombudsman to assist national ombudsman on points of eu law has only been resorted to on very rare occasions by the danish institution up until 2009. in the future, the danish parliamentary ombudsman membership of the co-operation scheme between the european ombudsmen and national ombudsmen – the so-called eno, the european network of ombudsmen – has the potential to be a means of ensuring and enhancing the european perspective in danish ombudsman practice (see on the network e.g. tsadiras, 2008). 189 5. explanations for the reservation towards europe there are a number of possible explanations for the danish ombudsman’s reluctance to identify and actively protect citizens’ european rights. due to the fact that the european perspective on the danish ombudsman is only sporadically taken up in danish general administrative law literature, the discussions are probably still in an awakening phase. 5.1. lack of suitable complaint cases a practical reason for the minimalistic european case law might be a lack of suitable and precise complaints concerning relevant points of community law. to some degree the ombudsman is dependant on an influx of “good” cases with relevant legal problems that can attract the ombudsman’s assessment and enforcement of eu law. as a comment on this, however, the range of functional flexibility should not be forgotten. the ombudsman is not dependant on complaints but can launch investigations at his own discretion. a possible lack of complaint cannot in itself justify a sporadic enforcement of eulaw. in addition, the academic writings of the ombudsman provide the institution with an abstract and highly normative platform for the enforcement and development of citizens’ european rights. as to the cornerstone in the series of the ombudsman’s own literature – “general danish administrative law” (gammeltoft-hansen, 2002) the european sources of law are introduced and mentioned only very briefly comprising some 10 pages of the elaborate work of more than 1100 pages. a basic practical reason for the relative neglect of eu-law might be a lack of human resources within the ombudsman institution. this is in large measure a matter of discretion for the ombudsman. as a comment it can be stated that even a relatively few proactive investigations into crucial points of community law might promote a general awareness and compliance by the authorities concerning this part of the existing law without excessively drawing on the resources of the ombudsman. as to the legal staff, it is a well-known fact in denmark that the current danish ombudsman institution has more lawyers at its disposal for preparing cases than the danish supreme court. 5.2. eu law as the monopoly of the european court of justice a formal and legal reason for the european distance of the ombudsman is the relationship between the ombudsman and the ecj. this is so far the official explanation by the ombudsman institution for the strategy of the limited enforcement of european rights. it has been repeatedly incorporated into ombudsman opinions as mentioned above. to my mind, however, such an explanation is questionable. the logical consequence of the ombudsman’s argument is that public authorities – e.g. a ministry or a municipality – can likewise justify a non-compliance with community law with their lack of a formal competence to ask preliminary questions to the ecj according to the procedure in article 234. such non-compliance by danish public authorities would constitute a legal problem. 190 if the ombudsman’s reference to the lack of competence to ask preliminary question is to be understood as a justification for a cautious review by the ombudsman as to points of community law that are not clear and where the position of the ecj might be difficult to predict, this would be a valid ground for caution in those specific cases. this presupposes, however, that the danish ombudsman analyses in concreto whether the relevant eu law in the cases that he deals with needs to be clarified. if the relevant community law is clear-cut, the ombudsman is obliged to include and protect european rights with the same intensity and vigour as his inclusion and protection of domestic laws. with a view to that, it is somewhat surprising that the danish ombudsman only hesitantly enters into a substantive analysis of european law, and that the institution very rarely draws upon the case law of the ecj. judging from the opinions of the ombudsman, the institution in general refrains from an investigation of the relevant jurisprudence of the ecj. invariably, the recurrent reference by the danish ombudsman to the lack of formal competence under the procedure of article 234 ec conveys an image of a somewhat standardized pretext for excluding eu law. 5.3. danish authorities as top of the class a third possible explanation for the european reservation might be that the ombudsman in general considers danish public authorities to be the absolute “top of the class” in the european family of member states. the perception has officially been voiced by the danish ombudsman and the presumption is that the implementation of community law by the responsible state and local authorities has an almost ideal standard and that this justifies a lenient approach by the ombudsman. the underlying rationale is that there is nothing rotten in the state of denmark. as a comment on this it can be stressed that a – possible high standard might explain a low percentage of criticism in the ombudsman’s opinions on community law but it does not exempt the ombudsman from checking and assessing eu-compliance altogether. the sparse case law of the danish ombudsman gives the impression – from a purely optical perspective of a fundamental reluctance to embark on an assessment of eu law. finally, the ombudsman’s image of danish authorities as the top of the class in the union does not seem to be based on concrete facts. according to the annual reports from the commission on monitoring the application of community law denmark in general provokes a fair share of the infringement cases. according to the commission, denmark’s share of the commission’s own initiative cases on infringements is 2-3 % and 1-2 % of the complaints to the commission on infringements (annex to the 24th annual report from the commission on monitoring the application of community law, 2006)6. in other words, the ombudsman’s seemingly blind faith in correct implementation is nothing more than wishful thinking. 6 [com(2007) 398 final] 191 5.4. alliance with parliament revisited an unofficial and tactical explanation to the patterns in the ombudsman’s enforcement of eu-law is coupled with the alliance between the ombudsman and the danish parliament. in general, the ombudsman institution’s respect for the supremacy of the national parliament can put a damper on the inclusion of supranational sources of law. within that line of thought one could argue that community law in a eurosceptic country like denmark – casting the no vote in general elections on eu in 1992 (maastricht treaty) and 2000 (monetary union) constitutes a kind of “politicised” source of law. in particular, this is the case if european rights constitute a clash with domestic rights. due to the danish ombudsman’s strong political antennas this might perhaps colour the legal focus of the ombudsman. by handling conflicts between citizens and public authorities within the – politically “more neutral” and purely technical – framework of national procedural law requirements, the ombudsman manages to swim in a calm sea without risking negative political feedback such a reduced access to parliamentary support for his opinions. in addition, the ombudsman personally faces a dilemma in the sense that he risks alienating eu-sceptical parties if he insists on enforcing eu-law in controversial cases whereas he may reversely provoke eu-supportive parties by not enforcing eu-law. due to the fact that the parliament appoints the ombudsman, the ombudsman presumptively endeavours to avoid unnecessary confrontation. it is difficult to say if such a tactical consideration can explain the general approach by the ombudsman to european matters. it is clear, however, that a purely tactical reluctance cannot justify a general european reservation. from a legal point of view the ombudsman institution must protect european rights on the same legal footing as the citizens’ national rights. 5.5. de facto supremacy of the national procedural requirements it is my contention that the most important reason for the ombudsman’s nonenforcement of eu law so far is the institution’s general preference for danish general administrative procedural law. as mentioned above this preference is an overall and consistent characteristic of the danish ombudsman and the relative exclusion of eu law is a concrete manifestation of this practical and intellectual bias within the ombudsman institution. this bias is clearly transposed to the theoretical products of the ombudsman institution which – not solely – but in large measure focus on procedural matters. the fundamental explanation for the danish ombudsman’s european reservation is that the institution considers the community law components of existing law to be the responsibility of the danish courts. from a legal point of view, however, this is not a valid explanation for european neglect. 6. a watchdog with teeth but no appetite within the field of general administrative procedural requirement the danish ombudsman has had remarkable success in exercising his broad competences and developing a unique environment of alliances with parliament, the press and danish 192 academia. within this particular field the ombudsman has made important and positive contributions to the enforcement and development of citizens’ rights. outside this field, however, the ombudsman is generally more reserved in his protection of rights. although the institution is equipped with a variety of flexible instruments to enforce and develop citizens’ european rights, the institution has chosen to, if not ignore, then to marginalize the increasing significance of community law within the public law landscape. there are a very limited number of cases identifying and assessing eu law although denmark has been a member of the union since 1973 and although the ombudsman was explicitly requested during the revision of the danish ombudsman act in the mid 1990’s to safeguard citizens’ european rights. if the danish parliamentary ombudsman institution consistently turns a blind eye to europe, the citizens might respond by opting for other control systems where european rights are taken into account both actively and seriously. if so, the ombudsman model may find itself in dire straits. this should be avoided. the danish ombudsman institution is a watchdog with teeth but with discerning taste buds. as far as citizens’ european union rights are concerned, the danish ombudsman has so far been a sleeping watchdog with no appetite at all. references 1. craig, p., eu administrative law, oxford: university press, 2006, 2. craig, p., and de burca, the evolution of eu law, oxford: university press, 1999. 3. driessen, b., ‘the council of the european union and access to documents’, 2005, european law review, no. 30, pp. 675-696. 4. gammeltoft-hansen, h., et al., forvaltningsret, copenhagen: djof forlag, 2002. 5. gammeltoft-hansen, h., ‘the ombudsman as a non-traditional tool for citizen participation’, 1998, the international ombudsman yearbook, pp. 189-197 6. gammeltoft-hansen, h., et al, ‘the ombudsman’s role from a nordic perspective’, 1996, the european yearbook of comparative government and public administration, no. 3, pp. 309-319 7. gøtze, m. and rytter, j.e., ‘monism or dualism in administrative law’, 2000, european review of public law, vol. 12, no. 2, pp. 525-544. 8. hartley, t.c., the foundations of european community law, oxford: university press, 2007. 9. heede, k., european ombudsman redress and control at 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(ed.), european ombudsman-institutions, wien: springer, 2008. 12. nassis, c., good administration in the european union, european public law series, london: esperia publications ltd, 2009. 13. passemiers, r. reynaert, h., and steyvers, k. (eds.), the impact of ombudsmen, vanden broele publishers, 2009. 14. steiner, j., et al, eu law, oxford: university press, 2006. 15. the danish ombudsman, copenhagen, 1995. 16. the danish ombudsman, i-iii, copenhagen, 2005. 193 17. the european ombudsman, “what can the european ombudsman do for you”, 2008. 18. tsadiras, a., ‘rules of institutional “flat-sharing” – the european ombudsman and his national peers’, 2008, european law review, no. 33, pp. 101-115. 19. wieslander, b., the parliamentary ombudsman in sweden, stockholm: gidlunds bokforlag, 1994. 20. wyatt, d. and dashwood, a., european union law, london: sweet and maxwell, 2006. 91 abstract the relationship between trade defi cit and fi scal defi cit has remained an important topic in the last decades. the literature reveals many attempts to investigate the relationship between the two defi cits, while terminologies like keynesian proposition, ricardian equivalence, and targeting current account defi cit are used for the relationship between the two defi cits. the literature also highlights the possibility of unidirectional or bidirectional causality between these defi cits for different countries and different time spans. these four possibilities have inspired us to investigate these possibilities in the light of many control variables like unemployment, urbanization, money supply, foreign direct investment, and economic development in the case of pakistan. the fi ndings of the study reveal that fi scal defi cit signifi cantly accelerates trade defi cit into both long term and short term; hence, it supports the keynesian proposition in pakistan, while a bidirectional causality between fi scal defi cit and trade defi cit into both long term and short term was also observed. moreover, the mean and variance of error term were also found to be structurally stable which confi rms the absence of structural break for the selected period in pakistan. in the end, based on these fi ndings, this study has concluded that two possibilities prevail out of four on the relationship between fi scal and trade defi cits. the twin defi cit is relevant and it does prevail in a transition economy like pakistan. keywords: pakistan, fi scal and trade defi cit (twin defi cit), causality, cointegration. testing relevance of twin deficit for a transition economy like pakistan muhammad shahid hassan ayesha wajid haider mahmood muhammad shahbaz muhammad shahid hassan assistant professor, department of economics, school of business and economics, university of management and technology, lahore, pakistan tel.: 0092-423-521.2801-10 e-mail: muhammadshahidhassan@yahoo.com ayesha wajid department of economics, school of business and economics, university of management and technology, lahore, pakistan tel.: 0092-423-521.2801-10 e-mail: m.shassan@yahoo.com haider mahmood assistant professor, department of management sciences, comsats institute of information technology, lahore, pakistan tel.: 0092-111-001.007 e-mail: haidermahmood@ciitlahore.edu.pk muhammad shahbaz assistant professor, department of management sciences, comsats institute of information technology, lahore, pakistan tel.: 0092-111-001.007 e-mail: shahbazmohd@live.com transylvanian review of administrative sciences, no. 46 e/2015, pp. 91-106 92 1. introduction the relationship between fi scal and trade defi cit can be summarized into the keynesian proposition and the ricardian equivalence hypothesis. the keynesian proposition states that fi scal defi cit will have a signifi cant and positive impact on trade defi cit and argues that fi scal defi cit comes into being due to expansionary fi scal policy which enhances local expenditures or absorption for imports, therefore, the continuous increase in imports will start increasing the trade defi cit. it could be inferred that budget defi cit may positively create trade defi cit. there are studies which support the keynesian proposition, such as: fleming (1962), mundell (1963), volcker (1987), zaman and dacosta (1990), kearney and monadjemi (1990), bachman (1992), smyth and hsing (1995), vamvoukas (1999), aqeel and nishat (2000), lau and haw (2003), onafowora and owoye (2006), corsett i and muller (2006), mukhtar, zakaria and ahmed (2007), kim and roubini (2008), muller (2008), beetsma, giuliodori and klaassen (2008), pantelidis et al. (2009), bouhga-hagbe et al. (2010), and jawaid and raza (2013). however, the fi ndings of monacelli and perott i (2007) revealed that fi scal defi cit will have a negative but signifi cant impact on trade defi cit. they further stated that as fi scal defi cit is becoming the reason of the current account or trade defi cit, government regulations must be aimed at bringing the balance between volume of exports and volume of imports. consequently, trade defi cit may decline and may achieve state of balance. the second view on the relationship between fi scal defi cit and trade defi cit is recognized as the ricardian equivalence hypothesis and it is proposed by barro (1989). this view reveals that fi scal defi cit is not the cause of trade defi cit and simply both defi cits are neutral. the advocates stated the transmission mechanism for the neutral relationship between fi scal and trade defi cits that because of expansionary fi scal policy government cuts taxes or may increase its expenditures. consequently, as the disposable income of the masses increases, private savings will be enhanced and in turn this will encourage domestic investment; therefore, overall exports will increase in response to increase in domestic production and exhibiting no external defi cit in the country. this view is supported by the fi ndings of miller and russek (1989), rahman and mishra (1992), evans and hasan (1994), wheeler (1999) and kaufmann, scharler and winckler (2002). moreover, there is another possibility of the relationship between fi scal defi cit and trade defi cit: trade defi cit may have a signifi cant impact on fi scal defi cit or trade defi cit may cause fi scal defi cit. this relationship between the two defi cits is investigated by summers (1988), islam (1998), khalid and guan (1999), and alkhatib-alkswani (2000); they found that unidirectional causality running from current account defi cit to budget defi cit prevails. the prime reason behind investigating the impact of trade defi cit on fi scal defi cit is to provide an answer for the question whether targeting current account defi cit aff ects fi scal/budget defi cit or not? furthermore, the relationship between fi scal defi cit and trade defi cit could be bidirectional as well, meaning that both defi cits could cause each other and may contradict the keynesian proposition (summers, 1988). the studies of laney (1984), dar93 rat (1990), evans (1993), ibrahim and kumah (1996), lau and baharumshah (2004), mukhtar, zakaria and ahmed (2007), baharumshah (2007), jayaraman and choong (2007), lau, abu mansor and puah (2010), and mehrara and zamanzadeh (2011) have confi rmed bidirectional causal relationship between trade and fi scal defi cits. the coexistence of both defi cits is referred to as twin defi cit. the developing countries of the world have been experiencing twin defi cit in the past years and the co-movement of both defi cits is accelerating with time. pakistan, as a transition economy, is also experiencing the simultaneous existence of both defi cits and these defi cits are also accelerating in pakistan, further exhibiting many macroeconomic ills in the country. in the case of pakistan, the causal relationship between trade and fi scal defi cits has been tested by burney and yasmeen (1989), burney and akhtar (1992), kazmi (1992), aqeel and nishat (2000), mukhtar, zakaria and ahmed (2007), and hakro (2009). this study is an att empt to investigate whether the keynesian proposition or ricardian equivalence hypothesis prevails in the case of pakistan. this study will also test the causal relationship between fi scal defi cit and trade defi cit and will check which view point is more suitable or most relevant for pakistan, so that it could help policy advisors in suggesting appropriate policy measures. in the present study we have considered unemployment, urbanization, money supply, foreign direct investment and human development index as explanatory factors of trade defi cit along with fi scal defi cit. this study is diff erent from the other studies due to its control factors, the time span and the methodological framework used. this study applies ng-perron (2001) unit root test, ardl bounds testing approach, and vecm based causality test for investigating the relationship between trade defi cit and fi scal defi cit in addition to various controlled factors for the dataset ranging from 1972 to 2012. section 2 off ers a brief review of the previous researches, section 3 presents the methodological framework, section 4 reviews the empirical fi ndings of the study, and the fi nal section 5 reports the conclusions and policy implications. 2. literature review zaman and dacosta (1990) investigated the causal relationship between budget defi cit and current account defi cit for the period ranging from 1971(q1) to 1989 (q4) and found unidirectional causality running from budget defi cit to current account defi cit. bachman (1992), using var model on quarterly dataset for the period from 1974 to 1988, explored federal budget defi cit as a factor that explained variations into current account defi cit and confi rmed evidence of twin defi cit in the us. beside bachman (1992), vamvoukas (1999) also examined the causal relationship between budget defi cit and trade defi cit for the greek economy for the period from 1948 to 1993 and found unidirectional causality running from budget defi cit to trade defi cit. this study concluded that the keynesian proposition prevailed on the long run and short run in the greek economy. aqeel and nishat (2000) who investigated the twin defi cit hypothesis for pakistan by considering a dataset from 1973 to 1998 found that fi scal defi cit positively and 94 signifi cantly caused a current account defi cit into long run, but it inversely caused a current account defi cit on the short run. the fi ndings further confi rmed the evidences of unidirectional causality running from economic growth to current account defi cit, running from money supply to current account defi cit, and running from exchange rate to current account defi cit in pakistan. lau and haw (2003) also explored the twin defi cit for asean economies like malaysia and thailand by applying vector autoregressive model and toda yamamoto technique by covering a sample period for thailand from 1976 (q1) to 2000( q4) and for malaysia from 1976 (q1) to 1998 (q2) and found evidence of unidirectional causality running from budget defi cit to trade defi cit for the case of thailand (validating the keynesian proposition) but evidence of bidirectional causality was found for the case of malaysia. the study concluded that the budget defi cit consistently aff ects current account through exchange rate and interest rate channels. lau and baharumshah (2004) found evidence of twin defi cit in the case of malaysia for the period from 1976 (q1) to 2000 (q4). in another study, onafowora and owoye (2006) found positive eff ects of budget defi cit on trade defi cit into both long run and short run, and also found an evidence of unidirectional causality running from current account defi cit to budget defi cit in nigeria for the period 1970-2001. the fi ndings further exposed that money supply, exchange rate, output growth and interest rate were negatively aff ecting trade defi cit in the long run. besides this study, mukhtar, zakaria and ahmed (2007) observed that budget defi cit increases trade defi cit in the long run but declines trade defi cit into short run and also found evidence of bidirectional causality between budget and trade defi cit for pakistan for a quarterly dataset from 1975 to 2005. pantelidis et al. (2009) also investigated the twin defi cit hypothesis for the case of greece for the 1960-2007 period and found an evidence of twin defi cit; however, this evidence was weak and they relate it with quintos terminology, therefore, they remained with keynesian proposition for their fi ndings regarding twin defi cit. additionally, they came up with the fi ndings that public expenditures regarding aging will be a serious threat for the long run stability of social security fi nancing. ozturkler and colak (2010) explored the relationship between trade defi cit and unemployment and found that trade defi cit signifi cantly accelerates unemployment in turkey for the period from 1960 to 2009. in another study, waliullah et al. (2010) found income and money supply as important determinants of trade balance for both short and long term spans for pakistan for the period from 1970 to 2005. the fi ndings further exposed that money supply signifi cantly decreases trade balance into both long run and short run. mohammad (2010) found real eff ective exchange rate as more important determinants of trade defi cit than that of foreign income, domestic consumption and foreign direct investment for pakistan for the period from 1975 to 2008. syed, hasnat and li (2011) did not fi nd any signifi cant relationship between foreign direct investment and trade defi cit in pakistan for the period from 1990 to 2010, whereas, the relationships between foreign direct investment and exports and between foreign direct investment and imports were found to be signifi 95 cant. aurangzeb and haq (2012) found the exchange rate, foreign direct investment, economic growth and remitt ances as signifi cant factors which aff ect trade defi cit in pakistan in the long run for the period from 1981 to 2010. this study provides evidence of bidirectional causality between foreign direct investment but it also found unidirectional causality running from trade defi cit to economic growth in pakistan. hassan, wajid and ahmet (2012) found negative and signifi cant eff ect of urbanization on trade openness in the long run but positive and signifi cant eff ect of urbanization on trade openness in the short run in pakistan for the period from 1975 to 2010. this study further found bidirectioanal causality between urbanization and trade openness in the short run but unidirectional causality running from urbanization to trade openness in the long run was evident in pakistan; the authors concluded that urbanization could benefi t trade openness in the short run but it could harm trade openess in the long run. anas (2013) found evidence of unidirectional causality running from current account defi cit to fi scal defi cit for morocco for the data set from 1980 to 2012, and concluded that current account defi cit left a negative impact on public defi cit in morocco. jawaid and raza (2013) found signifi cant and positive eff ects of fi scal defi cit on trade defi cit for both long run and short run in pakistan for the period from 1976 to 2010, and this study further found evidence of unidirectional causality running from fi scal defi cit to trade defi cit in the short run in pakistan. saysombath and kyophilavong (2013) found evidence of bidirectional causal relationship between fi scal and trade defi cits for lao pdr for the period from 1980 to 2010. tufail et al. (2014) found a positive and signfi cant eff ect of budget defi cit on trade defi cit and also confi rmed bidirectional causality between budget and trade defi cits for pakistan for the sample period from 1972 to 2011. 3. data source and methodology this part is designed to demonstrate the means through which the dataset is gathered up. also, the aim of this section is to develop on the insights of the methodological framework that is going to be applied for the empirical investigation. 3.1. methodological framework many empirical studies were conducted to test log linear models, like ehrlich (1977), layson (1983), bowers and pierce (1975), cameron (1994) and ehrlich (1996). all these studies revealed that the computed results from log linear models are more reliable and robust as compared with linear form models. therefore, the objective of this study is to test the log linear model which is given as below: lnhdi7lnfdi6 lnm5lnub4lnun3lnfd21lntd ++ +++++= , whereas: 96 table 1: variables variable names variable representation variable transformation data source sample period trade defi cit lntd ln [(imports – exports)/(real gdp)] wdi, world bank (2014) 1972 – 2012 fiscal defi cit lnfd log [(fiscal expenditures – fiscal revenue)/(real gdp)] wdi, world bank (2014) 1972 – 2012 unemployment lnun ln [(unemployment)/(total labour force)] wdi, world bank (2014) 1972 – 2012 urbanization lnub ln [(urban population)/(total population)] wdi, world bank (2014) 1972 – 2012 money supply lnm ln [(m2/r.gdp = monetary assetas share of gdp)] wdi, world bank (2014) 1972 – 2012 foreign direct investment lnfdi ln [(foreign direct investment infl ows)/ (real gdp)] wdi, world bank (2014) 1972 – 2012 economic development lnhdi ln [human development index] hdr (2009), undp 1972 – 2012 the relationship between trade defi cit and fi scal defi cit have been found in many studies such as zaman and dacosta (1990), bachman (1992), vamvoukas (1999), aqeel and nishat (2000), lau and haw (2003), lau and baharumshah (2004), onafowora and owoye (2006), mukhtar, zakaria and ahmed (2007), pantelidis et al (2009), and jawaid and raza (2013). following the evidence of ozturkler and colak (2010), we would like to investigate the relationship between trade defi cit and unemployment for pakistan. researchers like aqeel and nishat (2000), onafowora and owoye (2006), and waliullah et al. (2010) have explored the relationship between trade defi cit and money supply, and we intend to examine the relationship between trade defi cit and money supply in case of pakistan. studies conducted by mohammad (2010), syed, hasnat and li (2011), and aurangzeb and haq (2012) support us to test the relationship between trade defi cit and foreign direct investment for pakistan. the relationship between economic growth and trade defi cit is also tested for pakistan by aurangzeb and haq (2012). in the present study we will use human development index to represent economic development and we intend to test its impact on trade defi cit. we have not come across studies that explain the relationship between urbanization and trade defi cit, but, hassan, wajid and ahmet (2012) explored the impact of urbanization on trade openness for pakistan, therefore, that study prompted us to consider urbanization as a factor which can determine trade defi cit. 3.2. estimation methods the estimation procedure is divided into four parts: in the fi rst part the problem of unit root will be examined by applying ng-perron (2001). in the second part the long term cointegrating relation between outcome and predictors of this study will be examined by using ardl bounds testing1 approach. this same approach will facil1 the results for ardl bounds testing approach have been obtained using the demo version of mircofi t 5.2 developed by pesaran, richard and shin (2001). for more details on cointegration, please see bannerjee, dolado and mestre (1998) or engle and granger (1987). 97 itate us to fi nd out long run and short run coeffi cients of the predictors for outcome variable and in the fi nal part the direction of causality for short run and long run will be scrutinized using vecm based causality test. the long run cointegration and long run coeffi cients will be estimated by using the following equation: 11 p 0i it lnhdi17 p 0i it lnfdi16 p 0i it lnm15 p 0i it lnub14 p 0i it lnun13 p 0i it lnfd12 p 1i it lntd111tlnfdi171tlnfdi161tlnm15 1tlnub141tlnun131tlnfd121tlntd1110c tlntd + = − + = − + = − + = − + = − + = − + = − +−+−+−+ −+−+−+−+= the short run coeffi cients for the selected ardl model will be estimated using the following equation: 111tecm11 p 0i it lnhdi17 p 0i it lnfdi16 p 0i it lnm15 p 0i it lnub14 p 0i it lnun13 p 0i it lnfd12 p 1i it lntd11 10c tlntd μ+−+= − + = − + = − + = − + = − + = − + = − += moreover, cumulative sum of recursive residuals (cusum) as well as cumulative sum of the squares of recursive residuals (cusumsq) will be used in order to explore stability of the mean and variance of the error term of the selected ardl model. after discussing the section of methodology, now we would like to present the estimated results and their discussion in the following section: 4. results and interpretation table 2 reveals the fundamental information regarding the factors of the study. in the following table, the mean, median and standard deviation (among others) are reported. the j.b test was not signifi cant and showed that all the factors taken into this study are normally distributed. after the descriptive information, the problem of unit root has been addressed by applying the ng-perron (2001) unit root test. the results reported in table 3 demonstrate that among all the variables only fi scal defi cit has found to be stationary at the same level, while other variables have found to be stationary at fi rst diff erence. therefore, the dataset for this study has integrated order i(0) and i(1) or mixed order of integration. the literature on application of cointegration test has proposed that long term relationship between outcome and predictors can be examined by the auto regressive distributed lag (ardl) model if data series are integrated at order i(0) and i(1). 98 table 2: descriptive statistics tlntd tlnfd tlnub tlnun tlnfdi tlnhdi tlnm mean -0.345107 -2.681915 344.6361 1.419921 0.000586 -9.739171 30.35993 median -0.260032 -2.790124 344.4257 1.335001 0.000258 -9.838460 30.12166 maximum 0.287562 -1.126162 364.6201 2.156854 0.003643 -6.805691 48.77433 minimum -1.214745 -3.705248 324.6491 0.566228 2.44e-07 -13.09706 11.32993 std. dev. 0.430450 0.713870 11.22407 0.386482 0.000831 1.862924 11.11618 skewness -0.500117 0.488674 0.022888 0.151717 2.222113 -0.015661 0.020760 kurtosis 2.046594 2.008387 2.004647 2.390346 7.573392 1.912078 1.805771 jarque-bera 3.261979 3.311611 1.696074 0.792240 69.47288 2.023617 2.439339 probability 0.195736 0.190938 0.428255 0.672926 0.000000 0.363561 0.295328 sum -14.14940 -109.9585 14130.08 58.21678 0.024024 -399.3060 1244.757 sum sq. dev. 7.411482 20.38441 5039.186 5.974730 2.76e-05 138.8194 4942.774 observations 41 41 41 41 41 41 41 std. = standard; sq. = square, and dev. = deviation table 3: unit root test ng-perron test statistics variable i (0) variable i (1) mza mzt msb mpt mza mzt msb mpt tlntd -1.68878 -0.72442 0.42896 11.6012 δ tlntd -31.5138*** -3.95587 0.12553 0.81888 tlnfd -18.6556*** -3.02172 0.16197 1.42978 δ tlnfd -21.7022*** -3.28005 0.15114 1.17739 tlnub 1.69168 1.51875 0.89777 64.9465 δ tlnub -7.31139* -1.89697 0.25945 3.40529 tlnun -3.67021 -1.14572 0.31217 6.71918 δ tlnun -19.1433*** -3.05967 0.15983 1.40153 tlnfdi -0.39809 -0.35130 0.88245 40.7522 δ tlnfdi -7.09732* -1.84147 0.25946 3.60186 tlnhdi 1.39698 1.40720 1.00731 75.9094 δ tlnhdi -14.4573*** -2.66714 0.18448 1.77628 tlnm 0.41748 0.23132 0.55408 23.6233 δ tlnm -9.64562** -2.17415 0.22540 2.62522 *; **, and *** reveals signifi cance level of test statistic at 10%, 5% and 1% respectively. to fi nd a long run relationship we have applied ardl bounds testing approach and the estimated results reported in table 4 confi rm the existence of long run relationships between trade defi cit and its factors as f – statistic has found to be greater than the upper critical bound at 5% level of signifi cance. the results of unit root test and cointegration are reported in table 3 and table 4. the estimated results from table 4 show that the calculated value of f test is 6.0633 which is greater than its corresponding critical value 4.1892 at 5% level of signifi cance, therefore, this confi rms the evidence of long run cointegration between trade defi cit and its factors like fi scal defi cit, unemployment, urbanization, foreign direct investment, economic development and money supply. the estimated probability values of the chi-square tests for all the diagnostics tests were not found to be signifi cant which revealed that there are no serial correlation and heteroscedasticity problems in this study. moreover, the error term of the selected ardl model is 99 table 4: ardl bounds testing approach estimated models tdt = f(fdt, ubt, ut, fdit, hdit, mt) optimal lags (1,0,0,0,0,1,1) f – statistics 6.0633** w – statistics 42.4432** signifi cance level critical bounds for f – statistics critical bounds for w – statistics lower critical bound upper critical bound lower critical bound upper critical bound 5 per cent 2.7985 4.1892 19.5892 29.3247 10 per cent 2.3499 3.5982 16.4495 25.1874 diagnostic tests r2 0.9515 serial correlation 0.3506 [0.554] adjusted r2 0.9369 functional form 0.0024 [0.961] f – statistics 65. 3742 normality 0.9904 [0.637] p – value [f – statistics] [000] heteroscedasticity 0.0593 [0.808] dw – statistic 2.1353 durbin h – statistic -0.5753 [0.565] *;**, and *** demonstrates signifi cance level at 10%, 5% and 1% respectively. also the values within [ ] represents probability values. normally distributed and the functional form of the selected ardl model is also correctly specifi ed. afterwards, the long run and short run coeffi cients of fi scal defi cit along with other controls have also been estimated, and the results have been presented in table 5. table 5: long term and short term dynamics estimated long term coeffi cients using the ardl approach error correction representation for the selected ardl model dependent variable: tltd dependent variable: tältd variables coeffi cient[p value] variables coeffi cient [p value] tlnfd 0.1792 [0.078] δ tlnfd 0.0896 [0.047] tlnub 0.4250 [0.002] δ tlnub 0.2125 [0.000] tlnun 0.5145 [0.008] δ tlnun 0.2573 [0.012] tlnfdi -0.11862 [0.999] δ tlnfdi -0.0593 [0.999] tlnhdi -0.9016 [0.065] δ tlnhdi -0.0778 [0.726] tlnm -0.2469 [0.001] δ tlnm -0.0097 [0.802] c -148.6876 [0.003] 1-tecm -0.5001 [0.000] diagnostics for ecm model r-squared 0.6289 mean dependent variable 0.0225 adjusted r-squared 0.5175 s.d. dependent variable 0.1559 s.e. of regression 0.1083 akaike information criterion 27.9132 sum squared residual 0.3518 schwarz bayesian criterion 19.4688 log likelihood 37.9132 durbin-watson stat 2.1353 f-statistic 7.2618 prob. value (f-statistic) [0.000] *; **, and *** reveals signifi cance level of test statistic at 10%, 5% and 1% respectively. 100 the estimates for long term and short term coeffi cients reported in table 5 demonstrate that fi scal defi cit has a signifi cant and positive impact on trade defi cit in the long term and in the short term in pakistan. this shows that fi scal defi cit begets trade defi cit in pakistan, and hence it also validates the existence of keynesian proposition in case of pakistan. this fi nding is consistent with fleming (1962), mundell (1963), volcker (1987), zaman and dacosta (1990), kearney and monadjemi (1990), smyth and hsing (1995), vamvoukas (1999), aqeel and nishat (2000), lau and haw (2003), onafowora and owoye (2006), corsett i and muller (2006), mukhtar, zakaria and ahmed (2007), kim and roubini (2008), muller (2008), beetsma, giuliodori and klaassen (2008), pantelidis et al. (2009), bouhga-hagbe et al. (2010), and jawaid and raza (2013). table 5 also shows that unemployment and urbanization are signifi cantly increasing the size of trade defi cit in both long term and short term. it has been generally observed that the purchasing power of the people declines as unemployment expands; consequently, aggregated demand declines, which reduces overall prices in the country and hence the profi ts of entrepreneurs. therefore, decline in the profi ts of entrepreneurs will make them reduce investments and manufacturing, which diminishes exports and therefore increases the size of trade defi cit in the country. moreover, the increase in the urban population puts pressure on the aggregated demand in the country and induces imports to increase, also stimulating trade defi cit in the country. it is also evident that money supply and economic development are signifi cantly curtailing trade defi cit into long term, but the coeffi cients of money supply and economic development have found to be negative and not signifi cant for short term. the transmission mechanism could be illustrated as that due to increase in money supply in the hands of investors expand, which further induces investments to expand, production activities will fl ourish and these will further stimulate exports. hence, it will reduce the trade defi cit in the country. the negative coeffi cient of economic development for trade defi cit demonstrates that as economic development takes place it improves infrastructure, the quality of human capital, and the effi ciency of the factors of production; as such, production expands due to a decline in the cost of production. the increase in production will ultimately improve the size of exports and hence it will shrink trade defi cit in the country. the impact of foreign direct investment on trade defi cit was also investigated and the coeffi cients were not found to be signifi cant for both long term and short term. the coeffi cient for the fi rst-period lagged term of error was negative and signifi cant, which confi rms the evidence of convergence hypothesis in pakistan, this means that long run and stable equilibrium will be restored by following a 50 percent speed of adjustment and this long run equilibrium will be restored in about 1.9996 (1/0.5001 = 1.9996) years. 4.1. vecm causality test after fi nding long term and short term dynamics, we are going to estimate vecm based causal relationship between trade defi cit and its factors for both long term and short term (the results are reported in table 6). the estimates of the vecm based causality test reported in table 6 have confi rmed the existence of bidirectional causal relationship between fi scal defi cit and trade 101 table 6: granger causality test dependent variable short run causality long run causality tlntd tlnfd tlnun tlnub tlnm tlnfdi tlnhdi 1-tecm δ tlntd 2.9328* 2.4733 1.1309 0.2960 0.5076 0.0766 -0.6585*** δ tlnfd 3.8625** 1.7913 0.8963 0.2087 1.9094 2.7839* -0.6014*** δ tlnun 3.2018* 1.1417 0.5291 1.5054 0.6165 6.9561*** -0.6845** δ tlnub 0.5962 1.3642 0.4273 2.2975 0.2287 0.6660 -0.085784 δ tlnm 0.8793 0.4894 0.9885 2.2702 1.0157 0.9517 -0.6632*** δ tlnfdi 2.0784 2.7897* 1.6307 0.1553 1.6341 1.5450 -0.2215** δ tlnhdi 0.7574 1.2601 3.4756** 1.8570 1.2557 0.5445 -0.7485** *; **, and *** reveals signifi cance level of test statistic at 10%, 5% and 1% respectively. defi cit in both short term and long term; thus, both defi cits are interdependent in pakistan. this fi nding is supported by laney (1984), darrat (1990), evans (1993), ibrahim and kumah (1996), lau and baharumshah (2004), mukhtar, zakaria and ahmed (2007), baharumshah (2007), jayaraman and choong (2007), lau, abu mansor and puah (2010), and mehrara and zamanzadeh (2011). moreover, this study has also found bidirectional causal relationship between unemployment and trade defi cit in the long run, and unidirectional causality from trade defi cit to unemployment in the short run. the fi ndings further show that trade defi cit has a bidirectional causal relationship with money supply, foreign direct investment and economic development in the long term. after discussing the estimates of the vecm based causality test, this study has also tested the structural stability of mean and variance of error term of the selected ardl model and from the plots of cusum and cusum square we can conclude that both mean and variance of error term were found to be structural stable, therefore, there are no problems of structural break in this study for the selected period (1972 -2012). cusum cusum square -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1973 1983 1993 2003 2012 the straight lines represent critical bounds at 5% significance level plot of cumulative sum of squares of recursive residuals -20 -10 0 10 20 1973 1983 1993 2003 2012 the straight lines represent critical bounds at 5% significance level plot of cumulative sum of recursive residuals figure 1: stability test 102 5. conclusion and policy implications 5.1. conclusion this article aims at exploring the relationship between trade defi cit and fi scal defi cit using unemployment, urbanization, money supply, foreign direct investment and economic development as control variables for pakistan (from 1972 to 2012). the empirical results demonstrate that fi scal defi cit, unemployment and urbanization have a signifi cant and positive impact on trade defi cit into both long term and short term. however, money supply and economic development have a negative and signifi cant impact on trade defi cit only into the long term. summarizing this, the signifi cant and positive impact of fi scal defi cit on trade defi cit confi rms the evidence of keynesian proposition for pakistan. the empirical results regarding the direction of causality have confi rmed bidirectional causality between fi scal defi cit and trade defi cit in both short run and long run in pakistan, meaning that both defi cits generate each other. we have also confi rmed that unemployment and economic development have a bidirectional relationship to each other into both short and long term in the case of pakistan. the empirical fi ndings further reveal that in the short run there is unidirectional causality from trade defi cit to unemployment, while bidirectional causality prevails in the long run between these factors. factors like trade defi cit, fi scal defi cit, unemployment, money supply, foreign direct investment and economic development have found to have a bidirectional causal relationship with each other in the long run, with the exception of urbanization. unidirectional causality runs from urbanization to other factors like trade defi cit, fi scal defi cit, unemployment, money supply, foreign direct investment and economic development in the long run. the stability of both cusum and cusum square plots has confi rmed the absence of structural break. in the end, based on the fi ndings, this study confi rmed the keynesian proposition and twin defi cit in pakistan for the selected sample (from 1972 to 2012). 5.2. policy implications the fi ndings show that pakistan is suff ering from twin defi cit, meaning that fi scal defi cit begets trade defi cit and trade defi cit begets fi scal defi cit. att aining simultaneous equilibrium into both public and trade fi nances is a highly diffi cult job; however, government could use a mix policy tool to deal with this issue. firstly, government could curtail its non-development expenditures and should increase the volume of subsided inputs in the market. this att empt will curtail the cost of production but it will enhance domestic production, domestic employment and earnings of both the private sphere and government simultaneously. moreover, increases in domestic production will also encourage the volume of exports and therefore, on the one side fi scal defi cit will come down because of an increase in government income and on the other side trade defi cit would be reduced due to an 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grubb and neuhoff, 2006). policy makers have therefore developed an interest in different economic and financial instruments in order to tackle the issue of global warming. environmental taxes have been frequently advocated as a cost-effective instrument for reducing greenhouse gas (ghg) emissions. the objective of this paper is to address this question, by defining whether taxes for environmental purposes have had an important impact on ghg emissions. we investigate the interaction between collected and spent public appropriations on one side, and their impact on ghg emissions, expressed in co2 equivalents, from industrial processes, on the other. according to the intergovernmental panel on climate change, emissions from industrial processes represent one of the main sources of greenhouse gasses (ghg). taking into account all three categories, we evaluate the direct effect of environmental taxes, and the indirect effect of environmental taxes through environmental expenditures on ghg emissions in industrial processes. in this respect, the model discussed in this paper represents a simple methodological innovation. the article contributes to the debate whether environmental taxes and, consequently, environmental policy have been effective. we used a panel of 19 eu countries for the time period 1995-2010. countries included in the analysis are: france, italy, latvia, lithuania, hungary, czech republic, romania, greece, malta, portugal, netherlands, bulgaria, austria, finland, sweden, united kingdom, denmark, germany and spain. the criterion for selection of countries was the availability of data for direct and indirect effects of environmental taxes and ghg emissions in industrial processes. the major results of the analysis are that the direct effect of environmental taxes on the optimization of environment-related processes for minimizing ghg-related pollution in industrial processes is confirmed. we also confirmed the indirect effect of environmental taxes through environmental expenditures on the reduction of ghg emissions and found that the indirect effect is more statistically significant and more robust than the direct effect alone. the remainder of the paper is organized as follows: section two presents a literature review, section three describes the model and variables used in this analysis, section four presents empirical findings, while section five concludes. 2. literature review in the last twenty years eu countries have introduced environmental tax reforms (etr) in national legislations. this included a transfer of tax burden from factors of production to polluters themselves, summarized as a step from economic ‘goods’ to environmental ‘bads’ (morley, 2010). eu countries have tried to achieve this, inter alia, through the introduction of energy taxes with the aim to stimulate co2 abatement 1. 1 there has been a broad discussion on the issue of double dividend and earmarking of environmental taxes (e.g. goulder, 1995; bosquet, 2000; brett and keen, 2000; do valle et al., 170 conversely, this may not always be the case. ekins and speck (1999) indicated that energy intensive industries are often exempted from paying environmental taxes due to the fear of possible loss of competitiveness. this may compromise the effectiveness of environmental taxes. yet, these industries may adopt different measures to enhance the energy efficiency and restrain unwanted effects of environmental taxes and, consequently, improve their own competitive advantages in the long term. environmental taxes are an economic instrument of environmental protection whose primary purpose is to promote the reduction of environmental pollution through the polluter pays principle. the majority of researchers (see e.g. clinch, dunne and dresner, 2006; bosquet, 2000; do valle et al., 2012) advocated that environment-related taxes and etr may contribute to favorable environmental impacts. environmental taxes, especially carbon taxes to address the problem of global warming, also have an enormous revenue potential. oates (1995) argued that green taxes promise a double dividend, i.e. they may both decrease excessive levels of pollution and increase the efficiency of the overall tax system by reducing reliance on income, sales and other distorting taxes. in short, oates (1995) claims that pollution taxes can offer us both enhanced environmental quality and a better tax system. pearce (1991) also claimed that environmental taxes may produce a double dividend because of discouraging environmental damaging activities, and also by reducing the distortional costs of the tax system. clinch, dunne and dresner (2006) argued that revenues from environmental taxes are partly used for environmental projects and partly to reduce labor taxes. however, other theoretical analyses (e.g. goulder, 1995) raise doubts on the strong double dividend claims, and argue that environmental tax revenues are raised primarily for financing cuts in existing taxes2. however, several more recent authors (e.g. brett and keen, 2000; haibara, 2009; do valle et al., 2012) discuss that environmental taxes are in fact earmarked, in the sense of the revenues they raise being pre-committed to specific expenditure programs, e.g. revenues of these taxes are redistributed to polluters in the form of subsidies for abatement technologies (millock and nauges, 2006). brett and keen (2000) indicate good examples, e.g. in the us the incomes of a bewilderingly large number of environmental taxes are paid into a large number of trust funds that finance various clean-up activities, incomes of the swedish charge on ghg and other emissions are returned to companies in proportion to the energy each generates. road construction and maintenance is financed worldwide by use of road and fuel taxes; and water charges are not rarely used to improve in 2012) that will only be discussed briefl y in the next paragraphs because it off ers an important support to our theoretical basis, but it does not represent the main focus of the article. 2 it is also true that in times of economic crisis environmental tax revenues collected are also intensely used for other purposes and that the amount of taxes is not equal to the amount of expenditures for environmental purposes. although there is a lot of talk on greening fi scality (oecd, 2010; speck, 2013), in reality the importance of revenues from environmental taxes is stagnating or even decreasing (eurostat and european commission, 2012, p. 40). 171 dustry’s efficiency and infrastructure. another instance of our general argument is provided by teja and bracewell-milnes (1991) who, in the case of us states, argue that environmental funds have to be devoted to clean-up in advance, otherwise states not affected by pollution harm would have an ex post incentive not to pay up. further, in proposing a european carbon tax at a time when it is also widely urged that the european union finds a transparent source of finance for itself, the european commission has made it clear that it would not wish to use this as a source of finance (brett and keen, 2000). a possible reason for this may be that the tax would not otherwise receive political support. despite the fact that the idea of double dividend is not universally accepted it is hard to argue that a certain level of earmarking of environmental taxes is not present. earmarking is, of course, unlikely to be optimal, i.e. that raised revenues on some polluting activity will exactly equal the efficient level of expenditure to mitigate damage to the environment, but, given the above, the link between financing public abatement and pollution tax revenue or tariff revenue cannot simply be ignored. on this assumption, we follow the arguments of authors (e.g. brett and keen, 2000; haibara, 2009; do valle et al., 2012) that revenues from environmental taxes appear quite frequently to be earmarked to specific spending programs and, as such, an income source for environmental protection for municipal and state budgets. in this respect, environmental taxes are far from being just used to secure a ‘double dividend’ by reducing distorting taxes. the link between environmental taxes and air pollution due to ghg and other emissions has also been recognized by several scholars. studies (lópez, vinod and wang, 2008; lopez, galinato and islam, 2011; lópez and galinato, 2007) measured the impact of fiscal spending patterns on the environment by taking into account ghg and other emissions. they found out that a reallocation of government spending composition towards social and public goods, including mitigation of climate change, significantly reduces the burden on the environment. more expenditure for environmental purposes decreases the level of ghg and other emissions. further, pezzey and park (1998) examined the correlation between different air emissions and energy taxation. they argued that countries introduce different public policy instruments, such as exemption from traffic charges or tax levy on raw materials, in order to reduce air emissions. their findings showed that a tax on energy helps to reduce co2 and so2 emissions. in another study clinch, dunne and dresner (2006) argued that the tax on energy is closely associated with air emissions generation through a decrease in fossil fuel consumption. the increase in energy tax is reflected in the improvement of climate and air quality, i.e. by reduction of co2, so2 and nox emissions. albrecht (2002) studied the case of belgium and showed that environmental subsidies in the field of transport, e.g. for heating equipment and consumer goods, reduce energy consumption and co2 emissions level. khanna and zilberman (1997) on the other hand claimed that environmental taxes reduce carbon emissions even in the absence of environmental policy. speck and ekins (2002) summarized several ex-post evaluations that studied different eu countries. they found out that countries which had 172 already implemented environmental taxes in their legislation showed positive environmental impacts, which was reflected in the reduction of ghg emissions as a result of taxation. one of the shortcomings of these studies is that they address, e.g. only effect of taxes on ghg emissions without separation of environmental taxes to their direct effect and indirect effect through environmental expenditures on the reduction of ghg emissions. in this paper we want to go a step further because addressing both tax components at the same time provides us with more detailed insight when addressing the problem of ghgs emissions. 3. the model the original source for applying time series and cross-sectional data comes from wooldridge (2003). in our model we linked together the direct effect of environmental taxes and the indirect effect of environmental taxes through environmental expenditures on ghg emissions in industrial processes. collected environmental taxes and expenditures used for environmental purposes are expected to have a negative impact on ghg emissions but the question is to what extent? we use the following baseline specification to explain our model: (3.1) we are primarily interested in the impact of changes in explanatory variables on the dependent variable, so we use differentiated values of these variables (3.2). differentiation is used in order to eliminate fixed effects. (3.2) i co2 (equivalent) emissions in industrial processes; differentiation between co2 (equivalent) emissions in industrial processes (i) of two successive years; e environmental expenditures (n categories); differentiation between environmental expenditures (e) of two successive years; t direct effect of environmental taxes (l categories); differentiation between direct effect of environmental taxes (t) of two successive years; j counter by category (direct effect of environmental taxes, environmental expenditures); t time period (1995-2010); k, l, m time lags; α, β coefficients (parameters to be estimated); zt1 control variables; u1 idiosyncratic structural errors. 173 a detailed description of the variables used is found in appendix a. equation (3.2) shows the direct effect of the change in environmental taxes and the indirect effect of environmental taxes through the change in environmental expenditures on the change in ghg emissions in industrial processes. there are several fixed effects (i.e. constant in time) that influence the effects of the given covariates. in literature most often used are e.g., gdp per square kilometer, government expenditure in public goods (bernauer and koubi, 2006; lopez, galinato and islam, 2011), which are here added in the model as control variables. we have applied standard ols regression analysis to our panel data (19 countries, 1995-2010), with the required correction (due to the cross sectional dimension of the data) for heteroskedasticity. further, we have run robust regressions in order to be sure that our results are not unduly influenced by outliers. the estimates in equation (3.2) may be affected by biases because of reverse causality, omitted variables, or measurement errors in the explanatory variables. to mitigate possible biases caused by omitted variables we use differentiation of the explanatory variables, lags, and to test for possible biases caused by reverse causality we conduct hausman to test for potential endogeneity. 4. empirical results suppressing time subscripts on variables for simplicity of exposition, the empirical specification of our static-baseline equation is the following: (4.1) where (gind) is a yearly change of co2 (equivalent) emissions from industrial processes (tonnes of co2 equivalent per 1.000.000 € gdp), (entax) is a yearly change of energy taxes, including fuel for transport (€ per 1.000 € gdp), (enexp) is a yearly change of environmental expenditure for reduction of ghg emissions in industry (€ per 1.000 € gdp), (gdpl) is gdp per square kilometer, (tge) is total general government expenditures (millions of € per 1.000.000 € gdp), (gepg) is government expenditure in public goods (in % of total government expenditure), and ecol serve as ecolabel licenses (number of ecolabel licenses per 1.000.000 € gdp). finally, ε is the error term. table 1: descriptive statistics variable median mean std. dev. observations gind -1.581 -7.557 40.394 285 entax -0.347 -.146 2.156 247 enexp -0.005 -0.023 0.970 228 gdpl 1.469 3.232 4.110 266 tge 4.540 4.567 0.685 247 gepg 1.700 1.728 0.420 266 ecol 3.563 4.636 5.260 266 notes: observations=227. source: eurostat (2014), own calculations. table 1 presents the variables used in the analysis. 174 the variables co2 (equivalent) emissions from industrial processes, environmental taxes on energy, and environmental expenditures in industry are differentiated in time. the averages of these mentioned variables are negative which signifies their values are on average decreasing. table 2 shows the correlations between the variables used in the analysis. none of the correlations shows extreme correlations between pairs of variables, which suggests there is no apparent multi-collinearity. table 2: correlations gind entax enexp gdpl tge gepg ecol gind 1 entax -0.2489 1 enexp -0.2405 0.0179 1 gdpl 0.2334 0.0221 0.0167 1 tge 0.3135 -0.0853 -0.0149 0.052 1 gepg -0.2339 0.0225 -0.0622 -0.0557 -0.448 1 ecol 0.0219 -0.091 0.0468 0.0985 0.1891 -0.3509 1 notes: observations=227. source: eurostat (2014), own calculations it shows that the correlation coefficients for all pairs of the independent variables are away from unity which suggests there is no apparent multi-collinearity. other collinearity diagnostics show similar results (appendix b). the model is estimated with the ordinary least square method (ols), robust ols and robust huber regression (table 3). we present empirical results from regression analyses to illustrate a possible use of our model. ols estimates in table 3 present empirical results of the estimated regression without correction for heteroskedasticity. table 3: estimations of ghg emissions in industrial processes variable coeffi cients ols robust ols huber robust regression entax β1 -1.464*** (0.356) -1.464** (0.702) -0.325*** (0.113) enexp β2 -3.325*** (0.789) -3.325*** (1.244) -1.136*** (0.252) gdpl β3 0.727*** (0.179) 0.727*** (0.150) 0.172*** (0.057) tge β4 4.542*** (1.314) 4.542** (1.817) 1.257*** (0.420) gepg β5 -5.331** (2.106) -5.331* (3.063) 1.419** (0.673) ecol β6 -0.289* (0.157) -0.289** (0.135) 0.043 (0.050) constant α -18.677** (8.364) -18.677 (12.826) -10.918** (2.673) observations 227 227 227 notes: ols, robust ols and robust huber regression are used; dependent variable is yearly difference in co2 (equivalent) emissions from industrial processes (gind); standard errors are reported in parentheses; ***, ** and * denote statistically significant values at 1,5 and 10% on a two-tailed test, respectively. source: eurostat (2014), own calculations. 175 consistent with evidence that part of revenues accruing from environmental taxes is issued to make environmental improvements (e.g. brett and keen 2000; haibara, 2009; do valle et al., 2012) our results for ghg emissions are unambiguous. all coefficients (except for ecolabel licenses) are statistically significant at the 1% level and have the expected sign (a negative sign indicates a favorable effect on the change of co2 (equivalent) emissions from industrial processes). the main results showed that increasing energy taxes directly have a statistically significant and negative impact (-1.464***) on the change of co2 (equivalent) emissions from industrial processes. this finding is in line with the studies (e.g. clinch, 2002; pezzey and park, 1998; corbacho, cibils, and lora, 2013) that environmental taxes directly contribute to the improvement of ghg and other emissions. the analysis showed that environmental taxes have an impact on the level of ghg emissions in industrial processes also indirectly, through environmental expenditures in industry (-3.325***). this indirect impact of environmental taxes signifies that direct spending on activities for prevention, reduction and elimination of ghg emissions is extremely important for environmental improvement. however, the role of direct impact of environmental taxes should not be overlooked because economic entities seek to reduce their tax burdens. in this context, the eu countries use different economic and financial instruments for the protection of the environment, e.g. financial guarantees, environmental deposits, taxes and other forms of security, direct and indirect subsidies, and tax allowances. especially the last two represent financial incentives and opportunities for polluters to take advantage of using advanced green technologies in order to reduce costs and improve competitiveness by reducing energy and resource consumption, and thus contribute to lowering the total amount of ghg emissions. such measures are usually more stimulating for polluters than taxation or sanctions. in this context, polluters partly avoid paying environmental taxes and are entitled to subsidies. different control variables are included in the model that measures economic activity and environmental responsibility. the estimated effects of total general government expenditure and gdp per square kilometer are positive and statistically significant, at the 1% level, suggesting negative impact on ghg emissions. higher scale of economic activity translates into higher ghg emissions, while higher environmental responsibility tends to reduce ghg emissions. similarly, the central finding of bernauer and koubi (2006) suggested that economic activity and government size have a negative effect on air emissions due to ghg and other emissions. evidence is found by lopez, galinato and islam (2011), who suggested that increased public spending contributed to higher environmental degradation in case of ghg and other emissions. our results in table 3 do not indicate that increasing total governmental spending has been determined by factors other than concern for public good, but it reflects a higher level of economic activity. we included in our analysis – without relying on – the environmental kuznets curve (ekc) that may question our findings. ekc is a u-shape relationship between certain types of pollution and per capita income. if growth is driven primarily by capital accumulation in the early stages of develop176 ment, and primarily by technological progress in later years, as countries become rich enough to pay to clean up their environments, the ekc indicates that air pollution may fall with increases in income per capita (e.g. grossman and krueger 1993; antweiler, copeland and taylor, 2001). however, frankel and rose (2005) claimed the ekc is valid for certain pollutants, e.g. no2, so2 and particulate matter (pm) but not for co2 3. their results confirmed that higher economic activity has adverse effects on the environment in terms of co2 emissions. in this respect, the results of our analysis do not support the ekc theory, but support the idea of a free-rider problem because the loss of competitiveness obstructs countries from reducing ghg emissions on their own. since co2 is a global externality individual countries are not motivated to tackle the issue by themselves in the absence of international cooperation and regulation of environmental protection. the quality of the environment may, to a great extent, be understood as a pure public good. government expenditure on public goods may induce an effect that could be pro-environment (e.g. lopez, galinato and islam, 2011). higher level of government expenditure on public goods in comparison to expenditure on private goods may lessen the negative effects of market failure, while the latter may not. more funding for r&d and dissemination of technology through expenditures on public goods may result in the expansion and use of low-emission technologies under certain circumstances. expenditures on public goods may cause increases in peoples’ income. this may increase the population’s demand for cleaner environment and higher level of environmental regulation, which may consequently reduce air pollution due to ghg and other emissions. the results empirically showed that increasing the government share in public goods decreases ghg emissions from industrial processes. emission from ghgs may also be mitigated in other ways. the european ecolabel is a voluntary market tool that promotes the environmental excellence for products and services at european level by means of the 1980/2000 regulation of the european parliament and of the council. organizations that promote energy efficiency through the reduction of ghg emissions are awarded ecolabel licenses (vinagre díaz, wilby and rodríguez gonzález, 2013). we used it also because sankar (2005) indicated that use of ecolabelling as one of the signals for environmental compliance may be a good indicator that organizations carried out their businesses with a level of responsibility for environment. the results showed that the estimated effect of ecolabel licenses on pollution is negative, suggesting that a number increase has a beneficial effect. is it possible that the results are due to existence of cross-sectional dependence? the robust ols estimates with the correction for heteroskedasticity in table 3 are practically the same to those presented in the ols model. although ols and robust ols estimates showed statistical significance at 5% level of the majority of control variables, huber robust regression in table 3 indicated that one of the control vari3 several studies testing the ekc are available (e.g. frankel, 2003); some authors (e.g. bradford, schlieckert and shore, 2000) get mixed answers. 177 ables, e.g. ecolabel licenses, is not robust. however, the sign and significance of the main coefficients of interest (direct and indirect effects of environmental taxes) are not substantially affected. the estimated coefficient for energy taxes descents (from -1.46 to -0.33) and for expenditures from sector industry (from -3.33 to -1.14), but they both stay fairly large, both qualitatively and statistically. the statistical significance of both direct and particularly indirect effect of environmental taxes through environmental expenditures in huber regression is very robust since they have become even stronger than the one corrected for heteroskedasticity. the direct and indirect impact of environmental taxes may not happen instantaneously. therefore, we used the lagged environmental taxes variables that may alleviate the bias from reverse causality4. in the case where the lagged taxes variables are correlated with omitted variables that have an impact on ghg emissions but which may not be causally linked to environmental taxes variables, other biases could still be present. for this reason, we used fixed-effects model to control for time-invariant omitted variables, and random-effects model to control for time-varying effects (table 4). the latter prevents these biases as long as the omitted variables are economy wide, i.e. they have an effect in each country and year. we also followed the argumentation of antweiler, copeland and taylor (2001) who argue that it is possible to assume that unobserved country effects (i.e. regulations, tariffs) that may impact the determinants of ghg emissions are fixed over time due to the short number of observations for each country. table 4: estimations of co2 (equivalent) emissions in industrial processes: fixed effects, random effects, and hausman test variable fixed effects random effects entax -1.375*** (0.317) -1.408*** (0.310) enexp -3.408*** (0.678) -3.408*** (0.670) gdpl 1.340* (0.778) 0.865** (0.378) tge 2.356 (2.872) 3.308 (2.044) gepg -6.028* (3.279) -6.034** (2.707) ecol -0.353* (0.204) -0.321* (0.185) constant -9.305 (13.635) -12.113 (11.087) observations 227 227 hausman 0.9877 notes: fixed effects model, random effects model and hausman test is used; dependent variable is yearly difference in co2 (equivalent) emissions from industrial processes (gind); standard errors are reported in parentheses; ***, ** and * denote statistically significant values at 1,5 and 10% on a two-tailed test, respectively. source: eurostat (2014), own calculations comparison between fixed and random effects showed important properties, namely: there is a comforting consistency across the coefficients in both the size and sign of the estimated coefficients. random effects showed even better results than 4 following the same consideration we also used lagged values for selected control variables. 178 fixed effects. all explanatory coefficients of interest (direct and indirect effects of environmental taxes) are statistically significant and empirical results are practically completely in line with theoretical assumptions. smaller differences in coefficients between fixed and random effects in the estimation may be ascribed to the country and time omitted variables. we also checked the endogeneity of the explanatory variables using the hausman test: the hypothesis was rejected. this means, we may strongly believe that the unobserved variability is not correlated with the coefficients of interest and therefore, the model does not contain endogeneity. these statistical tests, particularly robust huber regression reported earlier, allow us to conclude that the results are sufficiently robust, thus not driven by dominant observations. 5. conclusion the most important conclusion of this paper is that both direct effect of environmental taxes and indirect effect of environmental taxes through environmental expenditures have statistically significant effect on ghg emissions in industrial processes. this is, in essence, confirmed by ols, robust ols and huber regression. so it is highly likely that this is the case. we estimated fixed and random effects models. no substantial difference was found when comparing both models. the results pass rigorous sensitivity tests and do not seem to be driven by confounding fixed or time-varying omitted variables. further, the indirect effect of environmental taxes is much more significant and robust than the direct effect. the evidence for direct effect of environmental taxes is less robust but it hints at a possible pollution-decreasing effect as well. the results showed that considering both direct and indirect effects of taxation could present an interesting policy option. they contribute to a more comprehensive understanding of assessment of environmental policy measures and could be useful for designing economic instruments in environmental policy. for public policy-makers this article may help to find the best balance between direct environmental taxation and the level of expenditures on environmental protection as a means to palliate the effects of ghg emissions. this will enable to achieve best value for money in terms of desired level of ghg emissions. it would be recommended to test other policy areas using the same methodology to get a broader picture before making a judgment about direct and indirect effects of environmental taxes. references: 1. albrecht, j., ‘technical potential for co2 emissions reductions and the scope for subsidies’, in clinch, j.p., schlegelmilch, k., sprenger, r.u. and triebswetter, u. 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source category that has a significant influence on a country’s greenhouse gas inventory in terms of the absolute level of emissions, the trend in emissions, or both. the different greenhouse gases are weighted by their global warming potential, and the results are expressed in co2 equivalents. the inventory contains data on carbon dioxide (co2), methane (ch4), nitrous oxide (n2o), perfluorocarbons (pfcs), hydrofluorocarbons (hfcs) and sulphur hexafluoride (sf6). the eu inventory is fully consistent with national greenhouse gas inventories compiled by the eu member states. unit: in tones of co2 equivalent per 1.000.000 € gdp. data were obtained from eurostat (2014). according to the intergovernmental panel on climate change (ipcc) industrial processes are one of the main sources of greenhouse gasses. emissions of co2 equivalents in industrial processes include by-product or fugitive emissions of greenhouse gases (eurostat, 2014). we have chosen co2 equivalents because ghg emissions are widely regarded as one of the most important environmental indicators. further, co2 equivalents are a meaningful measure of emissions into the air in general because, according to studies such as bernauer and koubi (2006), various important forms of emissions such as so2, co2 equivalents, n2o and nox behave similarly across countries and time. direct effect of environmental taxes: energy taxes, including fuel for transport (code: entax) an environmental tax is a tax whose tax base is a physical unit (or a proxy of a physical unit) of something that has a proven, specific negative impact on the environment, and which is identified in esa95 as a tax. only payments that are identified as taxes in the national accounts can be environmental taxes whereas other types of compulsory payments to government are not considered environmental taxes. environmental tax statistics uses the tax definition of the national accounts as a reference because this improves international comparability of the statistics, and allows integration of the tax data with the national accounts and with systems of integrated environmental and economic accounting. unit: € per 1.000 € gdp. data were obtained from eurostat (2014). energy taxes (including fuel for transport) include taxes on energy products used for both transport and stationary purposes. the most important energy products for transport purposes are petrol and diesel. energy products for stationary use include fuel oils, natural gas, coal and electricity. carbon dioxide (co2) taxes are included under energy taxes rather than under pollution taxes. the reason for this is that co2 taxes are in many cases levied on the same tax bases as energy taxes and are substitutes for energy taxes. including co2 taxes with pollution taxes rather than energy taxes would distort international comparisons (eurostat, 2014). 183 indirect effect of environmental taxes: environmental expenditure for reduction of ghg emissions in industry (code: enexp) the scope of environmental protection is defined according to the classification of environmental protection activities (ec, 2000). environmental protection expenditure in industry is defined as the money spent on all activities directly aimed at the prevention, reduction and elimination of ghg emissions and other nuisances resulting from the production processes. activities that, while beneficial to the environment, primarily satisfy technical needs or health and safety requirements are excluded. unit: € per 1.000 € gdp. data were obtained from eurostat (eurostat, 2014). economic activity although we are interested primarily in the impact of environmental taxation on ghg emissions in industrial processes, we need to control for a number of other factors that have been identified in the relevant literature as important determinants of air emissions due to ghg and other emissions. these additional explanatory variables are justified in theory and may be assembled into two categories that cover economic development and environmental responsibility of a country. many papers examined the relationship between economic activity and ghg and other emissions. economic activity of a country may be measured by intensity of economic activity, government spending composition and government size (e.g. lopez, galinato and islam, 2011; lópez, vinod and wang, 2008; bernauer and koubi, 2006), and may present a great pressure on the environment (baiardi and menegatti, 2011). intensity of economic activity: gdp per square kilometer (code: gdpl) we measure the scale of economic activity by gdp per square kilometer. this measure reflects the concentration of economic activity within a given geographical area. it is constructed by multiplying per capita gdp by population density (population / square kilometers) – this, in effect, results in a coefficient measuring gdp per square kilometer. this measure reflects the concentration of economic activity within a given geographical area. we expect a positive relationship between economic activity and ghg emissions (eurostat, 2014; bernauer and koubi, 2006). unit: gdp/km2. data were obtained from eurostat (eurostat, 2014). we have chosen gdp per square kilometer because, according to authors (e.g. bernauer and koubi, 2006), the larger the scale of economic activity per unit, the higher the level of environmental air emissions due to ghg and other emissions is likely to be. a similar explanation offers lópez, vinod and wang (2008) who suggest that the scale of economic activity ought to be measured by country gdp per square kilometer to give an idea of the output scale pressure on the natural environment. government spending composition: government expenditure in public goods (code: gepg) government expenditure in public goods include the expenditure in education, health and other social transfers (direct subsidies to households), environmental protection, research and development (r&d), knowledge creation and diffusion as well 184 as conventional public goods such as institutions, and law and order. unlike government expenditures in private goods, these expenditures may mitigate the effects of market failure and complement rather than substitute for private sector spending. household subsidies, both direct and indirect via education and health care provision, reduce the effects of liquidity constraints and enable households to increase investment in human capital (grant et al., 2007). unit: in % of total government expenditure. data were obtained from eurostat (eurostat, 2014). we have chosen government expenditure in public goods because according to the studies (e.g. lópez, vinod and wang, 2008; lopez, galinato and islam, 2011) more spending on public goods may be associated with reduction of ghg and other emissions. to do so it is required to reallocate government spending away from subsidizing private goods that provide incentives leading to resource depletion, and towards providing more public goods. on the other hand, the reallocation of government spending may favor human capital-intensive activities to the detriment of physical capital-intensive industries, which tend to be among the most polluting industries. government size: total general government expenditures (code: tge) total general government expenditure is defined in esa-95 §8.99 by reference to a list of categories: intermediate consumption, gross capital formation, compensation of employees, other taxes on production, subsidies, payable property income, current taxes on income, wealth, etc., social benefits, some social transfers, other current transfers, some adjustments, capital transfers and transactions on non-produced assets. unit: millions of € per 1.000.000 € gdp. data were obtained from eurostat (eurostat, 2014). we have chosen total government expenditure because according to some authors (e.g. bernauer and koubi, 2006) government size and ghg and other emissions are closely connected. an expansion in government size is unambiguously associated with welfare improving for society as a whole; namely, i.e. when this expansion is demand-driven (citizen-over-state) and when it aims at the provision of a pure public good or the correction of an externality. the study of bernauer and koubi (2006) examined the relationship between government spending and air emissions due to ghg and other emissions in 42 countries over the 1971-1996 period. their key finding was that countries with a larger government spending tend to suffer from more emissions into the air. however, a large body of literature (e.g. grossman and krueger, 1993) demonstrates the opposite results that follow the kuznets curve theory. environmental responsibility: ecolabel licenses (code: ecol) this indicator is defined as the number of ecolabels or ‘eu flower’ licenses in european countries. the community ecolabel is awarded to products and services with reduced environmental impacts. this means that climate requirements are taken into account, and that co2 emissions (and other harmful gasses) are limited – where it is most relevant. it is administered by the european commission and receives the support of all eu member states and the european free trade association (efta). the ecolabel criteria are discussed in the european union ecolabelling board (eueb) 185 whose membership includes representatives from industry, environmental protection groups, consumer organizations and representatives for small and medium-sized enterprises (smes) (eurostat, 2014). unit: number of eco licenses per 1.000.000 € gdp. data were obtained from eurostat (eurostat, 2014). we have chosen ecolabel licenses because, according to eurostat (2014), ecolabel licenses for products and services are related to reduction of air pollution. this suggests organizations take climate requirements (reduction of co2 equivalents) into account in their activities. tietenberg and lewis (2012) suggested that governments use ecolabeling as a means of putting at least some market pressure on the disputed ghg-related practices. appendix b : collinearity diagnostics variable vif tolerance gind 1.39 0.7212 entax 1.09 0.9136 enexp 1.09 0.9184 gdpl 1.09 0.9196 tge 1.33 0.7497 gepg 1.43 0.701 ecol 1.18 0.849 mean vif 1.23 appendix b shows that vif and tolerance values of the model are within acceptable limits, which suggests there is no apparent multi-collinearity. 155 abstract firstly, we investigate the structure of social capital based on several indicators selected on the basis of the european social survey’s 2006 wave for romania. secondly, the role of informal social interaction and some individual-level sociodemographical variables in determining formal, informal and community level volunteering is analyzed. the third part of the analysis investigates the role of these types of social capital in producing various forms of trust. the results of the analyses resulted in two specific variables, for informal and informal social capital: the former consists in variables accounting for informal networking with closer ties, while the latter consists in variables accounting for different kinds of voluntary activities. regarding the cognitive dimension of social trust, we succeeded to separate specific types of trust. once controlling for socio-demographics and religiosity, schmoozing exercises significant, positive influence only on formal volunteering. our results suggest that the profile of those involved in the specific forms of volunteering is quite similar in at least two aspects: it seems that compared to the youngest age category, middle aged individuals are less involved in volunteering; compared to the lower educated respondents those who are medium and upper level educated people are the most involved in each types of volunteering. keywords: formal social capital, informal social capital, volunteering, trust, european social survey. linkages between informal and formal social capital and their relations with forms of trust. a focus on romania* laura nistor cristina tîrhaş petru iluţ laura nistor lecturer, department of social sciences, faculty of sciences miercurea ciuc, sapientia university, cluj-napoca, romania cristina tîrhaş lecturer, department of social sciences, faculty of social and political sciences, avram iancu university, cluj-napoca, romania petru iluţ (corresponding author) professor, department of sociology, faculty of sociology and social assistance, babes-bolyai university, cluj-napoca, romania tel.: 0040-264-424.674 e-mail: pilut@socasis.ubbcluj.ro transylvanian review of administrative sciences, no. 34 e/2011, pp. 155-174 * this work was supported by the research program cncsis idei, contract 2572/2008. 156 1. introduction social capital constitutes a widely used concept in the social, economic and political sciences of nowadays and usually it is considered to be a notion describing social interaction and involvement, social trust and civil norms etc. which can be both reason, consequence and solution for a wide range of other social actions and phenomena, e.g. solidarity, democracy, economic development, civility etc. the broad concept of social capital is in fact full of distinctions, in the sense that there are many definitions within the literature which oppose different perspectives of definition and various types and forms of social capital. such distinctions have already been present in the theoretical roots of the social capital literature. bourdieu (1985, 1993), coleman (1988) and putnam (1993, 2000) who are considered the fathers of the concept had defined social capital on different levels and put forward different aspects and roles of it. bourdieu defined social capital on the level of the individuals, considering it as individuals’ potential to mobilize their social connections in order to achieve various types of other capitals (e.g., economic, cultural capital). coleman’s approach is directed, similarly to bourdieu’s, towards the micro-level; however, coleman defines social capital not so in terms of network-based resources, but by its functions. in the approach of coleman, social capital is embedded in networks and facilitates collective actions, mainly through obligations, expectations, trustworthiness, information, norms and sanctions associated with such networks. in contrast to these micro-level assessments, putnam theorizes the concept of social capital on the macro-level and defines it as the attribute of societies, a cultural phenomenon referring to civic participation, trust and trustworthiness. in his approach social capital can have a positive influence not only on the life of the individuals, but also on the whole society, since participation in networks and especially in formal associations, cooperation and trust resulting from participative behaviors can enhance the flourishing of democracy and civic life. the two approaches, the individual and macro-level assessment of social capital, were integrated by many scholars, especially in the case of those empirical studies which aimed at studying the determinants and consequences of social capital on both individual and country/regional level. in spite of such integrative endeavors, there is still a number of other distinctions between types and measures of social capital. consequently, some authors define the concept as an umbrella term having various forms and dimensions and to which are associated equally various empirical indicators (e.g. van oorschot, arts and gelissen, 2006). one of the major distinctions between types of social capital opposes bonding and bridging social capital, that is, strong intra-community oriented networks among similar people (e.g. family members, religious or ethnic groups) and weaker extracommunity networks developed among individuals with different social status, for instance, work colleagues (granovetter, 1973; putnam, 2000). there exists, however, another important distinction between formal and informal types of social capital. while the former refers to participation in strictly organized networks, like civic associations, trade unions, charitable and voluntary associations, political parties 157 etc., and constitutes the major type of social capital in the work of putnam (2000), the latter implies various forms of getting together with family members, friends, work colleagues, neighbors etc., and refers to more or less regular social interactions in the absence of a formal associational frameworks (putnam, 2000). the importance of the informal networks was theorized especially in the works of bourdieu (1985) and coleman (1988), which identified social capital especially with informal connections. an additional separation occurs between the structural and cognitive dimensions of social capital (see uphoff, 1999; kaasa and parts, 2008). the structural dimension refers to behaviors associated with social capital in forms of participation in both formal and informal networks, while the cognitive aspect refers to norms, beliefs and attitudes related to social capital, especially to forms of trust (general trust, institutional trust) and trustworthiness. generally speaking, the relationship between these two dimensions of social capital is that they are mutually reinforcing and – even more important – they are so interrelated that it is very difficult to establish which one is the cause and the effect. as putnam (2000, p. 137) assumed the causal arrows among forms of participation and social trusts “are as tangled as well-tossed spaghetti”. it is thus equally reasonable to presuppose that people become more trustworthy as a result of their sustained social interactions and that people who are participating in social interactions are more trustworthy than others. when we consider specifically the structural dimension of the social capital, that is forms of involvement, it is observable that formal and informal, bonding and bridging structures are usually treated as concurrent components and in spite of many attempts aiming at revealing the macro-level as well as micro-level linkages between them there are still relatively few articles which focus on the interrelations between various types and facets of social capital (e.g. halman and luijkx, 2006; van oorschot, arts and gelissen, 2006). consequently, little is known about the correlations between informal and formal participation (palisi, 1985). in the present study we aim to investigate this kind of linkage in the case of romania, a country which was considered in several studies an example for a weakly developed social capital, whether formal or informal (e.g. voicu and voicu, 2003; pichler and wallace, 2007). we frame our approach into the complementarity interaction theory (fischer, 1982; palisi, 1985; iluţ and tîrhaş, 2010) according to which formal and informal involvement can enhance one another and assume that these two specific forms of social capital (i.e. informal and formal) may interact even in the case of countries which show a social capital deficit, like romania. our analysis is built on the data set of the european social survey 2006. we separate between informal social interaction, informal help directed towards others than family members, community level involvement in helping activities and formal volunteering as structures of social capital. on the other hand, the cognitive dimension of social capital is measured through general trust and institutional trust, the latter separated in turn, in trust towards national and international institutions. the article develops around three main goals. firstly, we are going to investigate the structure of the social capital based on the above mentioned indicators: that 158 is the investigation of how these different indicators associate together in forming different dimensions of social capital. secondly, we are going to investigate the role of informal social interaction and some individual-level socio-demographical variables in determining formal, informal and community level help. in the third part of the analysis we will investigate the role of these types of social capital structures in producing various forms of trust. before presenting the hypotheses, the methodology and the results of the analyses we briefly sketch some of the literature assumptions regarding the opposition/complementarity between formal/informal social capital, respectively their trust producing potential. 2. formal and informal social capital. from substitution to complementary? regarding the opposition and/or complementary of these two sub-types of social capital, i.e. formal and informal social capital, haerpfer, wallace and raiser (2005) re-accentuated the role of the early views on social capital in the framing of the debate in one direction or another. thus, their definition of informal social capital follows the approach of bourdieu (1985) and coleman (1988) and is based on the relational and reciprocal aspect of transactions conducted within social relationships. in contrast, formal social capital is most evident in putnam’s (2000) approach, where social capital exists especially in forms of civic participation and thereafter social capital is complementary to formal institutions in supporting democracy and civility. once the ground defined, a number of empirical studies tried to demonstrate the opposition or co-existence of these two types of social capital. the analyses usually were directed towards the investigation of whether formal or informal social capital is more important in producing trust, civility and trustworthiness. putnam (2000) for instance argues that the engagement in civic organizations can enhance social capital, especially in terms of trust and social cooperation and thus, accentuates the role of the so called machers1 in social capital production. on the other hand, authors like lin (2001) assess that participation in informal networks is more important in social capital production. there are however integrative approaches as well. putnam (2000) himself when separates between machers (i.e. those involved in formal networks) and schmoozers2 assesses that these two types of social involvements may overlap to some extent, in spite of the fact that empirically they are rather distinct, since machers tend to be better educated, economically better off, compared to schmoozers who are more diffusely present throughout every social strata. moreover, the dynamics of these two involvements is different: while participation in formal networks peaks in late middle age, informal involvement peaks among young adults. the relationship between formal/informal networking is specifically discussed and empirically analyzed later on by pichler and wallace (2007) in their european aggregate 1 putnam (2000) uses the yiddish term machers in order to denominate those persons who are active in formal organizations. 2 the yiddish term describes those people who spend a lot of time for informal socialization. 159 level study. the authors followed fukuyama’s (1995) approach and considered that formal social capital can lead to better informal networking and support, which then reinforce social norms of co-operation and trust. however, the authors noticed that this should not been considered business as usual. it happens frequently that these two forms of social capital appear rather exclusive than inclusive to each other, in the sense that strong informal networks can take the place of formal participation. or, on the contrary, the proliferation of formal social capital in the absence of informal social capital might occur, especially in situations when in the presence of rich associative ties there is no need for informal networks (fischer, 1975)3. based on these considerations, the authors assumed that on the macro-level there might exist on the one hand, complementary regimes of social capital, within which both formal and informal networks are well developed. on the other hand, substitution regimes might be also present in which case one type of social capital, the most frequently formal, can be replaced by the other type of social capital. based on a european level aggregate analysis pichler and wallace (2007) succeeded to bring empirical foundation to these hypotheses and confirmed that there are several social capital regimes throughout europe, depending on the ways in which formal and informal social capital are both present and substituted. thus, the authors showed that while especially nordic countries and, to a lesser degree western european countries, score high on both dimensions of social capital and thus are examples for complementary regimes, southern countries are poorer in both kinds of social capital, while in eastern europe appears a substitution regime, where lower levels of formal social capital are replaced by high levels of informal social capital. regarding the individual level, van oorschot, arts and gelissen, 2006 revealed significant, positive correlations between three different facets (networks, trust and civism) of social capital. they concluded that on the level of the individuals it is legitimate to talk about an accumulation in terms of social capital, since there is a positive correlation between involvement in formal and informal networks (except the family), so that people who show these types of involvements are also those who trust others and institutions the most. the authors investigated these linkages on the level of aggregated, country-level data and concluded that there are positive, significant correlations between the formal and informal networks, in the sense that countries with higher level of participation in formal associations are also the countries in which people participate more in informal networks, particularly friendsbased networks, so that it seems that people are becoming formal members via their 3 the so-called “crowding out” hypothesis constitutes a more radical approach which can be however quoted here for the purpose of analogy building: this approach assumes that social expenditures of the welfare state made informal involvement, caring relations and civic involvement useless and, consequently assumes that in the most developed welfare states there must be the lowest levels of involvement in both formal and informal networks (van oorschot and arts, 2005). consequently, informal and formal social capitals may substitute or complement themselves, but they can be both eroded under certain contexts. 160 friends. moreover, there is positive, significant correlation between participation in networks, both formal and informal, and generalized as well as institutional trust. this finding is in accordance not only with putnam’s (1993) approach according to which participation enhances the flourishing of trust, but correlates also with the findings of pichler and wallace (2007). regarding the linkages between informal and formal social capital, kenny (1992), huckfeldt (1979), mutz (2002), etc. succeeded to confirm that people usually decide about formal political participation via their friends. the approach directed towards the investigation of the roles of informal social ties on volunteering (e.g. smith, 1994) is also extremely rich. these studies put forward the so-called “contact frequency hypothesis” (see wilson and musick, 1997) which presupposes that the more frequent involvement in informal social networks increases the likelihood of formal volunteering. the already classical study of wilson and musick (1997) confirmed that volunteering is connected to individuals’ informal social networks and is often facilitated by these networks in such a great manner that in america social interaction can be considered as one of the most important predictors of volunteering. the explanation is that in most cases people end up as volunteers because they are asked to volunteer for an organization and a regular involvement in informal social ties enhances the chance of being asked for volunteering. there were revealed some nuances as well which must be considered when reflecting on the relationship between informal involvement and formal volunteering. voicu and voicu (2003) suggested that when considering the linkages between formal volunteering and informal social interaction, one should consider the bonding vs. bridging natures of the social interactions under discussion. thus, while bridging social ties (e.g. colleagues) enhance volunteering, bonding social capital consisting in strong informal ties developed among peers are not expected to enhance formal volunteering, since these networks direct volunteering towards informal help. wilson and musick (1997) while signaled positive association between the frequency of involvement in informal social interactions and volunteering, demonstrated also that (at least in the context of the usa) the relationship between formal volunteering and informal volunteering (i.e. helping) was not mutually beneficial, in the sense that an increase in volunteering increased helping, but the reverse could not been proved. they also demonstrated that social ties are not linked to informal volunteering considered in the form of helping a neighbor. the authors’ explanation was that helping is probably perceived as an obligatory activity compared to formal volunteering and thus can be much more linked to the norm of obligation. in contrast, volunteering is much more rooted in altruism. regarding the roots of trust, that is whether formal or informal social involvements contribute more to trust, delhey and newton (2003) put in opposition the theory of voluntary organizations and that of network theory. in accordance with the voluntary organizations theory the most important form of participation is direct, face-to-face involvement in voluntary groups in the local community, since in these associations 161 people learn to collaborate, develop empathy and reciprocity. in contrast, the network theory assumes that trust is produced mainly by involvement in informal networks. after summarizing a number of research findings, the authors considered that this latter theory should be particularly relevant in the case of post-communist societies in which during the period of communism people developed important circles of involvement in private, unofficial networks through which citizens succeeded to help each other in overcoming the shortage of resources and also created isles of trust and reciprocity “within a wider society that was pervaded by general suspicion and mistrust created by the state” (delhey and newton, 2003, p. 98). li et al. (2005) concluded however that the relationship between formal associational membership and social trust is rather contradictory and that “it seems unlikely that social capital defined as associational involvement will be particularly powerful in generating outcomes such as social trust” (li et al., 2005, p. 111). similarly, frane (2008) by analyzing european level longitudinal data showed that contrary to putnam’s assumption according to which there is a connection between trust and formal participation, in europe could not be signaled such a trend and occurs the fact that “while the reduction of generalized trust is quite visible – thought not in all countries – associational involvement shows a more complex but an average positive trend” (frane, 2008, p. 167). in the post-communist societies, at least in romania, quantitative, survey-based as well as qualitative-ethnographic data show that there is an extremely low level of trust, both in terms of general social trust and institutional trust. moreover, it can be outlined that compared to the first years of the transition which were saturated by the enthusiasm of freedom, individuals’ trust has been following a down warding tendency. if we add to these data also those which show that according to a great part of the respondents life was better under socialism, in our opinion the low levels of institutional trust existing today can have two important roots. one of them consists in the disillusion with neoliberal capitalism, while the other might be located in the existing corruption on the level of the institutions. it is thus not surprising that the most trusted institutions by the romanians are those which do not have a direct tangency with either capitalism, or they were not involved in corruption-scandals (e.g. the army and the church). the fact that market economy and neoliberalism have brought with themselves competition and struggle for resources in nearly every domains of life resulted also in the diminishing of interpersonal trust. on the other hand, in order to face competition and generalized corruption, people have associated in informal networks4. 4 our theoretical point (which is based also on on-going qualitative research and which is not the subject of the present article) is that such informal networks are trustworthy networks in the sense that those involved in the network try to protect the interests of the network. moreover, trust is not necessarily the result of the involvement, but mainly the root of the involvement. in the majority of cases, these networks are family-based, a fact which is especially visible in the case of the small urban and rural settings. it is also worth noting that such kinds of networks are very closed and difficult to access by researchers. 162 3. data, hypotheses and methodology for the purpose of the present analysis we are relaying on the data of the european social survey’s (ess) third (2006) round5. on the basis of the items of this ess round questionnaire we selected several indicators of social capital which are presented in table 1 together with their original types of measurement6. the first column of the table indicates the types of social capital we hypothesized and intended to measure. we presupposed that informal social capital is tapped through four items which account for: the frequency of socialization with friends, colleagues and relatives (q1); the perceived existence of moral support for discussing intimate problems (q2); the perceived frequency of social involvement in networks compared to others (q3) and through the item which accounts for involvement in helping behaviors towards others than close network members (q4). we hypothesized also that this latter type of involvement can be considered a form of informal bridging social capital, since it is explicitly focused on the informal help provided towards others than family members. it is however explicitly differentiated from formal volunteering as well (q6). we presumed that involvement in community level help and activities (q5) can be situated somewhere “in between” informal helping and formal volunteering. we appreciated that this question does not refer specifically, by definition, to either formal or informal social capital, and respondents may indicate their participation in both informal community activities (e.g. the cleaning of the green space by a group of neighbors) and formal activities (e.g. participation in activities organized by community organizations, e.g. by the association of flat inhabitants, i.e. asociaţia de locatari in romanian)7. on the basis of these variables we succeeded to separate not only between informal social interaction and volunteering, but also between types of volunteering, i.e. formal and informal volunteering. according to wilson and musick (1997) helping behavior performed outside an organizational framework can be considered informal volunteering (or caring, if it is performed within the family) because it constitutes, similarly to volunteering, un-paid work. it is worth noting that while authors like amato (1990) consider that the main difference between informal and formal volunteering consists in their different degree of formalization, wilson and musick (1997), burr et al. (2005) etc. appreciate that the main difference between the two resides in their different motivational bases: while obligations have a powerful influence on informal help, volunteering is much more impacted by altruism. these rationales allowed us to put forward the question whether informal helping is more related to informal social 5 the data set was downloaded from the website of the norwegian social science data services via de website of the european social survey (www.europeansocialsurvey.org) 6 in some cases it was necessary to recode the response variants, as far as we followed the logic that higher codes must indicate the strengthening or growing of the social capital facet under discussion. 7 in the case of this item, the ess questionnaire explicitly asks respondents to associate this type of volunteering with any kind of activities they consider relevant in this respect. 163 interaction (based on its informal character) or to formal volunteering (based on its unpaid nature). additionally, through the inclusion of the indicator for community-level help, becomes possible to analyze a different facet of volunteering, which according to li et al. (2005) constitutes an involvement in a contextual, situational network. regarding the cognitive dimension of social capital, similarly to the analysis of halman and luijkx (2006) which was based on an earlier version of the ess, we relied on three specific items (q7 – q9) measuring the degree of trust in other people. institutional trust was measured through seven items which asked respondents to indicate their confidence in specific national and international institutions. table 1: hypothesized types of social capital and their indicators (ess, 2006) type of social capital questions type of measurement descriptives. standard deviations in parentheses informal how often do you meet socially with friends, relatives or work colleagues? (q1) 1–7 ordinal scale (1 = never to 7 = every day) mean = 4.09 (1.79) do you have anyone with whom to discuss intimate and personal matters? (q2) dummy (0 = no, 1 = yes) yes=70%; no=30% compared to other people of your age, how often would you say you take part in social activities? (q3) 1–5 ordinal scale (1 = much less than most to 5 = much more than the most) mean = 2.50 (0.90) not counting anything you do for your family, in your work, or within voluntary organizations, how often, in the past 12 months did you actively provide help for other people? (q4) 1–6 ordinal scale (1 = never to 6 = at least once a week) mean = 2.28 (1.48) informal/ formal and in the past 12 months, how often did you help with or attend activities organized in your local area? (q5) 1–6 ordinal scale (1 = never to 6 = at least once a week) mean = 2.74 (1.59) formal in the past 12 months, how often did you get involved in work for voluntary or charitable organizations? (q6) 1–6 ordinal scale (1 = never to 6 = at least once a week) mean = 1.64 (1.48) general trust would you say that most people can be trusted, or that you can’t be too careful in dealing with people? (q7) 0–10 ordinal scale (0 = you can’t be too careful to 10 = most people can be trusted) mean = 4.07 (2.61) do you think that most people try to take advantage of you if they got the chance, or would they try to be fair? (q8) 0–10 ordinal scale (0 = most try to take advantage to 10 = most try to be fair) mean = 3.81(2.48) would you say that most of time people try to be helpful or that they are mostly looking for themselves? (q9) 0–10 ordinal scale (0 = mostly looking for themselves to 10 = most of time try to be helpful) mean = 3.36(2.44) institutional trust how much do you personally trust each of the institutions? (q10 – q16) 0 – 10 ordinal scale (0 = no trust at all to 10 = complete trust) country’s parliament mean = 3.42 (2.57) legal system mean = 3.88 (2.69) police mean = 4.56 (2.83) politicians mean = 2.72 (2.35) parties mean = 2.80 (2.36) european parliament mean = 6.00 (2.77) united nations mean = 6.03 (2.85) 164 we hypothesized a positive linkage between these types of social capital, and specifically expected for a strong association among those informal and formal types of social capital which are very specific to each other. thus, we assumed that besides the positive association between informal social interaction and different forms of volunteering, formal volunteering will be the most strongly linked to informal helping behavior, as much as this latter type of help in our case does not consider helping under its family-oriented aspect and which, according to wilson and musick (1997) should have different motivations than formal helping. as far as both informal help and formal volunteering in our case are oriented towards others than close network members, we presupposed strong association between the two variables. given its quasi-formal character, we hypothesized that community-level help will be positively linked to both kinds of volunteering, as well as to informal social interaction. regarding the roots of trust, we hypothesized the existence of some kind of specificity in this sense, that is, we expected that general trust – which can be regarded as a more diffuse form of trust – will have a stronger association with informal types of social capital than with formal volunteering, while in the case of institutional trust we expected the reversed situation. besides investigating the structuring of these specific dimensions of social capital and the association between them, we were also interested in their most important socio-demographical determinants as well. we presupposed that if on the level of the socio-demographical variables we can reveal differential effects, then it is legitimate to talk about separate roots of these facets and, consequently, about the inexistence of linkages on the individual level. on the contrary, if similar socio-demographical roots are evident, than it is possible to reveal the linkages between these forms of social capital on these levels as well. in order to determine which are the socio-demographical roots of the types of social capital we relied on the most extensively used socio-demographical variables of the social capital literature: age (categorical variable: lower than 35, 36-55, 56+)8, gender (dummy: 0 = male, female)9, education (categorical: lower, medium, upper)10; income (ordinal: subjective rating of the household income on a four level scale)11; family size (continuous); type of residence (category: village, town, city)12. additionally we introduced the variable of religiosity13, since it is frequently quoted as an important predictor of social capital. 8 the corresponding relative frequencies are the following: lower than 35 years = 33%; 3655 years = 31%; 56 years and older = 36%. 9 female = 52% 10 we collapsed the original 8 level ordinal variable in the following categories with corresponding relative frequencies: lower educated = 34%; medium level educated = 46%; upper level educated = 20%. 11 the corresponding categories and relative frequencies are the following: very difficult to make ends meet = 24%; difficult = 38%; coping = 30%; living comfortably = 8%. 12 the corresponding relative frequencies are the following: village = 46%; town = 23%; city = 31%. 13 determined as factorial score based on the judgment of personal degree of religiosity, private and public space religious practice. the resulted factor explains 70% of the original variance. 165 the influence of these variables on various facets of social capital has been well documented empirically, both in international and national studies (e.g. wilson and musick, 1997; delhey and newton, 2003; voicu and voicu, 2003; halman and luijkx, 2006; van oorschot, arts and gelissen, 2006; kaasa and parts, 2008) and however the results are sometimes contradictory there are obviously some evident trends of influence. in spite of such evidence, we adopt here a rather inductive perspective, aiming at revealing those variables which have similar influence on both kinds of social capital and trust in our data. our analysis proceeds as follows. firstly, through exploratory factor analysis we are going to investigate the structure of social capital, based on the indicators presented in table 1. then, in order to better reveal the relations between various indicators of social capital we present the results of the bi-variate correlations. thirdly, we run several regression analyses in which the dependent variables are represented by the three different specific indicators of informal, formal and semi-formal volunteering. the purpose of these analyses is to reveal which are those socio-demographical variables, if any, which contribute to each of these indicators and thus link the various types of help together, respectively, what is the contribution of informal socialization to the three forms of volunteering. in the followings, the forms of trust are going to be dependent variables of regression analyses and the aim will be to reveal what is the contribution of the several types of social capital structures to trust producing. finally, results of a sem analysis are reported in order to facilitate the visualization of the relationship between various forms of social capital and their socio-demographic determinants. 4. analyses 4.1. the structuring of social capital indicators in forms of social capital in order to reveal how the selected indicators are structuring in different specific forms of social capital we used exploratory factor analysis; the results are presented in table 2. the results of the factor analysis suggest that the considered indicators explain about 70% of the original variance and can be placed along five different, specific components, which do not replicate, however, our presupposition regarding the informal/formal types of social capital as presented in table 1. informal helping instead of saturating the component of informal socialization comes together with the other two indicators of volunteering. this aspect is revealed in table 3 as well which, among others, presents the bi-variate correlations between the factor score of informal social networking and forms of volunteering and whose results show that while the correlation between informal social networking and informal volunteering is extremely low, the associations between informal volunteering and the other two types of volunteering are very consistent. consequently, we have two very specific variables, for informal and formal social capital: the former consists entirely in variables accounting for informal networking 166 table 2: factor analysis of indicators of social capital rotated component matrix components 1 2 3 4 5 most people can be trusted 0.844 most people try to take advantage of you 0.890 most of the time people helpful 0.861 trust in country’s parliament 0.814 trust in the legal system 0.791 trust in the police 0.704 trust in politicians 0.889 trust in political parties 0.870 trust in the european parliament 0.871 trust in the united nations 0.881 how often socially meet with friends… 0.830 take part in social activities compared to others 0.786 anyone to discuss intimate problems 0.604 involved in formal volunteering 0.736 involved in helping others 0.854 involved in community help 0.786 % of variance explained 23% 14% 12% 12% 10% kmo=0.781; chi-square=10768;p<0.001 extraction method: principal component analysis rotation method: varimax rotation with kaiser nominalization source: ess, 2006 table 3: bi-variate correlations between social capital types and dimensions types of involvement types of trust informal socialization informal helping formal volunteering communitylevel helping general trust institutional trust (national) institutional trust (international) informal socialization _ informal helping 0.059** _ formal volunteering 0.077** 0.476*** _ communitylevel helping ns 0.506*** 0.313*** _ general trust 0.063* ns 0.058** 0.055* – institutional trust (national) ns -0.072** ns ns 0.284*** – institutional trust (international) 0.061* 0.073* ns ns ns ns _ ***p<0.001; **p<0.01; *p<0.05; ns=not significant correlation source: ess, 2006 167 with closer ties, while the latter consists in variables accounting for different kinds of voluntary activities oriented towards situational networks (i.e. community) or more departed others. we appreciate that these results are a proof not necessary for the split between informal and formal types of social capital, but for the role of specificity in structuring together informal and formal types of social capital. thus, in the case of informal help, the activity towards which the indicator is oriented (un-paid helping) seems to have a more important role in the structuring of the variable together with the other variables accounting for volunteering, than the role of the type of help (informal) which is provided. moreover, as already mentioned in the previous section, we have to give attention towards the bonding/bridging divide as well: informal socialization in our case measures a kind of bonding type of socialization, since it accounts for networking with close others, while the question about the involvement in informal helping is explicitly oriented towards others than close network members (voicu and voicu, 2003). regarding the cognitive dimension, i.e. social trust, it is also obvious the separation of specific types of trust: general social trust, respectively two types of institutional trust, measuring the confidence in national, respectively international institutions. table 3 further illustrates the associations between forms of trust and the structural dimensions of social capital and it shows that while general social trust is significantly and positively associated with the confidence in national institutions, general trust – interestingly – has no significant relationship with trust towards international institutions. thus, it seems that the trust towards international institutions is not very much rooted in the general social trust, but, presumably in other cognitive dimensions like, for instance, aspirations, optimism, political efficacy etc., as much as the survey was realized in 2006 when the expectations from the european integration were extremely high in romania (tufiş, 2007). general social trust is weakly, albeit significantly associated with schmoozing, formal volunteering and community level helping, but – interestingly – it has no significant correlation with informal helping. we can speculate here that this is quite logical as far as general social trust is more abstract and is directed towards transindividual, less formal contexts, while informal helping has a more specific meaning and it is more linked to the personal characteristics of those involved in the informal networks than to their abstract confidence (iluţ, 2009). consequently, the hypothesis according to which social involvement and trust are interrelated can be confirmed only partially as much as institutional trust (whether we refer to national or international institutions) is even more ambivalent regarding its associations with the structural forms of social capital. in the followings we are turning to investigate further the interdependence between schmoozing and forms of volunteering. for this purpose we run three binary regression analyses in which the dependent variables are going to be represented by the three forms of volunteering (we created binary categories by collapsing the different frequencies of involvement to the value of 1 = involvement in various degrees vs. 0 = no involvement 168 at all). besides schmoozing, we introduced among the independent variables also the socio-demographical variables and that of the religiosity. in this way we succeeded to measure the impact of schmoozing while controlling for socio-demographics and also to determine if socio-demographical variables exercise differential influence on the three dependent variables (table 4). table 4: results of the binary logistic regression analyses informal help formal volunteering community-level help b exp (b) in parentheses wald b exp (b) in parentheses wald b exp (b) in parentheses wald age (reference: lower than 35) 36-55 0.260* (1.297) 4.039 0.392** (1.480) 8.081 0.566*** (1.761) 13.943 56+ 0.196 (1.216) 2.003 0.250 (1.284) 2.703 0.765*** (2.149) 21.157 female 0.054 (1.056) 0.262 0.113 (1.120) 1.054 -0.086 (0.918) .498 education (reference: lower level) medium 0.459*** (1.583) 13.963 0.337** (1.401) 6.408 0.559*** (1.749) 15.621 upper 0.860*** (2.364) 26.940 0.718*** (2.050) 18.501 0.698*** (2.010) 13.923 income (reference: very diffi cult) diffi cult 0.375** (1.455) 8.177 0.408** (1.504) 7.731 0.027 (1.027) 0.031 coping 0.404** (1.497) 8.006 0.503*** (1.654) 10.384 0.076 (1.079) 0.207 living comfortable 0.331* (1.393) 2.292 0.639*** (1.894) 7.996 0.162 (1.176) 0.401 members of household 0.069* (1.072) 3.265 0.014 (1.104) 0.116 0.119** (1.127) 6.970 residence (reference: village) town -0.100 (0.905) .599 -0.053 (0.949) 0.149 -0.370* (0.691) 6.112 city 0.020 (1.020) .024 0.045 (1.046) 0.115 -0.384** (0.681) 6.874 religiosity 0.118* (1.125) 4.831 0.207* (1.230) 12.967 0.133* (1.142) 4.775 frequency of socialization 0.070 (1.054) 1.435 0.167** (1.181) 8.005 0.080 (1.084) 1.565 constant -0.624** (0.536) 7.774 -1.595** (0.203) 42.380 0.124 (1.132) 0.241 nagelkerke r square: 0.050 chi square: 64.48/df 13; p<0.001 valid n=1742 nagelkerke r square: 0.060 chi square: 73.78/df 13; p<0.001 valid n=1736 nagelkerke r square: 0.056 chi square: 62.83/df 13; p<0.001 valid n=1735 the results show that while controlling for socio-demographics and religiosity, schmoozing exercises significant, positive influence only on formal volunteering and thus confirms the already classical finding of the literature that informal social 169 networks are important sources for involvement in volunteering (smith, 1994; wilson and musick, 1997; putnam, 2000). of course, the investigation of how exactly informal social networks become channels towards formal volunteering would need a deeper, preferably qualitative analysis which could provide further nuance. interestingly, schmoozing has no significant influence on either informal help or community level help. we think that this result can be explained by the already articulated issue, according to which informal help towards others than close network members illustrates the bridging side of social capital which thus becomes less compatible with the socialization with close ties. we presuppose that a different kind of informal help (i.e. caring for family members) would be more strongly associated with schmoozing. regarding socio-demographical variables, our results signal that the profile of those involved in these three specific forms of volunteering is quite similar in at least two aspects. it seems that compared to the youngest age category, middle aged individuals are less involved in volunteering; compared to the lower educated respondents those who are medium and upper level educated people are the most involved in each types of volunteering. while the influence from the part of the education does not constitutes a surprise, since it corresponds to the results of previous international and national level studies, the effect of age is much more curious. it seems, that contrary to previous findings reported in the case of romania (voicu and voicu, 2003; bădescu and sum, 2005) and which signaled negative relationship between age and volunteering, we can report the reverse, which is in accordance with the findings of putnam (2000) regarding the usa or that of kaasa and parts (2008) regarding europe. religious practice seems to be another linking factor: albeit its influence is not extremely strong, religiosity impacts significantly the involvement in forms of volunteering and thus our results confirm previous findings mentioned above, particularly that of voicu and voicu (2003) regarding the case of romania. if we look at the influence of the different independent variables it becomes obvious that informal help and formal volunteering are more similar to each other than to community level help. those involved in formal and informal volunteering seem to be middle aged individuals, while in the case of community level help the oldest age category has the highest chance for involvement, while perceived economic status has no impact in this latter regard. moreover, while residence has no significant influence on informal and formal volunteering, residence in towns and cities, significantly reduces the chance of involvement in community level help (kaasa and parts, 2008). this aspect seems to confirm those previous results of the literature which accentuate the negative influence of the urban way of life on community-level solidarity. all in all, we can conclude that both general, informal help and formal volunteering have the highest chance to occur among better educated, economically better off and relatively religious middle aged individuals and community level help has the highest chance to occur among old and religious people from rural settings. 170 4.2. the roots of trust in the followings we conducted ols regression analysis with the three forms of trust (factor scores) as dependent variables, while independent variables were represented, besides socio-demographical variables and religiosity by the factor scores of informal social networking and forms of volunteering (table 5). table 5: results of ols regression analyzes generalized trust institutional trust(national institutions) institutional trust (international institutions) age: 36-55 0.125* -0.027 -0.106 55+ 0.132* 0.087 -0.089 female -0.013 0.001 -0.124+ education: medium level -0.087 -0.063 0.203+ upper level -0.016 -0.188* 0.141+ income: diffi cult -0.047* -0.255** -0.077 coping 0.118* 0.067 -0.044 comfortable 0.067 0.051 -0.074 members of household 0.047 0.006 0.001 residence: town -0.127* -0.224** 0.010 city -0.202** -0.465*** -0.146* religiosity 0.068* 0.056* 0.039 informal social interaction 0.047 0.008 0.018 forms of volunteering 0.003 0.003 0.088* constant 0.301** 0.311** -0.020 r square=0.05 f(16,1575)=4.74; p<0.001 valid n=1278 r square=0.082 f(16,1275)=7.162; p<0.001 valid n=1278 r square=0.036 f(16,1275)=2.122; p<0.01 valid n=1278 the low values of the r squares indicate that the set of the variables selected are not very suitable for configuring adequately the roots of trust and, compared to the structural dimension of social capital, this cognitive dimension can be less clearly modeled (bădescu, 2001; kaasa and parts, 2008). generally speaking, it can be concluded that older people and rural residents have higher levels of general trust and the urban residence goes together with lower levels of institutional trust as well (cf. the results regarding the determinants of community level help), in accordance with previous findings. confidence in institutions is very difficult to be modeled based on socio-demographical variables, in any case, it seems that compared to lower educated respondents, medium and upper educated people are significantly less confident in national institutions and the situation is (at least marginally) the reverse in the case of the confidence in international institutions, so that our results replicate quite well the findings of tufiş (2007) regarding the roots of institutional trust in romania on the basis of the european values survey data. 171 in the light of the results based on the bi-variate correlations (table 2), the fact that in the case of the regression analyses informal social interaction and the factor score based on the three forms of volunteering do not have a significant influence on the forms of trust (except the marginally significant influence of volunteering on the confidence in international institutions) does not constitute a surprise. it seems that in the case of our data neither general social trust, nor confidence in national institutions can be explained in terms of social interaction, whether formal or informal. 5. instead of discussion: results of the path analysis in the followings, the above results of the regression analyses are presented in an integrated form in figure 1, which includes all the significant influences from the part of socio-demographics on forms of social capital, respectively that of the volunteering and informal social interaction on forms of trust. for the sake of visibility, we skipped from the graphic the variables of religiosity and that of number of household members, which did not have significant influence (neither direct nor indirect) on any type and dimension of social capital when all the variables were integrated into the model. moreover, the figure does not present those arrows of influence which were not significant. source: authors’ calculations figure 1: path analysis: determinants of the different structural and cognitive dimensions of social capital (cfi=0.922; rmsea=0.050) 172 the path analysis suggests, once again, that the direct, significant effects from the part of the socio-demographical variables on the different latent dimensions of social capital are that of the age on both informal social interaction, forms of volunteering and general trust; that of the socioeconomic status (corresponding to the mean value of education and subjective income) on forms of volunteering and institutional trust; that of the residence on social interaction, general trust and institutional trust. gender, while in the regression analyses turned to have no significant direct impact on any form of volunteering, now seems to have an indirect influence (through socioeconomic status) on forms of volunteering and confidence in national institutions. the latent variable of social interaction has a significant positive influence on the forms of volunteering and on general trust and, consequently, we are able to conclude that after all, informal social networking can be linked to the construct of volunteering which comprises the three, specific forms of volunteering. on the other hand, the confidence in national institutions seems to moderate between general trust and confidence in international institutions. as a general conclusion it can be deduced, that once the structural and cognitive forms of social capital are not considered as separate indicators, but in the form of groups of variables based on the factor loadings of the different indicators, the results seem to confirm the role of schmoozing on forms of involvement which is, thus, an important prove for the informal roots of the more formalized types of social capital, i.e. volunteering. in romania, as well as in other post-communist countries, survey data show the diminishing social trust, both under its general and institutional form. for the first case the reason lies in corruption, in institutional un-accountability etc. in the same time, people develop trust in informal support networks. the association within family networks, quasi-legal or illegal networks of support etc. serve thus as a complementary regime for the eroded trust in institutions and low levels of participation in formal networks and frequently illustrate the dark side of social capital, a phenomenon which is otherwise very hard to be studied through quantitative data (iluţ, 2009). our present data confirm that informal networks constitute a form of compensation for the less flourishing formal networks, but informal networks are, in the same time and under 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(eds.), the values of volunteering. cross-cultural perspectives, new york: kluwer academic, 2003, pp. 143-160. 35. wilson, j. and musick, m., ‘who cares? toward and integrated theory of volunteer work’, 1997, american sociological review, vol. 62, no. 5, pp. 694-713. 141 abstract over the past five years, romania has made considerable progress in developing public administration teaching. however the need to increase student interest and involvement in the learning process is a largely widespread issue in all romanian universities, which impacts on both teaching/learning methodology and student assessment methods. the present study aims to analyze (1) teaching practices, (2) students’ preferences and perceptions regarding these practices, and (3) the relationship between these preferences and real practices. i focused on teaching of public administration (or administrative sciences) as a discipline and the possible variations in students’ preferences as opposed to teachers’ beliefs and real practices. moreover, i was concerned with educational effectiveness in terms of acquired competencies and aspects that could increase the effectiveness of students’ learning. in respect of these objectives i designed two questionnaires: one for students in public administration enrolled in undergraduate programs and another for the teaching staff. the two questionnaires addressed comparable research questions. some questions were similar in order to allow the comparison of responses for both categories of respondents. seven public universities were selected through a convenience sampling method from more than 32 romanian universities which have developed accredited public administration programs. i have chosen the seven most important programs according to student numbers, from all geographic areas of the country. the last part shows that the three hypotheses were not fully validated and for a further research, i should investigate the problem of poor results of my students by a qualitative research among the students with poor attendance and lower than average academic performance. keywords: public administration, education, teaching practices, student preferences. lecturer and student perspective regarding teaching public administration in romania alina georgiana profiroiu alina georgiana profiroiu associate professor, faculty of administration and public management, academy of economic studies, bucharest, romania tel.: 0040-21-319.1900 e-mail: alina_profiroiu@yahoo.com transylvanian review of administrative sciences, special issue, pp. 141-155 142 1. introduction within the last two decades, after the fall of the communist regime, there has been an increasing interest in public administration teaching in central and eastern european countries, and romania is no exception for this. it should be noted that over the last 5 years, romania has made considerable progress in developing public administration teaching. however the need to increase the students’ interest and involvement in the learning process is a widespread issue in all romanian universities. closely related to teaching methods are the students’ assessment methods. how do we know if students have learned what we are trying to teach them? the current picture in cee countries, drawn by nemec, dimeski and matei (2011), highlights a big concern: ‘lecturing is still the dominant teaching method and written multiple-choice tests and oral examinations dominate as test methods. for an increasing number of courses the final examination now includes an essay’. in contrast, as stensaker (2008) argued, in order to achieve quality teaching and learning, greater attention should be paid to teaching and learning processes. it is important that teachers are explicit within all teaching practices in order to further develop student learning in all areas of the curriculum. the way one learns at the university may be different from school or college. a stronger emphasis is placed on teaching how to apply information. this means, for example, being asked to answer questions that provide scope for opinion and debate, where there’s no right or wrong answer. ‘research indicates that students are the most qualified sources to report on the extent to which the learning experience was productive, informative, satisfying, or worthwhile. while opinions on these matters are not direct measures of instructor or course effectiveness, they are legitimate indicators of student satisfaction, and there is substantial research linking student satisfaction to effective teaching’ (theall and franklin, 2001). in this respect, it is important that teachers within the most diverse environments are kept aware of the positive and negative effects of teaching methodologies currently used within their classrooms. this awareness will then enable teachers to structure learning experience to meet the needs of all individuals while fulfilling the requirements of the curriculum and maintaining student satisfaction. in the field of romanian public administration education there is an increasing interest of administrative sciences teachers for identifying new and modern teaching and assessment methods. the general objective of this study is to investigate the teaching methods in public administration programs, linking those to students’ motivation and involvement in the learning process. despite of the abundant literature related to teaching and assessment methods in higher education in general and in particular in public administration programs, i am unaware of any other study in which this topic was examined with reference to administrative sciences as a specific discipline in romania. the present study aims to analyze (1) teaching and assessment practices, (2) students’ preferences and perceptions regarding these practices, and (3) the relationship between these preferences and real practices. 143 i focused on public administration teaching (or administrative science) as a discipline and on the possible variations in students’ preferences as opposed to their teachers’ beliefs. moreover, i was concerned with educational effectiveness in terms of competencies acquired and aspects that could increase the effectiveness of students’ learning. this research is also relevant for my teaching activity. it is motivated by the poor exam results of my students. i have taught administrative science and related disciplines for 13 years within the academy of economic studies in bucharest. administrative science and fundamentals of public administration are two introductory courses that i have taught for the first year of public administration bachelor program within the school of administration and public management. i believe it is my duty as well to investigate the causes of his situation. in addition, a review of the literature has shown that no studies are available that investigate teaching methods used by teachers of public administration in romanian universities. therefore, it is essential to conduct the research to find out whether the methods used by teachers in public administration disciplines are perceived as useful and relevant by the students. this paper is divided into four parts. the first part presents an introduction into the context where the problem was stated, a brief literature review and explains the purpose, the focus of the work and the motivation underpinning the choice of topic. this introduction was followed by a review of the existing literature relevant to teaching in higher education and, particularly, in public administration. the third part describes the research design and methodology. it starts by reiterating the statement of the problem, aims, objectives of research and research questions, and continues with addressing a description of the research methods, the research design and justification for its use in this study. several hypotheses have been tested in this study. the paper contains an explanation of the sampling procedures and data collection process, a plan for data analysis and a discussion of ethical considerations. the last part presents the data analysis, the findings and discussions, followed by conclusions and recommendations. 2. teaching methods in higher education with special reference to public administration at the beginning of the 2000s, public administration was considered to be a young discipline (stillman and kickert, 1999, p. 5), although elements of modern pa programs have been taught within other disciplines for a considerable amount of time (connaughton and randma, 2001, p. 3). the situation has changed and public administration ‘nowadays […] is widely acknowledged as an independent and interdisciplinary discipline within the broader family of social sciences’ (fenger and homburg, 2010, p. 385). moreover, as connaughton and randma (2001) noted there are differences within europe in public administration practice and education that dependent on various factors (such as the concept of the state/state tradition, the identity of pa as a dis144 ciplinary, multidisciplinary and interdisciplinary domain), and which have either directly or indirectly influenced the curricula of pa in individual european countries. in the literature, banyan (2005) has also analyzed the impact of globalization on public administration and has suggested some complementary alternative to usual classroom pedagogies, such as applied experiences (study abroad, internships and capstone projects). in romania, higher education programs in administrative sciences have been offered ‘by over 30 public and private universities, programs that have undergone evaluation and authorization processes, […] by the romanian agency for quality assurance in higher education (aracis) and even european ones, for example eapaa, for programs at ubb and snspa’ (nemec, dimeski and matei, 2011). the traditional educational process is expressed by the ‘teaching is telling’ metaphor, focused on the mechanical assimilation and further reproduction of information, while the new approach promotes the idea that ‘students must be active discoverers and constructors of their own knowledge’ (barr and tagg, 1995). an effective learning process should generate substantial changes in the students’ behavior. the quality of instruction in the new model of effective teaching results from two factors: the teacher’s ability to generate ‘intellectual excitement’ and a good ‘interpersonal rapport with the students’. van de meer and ringeling (2007) stressed the importance of effectiveness, by making teaching more relevant and less theoretical. raising the students’ involvement in the instruction process means activating them all along the teaching session, rather than considering them passive receivers of ‘chunks’ and ‘bits’ of knowledge, taught in a cumulative and linear manner. active learning is much more based on stimulating the learners’ genuine curiosity concerning the topic under discussion, relying on the educator’s regard of their intellectual perceptiveness. students should be encouraged to suggest approaches to a problem or to guess the results of an experiment. sander et al. (2000) found that first-year students expected to be taught mainly through formal lectures but preferred more interactive and group-based activities. similarly, hativa and birenbaum (2000) found that students favored a student-centered approach to teaching rather than a teacher-centered approach. however, the approach that is most preferred by students is the presentation of the material in a clear, well-structured and interesting way (norton et al., 2005, p. 538). as regards specific teaching methods, walsh (2006) highlighted the role of the case study in teaching public administration in a cross national context by principally transferring of cases between contexts and among students of varying cultural backgrounds. in the end, she recommended ways in which international academic cooperation could contribute to the effective use of the case study method in order to address globalization in curriculum. furthermore, mandel and keast (2009) underpinned the importance of new kind of learning in collaborative networks. trigwell and prosser (1993) identified five different approaches to teaching depending on the intentions and the teaching strategies: teacher-focused approaches 145 aimed at the transmission of information and student-focused approaches aiming to bring about conceptual change and intellectual development in the students. in a questionnaire-based study, norton et al. (2005) found that conceptions of teaching varied across different disciplines, but they revealed that teachers teaching the same disciplines at different institutions had relatively similar conceptions of teaching. 3. methodology 3.1. restatement of the problem traditional teacher-centered methodologies do not seem to be appropriate anymore for the current generation of students and the levels of teaching and learning performance are unsatisfactory in terms of both depth and breadth. as nicolaides (2012, p. 621) mentioned ‘sadly, many lectures have adopted conventional methods of teaching and learning [...]. in many lecture rooms, teaching and learning techniques are outdated and theoretical knowledge is still disseminated through the technique of talk and chalk’. nemec, dimeski and matei (2011) identify the budgetary constraints as the main cause of scarcity of interactive methodologies in cee countries. in this context, we could justifiably explore the current public administration teaching status in romania. in addition, i have a personal concern for my students’ poor results at the administrative science discipline in the first year within undergraduate public administration ba program at the academy of economic studies in bucharest. 3.2. aim and objectives of research the aim of this study was to explore the teaching practices in public administration undergraduate programs. this paper discusses the issues of appropriate teaching methods for administrative sciences or public administration as a discipline in romania, aiming to stimulate in the students the learning motivation and the involvement in the learning process and to reduce the failure rate. i have also been interested in the various teaching methods used by administrative sciences teachers in most important public administration programs of various romanian universities and attempted to explore the students’ opinion regarding the teaching tools they perceived as most interesting. in addition, i investigated the differences between staff perceptions and student preferences. in meeting the above-mentioned objectives the following questions guided my research and were particularly useful for the design of my research instruments: rq1: which methods of teaching and interest stimulation are considered appropriate by teachers and students? rq2: which are the methods of teaching and interest stimulation actually used in the process of teaching administrative science (or equivalent)? rq3: which is the educational effectiveness of the discipline in terms of competencies acquired and which aspects could contribute to increasing effectiveness? rq4: which is the students’ interest for this discipline and which particular factors can stimulate their interest? 146 3.3. description of research design and data collection in respect of these research questions i designed two questionnaires: one for students of public administration undergraduate programs and another for the teaching staff who taught administrative science or related disciplines such as science of administration, basics of public administration, introduction to public administration, theory of public administration or fundamentals of public administration (according to the name of the discipline in different programs). both of these questionnaires have been divided into three parts: one requiring the participants’ identification, the second one referring to the teaching style and the third one regarding the effectiveness of this discipline. some questions were similar in order to compare responses of both categories of respondents. within the two questionnaires, closed-ended questions predominated due to the advantages related to easier statistical analysis of responses, collection of questionnaires with large number of items and enhanced respondent’s confidence rates (chelcea, 2007). seven public universities were selected through a convenience sampling method from more than 32 romanian universities which have developed accredited public administration programs: academy of economic studies in bucharest (ase bucharest), university of craiova, national school for political and administrative studies (snspa), bucharest university, alexandru ioan cuza university (uaic iasi), ovidius university from constanţa, babeș-bolyai university cluj-napoca (ubb). i have chosen the seven most important programs according to the number of students, from all geographic areas of the country. convenience sampling, a type of non-probability sampling, is characterized as involving ‘readily accessible’ persons for study participation (lobiondo-wood and harber, 2002). ‘convenience sampling – or as it is sometimes called, accidental or opportunity sampling – involves choosing the nearest individuals to serve as respondents and continuing that process until the required sample size has been obtained’(cohen, manion and morrison, 2000). in fact my research could be categorized as action research because it promoted reflection on practice. the student questionnaire contained 20 questions, 19 closed-ended questions and one open-ended question. the student sample was comprised of 99 students: 10-20 students studying public administration at undergraduate program from each university were selected through convenient sampling (20 – academy of economic studies in bucharest (ase bucharest), 10 – university of craiova, 10 – national school for political and administrative studies (snspa), 15 – bucharest university, 15 – alexandru ioan cuza university (uaic iasi), 14 – ovidius university constanţa, 15 – babeșbolyai university cluj-napoca (ubb). questions were designed to examine the frequency of attendance to seminars and courses, bibliographical resources used for this discipline, student opinion about appropriate methods of teaching (as perceived) for the administrative science discipline. students were asked to rate different teaching methods on the scale of 1 to 5, 1 – being the least appropriate and 5 – being the most appropriate teaching. in addition, they were asked to what extent certain teaching aspects could facilitate understanding and 147 increase their interest and to what extent different teaching methods were actually used by the teachers who have taught administrative science or related disciplines. i used a likert scale to measure the perception of the students: not at all, to a small extent, moderately, largely, to a great extent. skills acquired were examined by rating on a one to five likert scale. students were asked to rate the discipline’s difficulty and their interest for discipline on a scale of 1 to 5. also they were requested to mention the factors that have contributed to better understanding and higher interest. the teacher questionnaire contained 17 questions, 16 closed-ended questions and one open-ended question. teacher sample included 17 individuals who have taught public administration at the selected universities: 4 – academy of economic studies in bucharest (ase bucharest), 2 – university of craiova, 3 – national school for political and administrative studies (snspa), 1 – bucharest university, 2 – alexandru ioan cuza university (uaic iasi), 2 – ovidius university constanţa, 3 – babeș-bolyai university cluj-napoca (ubb). the first part of the staff questionnaire contains identification questions: name of the discipline taught, year of the study when this discipline has been taught, teaching experience in related discipline and in public administration program and their background. additional demographic data was not requested, taking into account that this is more a qualitative research, not a quantitative one ‘which often values random sampling techniques and large participants numbers to make generalizations about population’ (polit, beck and hungler, 2001). however, i preferred the questionnaire instead of an interview because i intended to address the same questions to teachers and students in order to compare their responses. teachers were asked to rate different teaching methods they have preferred and they have considered to be preferred by their students on the scale of 1 to 5, 1 – being the least appropriate and 5 – being the most appropriate teaching methods. also, they were asked about the competencies considered to be acquired by rating them on a likert scale: not at all, to a small extent, moderately, largely, to a great extent. data collection prior to data collection, i called up a discipline coordinator from the above-mentioned universities asking them to administer both questionnaires, one to their colleagues who have taught the same discipline and the other to their students who have already passed the exams. the participants have voluntarily agreed to participate in the study. no compensation was offered. the questionnaires were sent by mail and were collected during april 12 and may 15, 2013. in addition i designed three research hypotheses that emerged from my own expectations about the findings. they have guided me in interpreting the findings. – h1: there are significant differences between staff opinions and student preferences related to teaching methods and stimulation methods of student interest for administrative science (or equivalent) as discipline. – h2: there are significant differences between student preferences for teaching methods and those used in reality. 148 – h3: there are considerable variations in appreciation between students and teachers regarding the competencies acquired at this discipline. for ethical considerations, i fully revealed my identity and assured anonymity and confidentiality of participants. during the initial contact of my colleagues from other universities, i assur you that i would provide them with feedback if they requested it. 3.4. research limitations, practical implications and originality the sample of the study was limited to seven romanian undergraduate public administration programs, those with the highest number of students and it is not statistically representative because students were non-randomly chosen. the absence of identifying information makes it impossible to determine with certainty the existence and number of duplicates. also, students and teachers’ preferences for innovative teaching and assessment methods were not investigated. the paper aims to increase the awareness of the higher education institutions about the importance of the teaching process, through knowing their students’ points of view about the teaching methods. this will stimulate the interest of the students and help to get students involved in the learning process. originality and value of the research derives from the fact that it was the first to be conducted in the romanian universities that have developed public administration programs. 4. data analysis, findings and discussion 4.1. data analysis after data collection each quantitative characteristic was codified and introduced in an excel sheet. data was analyzed using descriptive statistics from excel package. absolute and relative frequencies were computed for each category of responses. the mean of valid responses was computed for each quantitative characteristic defined based on each question. statistical methods were used to determine whether there are significant differences between teachers’ options and students’ preferences for different teaching methods, also for acquired skills. the means of each characteristic of two respondent categories (teachers/students) were compared in order to test the validity of the three hypotheses. 4.2. participants of the 17 teaching staff members, 3 were assistant professors, 9 – lectures, 2 – associate professors and 3 – professors. their experience in teaching public administration was the following: one with less than 1 year of experience, six with 3-6 years of experience, one with 6-9 years and nine with over 9 years of experience. in addition, their teaching experience within this particular public administration program was as follows: one with less than 1 year of experience, one with 1-3 years, three with 3-6 years, three with 6-9 years and nine with over 9 years of experience. regarding their 149 background, 4 were lawyers, 4 – economists and 9 majored in administrative sciences (public administration). with reference to students, the table below shows the frequency of students’ attendance to seminars and courses. an attendance of 50% and more than 50% was reported for more than 95% of students, to both courses and seminars. table 1: student attendance to seminars and courses frequency of students attendance to courses to seminars no participation to any course/seminar 0 1 less than 50% attendance 3 1 50% attendance 54 41 more than 50 % attendance 42 56 one of the questions of students’ questionnaires was a multiple responses question and it referred to bibliographical resources used by them in studying the pa discipline. the distribution of responses was the following: table 2: bibliographical resources used by students bibliographical resources used by students % course notes or seminar materials 81 handbooks 46 scientifi c books 28 printed journals 2 internet resources 42 electronic databases 16 as we can see, course notes and seminar materials were reported to be the most widely used bibliographical resource (81% of respondents), followed by handbooks and internet resources, with 46% and, respectively, 42% of respondents. in contrast, only 16% of the interviewees indicated electronic databases as bibliographical resource which is not in accordance with the knowledge-based society. 4.3. findings and discussion in this section i test the validity of the three hypotheses presented at the beginning of the study by comparing the mean values of teacher and student responses. instead of presenting the findings for each question i preferred to present the comparative results of the two questionnaires used. the results are presented as correlated with the hypotheses and not with the research questions. discussion regarding teacher and student preferences for teaching methods the first hypothesis referred to differences between staff opinions and student preferences related to teaching methods and ways of stimulating students’ interest for administrative science (or equivalent) as a discipline. to test it, i compared the mean values of questions 2.1, 2.2 and 2.3 from both questionnaires and the mean values of question 2.4 of teacher questionnaire with those of question 2.7 of student questionnaire. 150 table 3: teaching methods teaching methods preferred by teachers students differences q211 lectures 3.8 3.4 0.4 q212 discussions and debates 4.7 4.5 0.2 q213 case studies 4.1 4.0 0.1 q214 role playing 2.9 3.5 0.6 q215 projects 3.8 3.9 0.1 as shown in table 3, there were no significant differences (0.1-0.2 points) between teacher and student preferences for teaching methods, excepting the case of lectures, the most traditional teaching method (with 0.4 point differences) and role playing (with 0.6 points differences), which is, in my opinion, one of the most innovative teaching methods in the romanian academic environment. discussion on teaching methods used by teachers in the teaching process trying to respond to the second research question, i defined the second hypothesis related to the differences between students’ preferences for teaching methods and those used in real life at this discipline. this hypothesis was tested by comparing question 2.1 with question 2.5 from the student questionnaire. in addition, i compared the mean values of these questions with those obtained for question 2.5 of teacher questionnaires (in the case of teaching methods) because i was concerned if there were any differences between student preferences and teacher perception of student preference. as can be seen in table 4 the students reported significantly less preference for lectures and, in contrast, more preference for role playing than teachers actually used in their classrooms. i can thus conclude that students favor innovative teaching methods more than the traditional ones. however, both groups marked discussions and debates with the highest score. table 4: comparison of perception regarding the teaching methods teaching methods considered by teachers as being preferred by students (1) preferred by students (2) actually used by teachers (3) differences between (2) and (3) lectures 3.9 3.4 4.3 0.9 discussion and debates 4.7 4.5 4.2 0.3 case studies 4.3 4.0 3.9 0.1 role playing 3.8 3.5 2.9 0.6 projects 3.4 3.9 3.9 0.0 if we compare column (1) with column (2) from table 4, we can see that there are insignificant variations between student preferences for certain teaching methods as viewed by their teachers (column 1) and the real preferences of students (column 2): 0.5 points for lecture and projects. these figures show us that teachers considered lectures as being more preferred by students than real student preferences and, by contrast, teachers’ perceptions about students’ preferences for projects were less important than students’ real preferences. furthermore, by comparing column (1) with 151 column (3), we can observe that regardless of teachers’ perceptions about students’ preferences, teachers have not taken into consideration students’ perceived perceptions when they used certain teaching methods. all these results are consistent with the responses to question 2.4 of the student questionnaire, which indicated modern teaching methods, practical examples, requirements and assessment methods presented in the beginning of courses as contributing to a greater extent of better understanding of the public administration discipline (see table 5). table 5: aspects which contribute to a better understanding of the pa discipline aspects which contribute to better understanding (2.4) not at all to a small extent moderately considerably to the highest extent nr mean values lecture accompanied by a power-point presentation 5 12 27 24 3 3 3.7 practical examples 1 0 3 40 53 2 4.6 examples from others countries’ public administration 1 7 17 35 34 5 4.3 encouraging additional bibliography study 1 17 31 31 13 6 3.7 encouraging critical analysis 2 9 31 35 17 5 3.9 use of modern teaching methods 0 1 11 31 50 6 4.7 use of appropriate assessment methods 0 2 11 44 38 4 4.4 informing students at the beginning of the course about discipline requirements and assessment methods 2 0 8 29 56 4 4.6 furthermore, the previous question was reiterated in another form, by asking students to rate from 1 to 5 certain aspects helping them to better understand the transmitted knowledge and to stimulate their interest. in this case students rated the most the debates and discussions within courses and seminars (4.1), practical examples (4.0), and preparation and oral presentation of individual papers (3.9). table 6: aspects helping understanding among students and stimulating student interest aspects helping better understanding of knowledge and stimulating students’ interest (3.5) mean values standard deviation aspects helping better understanding of knowledge and stimulating students’ interest (3.5) mean values standard deviation q351. debates and discussions within courses and seminars 4.1 0.93 q356. comparative examples with others countries 3.6 1.14 q352.teachear’s lecture 3.8 0.82 q357. projects 3.7 1.07 q353.visits of public institutions 3.3 1.47 q358. oral presentations of materi-als prepared by colleagues 3.7 1.04 q354. participation at workshops and conferences 3.0 1.24 q359. preparation and oral presentation of individual papers 3.9 1.12 q355. practical examples 4.0 1.11 q3510. practitioner’ lectures 3.5 1.29 my findings were not fully consistent with nemec, dimeski and matei’s (2011) remark that highlighted a big concern: ‘lecturing is still the dominant teaching method and written multiple choice tests and oral examination dominate as test methods’, because my results show that multiple-choice tests are no longer the dominant as152 sessment method. in addition, discussions and debates were actually used and oral presentation of individual paper is considered by students a factor that could contribute to better understanding of transmitted knowledge and to stimulate their interest. discussion of teaching effectiveness, measured by acquired skills and student interest for the discipline the last hypothesis relates to variations in student and teacher appreciation regarding the competencies acquired at public administration disciplines. it was tested by comparing question 3.4 of both questionnaires. with reference to effectiveness of the public administration discipline, table 7 shows a small variation between teachers and students considerations related to skills acquired during this discipline (0.1-0.5 points). the highest variations were reported for the ability to analyze, synthesize and forecast (0.5 points) and for the ability to make decisions and ability to use specific terms of administrative science (0.4 points). table 7: perception of acquired skills acquired skills consideredby teachers considered by students differences q341. ability to consult, interpret and apply legal texts of public administration 3.6 3.7 0.1 q342. ability to analyze, synthesize and forecast 4.1 3.6 0.5 q343. ability to work in teams 3.6 3.8 0.2 q344. decision making abilities 3.5 3.9 0.4 q345. ability to use specifi c terms of administrative science 4.7 4.3 0.4 in response to the last question regarding students’ interest for this discipline and factors stimulating their interest, students were asked to rate the discipline’s difficulty and their interest for administrative science on a scale of 1 to 5. the mean value for responses with reference to the discipline’s difficulty was 3.16 and the standard deviation was 0.69, which shows a little variation from the average. students’ interest for the public administration discipline was high with a mean value of 4.04 and a standard deviation of 0.65, which indicates that data points tended to be very close to the mean value. in addition, students were asked to indicate the factors that could contribute to increasing their interest for the related disciplines. 91% of the respondents indicated the discipline’s usefulness for civil servants training, almost half of them indicated that administrative science is the basic foundation for other disciplines and it contributes for better understanding of social reality. a third reported that this discipline facilitates the insertion in the labor market and a small number of those questioned (11%) indicated other reasons. 5. conclusions and recommendations in conclusion, i could state that the three hypotheses assuming important differences between students and teaching staff were not fully confirmed. a possible explanation could be the fact that the student sample includes mainly students with high 153 attendance and better than average results. the students’ opinion follows the teaching staff preferences. these results are consistent with the fact that 81% of students used course notes and seminar materials given by their teachers as bibliographical resources. therefore, for further research i should investigate the problem of poor results of my students by conducting a qualitative study among the students with poor attendance and lower than average academic performance. the main contribution of this study lies in the fact that there are no studies that have explored teaching in public administration courses and seminars in romanian pa programs. it also has practical relevance as the results of this study may help academic staff to design public administration courses that will further enhance students’ satisfaction and success. while the body of public administration research is growing in romania, public administration courses have not received adequate attention. researches such as this one are significant to all teachers in romanian public administration programs, particularly to those who teach administrative science or equivalent disciplines. the results of this study will possibly contribute to the body of knowledge useful to higher education in offering courses that stimulate students’ interest. this study was limited to public administration courses at seven romanian universities that have developed public administration programs. the results should not be generalized to other universities or populations because i used convenience sampling instead of random sampling. this research provides information about what types of instructional practices were actually used by teachers in public administration higher education. the results of the study indicated that there are no significant differences between students and teachers’ preferences regarding the teaching methods or the factors that could stimulate students’ interest. however, it is possible that responses for students’ survey were provided only by students with acceptable results who attended these courses. consequently, a conclusive explanation for students’ poor results still needs to be developed. it seems that teachers from the field of public administration undergraduate programs actually used a more limited and traditional repertoire of teaching strategies than their students preferred. students preferred debates and discussions within courses and seminars, practical examples and oral presentation of individual papers. these findings show that students prefer to be actively engaged in the educational process. hence, a higher education initiative needs to be designed in order to enhance the use of a wide range of strategies and promote a student-centered learning environment and improve the quality of instruction in higher education programs. it is important for the academic staff to be able to use a variety of methodologies within their teaching in order to 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(eds.), the modern state and its study: new administrative sciences in a changing europe and united states, aldershot: edward elgar, 1999. 17. theall, m. and franklin, j., ‘looking for bias in all the wrong places –a search for truth or a witch hunt in student ratings of instruction?’, 2001, new directions in educational research, vol. 109, pp. 45-56. 18. trigwell, k. and prosser, m., ‘congruence between intention and strategy in university science teachers’ approaches to teaching’, 1993, higher education, vol. 32, pp. 77-87. 155 19. van der meer, f.-b. and ringeling, a., ‘education strategies in post experience public administration master programs’, working paper, egpa conference, madrid, 2007. 20. walsh, r., ‘exploring the case study method as a tool for teaching public administration in a cross-national context: pedagogy in theory and practice’, working paper, egpa conference, milan, 2006. 144 abstract shale gas involves a technology which is a controversial method of energy production mainly because there are uncertainties about the possible environmental and human health impacts. the article aims to identify the level of knowledge in relation to the impact of environmental risks attached to shale gas exploitation in the academic and scientifi c community. it does so by employing the expert elicitation approach which has the benefi t of quantifying the judgment of individual experts. we have revealed a consistency among researchers in assessing the level of uncertainty of the main environmental risks and a preferred policy option in dealing with uncertainty, a vow for improved transparency, openness and ease of access to information. shale gas policy-making in europe needs a science-based approach as science informs policy by delivering objective and reliable knowledge. the article concludes that developing a comprehensive approach based on scientifi c data and an appropriate regulatory framework will provide a path forward for the future development of contested policies like shale gas. keywords: shale gas, uncertainty, access to information, expert elicitation. uncertainty in the shale gas debate: views from the science–policymaking interface constantin marius profiroiu paolo gasparini valentina ivan constantin marius profiroiu professor, faculty of public administration and management, academy of economic sciences, bucharest, romania e-mail: profi roiu@gmail.com paolo gasparini professor emeritus, university of napoli federico ii, napoli, italy, and amra scarl, napoli, italy e-mail: gasparin@na.infn.it valentina ivan assistant professor, faculty of public administration and management, academy of economic sciences, bucharest, romania e-mail: valentina.ivanjb@gmail.com transylvanian review of administrative sciences, no. 46 e/2015, pp. 144-161 145 1. introductory remarks shale gas, an unconventional hydrocarbon resource which became accessible through a contested technology occurs within a complex, multilevel context, involving multiple stakeholders and diff erent levels of governance. europe has so far experienced a hesitant progress, mainly on environmental grounds. policy formulation in europe poses a great challenge because it represents a problem of decision-making under uncertainty considering that impact assessments are still being carried at european level. the european commission has released so far only a non-binding recommendation aimed to guide member states and has sponsored several reports aimed to assess the environmental, economic and social impact of shale gas(european commission’s website, undated). ivan (2013, p. 82) highlights that the european commission has to make sure that operations comply with all applicable eu legislation and safeguard the safety of the environment and humans, in particular to paint a clear picture on potential risks and impacts. in an att empt to address concerns with sound scientifi c evidence, the european commission has decided beginning with 2015, as part of its horizon 2020 research and innovation program to grant about € 12 million to two studies aimed to assess and mitigate the environmental footprint of shale gas exploration and exploitation (kelly, 2015). the article is split in three main sections. first, the introductory part will briefl y point to the literature on the environmental impact with the aim to identify the main risks,as well as knowledge about their impacts on environment. considering that production from shale rock formations has not yet started in europe, uncertainties should be clarifi ed and properly assessed before being incorporated in the decision making process. the literature review shows that uncertainty signifi cantly limits the degree to which science can provide a solid fundament for policy making. the second part sets out the research design based on an expert elicitation questionnaire which was employed to gain knowledge into the views of representatives of academia and scientifi c environment which have expertise in the shale gas research fi eld. lastly, the discussions section will reveal experts’ view on the uncertainties in the process, barriers encountered when assessing relevant information, type of information which should be considered confi dential and policy options to ease the science – policy relation. to conclude with, the article argues that, although environmental risks of shale gas development have been reviewed,the context is still surrounded by uncertainty which has to be properly assessed when taking governmental decisions or drafting regulatory framework to accompany the development of shale gas in europe. 2. shale gas: a tale of two sides there have been many discussions about the costs and benefi ts of developing shale gas among scientists, industry, representatives of environmental organizations, policy makers, and the general public. the debate was polarized around the potential gains in scoring emission targets (howarth, santoro and ingraff ea, 2011, p. 679; wang, ryanand anthony, 2011, pp. 8196-8199), economic benefi ts (husain et al., 2011; 146 medlock, 2012, pp. 33-37), energy independence (gény, 2010, p.10; melikoglu, 2014, p. 460) and national security (kuhn and umbach, 2011), as well as likely threats to the environment and public health. boersma and johnson (2012, p. 570) split the environmental impacts associated with shale gas in three main categories: (i) groundwater contamination and release of waste water, (ii) greenhouse gas and fugitive methane emissions, and (iii) increased seismic activity. first, hydraulic fracturing has been criticized for excessive water use (kargbo, wilhelm and campbell, 2010, p. 5681; zobak, kitasei andcopithorne, 2010, p. 7) and polluting water due to potential toxicity of fracturing fl uids (chen et al., 2014, pp. 2546-2555; colbornet al., 2011, pp. 1039-1056) and methane contaminating drinking water (osborn et al., 2011, pp. 8172-8176; wood, 2012, p. 4). ground water issues have become an increasingly important area of research (younger, 2014, p.7), particularly ‘as a number of knowledge and information gaps relating to hydrogeological data exist, especially in the european context’. second, shale gas emits greenhouse gas caused by fugitive methane, thus leading to harmful health impacts (howarth, santoro and ingraff ea, 2011, pp. 679-690; wigley, 2011, pp. 601-608; white et al., 2015; jones, hillier and comfort., 2013, p. 387). finkel and hays (2013, p. 889) have emphasized that ‘scientifi c evidence on the impact of shale gas development on climate change is also highly contested considering that, despite the fact that natural gas burns cleaner than coal, methane is leaked and vented into the atmosphere throughout the lifecycle of shale gas development’. researchers (wigley, 2011, pp. 601-608; cathleset al., 2012, pp. 525-535; howarth, santoro and ingraff ea, 2012, pp. 1-13; wang et al., 2014, p. 16) sharing diff erent views on the impact have emphasized that there are uncertainties related to methane leaks. third, researchers have assessed the seismic risks (ellsworth, 2013; green, styles and baptie, 2012) portraying the likely impacts. to conclude with, styles (2015, p. 314) reviews in detail the main environmental impacts of shale gas extraction concluding that there do not seem to be insurmountable obstacles to the extraction of shale gas ‘in a properly regulated regime’.wang et al. (2014, p. 1) have summarized the key reports, papers and analyses that show the evolution of shale gas, reviewed evidence of revolution in us, and discussed environmental challenges att ached to shale gas exploration and exploitation and portrayed a wide range of views on the environmental impacts. furthermore, barcelo and bennett (2015), scientists and co-editors-in-chief of science of the total environment journal have painted a clear picture of environmental and human health risks of fracking by reviewing papers from 2012 up to fi rst half of 2015 covering climate change, environmental health impacts, and risks to the aquatic environment issues. the scientists have concluded that fracking operations are not free of risk to the environment and human health; however, scientists have a diff erent view when assessing impact. cairneyet al. (2015, p.1) argue that ‘there are two types of information relevant for the shale gas debate, that is the technical information, used to address scientifi c uncertainty, and political information, used to bolster agenda sett ing strategies’. this article will focus on the technical information used to address the scientifi c uncer147 tainties, defi ned by the researchers (cairney, fischer and ingold, 2015, p. 1) as ‘the information on the technical aspects of unconventional gas development, as well as scientifi c information on potential implications for the environment’. for the purpose of this article, we argue that technical information relevant (but not exclusive) to the shale debate is data related to greenhouse gas emissions, leaked methane gas, groundwater pollution, chemicals used in the fracking technology, data on the water supply, risk of earthquakes-seismicity data, air and noise pollution to local areas, and infrastructure issues. the uk environment agency (2013, p.5) has summarized in a diagram the main risks (see figure 1) which were taken into consideration for this research. figure 1: environmental impact from shale gas hydraulic fracturing operations source: environment agency, uk, 2013, p. 5. we argue that science plays a key role in providing societal responses to these problems, but more importantly, it informs policy by producing objective, valid and reliable knowledge. environmental issues are complex and fall within the realm of a number of scientifi c and socio-economic disciplines; are subject to integrated approaches and public participation.to bett er respond to the shale gas debate, a wide area of resources are employed, among which science and evidence based decision making (aea, 2012; boersmaand johnson, 2012, pp. 570-576; pearson et al., 2012; eaton, 2013, pp. 158-169; gamper-rabindran, 2014, pp. 977-987), social dialogue and stakeholder consultation (north et al., 2014, pp. 8388-8396; jacquet, 2014, pp. 83218333; wheeler et al., 2015, 299-308) are of paramount importance. environmental regulation, and in particular tailor made shale gas policy begs for a more rational, rigorous and systematic approach to policy-making. fischer (2001, p. 34) argues that ‘the demand for scientifi c expertise is especially strong among policy-makers in the environmental and natural resources policy, mainly because of the long term impact and uncertainty’, view shared by profi roiu (2006, p. 45) who draws att ention to the fact that, in relation to environmental issues,‘expertise becomes a key factor in organizing 148 political activity’. this is particularly the case of shale gas which involves a new technology whose long-term impact is still under consideration and raises fi erce debates. the link between scientifi c information and policy is not linear or unproblematic (cairney, 2014). involving science in the decision making process bears some criticism considering that scientifi c consensus does not necessarily guarantee the level of certainty demanded by policy makers. first, levin and cooper (2012, p.18) underlined that ‘knowledge emerging from research (...) is subject to revision as time goes on’. this is especially a limiting factor in the shale gas process due to the insuffi cient track record. second, carney et al. (2015, p.3) emphasize that ‘policymakers decide who and what information to trust, to help them develop a sense of risk associated with any decision’. based on the risk level, policy makers decide on the acceptable risks counterbalanced by the likely benefi ts and take a decision. policy makers are urged to take decisions despite the scarce availability of data and the knowledge gaps, despite their limited abilities to comprehend scientifi c reports. third, while ‘expert power’ may to an extent be necessary, haas (2004, p. 115-136) suggests that ‘more stringent “science policy” involving careful and transparent coordination by government of the use of expertise is key to legitimacy’. despite the limitations in considering uncertainty, disregarding it can negatively impact the policy making process as poor informed decisions in this case are likely to lead to negative long term environmental and human health consequences.van der sluijs (1997) highlights that ‘the failure to acknowledge and treat uncertainty can lead to poor decisions’, while walker et al., (2003, p. 5) stress that especially for environmental science a ‘better understanding of uncertainty and of how the level of uncertainty infl uences action is a prerequisite’. van asseltand rotmans (1996, p. 121) highlights that there are three main reasons for the degree of uncertainty att ached to scientifi c problems: (1) they are universal in scale and long-term in their impact; (2) available data is lamentably inadequate; and (3) the phenomena, being novel, complex and variable, are themselves not well understood. the shale gas debate scores all these three. first, considering that unconventional gas resources such as shale gas can be found in the us, europe, china or australia, solving the shale gas related uncertainties is likely to lead to responses to a universal scale issue. second, data on environmental impact att ached to shale gas exploitations is still being piled up, with a thorough long term impact lacking. in europe, the situation is even more in the dark considering that production from shale gas formations has yet to happen. third, evidence of its environmental impact is still under consideration, with risks still under review, which makes drawing scientifi c conclusions with a high level of certainty very diffi cult. uncertainty may arise because of incomplete information – whatwill be the environmental impact in the year 2030 of shale gas on groundwater in the u.s., or what will be the impact of the fracturing process in 30 years on environmental parameters (water chemistry and fl ow, air quality, micro-seismicity and seismicity, ground deformation). refsgaard et al. (2006, p. 1547) concludes that main reasons for uncertainty might include a judg149 ment of the information as incomplete, blurred, inaccurate, unreliable, inconclusive, or potentially false. to bett er exemplify how science can support the decision making process on the shale gas debate and reduce uncertainty, we will portray a short case study on assessment of seismic risk in uk. in april 2011 there were small tremors (which measured magnitude 2.3 and 1.5 on the richter scale) at preese hall near blackpool, where hydraulic fracturing operations were taking place. styles (2015, p. 332) highlights that ‘the felt seismicity (...) att racted signifi cant public interest worldwide, resulting in a government enquiry and an 18-month suspension of operations’. the uk department of energy and climate change (decc) suspended all hydraulic fracturing (june 2011) operations to investigate the issue and commissioned three independent experts1 to assess thecauses based on available geological and geophysical data. the scientists were selected because of their knowledge of geology, seismicity, and fracking (decc, 2014). detailed technical investigations were undertaken, which concluded that the tremors were probably caused by fracking fl uids fl owing into a geological fault (green, styles and baptie, 2012). based on scientists’ recommendation a traffi c light system was put in place which was aimed to determine whether the injection of water is safe; a threshold was set, with operations to be ceased if a tremor of magnitude 0.5 or greater is detected. this has also created a window of opportunity for the uk government which introduced new controls and checks for operators using hydraulic fracturing and imposed a stricter monitoring. based on available data, science has informed decision makers in this respect. studies carried have also shown that the probability of further earthquake activity is low which has given confi dence to the authorities to allow fracturing operations in uk and lift the moratorium in december 2012. decc (2014, p. 1) highlights in its fi nal report assessing the seismic risk that ‘as more data becomes available, the eff ectiveness of the new rules, including the threshold imposed will be reviewed’, fact which streamlines the importance of new evidence brought by science in taking decisions and drafting policy. the article argues that in contested policy issues, such as the shale gas, science is set to be an infl uential player in the public arena, a stakeholder which should contribute to a more democratic public debate by informing, communicating results and sharing knowledge. we emphasize that informed shale gas (policy) decisions require constant review of the uncertainties taking into consideration a range of possible scenarios. decision making over shale gas in europe will be most eff ective if scientific uncertainty is incorporated into a rigorous theoretic framework, and not ignored. moreover, the eff ective access to information and expertise represents a prerequisite for the use of science to inform policy-making and regulation. scientifi c community struggle to bring light to the debate should be complemented by policy makers’ efforts to design bett er methods to incorporate science into the policy-making process 1 brian baptie from the british geological survey, peter styles from keele university and chris green from g-frac. 150 and address the growing public concerns and diminish inaccuracies. this is likely to require improvements in the regulatory framework on public participation process, as well as on issues of transparency, accountability, and access to information. 3. research design the article’s main objective is to identify environmental risks att ached to shale gas exploitation and the level of knowledge in relation to the impact of these identifi ed hazards in the academic and scientifi c community. first, a literature review was performed to point to the main environmental risks att ached to shale gas exploitation based on information extracted from specialized publications, peer-reviewed, impact studies and reports of international bodies and academic research institutions. second, we emphasize that involving science in the decision making process leads to a more rigorous and systematic approach to policy-making. finally, we aim to question experts’ judgment on the level of data reliability with regard to environmental impacts. the article will empirically examine two hypotheses. first, our assumption is that there is a limited degree of certainty in relation to environmental risks att ached to shale gas exploitations. second, we intend to fi nd out which are the most suited policy options to deal with uncertainty issues at the european level. the list of researchers targeted for this study was put together using the snowball sampling instrument. based on the studies commissioned by the ec between 2012 and 2014 to external consultants (who provided a comprehensive and trustworthy list of references), we have drafted a list of potential respondents for our research. on top of this, we have used the following criteria: (a) membership to a specifi c science institutional fi eld (university) or to a research institute, or think-tank; (b) within the scientifi c fi eld, membership to a specifi c discipline (such as geology, mining, hydrology); (c) has carried research on shale gas, preferably commissioned by a state/national governmental body, european bodies/agencies. in total, the list numbered about 150 representatives to whom a questionnaire was sent. this method was preferred because ec has stressed that these studies have been used when drafting key recommendations for member states pondering upon investigating potential for shale gas. this stands for an indication of data (information, knowledge) a decision maker would use in making decisions and shaping policy. the research was conducted using a quantitative methodology, employing a questionnaire base research, encompassing scale, open end and multiple answers type of questions. a questionnaire-based expert elicitation was performed which is usually used when a research needs to achieve knowledge from individuals that have a particular expertise on a subject where there is insuffi cient knowledge (refsgaardet al., 2006, p. 1590; knolet al., 2010, p.1) or when issues are contentious and complex (o’hagan, 1998, p. 21). the questionnaire was sent via email to the 150 representatives of the academic and scientifi c community who were engaged (or still are) in shale gas research. sills and song (2002, p. 24) indicate that ‘a non-response rate of 80% for web-based questionnaires is not uncommon’. our response rate was low, a total of 17 151 experts out of 150 responded (11%), most likely due to holiday period (we had a signifi cant number of ‘out of offi ce’ replies). responses were submitt ed during may-july 2015. results should thus be treated with care as our sample is a limited subset of the total expert-population, thus the results are not necessarily representative, but rather valuable for the line of arguments and the insights into this highly contested issue. however, the ensemble of information we have from our literature review and the consistency of answers is signifi cant enough for our purposes. researchers have participated in the study on the understanding that their contributions would remain anonymous. the questionnaire was structured in three main parts: 1) environmental impact and reliability of present data on shale gas exploration, 2) access to data when doing research in this fi eld (including barriers), and 3) potential solutions to improve the situation. 4. discussion from the 17 replies that we have got from the academic and scientifi c community, all of the respondents have carried research on shale gas, eight being commissioned to carry research on shale gas for a national/local governmental offi ce or european commission. this has confi rmed the snowball sampling methodology employed has led to a correct identifi cation of respondents for this research. for a detailed list of respondents’ affi liation see figure 2 below. there were eleven representatives of universities, two from geological research institutes, and other four research institutes with competences in environment and energy related issues; with ten answers from u.s. and canada, while the rest came from european countries (united kingdom, germany, poland, romania and italy). out of the ten researchers from u.s. and canfigure 2: respondents’ affi liation 152 ada, four have been involved in information sharing with governmental offi ces of european member states or bodies of the european commission with respect to shale gas knowledge. we have asked researchers to indicate their main area of expertise with the aim to identify researchers that could evaluate risks associated with the environmental impact of shale gas development (see figure 3 below). we argue that researchers from the geology, hydrology, and natural sciences have expertise in assessing environmental impacts identifi ed through the literature review, such as impact on water resources and pollution of water, seismic risk or impact of greenhouse gas on the environment. we have not disregarded answers from the environmental economics and law which are assessing the environmental impact from an economic perspective (for example, costs att ached to hazards) and from the regulatory point of view aimed to accompany the shale gas development. the proportion of experts from each specialization is uneven, which has an impact on the fi ndings; on the other hand the heterogeneity is a preferential feature of the sample of experts and this is why we aimed for experts from diff erent fi elds. figure 3: respondents’ area of expertise second, we have asked researchers to rank using a 3 point likert scale (limited, medium and robust) the level of precision with which environmental hazards related to shale gas exploration and exploitation can be estimated, given the present state of knowledge. based on the literature review on environmental risks att ached to shale gas hydraulic fracturing operations, we have drafted a list of main risks. we claim that the views of the interviewees are neither exhaustive, nor representative of scientifi c and academia community, but it rather holds subjective beliefs, experts’ judgment for a small sample. the impact on water resources from water for the hydraulic fracturing process was identifi ed as being the risk for which there is a robust level of knowledge, closely followed by the risk related to contamination of soil, surface or groundwater due to spills of chemicals or return fl uids (see figure 4 below). most of the scientists argued that there is a medium level of knowledge in relation to the risks related to earth tremors and earthquakes and treatment or disposal of waste waters. respondents’ view shows there is predominantly a medium level of information on the risks at153 tached to shale gas development, with contamination of groundwater due to mobilization of solutes or methane perceived as baring a limited level of knowledge, closely followed by the risks att ached to fugitive emissions of methane and contamination of groundwater due to poor well design or failure. this comes to infi rm our hypothesis that there is a limited degree of certainty in relation to environmental risks att ached to shale gas exploitations. there are three possible explanations for this. first, considering that shale gas exploitations are in an early stage of development, evidence to assess the impact is being collected at an impressive speed. the literature review section has mentioned peer-reviewed articles, most of them dating from years 2011 and 2012. this is likely to show that an increasing volume of impartial, evidence-based information now exists as science helps build the evidence for this very recent and contested topic. second, we have a limited number of answers which make our fi ndings bias to experts’ judgment. third, specialization of the respondent is relevantwhen weighing the environmental risks. for example, for the risks related to contamination of groundwater dueto solutes or methane, or due to poor well design or failure, half of the respondents argued that there is a medium level of certainty. however, the only hydrologist who has participated to this research has indicated that there is limited knowledge with regard to the two mentioned risks. third, in order to identify the reasons for uncertainty in the fi eld, we have asked whether the lack of access to relevant data needed to carry the research was one of the barriers. this was a simple ‘yes or no’ type of question. fifteen out of seventeen respondents stressed that relevant data was missing, showing that some of the uncertainty in the fi eld is likely to stem from the scarcity of data. using a ‘yes or no’ type of question, we than asked whether researchers have encountered barriers in 3 4 4 1 2 4 5 3 5 10 8 10 6 8 8 7 8 3 4 5 6 4 4 4 impact on water resources earth tremors and earthquakes fugitive emissions of methane treatment or disposal of water contamination of soil, surface or groundwater due to spills contamination of groundwater due to well design or failure contamination of groundwater due solutes or methane impact on air quality robust medium limited figure 4: reliability of assessment of environmental impacts from shale gas hydraulic fracturing operations 154 accessing relevant information when carrying research on shale gas and 14 respondents mentioned ‘yes’, which shows that data needed to carry research is not publicly available. with an open type of question we wanted to identify how respondents have overcome constraints in assessing data. barriers seem to derive from three main factors. first, ‘much of the relevant data are proprietary’and when made available by the corporate sector, the data ‘is viewed with suspicion by some parties in the public debate’. second, ‘there is a general lack of data on impacts of operations on broader landscape’, fact that stresses that the long term impact were not properly assessed up to this moment. lastly, sometimes the regulation forbids operators to make data public. forth, we have asked respondents to mention whether any type of data should not be disclosed. the literature review on main environmental risks has helped us categorize relevant data for the debate; furthermore, we have identifi ed data supplied by operators (revenue and cash fl ow data – capital and operating expenditures), as well as operational data (well productivity, construction and development plans) as being relevant for the debate. our assumption was that some sensitive data (such as company related data) should be protected and kept confi dential, and thus the access to this type of data would be restricted. furthermore, we have assumed that relevant data is also in the possession of governments, thus making licensing data procedures leading to the grant of an exploration and exploitation authorization) and geo scientifi c data (seismic and geological profi les, quality and quantity of resources) of key importance. we have asked respondents to mention which type of information should be considered confi dential and/or protected in oil and gas exploration and exploitation of unconventional resources. the company data, in particular the revenue and cash fl ow data of operators (including capital and operating expenditures) was identifi ed by eleven respondents as being the most sensitive. this was followed by operational data (such as well productivity, construction and development plans), with ten replies, out of which three scientists argued that it should only be partially confi dential. geo scientifi c data ranked third with eight replies, of which two scientists argue that it should only be partially confi dential. 0 5 10 15 licensing data geo scientific data water availability environmental impact assement environmental mitigation costs fracturing fluid additives operational data revenue and cash flow data should be partially confidential should be confidential figure 5: type of data which should be kept confi dential 155 respondents have shown that with the exception of company specifi c data, most of the data relevant for the debate should be made public. there are mixed views regarding access to data which is usually in government’s possession, such as geo scientifi c data and licensing data procedures. our example on the science-policy making link has proved how relevant data regarding seismic and geological profi les was to identify the problem and take a decision in this respect. in this particular case, policy makers have used scientifi c conclusions grounded on reliable and accurate data, information which was used to create important scientifi cresearchresultsandleadtoimproved quality of information on the topic. fifth, we then wanted to identify the way forward in dealing with hindered access to data,so we have advanced a list of policy options which could accompany the process and lead to improved quality of governance and science-based policy making. we have identifi ed the policy options based on the stakeholder consultation carried by the european commission (2013, pp. 67-83) with the aim to bett er understand stakeholders’ views and concerns. in total, 22,875 respondents participated in the consultation. this consultation was the basis for the recommendation on minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high volume hydraulic fracturing issued on january22, 2014. the main policy options tested by ec have revealed that 51% of individual respondents believe that a comprehensive and specifi c eu piece of legislation for shale gas should be developed while 47% recommend clarifying existing eu legislation through guidelines, with 45% of individual respondents disagreeing with the statement that the current framework is appropriate to address the identifi ed challenges and environmental risks. 0 2 4 6 8 10 12 14 do nothing, the current framework is appropriate clarify existing eu legislation in terms of access to information through guidelines more stringent freedom of information regulation at european or national level voluntary compliance to international initiatives such as extractive industry transparency initiative figure 6: preferred policy option respondents have indicated ‘clarifying existing eu legislation in terms of access to information through guidelines’ (13 out of 17) as most preferred policy option (see figure 6 above), followed by ‘imposing more stringent freedom of information regulation at european or national level’ (9 out of 17). third preferred option was voluntary compliance with international initiatives such as extractive industry transparency initiative. this has shown that researchers feel there are inconsistencies in terms 156 of regulation and even legislative gaps, and that more accountability and increased transparency is needed. we have assumed that clarifying legislation in terms of access to information is the most preferred policy option by the researchers as sometimes the regulatory framework hinders access to data. public disclosure of data related to shale gas development is likely to gain public trust and therefore improve public governance in the opinion of most of the scientists interviewed. finally, we have asked our respondents, through an open question, their view on disclosure on data and whether it can contribute to an improved act of governance.‘more information should be compiled and shared in a way to facilitate research’ which can be used to inform the public at large considering that the debate is an emotion fuelled one, an ideological batt le. one respondent emphasized that‘both the public and the press are, in general, poorly informed about the main environmental issues; all would be bett er served by more transparency and public disclosure about operations, potential impacts and mitigation plans’.a way forward would be for the ‘regulators to see researchers as helpful partners in the safe oversight of industrial activities’ as ‘limited data access always breeds suspicion’ concludes one researcher. on the other hand, some expressed wariness because disclosure will not achieve what it is expected‘due to the already large mistrust of the public in oil and gas companies’and the fact that it has to be supplemented by other aspects (‘there is a lot more to gaining public trust than information disclosure’) while other, building on u.s. experience has argued that ‘you could have a 100% risk free well drilling and natural gas production process and 10-15% of a very vocal part of the population would still be strongly against it’. reluctance of governments and companies does not encourage research, and mechanisms aimed to ease access to data or compile and share information to facilitate research are sometimes missing. to conclude with, one researcher streamlines the debate by putt ing forward the argument that ‘government data should be public by defi nition; however, the situation with corporate data is trickier for competitive reasons’and this could be solved by limiting the scope of what is considered trade secret. improved access to information and data should facilitate research which in turn could help close the knowledge gaps by providing unbiased, reliable information to be incorporated in the decision making process. without relevant information, hazards directly att ributable to fracking operations cannot be quantifi ed. 5. concluding remarks literature review on the environmental challenges att ached to shale gas exploration and exploitation portrayed a wide range of views on the magnitude of impacts. it is acknowledged that fracking operations are not free of risk to the environment; however, scientists have a diff erent view when assessing the impact. scholars have emphasized that there is predominantly a medium level of information on the risks att ached to shale gas development, highlighting that evidence to assess the impact is being collected in a fast-paced manner, with an improved accuracy of data provided by science.the fi ndings contribute to the current state of art reviewing the main environmental impacts by identifying the risk perceived to hold limited knowledge. 157 clarity in science should be supplemented by clarity in regulation which safeguards access to information and transparency. our research has showed that the most preferred option in dealing with uncertainty is clarifying existing eu legislation in terms of access to information through guidelines. respondents have shown that more accountability and openness towards the general public and increased transparency is needed. considering that the shale gas debate is mainly an emotional fuelled one, an ideological batt le, the lack of science, evidence and scarce data breeds suspicion. making reliable and accurate data available for research purposes will lead to scientifi c evidence grounded on quality data which can be easily reviewed, thus eliminating inconsistencies and biases. there are signifi cant challenges att ached to eff ectively incorporating science, out of which limited disclosure of data relevant for the shale gas debate makes it diffi cult for representatives of academia and scientifi c community to carry research. we think that further research should be done to assess which data should be considered confi dential in this debate. our case study on incorporating science and evidence when making decisions has revealed that scientifi c data on the issue should be open access. furthermore, instead of shaping a transparent framework for the debate, the regulatory framework hinders access to information. future research should be carried in assessing the regulatory framework at european level in terms of access to information. however, a signifi cant part of uncertainty related to shale gas development may be unavoidable and scientifi c truths should be subject to review and revision. thus, when dealing with controversial issues, policymakers will always face signifi cant uncertainty when drafting policies, which requires a robust behavior in dealing with uncertainty and risk, encompassing communication of uncertainties, good scientifi c practice, accountability and openness towards the general public. references: 1. aea, ‘climate impact of potential shale gas production in the eu’, report for european commission dg clima, july 30, 2012, issue 2, [online] available athtt p://ec.europa.eu/clima/policies/eccp/docs/120815_fi nal_report_en.pdf, accessed on june 12, 2015. 2. barcelo, d. and bennett , j.p., ‘human health and environmental risks of unconventional shale gas hydrofracking’, 2015, science of the total environment, 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controlrisks.com/~/media/public%20site/files/oversized%20assets/shale_gas_white paper.pdf, accessed on march 27, 2015. 52. younger, p.l., ‘hydrogeological challenges in a low-carbon economy’, 2014, quarterly journal of engineering geology and hydrogeology, vol. 47, no. 1, pp. 7-27. 53. zobak, m., kitasei, s. and copithorne, b., ‘addressing the environmental risks from shale gas development’, briefi ng paper 1, worldwatch institute, washington dc, july 2010, [online] available at htt ps://www.worldwatch.org/fi les/pdf/hydraulic%20 fracturing%20paper.pdf, accessed on march 2, 2015. 196 abstract attention towards sustainability reporting is very high with reference to higher education. the paper aims to assess the maturity level of sustainability reporting and to measure its quality by evaluating the global reporting initiative (gri) indicators currently disclosed. the research was carried out using the inductive method. we delimited the study to universities and we evaluated the quality of sustainability reporting by analyzing the indicators disclosed in 2012 reports according to gri guidelines. the research gives an overview of sustainability reporting in universities by evaluating the quality level of their disclosure. the results confirm previous research by highlighting the necessity to improve sustainability reporting. moreover, the results show there are differences between universities that are connected to the peculiarities of each country. they also enable us to draw up an initial classification of universities. the paper provides one of the first in-depth studies of sustainability reporting quality for universities included in the gri database. keywords: sustainability reporting, gri indicators, universities, quality assessment. quality disclosure in sustainability reporting: evidence from universities*1 alberto romolini silvia fissi elena gori alberto romolini (corresponding author) assistant professor, faculty of economics, international telematic university uninettuno, rome, italy tel.: 0039-0669-207.640/50 e-mail: a.romolini@uninettunouniversity.net silvia fissi postdoctoral research fellow, department of business and economics, university of florence, florence, italy e-mail: silvia.fissi@unifi.it elena gori assistant professor, department of business and economics, university of florence, florence, italy e-mail: elena.gori@unifi.it * although this work represents a joint study by the authors, paragraphs ‘introduction’ and ‘the state of sustainability reporting in higher education’ can be attributed to silvia fissi; ‘studies into the quality of annual sustainability reports’ and ‘research design’ to alberto romolini; ‘analysis of results’ and ‘conclusions’ to elena gori. transylvanian review of administrative sciences, no. 44 e/2015, pp. 196-218 197 1. introduction sustainability is a global issue (dryzek, 1997). in the last few years, sustainable development has become one of the dominant global discourses of ecological concern. in this context, universities can play a critical role (orr, 1992, p. 4). various organizations around the world define sustainability differently (elliot, 2013, pp. 18-19), however the most frequently quoted definition is from the world commission on environment and development (wced, 1987, p. 43): sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs. sustainable development is not brought about by policies only – it must be taken up by society at large as a principle guiding the many choices each citizen makes every day, as well as the big political and economic decisions. in other words, sustainable development concerns economic and social structures (council of the european union, 2006). over the last few years, sustainability reporting has been acquiring increasing importance among corporations and their stakeholders around the world (international integrated reporting committee, 2011). also in the higher education sector, reporting for sustainability is an increasingly important issue (walton et al., 1997). universities use resources, own large areas of land and innumerable buildings and they are fundamental for the development of the economy (zilahy and husingh, 2009). in other words, they occupy a unique position, being responsible for the education and training of future generations. in the light of these considerations, taylor et al. (1994) called universities ‘silent destroyers’ – not as high profile as chemical companies but with very considerable environmental impact. moreover, formal education should be recognized as critical in forming environmental and ethical awareness, values, attitudes, skills and behavior (johnston et al., 2003, p. 7; lemons, 1995). previous studies underlined that there was a broad consensus on common priorities, encouraging universities to take up the challenge of addressing environmental responsibility (yale university, 1994; walton, alabaster and jones, 2000). now the development of methods and means of improving the role of universities in spreading sustainability issues is needed more than ever (sedlacek, 2013). however, while universities recognize they have a central role in promoting environmental citizenship across all disciplines and thus all professions, expertise and resources are often not developed or disseminated, remaining trapped in individual institutions or even within individual departments (beringer, wright and malone, 2008). the education sector accounted for less than 0.75% of 2007’s global reporting output (corporateregister, 2008, p. 10) and few studies are addressing the perspectives of sustainability reporting in universities (fonseca et al., 2011; johnston et al., 2003; newport, chesnes and lindne., 2003; walton, alabaster and jones, 2000). moreover, we are not aware of any studies currently engaged in international comparison of social reporting by universities. the present study aims to show the state of sustainability reporting in higher education and to give an assessment of the reports’ quality. to that end, it provides an 198 analysis of the extent of reports issued by universities in order to underline their main features and to contribute to the international debate about the development of sustainability reporting in the public sector. the paper has four sections. the section below describes the theoretical framework regarding the state of sustainability reporting in higher education. section three highlights studies concerning quality in sustainability reporting. the methodology is explained in section four. section five presents the results and implications of the analysis and section six sets out the final conclusions, limits and possible future research developments. 2. studies into the quality of annual sustainability reports many authors (atkinson, 2000; beloff, tanzil and lines, 2004; szekely and knirsch, 2005; tanzil and beloff, 2006) have made general evaluations of the notion of corporate sustainability performance measurement, while others have considered more specific issues such as environmental and social performance evaluation (olsthoorn et al., 2001; wood, 2010). in recognition of the wide variety of material that appears in sustainability reports, there have been a number of studies focusing on sustainability reporting practices, including the content, scope and structure of the reports (beloe et al., 2006). national-level studies have also been carried out in numerous countries over the last 10 years. differences in sustainability reporting were underlined by doh and guay (2006), and they were explained by concluding that social democratic traditions in europe, compared to those in the usa, have resulted in more external pressures on european companies regarding sustainability reporting issues. also, in european companies, internal aspects of sustainability reporting (association, vocational education, fair wages, equal opportunities and non-discrimination) are well covered by all countries with the exception of human rights, while external aspects (local safety, suppliers, human rights, child labor, labor standards, ethics, indigenous people, fair trade, stakeholders, education, third parties, reporting) present a more mixed picture within europe (welford, 2005). in some countries, universities are very keen to address sustainability issues, which are also used in ‘political slogans’ (yang, 2008). the majority of studies have focused on assessing the quality of sustainability disclosure by evaluating the sustainability reporting of stock exchange listed companies. authors utilized various methods of analysis: content analysis, benchmarking analysis, case studies and so on. the studies showed that the quality of sustainability reporting depends on qualitative and quantitative information, and on the extent to which the company has managed to improve its economic, environmental and social effectiveness and efficiency in the reporting period (daub, 2007). previous studies on sustainability reporting quality reached common conclusions: that their quality is quite far from acceptable levels, and questions remain on the quality of the information, according to the different needs of different stakeholders (daub, 2007). moreover, the insufficiency of social disclosures will eventually change due to external 199 media pressure, especially in developing countries (yang and yaacob, 2012). most publications on sustainability performance measurement have focused on the design of sets of indicators (spangenberg, 2002). research into indicators and indices has focused on both the individual corporation and sector levels. searcy (2012) pointed out that previous research has focused on short time horizons in evaluating sustainability indicators and this is a particularly serious oversight, given the explicit long-term focus of sustainability (lenzen et al., 2004). little research has been conducted on the indicators used to convey quantitative information in sustainability reports, yet, as daub (2007) explains, indicators represent the concrete data on the corporation’s performance with respect to sustainability, and thus are considered at least as important as the qualitative part of sustainability reporting. other examples of studies into indicators are those of adams and frost (2008) who highlighted the importance of including key performance indicators for sustainability reporting, but few studies have explored the specific indicators disclosed. in the university sector, sustainability reporting continues to receive little attention either in literature or in practice and most studies are of a normative nature (del sordo, pazzi and siboni, 2010). research highlights that the practice of sustainability reporting in the university context is not widespread, and the sustainability reports issued are mainly pivotal versions (frey, melis and vagnoni, 2010). moreover, a lack of quantitative information and little attention to the disclosure of environmental aspects were found (cassone and zaccarella, 2009). nowadays, universities have no legal requirement of disclosure regarding sustainability reporting issues. the global reporting initiative (gri) contains the reporting guidelines most commonly used by international companies, even though these guidelines do not make for standardization of reporting (morhardt, baird and freeman, 2002). in fact, gri guidelines do not require companies to fulfil or handle all topics. the aim of gri is to mainstream ‘disclosure on environmental, social and governance performance’ (gri, 2011a). thus, companies are free to choose from the guidelines in any way they prefer, and this contributes to the difficulty of assessing social reporting quality. the generic indicators developed by gri have been criticized on several grounds, including for being overly general and too numerous (moneva et al., 2006; smith and lessen, 2009). however, many criticisms derive from the analysis of specific sectors, while comparisons between different countries require standardized indicators, such as those of gri (verschoor, 2011). in general, previous studies highlight that the most commonly reported source for the content of social and environmental disclosures is the gri (kpmg, 2013). newport, chesnes and lindner (2003) underlined that if a university wants to benchmark its sustainability performance, it has to compare itself by using gri indicators, as most other existing instruments suffer from egocentrism and/or lack of comparability. moreover, no previous studies made a comparison between differences in sustainability reporting quality by assessing gri indicators in different countries. given the 200 above, if we want to measure the quality of information of higher education sustainability annual reporting, we can refer to gri indicators of quality in sustainability reports, defined in its framework as application levels a, b, or c, depending on the number and set of disclosures addressed by the organizations (romolini, fissi and gori, 2014). since italian universities use the gruppo di studio per il bilancio sociale (study group on social reporting – gbs) standard, it is not possible to compare their sustainability reports with those of other countries (gbs, 2008). the same problem arises if we consider a specific nation, but as our aim is to make an international comparison it is necessary to identify comparable sustainability reporting systems. a recent study (fonseca et al., 2011) analyzed the sustainability reporting in canadian universities focusing on gri indicators. according to the results, sustainability reporting is at an early stage and reports have limited value and are potentially misleading, moreover only few universities (less than 30%) disclosed sustainability performance by emphasizing eco-efficiency and green architecture. moreover, previous studies highlight that few universities have external assurance and consequently reports have a limited value and are potentially misleading as a tool to inform sustainability-oriented decisions (walton et al., 1997). another frequent problem of sustainability reporting in higher education is connected with the discontinuity in drawing up reports (ricci, 2013). 3. the state of sustainability reporting in higher education attention towards sustainability reporting is very high in europe and america, but also in developing countries (united nations environment program – unep, 2010; united nations, 2007). in recognition of the wide variety of material that appears in corporate sustainability reports, there have been a number of studies focusing on sustainability reporting practices, including the content, scope and structure of the reports (beloe et al., 2006; manetti, 2011; slater, 2008; stakeholder research associates canada, united nations environment programme and accountability, 2005). national-level studies have also been carried out in numerous countries over the last 10 years, including austria (langer, 2006), bangladesh (sobhani, amran and zainuddin, 2009), canada (davis and searcy, 2010), germany (gamerschlag, möller and verbeeten, 2011), greece (skouloudis, evangelinos and kourmousis, 2010), italy (perrini, pogutz and tencati, 2006; secchi, 2006), norway (vormedal and ruud, 2009), sweden (hedberg and von malmborg, 2003), switzerland (stiller and daub, 2007) and thailand (ratanajongkol, davey and low, 2006). the role of education in promoting sustainability has been emphasized by international environmental education declarations, such as the belgrade charter (unesco-unep, 1975) and the tbilisi declaration (unesco-unep, 1977). however, specific declarations for higher education started to emerge in the early 1990s (wright, 2004). these declarations stated the moral responsibility of higher education towards green education. 201 whether at national or international level, studies of sustainability reporting in universities concentrate on normative or empirical aspects, focusing on illustrating case studies (del sordo, pazzi and siboni, 2010). indeed, consideration of the state of implementation of sustainability policies often derives precisely from analysis of a single case study (christensen et al., 2009; sedlacek, 2013; walton, alabaster and jones, 2000). while a great heterogeneity of solutions is used by universities for social reporting, there seems to be general consensus regarding the contents of reports. on this point, neumann and guthrie (2004) state that an effective system of measurement and reporting for universities should be based on financial information, relating to intellectual capital and social and environmental performance. coy and pratt (1998), who focus their research on new zealand universities, underline the importance of accountability that also gives information regarding the university’s use of financial resources. with reference to research into case studies, a common denominator is represented by the doubt as to whether these initiatives have been effective. how well the university sector is progressing towards sustainability remains a conundrum (ricci, 2013; walton, alabaster and jones, 2000; wright, 2003). in this context, it is important to test a method for scoring sustainability reporting in higher education (shriberg, 2004, pp. 75-77). the studies into sustainability reporting in universities are mainly focused on the link between university and stakeholder (brown and cloke, 2009; jongbloed et al., 2008) or on the content of teaching dedicated to sustainability issues (idowu, 2008; matten and moon, 2004). few studies analyze the sustainability reporting system of higher education in general terms (beringer, wright and malone, 2008). in fact, comparative studies of sustainability reporting in general are relatively rare (williams and aguilera, 2008), while theoretical perspectives on corporate sustainability performance or stakeholder management have been developed for over two decades (freeman, 1984; clarkson, 1995; mcwilliams and siegel, 2000). it is only in the last decade that studies have begun to explore differences in sustainability reporting from a comparative perspective. comparative studies on legal and institutional analysis compared the perspectives and strategies of sustainability reporting inherent in different corporate governance systems, for example, comparing anglo-american to continental european approaches to sustainability issues (scott, 2004; doh and guay, 2006). other studies aimed to show differences in companies’ approaches to sustainability reporting in countries with seemingly similar socio-political traditions within these corporate governance systems (kolk, 2008). no previous studies have made a comparison between differences in sustainability reporting quality by assessing gri indicators in different countries. those issues are addressed by our study. we have focused our attention on a specific part of sustainability annual reporting by analyzing gri indicators of universities at an international level, for which no previous studies are available. 202 on the basis of our analysis of the literature, we believe it is possible for the higher education sector: hp1: to assess the maturity level of sustainability reporting and to measure its quality by evaluating the gri indicators currently disclosed; and hp2: to assess the differences in quality of sustainability reporting within examined countries. 4. research design the method of research used in this study is inductive in order to analyze the state of the art of sustainability reporting in higher education. the question of social reporting in universities is of international significance. considering that the sustainability reporting model chiefly used at supra-national level is the gri, we examined its database to identify the universities that conform to that standard 1. in particular, we analyzed reports published in 2012 by entities classified by the database as belonging to the category of ‘universities’ (table 1). 1 htt p://database.globalreporting.org, as of september 11, 2013 table 1: the population of the research country (number of universities) universities austria (2) boku university karl-franzens universität graz australia (1) la trobe university belgium (1) hoge school-universiteit brussel bolivia (1) universidad tecnológica de bolívar brazil (1) universidade feevale canada (1) university of calgary chile (1) universidad de santiago de chile china (1) university of hong kong finland (2) saimaa university of applied science turku university of applied science germany (1) leuphana universität lüneburg russia (1) vladivostok state university of economic and service spain (6) esade business school universidad de santiago de compostela universidad de zaragoza universidad internacional de andalucía universidad de cantabria universidad de cádiz switzerland (1) école polytechnique fédérale de lausanne (epfl) turkey (1) kadir has üniversitesi usa (7) ball state university michigan state university north carolina state university ohio university university of massachusetts dartmouth university of michigan brown university 203 not included in the research population were those universities which, although in the database, returned reports that were not coherent with the structure of the gri model. the universities excluded were: brown university, michigan state university, north carolina state university, ohio university, saimaa university of applied science, universidad tecnológica de bolívar, university of michigan, and vladivostok state university of economics and service. the first phase of research evaluated the quality of reports by analyzing the indicators contained in documents published in 2012 according to gri 3.1 guidelines (gri, 2011b). the approach used was derived from that of graves and waddoch (2000), mio (2010), callan and thomas (2009), and romolini, fissi and gori (2014). this analysis was carried out in clearly distinct steps. firstly, the presence of indicators was identified according to the table in the gri standard. to do this, we began by evaluating the use of each indicator from the model. subsequently, we calculated the average value of indicators, grouped based on the reporting categories laid down by the standard (economic performance, environmental performance, and social performance). next, to ‘measure’ the maturity reached by the practice of sustainability reporting, a further study was conducted, giving a weight to each of the indicators. then, a different value was assigned to the two types of indices – core (weight ‘1’) and additional (weight ‘0.5’), as per the model. consequently, the weights of the indicators were specified for each area of reporting: economic, environmental and social; the latter, in turn, being divided into ‘labor practices and decent work’, ‘human rights’, ‘society’ and ‘product responsibility’. in the second phase, the geographic distribution of the university population was examined to highlight the areas where sustainability reporting was more extensively applied. in particular, the use of indicators in the single countries making up the population studied was further examined. the investigation was carried out using two approaches for discovering the use of the gri indicators, first, by calculating the average value, and then by giving weight to the ‘core’ and ‘additional’ indicators. the number of universities is therefore not homogeneous with reference to the single countries. 5. analysis of results the aim of the research was to analyze the international panorama for sustainability reporting in universities. twenty universities that had drawn up a sustainability report in 2012 were found in the gri database (table 1). from a geographical viewpoint, we observed in general a dispersion of the phenomenon for the single countries involved, with a distinct prevalence of spain, representing about 30% of the population. this result is also confirmed by the huge presence of european universities, which alone represent 65% of those analyzed. within this context, spain however maintains its position of dominance, while other countries represented are austria, switzerland, belgium, turkey, germany and finland. it should be noted that no evidence of sustainability reporting was found in the gri database for italian universities. this result confirms the findings of previous studies 204 (ricci, 2013), clearly showing the use of customized reporting structures based on the gbs model, which cannot be inserted into the gri database nor compared at international level. similar to the italian case is that of the united states, with only two universities present in the population. another five american universities were excluded from analysis because, although present in the database, they used structures different from the gri model. counting the excluded cases, the usa have the greatest diffusion of the practice of sustainability reporting, even more so than spain, but their customized reporting structures, as in the case of italy, raise doubts as to their comparability. with reference to our investigation into the quality of sustainability reporting, an initial study was carried out into the use of indicators, which are unquestionably an element of disclosure. the research measured the quality level of disclosure, evaluating the use in absolute terms of sustainability reporting indicators (table 2). an element common to all the areas was achieving a score that, on average, was close to half of the maximum possible. this evaluation highlights the fact that, in the context of disclosure relating to sustainability reporting by universities, there is still considerable room for improvement and development. the analysis found notably high use of indicators in the macro-areas of ‘economic’ and ‘environmental’ performance. within the broader area of ‘social’ performance, the greatest levels of disclosure were found in the sub-section ‘labor practices and decent work’. under ‘economic’ performance, universities showed great use of indicators referring to financial-economic results and, vice versa, less attention towards ‘market presence’ and ‘indirect economic impacts’. this result shows significant interest in communicating to stakeholders the economic value produced by activities of research and education, rather than evaluating market conditions and indirect effects. in the environmental area, on the other hand, questions of greater interest concerned environmental emissions deriving from management, consumption of energy, water and raw materials and biodiversity. the environmental impact of the sector of research and education is clearly much reduced, compared with that of manufacturing and industry. so, it was reasonable to expect less use of indicators – as indeed research findings confirmed. lastly, in social performance, attention was clearly focused on impacts on internal working conditions, with particular importance given to effects on employment, safety at work, training and equal opportunity. the question of ‘training and education’ gave a significant result of 2.30 points, corresponding to 76.67% of the maximum score. similarly, the ‘human rights’ area returned good results – in particular ‘nondiscrimination’ reached 65% of the maximum score. under ‘society’, particular attention was given to ‘community’ (65%), ‘compliance’ (55%) and ‘corruption’ (41.67%). by contrast, questions regarding ‘product responsibility’ remained more in the background. this would appear to have little connection with the university system and its products, since education does not have material connotations, while research has particularly long and uncertain response times. 205 our research also aimed at examining the quality of reports, considering the use of indicators not in absolute terms but rather from the perspective of the gri model, which distinguishes between core and additional indices. to this end, we decided to allot different ‘weights’ to mandatory (core) indicators with respect to voluntary (additional) ones. the total weight of the indicators, calculated for each reporting table 2: gri indicators in universities’ sustainability reports reporting areas score max economic performance indicators 5.75 9.00 economic performance (ec1-ec4) 3.05 4.00 market presence (ec5-ec7) 1.45 3.00 indirect economic impacts (ec8-ec9) 1.25 2.00 environmental performance indicators 14.59 30.00 raw materials (en1-en2) 1.30 2.00 energy (en3-en7) 3.25 5.00 water (en8-en10) 1.55 3.00 biodiversity (en11-en15) 1.50 5.00 direct and indirect emissions (en16-en25) 4.75 10.00 products and services (en26-en27) 0.75 2.00 conformity (en28) 0.55 1.00 transport (en29) 0.55 1.00 general (en30) 0.40 1.00 social performance indicators 21.05 40.00 labor practices and decent work 9.95 14.00 employment (la1-la3) 2.30 3.00 industrial relations (la4-la5) 1.25 2.00 health and safety at work (la6-la9) 2.50 4.00 training and education (la10-la12) 2.30 3.00 diversity and equal opportunity (la13-la14) 1.60 2.00 human rights 3.45 9.00 investment and procurement practices (hr1-hr3) 1.00 3.00 nondiscrimination (hr4) 0.75 1.00 freedom of association and collective bargaining (hr5) 0.50 1.00 child labor (hr6) 0.30 1.00 forced and compulsory labor (hr7) 0.35 1.00 security practices (hr8) 0.35 1.00 indigenous rights (hr9) 0.20 1.00 society 3.60 8.00 community (s01) 0.65 1.00 corruption (s02-s04) 1.25 3.00 public policy (app. to political parties) (s05-s06) 0.90 2.00 anti-competitive behavior (s07) 0.25 1.00 compliance (s08) 0.55 1.00 product responsibility 4.05 9.00 customer health and safety (pr1-pr2) 0.75 2.00 product and service labelling (pr3-pr5) 1.45 3.00 marketing communications (pr6-pr7) 0.90 2.00 customer privacy (pr8) 0.50 1.00 compliance (pr9) 0.45 1.00 source: reports 2012 206 macro-area contained in the gri model, was found as a mean value, taking account of the great number of universities making up the population. the maximum result achievable was also indicated for each indicator. a higher average result for each reporting macro-area clearly indicates a better level of disclosure for economic, social and environmental performance (table 3). table 3: qualitative analysis of sustainability reporting in universities reporting areas score max economic performance indicators 5.20 8.00 economic performance (ec1-ec4) 3.05 4.00 market presence (ec5-ec7) 1.20 2.50 indirect economic impacts (ec8-ec9) 0.95 1.50 environmental performance indicators 12.11 23.50 raw materials (en1-en2) 1.30 2.00 energy (en3-en7) 2.45 3.50 water (en8-en10) 1.23 2.00 biodiversity (en11-en15) 1.10 3.50 direct and indirect emissions (en16-en25) 4.25 8.50 products and services (en26-en27) 0.75 2.00 conformity (en28) 0.55 1.00 transport (en29) 0.28 0.50 general (en30) 0.20 0.50 social performance indicators 17.57 32.50 labor practices and decent work 8.33 11.50 employment (la1-la3) 1.93 2.50 industrial relations (la4-la5) 1.25 2.00 health and safety at work (la6-la9) 1.95 3.00 training and education (la10-la12) 1.60 2.00 diversity and equal opportunity (la13-la14) 1.60 2.00 human rights 3.01 7.50 investment and procurement practices (hr1-hr3) 0.83 2.50 nondiscrimination (hr4) 0.75 1.00 freedom of association and collective bargaining (hr5) 0.50 1.00 child labor (hr6) 0.30 1.00 forced and compulsory labor (hr7) 0.35 1.00 security practices (hr8) 0.18 0.50 indigenous rights (hr9) 0.10 0.50 society 3.28 7.00 community (s01) 0.65 1.00 corruption (s02-s04) 1.25 3.00 public policy (approach to political parties/institutions) (s05-s06) 0.70 1.50 anti-competitive behavior (s07) 0.13 0.50 compliance (s08) 0.55 1.00 product responsibility 2.95 6.50 customer health and safety (pr1-pr2) 0.60 1.50 product and service labelling (pr3-pr5) 0.95 2.00 marketing communications (pr6-pr7) 0.70 1.50 customer privacy (pr8) 0.25 0.50 compliance (pr9) 0.45 1.00 source: reports 2012 207 the qualitative investigation also confirmed the results mentioned previously, that is the pre-eminence of the ‘economic’ and ‘environmental’ performance macro-areas and of ‘labor practices and decent work’ only, as part of ‘social performance’. these macro-areas had a better quality score compared with that shown in table 2, which shows results over 50% of the maximum score achievable. by contrast, attention waned regarding the areas of ‘human rights’, ‘society’ and ‘product responsibility’, with an even more marked drop in results in qualitative terms. further analysis into the quality of reports was made by evaluating the average number of indicators in relation to the single countries that made up the population under examination (table 4). the best results were achieved, in descending order, by turkey (72 points), the united states (67.5 points), australia (66 points) and chile (63 points). although european countries had the larger presence in the gri database, they did not have an equally positive level of disclosure, with the exception of germany, which reached 62 points. furthermore, although spain had by far the greatest number of universities involved in sustainability reporting, it achieved levels of disclosure that were fairly modest (34.88 points), albeit in line with other countries in northern europe. an examination of the scores achieved in each macro-area of reporting is of interest. in the overall scoring for ‘economic performance indicators’ and ‘environmental performance indicators’, with the exception of canada, no significant differences were found, while there was more marked variability in ‘social performance indicators’. in other words, the differences that account for wide gaps in the overall scores are related to the ‘social performance indicators’ area, where turkey and chile ‘stand out’ with 38 points, and the usa and australia with 37 and 34 points respectively. lastly, the qualitative analysis of the reports confirms the results from previous research phases (table 5). the podium is again made up of turkey (58.5 points), the united states (55 points), australia (54 points) and chile (51 points), with canada in last place with only 8.5 points. a comparison of scores from universities in absolute and qualitative terms (tables 4 and 5) reveals greater variation in scores for the ‘social performance indicators’, with some universities not reporting on certain topics, such as ‘human rights’ and ‘product responsibility’. 208 ta bl e 4: g ri in di ca to rs in u ni ve rs itie s’ su st ai na bi lity 2 01 2 re po rts . r es ul ts fo r e ac h co un try re po rti ng a re as au st ra lia au st ria be lg iu m br az il ca na da ch ile ch in a fi nl an d g er m an y sp ai n sw itz er la nd tu rk ey us a ec on om ic pe rfo rm an ce in di ca to rs 9. 00 5. 50 4. 00 3. 00 2. 00 6. 00 5. 00 8. 00 9. 00 5. 00 5. 00 9. 00 7. 00 ec on om ic pe rfo rm an ce (e c1 -e c4 ) 4. 00 3. 50 3. 00 1. 00 1. 00 3. 00 3. 00 4. 00 4. 00 3. 00 3. 00 4. 00 3. 00 m ar ke t p re se nc e (e c5 -e c7 ) 3. 00 0. 50 1. 00 1. 00 1. 00 1. 00 1. 00 2. 00 3. 00 1. 17 0. 00 3. 00 2. 50 in di re ct e co no m ic im pa ct s (e c8 -e c9 ) 2. 00 1. 50 0. 00 1. 00 0. 00 2. 00 1. 00 2. 00 2. 00 0. 83 2. 00 2. 00 1. 50 en vir on m en ta l p er fo rm an ce in di ca to rs 23 .0 0 10 .5 0 11 .0 0 4. 00 7. 00 19 .0 0 16 .0 0 10 .0 0 22 .0 0 11 .5 0 18 .0 0 25 .0 0 23 .5 0 ra w m at er ia ls (e n1 -e n2 ) 2. 00 1. 50 2. 00 2. 00 0. 00 2. 00 0. 00 1. 00 2. 00 0. 83 2. 00 1. 00 2. 00 en er gy (e n3 -e n7 ) 4. 00 3. 50 3. 00 0. 00 2. 00 4. 00 3. 00 2. 00 5. 00 3. 00 5. 00 5. 00 3. 50 w at er (e n8 -e n1 0) 2. 00 0. 50 1. 00 1. 00 1. 00 3. 00 3. 00 1. 00 3. 00 1. 17 0. 00 3. 00 2. 50 bi od ive rs ity (e n1 1en 15 ) 3. 00 1. 00 0. 00 0. 00 0. 00 1. 00 1. 00 0. 00 3. 00 1. 17 2. 00 4. 00 3. 50 di re ct a nd in di re ct e m iss io ns (e n1 6en 25 ) 9. 00 2. 50 5. 00 0. 00 3. 00 6. 00 8. 00 5. 00 5. 00 3. 33 7. 00 8. 00 7. 00 pr od uc ts a nd s er vic es (e n2 6en 27 ) 1. 00 0. 50 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 1. 00 0. 83 1. 00 1. 00 2. 00 co nf or m ity (e n2 8) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 1. 00 0. 00 1. 00 0. 67 0. 00 1. 00 1. 00 tr an sp or t ( en 29 ) 1. 00 0. 50 0. 00 0. 00 1. 00 1. 00 0. 00 0. 00 1. 00 0. 33 1. 00 1. 00 1. 00 g en er al (e n3 0) 0. 00 0. 50 0. 00 1. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 17 0. 00 1. 00 1. 00 so cia l p er fo rm an ce in di ca to rs 34 .0 0 13 .0 0 17 .0 0 6. 00 1. 00 38 .0 0 12 .0 0 16 .0 0 31 .0 0 19 .3 8 18 .0 0 38 .0 0 37 .0 0 la bo r p ra ct ice s an d de ce nt w or k 13 .0 0 8. 00 11 .0 0 3. 00 1. 00 14 .0 0 10 .0 0 11 .0 0 14 .0 0 9. 84 9. 00 14 .0 0 12 .0 0 em pl oy m en t ( la 1la 3) 3. 00 1. 50 3. 00 1. 00 0. 00 3. 00 2. 00 2. 00 3. 00 2. 50 3. 00 3. 00 2. 50 in du st ria l r el at io ns (l a4 -l a5 ) 2. 00 1. 00 2. 00 0. 00 1. 00 2. 00 0. 00 2. 00 2. 00 1. 00 0. 00 2. 00 2. 00 he al th a nd s af et y at w or k (l a6 -l a9 ) 4. 00 2. 50 2. 00 0. 00 0. 00 4. 00 3. 00 2. 00 4. 00 2. 50 1. 00 4. 00 3. 00 tr ai ni ng a nd e du ca tio n (l a1 0la 12 ) 3. 00 1. 50 3. 00 1. 00 0. 00 3. 00 3. 00 3. 00 3. 00 2. 17 3. 00 3. 00 2. 50 di ve rs ity a nd e qu al o pp or tu ni ty (l a1 3la 14 ) 1. 00 1. 50 1. 00 1. 00 0. 00 2. 00 2. 00 2. 00 2. 00 1. 67 2. 00 2. 00 2. 00 hu m an ri gh ts 7. 00 2. 00 2. 00 1. 00 0. 00 9. 00 1. 00 0. 00 3. 00 2. 35 3. 00 8. 00 8. 50 in ve st m en t a nd p ro cu re m en t p ra ct ice s (h r1 -h r3 ) 3. 00 1. 00 1. 00 0. 00 0. 00 3. 00 0. 00 0. 00 0. 00 0. 50 0. 00 3. 00 2. 50 no nd isc rim in at io n (h r4 ) 1. 00 1. 00 0. 00 1. 00 0. 00 1. 00 1. 00 0. 00 1. 00 0. 67 1. 00 1. 00 1. 00 fr ee do m o f a ss oc ia tio n an d co lle ct ive ba rg ai ni ng (h r5 ) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 67 0. 00 1. 00 1. 00 ch ild la bo r ( hr 6) 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 0. 00 0. 17 1. 00 1. 00 1. 00 fo rc ed a nd c om pu lso ry la bo r ( hr 7) 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 17 1. 00 1. 00 1. 00 se cu rit y pr ac tic es (h r8 ) 1. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 00 0. 00 0. 00 0. 17 0. 00 1. 00 1. 00 in di ge no us ri gh ts (h r9 ) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 209 so cie ty 7. 00 1. 50 2. 00 2. 00 0. 00 8. 00 1. 00 2. 00 6. 00 2. 50 3. 00 8. 00 7. 50 co m m un ity (s 01 ) 1. 00 1. 00 1. 00 1. 00 0. 00 1. 00 0. 00 1. 00 0. 00 0. 50 0. 00 1. 00 1. 00 co rru pt io n (s 02 -s 04 ) 3. 00 0. 00 0. 00 0. 00 0. 00 3. 00 0. 00 0. 00 3. 00 1. 17 1. 00 3. 00 2. 50 pu bl ic po lic y (a pp ro ac h to p ol itic al p ar tie s/ in st itu tio ns ) ( s0 5s0 6) 1. 00 0. 00 0. 00 1. 00 0. 00 2. 00 0. 00 1. 00 2. 00 0. 50 2. 00 2. 00 2. 00 an tico m pe tit ive b eh av io r ( s0 7) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 1. 00 co m pl ia nc e (s 08 ) 1. 00 0. 50 1. 00 0. 00 0. 00 1. 00 1. 00 0. 00 1. 00 0. 33 0. 00 1. 00 1. 00 pr od uc t r es po ns ib ilit y 7. 00 1. 50 2. 00 0. 00 0. 00 7. 00 0. 00 3. 00 8. 00 4. 69 3. 00 8. 00 9. 00 cu st om er h ea lth a nd s af et y (p r1 -p r2 ) 1. 00 0. 50 0. 00 0. 00 0. 00 2. 00 0. 00 0. 00 2. 00 0. 50 0. 00 2. 00 2. 50 pr od uc t a nd s er vic e la be llin g (p r3 -p r5 ) 3. 00 1. 00 1. 00 0. 00 0. 00 1. 00 0. 00 1. 00 3. 00 1. 50 2. 00 2. 00 2. 50 m ar ke tin g co m m un ica tio ns (p r6 -p r7 ) 2. 00 0. 00 0. 00 0. 00 0. 00 2. 00 0. 00 0. 00 2. 00 0. 86 0. 00 2. 00 2. 00 cu st om er p riv ac y (p r8 ) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 1. 00 1. 00 0. 33 1. 00 1. 00 1. 00 co m pl ia nc e (p r9 ) 0. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 00 1. 00 0. 00 0. 50 0. 00 1. 00 1. 00 to ta l 66 .0 0 29 .0 0 32 .0 0 13 .0 0 10 .0 0 63 .0 0 33 .0 0 34 .0 0 62 .0 0 34 .8 8 41 .0 0 72 .0 0 67 .5 0 210 ta bl e 5: q ua lita tiv e an al ys is in u ni ve rs itie s’ su st ai na bi lity 2 01 2 re po rts .r es ul ts fo r e ac h co un try re po rti ng a re as au st ra lia au st ria be lg iu m br az il ca na da ch ile ch in a fi nl an d g er m an y sp ai n sw itz er la nd tu rk ey us a ec on om ic pe rfo rm an ce in di ca to rs 8. 00 5. 00 3. 50 2. 50 1. 50 5. 00 4. 50 7. 50 8. 00 4. 67 4. 50 8. 00 6. 50 ec on om ic pe rfo rm an ce (e c1 -e c4 ) 4. 00 3. 50 3. 00 1. 00 1. 00 3. 00 3. 00 4. 00 4. 00 3. 00 3. 00 4. 00 3. 00 m ar ke t p re se nc e (e c5 -e c7 ) 2. 50 0. 50 0. 50 1. 00 0. 50 0. 50 0. 50 2. 00 2. 50 1. 00 0. 00 2. 50 2. 25 in di re ct e co no m ic im pa ct s (e c8 -e c9 ) 1. 50 1. 00 0. 00 0. 50 0. 00 1. 50 1. 00 1. 50 1. 50 0. 67 1. 50 1. 50 1. 25 en vir on m en ta l p er fo rm an ce in di ca to rs 18 .5 0 8. 25 10 .5 0 3. 50 6. 00 15 .0 0 14 .0 0 10 .0 0 16 .5 0 9. 92 14 .5 0 19 .5 0 18 .7 5 ra w m at er ia ls (e n1 -e n2 ) 2. 00 1. 50 2. 00 2. 00 0. 00 2. 00 0. 00 1. 00 2. 00 0. 83 2. 00 1. 00 2. 00 en er gy (e n3 -e n7 ) 3. 00 2. 25 2. 50 0. 00 2. 00 3. 00 2. 50 2. 00 3. 50 2. 33 3. 50 3. 50 2. 50 w at er (e n8 -e n1 0) 1. 50 0. 50 1. 00 1. 00 1. 00 2. 00 2. 00 1. 00 2. 00 1. 08 0. 00 2. 00 1. 75 bi od ive rs ity (e n1 1en 15 ) 2. 00 1. 00 0. 00 0. 00 0. 00 0. 50 1. 00 0. 00 1. 50 0. 92 1. 50 3. 00 2. 50 di re ct a nd in di re ct e m iss io ns (e n1 6en 25 ) 7. 50 2. 00 5. 00 0. 00 2. 50 5. 50 7. 50 5. 00 4. 50 3. 08 6. 00 7. 00 6. 00 pr od uc ts a nd s er vic es (e n2 6en 27 ) 1. 00 0. 50 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 1. 00 0. 83 1. 00 1. 00 2. 00 co nf or m ity (e n2 8) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 1. 00 0. 00 1. 00 0. 67 0. 00 1. 00 1. 00 tr an sp or t ( en 29 ) 0. 50 0. 25 0. 00 0. 00 0. 50 0. 50 0. 00 0. 00 0. 50 0. 17 0. 50 0. 50 0. 50 g en er al (e n3 0) 0. 00 0. 25 0. 00 0. 50 0. 00 0. 50 0. 00 0. 00 0. 50 0. 08 0. 00 0. 50 0. 50 so cia l p er fo rm an ce in di ca to rs 24 .5 0 10 .7 5 14 .5 0 6. 00 1. 00 31 .0 0 10 .0 0 14 .0 0 25 .5 0 15 .7 6 16 .0 0 31 .0 0 30 .7 5 la bo r p ra ct ice s an d de ce nt w or k 8. 50 6. 50 9. 00 3. 00 1. 00 11 .5 0 8. 00 10 .0 0 11 .5 0 8. 33 7. 55 11 .5 0 10 .0 0 em pl oy m en t ( la 1la 3) 2. 50 1. 25 2. 50 1. 00 0. 00 2. 50 1. 50 2. 00 2. 50 2. 08 2. 50 2. 50 2. 00 in du st ria l r el at io ns (l a4 -l a5 ) 2. 00 1. 00 2. 00 0. 00 1. 00 2. 00 0. 00 2. 00 2. 00 1. 00 0. 00 2. 00 2. 00 he al th a nd s af et y at w or k (l a6 -l a9 ) 3. 00 1. 75 1. 50 0. 00 0. 00 3. 00 2. 50 2. 00 3. 00 2. 00 1. 00 3. 00 2. 25 tr ai ni ng a nd e du ca tio n (l a1 0la 12 ) 2. 00 1. 00 2. 00 1. 00 0. 00 2. 00 2. 00 2. 00 2. 00 1. 58 2. 00 2. 00 1. 75 di ve rs ity a nd e qu al o pp or tu ni ty (l a1 3la 14 ) 1. 00 1. 50 1. 00 1. 00 0. 00 2. 00 2. 00 2. 00 2. 00 1. 67 2. 00 2. 00 2. 00 hu m an ri gh ts 5. 50 1. 75 1. 50 1. 00 0. 00 7. 50 1. 00 0. 00 3. 00 2. 18 4. 00 7. 00 7. 00 in ve st m en t a nd p ro cu re m en t p ra ct ice s (h r1 -h r3 ) 2. 50 0. 75 1. 00 0. 00 0. 00 2. 50 0. 00 0. 00 0. 00 0. 42 0. 00 2. 50 2. 00 no nd isc rim in at io n (h r4 ) 1. 00 1. 00 0. 00 1. 00 0. 00 1. 00 1. 00 0. 00 1. 00 0. 67 1. 00 1. 00 1. 00 fr ee do m o f a ss oc ia tio n an d co lle ct ive ba rg ai ni ng (h r5 ) 1. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 67 0. 00 1. 00 1. 00 ch ild la bo r ( hr 6) 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 0. 00 0. 17 1. 00 1. 00 1. 00 fo rc ed a nd c om pu lso ry la bo r ( hr 7) 0. 00 0. 00 0. 00 0. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 17 1. 00 1. 00 1. 00 se cu rit y pr ac tic es (h r8 ) 0. 50 0. 00 0. 50 0. 00 0. 00 0. 50 0. 00 0. 00 0. 00 0. 08 0. 00 0. 50 0. 50 in di ge no us ri gh ts (h r9 ) 0. 50 0. 00 0. 00 0. 00 0. 00 0. 50 0. 00 0. 00 0. 00 0. 00 0. 00 0. 00 0. 50 211 so cie ty 6. 50 1. 50 2. 00 2. 00 0. 00 7. 00 1. 00 2. 00 5. 50 2. 33 2. 50 7. 00 7. 50 co m m un ity (s 01 ) 1. 00 1. 00 1. 00 1. 00 0. 00 1. 00 0. 00 1. 00 0. 00 0. 50 0. 00 1. 00 1. 00 co rru pt io n (s 02 -s 04 ) 3. 00 0. 00 0. 00 0. 00 0. 00 3. 00 0. 00 0. 00 3. 00 1. 17 1. 00 3. 00 2. 50 pu bl ic po lic y (a pp ro ac h to p ol itic al p ar tie s/ in st itu tio ns ) ( s0 5s0 6) 1. 00 0. 00 0. 00 1. 00 0. 00 1. 50 0. 00 1. 00 1. 50 0. 33 1. 50 1. 50 1. 50 an tico m pe tit ive b eh av io r ( s0 7) 0. 50 0. 00 0. 00 0. 00 0. 00 0. 50 0. 00 0. 00 0. 00 0. 00 0. 00 0. 50 0. 50 co m pl ia nc e (s 08 ) 1. 00 0. 50 1. 00 0. 00 0. 00 1. 00 1. 00 0. 00 1. 00 0. 33 0. 00 1. 00 1. 00 pr od uc t r es po ns ib ilit y 4. 00 1. 00 2. 00 0. 00 0. 00 5. 00 0. 00 2. 00 5. 50 2. 92 2. 00 5. 50 6. 25 cu st om er h ea lth a nd s af et y (p r1 -p r2 ) 1. 00 0. 50 0. 00 0. 00 0. 00 1. 50 0. 00 0. 00 1. 50 0. 42 0. 00 1. 50 1. 50 pr od uc t a nd s er vic e la be llin g (p r3 -p r5 ) 2. 00 0. 50 1. 00 0. 00 0. 00 0. 50 0. 00 0. 50 2. 00 1. 00 1. 50 1. 00 1. 75 m ar ke tin g co m m un ica tio ns (p r6 -p r7 ) 1. 50 0. 00 0. 00 0. 00 0. 00 1. 50 0. 00 0. 00 1. 50 0. 83 0. 00 1. 50 1. 50 cu st om er p riv ac y (p r8 ) 0. 50 0. 00 0. 00 0. 00 0. 00 0. 50 0. 00 0. 50 0. 50 0. 17 0. 50 0. 50 0. 50 co m pl ia nc e (p r9 ) 0. 00 0. 00 1. 00 0. 00 0. 00 1. 00 0. 00 1. 00 0. 00 0. 50 0. 00 1. 00 1. 00 to ta l 54 .0 0 24 .0 0 28 .5 0 12 .0 0 8. 50 51 .0 0 28 .5 0 31 .5 0 50 .0 0 30 .4 2 34 .0 0 58 .5 0 55 .0 0 212 6. conclusions despite the growing interest in sustainability reporting, descriptive studies examining how companies build their reports are, to date, extremely scarce (perrini, 2006). moreover, notwithstanding the proliferation of these reports, questions remain on the information they should contain and on how they should be structured (davis and searcy, 2010). this paper provides one of the first in-depth studies of sustainability reporting quality within universities, and the research has sought to understand the state of sustainability reporting in higher education by evaluating its completeness and its quality. our first research hypothesis was confirmed by measuring the maturity and the quality of sustainability reporting in higher education. the analysis found the high use of indicators in the macro-areas of ‘economic’ and ‘environmental performance’ in the gri model. the main topics in the economic area are referred to financial and economic results, while the higher use of environmental indicators concerned environmental emission, energy, water, raw materials and biodiversity. in the social performance area the greatest level of disclosure were found in the internal working conditions with topics like effects on employment, safety at work, training and equal opportunity. in particular, regarding the qualitative level of disclosure, the results confirmed that significant improvements are required since the universities’ scores are generally below 50% of the maximum score achievable (daub, 2007). the results confirmed previous research by highlighting some reporting that was extremely limited in scope, depth and quality (united nations, 2010), for instance in the case of human rights and product responsibility. this reflects current practices in which sustainability reporting tends to focus more on how issues are managed rather than measuring the actual business impacts on communities and the environment (ie school of communication, 2010). the second research hypothesis was also confirmed: sustainability reporting quality is different within examined countries and, moreover, some areas are effectively more developed in some universities compared with others. in particular, the differences between the qualities of indicators disclosed in sustainability reporting may be linked to the peculiarities of each country: different countries have different national business systems that are shaped by a variety of national institutions. institutional features such as the political, financial, educational and labor, and cultural systems have a number of implications for the structural features of corporations, the organization of market processes, and the corporate governance (matten and moon, 2004). the results of this study are significant in that they enable us to draw up an ‘initial classification’ of disclosure of universities in the gri database. furthermore, these results offer interesting points of consideration for further studies. it would appear interesting to extend the analysis carried out to more years, in order to highlight a possible trend and the continued presence of differences in attention to disclosure in the various reporting macro-areas. these differences might then be investigated in order to understand their motivations. 213 moreover, the research provides an overview of the situation regarding sustainability reporting in universities using gri indicators, and it is a response to the need for more csr research in the context of higher education (coy and pratt, 1998; shriberg, 2004). another contribution of this study worth mentioning relates to the methodology used to assess the social reporting quality. this research went beyond previous studies by adding a proposal to evaluate the social reporting quality. our research examined the gri indicators and evaluated the quality of sustainability reporting according to those indicators. the paper shows that there are numerous possibilities for future research in this area that might be developed, arising out of the very limits of this paper. the main limitations of this study concern the universities analyzed, as the population comes from the gri database. secondly, many entities do not have their social reports certified by a third party. a recent research highlighted differences in external verification 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buciová, 2010; evans and davis, 2011). it is now widely recognized by business leaders that their companies need to accept broader responsibility over short-term profits (knox et al., 2005). csr is not only an excellent indicator of the legitimacy of a firm, it is also viewed as a source of competitive advantage (jamali, 2008; holder-webb et al., 2009). it ultimately develops a strong long-term reputation for the firm (brown and dacin, 1997; sen and bhattacharya, 2001). csr is not only receiving greater attention in the western world, it is also gaining currency in the developing world. a recent survey regarding csr and sustainability programs in gcc countries, including saudi arabia, showed that 72% and 83% of companies worldwide and in the region, respectively, indicated that csr has become more important in the past 2 years, with 78% of companies in the middle east employing a policy for csr/sustainability. in the middle east, 86% of companies rated it as a very important or important component of business strategy (cpi financial, 2013). csr has been studied from different perspectives and dimensions. the stakeholder-centered view of csr in particular generates voluminous studies covering the link between csr and the customer (brown and dacin, 1997; sen and bhattacharya, 2001; luo and bhattacharya, 2006; schuler and cording, 2006); csr and shareholders (lantos, 2001; porter and kramer, 2006; waddock and grave, 1997; brammer and millington, 2008); csr and government; csr and community; csr and prospective employees (strand et al., 1981; turban and greening, 1997; albinger and freeman, 2000; greening and turban, 2000; luce et al., 2001; backhaus et al., 2002; smith et al., 2004; ng and burke, 2005; kim and park, 2011); csr and current employees of the firm (riordan et al., 1997; peterson, 2004; brammer et al., 2007; turker, 2009; ebeid, 2010; ali et al., 2010; zheng, 2010; albdour and altarawneh, 2012; roeck and delobbe, 2012; bozkurta and balb 2012; you et al., 2013) and such other relationships. interestingly, most of the studies focusing on employee attitude and behavior considered internal csr to be the antecedent. even though internal csr is classified as csr activities, in the true sense of the term, this is simply the human resources management practice of the organization rather than a philanthropic contribution to the greater community. however, philanthropic responsibility, which is not directly related to employees, also has an influence on employee attitude and behavior (zheng, 2010). most of the published studies exploring perceived csr and attitude of employees focused on organizational commitment (peterson, 2004; brammer et al., 2007; turker, 2009). a few studies paid attention to attitude towards job satisfaction as a dependent or mediating variable (riordan et al., 1997; valentine and fleischman, 2008). as far as employee behavior is concerned, most of the studies focused on organizational citizenship behavior (hereafter referred to as ocb), and job performance (in-role behavior) only (aguilera et al., 2006; brammer et al., 2007; zheng, 2010). very few stud27 ies considered employee engagement as an outcome of the firm’s csr performance. albdour and altarawneh (2012) conducted a study on internal csr and employee engagement in the jordanian context. however, in recent years, there has been a great deal of attention on employee engagement. many have claimed that employee engagement predicts employee outcomes, organizational success, and financial performance (e.g. total shareholder return) (bates, 2004; richman, 2006). at the same time, it has been reported that employee engagement is on the decline and there is a deepening disengagement among employees today (bates, 2004; richman, 2006; saks, 2006). evidence from surveys, management consulting, journalistic and corporate sources shows that csr is an emerging and increasingly important driver of employee engagement (gross, 2010). therefore, employee engagement as desirable employee behavior as well as its connection to csr deserves more investigation. researchers paid particular attention to the dimensions of csr in banks as they are active players on the csr field. authors such as ararat (2007), adelopo and moure (2010), yiannaki (2010), and islam et al. (2012) studied some regional financial markets and their connection to csr. as many banks offer similar conditions in the same markets, competition in the banking sector is no longer just about price. creating uniqueness in the market with the introduction of innovative products through financial engineering is constant, and competitors are very quick to replicate innovations. ‘that is why the development of brand of the bank by creating a positive image in front of the main groups of stakeholders is an important aspect of the performance in a high-competitive environment’ (kostyuk et al., 2012). to this end, csr is now considered to be an appropriate tool (brown and dacin, 1997; sen and bhattacharya, 2001). even though csr in banks has received a lot of attention from the researchers, surprisingly there has been no particular study conducted in the context of saudi arabia. however, in terms of socio-politico-economic reality, saudi arabia holds a prominent position in the whole middle east and north africa (mena) region. in view of this dearth of research, the present study examines the impact of csr on employee job satisfaction and employee engagement and organizational citizenship behavior in the context of the saudi banking industry. here the objective is to hypothesize an integrative model that explains how csr influences employee job satisfaction, job engagement, and ocb. the theoretical foundation of the study is grounded in the spirit of social identity theory (tajfel and turner, 1979) and social exchange theory (blau, 1964). the uniqueness of this study lies in its framework and context. it conceptualizes one integrated model to build a relationship among csr, job satisfaction, employee engagement and ocb. it is also a pioneering empirical study in the context of saudi arabia. 2. definition of csr the present study adopts a stakeholder-oriented conceptualization of csr and depends on barnett’s (2007) definition of csr initiatives as ‘a discretionary allocation 28 of corporate resources towards improving social welfare that serves as a means of enhancing relationships with key stakeholders’ (barnett, 2007, p. 801). stakeholders are broadly defined as any individual, group, or entity that can affect or be affected by an organization’s activity (freeman, 1984). according to stakeholder theory, the existence of organizations depends on their ability to integrate stakeholders’ expectations into their business strategy because stakeholders provide essential resources and returns for the successful functioning and survival of organizations (donaldson and preston, 1995; roeck and delobbe, 2012). 3. csr and employee attitude and behavior: theoretical link employees are one of the most important stakeholders of any organization. since they can be affected by and also affect their organizational activities, the employees play a key role in the success or failure of their organization. this is how employees are likely to be affected by the csr programs and react differently at work (koh and boo, 2001; peterson, 2004). social identity theory (hereafter referred to as sit) and social exchange theory (hereafter referred to as set) are two widely-used theoretical frameworks that underpin the relationship between perception of csr and employees’ attitudinal and behavioral reactions (blau, 1964; tajfel and turner, 1986; ashforth and mael, 1989; molm and cook, 1995; hogg and terry, 2000; cropanzano and mitchell, 2005). sit was originally proposed by tajfel and turner (1979) as an integrative theory about the perception of psychological basis of intergroup discrimination. it is concerned with both the psychological and sociological aspects of group behavior. it studies the impact of individual perceptions, social categorization, and group distinctiveness on an individual’s attitudes and behaviors (cinnirella, 1998). according to sit, social identification corresponds to the psychological process through which individuals classify themselves into various social groups of reference (e.g. nation, organization, political or religious affiliation and so forth) in order to reinforce their self-esteem and overall self-concept (tajfel, 1981; tajfel and turner, 1986; hogg and terry, 2000). individuals may achieve positive self-esteem when they sense an ingroup identity that differentiates them from the out-group. thus, sit, with its underlying self-enhancement process, is a good framework for explaining the impact of csr on employees’ attitudes (peterson, 2004; brammer et al., 2007; turker, 2009). when the employees see that their organization works for the well-being of the society in the form of csr and, consequently, it develops a positive image in the society, they feel a sense of satisfaction and like to identify themselves with the organization as it enhances their self-esteem and pride (tajfel, 1978; hogg and terry, 2000). thus, sit provides a rational explanation of the relationship between perceived csr and employees’ positive attitude. however, it does not integrate notions of reciprocity, expectations and mutual obligations, which are needed to understand how attitudes enhanced by identification may contribute to desirable employee behavior within the organization. it is set that provides a better theoretical understanding of 29 this relationship. set highlights social behavior as the result of an exchange process (blau, 1964). the exchange refers to a reciprocal behavior (konovsky and pugh, 1994). specifically, if employees feel happy when they are working in their organization, they are likely to support their organization as a mutual exchange. sometimes employees may engage in voluntary behavior to reciprocate the treatment that they receive from their organization (organ, 1990). alan saks (2006) argues that set offers a stronger theoretical rationale for explaining employee engagement in the organization. robinson et al. (2004) describe engagement as a two-way relationship between the employer and employee. individuals repay their organization through their level of engagement. that is, the amount of cognitive, emotional, and physical resources that an individual is prepared to devote in the performance of work roles is contingent upon the economic and socio-emotional resources received from the organization. in his seminal book on social exchange, peter blau (1964) argues that philanthropic donations are likely to affect the dynamics of social exchange, not only with the recipients of this action but also within the donor’s own social group. he postulates, ‘men make charitable donations, not to earn the gratitude of the recipients, whom they never see, but to earn the approval of their peers who participate in the philanthropic campaign. donations are exchanged for social approval, though the recipients of the donations and the suppliers of the approval are not identical, and the clarification of the connection between the two requires an analysis of the complex structures of indirect exchange.’ (blau, 1964, p. 92). based on set, when the csr program fulfills the expectations of the employees, they are likely to have a positive attitude, which, in turn, leads to more enthusiastic behavior from the employees in the form of ocb, employee engagement, and other desirable behaviors (organ and lingl, 1995). 4. csr and employees: empirical studies and research framework the employee as a unit of analysis in csr research has so far received relatively less attention. however, this is changing in recent years, especially since 2010. the following table summarizes the main findings of previous empirical studies. the tabular view of the studies shows that most of the early studies on csr that consider employees as the unit of analysis focused on prospective employees rather than current employees, and tried to measure their level of attraction to the organizations involved in csr activities. the studies that focused on internal employees were also found to emphasize internal csr; i.e., csr to the employees in the form of procedural justice, training, or other hr activities as the antecedent of their commitment or satisfaction rather than external csr targeting the welfare of the larger community. few studies focus on job satisfaction and employee engagement. moreover, most of the studies ignore the moderating role of relevant attitude(s) such as job satisfaction or organizational commitment that lead to certain behavior, such as employee engagement, organizational citizenship behavior, employee turnover, workplace deviance behavior, etc. in view of this research gap, the present study has envisioned research that offers a holistic framework, incorporating csr, employee attitude, and employee 30 ta bl e 1: e m pi ric al s tu di es o n th e in flu en ce o f c sr o n em pl oy ee s’ at tit ud e an d be ha vio r st ud y va ria bl es (i v: in de pe nd en t v ar ia bl e; m v: m od er at in g va ria bl e; d v: d ep en de nt v ar ia bl e) fi nd in gs s tra nd e t a l. (1 98 1) iv : s oc ia l a nd p er so nn el p ol ic ie s of th e c or po ra tio ns d v: e nt ry p re fe re nc es th ou gh th ey h av e a lo w w ei gh t i n th e at tri bu te fu nc tio n, s oc ia l a nd e nv iro nm en ta l d im en si on s ar e in te gr at ed in e nt ry p re fe re nc es . tu rb an a nd g re en in g (1 99 7) iv : c or po ra te s oc ia l p er fo rm an ce (c s p ) d v: o rg an iz at io na l r ep ut at io n (o r ); o rg an iz at io na l a ttr ac tiv ene ss a s an e m pl oy er (o a ) c s p is p os iti ve ly re la te d to c or po ra te re pu ta tio n an d at tra ct iv en es s as a n em pl oy er . r io rd an e t a l. (1 99 7) iv : c or po ra te im ag e (a s pr ox y of s oc ia l p er fo rm an ce ) d v: j ob s at is fa ct io n (j s ) a nd in te nt io ns to t ur no ve r ( it ) c or po ra te im ag e as p er ce iv ed b y em pl oy ee s in fl u en ce s po si tiv el y jo b sa tis fa ct io n an d ne ga tiv el y tu rn ov er in te nt io n. m ai gn an e t a l. (1 99 9) iv : c or po ra te c iti ze ns hi p (c c ) d v: e m pl oy ee c om m itm en t ( e c ) p os iti ve in fl u en ce o f c c o n e c b y m ar ke tin g ex ec ut iv es . a lb in ge r a nd fr ee m an (2 00 0) iv : c or po ra te s oc ia l p er fo rm an ce (c s p ) m v: j ob s ee ke r c ho ic e (h ig h, m ed iu m , l ow ) d v: o rg an iz at io na l a ttr ac tiv en es s (o s ) c s p is p os iti ve ly re la te d to e m pl oy er a ttr ac tiv en es s on ly fo r j ob s ee ke rs w ith hi gh le ve ls o f j ob c ho ic e. g re en in g an d tu rb an (2 00 0) iv : c or po ra te s oc ia l p er fo rm an ce (c s p ) m v: in di vi du al d iff er en ce s in s el f-i m ag e d v: j ob p ur su it in te nt io n (j p i) p ro sp ec tiv e jo b ap pl ic an ts a re m or e lik el y to p ur su e jo bs fr om s oc ia lly re sp on si bl e fi r m s th an fr om fi rm s w ith p oo r s oc ia l p er fo rm an ce re pu ta tio n. m ai gn an a nd fe rr el l ( 20 01 ) iv : c or po ra te c iti ze ns hi p (c c ) d v: e m pl oy ee c om m itm en t ( e c ) p os iti ve in fl u en ce o f c c o n e c ; o nl y th e di sc re tio na ry c om po ne nt o f c c is st ro ng ly c or re la te d to e c . lu ce e t a l. (2 00 1) iv : c or po ra te s oc ia l p er fo rm an ce (c s p ) d v: f irm fa m ili ar ity (f f) , o rg an iz at io na l a ttr ac tiv en es s (o a ) c s p in fl u en ce s po si tiv el y an d in di re ct ly o a by in cr ea si ng th e le ve l o f fi rm fa m ili ar ity . f f m ed ia te s th e in fl u en ce o f c s p on o a . b ac kh au s et a l. (2 00 2) iv : c or po ra te s oc ia l p er fo rm an ce (c s p ) m v: k no w le dg e of c s p ; i m po rta nc e of c s p fo r t he jo b se ek er d v: e m pl oy er a ttr ac tiv en es s (e a ) e nv iro nm en t, co m m un ity re la tio ns a nd d iv er si ty h av e a la rg er in fl u en ce o n e a th an o th er s c s p fa ce ts . m in or iti es a nd w om en a re m or e se ns iti ve to th e di m en si on s of c s p af fe ct in g th em . i nfl u en ce o f p rio r c s p kn ow le dg e p et er so n (2 00 4) iv : c or po ra te c iti ze ns hi p (c c ) m v: e m pl oy ee ’s b el ie f i n c s r (h un t, k ie ck er a nd c ho nk o, 1 99 0) d v: e m pl oy ee c om m itm en t c c p er ce pt io ns a re p os iti ve ly re la te d to o c ; s tro ng er li nk a m on g em pl oy ee s w ho b el ie ve in c s r . t he e ffe ct o f e th ic al c c is s tro ng er . t he re is a g en de r ef fe ct fo r d is cr et io na ry c c . s m ith e t a l. (2 00 4) iv : c or po ra te s oc ia l o rie nt at io n (c s o ); a ffi rm at iv e a ct io n (a a ); d iv er si ty m an ag em en t ( d m ) d v: o rg an iz at io na l a ttr ac tiv en es s (o a ) a a pr og ra m s ar e pe rc ei ve d m or e fa vo ra bl y th an d m p ro gr am s an d ha ve a st ro ng er in fl u en ce o n at tra ct iv en es s fo r p ro sp ec tiv e st ud en ts . n g an d b ur ke (2 00 5) iv : d iv er si ty m an ag em en t ( d m ) m v: e m pl oy ee s ch ar ac te ris tic s (h ig h/ lo w a ch ie ve rs ; d m s up po rt) d v: o rg an iz at io na l a ttr ac tiv en es s (o s ) d m p ro gr am s in fl u en ce p os iti ve ly jo b ch oi ce d ec is io ns fr om w om en a nd et hn ic m in or iti es . b ra m m er e t a l. (2 00 7) iv : p er ce iv ed c s r (e xt er na l c s r a nd in te rn al c s r : p ro ce du ra l ju st ic e an d tra in in g) d v. o rg an iz at io na l c om m itm en t b ot h ex te rn al a nd in te rn al c s r a re fo un d po si tiv el y re la te d to o rg an iz at io na l co m m itm en t. 31 st ud y va ria bl es (i v: in de pe nd en t v ar ia bl e; m v: m od er at in g va ria bl e; d v: d ep en de nt v ar ia bl e) fi nd in gs va le nt in e an d fl ei sc hm an (2 00 8) iv : e th ic s pr og ra m m v: p er ce iv ed c s r d v: j ob s at is fa ct io n c or po ra te s oc ia l r es po ns ib ili ty fu lly o r p ar tia lly m ed ia te d th e po si tiv e as so ci at io ns b et w ee n fo ur e th ic s pr og ra m v ar ia bl es a nd in di vi du al jo b sa tis fa ct io n. tu rk er (2 00 9) iv : p er ce iv ed c s r (t ow ar d so ci al a nd n on -s oc ia l s ta ke ho ld er , cu st om er s, g ov er nm en t a nd e m pl oy ee s) m v: im po rta nc e of c s r to th e em pl oy ee s d v: e m pl oy ee c om m itm en t a ll ty pe s of c s r o th er th an c s r to th e go ve rn m en t w er e fo un d po si tiv el y re la te d to e m pl oy ee c om m itm en t. e be id (2 01 0) iv : c or po ra te s oc ia l r es po ns ib ili ty (c s r ) m v: e m pl oy ee s ch ar ac te ris tic s (in co m e le ve ls , p er io ds o f r et en tio n, g en de r, an d ag e. ) d v: o rg an iz at io na l c om m itm en t ( o c ) p ra ct ic in g so ci al a ct iv iti es , e sp ec ia lly th os e w hi ch a re p re se nt ed to th e em pl oy ee s af fe ct p os iti ve ly th e em pl oy ee s’ o rg an iz at io na l c om m itm en t. a li et a l. (2 01 0) iv : p er ce iv ed c s r m v: o rg an iz at io na l c om m itm en t d v: o rg an iz at io na l p er fo rm an ce th e st ud y fo un d si gn ifi ca nt ly p os iti ve re la tio ns hi p be tw ee n c s r a ct io ns a nd em pl oy ee o rg an iz at io na l c om m itm en t, c s r a nd o rg an iz at io na l p er fo rm an ce , an d em pl oy ee o rg an iz at io na l c om m itm en t a nd o rg an iz at io na l p er fo rm an ce . d ha ne sh (2 01 0) iv : f ou r d im en si on s of c s r (c ar ro ll, 1 97 9) d v: t hr ee d im en si on s of o rg an iz at io na l c om m itm en t ( m ey er a nd a lle n 19 91 ) e th ic al -le ga l d im en si on o f c s r is a s ig ni fi c an t p re di ct or o f t hr ee d im en si on s of o rg an iz at io na l c om m itm en t, w hi le th e di sc re tio na ry a nd e co no m ic d im en si on s of c s r a re n ot . zh en g (2 01 0) iv : e m pl oy ee p er ce iv ed c s r (f ou r d im en si on s of c s r a s id en tifi e d by c ar ro ll, 1 97 9) m v: j ob s at is fa ct io n an d or ga ni za tio na l c om m itm en t ( th re e di m en si on s m en tio ne d in m ey er a nd a lle n, 1 99 1) d v: o c b i, o c b o , i n ro le b eh av io r js p ar tia lly m ed ia te s th e o c b in c hi ne se c on te xt a nd p er ce iv ed c s r ; n or m at iv e co m m itm en t p ar tia lly m ed ia te s th e o c b a nd p er ce iv ed c s r ; j s fu lly m ed ia te s th e re la tio ns hi p be tw ee n pe rc ei ve d c s r a nd e m pl oy ee s’ in ro le be ha vi or ; j s p ar tia lly m ed ia te s th e re la tio ns hi p be tw ee n pe rc ei ve d c s r a nd o c b i; n or m at iv e co m m itm en t p ar tia lly m ed ia te s th e re la tio ns hi p be tw ee n pe rc ei ve d c s r a nd o c b i. tz in er e t a l. (2 01 1) iv : p er ce iv ed c s r m v: o rg an iz at io na l j us tic e d v: j ob s at is fa ct io n p os iti ve s ig ni fi c an t r el at io ns hi p be tw ee n c s r a nd e m pl oy ee jo b sa tis fa ct io n ob se rv ed . k im an d p ar k (2 01 1) iv : p er ce iv ed c s r m v: p er so no rg an iz at io n fi t d v: o rg an iz at io na l a ttr ac tiv en es s, a nd in te nt to a pp ly a m on g po te nt ia l j ob s ee ke rs g oo d c s r p er fo rm an ce s ap pe ar to p os iti ve ly a ffe ct jo b se ek er s’ in te nt io ns to a pp ly a nd a ttr ac tiv en es s to th e or ga ni za tio n. s ku di en e an d a ur us ke vi ci en e (2 01 2) iv : i nt er na l ( to w ar ds e m pl oy ee s) a nd e xt er na l c s r (r el at ed to cu st om er , b us in es s pa rtn er a nd lo ca l c om m un ity ) d v: e m pl oy ee in te rn al m ot iv at io n in te rn al a nd e xt er na l c s r a ct iv iti es p os iti ve ly c or re la te w ith in te rn al e m pl oy ee m ot iv at io n. in te rn al c s r w as fo un d to b e st ro ng er re la te d to in te rn al em pl oy ee m ot iv at io n th an a ll th e ex te rn al c s r d im en si on s. r eg ar di ng th e ex te rn al c s r , c us to m er -r el at ed a ct iv iti es in di ca te d st ro ng er c or re la tio n w ith in te rn al e m pl oy ee m ot iv at io n th an lo ca l c om m un iti es a nd b us in es s pa rtn er s re la te d c s r a ct iv iti es . t he w ea ke st re la tio n w as fo un d be tw ee n in te rn al em pl oy ee m ot iv at io n an d bu si ne ss p ar tn er s re la te d c s r a ct iv iti es . 32 st ud y va ria bl es (i v: in de pe nd en t v ar ia bl e; m v: m od er at in g va ria bl e; d v: d ep en de nt v ar ia bl e) fi nd in gs a lb do ur a nd a lta ra w ne h (2 01 2) iv : i nt er na l c s r p ra ct ic es n am el y, tr ai ni ng a nd e du ca tio n, h um an rig ht s, h ea lth a nd s af et y, w or k lif e ba la nc e an d w or kp la ce d iv er si ty d v: j ob e ng ag em en t ( je ) a nd o rg an iz at io na l e ng ag em en t ( o e ). in te rn al c s r h as s ig ni fi c an t i nfl u en ce o n em pl oy ee e ng ag em en t. h ow ev er , th e im pa ct o f i nt er na l c s r p ra ct ic es o n o e w as g re at er a s co m pa re d w ith th at o f j e . r oe ck a nd d elo bb e (2 01 2) iv : p er ce iv ed e nv iro nm en ta l c s r m v: o rg an iz at io na l t ru st a nd p er ce iv ed e xt er na l p re st ig e (p e p ) d v: e m pl oy ee s o rg an iz at io na l i de nt ity (o i) p er ce iv ed c s r (i .e . e nv iro nm en ta l c s r ) p os iti ve ly re la te s to e m pl oy ee s’ o i. th e re la tio ns hi p be tw ee n pe rc ei ve d c s r a nd e m pl oy ee s’ o i i s m ed ia te d by or ga ni za tio na l t ru st . b oz ku rta a nd b al b (2 01 2) iv : p er ce iv ed c s r m v: e m pl oy ee g en de r d v: o c b e m pl oy ee p er ce iv ed c s r is p os iti ve ly re la te d to o c b . yo u et a l. (2 01 3) iv : p er ce iv ed c s r d v: j ob s at is fa ct io n an d or ga ni za tio na l c om m itm en t b us in es s in ve st m en t i n so ci al re sp on si bi lit y ha d a si gn ifi ca nt im pa ct o n jo b sa tis fa ct io n an d or ga ni za tio na l c om m itm en t o f t he e m pl oy ee s. in a dd iti on , st af f j ob s at is fa ct io n ha d a si gn ifi ca nt im pa ct o n or ga ni za tio na l c om m itm en t. 33 behavior. the model demonstrates how employees’ perception of the csr practices of their organization affects their attitude toward job satisfaction, which ultimately affects their behavioral reaction in the form of job engagement, organizational engagement, and organizational citizenship behavior. the theoretical basis of the framework lies with sit (tajfel and turner, 1979) and set (blau, 1964). figure 1: research framework 5. hypotheses development 5.1. perceived csr and job satisfaction employee perception of the work environment has drawn a lot of attention from researchers in organizational literature. it is a psychological interpretation of an organization’s activities that has been seen as a predictor of individual performance, such as ocb (moorman, 1991) and job performance (pritchard and karasick, 1973). employee csr perception refers to employees’ personal evaluations and interpretations of an organization’s csr activities, which may differ from the actual csr practices of the organization. employee perception is subjective; it represents the employees’ interpretation of an organization’s activities and sense-making process (weick 1995). such perception, in turn, leads to employees’ attitudinal and behavioral reactions. job satisfaction is a widely-studied area of organizational research (currivan, 1999). it refers to a person’s overall affective reaction to the set of work and work-related factors and involves workers’ feelings toward different dimensions of the work and work environment (cranny et al., 1992). sit offers a plausible link between perceived csr and job satisfaction. when the employees find that their organization is 34 working in a socially-responsible way, they feel proud of their organization and like to associate themselves with it, which, in turn, leads to a higher level of job satisfaction. previous research examining perceived csr and job satisfaction (jose and thibodeaux, 1999; valentine and barnett, 2003; treviño and nelson, 2004; valentine and fleischman, 2008) found a positive relationship between the two; i.e., employee job satisfaction is found to be higher in organizations that are perceived to be socially responsible. h1: employees’ perception of csr activities of their organization is positively and directly related to their job satisfaction. 5.2. job satisfaction between perceived csr and ocb organizational citizenship behavior (ocb) is defined as an employee’s willingness to go above and beyond the prescribed roles which he/she has been assigned (organ, 1990). it is the willingness to give time to helping others who have work-related problems, taking steps to prevent problems with other workers, and obeying an organization’s rules, regulations, and procedures, even when no one is watching. these behaviors are perceived to be derived from employees’ positive work attitude, such as job satisfaction. set provides a plausible theoretical link between job satisfaction and ocb. previous empirical studies investigating the relationship between job satisfaction and ocb observed a significant correlation between the two (organ and konovsky, 1989; podsakoff and mackenzie, 1997; gonzález and garazo, 2006). ob literature suggests a distinction between two dimensions of ocb: ocb directed to individuals (hereafter referred to as ocbi) and ocb directed to the organization (hereafter referred to as ocbo) (mcneely and meglino, 1994). this distinction has implications for the present research, particularly in that the relative importance of affect and cognition might depend on whether ocbi or ocbo is more relevant. if we assume that ocb is a deliberate attempt to maintain the balance in a social exchange between employees and the organization (i.e., a cognition-oriented explanation), it is sensible to suggest that this behavior is more directly intended to benefit the organization. hence, ocbo is more likely to be a direct function of what employees perceive about the csr activities of their organization. in contrast, ocbi, primarily involving helping individuals at work, seems to have only indirect implications, at best, for maintaining balance in the organization – employee transaction. such behaviors might indeed reflect a natural expression of employees’ affect at work, as many social psychological studies have suggested (e.g. isen and levin, 1972), rather than reflecting employees’ deliberate attempt to restore the balance with the organization (lee and allen, 2002). as mentioned earlier, employees’ job satisfaction has a positive relationship with their perception of csr activities of their organization. again, job satisfaction has a positive influence on ocb. satisfied employees are logically perceived to devote their abilities and power to perform activities that go beyond their formal job description. consequently, when the organization performs csr, the employees become satisfied 35 because of enhanced self-image or greater sense of fairness, and they, in return, perform voluntary behavior within the workplace. thus the study hypothesizes the mediating relationship of job satisfaction to be between perceived csr and both ocbi and ocbo. h2: the relationship between employee perception of csr and ocbi is mediated by job satisfaction. h3: the relationship between employee perception of csr and ocbo is mediated by job satisfaction. 5.3 job satisfaction between perceived csr and employee engagement schaufeli et al. (2002, p. 74) define employee engagement ‘as a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption’. they also maintain that it is not a momentary and specific state but, rather, ‘a more persistent and pervasive affective-cognitive state that is not focused on any particular object, event, individual, or behavior’ (p. 74). according to alan saks (2006), ‘engagement is not an attitude; it is the degree to which an individual is attentive and absorbed in the performance of their roles’. the focus of engagement is one’s formal role performance rather than extra-role and voluntary behaviors (saks, 2006). in line with roles employees perform in an organization, two types of engagements are identified: job engagement (referred to as je) and organization engagement (referred to as oe). job engagement refers to the psychological presence of an individual in his/her job related role and organization engagement represents the engagement of an employee in performing his/her role as a member of the organization (kahn, 1990). according to the tenet of the set, one can argue that when an employee has a satisfied state of mind, he will engage himself more passionately in his job role and organizational role. alan saks (2006) observes a significant positive relationship between employee (both job and organizational) engagement and job satisfaction, organizational commitment, and organizational citizenship behavior as well as a significant negative relationship to intention to quit. the empirical study of may et al. (2004) found that meaningfulness along with safety and availability are significant antecedents of employee engagement. performance of csr by the organization may provide a higher sense of meaningfulness in the job in the sense that the employees may feel they are not working for the organization simply for their bread and butter; rather, they are part of an institution that serves the community to make the world a better place to live in. albdour and altarawneh (2012) observed a significant positive relationship between perceived internal csr of the employees and their job and organization engagement, but their study did not consider any mediating factors. however, in consonance with the mediating role of job satisfaction in between perceived csr activities and ocb, the present study envisions a similar role of job satisfaction between perceived csr and both types of employee engagement. h4: the relationship between employee perception of csr and job engagement is mediated by job satisfaction. 36 h5: the relationship between employee perception of csr and organization engagement is mediated by job satisfaction. 6. overview of saudi banking industry and csr saudi arabia is the largest economy of the mena region, with 2,239.1 billion riyal (equivalent to around $600 billion) gdp (at 2011 prices). there are 23 commercial banks operating in saudi arabia, including 12 domestic and 11 foreign banks. according to the saudi arabia monetary agency (sama), there were 1,646 branches by the end of 2011. commercial banks’ net profits stood at 30.9 billion riyal (equivalent to around $8.24 billion) in 2011, denoting a rise of 18.4% over the preceding year. as saudi arabia is predominately a muslim country governed under the principles of quranic law, a reflection of islamic beliefs and views is observed in the life of its citizens. according to shari’a (the islamic code of law), charging and collecting interest is strictly prohibited. however, the conventional banking system is essentially based on interest. consequently, there is a natural tendency among the saudis to bank with a shari’a compliant bank. therefore, all the banks operating in saudi arabia consider the issue and act accordingly. amongst the domestic banks, five are completely shari’a compliant banks and the rest maintain a shari’a – banking window along with their conventional banking practices. the avoidance of interest by the clients, even in shari’a compliant banks, is reflected in the bank’s deposit structure. a review of bank deposits in 2011 shows that demand deposits, which are no interest-bearing, comprise 58.1% of the total deposits, followed by time and saving deposits (27.7%) and other quasi-monetary deposits (14.2%). it simply implies that the cost of capital in saudi banks is relatively cheaper than that of their counterparts in many other countries. therefore, it is expected that the saudi banks can afford a greater involvement in csr activities. a review of the annual reports of the saudi domestic banks indicates that all the banks maintain external csr programs in one way or the other. the most common csr initiatives include investment in education, training, and health care, addressing the problems of the under-privileged segment of the society, and creating job opportunities for the unemployed (saudi arabian monetary agency, 2012). 7. methodology 7.1. participants participants included 266 employees working in different branches of the 12 domestic banks of saudi arabia, of which 73.7% are male and 26.3% are female. the lower level of female participants corresponds to the lower level of female participation in the workforce. in saudi banks, female employees work in branches dedicated to serving female clients only. the average age group of the participants is 30-40 years and the average work experience with the existing bank is 5-10 years. 7.2. procedures the data for this study was collected by graduate and undergraduate students of a large public university in saudi arabia. a total of 500 questionnaires were distrib37 uted to the employees of different banks located in jeddah, ryiad, hail, and makka. the survey included a cover letter that informed participants about the purpose of the study. participation was voluntary and participants were informed that their responses would remain anonymous and confidential. the questionnaire was originally prepared in english; however, to make it comprehensible to the respondents, each question was translated into arabic and both the english and arabic versions of the questions were included in the questionnaire. a total of 266 usable questionnaires were returned, representing a response rate of 53.2%. the data were then analyzed using spss version 16.0. 7.3. scales all the scales used for the study were adopted from previous studies. participants indicated their response on a five-point likert-type scale with anchors (1) strongly disagree to (5) strongly agree. the reliability of the scale was measured with the estimate of cornbach’s alpha (α). factor loading was calculated to see whether all questions used for predicting the relevant variables contributed adequately. perceived csr: the two-item scale used by valentine and fleishman (2008) was employed to measure perceived csr, particularly related to community. in fact, the focus was to measure the external csr of the banks. the item includes, ‘my bank is a socially-responsible organization that services the greater community’ (factor loading .944), and ‘my bank gives time, money, and other resources to socially-responsible causes’ (factor loading .944). the composite reliability coefficient, cornbach’s alpha (α), is calculated and found to be 0.87, which is satisfactory according to nunnally’s (1978) guidelines. job satisfaction: the three-item scale used by valentine and fleishman (2008) was employed to measure job satisfaction. the item includes, ‘all in all, i am satisfied with my job’ (factor loading .902), ‘in general, i like working at my organization’ (factor loading .932) and ‘in general, i don’t like my job’ (reverse score) (factor loading .816) α=.861. job and organization engagement: a five-item scale for job engagement and a six-item scale for organizational engagement used by saks (2006) were used for this study. the items assess the participant’s psychological presence in their job and organization. a sample item for job engagement is ‘sometimes i am so into my job that i lose track of time’, and for organization engagement ‘one of the most exciting things for me is getting involved with things happening in this organization’. all of the job engagement items loaded 0.70 or higher (α=.747). all six of the organization engagement items loaded 0.70 or higher (α=.892). ocbi and ocbo: two four-item scales adopted by saks (2006) were used for ocbi and ocbo. a sample item for ocbi is ‘i willingly give my time to help others who have work-related problems’; and for ocbo ‘i take action to protect the organization from potential problems’. all of the ocbi items loaded 0.70 or higher (α=.859). 38 however, for ocbo two items loaded above 0.80 and two items loaded below 0.3. the two items with poor factor loading were ‘i attend functions that are not required but that help the organizational image’ and ‘i offer ideas to improve the functioning of the organization’. initially including all four items, α came out to be .187; this was unacceptable so we dropped the above-mentioned two items with poor factor loading and observed a momentous increase in α value that turned out to be .761. 7.4. mediation regression analysis mediation regression analysis is used for exploring the relationship between independent and dependent variables (baron and kenny, 1986). to test mediation, this study estimated three regression equations: 1. regression of mediator on independent variable; i.e., job satisfaction on perceived csr. 2. regression of dependent variable on independent variable; i.e., je, oe, ocbi and ocbo on perceived csr. 3. regression of dependent variable on both independent variable and on the mediator; i.e., je, oe, ocbi and ocbo on both perceived csr and job satisfaction. in order to establish the mediating effect, results of the three steps must fulfill the following criteria: 1. the independent variable must have a significant effect on mediator in the first step. 2. the independent variable must have a significant effect on the dependent variable in the second step. and 3. mediator must have a significant effect on the dependent variable in the third step. when all three criteria have been achieved, the effect of the independent variable on the dependent variable must be less in step (3) than in step (2). in addition, after controlling for the mediator, the full mediating effect is achieved if the independent variable has no effect on the dependent variable, while partial mediation is achieved if the independent variable has a significant effect on the dependent variable (zheng, 2010, p. 64). 8. result table 2 represents the means and standard deviations of different variables used in the study. the scores of means for all the variables are above 3, which indicates that the respondents demonstrate above-average feeling for different variables included in the study, as 3 is the mid-point. table 3 shows whether independent variable ‘perceived csr’ is capable of influencing job satisfaction. the computed value of f (f = 87.16, df = (1, 266)) shows that the model is statistically significant. the influence of perceived csr is found to be statistically significant (t = 7.612, p = 0.000) and positive (β = 0.326). thereby it supports 39 h1. it is also visible that ‘perceived csr’ explains as much as 56.6% of the variation of ‘job satisfaction’. table 2: variables with mean and standard deviation variables mean standard deviation csr 3.88 .88 js 3.94 .81 je 3.89 .55 oe 3.90 .73 ocbi 3.77 .78 ocbo 3.34 .75 table 3: regression of perceived csr over job satisfaction independent variables un-standardized coeffi cients standardized beta coeffi cients t p constant 2.184 9.79 0.000 csr 0.458 0.326 7.612 0.000 anova f = 87.16; df = 1, 266; p = 0.000 predictors: (constant), csr dependent variable: js model summary r = 0.757 r square = 0. 573 adjusted r square = 0.566 standard error of estimate = 0.487 table 4 shows the mediation regression analysis based on baron and kenny’s (1986) recommendation. here we run three regressions for each dependent variable. in the case of ocbi, we observe in steps 2 and 3 that the β coefficient turns out to be insignificant and thus we can conclude that there is no significant relationship between perceived csr and ocbi; hence, the mediating role of job satisfaction is beyond question. therefore, we reject h2. as regards ocbo, it is observed that in step 2, perceived csr has a significant influence on ocbo but in step 3, the relationship turns out to be insignificant whereas the relationship between ocbo and js remains significant. this means the influence of csr on ocbo is fully mediated by js. thus, it supports our h3. concerning je, a significant positive relationship between je and csr is observed in step 2. in step 3, the relationship between csr and je becomes weaker and significant at the 5% level, while it remains significant at a 1% level for the relationship between je and js. this also indicates the influence of csr on je is fully mediated by js and, consequently, supports h4. as for oe, it is found that oe is significantly influenced by employee csr perception in step 2. step 3 also indicates a significant influence of csr and js on oe. however, the effect of csr on oe is less in step 3 (.200) than in step 2 (.418). thus, we observe that js has a partial mediating role in relationship between perceived csr and oe. therefore, the study partially supports h5. 40 table 4: regression of dependent variables (dv) on independent variable (iv) and mediator (js) dv regression model iv (csr)β coeffi cient moderating effect ocbi 1. js (mv) on csr (iv) 2. ocbi (dv) on csr (iv) 3. ocbi (dv) on csr (iv) and js (mv) .326* .169 .112 .174 no ocbo 1. js (mv) on csr (iv) 2. ocbo (dv) on csr (iv) 3. ocbo (dv) on csr (iv) and js (mv) .326* .237* .125 .344* full je 1. js (mv) on csr (iv) 2. je (dv) on csr (iv) 3. je (dv) on csr (iv) and js (mv) .326* .324* .144** .559* full oe 1. js (mv) on csr (iv) 2. oe (dv) on csr (iv) 3. oe (dv) on csr (iv) and js (mv) .326* .418* .200* .668* partial *signifi cant at 1% level, ** signifi cant at 5% level 9. discussion the study envisions a model incorporating employees’ perceived csr to the larger community as the independent variable, job satisfaction as the mediating variable, and employee job engagement, employee organizational engagement, organizational citizenship behavior related to the individual, and organizational citizenship behavior related to the organization as the dependent variables. it finds a significant positive correlation between employees’ perceived csr and job satisfaction. a similar result was also found in the studies of riordan et al. (1997), valentine and fleischman (2008), zheng (2010), tziner et al. (2011), and you et al. (2013). such a relationship is grounded in the basic tenet of the social identity theory that explains an individual’s attachment and attraction to a group. valentine and fleischman (2008) suggest that individuals prefer organizations that promote business ethics (treviño et al., 1998; jose and thibodeaux, 1999; treviño and nelson, 2004) and csr is a natural extension of organizational ethics, which involves answering the requirements of stakeholders, with particular focus on societal issues and challenges. thus, when an individual finds his organization is involved in csr, he feels good about his organization because of an enhanced self-image and delight, which ultimately leads to a higher sense of job satisfaction. the study does not find any significant relationship between ocbi and perceived csr or ocbi and job satisfaction. this finding is contrary to the findings of most of the studies seeking a relationship between job satisfaction and ocb (organ and konovsky, 1989; podsakoff and mackenzie, 1997; gonzález and garazo, 2006) or csr and ocb (zheng, 2010; bozkurta and balb, 2012). there may be several explanations of the result. first, most of the previous studies consider ocb as an integrated concept and did not bifurcate into ocbi and ocbo. therefore their findings did not reflect 41 the exact relationship between ocbi and job satisfaction. second, the employees may perform ocbi out of their own sense of responsibility or interpersonal relationship that has nothing to do with the satisfaction or dissatisfaction with the job. this study finds a significant relationship between ocbo and perceived csr mediated fully by job satisfaction. a similar result was found by zheng (2010) in the chinese context. this relationship makes sense. it validates the argument of lee and allen (2002) as they suggest, ‘if we assume that ocb is a deliberate attempt to maintain the balance in a social exchange between employees and the organization, it is sensible to suggest that this behavior is more directly intended to benefit the organization. hence, ocbo is more likely to be a direct function of what employees perceive about the csr activities of their organization’. the study observes a significant positive relationship between employee perception of csr and employee job engagement and organizational engagement. the relationship between csr perception and job engagement is fully mediated by job satisfaction while it is partially mediated in the case of organizational engagement. this is in line with the proposed hypothesis of rupp et al. (2006, p. 540). similar results were also found by zheng (2010) and albdour and altarawneh (2012). corresponding to the social exchange theory, a satisfied employee is more likely to reciprocate by performing his required duties more seriously in the workplace. moreover, meaningfulness of the job, which is an antecedent of employee engagement, is inserted in the organization’s external csr (may et al., 2004). it gives a sense of benevolence pertaining to their job. they feel they are working for the betterment of humankind, not just for narrow economic gain. consequently, it boosts their engagement towards their job as well as organization. 10. conclusion being responsible to the needs of the society and conducting ethical business practices are now the standard expectations of the employees. employees are not only concerned about the paycheck, they also look for meaning in their job. involvement in csr activities by the organization offers such a link for the employees. they like to identify themselves with a socially-responsible organization since it heightens their self-image and, in turn, they reciprocate through positive attitudes and behaviors such as greater job satisfaction, a higher sense of organizational commitment, intense engagement within the job and organization, a greater level of organizational citizenship behavior, and so on. the present study explores the relationship between perception of employees about the external csr practices of their organizations and employees’ job satisfaction and job engagement, organization engagement, organizational citizenship behavior related to organization in the context of the saudi banking industry. it is observed that, like most of the previous studies, there is a positive relationship between perceived csr and employee job satisfaction, employee engagement, and organizational citizenship behavior related to organization. it implies that involvement in external csr may act as a determinant of maintaining a 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started this quest by identifying and conducting an analysis of the existing administrative framework within the romanian trade register office (tro), as part of the eusdro project. we developed a model for the tro front and back office administrative processes. our findings suggest that although progress has been made there are still several drawbacks associated with the administrative process, within the romanian tro. thus we proposed an improved model for the romanian psc. keywords: eu services directive, public administration reform, e-government, psc, administrative process, psc model. extension of the european union services directive implementation in romania* iuliana dorobăţ laura mina radu constantinescu alexandru pavel iuliana dorobãţ assistant professor, department of economic informatics, faculty of cybernetics, statistics and economic informatics, academy of economic studies, bucharest, romania tel.: 0040-213-191.900 e-mail: iuliana.dorobat@ie.ase.ro laura mina assistant professor, department of administration and public management, faculty of administration and public management, academy of economic studies, bucharest, romania tel.: 0040-213-191.900 e-mail: laura.mina@maa.ase.ro radu constantinescu assistant professor, department of economic informatics, faculty of cybernetics, statistics and economic informatics, academy of economic studies, bucharest, romania tel.: 0040-213-191.900 e-mail: radu.constantinescu@ie.ase.ro alexandru pavel phd candidate, public administration department, faculty of political, administrative and communication sciences, “babeşbolyai” university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: alexp@polito.ubbcluj.ro * the present paper disseminates a part of the results provided by the ongoing research for the international project “extension of the eu services directive”, developed through asociaţia “centrul de studii avansate pentru servicii electronice (e-caesar)” and registered at the academy of economic studies from bucharest under grant contract no. 625/25.03.2009, with the title “european union service directive in romania (eusdro) project”phase ii “analysis and synthesis of the administrative process”. transylvanian review of administrative sciences, no. 35 e/2012, pp. 78-92 79 1. public administration reform in romania the rationale of the public administration is generally accepted to be the fulfillment of the continuously evolving public needs. in order to do so, pa has to deliver services in a transparent, democratic, effective and efficient manner. however, in most eu new member states (ms), pa is characterized by traditional bureaucratic procedures, mainly attachment to routine and repetitive activities, which considerably limit pa’s capacity to perform strategic tasks and to react to new and diverse social needs. as a result, pa activities are more likely to ameliorate problems than to solve them. this highlights the necessity of adjustment, not only to comply with european guidelines, but also to raise public acceptance of pa (goldschmidt et al., 2005, pp. 11-12). although public administration has never been an explicit part of the acquis communautaire, the various eu regulations influence more or less directly the administrative actions of the ms. these regulations mainly refer to the civil service, the decentralization process, improving financial control in order to access eu funds, e-government etc. the development of information and communication technologies was rapidly perceived as a solution for fulfilling the principles of modern public administration activities, particularly by simplification, speeding and reduction of costs (špaček, 2007, p. 120). however, in romania, electronic government is still an underdeveloped area, as there is no homogenous and interconnected system for public information, capable of reducing administrative costs induced to citizens and the business environment, which have to run from one office to another in order to get various certificates and authorizations. by contrast, other eu member states have come up with various solutions to cut down the administrative burden. slovenia for example has issued the rule according to which information once supplied by public administrations, are no longer solicited by pa (bouckaert et al., 2009, p.11). looking retrospectively at the pa reform process in romania, three main phases can be identified. thus, the first phase of reforming the public administration system begun immediately after the change of political regime, in 1990 and focused on changing the relationship between pa and society, meaning that pa must serve the society and not subordinate the society, as well as on the separation between the state and the civil society. by the end of the 1990s, pa reform enters a new phase, triggered by the goal of achieving the eu member state status. it was then the romanian government became aware of the necessity to create a modern and efficient public administration system. ever since, all government programs formally incorporated pa reform as their supreme objective. between 2001 and 2006, the administrative reform aimed at promoting values and principles such as: separation between political and administrative functions; creating and strengthening a new corps of professional and neutral career civil servants; bringing the decision-making processes closer to the citizen, decision-making autonomy, transparency, administrative simplification and respect for citizens; 80 competence delegation and service deconcentration; protection of citizens’ rights. several reports from the european commission signaled that many of the initially set goals as well as the adopted laws were not effectively respected and implemented and the new created entities did not manage to entirely fulfill their mission (hinţea, 2011, p. 182). this is the reason why the pa reform kept the top of the pre and post eu integration agenda. when talking about pa reform process in romania, both academics and practitioners argue the outcomes did not meet the expectations because the changes that have been made either had a top down logic or they were too fragmented and slow. moreover, the government always focused on the economic reform, neglecting pa reform most of the times, although the latter is a boosting framework for the economic environment (mina et al., 2009, p. 307). if we instead take a look at the post-accession period we can say for sure that the stimulus for transformation and for the adoption of most reform measures in romania was to a large extent generated by factors outside the national governments, mainly the european union. after the eu accession, pressure for change diminished and in consequence in order to continue the catching-up process, reforms should become a “voluntary” and domestically generated process. thus, in recent years, the structural and functional modernization of public administration in romania was triggered forward not just by the need for efficient public institutions, but mainly by the eu adhesion process. in this context there is no doubt that among the major challenges the romanian public administration must face there is the creation of the most appropriate mechanisms, capable of supporting the continuous european union integration process (profiroiu et al., 2006, p. 4). moreover, in the new context, the romanian public administration has to be more flexible, open, close to citizens, capable of doing more with less, and responding to the changing context (ţigănaş et al., 2011, p. 213). one of the most pressing deadlines lately imposed to member states by the eu integration process was for sure the implementation of the european union services directive (directive/2006/123/ec). thus, by december 2009, all eu countries had to adopt a combination of legislative and non-legislative measures, which included amendments of existing laws, as well as adoption of new specific pieces of legislation. 2. the european union services directive the eu services directive was adopted by the european parliament in december 2006 and is aimed at creating a single european services market, by eliminating all the obstacles service providers might face. the services directive is a big step forward in ensuring that both service providers and recipients benefit more easily from the fundamental freedoms guaranteed in articles 43 and 49 of the treaty establishing the european community – the freedom of establishment and the freedom to provide services across borders. in order to achieve this, the provisions of the directive aim to simplify the administrative procedures, 81 remove obstacles for services activities as well as enhance both mutual trust between member states and the confidence of providers and consumers in the internal market (european communities, 2007, p. 7). chapter 2 of the eu services directive, more precisely articles 5 to 8 establish a very ambitious program of administrative simplification and modernization, which sets three major objectives for member states: 1. simplification of the administrative procedures and formalities applicable to service providers; 2. provision of the possibility to complete procedures at a distance and by electronic means and to make information on national requirements and procedures easily accessible for service providers and service recipients; and 3. creating “unique desks” or points of single contact. the handbook on implementation of the services directive (hisd) states that the “points of single contact” are meant to be the single institutional interlocutors from the perspective of the service provider, so that he does not need to contact several competent authorities or bodies to collect all relevant information and to complete all necessary steps relating to his service activities (european communities, 2007, p. 16). pscs can be considered one of the innovations brought in by the services directive. thus, when wanting to start up a business in another country, service providers do not have to deal anymore with different national, regional or local authorities, but to simply contact a “unique desk” (single point of contact) which will help them with all due formalities. moreover, member states are required to simplify as much as possible their formalities and to eliminate discriminatory treatments for foreign businessmen, by making pscs available for all service providers whether established on their territory or on the territory of another member state. on the basis of article 6, member states are obliged to ensure that service providers can complete all procedures and formalities needed for access to and exercise of their service activities through “points of single contact”. this is one of the obligations of result in the services directive (european communities, 2007, p. 18). however, ms have the freedom to decide the manner of organizing their “unique desks”. the implementation of a psc could bring major benefits for citizens, public and private sector: it would not require anymore the physical presence of the applicant at any desk involved in the process of opening a business, it would make the actual business registering process more dynamic and would eliminate human errors and unnecessary filters. last, but not least, a psc could help reduce corruption by eliminating the contact between the public servant and the citizens and could also help raising the economic competitiveness of the country, as it is a well know fact that one of the first indicators foreign investors look at when choosing to start a business overseas is the number of days required to open a business (less time needed for opening a company means less bureaucracy and corruption, strong institutional structures and competitive economic environment) (ntro-isef, 2010). 82 until now, if a service provider wanted to provide services in another member state, this may have required multiple administrative paths, dependening on the sphere of service activity. as a rule departments and public authorities are only responsible for very specific tasks and for specific regions. the division of administration into material and localized responsibilities leads to multiple collections and redundant saving of data both from service providers and about service providers. this causes additional work and sometimes creates inconsistent databases. this fragmentation within the public sector creates additional time and energy expenditure. effort, energy and money are required to overcome this problem. for many service providers a lot of things are unclear, such as which proposals and formalities are actually necessary for their service activities and which government departments they must track down for explanations, notification and authorizations, enrolments and registrations. with the establishment of points of single contact, member states should ensure that service providers can carry out all procedures and formalities related to the start up and carrying out of services activities through a psc by the end of 2009. in conclusion, the eu services directive was meant to strengthen the principles of the european administrative space, especially the efficiency principle of pa, as it is well known that there is a conflict between the rule of law principle and the requirement for due procedures on one hand and the micro-economic efficiency requirement on the other hand (goldschmidt et al., 2005, p. 25). thus, the provisions of the eu services directive were designed to fight against the extensive use of formal procedures, which may be cost intensive and may slow down administrative performance. the romanian government considers that pscs are a modern instrument for administrative simplification, capable of assuring a more rapid and direct access to public services (cupar, 2008, p. 3). in order to support the implementation of pscs, the central unit for public administration reform (cupar) has developed a strategy for implementing the single point of contact within public administration, which includes a statement of goals, values and priorities, as well as a swot analysis and a stakeholder analysis. 3. the eusdro project the major goal of the eusdro project is to set-up a generic psc model for romania within the public service for creating a private company provided by the trade register office. to this respect, three major phases have been completed: documentation of the business opening process, analysis and modeling of the business opening process and architecture and development of a pilot solution for a point of single contact, taking into account that the services directive gives member states the freedom to decide how to organize the “points of single contact” on their territory. the project started from one scenario: the opening of a limited liability company (llc) with a single romanian associate. afterwards the program focused on developing several other scenarios for different company types and different operation categories within the trade register office. 83 3.1. research methodology the eusdro project focused on creating and implementing a model for a single point of service concerning the opening, changing and closing of a business in romania. the research team was composed of researchers from the polytechnic university, the academy of economic studies of bucharest and babeş-bolyai university from clujnapoca. the project had two main phases: 1. creating the model for the romanian psc; and 2. implementing the romanian psc model. the first phase was conducted by the academy of economic studies research team. in order to develop the prototype, we relied on an extensive requirements analysis and modeling stage. the initial work took place at the romanian trade office premises and consisted in on-site documentation related to all the aspects of the administrative process. we managed to benefit from the agreement of the management in order to obtain access to all the departments. this helped the research team obtain valuable information which was used to elicit the business use cases and to deliver the process model for the registration, changing and closure of a business. the administrative process was modeled using uml (unified modeling language) as we have developed use-cases, activity and state diagrams for both the front office and back office processes. while conducting the requirements analysis and modeling phase we noticed several issues regarding the administrative process and in the following we will suggest optimizations and improvements in order to increase the efficiency and to reduce redundancy. the second phase was conducted by the polytechnic university research team. the prototype application is focused on interoperability as a critical requirement. this paper addresses the research results of the academy of economic studies team. 3.2. the romanian tro administrative process modeling phase in the process of documentation we focused our efforts on business registration, business modification and business closure of a llc with a single associate due to the fact that according to the national trade register office (ntro) 2009 statistics, this is the most common type of company in romania (see figure 1). figure 1: number of business openings according to the company type (december 1990-february 2009) source: ntro, 2009, [online] available at http://www.onrc.ro/ statistici/sr_2009_02.pdf 84 the results of this entire intercession were delivered under the form of uml diagrams. thus the modeling phase implied the application of some successive steps (constantinescu et al., 2009): 1. actor identification; for this target, we start from the assumption that an actor implies a role played in the process by an individual or system within the studied administrative environment, thus we identified fifteen actors for the analyzed process; 2. building the use case model; this step mainly aims to describe the manner in which the above-specified actors interact. in the analyzed model, the administrative processes are divided into two categories: front-office processes (figure 2) and back-office processes (figure 3 and figure 4). we identified the following use cases for the business registration process: – verification and reservation of the llc name; – verification and reservation of the llc logo (optional); – the applicant compiles the dossier with all the necessary documents; – the dossier is checked and validated by the tro advisers and the clerk; – the dossier is checked and validated by the tro judge; and – the tro issues the llc registration certificate. we identified the following use cases for the business modification process: – the applicant compiles the dossier with all the necessary documents; – the dossier is checked and validated by the tro advisers and the clerk; – the dossier is checked and validated by the tro judge; and – the tro issues the llc registration certificate and the certifying certificates for which mentions exist. we identified the following use cases for the business closure process: – the applicant compiles the dossier with all the necessary documents for the dissolution with concomitant liquidation of the llc; – the dossier is checked and validated by the tro advisers and the clerk; – the dossier is checked and validated by the tro judge; and – issuing the documents for dissolution with concomitant liquidation and cancellation of a llc. 85 figure 2: the tro front office administrative processes for each case of the business modification process we identified the following sub-cases: – changes in the llc name; – nominating an administrator for the llc; – adding a new associate by selling llc shares; – increasing the social capital of the llc by co-opting a new associate; – opening a new working office; – extending the purpose of activity for the llc; and – increasing the social capital of the llc. / create the dossier the dossier was created / deposit the dossier at the svc office the dossier was deposited at the svc office [the dossier is correct and complete] [the dossier is incorrect or incomplete] / add new documents to the dossier the dossier was updated at the svc office the dossier was withdrawn / pay the taxes the taxes were paid / deposit the dossier at the ri office the dossier was deposited at the ri office 86 figure 3: the tro back office administrative processes – the dossier inspection 3. provide detailed description of each use case identified for the administrative process; for all the identified use cases associated to the administrative process, we provided a detailed description, according to a predefined template, which included: goal, actors, main phases and decision nodes; and / the spd office receives the dossier the dossier was deposited at the spd office / register the dossier the dossier was registered / add new documents to the dossier the dossier was updated at the spd office / the bvusau office receives the dossier the dossier was deposited at the bvusau office / add new documents to the dossier the dossier was updated at the bvusau office / the svc office receives the dossier the dossier was deposited at the svc office / check the dossier [the dossier is incomplete or incorrect ] the dossier presented problems the dossier was accepted [the dossier is correct and complete] / the clerck receives the dossier the dossier was deposited at the clerck's office / the clerck checks the dossier observations [the observations were unfounded] [the observations were well founded] the clerck did not update the dossier the clerck updated the dossier / the clerck receives the dossier the dossier was deposited at the clerck's office / the clerck checks the dossier / the dossier is sent to the court room / the dossier is sent to the court room 87 figure 4: the tro back office administrative processes – the dossier validation 4. provide a description of the entire administrative process by means of uml activity diagrams; due to the complexity of sub-processes encapsulated in each use case, but most of all to the existence of decision points identified in all use cases, it was necessary to graphically represent the flow of activities for every use case. also for the business registration process we thought necessary to compile a state diagram. / the dossier is analyzed / send the dossier to the court room [the dossier was accepted ] the dossier was postponed [the dossier has solvable problems] the dossier was closed [the dossier has unsolvable problems] the dossier was rejected the dossier was updated by solicitant [in short period of time] [in the court room] the dossier was updated in the court room / update the dossier at the spd office the dossier was updated at the spd office / close the dossier / check the dossier at svc office the dossier was checked by the svc office / update the dossier at the bpde office the dossier has orc codification / send the dossier to mfp the dossier has mfp codification / archive the dossier the dossier was archived [the dossier is complete] [the dossier is incomplete] the dossier was suspended [the dossier is updated in six months] [the dossier is not updated for six months] the dossier was canceled 88 3.3. analysis of the romanian tro administrative process by studying the progresses that have been made so far (ntro-isef, 2010), in order to simplify the administrative procedures required for business registration, business modification and business closure of a llc in romania, we can state that although the first two goals set by the services directive have been to a great extent reached (ntro-isef, 2010), we identified further improvements for the administrative processes conducted in the romanian tro. after analyzing the entire administrative process we identified the following drawbacks for the business registration process: 1. the process of creating the dossier for a llc registration is complex because it involves too many actors, too many documents (thus creating bureaucracy) and it has too many loop-backs; 2. the front office processes are partially automated; we identified an application called e-forms (this application needs furthermore improvements) that helps the applicant to deposit the dossier documents and does partial validation of the documents; 3. the back office processes are partially automated, we identified several applications that are used in the dossier analysis at several tro departments; the front office processes involve only the dossier creation and it is considerably simpler compared to the back office processes which involve the probation of the dossier, the analysis of the dossier and the process of issuing the registration certificates for the llc; in consequence, the lack of an integrated system leads to time consuming activities which cause significant delays in the whole process; and 4. the business registration process of a llc involves other institutions beside tro, for example the fiscal records for the company is issued by the public ministry of finance and the authorization certificates by several governmental agencies.; these kinds of interactions are characterized by slow inter-institutional feedback. we also have identified the subsequent drawbacks for the business modification process: 1. several tasks generate document redundancy; this manifests in the case of tax payment and also in certain sub-cases presented above (for example “changes in the llc name”) where the tro officials ask the applicant to submit the dossier copies and originals of documents that have been previously issued by the same institution; 2. the process of validating the dossier for a llc modification is complex because it has too many loop-backs; for example, all the data registration made in the spd office has to be rechecked in the svc office and then the dossiers are sent again to the spd in case of error with a list of correction; 89 3. the bureaucracy has reached a higher level, for example the applicant must submit additional documents in order for tax fees to be calculated. also, in the back office documents like the “operations and observations flow form” circulate and these documents have the only purpose of documenting and what has been done and by whom to alter the contents of the applicant’s dossier; and 4. the business modification process of a llc involves even more institutions beside tro (for example now are involved more actors: evaluation experts, notary attorneys, the land register office, romanian official monitor etc.) compared to the previously analyzed process and thus produces more delays. for the business closure process we identified the problems stated below: 5. the legislation imposes several time consuming tasks in order to close the llc, for example, 30 days must pass between dissolving the llc and the actual closure of it; and 6. the degree of bureaucracy, redundancy and time consuming tasks reaches the same level as in the previous processes. after the analysis of the administrative processes conducted in the tro we came to the conclusion that we should propose a model for a psc which should integrate the front office and back office processes that take place in the tro departments and which in consequence will simplify the entire tro administrative process as it is shown in figure 5. this model is based on the assumption that the subsequent improvements for a future state of the art psc will be implemented: 1. online submission of all the documents required for registering a llc; this means that the applicant should not submit any papers at the tro desk (for the moment the current romanian legislation states that the dossier submission on paper is mandatory) and the documents must be digitally signed; 2. online document management for all the papers submitted by an applicant; 3. online document validation for the entire dossier submitted by an applicant; 4. multilingual features; this system must be available to foreign applicants too, not just romanian ones; 5. online payment of all fees; the fees should be paid after the entire administrative process is over and not in between process tasks; 6. online free assistance for romanian and foreign applicants in order to understand the administrative process, to complete the necessary documents, to submit the dossier and to follow its course of action; 7. the tasks that judges perform in the back office to be automated; the presence of an applicant in the court room should not be mandatory even if the applicant’s dossier presents particularities; and 8. integration with other institutions applications in order to diminish the time consumed for inter-institutional feedback. 90 figure 5: the tro administrative processes after the implementation of the psc 4. conclusions from the institutional perspective, introducing the services directive into the national legal framework requires prompt and sustainable efforts of reforming current procedures, by modernizing and simplifying administrative formalities and processes imposed to service suppliers. from the technological perspective introducing the services directive into the national legal framework requires prompt and sustainable efforts for achieving the third objective set by the services directive (creating “unique desks” or points of single contact) which has not been achieved yet. the rationale of the psc is to offer citizens access to public services through one single access point, / create the dossier the dossier was created [the dossier is correct and complete] [the dossier is incorrect or incomplete] the dossier was withdrawn / check the dossier / check the dossier observations the dossier was registered the dossier was inspected the dossier was updated the dossier was validated the dossier was rejected the dossier was suspended the dossier was canceled / the dossier resolution [the dossier was incomplete] [the dossier is not updated for six months] [the dossier has unsolvable problems] [the dossier is accepted] / check the dossier [the dossier is updated in six months] 91 in order to eliminate the common labyrinth of redundant and complex administrative procedures. the administrative procedures we address in this paper concern the business registration, business modification and business closure of a romanian llc with a single associate. first, we present the tro administrative front office and back office model (figure 2, figure 3, figure 4) as a result of an extensive requirements analysis and modeling phase conducted as part of the eusdro project. then we conducted an analysis of the models we created in order to optimize them. we stretched out several improvements and proposed a simplified model (figure 5) adapted to accommodate the necessity of reforming current administrative procedures. after this model a psc was further developed and implemented by the polytechnic university research team. references: 1. bouckaert, g., nemec, j., nakrošis, v., hajnal, g. and tonnisson, k., public management reforms in central and eastern europe, slovakia: nispacee, 2009. 2. central unit for public administration reform (cupar), ‘methodological guide for simplifying administrative procedures’ (in romanian), [online] available at http://www. prefecturabraila.ro/integrare/ghid%20final%20(3).pdf, accessed on june 15, 2011. 3. central unit for public administration reform (cupar), strategy for implementing the single point of contact within public administration, 2008. 4. constantinescu, r., andreescu, a., boldeanu, d., mina, l. and scorţa, i., eu services directive in romania – eusdro project, raport de activitate. etapa ii – analiza şi sinteza procesului administrativ, contract no. 625/28.05.2009, departamentul de cercetări economice ase, bucharest, romania, 2009. 5. directive 2006/123/ec of the european parliament and of the council of 12 december 2006 on services in the internal market, published in oj l 376, 27.12.2006, pp. 36-68 (european union services directive). 6. goldschmidt, p., daruľová, m., niculescu, t. and stemberger, a., administrative capacity building in prospective and new eu member states. reference guide for horizontal integration, slovakia: nispacee, 2005. 7. european communities, handbook on implementation of the services directive (hisd), luxembourg: office for official publications of the european communities, 2007, [online] available at http://ec.europa.eu/internal_market/services/services-dir/handbook_ en.htm, accessed on june 30, 2011. 8. hinţea, c., ‘reform and management in romania. strategy and structural change’, 2011, revista de cercetare şi intervenţie socială, vol. 34, pp. 177-196. 9. mina, l., scorţa, i., andreescu, a., boldeanu, d., constantinescu, r. and nisioiu, c., ‘reforming public administration in the context of the eu services directive implementation. a case study on the business registration process in romania’, 2009, proceedings of the fifth ‘administration and public management’ international conference – ‘public institutions’ capacity to implement the administrative reform process’, bucharest, june 23-24, 2009, pp. 307-316. 10. national trade register office (ntro), ‘operaţiuni în registrul central al comerţului. sinteză statistică a datelor din registrul central al comerţului la 28 februarie 2009, date 92 provizorii’, no. 207, [online] available at http://www.onrc.ro/statistici/sr_2009_02. pdf, accessed on june 15, 2010. 11. national trade register office, intelligent system for electronic forms (ntro-isef), 2010, [online] available at http://e-forms.onrc.ro/, accessed on june 15, 2010. 12. profiroiu, m., andrei, t. and stancu, s., implementing the services directive in romania – analysis of requirements, perspectives and recommendations, european institute of romania, spos project, bucharest, 2007. 13. profiroiu, m., andrei, t., dincă, d. and carp, r., ‘reforma administraţiei publice în contextul integrării europene’, studii de impact iii, institutul european din românia, 2006, [online] available at http://www.ier.ro/documente/studiideimpactpaisiii_ro/ pais3_studiu_3_ro.pdf, accessed on march 30, 2011. 14. špaček, d., ‘public administration integration in the countries of the eu – theory and practice of principles for enhancing the participation’, 2007, gazdálkodás, vol. 51, special edition, no. 19, pp. 116-125. 15. špaček, d., ‘e-government management and evaluation in the czech republic – shifts in practice?’, 2010, paper presented at the nispacee conference, [online] available at http://www.nispa.org/files/conferences/2010/papers/201006151011320.spacek_egov. pdf, accessed on may 25, 2011. 16. ţigănaş, a., ţiclău, t., mora, c. and bacali, l., ‘use of public sector marketing and leadership in romania’s local public administration’, 2011, revista de cercetare şi intervenţie socială, vol. 34, pp. 212-233. list of abbreviations: bpd/e: bureau for data processing and editing bpde: bureau for preparing documents for issuing bri: incoming registration bureau brin: bureau for inter-institutional relationships bvdde: logo and name availability verification bureau bvusau: bureau for verification of name logo headquarter uniqueness and single associate cupar: central unit for public administration reform eu: european union eusd: european union service directive hisd: handbook on implementation of the services directive llc: limited liability company mfp: ministry of public finance mo: official journal of romania ms: member states ntro: national trade register office pa: public administration ri: issuing bureau sgg: general secretariat of the government slg: legal procedure documents department spd: data processing department svc: requests validation department tro: trade register office uml: unified modeling language 26 abstract there are two major preferences shaping political choices: one, regarding who should play the leading role in running the economy (markets or politicians) and the other, concerning social spending. according to reputation, leftist parties assign the leading role to politicians (i.e. the state), whereas rightist parties entrust markets with the central role in running the economy. right-wing parties’ reputation of not favoring social spending is not backed by facts. since both the left and the right display similar behaviors vis-à-vis social spending, it is preferable that markets play the central role in running the economy. flexible markets help economic growth and employment, reducing the need for high social spending. the freedom of property and freedom from corruption indexes show that, in romania, the market has never played the central role in running the economy. people’s prevailing concern over their wellbeing ‘now’ rather than ‘tomorrow’ generates competition among political right and left for higher social spending, leading to high public debt. neither left, nor right can guarantee sustainable limits for social benefi ts and public debt. capping the share of public debt in gdp by means of the constitution provides no guarantee for public debt sustainability, but is worth a try. keywords: political right, political left, reputation, political competition, time preference, markets, social spending,public debt. democracy, political competition and public debt lucian croitoru lucian croitoru senior advisor to the governor of the national bank of romania, bucharest, romania tel.: 0040-746-102.625 e-mail: lucian.croitoru@bnro.ro; lcroitoru2003@yahoo.com transylvanian review of administrative sciences, no. 45 e/2015, pp. 26-40 27 compared to non-democratic societies, authentic democracies are on average more productive, more tolerant, more transparent and freer. for these reasons, they are – as recently stated in the economist (1 march 2014) – richer, more peaceful and less corrupt1. and, more fundamentally, people are free to voice their ideas. all these clearly explain man’s struggle for democracy. however, it is less clear for people in democratic societies whether they should opt for leftist or rightist policies in their att empt to maximize their standard of living over the long term. this paper aims to suggest that certain innate or learned preferences of people may very well work against the aforementioned desideratum. 1. reputation and facts political choices are shaped by a plethora of factors, ranging from cultural to economic ones (kahneman and tversky, 1984; kahneman and tversky, 1991; gerber et al., 2010; healy, malhotra and hyunjung, 2010; valentino et al., 2008; panagopoulos, 2010; miller, 2011; hersh, 2012; ushistory.org, 2015). under their infl uence, people shape their preferences with regard to (i) who, among markets and politicians (the state) – the two power centers of capitalism2 – should play the leading (central) role in running the economy, and (ii) the ceiling which social spending, earmarked for those lagging behind in the economic process, should not exceed. people choose those parties whose policies they believe best satisfy these two preferences. nevertheless, more often than not, most people do not skim through party manifestoes. they choose the parties’ reputation. generally speaking, reputation follows facts but, once it has set in, reputation leads a life of its own and it may take a while before facts can infl uence it again. to the extent to which reputation becomes separated from facts, the choices no longer satisfy the preferences of the electorate. reputation seems to be a good guide of choices in mature democracies. in these democracies, the reputation of left-wing parties that they favor politicians and of right-wing parties that they favor the markets is still in line with facts to a great extent. however, the reputation of right-wing parties of not favoring a larger share of social spending (i.e. the cost of unemployment benefi ts, public pension provisions, minimum wage and other transfers) in gdp lacks support. quite on the contrary, in some cases, the share of public debt in gdp rose precisely as a result of higher social 1 drawing on a large panel data, rock (2007) fi nds ‘an inverted u relationship between democracy and corruption. the turning point in corruption occurs rather early in the life of new democracies and at rather low per capita incomes.’ recently, kolstad and wiig (2011) addressed endogeneity of democracy in the problem of measuring its impact on corruption and found that ‘democracy is far more eff ective in reducing corruption than indicated by estimates not taking the endogeneity of democracy into account.’ (p. 19). in the abstract of their paper, the authors conclude that ‘democracy is hence more important in combating corruption than previous studies would suggest’. 2 as introduced by greider (1989). 28 spending promoted by right-wing parties. for instance, in the us, the share of expenses incurred with social security programs in gdp rose by almost 10 percentage points from 1965 to 2012, with republican administrations (i.e. the american right) contributing almost 60 percent (greenspan, 2013, p.193)3. in younger democracies, parties’ reputation is less of a good guide of choices. for instance, the same as in mature democracies, in romania as well the parties perceived as right-wing struggle with the undue reputation of being adamant to any increase in social spending or public spending in general. there are countless examples to the contrary, yet the reputation has become entrenched. for instance, social spending rose from 9.4 percent of gdp to 10.6 percent of gdp during 1997-1999, when a right-wing coalition was in power. in addition, as compared to 2004, social spending edged up 1.3 percentage points of gdp in the period from 2005 to 2008, when rightist parties were also at the helm. it only got worse in 2010, when budget sector wages and benefi ts were temporarily slashed by 25 percent. these cuts were the exception that proved the rule stated by kuehnelt-leddihn (1988), according to which ‘tightenyour-belt parties, if they unexpectedly gain power, generally act more wisely, but they rarely have the courage to undo the policies of the santa parties’. the aforementioned cuts partly and temporarily undid the reckless policies of budget sector pay rises during the economic boom4. during that period, the budgetary structural defi cit (the cyclically adjusted budget defi cit) increased from 2.9 percent of gdp in 2004 to 8.6 percent of gdp in 2008. the wage bill increased from 8.1 percent of gdp in 2004 to 10.3 percent of gdp in 2008. the average public sector wage rose 25.3 percent per annum on average between 2005 and 2008, with the number of employees increasing by approximately 166,000. for the sake of comparison, in the same period, the average private sector wage advanced by 19.2 percent per annum. in the period from 2005 to 2008, the average public sector pension added 30 percent per annum. these increases are quite large in real terms, judging by the fact that the average annual infl ation ran at a mere 7.1 percent during the said period. the reputation of ‘right-wing’ parties of supporting the markets is even further away from reality (overinfl ated) in romania. although these parties ruled the country for 11 years during 1997-2000 and 2005-2011, the freedom of property (clarity of property rights) and freedom from corruption still rank among the lowest worldwide5. the low level of these economic freedoms is indicative of the fact that markets 3 a friend suggested that the ‘original sin’ in this case rests on the shoulders of those who trigger this process of faster rise in social benefi ts compared to gdp. the ‘original sin’ does matt er, no doubt about that, but greenspan accounts in the book quoted in the main text how president nixon, who parented the automatic benefi t hikes pegged to infl ation back in 1972, explained to him that ‘if we (republicans) don’t preempt the democrats and get the political credit, they (the democrats) will’ (greenspan, 2013, p. 193). 4 the romanian economy entered recession in in the fourth quarter of 2008. 5 the two freedoms defi ne the rule of law; the higher these freedoms, the more conspicuous the rule of law. 29 have never played a salient role in running the romanian economy. judging by this criterion, which i deem essential, all parties have bestowed the leading role in running the economy upon politicians (a leftist approach), with the outcome that entrepreneurship has barely made its way through6. in terms of demand and supply, there can be two explanations for this outcome. one is that the preference for the market playing the central role in running the economy has manifested itself, yet there was no one there to satisfy this preference. in other words, in the young romanian democracy, most voters believe that we have parties with genuine right-wing values and policies. they believe that, by voting for these parties, they actually vote in favor of the markets playing the leading role in running the economy. we may concede that, while the right was at the helm, markets enjoyed a higher degree of freedom, but they were certainly far from playing the central role in running the economy. under the presumed explanation, the culprit for this outcome is the parties’ overinfl ated reputation. normally, a genuine demand for right-wing parties yields – sooner or later – such a political structure not only in name, but also in fact. however, where the former totalitarian regimes wreaked havoc, right-wing parties might not succeed in a short timespan to entrust markets with the central role in running the economy, owing either to the reproduction of the old elites or to politicians’ educational background. as regards the change of elites, szelényi and szelényi (1995) showed that changing a totalitarian regime may be associated either with the reproduction of elites (meaning that the technocracy was coopted by the nomenklatura or the absence of a counter-elite ‘to replace the nomenklatura at the time of system breakdown’) or with the circulation of elites (when there is an already formed counter-elite or the technocracy was not coopted by the nomenklatura). starting from the theory of reproduction of elites and the path dependency theory, muntean (2013) points out that the ‘founding elections’, i.e. the fi rst democratic elections after the dissolution of totalitarianism, set the performance standards for several upcoming generations of members of parliament. according to muntean, in romania, owing to the lack of counter-elite, the founding elections enabled the reproduction of the former communist elites, which promoted their former sets of values. in my opinion, these ‘old habitus’, ‘former mental maps’ could explain why in the aforementioned periods (1997-2000 and 2005-2008) rightwing parties failed to entrust markets with the central role in running the economy. the other underlying cause mentioned above for right-wing parties ignoring the markets when assigning the leading role in running the economy relates to the educational background. muntean (2014) publishes several statistics indicating that the 6 although social spending rose at a fast pace, the inequality in terms of income and wealth has not diminished. the budget defi cits prompted by the increase in social benefi ts have been fi nanced via private savings. this explains why productivity and employment have been visibly outpaced by social spending. 30 quality of the educational background, economics included, has declined steadily in the parliament of romania. based on this, we suggest that maybe the right-wing parties and their representatives in parliament either failed to grasp the importance of putt ing markets at the center of running the economy or they wanted to assign this leading role to markets, but did not understand which reforms had to be promoted in order to achieve this goal. the other explanation why markets have never played a salient role in running the romanian economy (which highlights a situation that is allegedly harder to fi x), is that voters perceiving themselves as right wing did not want markets to be assigned the central role in running the romanian economy. but, from an economic perspective, the leading role of the market lies at the core of what the concept of political right actually means. if the number of those who vote for right-wing parties and who do not embrace this meaning is large, then we do not have a relevant number of genuine right-wing voters. preda (1994) provides explanations for why ‘the romanians declare themselves more right wing then westerners’ (p. 6) and concludes that ‘leftright’ is ‘a not too relevant dichotomy for romania and eastern europe’ (p. 4). if this was the case, right-wing parties understood the illusion their voters live with and tailored the economic components of their electoral off ers and their governing programs to the voters’ actual demand. thus, the market has so far been prevented from playing the central role in running the romanian economy. the examples above show that the spread between parties’ reputation and their actual actions (which i refer to as ‘reputational spread’) is a key factor that could alter the fulfi llment of people’s preferences for leftor right-wing policies. however, the reputational spread may also lead to the situation in which, although the simultaneous fulfi llment of the aforementioned preferences (i) and (ii) is possible, the electorate might have to choose between them. for the sake of clarity, let us assume that the public would actually want the markets to be assigned the leading role in running the economy and, at the same time, social spending to be raised. as shown above, this task could be entrusted to parties on the right. nevertheless, their undeserved reputation of opposing social spending will render the public’s decision more diffi cult. people will have to decide which of the two preferences is stronger. those who believe that lett ing markets play the central role in running the economy is more important will vote for the right. those who favor social spending more will vote for the left. from the point of view of the public’s preference, this is a distortion in the political structure which cannot be avoided in the presence of the reputational spread. 2. the crises and assigning political power the great recession has ushered in changes on the political scenes of many democracies. this is a hint that the stages of the economic cycle infl uence people’s preferences as to who exactly, between markets and politicians, should play the leading role in running the economy and to social spending. whenever they are faced with 31 economic crises and lose their income or their jobs, people have the explicit or implicit tendency to identify culprits. the changes that crises bring about on the political scenes depend on the identifi ed culprits. the following section shows how fi nancial markets, commercial banks in particular, have been blamed for the 2008 crisis. here we will merely show what decisions the public takes regarding the political vote depending on who is to blame: the markets or the politicians (the state). if the economy is in recession and the markets are perceived to have caused the decline, people give the central role in running the economy to politicians. to be more precise, the public opts for reducing market freedom and gives the vote to parties on the left. conversely, during the upswing of the economic cycle, markets are perceived to be doing a good job and the public gives power to the parties perceived as best understanding the markets, namely parties on the right. assuming the absence of the reputational spreads referred to in the fi rst section, these preferences of the public will be satisfi ed. this is the basis of governments’ asymmetric activism, which consists in more visible interventionism whenever there is a problem and the lack of intervention when the economy is in good shape. asymmetric activism heightens the magnitude of the economic cycle7. if politicians are perceived as being guilty for the crisis, conferring the power depends on the actual shape of the crisis. if expansionary policies lead to infl ation, as it was the case back in the 1970s, people tend to assign the power to parties on the right or, marking a major breakthrough, to independent bureaucracies, such as the central bank. however, if a public debt crisis emerges while an independent central bank manages (as during the great moderation) to keep infl ation low and stable, people will not want debt-cutt ing measures to translate into lower social spending. from the people’s perspective, it only seems logical for the debt-cutt ing task to be entrusted to left-wing politicians who, according to their reputation, would rather increase taxes or lower investments than diminish social spending8. as far as romania is concerned, 7 intervention during downturns is expected by people and therefore governments cannot aff ord not stepping in, although interventions are to no avail or, even worse, they deepen the recession, for instance if governments deem it necessary to narrow budget defi cits. in good times, however, macroeconomic policies cannot cool down the euphoria without generating recession. for example, assuming that the output level and the output growth rate are at their potential and that an asset price bubble is present, narrowing the budget defi cit in an att empt to cool off the bubble will lead to recession, which is politically unacceptable. thus, if the authorities cannot cool down a bubble, but can introduce regulations that stymie economic growth, asymmetric activism may increase the magnitude of the economic cycle. of course, in response to the hypothetical reduction of the budget defi cit, a central bank whose strategy consists of explicit or implicit infl ation targeting will lower the policy rate in order to keep output at its potential. 8 the distinction made by erik von kuehnelt-leddihn between santa claus parties, generous in terms of social spending, and tighten-your-belt (less generous) parties must have had a strong infl uence on this belief. 32 the 25 percent wage cut in july 2010 was a decisive element in terms of the outcome of the 2012 parliamentary elections. there are a few questions regarding this assigning of power to parties. the fi rst question is whether entrusting politicians with the central role following a crisis, i.e. restricting market freedom, is benefi cial to people. more precisely, to what extent is such a policy compatible with the objectives of social welfare? the second question is how can it be explained that both leftand right-wing governments accept to become highly indebted in order to generously fi nance increased public spending, especially associated with social programs? on the other hand, there has to be an answer why some governments still succeed in preserving public debt at relatively low levels. in what follows, this paper will answer all these questions. 3. limiting the role played by the markets in the aftermath of the 2008 crisis, there was a widespread belief that conceding the central role in running the economy to the markets starting in the 1980s had been a mistake. markets were blamed for the crisis. consequently, in many countries hit by the crisis, the electorate voted in favor of parties which they knew would entrust politicians with the leading role in running the economy. hence, many parties on the center-right or right worldwide lost power to left-wing parties, as it was the case in romania as well. behind the opinion that markets were guilty stood the controversial idea that the roots of the crisis could be traced back to fi nancial market deregulation initiated in the 1980s. people were given the explanation that, in the absence of regulation, the so-called ‘toxic’ assets emerged, which – in brief – enabled the privatization of gains and rendered the socialization of losses inevitable. there is no evidence of a connection between the loss of jobs and the somewhat liberal regulation promoted prior to the crisis. on the contrary, people have noticed that the relatively liberal regulation was associated with rising employment. for example, in the us, during 1969-1981, prior to fi nancial liberalizations, the civilian unemployment rate trended upwards and reached 9.7 percent in 1982 from 3.5 percent in 1969. with the start of fi nancial liberalizations after 1982, the unemployment rate trended downwards and came in at 4.6 percent in 2007. however, under the terrible impact of the massive job cuts after the onset of recession in 20089, the outrageous explanation related to fi nancial market deregulation seemed quite credible to a public infuriated at ‘the greediness of banks’ which, in some countries, had to be bailed out. it was not deregulation that lay at the root of the crisis, but rather the inherent instability of the economy. the inherent instability of the economy was underlined 9 in the period from 2009 to 2014 (six years into the recession), the average unemployment rate in the us was 8.3 percent. during 1982-1987 (six years into the recession that had started in the fourth quarter of 1981), the average unemployment rate stood at 7.9 percent, only 0.4 percent lower. 33 by minsky (1986, 1994), who also proposed to harness it by strengthening regulation. however, the profound drivers of the economic cycle are euphoria and panic, innermost traits of the human nature. as we have shown in ‘the end of regulation and the last regulator’, regulation can infl uence euphoria and panic only if capital movement is under total control, but even then the control can only be temporary (croitoru, 2013a). although most of the adopted regulations are not intelligent, we have been wise enough so far not to reintroduce controls over capital movement. the newly-approved regulations are, however, worryingly strict and complex, as acknowledged off the record even by politicians who have always advocated the central role of politics in running the economy. haldane and madouros (2012) have shown that the very large number of pages of the new regulations, if indicative of anything, are indicative of a high degree of complexity, thus generating a ‘too complex to manage’ problem10. very complex regulations stifl e market fl exibility. the absence of fi nancial market fl exibility will delay the resumption of relatively fast economic growth and the cut in unemployment. such a delay is not good. in many developed countries, it renders the issue of large public debt even more complicated. without the relatively fast-paced economic growth generated by markets not overly burdened with regulations, adjustments in public spending – social expenditures included – will necessarily be high. in less-indebted emerging economies, surrendering the central role in running the economy to politicians prevents eff orts from being focused on reducing corruption and clarifying property rights. corruption and unclear property rights diminish market freedom markedly and delay the instituting of the rule of law. in romania, a country with moderate freedom (an index of economic freedom of 66.6, as reported by heritage foundation), this is a serious issue: the index of freedom from corruption stands at 43.0, while the index of property rights is 40, compared, for instance, with germany (73.8), where the indices stand at 78 and 90 respectively or the czech republic (72.5), whose indices come in at 48 and 75 respectively11. clearly, surrendering the central role in running the economy to left-wing politicians when fi nancial markets are perceived as culprits for the crisis is the exclusive att ribute of 10 basel i had 18 pages in the us and 13 in the uk. basel iii has 1,000 pages in both countries. the glass-steagall act of 1933 had 27 pages, whereas its modern correspondent, the dodd-frank act of 2010, boasts 848 pages, plus a further 8,842 pages in 2012, accounting for only one third of the required rules legislation. haldane and madouros estimate that, ‘at this rate, once completed dodd-frank could comprise 30,000 pages of rulemaking’. they conclude that ‘for example, were that rule-making to occur on a us scale, europe’s regulatory blanket would cover over 60,000 pages’ (haldane and madouros, 2012, pp. 10-11). 11 in romania, the property rights and freedom from corruption indices stand at similar levels to those in less-developed countries. by comparison, these indices are as follows (the overall index of economic freedom is listed in parentheses): bulgaria (66.8) 41.0 and 30.0; vanuatu (61.1) 33.5 and 40; mongolia (59.2) 38.0 and 30.0; togo (53.00) 29.0 and 30; uganda (59.7) 26.0 and 25; ukraine (46.9) 25.0 and 20.0 (the heritage foundation, 2015). 34 voters. but this is not the solution to step up economic growth, i.e. the ultimate source of employment and social spending. 4. time preference and increasing social spending governments can increase spending on social programs at a faster pace than economic growth for decades. we have seen the united states embarking on this trend almost half a century ago. many other developed european countries have had similar experiences. the propensity of governments on the left and right alike for a higher share of social spending in gdp refl ects a more profound propensity of mankind that transcends ideologies. political parties merely take this inbred inclination into account in order to gain power or stay there. the aforementioned more profound predisposition is actually the time preference (individual ‘impatience’12). it consists in the natural prevalence of man’s preference ‘for current goods rather than for future goods’ (mises, 2008)13. in other words, on average, people are more concerned over their wellbeing at present or in the near future than their wellbeing in the more distant future. just like euphoria and panic, innermost traits of human nature, are the ultimate causes of the fi nancial and business cycles, time preference fuels the uptrend in public debt. time preference ‘shapes each choice and each action’ (mises, 2008, p. 490), including political choices. according to the time preference, voters give their votes to politicians that satisfy their need for public goods in the nearest future. if they confi ned themselves to tax revenues, politicians would not manage to supply the said goods as soon as the voters would like. in order to succeed, governments issue net debt at a rate that outpaces output growth. this is the mechanism whereby public debt rises. in most cases, the driver behind debt increase is social spending rather than public investment. social spending is fi nanced under a pay-as-you-go system, namely from contributions paid by taxpayers. but, in most cases, these systems run a defi cit and need to be fi nanced with private funds borrowed on fi nancial markets. for instance, the social security budget in romania runs a defi cit of lei 12.5 billion, which is covered through loans from the government budget, whose defi cit is in turn fi nanced via borrowings on private markets. to the largest extent, social benefi ts are an element of consumption. this means that public borrowings for fi nancing social spending are tantamount to a rechanneling of private savings fl ows from private investment to personal consumption. the excessive rechanneling of savings into private consumption may result into wider 12 an increasing number of recent neo-keynesian models of the business cycle diff erentiate ‘impatience’ by economic agents. for instance, impatience is diff erent across economic agents (some save, others borrow) in eggertsson and krugman (2012), cúrdia and woodford (2009), iacoviello and neri (2010) or eggertson and mehrotra (2014). 13 because of this ‘impatience’, 100 lei today value more than 100 lei in the future. 35 external defi cits, which – while fostering short-term economic growth – might raise growth issues over the longer term if they are not sustainable. at the level of the society, time preference sets a ceiling on savings as a share in income, thus also acting as the fundamental driver of the real interest rate on riskfree instruments (greenspan, 2013). similarly, at the level of the government sector, ‘impatience’ limits public savings. when budget defi cits widen, public savings drop. as far as the romanian economy is concerned, government savings have been negative, ranging between -0.8 percent of gdp and -2.8 percent of gdp during 1997-2001. when budget defi cits soared again in 2009, 2010 and 2011, public savings returned to negative territory, reaching -3.1 percent of gdp, -1.1 percent of gdp and -0.1 percent of gdp respectively. from the perspective of time preference, saving represents the sacrifi ce needed at present in order to consume more goods in the future or even to have new goods. ceteris paribus, the lower the time preference (‘impatience’), the higher the available saving14. however, implications on growth depend on the phase of economic cycle, the degree of development, etc.15 given the impatience of voters and the competition that politicians engage in to satisfy it, there is not too much room left for prudent government policies either on the left or on the right. the more infl ated vis-à-vis practice is the reputation of rightwing parties of exercising prudence in approving public spending, the more visible the deviation from prudence. infl ated reputation practically cancels out the vote of those who have a low time preference and who vote for precaution. as long as economic growth is stable and credit is readily accessible, the mechanism of swelling public debt described above is functional, the consequence being that savings rates in the public sector remain low or become negative. it functioned smoothly for a long time prior to the fi nancial crisis, giving birth to what we could call a ‘democracy built on debt’. 14 time preference is specifi c to each individual. time preference stands above average in case of individuals concerned with their standing in the immediate future and below average among individuals concerned with their standing in the more distant future. time preference of individuals is stable and refl ects a certain degree of intelligence. experiments have shown that the temptation of eating a cake runs extremely high among fourto six-year olds. only some of the children can postpone the eating of the cake for a relatively short period if, at the expiry of such period, they may eat two cakes. the same children that managed to delay the eating of the cake scored bett er at the high school graduation exams, which proves that a lower time preference is associated with higher intelligence, a correlation that is stable over time (the example is taken from greenspan, 2013). more on time preference can be found in shane, loewenstein and o’donoghue (2002). 15 for example, if the economy is at steady state and a shock arises in the time preference rate, economic growth will be stimulated if the shock is positive and slowed if the shock is negative. furthermore, given the law of diminishing returns, one can expect that the larger the capital per capita stock, the lower the positive eff ects of the increase in the time preference rate on economic growth. 36 the unease about low or negative saving in the public sector is not new. the economist reminds us that plato used to say, referring to democracy, that the citizen ‘lives from day to day to the end, in the gratifi cation of the casual appetite’16 (plato, 1997, p. 281). the problem with a democracy built on debt is that it becomes vulnerable to the business cycle and to the fi nancial cycle, whose profound causes – euphoria and panic – cannot be infl uenced by public policies. keynes has shown that democratic governments need to widen fi scal defi cits when, unavoidably, private demand collapses. this means that, in times of stable economic growth and easy access to credit, budget defi cits and hence public debt should remain low, so as to have room for expansion in times of crisis. the implicit idea is that governments should take on the thorny task of saving more and borrowing less during good times. however, voters’ time preference (‘impatience’) is at odds with this desideratum. given this impatience among voters, it is virtually impossible for democratic governments to engage in primary fi scal surpluses during upturns in order to diminish public debt. on the contrary, voters’ inbred ‘impatience’ keeps the competition among parties alive, irrespective of ideology, in order to meet the public’s demands in the nearest future. the unabated demand for social programs, which neither left-wing governments, nor right-wing ones can ignore, has serious implications. the larger share of social benefi ts in gdp leads to a slower growth rate of investment and, eventually, of output. in order not to impair the capacity to fi nance future social programs, the pace of increase of social benefi ts should equal that of gdp. granted, such a strategy would slow down the achievement of social welfare objectives, but it would allow for smaller public debt and would speed up economic growth, the ultimate source of social benefi ts. prior to the crisis, politicians thought that, via regulations, they had abolished the cyclicality of the economy and thus mitigated risks, including those associated with high levels of public debt. the crisis shatt ered this illusion. one cannot raise public debt by bett ing on the fact that regulations abolish the economic cycle, since euphoria and panic are its ultimate causes. in the aftermath of the crisis, fi nancial regulation was strengthened yet again but, just like it has not managed to cool off euphoria and panic in the past, the measure is doomed to fail in the future as well17. new fi scal rules were also adopted. they will have a positive eff ect until history repeats itself and political competition to off er voters what they want in the present or in the near future leads to the abolishment or the tacit violation of such rules. 16 this is, in my opinion, one of the fi rst references of a philosopher to the contents of the ‘time preference’ concept, which carl menger introduced in economics through his principles of economics. plato suggests the contents of this concept by referring to moderation, while the notion of precaution is implicit. 17 a demonstration is provided in croitoru (2013a, pp. 33-55). 37 5. in lieu of a conclusion the public’s preference on who should play the central role in running the economy (the markets or politicians, i.e. the state) infl uences political choices. if parties’ reputation in this respect becomes separated from facts, discrepancies emerge between people’s preferences and the political structure of parliament. economic crises can bring about abrupt changes in people’s educated preferences on who should play the leading role in running the economy. if markets are found guilty for the crisis, the central role in running the economy will stay with/will be entrusted to politicians. this does not always work the other way round. euphoria, panic and the herd behavior cannot be annihilated via regulations and will forever act as the ultimate causes of the economic cycle. for this reason, fi nancial markets will often fi nd themselves in the position of ‘culprits’ for the crises. at least on those occasions, they will lose for a while the central role in running the economy. if they want politicians (the state) to play the central role in running the economy, people will give their votes to parties on the left. pushing markets into the backseat will slow economic growth, which is the ultimate source of social spending. the economic advance required for generating new jobs will stall, stifl ed by unwise (unintelligent) regulations. experience shows that introducing unwise regulations takes several years but unwinding them is becoming possible only decades later. goodhard (2010) refers to several rules and regulations initially introduced during the 1930s-1960s and repealed during 1980-2007. if people choose markets to play the central role in running the economy, their vote will go to right-wing parties. the fl exible markets will contribute to economic growth by stimulating competition, innovation and productivity growth, which will lead to higher employment and diminish the need for increased social spending. the experience of the uk under margaret thatcher and john major is well known. the consistent enforcement of right-wing policies took the uk, over a 19-year period, from the 19th place to the second place among oecd countries in terms of standard of living (blundell, 2008). when margaret thatcher died, i wrote an article (croitoru, 2013b), which concluded that ‘basically, what counted was a correct philosophy (that of freedom) on who plays the central role in running the economy (the market or the government), along with political will and the courage to put it into practice. the rest comes easy’. it is the main conclusion of this paper as well. in romania, starting with the 1940s, markets have never played the central role in running the economy. the chance for markets to hold the leading role in running the economy can only be off ered by a genuine political right. when this happens, the freedom of property and freedom from corruption will increase, unleashing the entrepreneurial spirit and stimulating productivity and the standard of living. time preference, namely people’s inbred tendency to be concerned with their wellbeing at present or in the near future than with their wellbeing in the more dis38 tant future, is a major driver of the competition among parties for increasing social benefi ts, irrespective of ideology. since parties on the left and right alike compete for higher social spending, the public’s preference for a certain ceiling on social spending as a percent in gdp should not have a bearing on the vote. however, right-wing parties’ reputation of being less favorable to social spending compared to left-wing parties makes it so that the social spending preference does infl uence the vote. given the time preference, neither right-wing governments, nor left-wing ones can provide any guarantee that, over long periods of time, the growth in social benefi ts and public debt will not outpace gdp dynamics, thereby reducing the available resources for private and public investment. in other words, neither the left, nor the right can oppose fi nancing democracy on debt. the time preference, which leads to swelling public debt, calls for adopting fi scal rules meant to cap its increase as a share in gdp. in order for them to be as resilient as possible to political competition fuelled by the time preference, rules need to be enshrined in the constitution, which would render them diffi cult to abolish. some eu member states, such as estonia, romania, norway, denmark or bulgaria have succeeded in containing public debt as a share of gdp to relatively low levels, without applying such a rule. the same thing happens, however, in some poor african countries, or in some developed economies in asia, hinting at the presence of other factors that, in some cases, may suppress public debt as a share of gdp. take bulgaria for example: the fi xed exchange rate set by the currency board causes the current account to worsen in times of large capital infl ows, so that narrowing the fi scal defi cit and thus containing the public debt remain the main tools to fi x the external imbalance. in the case of norway, the oil reserves ensure strong budget revenues, stemming the need for public borrowings. for the poor countries, putt ing a cap on debt is most likely ensured by foreign investors’ low tolerance for large public debt fi gures. ultimately, in some countries, cultural factors play a role, as is the case of the economies in the euro area’s north versus the south. in view of the said factors – culture, investors’ tolerance (development level), hydrocarbon resources and the currency regime –, to establish a rule for containing public debt as a share of gdp may prove more benefi cial if we consider that it openly expresses the objective to cap public debt. nonetheless, this rule too has its weak points (croitoru, 2013c). first, it cannot operate in a currency area that is not backed by a fi scal union. second, it cannot ensure the government’s good fi scal behavior towards too-big-to-fail entities. when such entities fail, the government will have to step in, no matt er how high public debt rises after such an intervention. apart from these instances, one may hope that the rule will be able to put a 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hutchings, v.l., banks, a.j. and davis, a.k., ‘is a worried citizen a good citizen? emotions, political information seeking, and learning via the internet’, 2008, political psychology, vol. 29, no. 2, pp. 247-273. 53 abstract transfer of learning is a necessary step between learning and performance. this article is based upon a quantitative survey, studying the main transfer inhibiting and enhancing conditions from a public management program in the belgian public sector. the statistical results demonstrate that individual and program characteristics determine primarily the transfer of what has been learned. this allows both researchers and practitioners to focus on the most obvious independent variables in order to increase the effectiveness of management and leadership development, i.e. the link between the program and the general hrm-processes in the organization, the opportunities provided to the participant and the communication towards the participant and his/her colleagues. apart from that, the impact of the selection procedure for enrolment has a determining role on the program’s success. keywords: management and leadership development, training effectiveness, transfer, human resource development. first things first: focusing on the obvious for better management and leadership development bruno broucker bruno broucker assistant professor, ku leuven public governance institute, leuven, belgium tel.: 0032-16-37-35.26 e-mail: bruno.broucker@kuleuven.be transylvanian review of administrative sciences, no. 46 e/2015, pp. 53-70 54 1. i ntroduction in the past, the impact of educational programs has been questioned regularly (broad and newstrom, 1992; awoniyi, griego and morgen, 2002). yet, educational investments, in both the public and the private sector, continue to be considered as important human resource development strategies to increase individual and organizational performance. the same goes for management programs and leadership training, where it is assumed that they aff ect management and leadership, and thus performance (wright and pandey, 2010; buelens et al., 2006). the question is whether those programs actually ‘work’, because there needs to be a translation from learning to practice before performance can be aff ected positively. and if so, can we increase that impact by focusing on the dependent variables? that is what this article is about, and its added value is on two fronts. first, most transfer studies have been limited to short term training programs in the private sector (gilpin-jackson and bushe, 2007; broucker, 2010). the focus of this article is on long term management programs in the public sector and their main inhibiting and enhancing conditions, based on quantitative results of a survey taken from belgian civil servants. second, this article wants to tackle the question of what factors have to be dealt with primarily in order to enhance transfer and thus eff ectiveness of management programs in the public sector. this is necessary, since literature suggests that the number of transfer stimulating and inhibiting factors remains large. even though there is a consensus about the main independent variables, i.e. the individual, the transfer climate and the training program (broad and newstrom, 1992; holton, 1996; burke and hutchins, 2007), the list of sub-factors of those main variables is extremely large, which incorporates the risk of theoretical vagueness and the loss of a clear research focus. burke and hutchins (2007) in their review came to a list of 17 factors which have a strong or moderate relationship with transfer, 5 factors with mixed support in the research debate for their infl uence on transfer, 8 factors which have been examined minimally, and 18 factors which need more research. broucker (2014) also claims that the complexity of the transfer processes and the number of its infl uencing factors may even be higher. 2. transfer of training: the concept transfer is often defi ned as ‘the eff ective and continuing application, by trainees to their jobs, of the knowledge and skills gained in the training, both on and off the job’ (broad and newstrom, 1992). broucker (2010) has argued that this defi nition doesn’t make a distinction between diff erent types of educational programs and doesn’t make clear what ‘application’ actually means. therefore he suggests another defi nition upon which this article will be based: ‘transfer is when acquired knowledge and skills add value that improves job performance’ (broucker, 2010). two elements in this defi nition are important: (1) time, since transfer is future-oriented and continuing by nature; (2) transfer must be considered as an elementary and conditional step between the learning process and job performance. several theoretical models have 55 emphasized this sequence of events (foxon, 1994; thayer and teachout, 1995; kontoghiorghes, 2004; pidd, 2004; broucker, 2014). transfer studies and conceptual models have, throughout the years, identifi ed and emphasized the importance of three variables in this process (broucker, 2010): individual characteristics (quiñones and holladay, 2003; pidd, 2002; lim and johnson, 2002; ruona, leimbach, holton and bates, 2002), training characteristics (paek and hawley, 2006; ford, quinoñes, sego and sorra, 1992; broad and newstrom, 1992) and transfer climate characteristics (broad and newstrom, 1992; awoniyi, griego and morgan, 2002; van der klink, gielen and nauta, 2001; clarke, 2002; ford et al., 1992; gumuseli and ergin, 2002; quiñones, 1995; olivero, bane and kopelman, 1997). those variables stand for (1) the individual competencies and motivation to apply what has been learned, (2) the similarity between program and work environment, and (3) the organizational climate of support for the transfer process (i.e. the transfer climate). 3. m ethods 3.1. data collection the data was collected from a survey taken from 300 belgian federal civil servants in 2008, graduated from an educational program in public management (the ‘public management program’, hereafter: pump) in the period 2001-2007. the entrance to the program was yearly limited to 50 federal civil servants. the main objective of pump, commissioned by the federal government, was to contribute to the reform of the federal administration by giving civil servants the necessary knowledge, competencies, skills and att itudes to support the modernization process and therefore preparing themselves for a future managerial or leadership role. simultaneously, pump wanted to create an interand intradepartmental network of civil servants, enhancing a reform culture and a new way of managerialism (broucker, 2011). the intensive one-year program contains diff erent sections such as, among others, public management and leadership courses, exercises aiming at knowledge integration, organizational consultancy tasks and an external internship. the survey-instrument used was based upon the learning transfer system inventory, originally created and validated in the united states, measuring the ‘learning transfer system’, which are all the transfer infl uencing factors within the individual, the training program and the organization (donovan, hannigan and deirdre, 2001). it measures 16 factors (see table below) (holton and bates, 1998; holton, bates and ruona, 2000), has been translated and validated in thai (yamnill and mclean, 2001), chinese (chen, 2003), arab (bates and khasawneh, 2005) and french (devos et al., 2006), and has proven cross-organizational validity (holton, chen and naquin, 2003). 56 table 1: ltsi scale defi nitions trainee characteristics scales • learner readiness: the extent to which individuals are prepared to enter and participate in a training program. • performance self-effi cacy: an individual’s general belief that he is able to change his performance when he wants to. motivation scales • motivation to transfer learning: the direction, intensity and persistence of effort towards utilizing in a work setting skills and knowledge learned in training. • transfer effort—performance expectations: the expectation that effort devoted to transfer will lead to changes in job performance. • performance—outcomes expectations: the expectation that changes in job performance will lead to outcomes valued by the individual. work environment scales • feedback/performance coaching: formal and informal indicators from an organization about an individual’s job performance. • supervisor/manager support: the extent to which managers support and reinforce the use of learning on-the-job. • supervisor/manager sanctions: the extent to which individuals perceive negative responses from managers when applying skills learned in training. • peer support: the extent to which peers reinforce and support use of learning on-the-job. • resistance/openness to change: the extent to which prevailing group norms are perceived by individuals to resist or discourage the use of skills and knowledge acquired in training. • personal outcomes-positive: the degree to which applying training on the job leads to outcomes that are positive for the individual. • personal outcomes-negative: the extent to which individuals believe that applying skills and knowledge learned in training will lead to outcomes that are negative. ability scales • opportunity to use learning: the extent to which trainees are provided with or obtain resources and tasks on the job enabling them to use the skills taught in training. • personal capacity for transfer: the extent to which individuals have the time, energy and mental space in their work lives to make changes required to transfer learning to the job. • perceived content validity: the extent to which the trainees judge the training content to accurately refl ect job requirements. • transfer design: the extent to which training has been designed to give trainees the ability to transfer learning to job application and the training instructions match the job requirements. diff erent steps were taken before launching the survey. first, it was qualitatively tested, using interviews taken from graduates from the justice department and from graduates from another program in public management (van de kerckhove, 2007) to see whether the factors were relevant for and applicable to the belgian public sector. second, the survey was translated by forward translation (chen, 2003) and pre-tested by interviews taken from a small, yet diverse group of graduates of pump. consequently, the questionnaire was adjusted to the specifi cities of pump, and elaborated. since the ltsi only measures transfer inhibiting and stimulating conditions, questions about transfer were added (e.g. ‘i use the knowledge gained from the program in my daily work’). given that one of the objectives of pump was to create a network of civil servants, questions about ‘peer support from student colleagues’ were added. finally, the survey was sent out on paper, and two reminders were sent as well. 3.2. results some descriptive results. the response rate was 62%. a large majority of the respondents gave 4 major reasons why they enrolled the program: personal enrichment 57 (25%), motivation to participate in the administration’s reform (14.8%), career perspectives (11%) and personal interest (12%). in the survey a distinction was made between the working period of the respondent before his participation in the program and his working period after the program. this is necessary to see whether transfer, because of the program, took place, and because, for some graduates, the time lapse between the program and the survey was about 7 years and career changes might be expected: – 54% of the respondents didn’t participate in reform projects before the program, compared to 43% after the program. the diff erence between both periods was signifi cant, suggesting that participation in reform projects is stimulated by pump (sig. t-value = 0.001). this is relevant, given the program’s objective to contribute to the reform. – the respondents were asked whether their organization took transfer stimulating initiatives. they answered the question for the organization wherein they were active before the program and for their actual situation. 50.4% and 45.5% indicated that their organization didn’t take any transfer stimulating initiative. – respectively 18.9% and 32.5% of respondents stated that they were asked to take part in modernization projects, which is rather low, given the program’s objective. – at least 75% of the respondents (1) agreed that pump had an added value on the daily work, (2) believed to have the capacities to use pump, (3) agreed that pump was a necessity for the government, (4) stated that non-use of pump wasn’t perceived negatively by their organization, (5) believed in the utility of the educational program. other results suggested that supervisor support, peer support, added value from the program to the individual career were perceived rather neutral. as a result, it can be stated that pump had, for the majority, been transferred to the workplace, but that the transfer climate from the federal organizations could be defi ned as neutral: for most respondents no consequences were linked to the non-use of the program. factor analysis. explorative factor analysis with spss was conducted, with direct oblique rotation as extraction method (field, 2006; ho, 2006). only factors with an eigenvalue above 1 were selected (ho, 2006). the way the variables, with their loadings, are clustered, is demonstrated in the next table. the statistics show that it was reasonable to conduct explorative factor analysis. the kmo measure of sampling adequacy provides a value of 0.837 and the bartlett ’s test of sphericity indicates a significance value of 0.000 (field, 2006). the anti-image correlation matrix demonstrated that the diagonal values were higher than the necessary 0.50 (field, 2006). the total explained variance by the 18 factors is 71%. the minimum factor loading is 0.30. as a result, the number of lost variables is minimized, and cross loadings are displayed. the few cross loadings can be ignored, since they are inferior to the dominant factor, or because cross loading occurs under a theoretically illogical factor. the table provides the items for each factor, together with the reliability index. 58 ta bl e 2: it em s an d fa ct or re lia bi lity in di ce s va ria bl e lo ad in g ite m cr on ba ch ’s al ph a fa ct or o pp or tu ni ty 2 .7 80 w ith in th e or ga ni za tio n i r ec ei ve d op po rtu ni tie s to u se th e kn ow le dg e ac qu ire d in p um p 0. 89 8 o pp or tu ni tie s re ce ive d fro m th e or ga ni za tio n to a pp ly pu m p pu m pv er an tw 1 .7 60 w ith in m y or ga ni za tio n, i wa s, b ec au se o f p um p, c ha rg ed to c oo pe ra te in m od er ni za tio n pr oj ec ts o pp or tu ni ty 1 .7 56 i r ec ei ve d op po rtu ni tie s to v al or ize p um p o pp or tu ni ty 3 .7 34 w ith in m y or ga ni za tio n i r ec ei ve d th e po ss ib ilit y to p ro po se c ha ng e in itia tiv es , b as ed o n m y pu m pex pe rie nc e ve ra nt wt ra ns fe r1 .3 65 m y or ga ni za tio n ke pt a n ey e on m e so th at i wo ul d us e pu m p m ax im al ly pu m pi nz ich t3 .7 37 w ha t i h av e le ar ne d in p um p he lp s m e in m y wo rk 0. 91 4 th e pe rc ep tio n th at p um p ha s a po sit ive in fl u en ce o n th e jo b (tr an sf er ) pu m pi nz ich t4 .6 73 in m y da ily w or k, i us e, in o ne w ay o r t he o th er , m y ac qu ire d kn ow le dg e an d ex pe rie nc e fro m pu m p pu m pi nz ich t2 .6 36 pu m p he lp s m e to b et te r m ak e de cis io ns m ot via tio n3 .6 21 af te r g ra du at in g, i be lie ve d th at p um p wo ul d he lp m e to d o m y jo b be tte r pu m pi nz ich t1 .6 15 si nc e pu m p, i no tic e a ch an ge in m y wa y of w or kin g m ot iva tio n2 .5 57 af te r p um p i b el ie ve d pu m p wo ul d in cr ea se m y pe rs on al p er fo rm an ce o rg an isa tie in itia tie f1 .5 22 be ca us e of p um p i t ak e m or e qu ick ly in itia tiv es in m y wo rk pu m pi nz ich t6 .4 99 i u se p um p in m y wo rk br ui kb 2 .4 81 pu m p is im m ed ia te ly us ea bl e in m y da ily w or k o rg an isa tie in itia tie f5 .4 71 be ca us e of p um p i h av e al re ad y co nt rib ut ed u se fu lly to c er ta in p ro je ct s se lfef fi c ac y2 -.9 30 g en er al ly, i fe el c on fi d en t e no ug h to tr y so m et hi ng n ew in m y wo rk 0. 81 0 se lfef fi c ac y se lfef fi c ac y1 -.9 21 i h av e en ou gh s el f-c on fi d en ce to ta ke n ew in itia tiv es , e ve n if th e re sis ta nc e on th e wo rk pl ac e is hi gh se lfef fi c ac y3 -.5 97 i h av e al wa ys b ee n su re to h av e th e ca pa cit ie s to u se p um p in m y wo rk co lle ag ue g ra du at es 3 .9 14 i c on su lt ot he r g ra du at es if i ha ve s pe cifi c q ue st io ns o n th e jo b 0. 87 4 su pp or t f ro m c ol le ag ue gr ad ua te s co lle ag ue g ra du at es 2 .9 11 i c on ta ct o th er g ra du at es if i ne ed th ei r e xp er tis e co lle ag ue g ra du at es 4 .8 11 i f ee l s up po rte d by o th er g ra du at es w he n i a m c on fro nt ed w ith d iffi c ul tie s in m y wo rk co lle ag ue g ra du at es 1 .6 93 th e gr ad ua te s re pr es en t a g oo d pr of es sio na l n et wo rk de sig n2 .8 22 th e tra in er s us ed a lo t o f e xa m pl es to d em on st ra te h ow i co ul d us e pu m p in m y jo b 0. 87 1 le ve l o f a cc or da nc e be tw ee n pu m p an d th e wo rk pl ac e de sig n3 .7 80 th e ex er cis es m ad e in p um p, c la rifi e d ho w i c ou ld a pp ly wh at i ha ve le ar ne d in m y jo b de sig n1 .7 21 th e tra in er s ha d a cle ar id ea a bo ut h ow i co ul d us e m y ac qu ire d kn ow le dg e co nt en tv al id ity 4 .6 95 th e sit ua tio ns d es cr ib ed in p um p, re se m bl ed th e sit ua tio ns i en co un te r i n m y jo b de sig n4 .6 23 be ca us e of th ei r t ea ch in g m et ho ds , t he tr ai ne rs g av e m e co nfi d en ce th at i wo ul d be a bl e to us e m y ac qu ire d kn ow le dg e co nt en tv al id ity 2 .4 53 th e co nt en t o f t he p ro gr am fi tte d th e pr ac tic e 59 va ria bl e lo ad in g ite m cr on ba ch ’s al ph a fa ct or pe rfo rm an ce 1 -.7 27 in th e or ga ni za tio n wh er e i w or ke d on e wa s ap pr ec ia te d if he d id h is jo b we ll 0. 91 4 th e at tit ud e of th e or ga ni za tio n to wa rd s pe rfo rm an ce a nd c ha ng e pe rfo rm an ce 3 -.7 10 th e or ga ni za tio n wh er e i w or ke d at th e m om en t o f m y pa rti cip at io n, a pp re cia te d go od pe rfo rm an ce s pe rfo rm an ce 2 -.4 52 th e or ga ni za tio n wh er e i w or ke d at th e m om en t o f m y pa rti cip at io n ha d an e ye fo r p er so na l pe rfo rm an ce re sis ta nc e5 -.3 90 em pl oy ee s wh o try to in itia te n ew w or kin g m et ho ds , w er e di sc ou ra ge d on th e jo b pe rs on al po sit ive 1 -.3 90 g en er al ly sp ea kin g, th er e wa s sa tis fa ct io n on th e jo b if ne w ac qu ire d kn ow le dg e wa s us ed re sis ta nc e4 -.3 30 o n th e jo b no -o ne w an te d to d o so m e ef fo rt to c ha ng e th in gs re sis ta nc e2 .3 25 o n th e jo b em pl oy ee s we re o pe n to c ha ng e, if it w ou ld a m el io ra te th e or ga ni za tio na l pe rfo rm an ce re sis ta nc e3 .3 06 o n th e jo b ex ist in g wo rk in g m et ho ds w er e pr ef er re d to th e ap pl ica tio n of n ew le ar ne d m et ho ds re ad in es s2 .8 18 fr om th e be gi nn in g, i kn ew w ha t i c ou ld e xp ec t f ro m p um p 0. 82 6 pr ep ar ed ne ss to th e pr og ra m re ad in es s1 .8 03 be fo re th e pr og ra m s ta rte d, i ha d an id ea a bo ut h ow it c ou ld b e us ef ul fo r m y jo b re ad in es s4 .7 36 fr om th e be gi nn in g, i kn ew h ow p um p wo ul d fi t m y wo rk s itu at io n re ad in es s3 .7 31 th e ed uc at io na l g oa ls fro m p um p we re c le ar fr om th e be gi nn in g re fl e ct io n_ f4 .7 86 pu m p is a re fl e ct io n fra m ew or k fo r t he fu tu re 0. 69 9 pu m p is a re fl e ct io n fra m ew or k fo r t he fu tu re ti m e2 .7 38 pu m p is a pr oc es s of m at ur at io n o rg an isa tie in itia tie f4 .3 97 pu m p he lp s to in itia te c ha ng e re fl e ct io n_ f2 -.7 64 th e fe de ra l a dm in ist ra tio n ne ed s a pr og ra m a s pu m p to re fl e ct a bo ut th e fu tu re o f t he be lg ia n pu bl ic se ct or 0. 76 7 th e ex te nt to w hi ch th e fe de ra l g ov er nm en t n ee ds pu m p re fl e ct io n_ f1 -.7 09 th e fe de ra l g ov er nm en t n ee ds th e in sig ht w hi ch is p ro vid ed b y pu m p m an ag er su pp or t1 -.7 06 m y su pe rv iso r w as re ce pt ive fo r e ve ry th in g wh at w as le ar ne d in p um p 0. 58 1 su pe rv iso r s up po rt m an ag er sa nc tio ns 2 .6 86 m y su pe rv iso r d id n’ t fi n d a pr og ra m lik e pu m p us ef ul m an ag er su pp or t4 -.6 17 m y su pe rv iso r w as in te re st ed in w ha t i le ar ne d fro m p um p m an ag er su pp or t5 -.5 97 m y su pe rv iso r e xp ec te d m e to u se th e kn ow le dg e fro m p um p at a m ax im um m an ag er su pp or t2 -.5 53 m y su pe rv iso r e nc ou ra ge d m e to u se p um p at a m ax im um m ot iva tio n1 -.4 59 du rin g th e pr og ra m i al re ad y th ou gh t a bo ut h ow i co ul d us e pu m p in m y wo rk m an ag er sa nc tio ns 1 .4 50 m y su pe rv iso r d id n’ t w an t m e to u se w ha t i h ad le ar ne d in p um p m an ag er su pp or t3 -.4 45 du rin g th e pr og ra m i ha d di sc us sio ns w ith m y su pe rv iso r a bo ut h ow m y pu m pex pe rie nc e co ul d be u se d in th e or ga ni za tio n pe rs on al po sit ive 2 -.3 23 o n th e jo b it wa s ap pr ec ia te d if i u se d kn ow le dg e fro m p um p 60 va ria bl e lo ad in g ite m cr on ba ch ’s al ph a fa ct or pu m pc ar riè re 2 .6 81 pu m p re pr es en ts a s te p fo rw ar d in m y ca re er 0. 81 7 co nt rib ut io n fro m p um p to th e ca re er pu m pc ar rie re 3 .6 68 pu m p is an a dd ed v al ue o n m y cv pu m pc ar riè re 1 .6 56 pu m p is a st ep fo rw ar d in m y ca re er pe rs on al po sit ive 3 .5 91 if i d o no t u se p um p, m y ch an ce s on p ro m ot io n wi ll b e sm al le r pu m pv er an tw 2 .5 08 w ith in th e or ga ni za tio n i a m m or e qu ick ly ap pr oa ch ed to ta ke u p ne w re sp on sib ilit ie s pe er su pp or t3 .8 71 m y co lle ag ue s we re in te re st ed in w ha t i w ou ld b e ab le to d o wi th p um p on th e jo b 0. 86 4 su pp or t f ro m c ol le ag ue s pe er su pp or t2 .8 47 m y co lle ag ue s ex pe ct m e to u se p um p in m y jo b pe er su pp or t4 .8 33 m y co lle ag ue s en co ur ag e m e to u se p um p in m y wo rk m ax im al ly pe er su pp or t1 .7 35 m y co lle ag ue s su pp or te d m y pa rti cip at io n in p um p pe rs on al ne ga tiv e2 -.7 38 in m y or ga ni za tio n i w as a sk ed fo r e xp la na tio n if i d id n’ t w an t t o co nt rib ut e to p ro je ct s wh er e m y ac qu ire d kn ow le dg e co ul d be u se d 0. 82 4 di ss at isf ac tio n in c as e of n on -u se o f a cq ui re d kn ow le dg e pe rs on al ne ga tiv e3 -.7 00 in m y or ga ni za tio n it wa s no t a cc ep te d if ac qu ire d kn ow le dg e wo ul d re m ai n un us ed pe rs on al ne ga tiv e1 -.5 67 it wo ul d no t h av e be en a pp re cia te d if i w ou ld n ot u se p um p on th e jo b pe rs on al ne ga tiv e4 -.5 17 if i w ou ld n ot u se p um p in th e or ga ni za tio n, i wo ul d re ce ive n eg at ive c om m en ts fe ed ba ck 1 .7 02 o n th e jo b, i ha d re gu la rly c on ve rs at io ns a bo ut h ow to im pr ov e m y pe rs on al p er fo rm an ce 0. 80 0 fe ed ba ck o n in di vid ua l pe rfo rm an ce m an ag er su pp or t6 .5 22 m y su pe rv iso r m ad e cle ar w ha t h e ex pe ct ed fr om m e af te r p um p fe ed ba ck 2 .4 79 o n th e jo b i r eg ul ar ly re ce ive d ad vic e ab ou t h ow i co ul d im pr ov e m y pe rs on al p er fo rm an ce fe ed ba ck 3 .4 09 af te r p um p i r ec ei ve d fe ed ba ck a bo ut h ow w el l i u se d m y tra in in g pe rfo rm an ce 4 .3 27 w he n i d id s om et hi ng g oo d on th e jo b, i qu ick ly re ce ive d po sit ive re ac tio ns pe rs on al ca pa cit y3 .7 82 i d on ’t ha ve ti m e to re fl e ct a bo ut m y wa y of w or kin g, n ei th er to a dj us t t hi s wa y of w or kin g. 0. 44 9 pe rs on al p os sib ilit ie s to u se pu m p pe rs on al ca pa cit y1 .5 64 i w as to b us y to th in k ab ou t h ow i co ul d ap pl y pu m p in m y jo b ef fo rt1 .5 69 i b el ie ve th at e du ca tio na l p ro gr am s ge ne ra lly le ad to p er so na l p er fo rm an ce im pr ov em en t 0. 10 4 c on te nt ? ti m e1 .5 32 th e ut ilit y of p um p is on ly no tic ea bl e a fe w ye ar s af te r t he p ro gr am ef fo rt3 -.7 26 th os e wh o try to le ar n, w ill ev en tu al ly pe rfo rm b et te r 0. 55 3 be lie f i n th e ut ilit y of ed uc at io na l p ro gr am s ef fo rt2 -.6 21 th e m or e so m eo ne a pp lie s hi s ac qu ire d kn ow le dg e, th e be tte r h e do es h is jo b o rg an ia tie in itia tie f3 .6 17 s in ce p um p i t ry to s en sib iliz e m y co lle ag ue s fo r c er ta in c ha ng e in itia tiv es 0. 40 9 th e sp ac e on e ha s in th e or ga ni za tio n to ta ke in itia tiv es o rg an ia tie in itia tie f2 .4 33 s in ce p um p i r eg ul ar ly ta ke in itia tiv es in c er ta in p ro je ct s m an ag er sa nc tio ns 3 .3 84 m y su pe rv iso r h op ed th at i wo ul d ta ke u p m y ol d ta sk s as s oo n as p os sib le a fte r p um p ve ra nt wt ra ns fe r2 -.7 49 if i w an t t o us e pu m p in th e or ga ni za tio n, i ne ed to ta ke u p re sp on sib ilit y m ys el f 0. 29 7 is ol at io n fro m th e in di vid ua l in c ha ng e pr oc es se s re sis ta nc e1 .5 53 o n th e jo b th er e is a lo t o f r es ist an ce to wa rd s ch an ge 61 the diff erent factors can be seen in the table above. important is the following: fi rst, ‘the program’s impact on the daily job’. this factor can be considered as transfer and is the most important dependent variable; second, another nature of transfer was explored: pump as a refl ection framework, questioning whether new theoretical insights might, implicitly, infl uence the individual’s work; third, the possibilities to use pump. basically, it refers to the available amount of time to apply pump. remark that the reliability is rather low (0.449). however, given the theoretical importance, this factor has been taken into account. fourth, factor 16 was theoretically diffi cult to interpret, with a low alpha-value, and was therefore retrieved from further analysis. the same goes for the last factor. the table below presents the inter-factor correlations. discriminant validity was tested, to see if the diff erent factors are measuring diff erent aspects (hatcher, 1994). the interval was calculated for the highest signifi cant correlation (r = 0.627): if the validity is demonstrated for that correlation, the other correlations are also valid. the next formula is used: the interval (reliability: 99%), ranges from 0.36 to 0.74: discriminant validity is confi rmed. regression analysis. regression analyses were conducted to defi ne relations between dependent and independent variables (miller et al., 2002; kerr, hall and kozub, 2002). three dependent variables were initially identifi ed: the extent to which the graduates use their knowledge in their daily work (i.e. transfer), the extent to which they use it as a refl ection framework (i.e. another possible form of transfer), and the added value of the program to their career. the latt er was also considered as independent variable. a fourth was added afterwards: self-effi cacy, given its importance in past research. two diff erent regression procedures were used: a forward stepwise procedure and a hierarchical regression analysis, to see what the relative importance of each variable in the model is (miller et al. 2002; field, 2006; cohen and cohen, 1983). first, transfer as dependent variable was investigated. the model is provided in table 4. the r²-value is relatively high (53.8%). according to these results, in combination with the extra statistics provided in table 5, it is clear that there will be more transfer, if (1) the program bett er fi ts the work situation, (2) one believes that pump will lead to a career growth, (3) one considers pump as a refl ection framework (4) one has the feeling to be supported by colleague graduates, (5) one has more self-confi dence, (6) one comes from an older pump-generation, (7) one is older, (8) one believes more in the utility of educational programs. important in table 6 are the collinearity statistics. the ‘tolerance’-index indicates how strong the variables are correlated to each other: no collinearity problem occurs. 62 ta bl e 3: c or re la tio n m at rix opportunities received transfer self-effi cacy colleague graduates support transfer quality pump attitude towards performance preparedness pump as refl ection framework necessity pump supervisor support added value to career colleague support disapprove non-use feedback time for transfer belief in use programs room for initiatives o pp or tu ni tie s re ce ive d 1 tr an sf er .3 25 (** ) 1 se lfef fi c ac y .0 68 .2 98 (** ) 1 co lle ag ue g ra du at es s up po rt .0 64 .3 28 (** ) .1 07 1 tr an sf er q ua lity p um p .2 10 (** ) .5 12 (** ) .2 37 (** ) .2 80 (** ) 1 at tit ud e to wa rd s pe rfo rm an ce .5 70 (** ) .1 18 -.0 40 .0 62 .0 96 1 pr ep ar ed ne ss .1 16 .3 43 (** ) .2 43 (** ) .0 77 .3 81 (** ) .0 58 1 pu m p as r efl e ct io n fra m ew or k .1 24 .5 01 (** ) .1 93 (** ) .1 99 (** ) .3 53 (** ) .0 13 .2 10 (** ) 1 ne ce ss ity p um p .1 35 .4 62 (** ) .1 63 (*) .2 19 (** ) .3 54 (** ) -.0 35 .2 62 (** ) .4 33 (** ) 1 su pe rv iso r s up po rt .6 21 (** ) .2 35 (** ) .0 75 .0 85 .1 83 (*) .6 90 (** ) .1 45 .0 71 .0 40 1 ad de d va lu e to c ar ee r .4 46 (** ) .5 60 (** ) .1 32 .1 48 (*) .2 89 (** ) .2 80 (** ) .1 83 (*) .3 47 (** ) .3 58 (** ) .3 98 (** ) 1 co lle ag ue s up po rt .4 33 (** ) .2 09 (** ) .0 17 .1 08 .2 67 (** ) .4 26 (** ) .1 38 .0 85 .2 12 (** ) .4 99 (** ) .3 74 (** ) 1 di sa pp ro ve n on -u se .5 92 (** ) .2 96 (** ) .0 33 .2 27 (** ) .1 57 (*) .5 81 (** ) .2 17 (** ) .1 22 .1 17 .5 82 (** ) .3 44 (** ) .3 90 (** ) 1 fe ed ba ck .5 58 (** ) .2 54 (** ) .0 32 .1 77 (*) .1 98 (** ) .6 16 (** ) .0 75 .0 86 .0 39 .6 76 (** ) .3 82 (** ) .4 54 (** ) .5 20 (** ) 1 ti m e to tr an sf er -.1 18 -.2 27 (** ) -.2 58 (** ) -.0 79 -.2 44 (** ) -.0 80 -.2 15 (** ) -.0 99 -.1 76 (*) -.1 78 (*) -.1 27 -.1 36 -.1 08 -.0 87 1 be lie f i n us e pr og ra m s .1 44 .3 73 (** ) .1 86 (*) .1 40 .2 43 (** ) .0 11 .2 15 (** ) .3 44 (** ) .1 84 (*) .0 83 .2 82 (** ) .0 98 .2 03 (** ) .1 71 (*) -.0 32 1 sp ac e fo r i ni tia tiv es .3 59 (** ) .6 27 (** ) .1 04 .1 39 .3 77 (** ) .2 67 (** ) .2 31 (** ) .3 50 (** ) .3 26 (** ) .3 25 (** ) .5 25 (** ) .2 17 (** ) .2 89 (** ) .3 16 (** ) -.1 33 .2 36 (** ) 1 ** c or re la tio n is sig ni fi c an t a t t he 0 .0 1 le ve l ( 2ta ile d) . * c or re la tio n is sig ni fi c an t a t t he 0 .0 5 le ve l ( 2ta ile d) . 63 table 4: regression model dependent variable: transfer r r² adjusted r² std. errorof the estimate change statistics r² change f change df1 df2 sig. f change .747 .558 .538 .48464 .009 3.620 1 179 .059 predictors: (constant), program, career, refl ectionf, colleague graduates, self-effi cacy, pump generation, year of birth, belief_utilityprogram table 5: coeffi cients regression model standardized coeffi cients t sig. 95% confi dence interval for b correlations collinearity statistics β lower bound upper bound zeroorder partial part tolerance (constant) 3.447 .001 52.980 194.847 program .251 4.454 .000 .148 .382 .504 .316 .221 .775 career .385 6.832 .000 .232 .421 .545 .455 .339 .776 reflectionf .177 3.088 .002 .072 .329 .468 .225 .153 .748 colleague graduates .131 2.499 .013 .022 .186 .324 .184 .124 .894 self-efficacy .102 1.934 .055 -.002 .211 .294 .143 .096 .887 pump generation -.147 -2.847 .005 -.087 -.016 -.101 -.208 -.141 .929 year of birth -.114 -2.173 .031 -.020 -.001 -.110 -.160 -.108 .891 belief_ utilityprogramme .104 1.903 .059 -.004 .211 .372 .141 .095 .833 a dependent variable: transfer second, ‘pump as an added value to the career’ was used as dependent variable. the results (table 6) demonstrate that it is determined by the opportunities received in the organization, transfer, support from colleagues and age. this model explains 41.6% of the variance. again, collinearity is not a problem. table 6: regression model dependent variable: added value to the career r r² adjusted r² std. errorof the estimate change statistics r² change f change df1 df2 sig. f change .655 .428 .416 .64268 .029 9.281 1 183 .003 predictors: (constant), opportunities, transfer, peers, year of birth (e) dependent variable: career table 7: coeffi cients regression model unstandardized coeffi cients standardized coeffi cients t sig. 95% confi dence interval for b correlations collinearity statistics b std. error beta lower bound upper bound zeroorder partial part tolerance vif (constant) -38.154 12.641 -3.018 .003 -63.095 -13.213 opportunities .152 .052 .188 2.909 .004 .049 .256 .433 .210 .163 .749 1.335 transfer .558 .071 .473 7.858 .000 .418 .698 .545 .502 .439 .861 1.162 peers .147 .061 .152 2.421 .016 .027 .267 .366 .176 .135 .788 1.269 year of birth .020 .006 .178 3.046 .003 .007 .032 .188 .220 .170 .916 1.092 a dependent variable: career 64 third, self-effi cacy was used as dependent variable, given its importance in previous research. three independent variables are identifi ed: (1) preparedness, (2) the pump-generation and (3) the quality of the program. this model explains almost 10% of the variance. table 8: model regression analysis self-effi cacy r r² adjusted r² std. errorof the estimate change statistics r² change f change df1 df2 sig. f change .335 .112 .098 .66090 .026 5.370 1 184 .022 predictors: (constant), preparedness, pump generation, program table 9: coeffi cients of the regression model unstandardized coeffi cients standardized coeffi cients t sig. 95% confi dence interval for b correlations collinearity statistics b std. error beta lower bound upper bound zeroorder partial part tolerance vif (constant) 122.524 48.029 2.551 .012 27.766 217.281 preparedness .186 .070 .199 2.637 .009 .047 .325 .242 .191 .183 .846 1.182 pump generation -.060 .024 -.174 -2.488 .014 -.107 -.012 -.134 -.180 -.173 .981 1.019 program .179 .077 .174 2.317 .022 .027 .331 .235 .168 .161 .856 1.169 a dependent variable: self-effi cacy 3.3. structural equation model with the results of the regressions, a structural equation model (sem) was constructed, to confi rm the regressions simultaneously (hair et al., 1995). those analyses are conducted with lisrel. the output is provided visually. preparedness belief_utilityreflection_fcolleague_student year of birth peers careertransferself-efficacy pump generation opportunitiestransfer quality programme chi-square = 27.61, df = 15, p-value = 0.02414, rmsea = 0.075 0,87 0,58 1,09 0,420,24 0,48 0,41 0,7356,04,81 0,490,37 0,09 0,35 0,02 0,30 0,12 0,10 0,38 0,14 -0,00 0,10 -0,050,16 -0,05 0,220,15 figure 1: output sem lisrel 65 the equations are all confi rming the diff erent regression analyses. the fi t-indices in table 10 below confi rm that the model has enough fi t to be used and interpreted like it has been done. table 10: indices sem rmsea normedfit index non-normed fit index comparative fit index incremental fit index relative fit index goodness of fit index 0.075 0.96 0.90 0.98 0.98 0.81 0.97 4. discussion of the results individual and program characteristics are determining transfer directly and organizational characteristics are merely absent. both the descriptive and explanatory results have demonstrated that the transfer climate can be defi ned as neutral. this does not mean that organizational features are unimportant or unnecessary. if they would be present, participants could have a higher transfer level perception. the question is what should be done fi rst to enhance transfer: fortifying factors from which we know they have an impact, or focusing on factors from which we assume they could have an impact, but are absent in the analysis above? therefore, let’s focus fi rst on the factors that are presented in the model. for the individual it is clear that age, pump-generation, self-effi cacy, ‘the belief in the utility of programs’ and ‘the belief that pump is a refl ection framework for the future’ are important elements increasing transfer. of course, age cannot be manipulated, but it is something that can be taken into account in the selection procedure of a program. the same goes for the belief in pump’s value for the future and the utility of programs, since those are indicators of a certain att itude towards pump in particular and educational programs in general. therefore, a transfer enhancing mechanism would be the intensifi cation of the selection procedure. if the input can be controlled seriously, the output may generate more expected outcomes. the basic idea is that if transfer is taken into account from the beginning, it may probably have a bigger chance to succeed than when emphasis is only put on transfer enhancing mechanisms during the transfer process (broucker, 2014). when it comes to the eff ect of generation on transfer, it is important to emphasize the time-aspect, since transfer may take longer than expected: the bigger the time span between participation in a management program and transfer measurement, the more likely it is to measure transfer. for the program, it is clear that the resemblance between learning situation and work situation is crucial. interesting in this debate however, is the support from colleague students, as shown by the results. from that perspective it is not only necessary to talk about the transfer climate of the organization, but also about the transfer climate of the program: are participants supportive towards each other to transfer and use their acquired knowledge? are they helping each other with certain problems in their work, thereby crossing organizational boundaries? for the organizational features, no variable has been identifi ed as having a direct impact on transfer. yet, four factors are more or less connected to organizational features: the belief that the program has an impact on career (direct eff ect), opportunities received 66 (indirect eff ect), preparedness (indirect eff ect) and support from peers or colleagues at work (indirect eff ect). those are related to organizational dynamics. first, the preparedness of an employee to enter the program depends on the communication process, not only from the program organizers but also from his organization. the organization must clarify why the employee is enrolled and what is expected from him afterwards. this seems obvious, but isn’t. second, to have an impact on the career, the employee must have an idea of the usefulness of the program for the organization and his job. this is the result of a clear link between the program and the general hrm-processes and is the structural embeddedness of an educational program in an organizational strategy. third, opportunities received are direct interventions from the supervisor or on demand from the graduate. an opportunity may be a diff erent job content, new tasks or responsibilities. fourth, support from colleagues at work. it seems obvious that the impact of colleagues is important since they are in direct contact with the participant. therefore it seems important to involve, in one way or the other, colleagues by informing them about who will follow which educational program and why. this may reduce a possible resistance caused by ignorance and stimulate support. it may also be interesting to defi ne certain responsibilities for the colleagues in the transfer process of the employee. as a result it is necessary to focus on the link between the program and the general hrm-processes, the opportunities provided and the communication towards the participant and the colleagues. 5. conclusion the purpose of this article was to provide a clear list of some important factors upon which further research could be focused and at the same time providing a small, but relevant group of factors that can be switched relatively easy in transfer stimulating conditions. it is clear that this will not solve completely the lack of transfer, but bearing in mind what the regression analyses have provided, it seems necessary and important to focus on those variables fi rst. for practitioners it is necessary to have a clear idea of what can be done to improve transfer, even if this is not a guarantee. for researchers, it will always be necessary to try to understand the complexity of the real world, and it is only by detailed research that we will come to a simple set of transfer stimulating conditions. to combine the two ambitions, i.e. satisfying practitioners and researchers with the results of this article, the table below provides suggestions for concrete actions and for further research. by doing this, this article tries to reduce the amount of variables that may have an impact on transfer and wants to prioritize those variables, without increasing the complexity of the debate. 67 ta bl e 11 : t ra ns fe r s tim ul at in g fa ct or s ch ar ac te ris tic s fa ct or s su gg es tio ns fo r p ra ct iti on er s su gg es tio ns fo r f ur th er re se ar ch in di vid ua l ch ar ac te ris tic s ag e th e co m m un ica tio n pr oc es s sh ou ld c le ar ly de fi n e wh ich ta rg et g ro up is in th e fo cu s. a ge m ay b e an in di ca to r i n th at p ro ce ss . tr an sf er re se ar ch s ho ul d m or e be fo cu se d on th e se t o f va lu es a nd b el ie fs a n in di vid ua l h as to wa rd s ed uc at io na l pr og ra m s. h is m ot iva tio n to tr an sf er a cq ui re d kn ow le dg e wi ll pr ob ab ly de pe nd u po n th os e va lu es , wh ich m ak e th em a n im po rta nt p rio rit y. se lfef fi c ac y • co nt ro llin g vig or ou sly th e se le ct io n pr oc ed ur e: wh at va lu es do th e pa rti cip an ts h av e ab ou t e du ca tio na l p ro gr am s in g en er al a nd th is pr og ra m in p ar tic ul ar ? w ha t d o th ey th in k fro m e du ca tio na l p ro gr am s? h ow d o th ey pe rc ei ve th ei r o wn c ap ac itie s? • co m m un ica tio n pr oc es s: w ha t is th e go al o f th e pr og ra m ? w ha t wi ll em pl oy ee s kn ow a fte rw ar ds , a nd w ha t w ill th ey b e ab le to d o? d es cr ib in g go al s sh ou ld n ot ju st b e in g en er al te rm s, b ut in d et ai l. be lie f i n th e ut ilit y of p ro gr am s at tit ud e to wa rd s th e pr og ra m tr ai ni ng ch ar ac te ris tic s tr an sf er q ua lity of th e pr og ra m te ac hi ng m et ho ds a nd p ro gr am c on te nt th at c le ar ly fo cu s on a ct ua l p ro bl em s an d sit ua tio ns in t he w or kp la ce . th is al so d ep en ds o n th e pr og ra m : do es th e pr og ra m w an t t o en co un te r a re al p ro bl em in th e wo rk p la ce o r a re m or e ge ne ra l c om pe te nc ie s tra in ed ? tw o im po rta nt p ro gr am c ha ra ct er ist ics c an b e de fi n ed : (1 ) th e re la tio ns hi p wi th c ol le ag ue s tu de nt s. u nt il no w th is as pe ct h as n’ t be en m uc h in t he f oc us o f tra ns fe r re se ar ch . (2 ) ge ne ra l pr og ra m c ha ra ct er ist ics a nd t he lin k be tw ee n le ar ni ng s itu at io n an d wo rk s itu at io n. t hi s as pe ct h as b ee n co nfi rm ed b y pr ev io us re se ar ch . su pp or t f ro m co lle ag ue s tu de nt s tr ai ni ng s ho ul d no t b e an is ol at ed a ct ivi ty a nd s ho ul d be c on tin ue d af te rw ar ds (n et wo rk in g) . b y cle ar ly co nt ro llin g th e se le ct io n pr oc ed ur e a gr ou p ca n be se le ct ed th at h as th e sa m e po te nt ia l a nd e xp ec ta tio ns . t hi s is no t n ec es sa ril y a ho m og en ou s gr ou p. w ha t i s im po rta nt is th e un ity o f t he g ro up , a nd th is ca n be s tim ul at ed d ur in g th e tra in in g pe rio d. o rg an iza tio na l ch ar ac te ris tic s pr ep ar ed ne ss co m m un ica tio n pr oc es s: p ar tic ip an ts m us t h av e a cle ar id ea o f w ha t c an b e ex pe ct ed fr om th e pr og ra m a nd w ha t i s ex pe ct ed fr om th em a fte r t he p ro gr am . i t wo ul d be in te re st in g to fo cu s th e re se ar ch on or ga ni za tio na l ch ar ac te ris tic s m or e on t he s tru ct ur al em be dd ed ne ss o f th e pr og ra m . th is em be dd ed ne ss ta ke s fo rm in th re e di ffe re nt w ay s: ( 1) th e jo b co nt en t, wh ich m an ife st s its el f b y pr ov id ed o pp or tu ni tie s, (2 ) t he ca re er p at h, w hi ch is m ad e cle ar b y pl ac in g th e pr og ra m in a c ar ee r p er sp ec tiv e an d in th e or ga ni za tio na l g oa ls, (3 ) t he s oc ia l e m be dd ed ne ss b y in vo lvi ng c ol le ag ue s. th e pr ep ar ed ne ss of th e in di vid ua l is re la te d to th os e as pe ct s, b ec au se h e m us t be a wa re o f th is em be dd ed ne ss . r es ea rc h sh ou ld fo cu s cle ar ly on th os e as pe ct s. be lie f i n ad de d va lu e to wa rd s ca re er o rg an iza tio ns m us t cle ar ly de fi n e wh at t he p os itio n of a p ro gr am is w ith in th e ge ne ra l c om pe te nc y m an ag em en t, th e lin k wi th th e jo b re qu ire m en ts , t he or ga ni za tio na l g oa ls an d ca re er p er sp ec tiv es . i n ot he r w or ds : t he o rg an iza tio n m us t c le ar ly de fi n e wh y a ce rta in p ro gr am is n ec es sa ry fo r t he o rg an iza tio n an d us ef ul /in te re st in g fo r t he p ar tic ip an t. o pp or tu ni tie s pr ov id ed im pu lse s fro m th e or ga ni za tio n: it is c le ar th at if th e pa rti cip an t i s pr ep ar ed to th e pr og ra m a nd h as c er ta in e xp ec ta tio ns a bo ut w ha t w ill ha pp en a fte r th e pr og ra m , t he n ec es sa ry o pp or tu ni tie s ha ve to b e pr ov id ed in o rd er to fu lfi l th os e ex pe ct at io ns . o rg an iza tio ns d o ha ve a r es po ns ib ilit y to wa rd s th e em pl oy ee af te r t he p ro gr am h as ta ke n pl ac e. pe er s up po rt co lle ag ue s sh ou ld b e in fo rm ed a bo ut th e pa rti cip at io n in tr ai ni ng p ro gr am s of ot he r e m pl oy ee s. 68 references: 1. awoniyi, e., griego, o. and morgan, g., ‘person-environment fit and transfer of 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government practitioners regarding the relevance of social media, the use of social media for feedback on service quality, and privacy and security commitments in e-government. the literature on the use of information technology to transform government, the potential for online government information to contribute to citizen engagement, and the rapid growth in local government use of social media is relevant to this discussion. keywords: local e-government, social media, citizen engagement, e-participation. the effectiveness of social media implementation at local government levels elvira nica gheorghe h. popescu eugen nicolăescu vlad denis constantin elvira nica associate professor, ph.d., department of administration and public management, administration and public management faculty, bucharest university of economic studies, bucharest, romania tel.: 0040-722-303.674 e-mail: popescu_elvira@yahoo.com gheorghe h. popescu professor, ph.d., department of finance, banking, and accountancy, faculty of finance and banking, ‘dimitrie cantemir’ christian university, bucharest, romania tel.: 0040-723-313.111 e-mail: popescu_ucdc@yahoo.com eugen nicolăescu associate professor, ph.d., department of finance, banking, and accountancy, faculty of accountancy and audit, ‘dimitrie cantemir’ christian university, bucharest, romania tel.: 0040-722-303.605 e-mail: eugen.nicolaescu@cdep.ro vlad denis constantin associate professor, ph.d., department of general surgery, faculty of medicine, ‘carol davila’ university of medicine and pharmacy, bucharest, romania tel.: 0040-722-752.668 e-mail: constantindenis@yahoo.com transylvanian review of administrative sciences, special issue/2014, pp. 152-166 153 1. introduction in the present paper, we focus on the implementation of social media into government administration, active e-participation models in local governance, and the challenges of e-government development at the local level. the purpose of this article is to gain a deeper understanding of the engagement of social media to promote citizen dialogue and government transparency (machan, 2013), the factors that influence citizens to engage in e-participation, and the current state of e-government at the local level. the material gathered in this study provides a rich and diverse context for understanding challenges in managing social media across government organizations (zaharia et al., 2013), the democratic potential of e-government, and the potential of social media to contribute to civic engagement. we are specifically interested in how previous research investigated the integration of social media tools in core government operations, the use of social media technology in government, and the provision of mechanisms for citizen online participation in government. 2. e-government as a means of fostering citizen participation local e-government leaders should make a commitment to management for results and performance (brata and lagendijk, 2013), and then to managing them, and should reward the accomplishments of teams and individuals that contribute to improving e-government performance management practices. e-government development in local government aims to improve service quality by focusing on customers (e-government may substantially improve public service delivery to individual citizens) (kim, 2009). digital governance includes both delivery of public services and citizen participation in governance. strong administrative support is important to e-governance performance, e-governance may evolve from posting information online to utilization of websites for online citizen participation, and informational content is the initial stage in all forms of e-government adoption. government websites require users to submit their personal information apart and make use of tracking tools and cookies: websites should provide relevant and sufficient informational content to citizen users, and have privacy policies on every page that requires data in order to gain citizens’ trust (carrizales et al., 2011). citizens demand better services and thus information technology implementation in local government organizations (tomescu and agatador popescu, 2013) needs to accommodate them; a central government can impose the adoption of e-government on local government bodies by indicating certain policies and regulations, and local governments can implement positive values from other successful local e-governments adoption in their environment. lack of mission and vision in e-government implementation may create disorientation of the project (problematic goals in e-government implementation can hardly determine a strategy on how to implement effective e-government systems) (nurdin, stockdale, and scheepers, 2011). local government employees should perceive e-government performance in terms of improved service quality (hunter, 2013a), transparency, and cost-efficiency. inspi154 rational motivation and the level of organizational commitment among the executive e-government leaders’ employees are important factors in the implementation of e-government innovations. employees who think reward systems are fair tend to express a positive impact of e-government development on cost-efficiency. the level to which an e-government program is managed for results substantially affects employees’ perceptions of e-government performance. elective executive leadership, management capacity, and management for results may influence employee perceptions of local e-government performance (kim, 2009). government agencies use different web technologies to offer various forms of electronic participation applications, the web-based e-participation program is an important tool for e-government to facilitate citizen participation, and e-participation is a special type of e-government service, relying on web-based applications as a technological platform (the use of e-participation is a technology adoption by citizens). citizens tend to use e-participation to engage in policy decision-making processes (citizen-initiated e-participation may require citizens’ commitment to participation in public affairs). the online community is one feature of citizen-initiated e-participation, ‘ground-up’ e-participation focuses on participation established by citizens, and trust in government influences citizens to engage in citizen-initiated e-participation (through ongoing and repeated interactions, e-participants can build online networks) (lee and kim, 2014). at the aggregate level, e-government has incorporated more technological and organizational sophistication: national governments should have both financial resources and technical expertise to move systematically toward more sophisticated stages of e-government. e-government initiatives tend to evolve from the national to the local level: the system of rules moves from a solution-oriented goal to a behavior-control-oriented goal (systems of rules may affect the evolution of e-government). specific contexts and the capabilities and resources of certain stakeholders may affect e-government evolution, the degree of responsiveness and accountability should be greater in local governments, and the development of clear dynamic indicators for the evaluation of e-government initiatives is necessary (gil-garcia and martinez-moyano, 2007). e-government may assist in the transformation of governance through service delivery and more informed and engaged citizenship. e-government use influences resources for participation, but depends upon motivation, and is associated with civic engagement and political participation. the use of government websites may stimulate knowledge and discussion of public issues (profiroiu, țapardel and mihăescu, 2013): information about policy issues and community affairs may promote discussion and mobilization, and may act as a component in promoting civic engagement. there is an association between e-government use and civic engagement that may be supported by the online information and communication opportunities: citizens who are interested and informed tend to use digital government to support their civic engagement (the information capacity of e-government may influence the possibilities for government interaction with citizens) (haller, li and mossberger, 2011). 155 3. the impact that social networking applications have on e-government local government authorities should create a transaction-enabled citizen-centered e-government (ionescu, 2013), they should use an e-government strategy with well defined objectives, and local councils should focus their e-government initiatives on providing information and services to the citizens. putting the traditional government structures online does not generally meet citizens’ expectations. connected e-government may affect organizational structures, policies, and employees. management and leadership can influence the fulfillment of e-government promises (fan, 2011). the usability and accessibility of websites are critical in the provision of online government services. government website design may combine content and services in anticipation of the needs of citizens (the usefulness of a website is dependent on its content). website usability may enable channels of communication and improve the relationship between government and citizens (carrizales et al., 2011). the presence of bureaucratic organizations in the public sector (pera, 2013a) may influence the process of implementing an innovation: the organizational dimensions and the factors in each dimension may impede the adoption and implementation of local e-government (adoption and implementation of e-government at local levels involve many organizational constraints) (nurdin, stockdale and scheepers, 2011). e-participation is a communication channel in which e-participants express themselves, and plays as an online community, limiting the ability of both government and e-participants to interact with each other interpersonally (e-participants are active when they post more ideas and comments to others). weak offline ties are positively associated with active e-participation (weak social ties are an incentive to use e-participation actively). people who do not actively engage in real life and have few social ties are more active online or e-participate (inglehart et al., 2014; manolache, 2013). strength of social ties is not relevantly correlated to active e-participation (de beaufort and summers, 2014; dowell and larwin, 2013). active e-participation enables e-participants to build strong online ties, and may help at building online social networks as a complementary means for mobilizing resources. active e-participation in local governance may be relevant for effective and transparent decision making and problem solving (lee and kim, 2014). e-government initiatives may be solutions to problems identified by public managers (they concentrate especially on the solution-guiding dimension). public managers should develop and test initiatives to assess their efficiency and effectiveness (paraschiv, 2013), and should develop strategies according to their options and the goals of the e-government applications (gil-garcia and martinez-moyano, 2007). service users tend to email agencies or officials, to interact with government offline, and to participate online, in general, in public affairs. online information may encourage citizens to interact with government offline, the information capacity of e-government may be a resource for acquiring knowledge for engagement and participation, and the effects of using the internet depend on the gratifications individuals seek from media (haller, li and mossberger, 2011). 156 governance and administrative institutions have gradually adjusted to the potential offered by modern cyberspace: the public domain can realize efficiency gains and enhance the democratic interaction with citizens. the benefits of e-governance may be assessed on the basis of improvements in efficiency, effectiveness, and good governance (e-governance presupposes open and interactive communication channels). local governments should ensure an efficient set of e-mechanisms that stimulate the trust and accountability of the public sector (yadav, 2014). a growing public interest in e-governance may lead to policies and strategies to induce ict development and mobilize it. ict may enhance e-governance and reinforce the cyber image of cities. using ict to promote economic and social goals focuses on visions and critical judgment of the ict relevance (nijkamp and cohen-blankshtain, 2013). social media can improve interactivity between a government and the public, allowing officials in government to build relationships with the citizens it represents (pera, 2014); they can enhance governments’ abilities to interact with citizens, and are transforming the way organizations communicate with their publics. social media can offer a low-cost platform for dialogic communication with their publics (local governments can benefit from massive audience reach that social media provide). e-democracy can be promoted by engaging social media’s ability to interact directly with citizens, and can transform citizen involvement in democratic processes mediated by social networking sites (graham and johnson avery, 2013). governments can take advantage of emerging trends in social media, and are employing social media in ways that meet core operational goals: government agencies are turning to social media to engage constituencies and improve the provision of services (petersmann, 2013), and all levels of government can be more transparent through social media (social media can alert the public about the release of new information and indicate available online reports). local governments are using various social media applications to connect with constituents, and tend to develop consistent social media management strategies and employ new tactics (establishing and implementing a social media policy should help in managing the social media activities) (hansen-flaschen and parker, 2012). 4. managing social media across government organizations local governments that allow open communication on their social networking pages and exchange of information and ideas, must incorporate social media into their communication plans in engaging ways (popescu ljungholm, 2014), and must engage citizens by posting regularly and making their opinions relevant. governments should integrate their social media presence with their websites, should systematically monitor the approaches of social media in order to evaluate effectiveness, and should consider citizen expectations as motivations for social media use (they must prioritize and respond to public expectations) (graham and johnson avery, 2013). the success of an e-government strategy may depend on its ability to develop it capacity, the perceived performance of an e-government innovation may depend 157 on the government’s ability to develop it capacity, and organizational leaders and it departments need to analyze carefully their e-government strategic plan (human, organizational, and technological resources may generate capabilities that influence the performance of e-government systems). local governments should develop capabilities to assemble resources that support e-government development strategies, and need organizational commitment to management for e-government results in order to clarify the strategy of continuous e-government investment and development (kim, 2009). there is a positive relation between perceived fairness of the e-participation process and citizens’ active e-participation (stel, 2014). fairness in the participation process (popescu et al., 2013) and information access may make citizens to actively engage in e-participation (fairness and access to information in participation processes may be related to active e-participation). one can find a positive relation between volunteering and citizens’ active e-participation. e-participation processes should be designed and managed to enhance citizens’ ability to access information on government activities. government responsiveness matters for facilitating active e-participation (management of e-participation processes is decisive in shaping active e-participation). there is a positive association between trust in government and active e-participation (trust in government encourages citizens to have a sense of cooperation with government) (lee and kim, 2014). social-media technologies are effective tools to promote public goals, the use of social media means the interaction of elements of the technical and the social systems, and the coupling of technology and task shows how social media is integrated into organizational work systems. social media technology is taken up by various types of government agencies, organizational factors may affect social media technology-task couplings, and managers should use social media as a means of communication, collaboration and stakeholder engagement (de oliveira and welch, 2013). the adoption of social media may provide convenient venues for dialogue between citizens, and with government: social networks may provide a new platform for communication between citizens and government officials (features that provide greater interactivity online may provide resources for civic engagement). the emergence of new tools online may not easily alter the classical patterns of government behavior. the popularity of social networks may increase their adoption on government websites (most local governments allow comments to be posted). there are new possibilities for transforming relationships between government and citizens through open government and citizen participation (mossberger, wu and crawford, 2013; hunt, 2013; moore, 2013). new technologies allow citizens to evaluate the records of governments and elected officials (kenagy, fox. and vollrath, 2013), social media’s implications for government leaders can change the way governments interact with their publics, and governments’ interactions with their publics and online presence evolve beyond a static website. organizations can manage the information they disseminate to publics through channels created by social media, government officials’ perceived im158 portance of social media is a strong predictor of actual use by local governments, public information and communication officers should manage social media for local governments, and, through the utilization of social media, governments are making their initiatives more open and accessible (graham and johnson avery, 2013). cities are trying several tools and techniques to diversify social media offerings, using various tools and platforms to reach constituents (hunter, 2013b), provide online content and increase collaboration (cities are establishing new workflows to accommodate social media activities) (vasile, 2013; pera, 2013b). cities are developing strategic processes to launch new social media pages, and should implement creative ways for generating innovative ideas on how to better use social media. city employees try to integrate social media activities into their daily tasks, large cities are likely to be decentralized in regards to social media activities, and the adoption and promotion of social media are growing in city governments. mobile applications constitute a growing trend in the city government use of social media, large and medium-sized cities have additional staff time and budget to develop mobile applications, and the social media applications can solicit feedback directly from constituents (hansen-flaschen and parker, 2012). government agencies are using social media technologies to conduct their business and seek input: they tend to use social media to disseminate government information, services, and resources. social media technologies may be a relevant change agent in shaping future democratic models, altering how the public and government interact, develop solutions, and deliver services, and having an outstanding influence on government-public-community interactions. social media technologies are transformational in their ability to provide governments with instant feedback and new perspectives of their workflow, and should create immediate dialog through an interactive forum (bertot et al., 2010). 5. case study: expectations and perceived importance concerning the use of social media in the local governments e-government evaluation helps in driving e-government development: e-government efforts move from initial information provision to fully integrated electronic public services. governments should ensure a secure environment that can be trusted to protect personal information from loss and misuse (they tend to move from basic online government information to connected e-government). most of the local government websites provide one-way communication of information from government to citizens (privacy and security are a primary concern for e-government websites) (fan, 2011). leadership is crucial for successful adaptation of technology by government, being a necessary component to building e-government capabilities. the e-government transformation requires organizational leaders’ commitment to change public structures and transaction processes. visionary leadership, thoughtful planning and monitoring can make e-government an important instrument for government services and information. e-government performance requires executive leaders who believe 159 in innovation and experimentation. it capacity and hrm capacity relate to perceived e-government performance (management capacity and processes may improve innovation and performance potential): it capacity and the level of identification commitment of employees positively influence the perceptions of e-government performance. executive e-government leadership, it capacity, hr capacity, and the level of management for results influence employees’ perceptions of the local e-government performance (kim, 2009). communication with citizens may foster more responsive government: the participatory dimension of web 2.0 may improve communications between government and citizens. the diffusion of social network use among local governments and the emergence of open data portals may transform relationships between government and citizens. social networks may provide a platform for citizen participation: citizens can interact with each other, and can see responses from government officials. local government authorities may post raw data, encouraging users to develop applications that make the information more usable. responding to online surveys, filling out comment forms, or sending emails to officials may increase opportunities for government to receive feedback from citizens. the significance of open data portals depends on what data are made available and whether it is fully usable for intended audiences, local governments or independently-developed applications may provide innovative ways for citizens to use the data, whereas local websites play an outstanding role in making basic information available, thus improving transparency (mossberger and wu, 2012). 5.1. methodology as the literature we have investigated so far indicated mixed results concerning the effectiveness of social media implementation at local government levels, we have decided to clarify this better by focusing first on public administration scholars (as they have substantial theoretical experience on this topic) and secondly on local governments’ employees (for their relevant empirical evidence related to this area). this is the first case study aiming to collate such results. the research started with a content analysis of e-participation survey data collected from 806 public administration scholars (64% response rate) from 54 countries attending 46 conferences in europe between february 2012 and march 2014 (table 1). we have selected the scholars according to their professional background on the topic (we especially chose those with first-rate academic affiliations and significant articles in isi/thomson reuters and scopus journals). we aimed to clarify their expectations and perceived importance concerning the use of social media in their local governments. we asked them to evaluate on a 1 (not important) 10 (extremely important) scale how relevant they believed it was for local governments to use social media to engage citizens, and whether they thought the adoption of social media tools could facilitate citizen knowledge and engagement. we were also interested in evaluating the time allotted weekly by the 806 scholars in interaction with e-government (figure 3), and their satisfaction regarding solved claims by e-government (figure 4). 160 most scholars were from uk (46), france (39) and germany (37), and they also provided the most detailed responses (us also included). those 806 participants we selected were associated with 208 universities (96 from europe, 47 from north america, 43 from asia, 9 from africa, 7 from australia, and 6 from south america). we identified the conferences by inspecting www.conferencealerts.com, and selected only those organized by outstanding universities or research institutes. we used this method for the survey as it seemed to be the most direct and clarifying one regarding our objectives (we received fast and almost thoroughly refined answers), with a satisfying response rate of 64%. the respondents were not significantly different in terms of age, gender, and education. then, we sent 1,014 emails to employees in local governments from those 54 countries, asking them to evaluate on a 1 (not important)-10 (extremely important) scale their beliefs regarding the importance to use social media to engage citizens. regarding local governments, we selected only city halls, because we supposed they were quite well organized entities, and we identified on their websites those employees in charge with social media activities aimed to engage citizens in online participation. the most substantial and detailed answers came from employees working in countries renown for the quality of their public administration (sweden – 68, norway – 63, finland – 58, and new zealand – 54). we received irrelevant or mostly unclear replies especially from employees based in asia and africa. we used this method for the survey as we felt it was the most direct and satisfactory one concerning our objectives. we received 414 replies (table 2), the answers were quite fast (1-7 working days), the response rate was lower than with the scholars, mainly 40%. 5.2. results our analysis was meant to emphasize the use of social media by local governments to communicate with their publics, perceptions of e-government performance in terms of service quality, transparency, and cost-efficiency, and e-government’s potential in enhancing the transparency and accountability of government towards its citizens. this study was grounded in the considerable body of scholarship examining the performance of ict-services in the public domain, the influence of organizational barriers to local e-government implementation, and adoption and implementation of e-government systems. the findings highlighted the importance of examining the use of the internet by governments to communicate with citizens, e-government performance in public organizations, and the linkages between the use of e-government websites and measures of civic engagement. table 1: scholars’ beliefs regarding the adoption of social media tools for facilitating knowledge and engagement scale 1 2 3 4 5 6 7 8 9 10 percentage of respondents 1 2 8 7 12 19 16 15 14 6 161 figure 1: scholars’ beliefs regarding the adoption of social media tools for facilitating knowledge and engagement selected scholars tend to generally think social media tools facilitate knowledge and engagement outstandingly. more than 70% of the scholars that responded felt that adopting social media would increase engagement and facilitate communication. table 2: local governments’ employees’ beliefs regarding the importance to use social media to engage citizens scale 1 2 3 4 5 6 7 8 9 10 percentage of respondents 4 8 6 9 14 11 6 17 9 16 figure 2: local governments’ employees’ beliefs regarding the importance to use social media to engage citizens local governments’ employees seem to be relevantly convinced of the importance to use social media to engage citizens. compared to the scholars’ responses on the same questions, we can see a bit more reticence on the part of practitioners – only 59% (compared to 70%) feel that social media facilitates communication and increases citizen engagement. 1 2 8 7 12 19 16 15 14 6 0 5 10 15 20 1 2 3 4 5 6 7 8 9 10 1= non importat, 10= extremely important scholars response: adoption of social media facilitates knowledge and engagement (%) 4 8 6 9 14 11 6 17 9 16 0 5 10 15 20 1 2 3 4 5 6 7 8 9 10 1= non important, 10= extremely important local government employees: adoption of social media facilitates knowledge and engagement (%) 162 figure 3: time allotted by scholars weekly in interaction with e-government regarding interaction with local governments through online channels, scholars tend to spend mostly between 15 and 30 minutes per week (55%) with another 34% spending between 45 to 60 minutes or more on online channels. however, by taking a look at figure 4 we can see that half of the respondents (scholars) are either not satisfied or just partially satisfied regarding this interaction so there is clearly room for improvement. figure 4: scholars’ satisfaction regarding solved claims by e-government taken together, these findings suggest that our respondents are generally convinced that e-government and social media can foster citizen participation substantially. anyway, social media tools used by local governments to communicate with citizens should be more refined, as some local governments’ employees ask for the improvement of those tools. citizens tend to use a large portion of their time in their weekly interaction with e-government, but their satisfaction is not quite significant (there might be financial constraints influencing the implementation of local e-government). 163 5.3. comparison with other studies in order to better understand our own results we decided to present two recent similar studies. the first one (fyfe and crookall, 2010) was focused on finding what were ‘the thoughts and attitudes of public servants (…) the role of social media in addressing the challenges of government modernization and the transformation of hierarchical organizational cultures to ones that are collaborative and open’ (fyfe and crookall, 2010, p. 5, study done in canada). based on the data analyzed (interviews and discussion with over 100 respondents) the authors found there were six major drivers (or functions) for increased use of social media by public organizations (prevalence of each of the six depending on the specific responsibilities of the organization and its leadership): (1) internal collaboration; (2) cross-agency collaboration; (3) providing information; (4) open government; (5) interacting with and improving services to citizens; and (6) transforming government culture (fyfe and crookall, 2010, pp. 8-9). the authors conclude that there was a general consensus about that governments’ need to implement and use social media, with the major challenges being the adoption of these new tools by middle managers and the change of the typical hierarchical public service culture which is slow to adapt; thus leadership will play a very important role, at least in the short term, for building a culture of openness and trust and developing responsive and adaptable guidelines on social media use by public servants (fyfe and crookall, 2010, p. 16). our own study would lead to similar conclusions as both public servants and scholars do not doubt the importance of social media for modern public administration. furthermore, the higher reticence of actual public servants is also confirmed with middle managers adoption of tools being seen as a challenge. another recent study (mossberger, wu and crawford, 2013) on the use of social media by local governments in the largest 75 us cities shows a massive increase of social media use between 2009 and 2011 (six times more use of social media in 2011 compared to 2009), thus indirectly showing the importance that governments see in this form of interaction with its publics. another interesting fact pointed out by the study is that citizen participation on government websites was lower than expected, ‘raising questions about what citizens want, as well as what government should do’ (mossberger, wu and crawford, 2013, p. 20). it is safe to say that social media is clearly increasing in importance but, at the same time, a clear image about the benefits and costs associated with it is not really understood. magro (2012, p. 155) is clear about this: ‘the ‘best’ way to use social media in government is a nebulous and subjective problem that does not lend itself to a single set of guidelines for every task, country, agency, citizen, and government’. 6. conclusions the current study sets out to highlight the importance of social media use in the public sector. it is clear, based on the existing literature, that social media is a powerful tool for public organizations and governments all over the world in their efforts 164 to open up and increase participation or engagement from the communities that they are representing. it can also be seen as an instrument for increasing good governance practices, especially regarding transparency, facilitating communication and interaction between stakeholders, and, ultimately, increasing accountability. however, at present, although social media importance is not disputed, the best way for governments to proceed in implementing effective mechanisms and tools in order to respond to citizen demands is not very clear. the implications of the developments outlined in the preceding sections of this paper suggest a growing need for a research agenda on the diffusion of social media use among local governments, the adoption of social media tools for facilitating citizen knowledge and engagement, and the provision of municipal information and services through ict applications. the results of the current study converge with prior research on the impact of digital government on civic engagement, citizen feedback through e-government use of social media, and organizational barriers in information technology. however, they constitute just a start for better understanding the use of social media in public sector organizations. further study on the actual implementation process, 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the character and scale of agencification in slovakia. we also wish to test a specific hypothesis, derived from npm policy convergence theory: that agencification in slovakia lacks a systematic conceptual framework located in the local context. our research has unearthed nine countrywide service delivery agencies, plus a large number of decentralized delivery agencies (e.g. public hospitals, universities, schools and public training institutions), and 25 central regulatory agencies. this is not an exhaustive list as there is no official data on agencies. we argue that slovak agencification – especially during the dzurinda administrations – was mainly determined by two factors: the eu accession process and the political orientation of the governing coalition. agencification predicts that increased managerial freedom should improve results. we show that this is true for slovakia, even though our hypothesis that agencification in slovakia lacks a systematic local conceptual framework is also shown to be true. we argue that despite many implementation problems, the creation of agencies in slovakia and elsewhere in cee was an important step forward. keywords: slovakia, agencification, local public services, politics of agencies, post-communist transition. agencification in slovakia: the current situation and lessons learned* juraj nemec beáta mikušová meričková zuzana vozárová juraj nemec professor, department of finance and accounting, faculty of economics, matej bel university, banska bystrica, slovakia banking institute prague, czech republic tel.: 00421-48-446.6318 e-mail: juraj.nemec@umb.sk beáta mikušová meričková associate professor, department of public economics and regional development, faculty of economics, matej bel university, banska bystrica, slovakia tel.: 00421-48-446.2317 e-mail: beata.merickova@umb.sk zuzana vozárová phd student, department of public economics and regional development, faculty of economics, matej bel university, banska bystrica, slovakia tel.: 00421-48-446.2731 e-mail: zuzana.vozarova@umb.sk transylvanian review of administrative sciences, special issue, pp. 140-159 1 * this specific research was supported by the czech grant agency gacr under the contract no. p403/10/1892: optimizing outsourcing in the public sector and by ministry of education, science, research and sport of the slovak republic under the contract no. vega 1/0207/09 contracting out services in public sector. 141 1. introduction slovakia is a relatively small state in the middle of europe. its area is 49,034 square km and its population about 5.4 millions. the slovak constitution was ratified on 1st of september 1992, and was fully effective from 1st of january 1993 when slovakia amicably split from the czech republic. during 1993-2011 both left wing and right wing coalitions ruled the country, with different strategies and reform programs. since 2004 slovakia has been a member of the european union, and from 2009 also of the euro zone. the main goal of this article is to describe the scale of agencification in slovakia, and to try to explain the most important aspects of its developments and functionalities. our research was conducted as an integral part of the cost cripo project comparative research into current trends in public sector organization (cripo, is0601). the novelty of our paper is that we focus not only on the national level, that is, on the classical forms of agencies. we feel that agencification theories could also be applicable on the sub-national level and therefore we also try to examine briefly the area of delivery of local public services, using our regionally unique comprehensive database of field research results. 2. theoretical framework agencification refers to the creation of semi-autonomous organizations that operate at arms’ length of the government, to carry out public tasks (regulation, service delivery, policy implementation) in a relatively autonomous way i.e. there is less hierarchical and political influence on their daily operations, and they have more managerial freedoms (van thiel, 2009; roberts, 1986; pierre, 2004). the concept of “agencification”, or distributed governance, is a core element of the “new public management (npm)” (greenaway, 1995; pollitt et al., 2001; verhoest et al., 2010; lægreid and verhoest, 2010; trosa, 1994). npm is often described as the reform movement in public management, propelled by policy makers seeking to improve government and public administration practices, with its emphasis on “performance appraisal and efficiency, the disaggregation of public bureaucracies into agencies which deal with each other on a user pay basis; the use of quasi-market and contracting out to foster competition; cost-cutting; and a style of management which emphasizes amongst other things, output targets, limited term contracts, monetary targets and incentives, and freedom to manage” (rhodes, 1991, p. 11). the oecd summarizes these attempts as the aim to make the public sector “lean and more competitive while, at the same time, trying to make public administration more responsive to citizens’ needs by offering value for money, choice flexibility, and transparency” (oecd, 2005). the theory behind npm has been influenced by an eclectic variety of ideas, coming from different disciplines, such as public choice, management theory, classical public administration, neoclassical public administration, policy analysis, principal-agent 142 theory, property rights theory, the neo-austrian school, and transaction-cost economics (gruening, 2001). these very different theoretical orientations could be grouped into three broad categories: 1) (neo-) classical public administration and public management, 2) management sciences, and 3) new institutional economics. the first group’s main orientation is the orderly organization of the state, applying scientific principles of government organization and collective decision making (anthony and young, 2003; lee, 1995). the second stream (management sciences) advocates the introduction in the public domain of private sector management ideas and techniques (brignall and modell, 2000; broadbent and laughlin, 1998; hood, 1995; lane, 2000). the third orientation (new institutional economics) views governmental decision makers as self-interested subjects, working in an environment in which information asymmetry, bounded rationality and opportunism leads to transaction costs and agency costs (dunleavy and hood 1994; laking, 2002). each of these three orientations introduces specific themes into the npm agenda and agencification. however, there are three main themes that emerge from an overall appreciation of npm reforms. these are (a) decentralization, (b) improved competitiveness by increased efficiency and effectiveness, and (c) accountability for performance. these themes correspond to three basic criteria, offered by pollitt et al. (2001) that characterize the npm version of agencies: – deregulation (or more properly re-regulation) of controls over personnel, finance and other management matters; – performance “contracting” – some form of performance target setting, monitoring and reporting; and – structural disaggregating and/or the creation of “task specific” organizations (moynihan, 2006). the varying understandings of agencification in different settings demonstrate that public management ideas that carry the same label and basic prescriptions can be constructed in different ways in different countries, adopted for different reasons and lead to different outcomes. in slovakia, as it is the case in any other country, the diffusion of npm and/or agencification has some specific, idiosyncratic features. one of the difficulties in examining npm/agencification in different countries is in categorizing what has actually been transferred and adopted. dunleavy and hood (1994) have argued that npm ideas are best understood as a series of doctrines explaining the sources of public sector problems and the means to solve those problems. the practical adoption of these doctrines in a particular place and time provides the opportunity to create experiential learning for others (mantzavinos, north and shariq, 2004), which can be positive (experience reinforces the claims of the doctrine with evidence of the effectiveness of reforms) and negative (experience undermines the claims of the doctrine with contradictable effects of reforms). the literature of npm policy transfer and adoption – npm policy convergence theory (weaver and rockman 1993; schick, 1998; christensen and lægreid, 1999; 143 pollitt and bouckaert, 2004; hammerschmid and meyer, 2005) suggests that ideas, presented in doctrinal form, should be systematically reshaped to fit the local context characterized by such factors as specific economic pressures, chance events, resources, political institutions and ideology, external stakeholders, social values, and administrative culture. variation in the local context can thus be expected to create variations in npm policy transfer and adoption etc. so is the case with respect to variations in the concept of agencification across countries. in considering accounts of npm, reed (2004) suggests that while the concept might have some common meaning, the use and meaning of the term in local discourse will be shaped by local contingencies. public management reforms are particularly prone to ambiguity (hammerschmid and meyer, 2005). ambiguity in the public sector arises from environmental uncertainty, from unclear goals, and uncertain knowledge about effective organizational technologies (dimaggio and woody, 1983). this makes it difficult to confidently predict that plausible doctrines will work in practice (pollitt and bouckaert, 2000). such doctrines present simplified versions of managerial technologies, but are sometimes conflated with political ideology (lodge, 2003), and often abstracted to a point where the doctrine is not a practical description of how to apply the reform in a particular setting. the outcomes of agencification are often contradictory. pollitt et al. (2004) offer an empirical summary of the agencification experience in different countries: – agencies are frequently pursuing multiple goals rather than a single purpose. – agencification has not fostered a clear separation between policy and implementation. – the creation of new agencies is marked by a high degree of path dependency rather than dramatic change. – agencification can undermine policy coordination. – there is little evidence that performance information is being used. – informal non-contractual relationships between agencies and the center remain an important basis for policy development. – there is little clear evidence that agencies have saved money, improved performance or reduced the size of government. – agencification has sometimes weakened central capacity and oversight, increased information asymmetry and bureaucratic/stakeholder influence. where central oversight has been maintained, it has required the development of an audit-based regulatory system (moynihan, 2006). despite the fact that new public management and agencification have become an important policy issue on many countries’ reform agenda, case evidence (pollitt and bouckaert, 2000; pollitt et al., 2004) suggests that the reforms have rarely been implemented correctly. 144 3. methodology there is little data about agencification in slovakia (beblavý, 2002; moynihan, 2006). in this paper we try to fill this gap by focusing both on the “standard” national level, and also on the sub-national governments. the main goal of this article is to characterize developments and the current stage of agencification in slovakia. this will be done in the following logical sequence: – analyzing when, how and why agencies in slovakia were created; – defining the scale of agencification in slovakia; – analyzing the most important aspects of agencies’ functioning at national and sub-national levels; and – summarizing the findings and lessons learned. the specific goal of the paper is to test the following hypothesis – formulated on the basis of npm policy convergence theory – regarding agencification in slovakia: agencification in slovakia lacks a systematic conceptual framework located in the local context. because of the very limited database available for the evaluation of agencification in slovakia we have to rely mainly on qualitative research methods, and we also decided to use case studies as the tool to support our arguments. as indicated above, we also include sub-national level cases. the case study on the delivery of local public services shows that core agencification concepts can also be adapted to this level and provides important facts in relation to our research assumptions. 4. agencification in slovakia in this section we try to discuss the main features of agencies and agencification processes in slovakia, with respect to the protocol and materials developed by the cost team. slovakia is actively seeking public management policies consistent with the democratic market systems. npm and agencification have become an important policy issue on the public sector reform agenda. governments have continued to try to move from a centrally planned to a market based economy. more significant attempts to improve government and public administration practices by adopting npm policies are apparent only in the last five years. after the 1989 velvet revolution led to the end of communism, the revitalization of democracy in czechoslovakia (bercik and nemec, 1999) and the formalization of a separate state by the slovakian constitution in 1992, slovakian public management policy primarily focused on the decentralization of administration. other public management issues, such as increasing efficiency, effectiveness, performance accountability, as well as agencification were less prominent on the policy agenda (sigma, 2002). the only important exception was the switch from a system of financing health care, pensions and unemployment benefits, from general taxation to social insurance. a consequence was the creation in 1993 of three public agencies – vseobecna zdravotna 145 poistovna and poisťovna mv sr for health care insurance and socialna poistovna for unemployment and pension benefits. the main motivation for agencification in these cases was to raise extra revenue without creating major new taxes: an attractive option in the then difficult financial situation. earmarked taxes or fees justified by the creation of a new agency were less visible and less politically risky. the process of agencification also allowed policymakers to claim they were fixing difficult policy problems. for example a health insurance agency is a substitute for a comprehensive public health insurance system (beblavý, 2002; moynihan, 2006). the main wave of agencification was connected to the reform measures of the 1998-2006 liberal governments and to the eu accession process. both factors served as major catalysts of change, leading to the creation of a relatively comprehensive set of agencies, many of them enjoying a very high degree of autonomy from the executive government. this epoch of agencification started after the general elections in 1998, when the new liberal slovak government (prime minister dzurinda) returned to the issue of public administration reform with three key goals: – fulfilling the requirements of the eu accession process; – territorial decentralization (as a goal, not an instrument – see for example nemec, 2009); and – implementation of several npm mechanisms in the public sector (mainly performance financing, performance budgeting, and privatization). it is obvious that in this phase, based on liberal and pro-market ideology and eu deregulation policies, agencification became an increasingly important issue. with little or no discussion about the normative and practical aspects of privatization and agencification, in particular the split between policy and administration; pursuing efficiency through specialization and expertise, and depoliticization, a massive reorganization of the public sector occurred between 1998 and 2006, based on “market” (npm) ideologies. tables 1 and 2 in the annexes show the many different agencies that were created, with the idea of shrinking direct state delivery, and moving to private production with state regulation. however, motivation for agencification was not that straightforward as there was a diversity of actors, each having different incentives to support agencification. the media and the general public accepted the doctrines claiming increased professionalism and level of service. managers saw agencification as an opportunity to win more autonomy and better pay, reducing the uncertainty arising from central government policy changes. ministers and elected officials saw agencification as an attractive path because it reduced administrative and financial responsibilities while providing additional patronage opportunities, a motivation contrary to expectations that agencification will reduce government size and political interference in management. another rationale for the creation of agencies was the search for an alternative between central and local provision. at a local level the creation of a pluralistic service delivery system (see the case study below) was begun very soon after 1990, and continued 146 throughout the dzurinda period. these endogenous motives for agencification were strengthened by exogenous pressure on policy makers. the need to comply with the “acquis communautaire”, already influenced by liberalization trends in the eu, required the establishment of several regulatory and implementation agencies to cope with new tasks. in 2006 the left wing government of robert fico was elected by voters who were very dissatisfied with the perceived radicalism of previous reforms. this new government could not reverse the previous agencification decisions, in part because of eu membership obligations. more generally, public administration reforms received little attention during this period. but the extent of agencies’ autonomy and their politicization received much attention. in 2010, the liberal coalition returned to power. however, because of the economic and financial crisis a new wave of agencification was not an issue. political control over the most important agencies remained the only hot problem. the key question being to which party from coalition or opposition the leadership of regulatory agency belongs. the agency interests were not counterbalanced by a strong central public management agency. the ministry of finance and the ministry of labor, social affairs and family have responsibilities for different aspects of public management, but interest in either ministry in the topic has not been intense. the absence of a strong central direction is one reason why many argue that the agencification in slovakia lacks a systematic conceptual and legal framework (beblavý 2002; moynihan, 2006). depoliticization in general and depoliticization of agencies in particular was never on the real agenda of any slovak government. however, the opposite might be true – just after creating agencies political parties started to understand the benefits emanating from controlling agencies. as a result, the political fight for the “allocation” of agencies – either between coalition versus opposition parties, or within the political parties in power – has become increasingly visible. it is illustrative that although the current radicova government promised that merit must be the basis of appointments to top agency positions, the reality seems to continue to be just the opposite. some attempts to diminish the financial autonomy of agencies (especially if allocated to the opposition parties) became also visible after 2006. compared to some other countries slovakia did not react to the fiscal constraints caused by the economic and financial crisis by cutting staff or merging agencies. rather, the general government policy to cope with large deficits was and continues to be to increase taxes and to cut public expenditures – almost equally for all budgetary chapters. there was no review of the effectiveness of different types of expenditures and of public bodies’ performance. this remains a challenge for the future. 4.1. main barriers on the basis of existing data (summarized for example by bouckaert et al., 2009) we could argue that agencification in slovakia is realized in a very difficult environment characterized by some of country specific features as well as some (cee) region147 specific features. making the choice between traditional government bureaucracies and agencies represents very much the choice between “devil” and “beelzebub” (van mierlo, 1997). these features include the following: – the slovak public sector is characterized by over-politicization of the decision making processes at all levels. perhaps aping former communist practices political parties, regardless of their position in the political spectrum, seek maximum control of all important public sector bodies. – the business environment in slovakia is still far from being highly competitive. in our view short term profit maximizing strategies prevail, and fair long term business strategies are still rare. even potentially competitive markets are not well developed, and remain dominated by monopolistic or oligopolistic structures and behavior. – the expectations at the beginning of transformation were optimistic, but today we well know that democratic institutions and norms were not fully developed during the twenty years of transformation. the formal structures exist, but actors’ behavior is still “semi-socialist”. lack of individual responsibility, paternalism and fiscal illusion remain important features of citizen’s mindsets and behavior. for example in slovakia 67% of respondents believe that their problems need to be solved by the state (buncak et al., 2009). under such conditions rentseeking corrupt behavior by politicians and bureaucrats is successful, because it is the simplest way to maximize individual benefits, at least from a short-term viewpoint. – the possible success of any npm tool (including agencies) is also connected with the “quality of the rule of law”. the state is switching from the role of provider to that of regulator: such a change is only formal, not substantive if the regulations and guidelines do not exist and where the law is neither respected nor enforced. – the performance of agencies should be based on values and principles like accountability, responsibility, performance, balanced autonomy and control. under slovakia conditions although in many cases autonomy is a major concern of the actors, accountability and control issues remain marginal. this problem is exaggerated by the predominantly old-fashioned, administrative procedural type of public sector control and auditing practices. 5. assessing the functionality of agencification in slovakia as noted there is little information about slovak agencification processes. therefore we are not able to draw overarching conclusions about the character and results of the agencification process. in order to characterize the situation and to formulate some arguments for our final evaluation and core policy recommendations, we use two case studies, based on data from our own research (as indicated above performance reviews for the main slovak agencies are not available). the first case study focuses on central level agencies, more specifically, universities. it provides important facts about issues like independence versus central control, accountability and responsibility, 148 and pervasive performance effects. the second case study focuses on the sub-national level and is based on comprehensive data about local public service delivery collected by the authors. this case study again confirms that although agencies are a common solution in the slovak public sector, the lack of a systematic approach, means they deliver very contradictory results. 5.1. case study i: higher education institutions as performance financed agencies the reform of higher education during the first dzurinda government transformed state universities and other higher education institutions into independent public agencies, financed on the basis of their performance (only police and military universities remained state bodies), and also created the space for private schools. the underlying idea was that increased autonomy, flexibility, and a switch to multisourced financing would lead to better quality education. results however do not seem to match these intentions. the management of public higher education institutions is now almost fully independent of the government. their rectors report to the advisory boards, not to the ministry. the revenues of slovakian public higher education institutions today come from two sources: public grants and transfers and their own incomes. despite the intention to increase the ratio of self-generated income, almost nothing happened in this regard. public grants still represent 80%-90% of total university revenue. for the allocation of public grants the slovak republic uses a formula based performance financing system. the specific budget mechanisms are based on the existence of several sub-programs constituting the total amount of public transfers for public higher education institutions. the system of these sub-programs is as follows: program of higher education, science and social support to students • subprogram higher education – grant to finance accredited study programs; • subprogram higher education science and technique – grant to finance research and development; • subprogram higher education development – grant to finance development needs; • subprogram social support for students – grant to provide support to students; and • subprogram targeted transfers. source: ministry of education higher education institutions transparently “compete” for public resources mainly in the first two sub-programs via the following criteria: – number of students (weighted by “unit costs per student”, which differ across universities). according to this criterion 85%-90% of the public grant was allocated at the beginning, during the period from 2002 to 2006. – quality of research (as measured by such indicators as the financial value of international and national research grants, number of publications, number of phd students). the amount of resources allocated according to this criterion was marginal in the early days. 149 table 1 shows that the performance-based allocation – items 1 and 2 – amounts to almost 90% of the total allocation, thus the discretion of the ministry in providing resources is minimized. this proportion remained similar in subsequent years. table 1: public transfers to public higher education institutions 2002-2006 (mil. current sk) 2002 2003 2004 2005 2006 grant to fi nance study programs 5,825 78% 6,660 80% 7,460 79% 8,023 78% 8,745 76% grant to fi nance research & development 584 8% 638 8% 948 9% 1,066 10% 1,119 10% grant to fi nance development needs 378 5% 370 4% 330 5% 450 4% 500 4% grant to provide support to students 648 9% 650 8% 700 7% 810 8% 1,150 10% total 7,435 8,318 9,438 10,349 11,514 source: www.minedu.sk it was expected that the performance-based allocation of funds would motivate higher education institutions to focus more on quality and less on the number of students. but all institutions reacted with a significant increase in the number of newly admitted students. this could have been a positive development, but because total allocated resources only increased a little faster than inflation the outcome was tragic. the grant per student decreased significantly over the last 5 years (table 2). the intention was to allow higher education institutions to compete transparently for funds on the basis of quality. the outcome was significantly different – universities have fallen into the “performance financing trap” caused by the pervasive motivation effects of the financing formula. table 2: newly admitted higher education students in slovakia (1990-2006) 1990/91 1995/96 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 new full time students 13,404 20,809 24,279 24,270 26,974 24,150 32,488 35,542 % of new full time students from 18 (19) years old population 15.9% 21.8% 27.2% 27.2% 30.4% 27.2% 36.7% 41.3% new part-time students 1,868 3,881 9,665 12,763 8,057 15,057 15,718 17,254 total 15,272 24,690 33,944 37,033 35,031 39,207 48,206 52,796 source: ministry of education the interpretation of these figures – the above mentioned trap – is straightforward: facilities are overcrowded, the level of achievement in entry examinations is declining and staff is increasingly overburdened. but this is unique neither to slovakia nor to central and eastern europe. falling entry requirements and overcrowded higher education facilities signal a risk of falling graduate quality because if the best students go to university and the number enrolled expands the average and marginal quality falls. 150 the fact that with fewer resources per unit the quality of output was sacrificed is well documented by the national ranking agency arra and its evaluations (www.arra. sk). the government only reacted later by increasing the weight of scientific results in the allocation formula from 5% at the start to 40% in 2009, and by introducing a new performance evaluation system for public higher education institutions. according to this performance evaluation system better performing institutions receive higher weights in the calculation formula – for example higher grant per student. higher education institutions are also interesting from the view point of the control and accountability of agencies. as indicated, public schools are only held accountable by their representative bodies. the main representative body is the advisory board with 14 members appointed by the minister responsible for higher education. the minister nominates six members of the board, the rector another six members, and two members are nominated by the academic senate. this means that the majority of board members is nominated by the university and perhaps may only represent university interests. the “internal” representative body is the academic senate. it has as a minimum of 15 members (the maximum is not defined) and is elected by the “academic society” (students and teachers); a minimum of one third by the students. only members of the “academic society” can be elected to the senate. in such a system the ministry lost almost all direct influence over universities’ decisions. its advisory body – the accreditation committee (quality regulatory agency) – cannot help much in this direction either. the role of the accreditation committee is to advise the minister, on the basis of transparent criteria, on matters of granting rights to deliver study programs by public and private schools. only recently, with the introduction of the performance evaluation system, has the committee acquired some means to promote a better quality of education. but it still cannot interfere in the internal matters of universities. ineffective regulatory system, pervasive effects of performance financing scheme and possibly other factors such as the character of the labor market (according to our data many private and all public employers demand diplomas and not knowledge) are the factors behind several of the accountability and control problems characteristic of slovak higher education. several important “incidents” were comprehensively covered in the media and showed that the system is far from perfect. we mention two well-known cases for illustration. the university in trencin was found to have granted several ma degrees after only about six months study. apparently this was legal so that the university cannot be legally sanctioned. the only body authorized to deal with the issue, the accreditation committee, allowed the program to continue. the media reported that universities in trnava and in banska bystrica had also collected illegal fees from part time students. the minister immediately demanded a stop to the practice. the ministerial request was however declined by the rectors. because it was impossible to settle the case with the use of the regulatory tools of the ministry, several court cases occurred, with various outcomes, and university rectors tried to sue 151 the minister for defaming their university’s name. after subsequent legislation legalized fees for part-time students most outstanding court cases were dropped. 5.2. case study ii: the delivery of local public services the delivery of local public services in slovakia represents an interesting example of different types of “agencies” used by sub-national governments. local self-governments in slovakia have a large level of autonomy; only courts may reverse the decisions of municipal bodies. moreover, municipalities’ budgets amount to a relatively important proportion of public expenditures (see table 3). table 3: total general and local government revenues and expenditures as % gdp in slovakia 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 total general government revenues 42.60 40.50 40.40 38.60 38.00 36.80 37.40 35.30 35.40 33.50 32.50 32.70 total local government revenues 3.30 2.70 2.80 3.00 2.90 3.90 7.20 6.90 6.70 6.30 6.00 5.30 total general government expenditures 49.00 45.80 47.80 50.90 44.50 45.00 40.10 37.60 38.20 36.90 34.40 34.90 total local government expenditures 4.70 3.70 3.60 2.70 3.00 3.60 7.30 6.40 6.70 6.60 6.10 5.40 source: eurostat about 80% of municipal revenues are covered by the principal intergovernmental transfer, which is the share of personal (pit) and corporate income tax. less than 20% of municipal revenues are covered by municipal taxes and charges. municipalities have a really restricted space to develop their own tax policy. our long term research focusing on the method of delivery of selected local public services provides interesting information about the mix of delivery forms. the data from our two representative samples (ochrana et al., 2007), collected by questionnaires, show that all possible agency types (type 3, 4 and 5; see van thiel, this issue) are involved in the system of local services delivery (table 4). data from other samples (like beblavý and sičáková-beblavá, 2006; pavel and beblava, 2008; majlingová, majlingová and šagát, 2006; vozárová, 2010) indicate similar patterns. table 4: local public services delivery in slovakia (own samples 2000 and 2006) service own employees municipal body municipal limited company municipal shareholders company full contracting 2000 2006 2000 2006 2000 2000 2006 2000 2006 2000 waste management 5% 5% 20% 5% 21% 7.5% 5% 2.5% 49% 80% cemeteries 39% 55% 27% 7.5% 6% 10% 0% 2.5% 28% 25% public green 38% 78% 27% 7.5% 13% 10% 3% 0% 19% 4.5% local communications 27% 38% 27% 10% 14% 15% 2% 2% 30% 35% local lighting 33% 63% 23% 2.5% 21% 12.5% 0% 0% 23% 22% 152 “agencification” at the sub-national level began in the first phases of transformation (1990s), when the production of local public services was in many cases transferred from direct municipal production to several types of “agencies”, or outsourced. the core problem of this process is the fact that outcomes from such a change are unclear. the most comprehensive comparisons of efficiency of different forms of delivery of local public services were produced by maljingova (2005) with a focus only on the waste management service. the data indicated that costs do not depend on the institutional form; the establishment of agencies or contracting does not automatically decrease costs. but the data are not very reliable, despite the fact that all questionnaires were signed by municipal officials (the same problem appears in relation to the data in table 5). we emphasize two core problems related to data reliability: – first, inaccuracies in calculating the real cost of service delivery by the local self-government. because there is no cost-centers-based-accrual accountancy at the level of local self-government, municipalities are not able to measure the real costs of service delivery. moreover internal delivery costs are underestimated, as normally only the direct costs are included. – second, recent experience clearly indicates that because performance benchmarking is not standard in slovakia, many municipalities simply do not know the real data and so only provide estimates (see nemec et al., 2008). table 5: costs of waste management in slovakia according to the form of delivery and size category (sk) -999 1,000-4,999 5,000-9,999 10,000-19,999 20,000-49,999 50,000own employees 164 323 78 x 150 x municipal body 455 151 398 205 130 x municipal limited company x 89 36 209 163 x municipal shareholders company x 181 x x x x contracting 181 168 127 117 212 65 source: majlingova (2005) in our surveys we only examined the efficiency of contracting (table 6). it was expected that competition would ensure contracting would lead to lower costs for the same quality, or slightly higher costs for much better quality. however, data from different sources (such as merickova et al., 2010; merickova, 2006; beblavý and sičáková-beblavá, 2006; pavel and beblava, 2008; majlingová and šagát, 2006; vozárová, 2010) indicate that there are no major differences in service quality, and according to our samples efficiency gains are not always present. our data indicate that agencification and contracting do not deliver better results compared to classic forms of delivery of local public services. there are several explanations for this finding (for a more complex evaluation for example see merickova et al., 2010 or ochrana et al., 2007). 153 table 6: costs of contracted public services per inhabitant (own employees = 100%) service 2001 2005 2006 2008 2009 waste 94 94 125 184 60 cemeteries 64 13 67 146 66 public green 82 192 150 151 133 maintenance of local communications 70 109 119 114 104 public lighting 100 138 128 156 127 first, taking into account the fact that economic theory does not prescribe a specific form for delivering local public services that is optimal to all conditions, the process of deciding which form to use should be based on systematic ex-ante assessment of delivery options. however, this is usually not done in slovakia (see for example merickova et al., 2010). the decisions about the delivery form are usually not systematic; moreover, the methods of awarding the contracts are not sufficiently competitive as direct awards still dominate. this situation is alarming; municipalities frequently do not respect the public procurement law, and thus the risks of corruption and inefficiency of service provision increase. other problems include municipal managers’ lack of managerial skills, non-existent guidelines, limited competitiveness of supply and the low quality of control and audit in the public sector. the core lesson for our study is that the problems connected with contracting of local public services indicate that in slovakia providing autonomous players with a high level of independence may not lead to positive outcomes. 6. conclusions our research establishes several important conclusions about agencification in slovakia. first, slovakia belongs to those countries exhibiting moderate to extensive agencification efforts (see also beblavy, 2002) at all levels of government. as shown in the annexes slovakia has nine nationwide service delivery agencies plus a large number of decentralized delivery agencies, including public hospitals, universities, primary and secondary schools, and public training institutions. it also has 25 central regulatory agencies. but this is not a comprehensive list as there is no official list of agencies. as for the purpose of agencification in slovakia, especially during the dzurinda governments there were two core factors: the eu accession processes, and the political orientation of the governing coalition. the concepts of responsiveness to citizens’ needs for value for money, choice flexibility, and transparency do not seem to have played an important role. from the viewpoint of the outcomes of agencification it was expected that increased managerial freedom would lead to better results. as indicated in the analysis, this did not prove to work very well in slovakia. our data shows that in many cases agencification in slovakia achieved few or no productivity and quality improvements in the production of public services. 154 in addition to our case studies, we have also provided arguments and evidence in support of our assumption that agencification in slovakia lacks a systematic conceptual framework attuned to the local context. yet despite all these problems we assert that the creation of agencies in slovakia and elsewhere in cee were important steps forward, despite the many implementation problems that attend most changes under cee conditions (dunn et al., 2006). such developmental illnesses can be remedied by the process of increased democratization in the region, especially by raising the level of public awareness, participation and control. it will just take time. references: 1. anthony, r.n. and young, d.w., management control in nonprofit organizations, burr ridge: mcgraw-hill/irwin, 2003. 2. beblavy, m. and sicakova-beblava, e., inštitucionálne dilemy pri zabezpečovaní verejných služieb, prešov: transparency international slovakia, 2006. 3. beblavy, m., ‘understanding the waves of agencification and the governance problems they have raised in central and eastern europe’, 2002, oecd journal on budgeting, vol. 2, no. 2, pp. 121-139. 4. bercik, p. and nemec, j., ‘the civil service system of the slovak republic’, in verheijen, t. 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(eds.), do institutions matter? government capabilities in the united states and abroad, washington d.c.: the brookings institution, 1993. annex 1 table 1 lists the most important agencies of different types in charge of public service delivery, grouped by task and sector. the data show that utility services are delivered predominantly by privatized bodies, while agencies from categories 1 and 2 (van thiel et al., 2009) are indicated in bold and are found mainly in social services. 157 ta b le 1 : m ai n p u b li c se rv ic e d el iv er y ag en ci es /b od ie s se ct or le ga l s ta tu te o f p ro vi de rs ev ol ut io ns o f f or m s of o w ne rs hi p te le co m m un ica tio ns sl ov ak te lek om , s ha re ho lde r c om pa ny , o wn ed b y d eu tsc he te lek om a g pr iva tiz at io n of s ta te b od y sl ov en sk e te le ko m un ika cie in 1 99 920 00 po st al s er vic es sl ov ak p os t, sh ar eh ol de rs c om pa ny , o wn ed b y th e st at e co nv er te d fro m s ta te e nt er pr ise in 2 00 4 pr od uc tio n, tr an sp or t a nd m ar ke tin g of el ec tri cit y m an y lic en se d pr iva te c om pa ni es . l ar ge st b od y is sl ov en sk e el ek tra rn e, a s ha re ho ld er c om pa ny de re gu lat ed m ar ke t, sl ov en sk e ele ktr ar ne o wn ed b y t he st at e (3 4% ) an d en el s pa (6 6% ) g as tr an sp or t-d ist rib ut io n sp p di st rib uc ia – fo r d el ive ry o f g as to c on su m er s an d eu ro st re am – fo r i nt er na tio na l g as tr an sp or t – b ot h 10 0% d au gh te r c om pa ny o f s pp un bu nd lin g fro m 1 . 6 . 2 00 6 m ar ke tin g of g as sp p – sh ar eh ol de rs c om pa ny , o wn er th e st at e – 51 % a nd s lo va k g as ho ld in g b. v. – c on so rti um e .o n ru hr ga s a g az d e fr an ce (4 9% ) pr iva tiz at io n in 2 00 2 ra ilw ay tr an sp or t o f p as se ng er s sl ov ak r ai lw ay s st at e en te rp ris e, e st ab lis he d 1. 1. 19 93 fr ei gh t r ai l t ra ns po rt ca rg o sl ov ak ia fr om 1 .1 .2 00 5 as th e se pa ra te s ta te s ha re ho ld er s co m pa ny , pr ev io us ly pa rt of s lo va k ra ilw ay s re gi on al a nd lo ca l t ra ns po rt of pa ss en ge rs o n ra il – s lo va k ai lw ay s o n ro ad – lic en se d pr iva te c om pa ni es de re gu la tio n of ro ad tr an sp or t f ro m m id -2 00 0, re gu la te d by s ub na tio na l g ov er nm en ts . ai r t ra ns po rt pr iva te c om pa ni es af te r s pl it of c ze ch os lo va kia th e fe de ra l a irl in es c sa b ec am e a pu re ly cz ec h bo dy . f ew n ew p riv at e co m pa ni es e st ab lis he d la te r. at te m pt s to c re at e na tio na l a irl in e fa ile d. in la nd w at er tr an sp or t pr iva te c om pa ni es pr iva tiz at io n of fo rm ed s ta te b od y. w at er re gi on al p riv at e co m pa ni es de re gu la tio n fro m 2 00 6 w as te w at er re gi on al p riv at e co m pa ni es de re gu la tio n fro m 2 00 6 he at in g al l t yp es pr iva tiz at io n in 1 99 0 br oa dc as tin g pu bl ic t v w ith th re e ch an ne ls (a ge nc y 2) , p riv at e tv s, re gi on al t vs li ce ns es fo r p riv at e tv s iss ue d. ho sp ita l h ea lth s er vic es m ixe d sy st em o f l eg al fo rm s, a ll h os pi ta ls pr ed om in an tly p ub lic ly fi n an ce d. p ub lic h os pi ta ls m ay re pr es en t f or m o f a ge nc y t yp e (2 ). fr om s ta te h os pi ta ls to m ixe d sy st em a s th e re su lt of 2 00 4 le gi sla tio n, th e pr oc es s wa s st op pe d in 2 00 6, b ut m ay b e re st ar te d. am bu la to ry h ea lth s er vic es m ai nl y pr iva te b ut p ub lic ly fi n an ce d am bu la nc es . pr iva tiz at io n in la te 1 99 0. fi na nc in g he al th s er vic es on e pu bli c a nd th re e pr iva te h ea lth in su ra nc e co m pa nie s. pu bl ic h ea lth in su ra nc e co m pa ny v sz p m ay re pr es en t a t yp e (2 ) f or m o f a ge nc y. pl ur al ist ic co m pu lso ry p ub lic h ea lth in su ra nc e fro m 1 99 3. pr im ar y an d se co nd ar y ed uc at io n m ixe d sy st em , w ith p re do m in an tly p ub lic s ch oo ls. s om e pr im ar y an d m os t s ec on da ry s ch oo ls m ay re pr es en t f or m o f a ge nc y t yp e (2 ). m ixe d fo rm e ar ly 19 90 . s ys te m o f s tu de nt v ou ch er s (p er fo rm an ce fi n an cin g) c re at ed fa ire r e nv iro nm en t f ro m e ar ly 20 00 . hi gh er e du ca tio n m ixe d sy st em , w ith p re do m in an tly p ub lic s ch oo ls. p ub lic u ni ve rs iti es an d hi gh s ch oo ls m ay re pr es en t f or m o f a ge nc y t yp e (2 ). pr iva te s ch oo ls st ar te d fro m e ar ly 20 00 . t he y m ay c ha rg e fe es an d ar e no t e lig ib le fo r s ys te m ic st at e su pp or t. pu bl ic sc ho ol s ar e pe rfo rm an ce fi na nc ed . 158 se ct or le ga l s ta tu te o f p ro vi de rs ev ol ut io ns o f f or m s of o w ne rs hi p vo ca tio na l t ra in in g al l a cc re di te d bo di es c an d el ive r t ra in in g, ir re sp ec tiv e of th ei r l eg al st at us . m an y se ct or al p ub lic tr ai ni ng in st itu te s m ay b e re ga rd ed as a ge nc y t yp e (2 ). fu lly d er eg ul at ed d el ive ry b as ed o n ac cr ed ita tio n on ly fro m la te 19 90 . co m pu lso ry s oc ia l p ro te ct io n (u ne m pl oy m en t a nd p en sio n be ne fi t s) st at e in su ra nc e fu nd (s oc ia ln a po is to vn a) – m ay re pr es en t a ge nc y ty pe (2 ) es ta bl ish ed in 1 99 3 co m pl em en ta ry s oc ia l p ro te ct io n m ai nl y pr iva te c om pa ni es . es ta bl ish ed in la te 1 99 0 an d ea rly 2 00 0 fi na nc ia l s er vic es pr iva te ea rly p ha se o f p riv at isa tio n. s el lin g na tio na l b an ks to fo re ig n co rp or at io ns in la te 1 99 0. se cu rit y – po lic e, p ris on s, im m ig ra tio n st at e ad m in ist ra tio n bo di es , u nd er th e m in ist ry o f i nt er io r se cu rit y – pr os ec ut io n sp ec ia l s ta te a dm in ist ra tio n bo dy . pa ym en ts – e u fu nd s m or e im pl em en ta tio n ag en cie s m ay re pr es en t a ge nc y t yp e (2 ) pa ym en ts – s tu de nt lo an s in de pe nd en t b od y – st ud en ts ky p oz ic ko vy fo nd , m ay re pr es en t ag en cy t yp e (2 ) es ta bl ish ed in 1 99 7 pa ym en ts de ve lo pm en t a id in de pe nd en t b od y – sl ov ak a ge nc y fo r i nt er na tio na l d ev el op m en t co op er at io n, m ay re pr es en t a ge nc y t yp e (2 ) es ta bl ish ed in 2 00 7 pa ym en ts – s oc ia l b en efi ts de -c on ce nt ra te d st at e ad m in ist ra tio n pl us s el f-g ov er nm en t. re gi st ra tio n – la nd re gi st ry (c ad as tre ), bu re au o f s ta tis tic s sp ec ia l s ta te a dm in ist ra tio n bo di es re gi st ra tio n – ca rs a nd d riv er s lic en se s po lic e m et ro lo gy in de pe nd en t b od y – ur ad p re n or m al iz ac iu , m et ro lo gi u a sk us ob ni ct vo m ay re pr es en t a ge nc y t yp e (2 ) es ta bl ish ed in 1 99 8 m et eo ro lo gy in de pe nd en t b od y – st at ny h yd ro m et eo ro lo gi ck y us ta v, m ay re pr ese nt a ge nc y t yp e (2 ) es ta bl ish ed in 1 99 3 m us eu m s m os tly le ga l b od ie s, b ut fi na nc ia lly d ep en de d. b et we en p ub lic b od y an d ag en cy . f ew p riv at e m us eu m s. co nn ec te d to a ll l ev el s of g ov er nm en t – m in ist ry o f c ul tu re , re gi on al a nd lo ca l s el f-g ov er nm en ts . ho us in g pr iva tiz ed . s om e m un ici pa liti es b ui ld a nd m an ag e so cia l h ou sin g fl a ts . so cia l s er vic es m ixe d sy st em , p ub lic o rg an iza tio ns a nd p riv at e bo di es . fo re st ry st at e en te rp ris e le sy s r. es ta bl ish ed in 1 99 9 ro ad s o n ce nt ra l le ve l – s lo ve ns ka s pr av a ci es t a nd s lo ve ns ka d ia ln ic na sp ol oc no st , b ot h m ay re pr es en t a ge nc y t yp e (2 ). hi gh wa ys (s ds ) a nd ro ad s of fi rs t c at eg or y (s sc ) “ be lo ng ” t o ce nt ra l g ov er nm en t, wh ile th e re st b el on g to s el f-g ov er nm en ts . 159 annex 2 table 2 gives an overview of the main independent and semi-independent regulatory (and similar) agencies, grouped by policy sector. table 2: regulatory agencies, grouped by sector* sector market structure modes of regulation telecommunications liberalized independent regulator: telekomunikacny urad sr (www.teleoff.gov.sk), may represent agency type (2). postal services in the processof liberalization independent regulator: postovy regulacny urad (www.posturad.sk), may represent agency type (2). production of electricity liberalized independent regulator: urad pre regulaciu sietovych odvetvi (www.urso.sk), may represent agency type (2). electric networks (transport-distribution) regional monopolies independent regulator: urad pre regulaciu sietovych odvetvi (www.urso.sk), may represent agency type (2). marketing of electricity regional monopolies independent regulator: urad pre regulaciu sietovych odvetvi (www.urso.sk), may represent agency type (2). gas transportdistribution monopoly independent regulator: urad pre regulaciu sietovych odvetvi (www.urso.sk), may represent agency type (2). marketing of gas monopoly independent regulator: urad pre regulaciu sietovych odvetvi (www.urso.sk), may represent agency type (2). railway transports of passengers monopoly semi-independent regulator úrad pre reguláciu železničnej dopravy (www.urzd.sk), may represent agency (between 1 and 2). freight rail transport monopoly semi-independent regulator úrad pre reguláciu železničnej dopravy (www.urzd.sk), may represent agency (between 1 and 2). regional and local transport of passengers regional and local licenses, normally to one supplier semi-independent regulator úrad pre reguláciu železničnej dopravy (www.urzd.sk), may represent agency (between 1 and 2). air transport liberalized semi-independent regulator – letecky urad sr (www.caa.sk), may represent agency (between 1 and 2). inland water transport liberalized semi-independent regulator – statna plavebna sprava (www.sps.sk), may represent agency (between 1 and 2). hospital health services mix of all types of companies and ngos independent regulatory offi ce urad pre dohlad nad zdravotnickou starostlivostou (www.udzs.sk), may represent agency type (2). ambulatory health services mainly private independent regulatory offi ce urad pre dohlad nad zdravotnickou starostlivostou (www.udzs.sk), may represent agency type (2). higher education dominated by state/public schools, few private high schools exist. semi-independent akreditacna komisia (www.akredkom.sk), may represent agency (between 1 and 2). financial services competitive market independent regulator – narodna banka sr (www.nbs.sk), may represent agency type (2). broadcasting competitive market independent regulator – rada pre vysielanie a retransmisiu (www.rada-rtv.sk), may represent agency type (2). * some other (regulatory) bodies in slovakia that may be characterized as agencies of the second type (all are legal persons, some of them partly dependent on their ministries). we should mention the public procurement office (www. uvo.gov.sk), the national labor inspection (www.safework.sk), the monuments board of the slovak republic (www. pamiatky.sk), the antimonopoly office (www.antimon.gov.sk), the slovak office for technical normalization (www.sutn. gov.sk), the slovak metrologic body (www.smu.gov.sk), the office for nuclear supervision (www.ujd.gov.sk), the office of the industrial property (www.indprop.gov.sk). 37 abstract the so-called decentralization of public procurement in eu member states is accepted as the most suitable design of the public procurement system, often justifi ed by greater economic effi ciency and by the possibility of boosting the development of small and medium-sized enterprises, which act on the public procurement market as providers of goods, services and works. despite the existence of highly decentralized public procurement systems which refl ect the decentralization of administrative systems, especially after the recession, there is a stronger tendency for centralization of public procurement in the eu. the so-called aggregation of demand by contracting authorities can be done in order to achieve economies of scale, including lower prices and transaction costs as well as to improve and professionalize the management of procurement procedures (as highlighted in the directive 2014/24/eu by the european parliament and the eu council). however, even in the context of public procurement centralization, local contracting authorities (i.e., public administration authorities and organizations) in member states should be provided with a suffi ciently wide range of possible (centralized) organizational structures and contractual (vertical and horizontal) public-public partnerships which will allow them to select the most suitable and most economically effective organizational structure for the execution of public procurement. keywords: centralization, public procurement, local self-government, fi scal decentralization, eu. (de)centralization of public procurement at the local level in the eu*1 boštjan brezovnik žan jan oplotnik borut vojinović boštjan brezovnik associate professor, faculty of law, university of maribor, maribor, slovenia, e-mail: bostjan.brezovnik@um.si žan jan oplotnik professor, faculty of economics and business, university of maribor, maribor, slovenia e-mail: zan.oplotnik@um.si borut vojinović assistant professor, faculty of tourism, university of maribor, maribor, slovenia e-mail: borut.vojinovic@um.si * this paper is excerpt of a broader research project titled ‘advancing accountability mechanisms in public finances’, founded by undp serbia and government of sweden. transylvanian review of administrative sciences, no. 46 e/2015, pp. 37-52 38 1. introduction when talking about centralization and decentralization of public procurement, there are several possible approaches; however, in real life, there are no ‘pure’ models that can be summarized in theoretical statements, trying to construct individual types or models of centralization and decentralization of public procurement. to practically organize public administration (including the fi eld of public procurement) actually means to fi nd the right combination between the idea of centralization and decentralization. nowadays, the establishment of a reasonable balance between local and central has become one of the most important issues in the functioning and organization of any country, including the fi eld of public procurement. in general, it can be concluded that in certain areas of the functioning of a modern state centralism is a necessity (e.g. uninterrupted life and integration of all the parts of a society also conditions the existence of a high degree of uniformity and consistency in the organization of all forms of activities of modern society; each system, hence also the state, requires a specifi c focus, coherence and coordination of public tasks to ensure its existence). on the other hand, a smooth and normal execution of tasks may, in some areas, be possible only in the context of decentralized administrative systems. in the broadest sense, decentralization means any weakening of the direct impact of the particular center of an organized system on the parts of the system. thus, in territorial decentralization, a territorial unit to which tasks have been transferred is in a certain sense and scope subject to the infl uence resulting from the unit, which is therefore diff erent from the central state administration. we can say that decentralization exists whenever a non-central (provincial) authority has the right to adopt individual decisions independently within the framework of the constitution and laws. decentralization has, in the sense described above, mainly a political connotation or it reveals itself as a problem of political nature (grafenauer and brezovnik, 2006, p. 98). starting from the administrative branch of government and the implementation of public administration tasks, it can be said that by centralism (public procurement) we understand the focus on performing tasks in central authorities and fully dependent on the center’s direct ‘directives’ and under the control of the central government (the highest level administration authorities). we could speak of administrative centralization (or the so-called rigorous centralism) in the purest and strictest form only if one single national offi ce would exist for the whole country, where all public administration (thus also the implementation of public procurement) would be concentrated. this is not possible in practice, therefore in every modern country the idea of decentralization appears to a greater or lesser extent. however, decentralization in the framework of public administration is possible in two ways: (a) administrative decentralization (devolution) and (b) decentralization through (or by means of) self-government or local self-governing units. decentralization has two diff erent aspects: the administrative-technical and interest-related approach. the aim of the former is to achieve the maximum possible rationality and effi ciency of management, 39 while the aim of the second aspect is to increase the opportunities of promoting the interests of their respective (interest) holders. the result of the fi rst approach is the devolved implementation of tasks, and local self-government for the second one. if the administrative decentralization is just a technical and organizational question of delegating tasks, which are otherwise centralized, to regional organizational units or to lower state authorities falling outside the state center, then decentralization by local self-government communities is also (or especially) a political question since it concerns a specifi c division of administrative functions between the central administration and ‘local (self-)governments’, which can operate as independent administrative centers. therefore, only local self-government and the implementation of aff airs in the fi eld of public administration in local self-governing communities represents true (real) decentralization. decentralization and devolution have a common element: there is a delegation of tasks from the central authorities to other more narrowly defi ned ‘powers’, whereby we can say that devolution represents an intermediate stage and, on the one hand, means a deviation from centralization, while, on the other hand, it is a move towards decentralization. however, for devolution, which no doubt applies to decentralization in self-governing units, a certain distancing from the central core and ‘bringing public administration closer to the people’ is typical. as such, devolution often represents a transitional stage and a good preparatory stage for decentralization because it is much easier to transfer aff airs from local government authorities to self-governing authorities than directly from the central government authorities. therefore, we can conclude that there are no pure models of centralization and decentralization (including in the fi eld of public procurement), but we can rather talk about diff erent degrees of stricter and looser forms of centralization or decentralization. it is a process and a dynamic phenomenon which depends on various elements and conditions. with decentralization, it is thus possible to talk of diff erent series of stages – from a maximum stage of independence and autonomy to a minimum independence in the distribution of tasks. to put it simply, we can say that the following diff erences exist between individual types (degrees, models) of centralization and decentralization: – whether a narrowly defi ned community (unit) has a status of legal entity or not and what is its specifi c context; – what is the extent of local issues and tasks that are exercised by the local communities (units) and how and to what extent they are provided with fi nancial and other assets; – what are the controlling and supervisory authorizations of central (government) authorities in relation to decentralized (local) authorities; and – whether the local population alone decides on the selection (by way of election, appointment) or composition of the authorities in local communities (units) and what is the impact of central authorities thereof, etc. 40 tasks in the implementation of ‘public’ (general social) aff airs (including public procurement) are in each country executed by authorities, which may be central (core) or provincial (local). for non-central authorities there is a diff erence between those which are, in their creation and operation, directly dependent on the central government authorities, and those in whose formation and operation the local population has a decisive infl uence. the former are established by the central government authority in the local unit, so that we speak of local government authority (we can also term them centralized regional authorities). the latt er, however, are local self-governing authorities. local government authorities mainly perform functions related to the direct execution of state regulations, functions that are ‘bureaucratic’ in character and have also been ‘bureaucratically’ designed. in contrast, the local self-governing communities also have authorities that are ‘representative’ in character (municipal councils, etc.) and are elected by the residents, as well as municipal ‘bureaucratic’ authorities which are responsible for the direct implementation and operationalization of decision-making (grafenauer and brezovnik, 2006, pp. 98-99). 2. decentralization of public procurement the so-called decentralization of public procurement in eu member states is most often accepted as the most suitable design of the public procurement system, which justify with greater economic effi ciency and consequently with the possibility of boosting the development of small and medium-sized enterprises that act on the public procurement market (vojinović et al., 2010, p. 317). the following are most often specifi ed as one of the key arguments in support of decentralization of public procurement: reduced incentives for corruption; reduced chances for mistakes aff ecting large volumes; less bureaucracy because of shorter time frames and fewer forms for both purchasers and suppliers; greater possibilities for small and medium-sized enterprises to compete for contracts; lower prices for local goods; and more scope for employees to take responsibility. the decentralization of public procurement is closely linked to the territorial, administrative as well as fi scal decentralization of individual eu member states. the number of contracting authorities, which can range in individual states from a few hundred up to several thousand depends on the degree of territorial and administrative decentralization. however, the extent of public fi nancial funds held by contracting authorities and which are available for the procurement of goods, services and works depends mainly on the degree of fi scal decentralization (oecd, 2000, p. 5). at this point, it should be noted that, in spite of globalization trends and european integration the local self-government has been developing in a uniform direction in eu member states, which is actually a result of the ratifi cation of the ‘european charter of local self-government’ (1985). this is refl ected in the increasing harmonization of local self-government systems (šmidovnik, 1995, p. 35). reforms of public administration and especially local self-government systems thus include the fundamental principles of democracy, denationalization, devolution, decentralization, subsidiarity, etc. 41 in spite of this, signifi cant diff erences exist between local self-government systems in eu member states both in the number of decentralized units, levels of local self-government and consequently also between the diff erently distributed competencies between state authorities and local community authorities (tournemire, 2014), which is also refl ected in the manner and extent of funding thereof (brezovnik and oplotnik, 2003) and, of course, consequently in public procurement. as can be seen from table 1, considerable diff erences appear in the number of levels of local self-government between eu member states, which is partly the result of diff erences in historical, geographical and cultural backgrounds (oplotnik et al., 2013). table 1: number of lower levels of government (local self-government – lsg) in eu-27 (for 2010) no. of residents (in 000) area (in km2) first level of lsg second level of lsg third level of lsg countries with one level of lsg bulgaria bol 1.747 111.002 264 cyprus cyp 804 5.695 378 estonia est 1.34 45.227 226 ireland irl 4.476 69.797 114 latvia lat 2.239 64.589 119 lithuania lit 3.287 65.3 60 luxemburg lux 507 2.586 105 malta mal 414 316 68 slovenia slo 2.042 20.273 210 countries with two level of lsg austria aus 8..37 83.871 2.357 9 finland fin 5.363 338.145 342 2 portugal por 10.636 92.152 308 2 czech r. czr 10.538 78.868 6.250 14 denmark den 5.546 43.098 98 5 greece gre 11.305 131.957 325 13 hungary hun 10 93.029 3.177 19 netherland net 16.611 41.528 430 12 romania rom 21.431 2.385.391 3180 41 slovakia sl 5.43 49.034 2.928 8 sweden swe 9.378 449.964 290 20 countries with three level of lsg belgium bel 10.883 30.528 589 10 6 france fra 64.812 632.834 36.682 100 26 germany ger 81.744 357.027 12.104 301 16 italy ita 60.468 301.336 8.094 110 20 poland pol 38.191 312.685 2.479 379 16 spain spa 46.073 505.997 8.116 52 17 great britain gbr 62.195 243.82 406 28 3 total eu-27 501.636 4.409.047 89.699 1,125 104 source: brezovnik et al. (2014); oplotnik and finžgar (2013) table 1 shows that seven eu member states have all three lower levels of governance, whereby the latt er are usually called ‘regions’ or ‘provinces’. the degree of autonomy is quite diff erent between them. the most autonomous are regions in great 42 britain (scotland, wales and northern ireland), but the german ‘länder’ also have considerable autonomy. however, eleven eu member states have two lower levels of governance, while nine have only one level, which is most commonly known as ‘municipality’. there is a total of nearly 90,000 municipalities in the eu member states. the size of municipalities diff ers considerably across countries, with countries such as the czech republic, slovakia and france reporting the lowest number of inhabitants per municipality (less than 2000) and countries such as denmark, greece, the netherlands, sweden and the united kingdom reporting the highest number according to the total average (more than 20,000). the extreme value with the observed category was achieved by the united kingdom that recorded more than 152,000 inhabitants per municipality in 2010 (brezovnik et al., 2014; oplotnik and finžgar, 2013). table 2 shows the analysis of local revenues or local fi nancial resources mainly through the indicator of the share of local fi nances in total public fi nances and gdp, serving as the basis for the analysis of the share of decentralization in eu member states. table 2: share of local finance in the public finance and gdp share of local finance in total public finance (%) share of local finance in gdp (%) 1995 2007 2010 change % 95-07 change % 07-10 1995 2007 2010 change % 95-07 change % 07-10 belgium bel 34.9 37.9 38,5 3.0 0.6 16.6 18.2 18.8 1.6 0.6 bulgaria bol 22.4 16.1 19,8 -6.3 3.6 8.4 6.6 6.9 -1.8 0.3 czech r. czr 30.3 27.5 29,0 -2.8 1.5 12.2 11.1 11.4 -1.1 0.3 denmark den 57.8 57.2 66,3 -0.6 9.1 32.6 31.8 36.8 -0.8 5.0 germany ger 36.8 39.1 38,8 2.3 -0.4 16.7 17.1 16.9 0.4 -0.2 estonia est 24.8 24.7 25,2 0.0 0.5 10.5 9.0 10.3 -1.5 1.3 ireland irl 33.2 19.1 19,2 -14.1 0.1 12.9 7.0 6.8 -5.9 -0.2 greece gre 5.2 6.1 6,6 1.0 0.5 1.9 2.5 2.6 0.6 0.1 spain spa 37.6 46.5 49,0 8.8 2.6 14.0 19.1 17.8 5.1 -1.3 france fra 18.8 21.0 23,2 2.2 2.2 9.2 10.5 11.5 1.3 1.0 italy ita 28.3 32.2 32,5 3.8 0.4 12.7 14.8 14.9 2.1 0.1 cyprus cyp 3.7 4.2 5,4 0.5 1.1 1.2 1.9 2.2 0.7 0.3 latvia lat 19.7 29.2 31,3 9.5 2.1 7.3 10.4 11.3 3.1 0.9 lithuania lit 24.3 23.8 33,7 -0.5 9.9 8.0 8.0 11.4 0.0 3.4 luxemburg lux 13.5 11.8 11,8 -1.8 0.1 5.7 4.7 4.9 -1.0 0.2 hungary hun 28.2 25.7 25,9 -2.6 0.2 13.3 11.7 11.7 -1.6 0.0 malta mal 1.7 1.5 1,8 -0.2 0.3 0.6 0.6 0.7 0.0 0.1 netherland net 48.3 33.5 35,3 -14.8 1.8 22.8 15.2 16.3 -7.6 1.1 austria aus 34.1 31,5 31,6 -2.6 0.1 17.2 15.0 15.2 -2.2 0.2 poland pol 23.1 33.0 36,3 9.9 3.3 10.0 13.3 13.6 3.3 0.3 portugal por 13.4 15.6 15,1 2.1 -0.4 4.9 6.4 6.3 1.5 -0.1 romania rom 13.1 26.9 28,5 13.8 1.6 4.2 9.5 9.7 5.3 0.2 slovenia slo 17.7 19.6 22,1 1.8 2.5 7.8 8.3 9.8 0.5 1.5 slovakia sl 6.9 18.5 17,0 11.7 -1.5 3.1 6.0 5.5 2.9 -0.5 finland fin 36.1 35.3 41,7 -0.8 6.4 20.0 18.6 21.9 -1.4 3.3 sweden swe 42.2 43.9 48.0 1.7 4.2 24.3 23.9 25.3 -0.4 1.4 great britain gbr 28.9 30.2 34.2 1.2 4.1 11.0 12.4 13.8 1.4 1.4 total eu 27 26.4 28.4 11.6 12.4 source: brezovnik et al. (2014); oplotnik and finžgar (2013) 43 for the implementation of tasks (determined by the constitution, laws and regulations) the state as well as the lower level requires adequate fi nancial resources. in the practice of countries, the sheer volume of fi nancial resources allocated for the purposes of carrying out the tasks varies considerably both in terms of scope and structure, which consequently means a considerable diversity of systems of fi scal decentralization. the share of fi nancial resources of the total public revenues and with regard to gdp that were earmarked for fi nancing the implementation of tasks at lower levels and the change in both indicators are shown in table 2 and figure 1. table 2 shows that the share of local fi nances in public fi nances between 1995 and 2010 increased in 20 countries. below you can see a comparison of the number of levels of local self-government and share of the local fi nances in the total public fi nances (figure 1), where the vertical axis shows the shares of local fi nances in the total public fi nances, while the horizontal axis shows the number of lower levels by individual countries in the group of eu member states. figure 1: local fi nance in public fi nance (%) and the number of lower levels for eu-27 source: brezovnik et al. (2014); oplotnik and finžgar (2013) the countries are divided into three groups, namely countries that are (according to the criteria of volume of local fi nances in public fi nances) heavily decentralized, which means that the central level allocates more than a third of revenues to the lower levels of governance; these are followed by countries with a medium degree of decentralization, where countries with the vertical axis indicator value ranging between 20% and 30% are placed, while the countries with the indicator value below 20% have been defi ned as those with low level of decentralization (as compared with the group 44 and the average of the analyzed countries). most funds for local self-government are allocated in countries such as denmark (66% of public fi nances or 37% of gdp), spain (49% of public fi nances or 18% of gdp), and sweden (48% of public fi nances or 25% of gdp). these are followed by countries such as germany, belgium, poland, the netherlands, etc. on the other hand, the least decentralized of all the countries, e.g. malta, cyprus and greece allocated less than 10% of all public revenues to lower levels of governance. the group of countries with a low degree of decentralization also includes countries such as bulgaria, ireland, slovakia and portugal. the rest of the countries belong in the group with a medium degree of decentralization. in figure 1, the upper right quadrant mostly contains countries with multiple levels of governance; all these countries belong in the group of highly decentralized countries. however, we cannot be completely sure that only the existence of three levels of government conditions high decentralization in terms of the share of public fi nances. countries such as denmark, sweden, finland, the netherlands and austria have only two levels of government but nevertheless belong to highly decentralized countries. on the other hand, we can say that most countries (with the exception of lithuania and latvia), which have only one lower level of decentralization do not exceed the average share of local fi nances in public fi nances (approx. 30%). thus, the bott om left quadrant contains 5 to 9 countries that have only one lower level of governance and are classifi ed in the group of countries with a low degree of decentralization. a larger number of levels of lower degrees of governance in principle also implies a higher share of local fi nancial resources in the overall public fi nances, while conversely it cannot be confi rmed that a country with only one lower level of governance usually also shows a low degree of decentralization (brezovnik et al., 2014; oplotnik and finžgar, 2013). since countries such as lithuania, latvia, estonia and slovenia deviate from this rule, as they have a lower level of government but are on the other hand classifi ed in the group of medium or highly decentralized countries. interestingly, in countries with a high degree of (fi scal) decentralization such as lithuania, united kingdom, germany, italy, france, denmark and finland we can notice a trend of centralization of public procurement (šerpytis et al., 2011, p. 104). 3. legal framework for the centralization of public procurement in the eu despite the highly decentralized public procurement systems in eu member states which refl ect the decentralization of administrative systems, especially after the recession, on the public procurement markets in the eu, there is a stronger tendency for aggregation of demand by contracting authorities to achieve economies of scale, including the lower prices and transaction costs as well as improvement and professionalization of the management of procurement procedures which have been particularly highlighted in the directive 2014/24/eu by the european parliament and the eu council. otherwise, the so-called centralization of public procurement can be achieved by aggregation of public contracts of the involved contracting authorities or by aggregation of contracts in terms of volume and value over the longer period. however, by the opinion of the european parliament and the eu council this type of 45 aggregation and centralization of public contracts should be carefully monitored to prevent excessive concentration of purchasing power and collusion, and to maintain transparency, competition and opportunities of market access for small and medium-sized enterprises. the increased use of centralized purchasing methods can be traced in the practice of the majority of eu member states. the main purchasing authorities are responsible for the acquisition, management of dynamic purchasing systems or awarding public contracts/concluding framework agreements for other contracting authorities. due to the large volume of public procurement these techniques may contribute to greater competition and should help professionalize public procurement. central purchasing authorities may operate in two diff erent ways; in the fi rst case they should be able to act as wholesalers with purchasing, storing and reselling abilities, and in the second case they should be able to act as intermediaries rewarding public procurement, management of dynamic purchasing systems or concluding framework agreements used by contracting authorities. in some cases such an intermediary role can be performed through independent execution of relevant procedures of submission, without detailed instructions of the said contracting authorities. however, in other cases, it is done with the execution of relevant procedures of public procurement in accordance with the instructions of the said contracting authorities, on their behalf and their own account. by this the european parliament and eu council warn that it is necessary to lay down rules on the allocation of responsibilities between central purchasing authority and contracting authorities procuring from the central purchasing authority or through it. if the central purchasing authority is solely responsible for the conduct of public procurement procedures, it should also be exclusively and directly responsible for the legitimacy of conducted public procurement procedures. contracting authorities should be able to submit public contract services for the provision of centralized purchasing activities to the central purchasing authority without the procedures laid down in directive 2014/24/eu. enhancing provisions concerning central purchasing authorities should in no way prevent the current practice of occasional joint public procurement, i.e. less institutionalized and systematic joint procurement or established practice of usage of service providers that prepare and conduct procurement procedures on behalf and for the account of the contracting authority and in accordance with its instructions. conversely, some of the characteristics of joint public procurement should be clarifi ed, since the latt er might play an important role in relation to innovative projects. joint public procurement can take diff erent forms, ranging from coordinated public procurement by preparation of common technical specifi cations for works, goods or services that will be procured by several contracting authorities, each of which executes a separate procurement process, to situations where the said public procurers jointly carry out a procurement process with the participation or by authorizing a contracting authority for the conduct of the public procurement process on behalf of all contracting authorities (directive 2014/24 / eu). 46 4. centralization of public procurement at the local level since there is often lack of expert knowledge, resources and abilities to perform effi cient procedures of public procurement, many countries developed various institutions at higher level to pool the purchasing arrangements of groups of government offi ces, public bodies of various kinds or local authorities at the regional level. in certain cases, several local authorities have also decided to form consortia or joint ventures in order to purchase the most common services such as water, waste disposal and school meals and to make those procurement processes more effi cient. they may also decide to purchase directly from other municipality or regional authority, or from the private market since prices can often be negotiated and lowered. such centralized procurement groups often do not have separate legal personality but join together ad hoc and use framework contracts under which the specifi cations of goods and services and prices are agreed for a certain period of time (also noted in oecd, 2000, p. 9). such cooperation between the authorities, not only local communities but also other authorities and organizations of public administration are termed public-public partnerships. despite the unequal defi nition the public-public partnerships can classifi ed according to the following: diff erent types of partners that are involved in the partnership; and the goals of the partnership (brezovnik, 2008). according to the defi nition of the public-public partnership, which is most commonly used in the eu, the public-public partnership refers to cooperation between two or more authorities or public legal entities governed by public law within the country (lobin and hale, 2006, p. 7). thus it can be established horizontally on the same level of governance (e.g. between local communities, for example, inter-municipal cooperation) or vertically between diff erent levels of governance (e.g. between the state and the local community). public-public partnership is not limited to public authority (territorial) entities (state, regions, provinces, municipalities), but can also be established between public legal authority entities and other public legal entities (specialized public legal entities such as public companies, public funds, public institutions, etc.) or only between other public legal entities (škof and bradaschia, 2010, pp. 329-342). partnerships between two or more public legal authority entities within the country are very common and normal. two or more of public legal authority entities can cooperate with each other in public procurement. such forms of public-public partnerships can be traced in almost all eu member states. the reasons for such cooperation are either in rationalizing the organization of the implementation of the public procurement or in achieving favorable conditions for the procurement of goods, services and works. at this point it should be noted that the directive 2014/24/eu lays the foundation for the enhancement of the specifi ed form of horizontal and vertical cooperation in public procurement, in particular between local and regional authorities. comparatively, several forms of cooperation between regional and local authorities in the organization and implementation of public procurement can be traced in 47 the member states. on the one hand, the main diff erences are based on the partners involved (horizontal cooperation, where partners operate on the same level, vertical cooperation, where they operate at diff erent levels, and joint cooperation where there is a combination of horizontal and vertical cooperation), on the other hand, there are also procedures for the exercise of cooperation that are considered, but have been implemented diff erently in countries and have become part of the institutional structure. in the case of horizontal cooperation in the fi eld of public procurement it handles a form of cooperation (partnership) developed by the regional or local authorities, which operate on the same level and have the same powers (and usually with comparable means) and include partners at the same level. the development of forms of horizontal cooperation is an alternative to the introduction of new levels of government (levrat, 1994, pp. 86-96). for this reason the diff erent levels, whose forms of cooperation are part of an institutional system, vary depending on the continuity of supply of public goods. however, extreme cases lead to the emergence of a new level of governance. such (horizontal) partnerships are refl ected in the following: harmonization of policies of diff erent authorities without the establishment of a legal entity or the establishment of (independent), specialized legal entity (public law) (e.g. specialized agencies). at this point we have to distinguish between voluntary participation in the establishment of specialized entities (public law) and those required by law. examples of specifi c forms of compulsory participation can be observed in the practice of the eu member states: spain (interest associations of municipalities); france (some urban communities); greece (development partnerships that shall be established by ministerial decision); the netherlands (since 1994, the law requires mandatory participation of local or regional authorities in joint projects, government municipalities may issue a mandatory participation instruction); in the great britain (the law requires such cooperation in any fi eld). the decision for voluntary participation is usually taken by authorities which in particular seek to streamline their business operations (vandamme, 2004). in the framework of the forms of horizontal cooperation in public procurement we have to particularly note the various forms of inter-municipal cooperation. these forms of horizontal co-operation which at the level of basic local government units perform their common task, have in the local government systems of european countries been known for over a hundred years. for example, inter-municipal cooperation is dealt with in all laws, with which individual countries regulate local government on a fundamental level. several countries, including in particular france, have for example arranged inter-municipal cooperation by special laws. the municipal associations in germany and austria have the constitutional position of a local self-government institution. in this the law does not normally interfere with the functional competence subjectivity of local self-government on a fundamental level. the promotion of inter-municipal cooperation has in the normative fi eld been performed in two ways. the fi rst as48 pect (used at the federal level in austria and in italy) is legal standardization of forming alliances for specifi c tasks. the second one (belgium, germany bavaria, sweden, the netherlands, and finland) has gone in the direction of promoting voluntary association of municipalities for specifi c tasks. a specifi c example is the french inter-municipal cooperation, which has grown on single-purpose associations (the fi rst law of 1890), which have with multi-purpose associations, districts and associations of municipalities (fr. communautés de communes) outgrown all similar movements by type and number of interest institutional inter-municipal cooperation. therefore, in 1998 france adopted a special law on inter-municipal cooperation, which establishes three types of institutions of this cooperation – municipality associations, associations of sett lements and urban associations, imposes requirements regarding the number of the population, closed areas and tasks that the association must ‘select’ to gain access to the funds earmarked by the state to promote the activities of local government. the french way of promoting inter-municipal cooperation is a unique and eff ective way to change the territorial organization of administration and, consequently, the public procurement system. inter-municipal cooperation in all these countries is institutionalized and represents an independent legal entity, which carries out the municipal aff airs. in terms of organization all forms have a representative body (usually on a parity basis and indirectly) and administrative system the organization. it should be noted that in the case of institutions of inter-municipal cooperation, as defi ned in the laws of the eu member states, it does not handle of the creation of government systems of new ‘major’ local communities, but for the same type of local self-government (gotovac, 2003, pp. 74-76). however, in the case of vertical cooperation it is a form of cooperation operating at diff erent levels (eu, state and local communities). vertical cooperation also includes partners which work on diff erent levels. the joint co-operation may include a number of partners operating on the same level, and at least one partner that works on a diff erent level. in practice, this kind of cooperation is refl ected in the following: establishment of a common entity (legal entities) (e.g. a central purchasing body) cooperation based on the transfer of funds, and contractual cooperation (vandamme, 2004, pp. 139-140). the so-called contractual vertical cooperation is also referred to in the directive 2014/24/eu, since article 37 provides that member states may determine that the public procurer may procure goods and/or services with a central purchasing body that provides centralized purchasing activities. member states may also provide that contracting authorities may procure works, goods and services on the basis of public contracts awarded by central purchasing authority on the basis of dynamic purchasing systems, managed by a central purchasing authority, or on the basis of a framework agreement concluded by a central purchasing authority that provides centralized purchasing activities. according to the specifi ed the member states may provide that certain public procurement are carried out with the help of central purchasing authorities, or one or more specifi c central purchasing authorities. 49 6. central purchasing authorities at the national and local level public procurement activities represent one of the vital activities, thus the development of a sound and effi cient system is often high on a political priority list. eu member states generally establish some kind of organizational structures to carry out tasks related to the public procurement. to make the public procurement system work at all levels, a set of functions needs to be performed at the central (or regional) level as legislation preparation, advising authorities/entities and economic operators on the application of legislation, provision of public procurement training, publication of contract notices, etc. these important functions are in place in all member states to support contracting entities as well as economic operators in their respective tasks so as to enable them to act effi ciently and in compliance with national legislation, principles of the ec treaty, and good practices. the advisory functions are normally the responsibility of the central bodies, but some of these functions are also shared by a number of players within the public procurement community. as stated in one of oecd analysis (oecd, 2007, pp. 14-15), the advisory and operations support functions, commonly associated with, are the following: organization of a helpdesk function to provide legal and professional support to purchasers and economic operators on a daily basis; development of guidance systems and operational tools for managing all phases of the procurement process, interpretative communications, etc. according to the specifi ed practice in eu member states it is important for centralization of public procurement at the local level that public procurers (i.e., public administration bodies and organizations) in the member states are provided with a suffi ciently wide range of possible organizational structures in the framework of the status and contractual (vertical and horizontal) public-public partnership allowing them a choice of selecting the most suitable and economically most eff ective organizational structure for execution of public procurement. certainly the inter-municipal cooperation (both status e.g. by creating joint (inter-municipal) administrative authorities or establishment of specialized agencies, as well as contract (interest) cooperation) and the centralization of procurement at the level of each local community must be promoted at the local level, especially in highly administratively and functionally decentralized eu member states, which have a larger number of public procurers. at this point we have to note that local authorities in eu member states are co-founders of a large number of pseudo-state organizations (e.g. public companies, public institutions, public funds, etc.), i.e. indirect budget users, for which they could conclude vertical (mostly contractual) public-public partnerships to implement the procedures of public procurement and thus achieve greater economic effi ciency of public spending. works, supplies and services covered by framework agreements awarded by the central purchasing bodies should generally be of common interest to, and frequently purchased across, the public administration. the range of items normally covered by the central purchasing bodies operations includes the following supplies and services (works contracts are more rarely awarded by central purchas50 ing bodies): ict products and services (computers, photocopiers, printers, servers, software); telecommunications (tcl) products (networks, mobile phones, landline phones, telephone exchanges); offi ce furniture; travel services; offi ce equipment and supplies; vehicle and transport services; fuel (for heating and transport) and electricity; food (foodstuff s, meal tickets); organizational and human resources development services (sigma, 2011, p. 7). 7. conclusion in practice of the eu member states and elsewhere in the world we have mainly due to the crisis of the public sector witnessed a moving away of countries from decentralized public procurement systems towards the new centralized system, which are mainly the result of institutional and contractual cooperation within the public sector in the framework of horizontal and vertical public-public partnerships. with regard to the above mentioned, the introduction of new forms of centralized public procurement involves the following two things: fi rstly, the institutional integration of organizations within the public sector, and secondly, the creation of appropriate organizational structures within the administrative services of the state and local communities and outside of this framework, or even outside the public sector with the aim of eff ective implementation of public procurement. with the introduction and development of new (innovative) forms of centralization of public procurement the national, regional and local authorities are provided with suffi ciently wide range of organizational structures of implementation of public procurement, whose primary objective is to improve the quality of public procurement and thereby satisfy the requirements for quality and more aff ordable goods, services and works. however, with a wide range of organizational structures the national, regional and local authorities are actually allowed to independently, in the framework of their powers, decide on the most appropriate (organizational) structure for the implementation of public procurement. the last reform of public procurement at eu level will defi nitely accelerate the trend of centralization of procurement at the local level, as it will be needed in the eu member states, since with the reduced infl ow of public funds it will be necessary to design appropriate (economically) effi cient public procurement systems both at the supranational, national and local level. in this context we have to note that eu member states should provide adequate structural solutions in their national legislation. it is necessary to set out the appropriately revised and updated national legislation and, of course, as far as possible, to achieve harmonization of regulations in the fi eld of public procurement, which is a prerequisite for an eff ective reorganization of public procurement systems. this reorganization is not only normative, but must also be eff ective. the basic guideline of this reorganization of public procurement systems should be greater effi ciency in public procurement. 51 references: 1. albano, g.l. and sparro, m., ‘flexible strategies for centralized public procurement’, 2010, review of economics and institutions, vol. 1, no. 2, pp. 1-32. 2. brezovnik, b., ‘decentralization in theory and practice’, 2008, lex localis – journal of local self-government, vol. 6, no. 1, pp. 87-104. 3. brezovnik, b. and oplotnik, ž.j., fiskalna decentralizacija v sloveniji, maribor: inštitut za lokalno samoupravo in javna naročila maribor, 2003. 4. brezovnik, b., izvajanje javnih služb in javno-zasebno partnerstvo, maribor: inštitut za lokalno samoupravo in javna naročila maribor, 2008. 5. brezovnik, b., oplotnik, ž.j. and finžgar, m., financiranje slovenskih občin, maribor: inštitut za lokalno samoupravo in javna naročila maribor, 2014. 6. dametri, r.p., benevolo, c., rossignoli, c., ricciardi, f. and de marco, m., ‘centralization vs. decentralization of purchasing in the public sector: the role of e-procurement in the italian case’, in khachidze, v. (ed.) icets 2012, berlin: springer-verlag, 2012, pp. 457-470. 7. dexia, ‘subnational public finance in the european union’, 2011, [online] available at htt p://www.dexia.com/en/news/in_short/documents/ndce_july_2011_en.pdf, accessed on march 4, 2013. 8. finžgar, m. and oplotnik, ž.j., ‘comparison of fiscal decentralization systems in eu27 according to selected criteria’, 2013, lex localis – journal of local self-government, vol. 11, no. 3, pp. 651-672. 9. gotovac juvan, v., ‘ustanovitev interesne zveze občin (z vzorcem akta o ustanovitvi)’, 2003, lex localis journal of local self-government, vol. 1, no. 1, pp. 69-87. 10. grafenauer, b. and brezovnik, b., javna uprava, maribor: pravna fakulteta maribor, 2006. 11. jovanović, p. and benković, s., ‘improvements in organizing public procurement at the local self-government level in serbia’, 2012, management (journal of theory and practice management – title in serbian), vol. 64, pp. 25-32. 12. jovanović, p, žarkić joksimović, n. and milosavljević, m., ‘the effi ciency of public procurement centralization: empirical evidence from serbian local self-governments’, 2013, lex localis – journal of local self-government, vol. 11, no. 4, pp. 883-899. 13. karjalainen, k., ‘challenges of purchasing centralization – empirical evidence from public procurement’, helsinki: helsinki school of economics, 2009. 14. levrat, n., ‘concurrence et coopération entre collectivités infra-étatiques. les régimes politiques européens enperspective’, 1994, les cahiers français, vol. 268, pp. 86-96. 15. lobin, e. and hall, d., ‘public-public partnership as a catalyst for capacity building and institutional development: lessons from stockholm vatt en’s experience in the baltic region’, london: public services international research unit, university of greenwich, 2006. 16. nalas, fiscal decentralization indicators for south-east europe, skopje: nalas, 2012. 17. oecd, ‘centralised and decentralised public procurement’, sigma papers, no. 29, paris: oecd publishing, 2000. 18. oecd, ‘central public procurement structures and capacity in member states of the european union’, sigma papers, no. 40, paris: oecd publishing, 2007. 52 19. oplotnik, ž. and finžgar, m., ‘comparison of fiscal decentralization systems in eu27 according to selected criteria’, 2013, lex localis – journal of local self-government, vol. 11, no. 3, pp. 651-672. 20. sigma, central purchasing bodies, paris: sigma, 2011. 21. šerpytis, k., vengrauskas, v. and gineitiene, z., ‘evaluation of financial eff ects of public procurement centralisation’, 2011, ekonomika, vol. 90, no. 3, pp. 104-119. 22. škof, b. and bradaschia, n., ‘public-public partnerships: the role of slovenian local authorities in carrying out the joint tasks’, 2010, lex localis – journal of local self-government, vol. 8, no. 4, pp. 329-342. 23. šmidovnik, j., lokalna samouprava, ljubljana: uradni list rs, 1995. 24. tournemire, g., ‘coordination arrangements across government sub-sectors in eu member states’, brussels: european commission, 2014. 25. vandamme, j., ‘services of general interest in europe’, brussels: cor studies, 2004. 26. vojinović, b., oplotnik, ž. and prochniak, m., ‘eu enlargement and real economic convergence’, 2010, post-communist economies, vol. 22, no. 3, pp. 303-322. 149 abstract this paper examines the sustainability transparency of governments, i.e., the disclosure of information on the sustainability of their actions. to do so, we identify contributory factors to the online disclosure of environmental, social, economic and general information by local governments in nordic countries. linear regression analysis was used to identify factors infl uencing the online dissemination of government information on sustainability; a factor analysis, as a precursor to linear regression, led us to reduce 14 explanatory variables to four factors: fi nancial risk, demography, professional qualifi cations and local government resources. the results obtained show that local fi nancial priorities have a greater impact on the sustainability-related content of governmental websites than does concern for the needs of the population. furthermore, an organization’s disclosure of its fi nancial risks, together with greater awareness of stakeholders’ demands, could promote transparency in the fi eld of environmental, social and economic sustainability, while local demographic characteristics could foster the publication of information on environmental sustainability. keywords: environmental, development, sustainability, local government, transparency, explanatory factors. identifying motivation of the local governments to improve the sustainability transparency*1 andrés navarro galera araceli de los ríos berjillos mercedes ruiz lozano pilar tirado valencia andrés navarro galera professor, financial economics and accounting department, university of granada, granada, spain e-mail: angalera@ugr.es araceli de los ríos berjillos professor, business organization department, loyola andalucía university, córdoba, spain tel.: 0034-957-222.133 e-mail: arios@uloyola.es mercedes ruiz lozano professor, financial economics and accounting department, loyola andalucía university, córdoba, spain e-mail: mruiz@uloyola.es pilar tirado valencia professor, financial economics and accounting department, loyola andalucía university, córdoba, spain e-mail: ptirado@uloyola.es * acknowledgments: this study was carried out with the assistance of a research project funded by the regional government of andalusia (ref. p11-sej-7700) and that of two projects funded by the national research plan, nos. eco2010-17463-econ and eco2010-20522-econ. transylvanian review of administrative sciences, no. 45 e/2015, pp. 149-167 150 1. introduction the sustainability of governmental actions is a current issue of great concern in research into the online communication between governments and citizens. various international organizations (european union, 2011; usaid, 2008) have recommended that governments should inform citizens about the sustainability of their actions in environmental, social and economic areas. one of the most recent statements made in this respect was by the ifac (2013b) in its recommendations to the g20 leaders concerning the promotion of accountability and sustainability through the adoption of international standards and integrated reporting. furthermore, there is growing interest among stakeholders regarding the sustainability of public services, together with greater concern among public entities to enhance public confi dence in them, by publishing details of their sustainability commitments (ifac, 2013a). most previous studies have focused on analyzing the role of government websites as tools for information disclosure (gandía and archidona, 2008), especially fi nancial information (cárcaba garcía and garcía-garcía, 2010; gallego-álvarez et al., 2010). in contrast, insuffi cient att ention has been paid to the dissemination of information on governmental commitments to sustainability and, particularly, to the factors that may enhance such commitments by local governments. indeed, the lack of empirical research in this area means that much remains to be examined concerning the dissemination of information on the sustainability of government policies (guillamón et al., 2011). based on the international pronouncements (ifac, 2013b) and previous academic studies (dumay et al., 2010; guthrie et al., 2010), we study the question of sustainability transparency, defi ned as the online publication by local governments of information regarding the sustainability of their actions, for the general awareness of the stakeholders. the aim of this paper is to contribute to our understanding of the factors that may favor greater transparency in local governments’ actions with respect to sustainability. to do so, we analyze the information provided on the websites of local governments in nordic countries, performing a statistical analysis of its relation with 14 variables, divided into socio-demographic and economic-fi nancial variables. specifi cally, we tested whether these local governments publish on their websites the indicators recommended by major international guidelines for sustainability reports (social, economic and environmental). in this analysis, we calculated transparency indices, which were taken as the dependent variables for our study. in this study, governments that disclose more information about sustainability are considered more transparent, and those publishing less information in this respect, less transparent. this article is divided into fi ve sections, including the introduction. the next section presents theoretical arguments about the use of web pages and online communication to disclose information on government sustainability. this section provides the conceptual framework for our empirical study. in the third section, we explain the rationale for our sample of local governments and for the choice of variables, and 151 defend the appropriateness of the statistical tool employed. the fourth section then discusses and analyses the empirical results obtained. the fi fth and fi nal section is dedicated to presenting the conclusions drawn from these results. 2. the use of websites and online communication concerning governmental sustainability bertot et al. (2010) and pina et al. (2010) observed that e-government and the use of websites enable citizens to take a more active role in public aff airs, through greater transparency, as they can be informed about the activities of public bodies and their contribution to social and economic development, a key aspect of governmental sustainability. this interest in the communication of sustainability information has led to the publication of international guidelines for the disclosure by public bodies of their commitments on sustainability. the main guidelines have been developed by accountability (2008) and the ungc (2009), but the most signifi cant is the document published by the global reporting initiative (gri, 2006, 2013), and specifi cally for public administrations, the ‘supplement for public agencies’ (gri, 2010). according to guthrie and farneti (2008) and mussari and monfardini (2010), few empirical or theoretical investigations have been conducted into governmental practices regarding sustainability reporting by public organizations and how it can be managed. various theoretical bases may be proposed to justify the implementation of sustainability-promoting practices, but they are generally addressed in terms of legitimacy theory (lt) (marcuccio and steccolini, 2009) or of stakeholder theory (st) (deegan and unerman, 2006). lt observes the actions taken by managers, usually through information disclosure, aimed at changing perceptions of government in order to increase the legitimacy of its actions and existence. according to st, the longterm existence of an organization needs the support and approval of its stakeholders (liu and ambumozhi, 2009). according to lt, poor performance by an entity may oblige it to disclose more information, in order to explain these results (marcuccio and steccolini, 2009). under st, diff erent groups of stakeholders and their demands may have an impact on a local government’s behavior, pressuring it to provide information. previous research has shown that lt and st may provide an appropriate theoretical framework to explain the behavior of governments in relation to transparency, as an essential element of accountability. deckmyn (2002) considers transparency a starting point in building public understanding, participation and involvement. from a cultural perspective, curtin and meijer (2006) believe that the relationship between transparency and legitimacy should be considered, due to the changing environment, in order to ensure success, survival and resources. accordingly, and taking into account the aims of this paper, we believe the selection of lt and st may be useful, fi rst, as a conceptual basis on which to select possible explanatory variables, and second, to empirically test their usefulness for explaining the level of transparency by governments. 152 in local governments, high levels of debt and defi cit often result in fi nancial crisis. in such a situation, to maintain or restore legitimacy, or in response to the demands and needs of stakeholders, governments could become more transparent about the sustainability of their actions, as suggested by marcuccio and steccolini (2009) on the basis of lt and st. therefore, it is interesting and timely to study whether certain factors could favor governments’ interest in disclosing information about the sustainability of their actions (marcuccio and steccolini, 2009; navarro et al., 2010). however, these two theories are not without criticism. in their empirical study campbell et al. (2003) demonstrated the limitations of the traditional theories supporting information disclosure, due to the diverse perceptions of those responsible and the variety of channels of communication available for the disclosure of information. campbell et al. (2003) and deegan (2002) concur that although lt may explain, in part, the motivations for disclosing information about sustainability, it does not fully account for the performance of organizations in this area. moreover, curtin and meijer (2006) highlighted several weaknesses: few citizens have access to information and those who do, face an excess of it. putt ing too much information in websites may even have an adverse eff ect, encouraging policymakers to maintain strict procedures and avoid innovative solutions or raising stakeholders’ hopes. stakeholder theory, too, has been called into question as a theoretical framework justifying the disclosure of sustainability information because, as shown by elsakit and worthington (2012), many studies have demonstrated the existence of a gap between the levels of information disclosed by organizations and its usefulness to stakeholders. to conclude this section, we defi ne the scope att ributed to the term ‘sustainability transparency’ in the context of this empirical study. in accordance with international pronouncements (cipfa, 2007; european conference on sustainable cities and towns, 2004; european union, 2011; ifac, 2013a, 2013b; usaid, 2008) and previous academic studies (dumay et al., 2010; guthrie and farneti, 2008; guthrie et al., 2010), sustainability transparency is viewed as the online disclosure of information concerning the sustainability of the actions of local governments, in order to keep stakeholders well informed. 3. empirical study of local governments in nordic countries the aim of this research is to study information dissemination with respect to sustainability in the fi eld of local government, identifying explanatory factors for levels of disclosure regarding economic, social, environmental and governance issues. the empirical analysis carried out to achieve this goal is based on the following assumptions, based on previous research, which may be viewed as the pre-study hypotheses. on the one hand, that governments are motivated to legitimize their actions before citizens; secondly, that local governments enjoy greater proximity to citizens and address a larger number and a greater diversity of stakeholders; thirdly, that there are initiatives to standardize the content of information on sustainability; and fi nally, that 153 local government websites constitute an important instrument for communicating with stakeholders. 3.1. sample selection we analyzed the websites of the 16 most populous local governments in denmark, finland, sweden and norway (4 cities per country). the municipalities studied are suffi ciently homogeneous as to ensure the representativeness of their joint analysis, for several reasons. first, they all present a comparable degree of awareness of sustainable development and an interest in the use of e-government. in fact, all of them except odense and uppsala have signed the aalborg charter (european conference on sustainable cities and towns, 2004). second, the countries in which these local governments are located were analyzed because they make special eff orts to promote corporate social responsibility (neamțu, 2012), and to incorporate diverse aspects of sustainability in their regulations. third, another similarity among the local governments selected is that the nordic countries have been infl uenced both by the style of public administration of southern europe and by that of the anglo-american countries. two outstanding features of these nordic countries are the role played by stakeholders in the promotion of public policies, as evidenced by their label ‘corporatist state’ and their more pragmatic view of public management reforms (navarro and rodríguez, 2011). the sixteen cities selected are those with the highest population in each of the four countries. a larger sample size would have enriched the results, but the necessary data for statistical analysis are not available for other cities. nevertheless, the cities studied, apart from refl ecting the variety present in these countries, represent over 25% of their total population. the size of our sample (16 local governments) was considered suffi cient for us to obtain robust, consistent results in support of the conclusions drawn, for three reasons. first, as corroborated by many specialists in statistical analysis (gnanadesikan, 1997; hardle and simar, 2012; koch, 2013), in the case of samples similar to ours (a limited number of municipalities that are large in terms of the population size used in previous studies), factor analysis is a reliable tool for establishing correlations among the quantity of variables like that used in this study because this approach is suffi ciently powerful to refl ect the latent variables in the population. second, as shown in section four, the two models obtained are in fact statistically signifi cant, with r2 values of 0.572 for model 1 and 0.743 for model 2. third, the same methodology has been used in previous researches for similar samples of local governments, obtaining comparable results (warner and hebdon, 2001). likewise, according to cárcaba garcía and garcía-garcía (2010), gallego-álvarez et al. (2010), and pina et al. (2010), municipalities with large populations are the most appropriate for the purposes of our research, because they have more resources with which to develop technological initiatives and their policymakers are often more receptive to communicating with stakeholders via the internet and to promoting e-government. 154 3.2. research methodology linear regression analysis was used to identify factors infl uencing the online dissemination of government information on sustainability. this tool is widely used to explain the infl uence of certain variables; see, for example, previous studies on information disclosure such as gallego-álvarez et al. (2010), gandía and archidona (2008), garcía-sánchez et al. (2013), and liu and ambumozhi (2009), who have used this same methodology to identify the explanatory factors that could determine online levels of disclosure by diff erent types of public agencies. however, the sample size available and the number of variables considered led us to develop factor analysis as a precursor to linear regression analysis. factor analysis is generally accepted by specialists in the fi eld as an appropriate statistical method for sample sizes similar to that used in this. 3.2.1. explanatory variables based on lt, st and the arguments set out in section 2, as well as on previous studies of factors that may infl uence information disclosure (marcuccio and steccolini, 2009), we selected fourteen variables that could favor the disclosure of sustainability information, grouped into two categories: eight socio-demographic and six economic-fi nancial variables. beginning with the socio-demographic variables, and in accordance with the postulates of st, we fi nd that population size is one of the most commonly used variables in studies of information disclosure (debreceny et al., 2002; gonzález et al., 2011). for guillamón et al. (2011), population size has a signifi cant positive impact on transparency: fi rstly, because larger municipalities manage larger budgets and are subjected to greater pressure; and secondly, because they require technical and human resources that are beyond the reach of smaller municipalities. taking these considerations into account, we selected as potential explanatory factors eight variables related to the socio-demographic characteristics of the population: – total resident population, as an indicator of municipal size, in the assumption that larger cities will have greater information needs. – (2) population density: if population size is a key factor in information disclosure, then areas with a higher population density will make greater demands for information. – (3) proportion of dependent population (aged less than 20 years or over 65 years). this group has specifi c demands for information on sustainability, and we assume that the larger the total population, the larger the number of dependents. – (4) unemployment rate. – (5) percentage of immigrant population. this group has specifi c needs for information on sustainability, and we wish to determine whether the existence of a larger or smaller immigrant population is relevant to information disclosure. – (6) number of students in higher education. according to gonzález et al. (2011), one of the factors to be taken into account in measuring the quality of life in a 155 municipality is the education level of its inhabitants. in previous studies (benito et al., 2010) this factor has been shown to be determinant in municipal effi ciency. – (7) proportion of homes with access to internet, as an indicator of the population’s greater or lesser capacity to access the information disclosed on the internet. few previous studies (pina et al., 2010) have addressed the relationship between information disclosure and internet access. – (8) proportion of jobs in the provision of ict services, we believe that the existence of a higher proportion of skilled professionals in technology-related industries could improve the availability and quality of the information provided online, as well as enhance access to this information and facilitate its updating. with respect to economic-fi nancial variables, lt and the fi ndings of previous studies justify the selection of six variables of this type. alt, lassen and shanna (2006) included municipal defi cit as an explanatory factor of fi scal transparency, considering that a rising level of defi cit tends to be inversely related with transparency. conversely, a high degree of fi scal transparency is associated with lower levels of defi cit (guillamón et al., 2011). to measure the defi cit, we used two variables: – (9) municipal debt per capita (benito et al., 2010), and – (10) the defi cit of the municipal budget (caba-pérez et al., 2008; guillamón et al., 2011). other variables that could be explanatory factors of governmental information transparency on sustainability are related to revenue structures. in this respect, piotrowski and van ryzin (2007) concluded that income is positively related to fi scal transparency. thus, two new variables were included: – (11) proportion of local taxes to municipal revenue. according to guillamón et al. (2011), municipalities with higher taxes issue more fi nancial information and are more transparent. – (12) financial autonomy – in this paper, fi nancial autonomy is defi ned as the municipality’s ability to generate revenue, apart from that received from other public administrations. authors such as guillamón et al. (2011) argue that municipalities which receive larger transfers publish more fi nancial information and are more transparent. finally, guillamón et al. (2011) fi nd evidence of a link between levels of transparency and levels of municipal spending; for this reason, we have included two variables that allow us to test this relation: – (13) municipal spending per capita, and – (14) proportion of municipal employees in health and education. the values of the fourteen variables were obtained from the eurostat urban audit database. other variables used in previous studies are not included here due to the non-availability of data for local governments in urban audit for these cities. 156 3.2.2. dependent variables the dependent variable used is the level of disclosure on sustainability in local government websites, measured using a questionnaire consisting of 75 items and divided into four blocks (annex i). the structure and content of the questionnaire are based on the g3 recommendations of the global reporting initiative (gri, 2006) complemented with the revised version of the sector supplement for public agencies (gri, 2010). we also included an additional item inquiring whether the local government published a sustainability report. currently, the most widely used guide on the disclosure of sustainability information is issued by the gri, and its relevance in the fi eld of local government is highlighted in the recently published sustainability reports on dublin and warsaw. gri is considered the leading guide in the fi eld of sustainability reporting, as refl ected in the content of the rules published by the governments of the nordic countries sampled. agreeing to authors such as crognale (2009) and dumay et al. (2010), the gri model has had the greatest impact to date, and it is regarded internationally as a standard information guide to the sustainability of public bodies. some studies have used questionnaires based on the gri guide, similar to that employed in this work (garcía-sánchez et al., 2013; navarro et al., 2010; navarro et al., 2014), which facilitates the comparison of results. accordingly, the gri guide is used in the present study as a basis for drafting the gri questionnaire, excluding the items that are specifi c to private companies and do not apply to local governments, and including other appropriate items that are relevant to local administration, such as borrowing capacity. in this respect, we followed the recommendations and criteria of bodies such as the audit commission (2007) and accountability (2008). in our questionnaire (75 items), the information blocks are structured to refl ect the diff erent dimensions of government sustainability, as follows: block 1 – general information on sustainability (28 items), block 2 – economic information (24 items), block 3 – social information (10 items), and block 4 – environmental information (13 items). to score the results, a dichotomous variable was defi ned, taking the value 1 if the information for the item in question is published on the website and 0 otherwise or if it is not easily accessible. one of the most widely used techniques for studying the information issued by public and private entities is that of content analysis, which awards a score of 1 if the information is disclosed and 0 otherwise. this technique provides a numerical indicator of the amount of information issued in medium in question, and has been applied in many previous studies (gallego-álvarez et al., 2011; navarro et al., 2014). therefore, the dependent variables are the index for the cities in each of the four questionnaire sections (general, economic, social and environmental information), obtained by summing the values (1 or 0) obtained for each item (annex i). we also derived a total index of the information disclosed, by awarding an equal weight (25%) to each information block, taking into consideration the lack of consensus about factor weighting in the composition of such indices (avshalom madhala and shavit, 2008). 157 3.3. statistical methods the empirical results obtained were subjected to multiple linear regression analysis. in this study, there are fi ve dependent variables, corresponding to the index of each of the four questionnaire blocks (general, economic, social and environmental information) plus the total index of information disclosure. the explanatory variables are the factors represented by the 14 independent variables together with a dichotomous variable indicating whether governments have published a sustainability report (1) or not (0). in addition, the ratio between the number of explanatory variables and the number of cities, as well as the possible existence of correlations between the explanatory variables, led us to conduct a factor analysis as a precursor to linear regression analysis. this allowed us, on the one hand, to reduce the 14 explanatory variables to a smaller number of independent variables or factors and, on the other, to avoid or correct the possible multicollinearity among variables, as the new factors derived are linear combinations of the original variables and are independent of each other. this methodology was applied under conditions similar to those used in the study by rencher and christesen (2012), or more specifi cally to local governments by warner and hebdon (2001). to determine the suitability of applying factor analysis, we performed the kaiser-meyer-olkin (kmo) test and bartlett ’s test of sphericity. the results of the latt er showed that factor analysis could be performed. as discussed above, the use of this method is appropriate for sample sizes and numbers of variables such as those used in the present study, allowing us to obtain reliable and robust results. 4. results of the empirical study 4.1. levels of disclosure first, it is noteworthy that only three of the local governments analyzed (helsinki, trondheim and turku) present formal sustainability reports. in none of the countries in the sample it is obligatory for public bodies to develop sustainability reporting, as it is also the case in the rest of europe. however, the fact that no sustainability report is published does not necessarily mean that information is not divulged in this area; thus, a general level of disclosure of 47.5% of the questionnaire items was identifi ed (annex i). in relation to the gri guidelines, the level of disclosure could be classed as ‘medium’. for the questionnaire items as a whole, the highest level of disclosure concerned general information (54.5%), followed by environmental and social information (51.9% and 43.8% respectively). economic issues are less widely reported (38.5%). 4.2. factors obtained the results of the factor solution and the variable loads for the clustering of the variables into four factors are shown in table 1. this clustering, for each of the four factors, was carried out taking into account the weight of the factor loadings. each 158 variable was included in the factor in which its weight was greatest. 82.5% of the total variance is accounted for by the four factors. after analyzing the variables grouped according to factor analysis, we interpreted the content and signifi cance of the resulting four factors: – factor 1: financial risk. this factor is associated with inadequate resources and includes variables 6, 9, 10 and 14, since its evolution can infl uence the fi nance capability/needs of local government to meet its commitments and thus the viability of its projects. less tax revenue and less autonomy (-0.8929 and -0.685) are associated with a greater risk of fi nancial failure. regarding the budget defi cit, the positive parameter (+0.921) should be interpreted taking into account that all of these local governments present budget defi cits, and so the higher the defi cit, the greater the fi nancial risk. in addition, the more households have access to internet, the greater the technological investment needed and thus the greater the risk of fi nancial insuffi ciency (+0.803). – factor 2: demography. this factor includes the population characteristics refl ected in variables 1, 3 and 11. this group refl ects the possible impact of population size and density on the information needs of stakeholders, and thus could also be aff ected by ict jobs (+0.938, +0.812 and +0.853). – factor 3: professional qualifi cations. this factor includes unemployment rates and the level of immigrant population (+0.936 and +0.722), which could be proxies for lower educational levels in the population. the number of university students has a negative sign in this factor, corresponding to higher professional qualifi cations (-0.732), and this, too, could aff ect the information needs of stakeholders. – factor 4: local government resources. this factor is representative of a local government’s capacity to deliver services to its citizens. it includes, on the one hand, municipal spending and the percentage of public employees in the areas of health and education (+0.644 and +0.624), which may refl ect the ability to provide services. on the other hand, this factor refl ects municipal debt and the proportion of dependent population (-0.608 and -0.640), which could both have a negative impact on the ability to provide services. in summary, factors 2 and 3 would be more closely associated with st, since they include issues strongly related to demands presented by the population, and both factors could reveal whether there is interest among local governments in providing more information, in response to the demands of one of the principal stakeholders (the local inhabitants). on the other hand, factors 1 and 4 are more closely related to lt, as they include fi nancial issues relevant to the survival of the organization. information on these questions reveals the use made by the government of public resources, and is thus an indicator of governmental eff ectiveness and effi ciency, which if positive would strengthen the government’s legitimacy in the opinion of its stakeholders. 159 table 1: matrix of rotated factors variable component factor 1 factor 2 factor 3 factor 4 1. total resident population -.120 .938 .168 -.115 2. population density .062 .812 .162 .337 3. proportion of dependent population to active population -.122 -.628 .033 -.640 4. unemployment rate .099 .028 .936 .046 5. proportion of immigrants to municipal population .092 .591 .722 .082 6. number of students in higher education -.424 -.116 -.732 .447 7. proportion of homes with access to the internet .803 .099 .296 .068 8. proportion of jobs in the provision of ict services -.246 .853 .002 -.137 9. municipal debt per capita .110 .010 .106 -.608 10. the municipal budget defi cit .921 -.050 .193 .105 11. proportion of local taxes to municipal revenue -.829 .228 .363 .068 12. financial autonomy -.685 .390 -.369 .156 13. municipal spending per capita .604 .390 .144 .644 14. proportion of municipal employees: health and education .484 -.389 .233 .624 4.3. regression models this statistical analysis produced two regression models, as shown in table 2, one for the total index (sum of the four individual indices of the questionnaire sections) and one for the index of environmental information. we did not fi nd any linear relationship between the explanatory variables nor, with respect to the individual sections, between the levels of disclosure of general, economic and social information blocks. table 2: linear regression independent variables model 1 model 2 dependent variable: total index dependent variable: environmental information (constant) 0.440 (0.000) 0.474 (0.000) factor 1: financial risk 0.058 (0.026) 0.131 (0.002) factor 2: demographics 0.033 (0.163) 0.095 (0.015) factor 3: professional qualifi cations -0.004 (0.880) -0.029 (0.438) factor 4: local administration resources -0.045 (0.078) -0.098 (0.015) sustainability report 0.170 (0.021) 0.244 (0.024) other statistics f-statistic 5.016 (0.015) 9.657 (0.001) adjusted r2 0.572 0.743 models 1 and 2 show that the publication of a sustainability report is positively associated, in general, with a greater volume of information disclosure regarding the sustainability of government policies. therefore, although larrinaga and pérez (2008) concluded that the absence of such a report does not mean that sustainability information is not disclosed, our results corroborate the view that the fact of preparing and publishing reports can contribute to a higher level of governmental sustainability information being disclosed. nevertheless, as explained in section 2, a low level of information disclosure does not necessarily imply the absence of internal actions by governments to improve the sustainability of the organization. 160 factor 1 (fi nancial risk) is positively related to both the overall volume of information published (model 1, +0.058) and to the dissemination of information on environmental sustainability (model 2, +0.131). on the other hand, factor 2 (demographics) has a positive association with the disclosure of environmental information (model 2, +0.095), although it produces no signifi cant eff ects on the overall volume of information published (+0.033). with respect to factor 3 (professional qualifi cations), we found no statistical evidence of a relationship with any of the variables explained. in contrast, as shown in model 2, factor 4 (local government resources) presents an inverse association with the level of disclosure of environmental sustainability information (-0.098). thus, the postulates of lt appear to infl uence more managers’ behavior with respect to transparency rather than those of st, since the most infl uential variables (fi nancial risks and resources) are associated with the survival of the local government, and not with the demands of stakeholders in terms of their demographic characteristics, despite their infl uence on environmental sustainability. however, these results could also be interesting to assess the criticisms addressed in previous studies concerning the explanatory power of lt and st as a theoretical framework. in the case of lt, the absence of a specifi c association between factors 1 and 4, on the one hand, and the disclosure of social and economic information, on the other, could be due to diff erent perceptions within government regarding the accountability approach, or diff erences in the availability of communication channels within local government, which would corroborate the criticisms of campbell et al. (2003) and deegan (2002). as regards st, the absence of a statistical relationship between factor 3 and the disclosure of information on sustainability (environmental, social, economic and generic) could contribute to the debate on the criticisms of authors such as elsakit and worthington (2012). moreover, the absence of a specifi c association between factor 2 and the disclosure of economic and social information also supports criticisms of the usefulness of st to explain the behavior of local governments in relation to information transparency on sustainability. in any case, the overall volume of government sustainability reporting increases when governments publish their commitments to sustainability via sustainability report, and also when their accounts refl ect the presence of greater fi nancial risks. these results contrast with the conclusions of some previous studies on fi nancial transparency in local government (alt et al., 2006; guillamón et al., 2011), according to which high defi cits are associated with less transparency. according to our results, however, the higher the level of resources (factor 4) the less information is published on environmental sustainability. however, and in the same line as gallego-álvarez et al. (2011), our results show that population size and density (demographic characteristics) can favor information transparency regarding environmental sustainability. in addition, corroborating alt et al. (2006), our results suggest that high levels of government debt can adversely aff ect the disclosure of environmental information. 161 we obtained no statistical evidence of any infl uence of the number of students in higher education on the dissemination of information on sustainability, although benito et al. (2010) and gonzález et al. (2011) have reported this variable to have a positive impact on information transparency. likewise, our results do not support the hypothesis that spending per capita favors the publication of general, economic or social information; guillamón et al. (2011), on the other hand, concluded that this variable did have a positive infl uence on transparency. 5. conclusions our empirical results show that the majority of the local governments analyzed do not publish sustainability reports online referring to the organization as a whole. however, we have obtained empirical evidence that the publication of these reports, by itself, is associated with managers being more motivated to publish information on sustainability. similarly, their websites contribute to the transparency of information on sustainability, albeit only moderately, as their content is just half of the level recommended in the gri guidelines, and the information disseminated is scatt ered among diff erent departments, with no patt ern of coordination. from a political standpoint, these results suggest that local governments could improve sustainability transparency by coordinating the eff orts of their heads of departments. accordingly, it could be useful to organize joint work sessions aimed at developing sustainability information to be published in a single sustainability reporting document, in an endeavor in which all responsible in the government team would motivate each other and become involved through active, properly planned participation. overall, our results show that local governments’ interest in the transparency of sustainability reporting is greater for generic and environmental issues than for economic and social questions. to properly interpret our fi ndings, it should be taken into account that the level of information disclosure on governmental transparency may not coincide with the eff orts actually made by the organization. indeed, our results show that the eff orts made in the internal policies do not always involve a greater commitment to transparency. this fi nding reveals an opportunity to improve the level of sustainability information provided, by means of internal staff communication campaigns to raise awareness and motivation about the benefi ts of sustainability transparency from the standpoint of the future viability of the services provided. although economic information is the type that is least often disclosed, online transparency on sustainability is favored more by the economic and fi nancial characteristics (factor 1) faced by governments than by the socio-demographic characteristics of their population (factor 2). in accordance with lt, our empirical results show that the existence of fi nancial risks in local governments can motivate them to increase transparency on sustainability, while demographic characteristics could contribute to their disclosing more information on environmental sustainability. from a political standpoint, our fi ndings indicate that all these fi nancial risk variables could be emphasized by governments to motivate managers toward greater 162 transparency in their reporting of sustainability policies, by establishing communication channels within the organization to identify fi nancial risks that could negatively impact on the institution. moreover, policymakers’ concern for the fi nancial viability of the municipality tends to outweigh their concern for the needs of the population as regards online transparency on the sustainability of public policies. we found no empirical evidence to support the specifi c infl uence of fi nancial risks or of government resources on the disclosure of economic and social information. however, demographic variables (factor 2) were positively associated with greater online information transparency on environmental sustainability, and so, according to st, this factor could favor this transparency. politically, these fi ndings suggest that transparency on environmental sustainability would be more easily achieved by large municipalities with a high population density. this transparency would also be favored by government policies to encourage the use of the internet or through the creation of formal and informal networks of collaboration, especially those focusing on the most vulnerable populations, favoring their communication, participation and ability to relate to social actors. nevertheless, demographic variables are less readily controlled by local governments and, therefore, their usefulness as an instrument for promoting transparency is more limited than that of fi nancial variables. indeed, our results do not corroborate the existence of a relationship between demographic variables and generic, economic or social sustainability. we found no empirical evidence of the infl uence of professional qualifi cations on the disclosure of any type of sustainability information. this fact, together with the scant infl uence of the demographic variables, suggests that local governments could improve their level of sustainability transparency by paying special att ention to the information demands of stakeholders within society. in the same line, we found no evidence of a positive eff ect of the government resources (factor 4) on the overall level of online information disclosure on sustainability. indeed, our results show that the shortage of resources in local government could enhance the disclosure of information on environmental sustainability. moreover, greater municipal debt per capita and a higher proportion of the dependent population may also result in less online transparency of environmental sustainability reporting. in consequence, the eff orts of local governments to reduce debt per capita, as well as other positive eff ects, could improve transparency on environmental sustainability, although we found no evidence of any impact of such measures on transparency regarding economic sustainability. however, the results obtained do lead us to believe that the larger the dependent population, the more local governments should focus their communication policies on the services available, the assistance that can be obtained, the resources available, from institutions or otherwise, and on promoting a greater understanding of networks for citizens’ collaboration. taking into account st principles, policymakers could stimulate the interest of managers in this question through initiatives aimed at meeting the demands of stakeholders according to their specifi c characteristics (young people, pensioners, students, 163 the unemployed, immigrants, etc.), and making use of opinion surveys, analyses of complaints and suggestions presented, and meetings with associations to encourage participation by the public. in summary, from the standpoint of political implications, we have identifi ed certain actions and instruments that local governments could employ to raise levels of disclosure of sustainability information, such as the coordinated development of a sustainability report compiling information regarding the organization as a whole. moreover, internal communication campaigns should be carried out to provide general information about fi nancial risks, and staff 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year and the forthcoming 3-5 years? 4 25.0 2. organization profi le 84 65.6 7. does the rg own trademarks? 12 75.0 8. are different areas clearly defi ned? 16 100.0 9. do rg offi cials have area-defi ned responsibilities? 16 100.0 10. is the situation of the regional seat of government stated? 14 87.5 11. is a statement made of the number of countries in which signifi cant activities are carried out? 9 56.3 12. is the number of employees stated? 12 75.0 13. have signifi cant changes taken place in the rg structure or size? 3 18.8 14. has the rg been awarded prizes or other recognition during the period in question? 2 12.5 3. information parameters 82 85.4 15. is a statement made of the period corresponding to the information supplied? 13 81.3 16. is the date of publication of this information stated? 13 81.3 17. is the presentation frequency of this information stated? 16 100.0 18. is there a liaison person for questions concerning the information supplied? 14 87.5 19. does the information supplied include dates of specifi c interest for suppliers and users? 15 93.8 20. is priority assigned to the aspects addressed in the information supplied? 11 68.8 4. government undertakings and stakeholder participation 50 39.1 21. is there a given person or government body responsible for defi ning organization strategy? 14 87.5 22. does the chief offi cial hold any other public or private post? 1 6.3 23. do there exist works’ committees or workers’ representatives? 10 62.5 24. are the stakeholders included in the information supplied? 15 93.8 25. does the information presented include the government’s programme? 5 31.3 26. is a statement made of the government’s programme commitments that have been fulfi lled? 2 12.5 27. does the governing party have an absolute majority? 3 18.8 28. are stakeholder selection and identifi cation criteria included in the information supplied? 0 0.0 block 2: economic information about sustainability 148 38.5 5. economic indicators 29. is an expenditure forecast/benefi ciary population published? 3 18.8 30. is a revenue forecast/benefi ciary population published? 2 12.5 31. are revenues transferred from other public administrations/total revenues published? 6 37.5 32. is the level of fi scal pressure published? 10 62.5 33. is gross expenditure, detailed by type of payment, published? 14 87.5 34. is gross expenditure, detailed by fi nancial classifi cation, published? 11 68.8 35. is capital expenditure, detailed by fi nancial classifi cation, published? 6 37.5 36. is the cost of service provision published? 10 62.5 37. is the mean payment period stated? 0 0.0 38. is a statement made of current calls for tenders for the supply of goods or services? 0 0.0 39. is the profi le of contracting companies published? 6 37.5 40. is a statement made of future calls for tenders? 0 0.0 167 information total % 41. is the policy on internal promotion published? 1 6.3 42. are staff training facilities published? 2 12.5 43. is the government’s capacity for legal indebtedness made public? 11 68.8 44. is a statement made of future fi nancial risk? 0 0.0 45. is a statement made of public assets and insured goods? 0 0.0 46. is an audit report published? 11 68.8 47. are data given on subsidies received? 5 31.3 48. are the annual accounts published? 14 87.5 49. is a report published on the accounts policy implemented? 14 87.5 50. is a report published on the expenditure forecast? 6 37.5 51. does the latter include medium-term perspectives? 4 25.0 52. are the following key economic assumptions and forecast made public: gdp growth, employment, unemployment, infl ation and rates of interest? 12 75.0 block 3: social information about sustainability 70 43.8 6. social indicators 53. is the offer of services made public? 14 87.5 54. is a statement made on expenditure incurred in the area of social issues? 9 56.3 55. is a subsidies announcement made for business activities? 10 62.5 56. is a statement made on pensions obligations to employees? 13 81.3 57. are grants offers to neighbourhood associations made public? 2 12.5 58. are offers of public employment made public? 8 50.0 59. are grants offers to ngos made public? 2 12.5 60. are indicators of effectiveness and effi ciency published? 11 68.8 61. is information given on initial wage (when staff are hired)/local minimum wage? 1 6.3 62. is information given on expenditure on local suppliers/total expenditure? 0 0.0 block 4: environmental information about sustainability 108 51.9 7. environmental indicators 63. is information published on the initiatives taken to alleviate the environmental impact of products and services? 13 81.3 64. is the degree of reduction of the above impact stated? 10 62.5 65. is a statement made of the direct consumption of energy obtained from primary sources? 6 37.5 66. is a statement made of the consumption of intermediate energy? 6 37.5 67. is a statement made of the actions taken to increase savings via conservation or increased effi ciency? 13 81.3 68. is information published on initiatives taken to promote products and services that are energy effi cient or based on the use of renewable energies? 12 75.0 69. is information published on reductions in energy consumption as a result of the above initiatives? 5 31.3 70. is information published on the initiatives taken to reduce indirect energy consumption? 10 62.5 71. is information published on reductions achieved by the above initiatives? 3 18.8 72. is information published on the different sources of water supply employed, and the volume obtained from each source? 8 50.0 73. is information published on the percentage and total volume of water that is recycled and reused in the community? 5 31.3 74. is information published on the disposal of waste water by the community? 7 43.8 75. is information published on the total and type of expenditure on environmental investment? 10 62.5 570 47.5 55 abstract the study presents the project cycle management and the known branding processes in order to create a feasible and detailed plan for settlement branding aiming to create a guideline for brand makers. the second part of the study focuses on the critical parts of settlement branding in transylvania, the evaluation of competition, targeting, definition of brand values as perceived by the internal and external target groups by schema-based authentication and stereotypes. the presented cases of municipalities in transylvania have a practical approach and provide a guideline for brand builders by defining local values, making the community aware of them and promoting them in order to reach the targeted unique advertising position. keywords: city branding, regional branding, settlement branding, geographical location branding, communication, branding process, positioning, target groups, auto-stereotypes, hetero-stereotypes. the process of settlement branding. case studies on city branding in transylvania kádár magor kádár magor lecturer, department of communication, public relations and advertising, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-744-270.619 e-mail: kadar.magor@fspac.ro transylvanian review of administrative sciences, special issue/2014, pp. 55-69 56 1. introduction settlement or city branding means to find an unparalleled position for the city in question which arises from its endowments that make it unique, recognizable and distinguishable compared to other municipalities. to accomplish this we need to identify certain specific values, brand pillars which characterize the settlement, and the community embraces them and identifies with them. quite often these are identity elements through which people consciously distinguish themselves from the inhabitants of other cities, regions and countries. sometimes, these elements, although not consciously, become characteristic to the community in question. thus, city branding becomes self-expression, promoting a community through its own values. the local community is always the primary target group while external target groups towards which these community values are presented become of secondary importance. taking into account the general arguments and the specific situation of transylvania, we can highlight the following aspects related to city-branding: 1. regional positioning: ensures a unique position among the towns of a given region. 2. it highlights the city in comparison with other cities: visitors may recognize the city due to this, and these factors of attraction are quite visible for investors. 3. the home-feeling: the inhabitants feel the difference; they are able to formulate why they are proud of their unique city; their well-being is enhanced; it promotes indirectly the returning of those who had left the city and improves the entrepreneurship. 4. booking the value: it formulates and embraces values, sometimes considering them exclusive; it can identify and rationalize them (it becomes a factor in the creation of an identity). in order to achieve all the above we first need to formulate the branding values and position them. by positioning, the city acquires a special place in the eyes of the target group and will stand out from the rest of the cities. there may be a competitive situation when compared to other similar cities, but it also may be the very first position in an entirely new category, allocating a value to the detriment of other cities. in an evolving area the branding of the settlements happens in a similar way. right at the beginning we have to state that city branding is more than creating a visual presence or visual identity. it is a process of strategic planning, taking into consideration many social, cultural and economic elements in order to reduce the existing situation to a logical brand essence. the essence is represented by a few easily understood, remembered and recallable topics, symbols, slogans and even feelings. even if the settlement or place branding is a relatively new research field it has been adapted and used to promote image development for places, cities or even nations (kavaratzis and ashworth, 2005). the cornerstone was in the 1980s when the collapse of the industry forced new development fields to be exploited or brought to life. the changed possibilities and reset opportunities of settlement branding and the development aptitude of cities become the traction engine of their development. ac57 cording to this, the settlement branding and promotion got a highlighted importance and became a core part of settlement development plans and strategies. in the following sections, we would like to provide a quick overview of the process of value establishment, branding, positioning, as well as of the possible directions for further improvement of the branding of regions and settlements in transylvania. 2. the process of settlement branding positioning and association of values go beyond the possibilities of marketing, thus in the scholarly literature there is a slow shift from marketing – both product and settlement marketing – to branding. this shift is mainly justified by the need for more complex and more organized processes which cannot be covered by extending the traditional ‘4p’ classification to ‘7p’. the branding process, regardless of whether it refers to a certain product, organization, person, trademark, event or even settlement or region branding, features the same set of stages in creating and consolidating the brand. as local public administration (lpa) decides that there is a need for a brand and a branding process, a complex planning and execution set of phases will be carried out. there are a number of approaches which will be presented in the following, and then our own set of phases created based on our personal settlement branding experience will be presented. the project cycle management (pcm), a cycle of operations for managing the european commission’s external assistance, features five phases (european commission, 2004). in practice, the duration and importance of each phase of the cycle vary from project to project, depending on their scale and scope, and on the specific operating modalities under which they are set up. 1. programming: focuses on identifying development priorities and the integration in higher level strategies; decides upon priorities, sector focus, type of assistance and financing modalities. 2. identification: focuses on having a concept project relevant to main local needs and being consistent with higher level policies; decides upon acceptation, modification or rejection of the project idea(s). 3. formulation: focuses on the sustainability of the project and its ability to deliver sustainable benefits; decides upon accepting, modifying or rejecting the project proposal. 4. implementation: focuses on achieving the results by using resources efficiently and effectively; decides upon continuing to finance, on the modification of the scope or the termination of the support. 5. evaluation: focuses on the results, the achievement of planned benefits, sustainability, and the lessons learned. decides upon the change of the policies, on the scope of the future program or operating modalities. 6. audit: focuses on compliance with applicable laws and rules, on meeting the efficiency, economic and effectiveness criteria; decides upon the continuation, modification or termination of the projects, the recovery of project funds, modification of the design of the future projects, and the change of policies. 58 the key element of pcm in local or regional branding is programming, forcing the lpa to develop projects integrated in higher national or international level strategies. as a public policy issue it gives the opportunity to redefine local public policies in order to have an integrated development. the experience of romania shows that constant development of visions, objectives or long term aims barely exists, so it is common to have well-programmed regional development plans that meet the national standards and development priorities in the moment of design, and which become overrated during implementation since the national standards are modified. the pcm indicates that a general 4-phase structure is suitable for most of the projects, events, development or branding processes. the planning, formulation, implementation and evaluation phases can be considered a complete cycle, the final evaluating phase repeating the primary evaluation in order to highlight the differences due to the project. the final phase can be considered the starting planning phase to a forthcoming repetitive project. a specific branding process can also be built upon this four-stage structure in which outlining the future during planning has a particular importance as well as the presentation of the creative elements during the planning of the strategy (healey, 2008). 1. surveying the existing situation. its role is to know the target group, the previous processes and their evaluation. 2. outlining the view over the ideal future: harmonizing the results of the survey and the ideas, and creating the main concepts in developing the brand. 3. combining strategy and creativity: creating a connection between the areas that have a specific role in creating and developing the brand, outlining a strategy, shaping and displaying a visual identity, and ensuring visibility. 4. monitoring and then repeating the first stage: following-up the results, planning, testing, re-planning, and re-testing. creativity has an outstanding role in the patterns of city and regional planning; image and spirit have an even more powerful presence, and so do internal bonds and insights. branding is considered to be a one-time, closed process, which is not cyclical by nature (olins, 2008). 1. research, analysis and strategic recommendations. surveys regarding the target group, the market, communication and design, the results of which determine the particular action plan. 2. creating identity and formulating the particular idea. the areas in which identity is visible are the behavior of the target group, the brand-building process as well as its designation and the visual representation. 3. presentation and display. presentation to the internal target group is in fact a pretest before the entry on the market. it takes shape of a pr or image campaign; it is visible, perceptible, while the reactions help in re-planning. 4. implementation. the final branding plan for the promotion of the determined visual identity is followed by the application of tools which make the brand public. 59 the models presented in the anglo-saxon scholarly literature approximate the models applicable in the eastern european city and region branding (mceachern, 2006). the creative process and the insight emerge, and so does the project cycle approach. 1. the first stage is called understanding, and it implies an extensive research effort in order to understand the city, its assets, culture, traditions, and the views held by diverse groups. at this stage it is important to distinguish between the internal and the external audience. 2. the second stage is called insight. in the first section of the paper most of the definitions of the city-branding concept highlighted the fact that a brand should incorporate an emotional dimension that triggers the formation of associations in people’s minds. at this stage all the facts gathered during the research effort need to be transformed into ‘emotional sparks’. this stage focuses on defining the uniqueness of the place and identifying what makes that place special and different on the competitive market. 3. the third stage is called imagination. this is perhaps the most critical stage since all the data gathered and the emotional sparks are transformed into tangible products such as symbols, logos, message texts, value statements, etc. 4. the last stage is evaluation. because branding is a strategic effort there needs to be some indication of whether the branding campaign reached its objectives. all in all, with regard to the context of eastern european public institutions a model can be created which accomplishes the expectations of the branding process, which is cyclical, meaning that it builds upon the previous processes and mirrors the expectations of the lpa regarding the branding. it includes aspects of project planning, creative processes, and it follows the stages of the branding. 1. the stage of planning and preparation: a. planning the project: determining the workflow, fixing the tasks undertaken and the deadlines, coordinating with the institutions and the partners, allocating tasks, and determining the resources; b. branding plan: determining the data analysis methods, the priorities and the work methods, abstracting the scholarly literature, setting the model, creating a coherent system of contents and aspects regarding the contents of the plan; c. programming: collecting internal and external city branding programs and analyzing them, summarizing the rules regarding strategic and development planning, and the national regulations and directives; and d. analyzing the situation: market research, surveying the behavior of the target groups and the amount of information they possess (interviews, surveys, questionnaires, focus groups), analyzing previous branding processes, image elements, and the involvement of the media and of the local elite. 2. elaboration, the phase of creative work: a. creative process: identifying the view on future and on the areas to develop; identifying the brand pillars, brand values, and brand essence; identifying the 60 insight, the existent feelings and those that can be developed, attitudes and bonds (value statement); identifying the identity and the unique advertising position; b. branding plan: determining the branding directives and strategies; creation of the phases of the branding plan (working groups); c. campaign: determining the target groups; selecting the tools and channels; d. visual identity: creating the image handbook; drafting the names and slogans; adjustment to channels and carriers; and e. re-planning: narrowing the development pillars or directives; verifying the compliance with existing policies; verifying the fulfillment of programming. 3. the output phase: a. pre-tests: public presentations, public debates, reconciliation with the customer and other key-actors, creating and testing the prototypes of the visual carriers, visualizations, slogans, testing visual carriers (focus group product trials, public presentations, debate forums), consultation with branding specialists; b. re-planning or finalizing: completion or modification based on the results of the pre-tests, creation of the final branding plan and image handbook, and its delivery to the client; c. campaigns: launching the communication process, acquisition of publicity, addressing and involvement of local and external target groups; and d. monitoring: continuous monitoring of the shifts in opinions (periodical flash questionnaire surveys), shifts in the media image (content and form media monitoring including external and online media), in feed-back and consumption indicators (e.g. the sale of carriers). 4. closing and evaluation: a. post-surveys: repeating the planning stage, identifying the relevant differences and correspondences; b. closing and documenting: assimilation and interpretation of the results; correction of the plans, planning sustainable communication; creating a crisis scenario to prevent crisis situation; publication of the conclusions and the results; publication of professional articles. c. re-planning: verification, correction or redefinition of the compliance of the strategy with the policies (this phase becomes the pre-test of future branding processes); and d. institutionalization: establishing communication and city image offices within the lpa that will launch the plans following the closing of the project as well as the further operation of the process (continuous communication, events, preservation of organizational connections, media communication). depending on the city or the region to be branded, the different phases of the branding process can be further detailed, while others can be eliminated or the whole structure can be completed. nevertheless, it is advisable to perform a comprehensive 61 previous analysis of the situation in the settlements where no branding plans or strategic development plans have been carried out. similarly, there is a need for a stronger implication of the lpa if the process is planned in more detail for a longer period of time (e.g. creation of the communication image or the establishment of city image offices). the whole city branding process must be carried out under the control of the lpa in close partnership with other public institutions, ngos and organizations of the private sector, but the lpa has the leading role and, at the same time, has to ensure the continuation of the process. the city branding process and the image-building campaigns face numerous problems and stumbling blocks while put into practice (kádár, 2010). therefore, it is paramount to prepare planning and evaluation as professionally as possible. in the following part, the stages of preparation and planning will be presented, as well as the phase of elaboration and creative work. a special focus will be placed on the critical issues that are almost impossible to handle by the specificity of the transylvanian social and cultural context and by the public institutions. we will analyze the case of settlements where at least one branding cycle has been carried out by the author, and, based on this, further directions will be formulated regarding the branding of the settlements in question as well as the wider transylvanian region branding. 3. planning and preparation the first stage can be described as an extensive research effort in order to understand the city assets, culture, traditions, and the views held by diverse groups. the core definition of the target groups and target audiences includes in the first place the internal audience (citizens, agglomeration areas, frequent visitors) and the external target groups and audiences (tourists, investors, occasional visitors, etc.). a correspondence must exist between externally presented brand values and internally experienced values, i.e. the marketing should reflect both the citizens’ conception of their city and what visitors experience. missing the correspondence leads to an identity conflict stopping the city to develop its unitary image. a proper understanding and value projection require an exhaustive project planning, preliminary evaluations, programming and a detailed brief on target groups. a marketing campaign turned into a branding campaign has at least three stages, two of them in planning the preparation stage (newman, 1994): 1. market segmentation: evaluating the needs, defining consumer types, defining target groups; 2. positioning: evaluating the strong and weak points of the product, evaluating the competitors, targeting the groups, developing a brand image; and 3. defining and executing the strategy: defining the product, creating the push marketing strategy, creating the pull marketing strategy, poll/public opinion research, organizational development and leadership. 62 3.1. evaluating the product and the competitors during the process of city branding the existing values need to be revealed and, in certain cases, they need to be invented. then, they can be ranked and built into brand pillars, planning the way they will contribute to the positioning of the city, regardless of the economic or social profile. the construction process follows the classical steps from the premises to the assessment of the situation and of competition (ollins, 2008; keller, 1998). 1. premises; 2. strengths, facilities; 3. weak points, deficiencies; 4. development points, potential; 5. competition and competitiveness; and 6. long-term objectives, brand objectives. a situation analysis often stops after the assessment of the features and shortcomings, but this is not enough for branding. values and often even the problems have to be compared with those of the surrounding municipalities and regions, and when we want to go internationally we need to compare them with settlements and regions from other countries. in the case of a unique value, we should identify those regions that have similar characteristics (e.g. wine regions, business centers, traditional crafts or traditional regions); while in the case of general values we need to analyze every similar settlement (e.g. educational or medical center). in the case of general characteristics and values, the principle of reservation will be applied: it depends on who is faster and more intense in achieving the association with a value. an already reserved value may still be built into a brand pillar and by intensive communication it may be seized and taken from other settlements but this needs a more organized construction and a higher involvement of resources. tîrgu-mureș is an example for value pillage. it used to be outstanding as a medical center and medical university, it was the cradle of modern emergency medical treatment (smurd); nevertheless, by now cluj-napoca is mentioned as a primary location in a medical context. the city’s theater and philharmonic orchestra were also outstanding, together with its famous musical, theater and puppetry schools, which, if not brought back to their previous place by recent changes, are outgrown by the companies and alternative offers of other towns (cluj-napoca, sibiu, sfântu gheorghe). its athletes were outstanding in europe and worldwide, its sports performances and previous sports facilities were legendary, today it is one of the municipalities with the fewest sporting opportunities; one could carry on. the alternative film festival has been overtaken by astra in sibiu and tiff in cluj-napoca (the latter brand has become so important that it positions the city on the international level), and since 2013 the most popular youth festival, peninsula, has moved to cluj-napoca. although not impossible, branding is a difficult task for designers. they should define a stable position which may be assumed by the city’s current situation in order to regain certain values. especially because the parallel construction is spectacular 63 only within transylvania, attracting international attention needs more cooperation (e.g. airports shall be connected, common medical centers shall be built). an increasing number of regions assume these tasks, the most spectacular cases within eastern europe are the case of slovenia, the croatian coastal tourism, or the campaign of hungary timed for the rotating eu presidency, which was based on spas and medical tourism, and which harnessed this brand pillar in eastern europe. 3.2. target groups of settlement branding public institutions represent a unique group among the operators. they have the most diverse network of connections, with a different set of applicable rules regarding their communication, relationship building, transparency and operation. this network of connections includes groups in the widest meaning of the word, which can be interpreted as target groups because of the state representation. the representative of the city in the city branding process is the city council and the mayor’s office. nevertheless, the inner target group is not formed by the employees of the institution, which are the target of the organizational communication, but by the inhabitants of the city. on the one hand, the employees have an important role as a subgroup as they deliver information firsthand, while on the other hand they are easily reachable, as they are a closed target group in close connection with the institution. the largest target groups of the city branding will be the following: 1. inner group: the inhabitants of the city a. the employees of the public institutions and of the branding organization; b. the permanent inhabitants of the city; and c. the visitors of the city: guests, the ones who commute or visit. 2. public institutions: a. public institutions in direct subordination; b. the local institutions representing the state public institutions; and c. upper administrative or decision-making bodies. 3. the media: a. local and regional media institutions with a direct connection; and b. national and international media institutions. 4. tourists: a. regular visitors: ones who emigrated inland or abroad; b. irregular visitors: ones who emigrated inland or abroad; and c. transit-tourists. 5. investors: a. local and regional, usually small or medium-sized enterprises; and b. national and international small or medium-sized enterprises or networks, multinational companies. 6. non-governmental organizations, churches. the target groups can be further detailed by determining in the communication or branding plan the weight of the different target groups, the channels through which 64 different types of messages need and are possible to be transmitted, and the intervals for transmission. communication can also be direct or indirect; much information reaches the different groups through several agents, while the closer groups get it from several directions and more often. in image-building and advertising it is important to consider the peculiarities of public institutions such as the handling of public funds, transparency or the elected bodies, which are more prudent regarding their own image, and on the other hand are exposed to the results of the election cycles. as the local administration needs to reach several groups and target groups, intensive media use is frequent although, based on the author’s experience in the transylvanian context, the use of below the line instruments (btl) is less common, and the web 2.0 possibilities (including social media) is almost not used. nevertheless, this is seldom the result of the lack of expertise or failure; the real reasons are most frequently the lack of funds, being overwhelmed or the lack of good examples. it is important to mention the regulation according to which public institutions cannot spend money on advertising, thus their communication expenses need to be covered from other sources. 4. defining the project and the creative work as described in the introductory part, a city should be positioned, thus acquiring a special place in the eyes of the target group, and it should stand out from the rest of the cities. positioning also incorporates emotional dimensions and assimilates the personal experiences, creating the brand insight. in this way, its ability to do so triggers the formation of associations in people’s minds. this stage focuses on defining the uniqueness of the place and on identifying what makes that place special and different on the competitive market. finding the associations is a circumstantial process. they can be real, physically existing elements, stories, added values, habits, but all sorts of contents as well. the complexity of information, experiences and senses help the impulses to contribute to the general brand image (kádár, 2013). 4.1. autoand hetero-stereotypes preliminary expectations, experiences and the already existing information affect quite significantly the perception and the formation of the impression. classification appears (meaning that the perceived regions, objects, people and events are classified), which helps individuals to get around better in the world, to think and express their judgments. classification generates the formation of schemes. these are representations or memory structures referring to the behavior and knowledge of people, objects, events and situations. finding the most appropriate scheme for any incoming information is called schema-based authentication, which allows us to successfully process a huge amount of incoming information. thus, we do not need to store all the information concerning a new object or person as it is enough to encode and store the 65 most prominent features. schema-based identification serves as a significant help in the orientation, perception of the environment and in processing the information. it moderates the acquisition of in-depth information, and allows judgments with a fixed content and based on a limited number of schemes. e.g. the schema-based authentication makes one of the strongest decisive elements when thinking about a region for choosing a family holiday. if there are no other influencing factors, such as recommendations or outstanding offers, the processed existing information will govern the decision. stereotypes are schemes formed about types, classes or groups of people. the term comes from walter lipmann, a journalist who thought of simple, schematic pictures and considered that through a system of assumptions we can create order in the environment surrounding the observer. according to a more complex interpretation, stereotypes are properties characterizing large social groups which are based on high-level consensus; they persist quite steadily in time. perception and the development of impressions are significantly influenced by auto and hetero-stereotype. auto-stereotype is a stereotype used by a group to refer to it; a characteristic generalized to all members of the group. these characteristics are expressed both within the group and in the external communication; they can be measured, but they are characterized by a certain level of uncertainty, as a stereotype with which a group refers to itself does not match with the stereotype referred to the group by a different one, as in the case of hetero-stereotype1. general auto-stereotypes used by different analyses are, in fact, an idealistic self-description and often the expression of a desired picture as described by le vine and campbell (kádár, 2013). 1. we are proud of ourselves. we appreciate ourselves and the traditions of our ancestors. 2. we are faithful. 3. we are reliable and honest with each other but we shall not be fooled by the tricks of strangers. 4. we are brave and progressive minded. we stand up for our own, we defend what is ours and we cannot be gypped out of what is rightfully ours. 5. we love peace and people. we only hate our impenitent enemies. 6. we are fair and honest. hetero-stereotypes refer to groups that differ from the group of the observer or the interviewed person, and every characteristic that refers to the group will be regarded as one valid for each member of the group. this stereotype does not take into account the existence of sub-groups and differences between group members. we may frequently observe that the closer the observer is to the observed person’s group, the more he/she is capable to set up sub-groups (ethnicity within a race, and within that 1 the ethnobarometer test series deal with the auto and hetero-stereotypes occurring within the inter-ethnic relations in romania. 66 sub-groups related to a certain region or language, specific cultural and socialization characteristics or habits referring to a more restricted circle of the individual, etc.). a general stereotype may be set up in the case of a conflict consisting of the characteristics attributed to the observed group by the group in conflict as described by le vine and campbell. 1. they are selfish and individualists. they consider that their kind have primary importance. 2. they stick together and shut out the others. 3. they deceive us as soon as they have the chance to. they are not honest; they lack any morality when it comes to us. 4. they are aggressive and expansionists. they want to step out to our detriment. 5. they are hateful and especially vicious towards us. 6. they are immoral and dishonest. stereotyping and its measurement help a lot in the branding process: it helps determining a group and its self-image; the set of values becomes measurable; characteristics and values can be formulated upon which a branding strategy can be built. on the other hand, hetero-stereotypes are practical to formulate the opinions of different outside target groups on a settlement, on a region and on the people living there2. of course, stereotyping has its advantages and disadvantages. the results of the research analyzing the image, symbols and the identity will be relevant only to a part of the community, and can create repulsion in another community. with the multiethnic and multicultural environment of transylvania characterized by deep gaps it is recommended to have representative researches when using stereotype-based value definition. the aims as well as the autoand hetero-stereotypes change when they are presented to outsiders, and the citizens of certain regions would rather identify with the indicated brand values. they may appear in a uniform manner in front of foreign visitors, regardless of whether they are tourists, investors, institutions or guests to events (sports events, for instance, do not hide their community building intentions and are very aware of their branding potential). similar to the case of the associations described above related to positioning, each group or community may be associated with a certain symbol, but a symbol may also refer to a certain group. branding a region is suitable for this purpose as well, and besides the spontaneous association of dracula with transylvania other symbols could be developed which would brand the community or the nation (ollins, 2003). as long as they are not clearly identified, we cannot speak of a uniform brand regarding transylvania, but the processes of 2 the hetero-stereotypes are essential in measuring the sett lement or country brand value. the leading evaluation methods relevant for romania are the anholt nation brands index, the country brand index and the travel and tourism competitiveness report. 67 self-expression as well as those aiming at the expression of a certain identity may be considered a good sign. 4.2. from values to brand the practice of branding encompasses five elements: positioning, storytelling, design, price and customer relations (healey, 2008). the order is not random, self-definition is followed by the display of elements which are essential in the case of city branding as well. positioning requires the identification of those values which clearly characterize the city, symbols with which they are willing to associate themselves. practically, any characteristic may become a symbol. for example, many transylvanian settlements already have their own characteristic features that can be transformed into a symbol: – permanent adjectives, e.g. city of treasures; – traditions, e.g. the center of wood carvers and pottery; – natural resources, e.g. city of the bear lake, the region of thermal spas and sparkling water springs; – built heritage, e.g. black church, sas-palace; – the birthplace of famous personalities, e.g. the birthplace of king matthias, the village of lucian blaga, the city of the bolyai family; – institutions, e.g. theaters, opera, medical college; – places of historic events, e.g. battles like the one at câmpul pâinii; and – places of spiritual life, e.g. the places of pilgrimage in alba iulia or şumuleu ciuc/ csíksomlyó. association is a bidirectional process. on the one hand, one instantly thinks to a settlement when stating a value (e.g. the celebration center of the national holiday of romania or the place of the pentecost pilgrimage). on the other hand, by thinking to a settlement or region this should be the first association (top of the mind) (e.g. băile felix – thermal spa, praid – salt mine). this is partly due to the spontaneous image and brand development, but in many cases this is not enough and a conscious brand development is necessary. the geographical and historical features of certain settlements create many opportunities; these places boast with a multitude of symbols and values. for example, the current geopolitical situation of cluj-napoca makes it almost compulsory the center of the region, therefore the brand is based on its ‘capital of transylvania’ status. the first two years of the branding process consist almost entirely in the definition of the values, which should be examined from the point of view of the current social features, e.g. from the point of view of ethnic groups. first as a roman settlement, then as a free royal town, cluj-napoca experienced each stage of transylvanian history. the ideologies, arts, crafts and institutions created in the course of its history define its current status. in a mature community multiculturalism is considered a value, but in cluj-napoca it triggers the difficulties of branding as well. therefore, we thought that in cluj-napoca multiculturalism may serve as an axis for branding (cluj-napoca city 68 hall, 2011). being present both in the historical and actual context, multiculturalism cannot be overlooked or forgotten. it is also in line with the principles of the european union3 which may provide additional opportunities for the city4. as cluj-napoca has many other values as well as a series of unique symbols, the branding strategy may distinguish four different pillars in branding: economy, culture, education and sports. this way, it will position itself by pointing out a value for each pillar, while the elements are embedded into the historical background and linked through various programs. if there are no obvious symbols to form the essence of the brand, the responsibility of assuming heritage disappears and we have the freedom to invent, allocate and develop highly structured fictional values and attributes. one such example is sfântu gheorghe; its values are well known to the inhabitants of the city and the region around it. the symbol in this case may be the name of the saint whose name the city bears, but today for the inhabitants of transylvania the very first association related to this city is the saint george festival, a series of events which focuses the attention on the city, highlights its potential as a destination for mass tourism and may emphasize values which are difficult to identify from distance. due to the festival the city’s receptiveness and capacity increases and becomes more flexible, thus it can provide space for other events (a good example is the reflex theatre festival, which is slowly switching from a product name to a brand). thus, the city gains a place on the mental map of consumers and acquires a place among the cities and cultural destinations of transylvania. similar tactics were used in sibiu which, due to its saxon historical heritage had a relatively well-defined, solitary place on mental maps but this was strengthened by a well-organized, powerful series of programs, and together with luxembourg, the city became the european capital of culture in 2007. this title brought a substantial development support and the possibility for institutional and infrastructural expansion as well as intensive media attention, consolidating the city’s position in the country and drawing international attention. by the end of the year the repositioned city decided to keep organizing certain events, developed a series of continuous activities thus ensuring a continuous flux of visitors, and, by exploiting this new status, launched a strong cultural and economic development. 5. endnote although the city branding process is complex, it can be divided into stages and steps; the synergy of the activities is difficult to measure and it is hardly predictable 3 the fi rst slogan of the european union, all diff erent, all equal, in 2000 was replaced by the latin in varietate concordia, meaning unity in diversity. the presence and interpretation of this slogan goes back to taoism: unity without uniformity and diversity without fragmentation. 4 in 2015 cluj-napoca is going to be the youth capital of europe and will have the opportunity to become the cultural capital of europe in 2021. 69 and measurable. according to the classic dilemma of advertising, never knowing which of the key elements led to the results achieved, the branding activities face the same question (kádár, 2010). as it is a time-consuming process aiming to change the awareness level, attitudes, actions and habits, the results will be seen over time. even if the city and regional branding has become a well-known procedure with visible positive outcomes in the last three decades, most of the lpas of the romanian settlements do not see the need for branding. there are development plans made not for executing and seeking their benefit but because there is demand for them from a higher administrative level or are created to fulfill a compulsory requirement. this applies to the city branding attempts as well; in most of the cases they offer public visibility for lpa leaders but they are never implemented. it might be a programming concept, as all five country branding attempts ended up in a major scandal. of course there are exceptions, such as the cases of some municipalities, transylvanian county seats such as sibiu, cluj-napoca or sfântu gheorghe we were working with, or another 30-something other municipalities all across romania. having a clearly defined city branding process as described above and a growing number of specialists in the field, the number of branded settlements will most certainly grow. references: 1. cluj-napoca city hall, ‘strategia de branding cluj-napoca’ (the branding strategy of cluj-napoca), 2011. 2. european commission, ‘project cycle management guidelines’, brussels, 2004, [online] available at http://ec.europa.eu/europeaid/sites/devco/files/methodology-aid-delivery-methods-project-cycle-management-200403_en_2.pdf, accessed on june 24, 2014. 3. healey, m., what is branding?, mies, switzerland: rotovision sa, 2008. 4. kádár, m., ‘psychological background of the reading of nonverbal signs. introduction to profiling’, in balaban, d., mucundorfeanu, m. and hosu, i. (eds.), pr trend. new media: challenges and perspectives, mittweida, germany: amak akademie für multimediale ausbildung und kommunikation, 2013. 5. kádár, m., ‘tehnici de analiză a campaniilor de comunicare’, 2010, revista română de comunicare şi relaţii publice, vol. 2, pp. 61-68. 6. kavaratzis, m. and ashworth, j.g., ‘city branding: an effective assertion of identity or a transitory marketing trick?’, 2005, tijdschrift voor economische en sociale geografie, vol. 96, no. 5, pp. 506-514. 7. keller, k.l., strategic brand management. building, measuring and managing brand equity, upper saddle river, nj: prentice hall, 1998. 8. mceachern, d., ‘putting communities at the center of branding’, 2006, public management magazine, vol. 88, no. 5, june, [online] available at http://webapps.icma.org/ pm/8805/public/cover.cfm?author=don%20mceachern&title=putting%20communities%20at%20the%20center%20of%20branding, accessed on june 15, 2014. 9. newman, b.i., the marketing of the president – political marketing as campaign strategy, thousand oaks, ca: sage publications, 1994. 10. olins, w., the brand handbook, london: thames & hudson, 2008. 197 abstract the article focuses on the analysis of internal dynamics and controversies of patterns of county-level governance. seven alternating confi gurations of county governance in estonia are taken as an empirical case. we also intend to develop further a conceptual framework for analysis of county governance, drawing on the experience of developing county governance in europe in the last decades. we reveal that dual and fused patterns of county governance have rather different roles in balancing intergovernmental relations. hence, when combining dual pattern with elements of fused pattern, it should be done very carefully in order to avoid deep tensions in the intergovernmental system. this was ignored in estonia where, in the 1920s and the beginning of the 1990s, a strong political mandate of county governor and its role as representative of the state were combined. in the 1930s the crisis of county governance was solved with a perfectly balanced fused pattern, established by an authoritarian regime. in the 2000s, estonia faced a political as well as a structural deadlock in the development of the intergovernmental system because of the deconstruction of county governance. as a result, the crisis in one link would require a complete reorganization of central-local relations in estonia in the second half of the 2010s. keywords: county governance, county governor, prefect, fused pattern, dual and split hierarchy, patterns of intergovernmental relations. sources of institutional integrity and contradictions of county governance: analyzing the estonian experience georg sootla liia laanes georg sootla (corresponding author) professor of public policy, institute of political science and governance, tallinn university, tallinn, estonia tel.: 00372-504.9236 e-mail: sootla.georg@gmail.com liia laanes phd candidate, department of political and economic studies, university of helsinki, helsinki, finland e-mail: liia.laanes@helsinki.fi transylvanian review of administrative sciences, no. 46 e/2015, pp. 197-216 198 1. introduction in the last decades studies of subnational government have focusedmainly either on the developments of municipal (amnå and montin, 2000; loughlin, 2001; caulfi eld and larsen, 2002; kersting and vett er, 2003; denters and rose, 2005) or regional tiers of government (keating, 1998; loughlin, 2001). studies of county level governance have focused on its single components – either on the state administration (hajnal and kovács, 2013; bogumil and kuhlmann, 2013) or the institution of the prefect at the county/province level (knapp and wright, 2006; demontricher, 2000; bjørnå and jenssen, 2006) or on county self-governing institutions (aalbu, böhme and uhlin, 2008; blom-hansen et al., 2012). there have been only few att empts to analyze county governance as a system of interaction of institutions and actors (leemans, 1970; reigner, 2001; knapp and wright, 2006). there are at least two reasons why academic interest in county level government should not fade, especially in central and eastern europe. firstly, there is increasing need to analyze relations between central and local government from the perspective of multi level governance (piatt oni, 2009; peters and pierre, 2001), in which the county level is the critical link in creating balancing mechanisms between tiers. secondly, in many cee countries the reforms of local government in the beginning of the 1990s aimed to create the municipal self-government as a democratic counterweight to the state administration (horváth, 2000). as a result, the capacity of local governance was dissipated among large number of fragmented local authorities (except in lithuania and bulgaria) (lankina, hudalla and wollmann, 2008). the capacity of the county government was either intentionally diminished (as in the baltic states) or it was reorganized, but not so profoundly as the municipal level (horváth, 2000). in the 2000s profound reorganizations of county level governance were launched (in latvia, estonia, hungary, slovakia, eastern germany) in parallel with the amalgamation of municipalities (in eastern germany, latvia, denmark, greece) or the establishment of regions (in the czech republic, slovakia, poland). however, in denmark, latvia, finland and lithuania counties as administrative units were abolished (baldersheim and rose, 2010; meklinand pekola-sjöblom, 2013) and the impact of this measure on intergovernmental relations deserves a special study. estonia has been within the period of 1917-1940 and since 1989 a great laboratory of experimentation of various patt erns and practices of county governance. in this paper we do not intend per se to introduce the history of estonian county governance but instead to analyze it as an empirical case in order to understand variables of internal integrity as well as controversies of diff erent patt erns. besides, we intend to develop further a framework for the analysis of county governance as an integrated system and to identify basic patt erns of interactions between its actors, roles and tasks. research and data. in the analysis of county governance in estonia in the interwar period we draw on the legislation, articles and public debates in the press, fi rst of all in local government associations’ journals, and minutes of county council meetings. the analysis of post-communist developments is based, supplementary to these sources, on the data archive which our research team (saar, 2006) started to com199 pose from 2006 onwards. to its core is the collection of documents from government archives and from personal archives, concerning local government developments, diff erent research reports, as well as targeted interviews with actors, including with county governors and municipal leaders within last decade. 2. organization of politico-administrative space at the county level the county, as a governance tier and unit, is not only diff erently named as county, district, province, department etc., but in eu statistics (nuts classifi cation) some of them are treated –depending on size of population – as the lower regional units nuts-3 (german kreise, french département, etc.) whereas others are considered as upper local level units (lau 1) (polish powiat, estonian maakond) (eurostat, 2007). nevertheless, it is the second tier of governance which has specifi c actors, roles and patt erns of interaction clearly diff erent from municipal as well as regional tiers. 2.1. actors at the county level there are four institutional actors (knapp and wright, 2006, p. 352), whose interaction determines the character of governance at the county level. the fi rst (also, historically, the earliest) is the county prefect who is primarily representative of the state in the county. the symbolic and informal legitimacy of the prefect as the highest state offi cial in the county plays a crucial role in determining its other roles (knapp and wright, 2006; de montricher, 2000). very important for the legitimacy of the prefect is who appoints the prefect: the president as the head of state, like in france, or the government on the proposal of a minister within routine civil service appointment, like in estonia. the second set of actors are central government fi eld services which can be organized as a fragmented set of functional agencies of ministries or as a more or less integrated multifunctional state offi ce in a county (like in hungary and some länder in germany). true, sometimes the territorial service area of a fi eld agency and the territory of a county may not coincide. in order to contribute to the development of counties as an integrated space there is a need to coordinate activities of these agencies and to adapt ministerial policies to the local needs. the third actor is devolved county self-government, i.e., county council and its executive (hoene, baldassare and shires, 2002; kemp, 2008; knapp and wright, 2006) which accomplishes (1) specifi c local tasks which presume a larger scale than municipalities can provide; (2) the central government tasks delegated to county council’s executive, and (3) assistance of smaller municipalities due to their insuffi cient capacity, especially through professional advice, thus contributing additionally to territorial integrity of administration (wollmann, 2000). fourth, knapp and wright (2006) consider that important actors are various local private or voluntary organizations, associations, boards, and development councils, which can infl uence the integrity of the development of a county’s politico-administrative space. 200 2.2. roles there are three broad sets of roles the actors have at the county level: (1) governing roles; (2) service provision roles; and (3) balancing role in horizontal/territorial and intergovernmental power networks. in the research literature several governing roles are identifi ed. the fi rst is – as indicated – representation of the state and assurance of certain uniformity and common values/standards among all actors at the county level (bjørnå and jenssen, 2006). the second is supervision of activities of local self-government authorities (devas and delay, 2006; bjørnå and jenssen, 2006) as well as of state fi eld agencies and other actors concerning their compliance to laws and regulations. usually both of these roles are accomplished by the prefect. however,in some countries (hungary, germany, poland, estonia), the head of the county council’s executive is charged with the supervisory role. sometimes the county council’s executive body, as we see in estonia, may be assigned the role of a representative of the state. there is a widespread belief, that – especially in small countries – the merger of diff erent governing roles is justifi ed because of economy of scale. however, as we see later, this may result in controversies of the governance and its frequent reshuffl ing without a clear purpose, involving substantial governing gaps. third, county authorities (usually both the prefect and council) are in charge of allocating central resources (i.e., eu funds) and developing local strategies/priorities for diff erent sectors and municipal authorities (lidström, 2011; sharpe, 1993). the fourth important governing role is the coordination of activities of diff erent actors and planning of the county’s development (sharpe, 1993; hulst, 2005; lidström, 2011) in order to reduce functional fragmentation and duplication of policies. in some countries both roles are assigned – due to the absence of county level – to the board of municipalities (finland) or development councils (lithuania). the fi fth – the county authorities can be responsible for organizing national elections at sub-national level. hence, the prefect or county governor faces a confl ict between its administrative and political roles (knapp and wright, 2006; de montricher, 2000). county level actors are also responsible for provision of public services (devas and delay, 2006). this includes two broad classes. first are administrative services, including technical-legal supervision, enforcing standards, issuing licenses and permits and professional assistance in areas of ministerial responsibility, which are usually accomplished by state fi eld offi ces. second are local public services, the provision of which presumes larger scale or specifi c competence that is available at the county level (lidström, 2011, p. 21; sharpe, 1993; hoene, baldassareand shires, 2002). there are many ways for division of competences and tasks between state agencies and self-governing actors in provision of services at the county level even in a single country (bogumil and kuhlmann, 2013). in countries with a strong municipal tier of self-government the second tier has only selected tasks, most often managing health sector, regional roads, high schools, planning/zoning, land issues, etc. in continental countries more tasks may be assigned to the councils, but in service delivery these 201 authorities/offi cials are usually accomplishing fused roles as self-governing as well as state actors. the third role is ensuring balances in intergovernmental power networks. county governance can form a kind of system of ‘lagrangian points’, where the county government is the balancing point or providing mechanisms for merging diff erent levels into a vertically integrated whole and therefore ensuring integrity of the intergovernmental system. this makes county leaders important interest mediators and surely political actors (knapp and wright, 2006; de montricher, 2000; reinger, 2001). first, in multilevel governance the county governance can become a crucial actor which ensures an interactive patt ern of central-local relations (amnå and montin, 2000) instead of insulating the tiers and encouraging competition between them. this can ensure eff ective implementation of national policies in the local space, where a major part of public policies are actually accomplished, and prevent adversarial competition as well as protective-parochial stance of municipalities. at the same time, county level actors may ensure the articulated input of local interests into the national policymaking. second, county council and politics are necessary channels for upwards mobility of political elites and a tier which can ensure autonomy of local political life vis-á-vis national parties’ headquarters (sharpe, 1993). hence, we evidenced how complex a patt ern of actors and roles of county governance can be in a single country, but it is more diverse if we take into account variations of actors and roles in diff erent counties. therefore we att empt to delineate only general contours of those patt erns of interactions in order to establish main sources of synergy and tensions that diff erent patt erns may contain. 2.3. patt erns of interaction leemans (1970) and, later, smith (1993) and bennett (1997) distinguished between three basicideal type patt erns of intergovernmental relations which determine the basic logic of the county level governance. the fi rst is the fused or single hierarchy patt ern in which the prefect’s offi ce, government fi eld services, and the representative local government are integrated into a more-or-less holistic system. probably the most fused patt ern was practiced in france before the 1982 reforms, when the prefect was not only the representative of the state but simultaneously the chair and chief executive of the department’s council. a full fusion of hierarchies in the county has not been achieved even in that case because of considerable autonomy of ministerial agencies and impact of elected council. there are a few supplementary mechanisms of fusion: 1. the guidance of central government over civil service in local administration or autonomous service provision organizations (schools, service centers); 2. delegation of state functions to the county council which results also in more tight supervision by, and information feedback to, state or its agencies; 3. a less formal fusion stemming from rather strong interdependence between state fi eld offi ce staff and council executive and administration (reigner, 2009), which 202 strengthens the professionalism and capacity of public service at county as well as at municipal level; and 4. county councils are rather dependent on government grants and programs whose provision and management is coordinated with fi eld agencies or/and prefect. there are also specifi c points of fusion of county governance with the fi rst level of local authorities, fi rst of all through formation of statutory cities (the czech republic, austria) or stadtkreise in germany. besides, county council can be formed via indirect elections and consist of representatives or higher offi cials of municipal authorities (italy, spain) (uclg, 2015). the most important thing is that interaction in the framework of the fused system is carried out through complex patt erns of administrative politics between main actors. in horizontal dimension this enables in some cases to reach eff ective balance and cooperation, but in other cases it results in tensions and competition over the leadership and competences (reigner, 2001). in vertical dimension the fused and partly holistic hierarchy enables rather eff ectively to ensure policy responsiveness and division of labor between tiers and for county governance to be a balancing point. decentralization trends, however, (like in france starting from decentralization act iii in last years) (sharapova, 2014) may diminish the departmental council’s tasks and strengthen regions’ roles, like in spain and italy, transforming the central-local relation into the multilevel interactive arrangement. the second is the dual patt ern, in which prefect, central government agencies and rather autonomous local self-governing bodies act as parallel subsystems without direct formal administrative links. there is also no subordination or overlap between tiers of government like in the case of the fused patt ern. the government services at county level are coordinated by the prefect via boards (bjørnå et al., 2006) which are clearly separated from self-government services at county level. this patt ern is practiced in northern europe. the dual patt ern establishes more or less fi rm power balance between autonomous actors/levels without any administrative hierarchy and interventions. this patt ern of balance is based, on the one hand, on strong and autonomous municipalities, which provide a major part of public services at subnational level and, on the other hand, on various mechanisms of consensual decision-making and active civic participation, which facilitate the horizontal cooperation in advancing the territorial development fi rst of all via participative planning (zonneveld and waterhout, 2010). instead of administrative politics as main device of coordination, as in the fused system, we observe here a kind of politics of civic, voluntary participative coordination of various autonomous actors in networks, where the state takes increasingly a role of meta-governor (sørensen and torfi ng, 2007; bjørnå and jenssen, 2006). for these reasons the formal county institutions do not have anymore an important role as intermediate link or lagrangian points in central-local relations and there is a trend to abolish county self-governing authorities in countries which have dual patt ern as in latvia, 203 denmark, finland or to debate on that scenario (norway, sweden) without a fear to ruin the central-local balance in the age of multilevel governance. true, those debates are lately held also in continental countries, like in italy and spain. leemans (1970) and bennett (1997) distinguish also the split hierarchy patt ern, where county governance is accomplished exclusively by state actors where as self-government (council) is acting only at the fi rst tier. this patt ern can be relevant for analyzing developing countries where capacity of municipalities and local democracy are underdeveloped. in countries with councils only at the fi rst level, a wide range of cooperative arrangements of self-governing units at county level are established (like in finland, estonia and slovakia) or municipalities are starting to occupy de facto the county-province space (denmark, lithuania, latvia) whereas state agencies act in the larger administrative districts. for this reason we consider it as a subtype of the dual patt ern in our analysis. 3. alternating patt erns of county governance in estonia estonia was until the beginning of the 20th century a part of the russian empire and the only experience of governing for estonians was community governance. the splintering of manorial and community powers started in 1817 and 1819 and by the end of the 19th century self-governance in rural municipalities was rather extensive. counties and large towns were a strong hold of german elites, and nothing similar with russian zemstvo (shutov, 2011) self-government was known on estonian soil. the att itudes formed by that experience of community self-governance contain the distrust of estonians towards the government in larger units (including counties) that have been ruled by aliens. this stance revived during the soviet period and infl uenced also the governing culture and att itudes towards higher tiers of authority in the republic of estonia after the 1990s (sootla and lääne, 2012). 3.1. patt erns of county governance during the interwar period during the interwar period (1917-1940) we can identify at least four patt erns of central-local relations. it is noteworthy that the new county act was adopted only in 1938; therefore, the fi rst three patt erns were based on temporary and revised imperial laws and on informal customary rules. estonia gained independence in 1918. the estonian constitution of 1920 (sec. 75) stipulated that ‘state power is exercised at local level through the self-government bodies unless special agencies are created by the law’, thus establishing the fused patt ern. subnational governments were formally part of holistic state hierarchy, but actually the county self-government enjoyed for a long period a large autonomy because of a strong council (kohver, 1928, p. 250). however, three consecutive changes in county governance developed rather diff erent confi gurations. the fi rst patt ern of county governance (1917-1920) was a classical fused but rather temporary confi guration. members of the county council were elected by an electoral college composed of representatives of the municipalities; the council appointed the 204 county governor as chief executive of the collegial government. the prefect (commissioner) was appointed as a representative of the central government with the main task of supervision over legality of county governments’ activities. the second patt ern lasted more than a decade (1920-1934). it was a politically autonomous county government in the framework of formally fused hierarchy. direct elections of council were established by county councils’ election act of 1920 and the council appointed the county governor and the collegial government. ex post legal supervision over the county government and cities was assigned to the central government, and supervision over the rural municipalities was assigned to the county government (temporary act of 1919). in the patt ern we can identify several sources of tensions. first, the county governor had the role and status of a prefect. however, because of strong political mandate from the council, the tensions between these dual roles of county governor emerged. second, county departments were chaired by members of government, i.e., a kind of a committ ee system of council-executive was developed (svara, 2001), which increased the political guidance over the county administration. in case of balanced party competition this patt ern enables the council to focus on strategic issues and to exert eff ective political control over the autonomous executive. however, due to the oligarchic trends in estonia (parming, 1975), the real powers at the county level started to transfer into the hands of the governor. third, the county government had a right to exert not only ex post legal review over decisions of municipalities, but also to block ex ante some of the councils’ decisions and to scrutiny municipalities’ accounting and management of services (avikson, 1931). county offi cials also assisted municipalities in planning and service delivery because of low administrative capacity of municipalities. fourth, major service provision functions (infrastructure-roads, health and health protection, sanitation, etc.) were the responsibility of county administration, but actually accomplished by autonomous public organizations (hospitals, service provision units, centers of professionals). the county budgets were, in comparison to other tiers of local government, relatively large and more dependent on the central government fi nancing than municipal budgets1. fifth, municipalities were in the role of ‘younger brother’ at joint municipal regional and national associations of rural municipalities. these institutional features make relations between municipalities and counties clearly hierarchical and political. in this way, various tensions in county governance and intergovernmental relations have developed. municipal councils became interested in applying for support to central authorities to maintain their autonomy against intervention of politically biased county administration. representatives of central government, who should 1 the total share of local authorities in general public revenues of estonia was 19.4%, out of that total, the revenues of eleven county governments comprised 3.8% as compared to the 15.6% of revenues for all 398 municipalities. in county government budget the proportion of tax revenues was 35%, whereas in cities’ and towns’ budgets – 41% and in rural municipalities’ budgets it was as much as 67% (avikson, 1931, pp. 174-175). 205 supervise and direct (along sectoral lines) the collegial county government, which has a strong political mandate from the council, also need the political support of municipalities in curbing the political ambitions and bias of the intractable county’s leadership. as a result, during the 1920s, instead of further legitimizing the county self-government as a key actor, it became in the eyes of municipal and central government elites as an unnecessary mediator between central and municipal authorities (avikson, 1931, p. 167). at the end of the 1920s an institutional crisis of estonian democracy started (parming, 1975). county governments were accused of excessive politicization (kohver, 1928) and debates over abolishment of the county self-government intensifi ed. in january 1934, the estonian parliament abolished county councils (act of 1934). in march 1934, after the military coup, an authoritarian regime was established in estonia. in the third (interim) patt ern – collegial county government without the council – the county government was directly subordinated to the minister of interior, which could appoint and dismiss not only members of government (e.g., governor) but also the senior staff of a county administration (act of 1934). the decisions which were formerly in the competence of the council were simply re-assigned to the county government, but those decisions had to be approved by relevant branch ministers. the patt ern was even more peculiar than previously. first of all, central government offi cials were not able to eff ectively check the extensive amount of tasks accomplished by and decisions of the county government, which were previously checked by the council. the central government was not able, despite explicit intentions (act of 1934), to redistribute excessive responsibilities of county councils to central government agencies or municipal authorities (ministry of interior, 1938). hence a lesson: the county council with optimal political discretion could serve also as a supplementary balance in ensuring eff ective administrative coordination and oversight of actors at the county level (reigner, 2001). the fourth –a newfused patt ern of county governance was established by the county act of 1938, after the new constitution of estonia (adopted in 1937) restored the two-tier local self-government system. it was designed rather carefully in order to abolish major controversies of former ones. the act sought ‘on the one hand, to strengthen the position and capacity of the county self-government’s bodies and, on the other hand, to streamline the links between the county self-government and central government’ (ministry of interior, 1938). the new system was diff erent in several aspects. on the one hand, the council was appointed by and from the members of the plenary of the rural municipality elders and city majors. it was introduced to increase the proximity of the county government and the rural municipalities and city governments (maddisoo, 1938, p. 135), i.e., to prevent the politically biased relations between tiers. on the other hand, the president appointed the county governor who, as representative of the state in the county, was also the chief executive and head of the county government and the chairman of the county council. this ensured double check, from both state and municipal level, 206 over the previously too autonomous and politically unpredictable collegial county government. the county governor was supervising the activities of rural municipalities and towns and had suspensive veto power over decisions of county council. however, if the county council did not amend its decision, the minister of interior decided whether to enforce the veto or not. this was an executive-council patt ern (svara, 2001) mediated by active intervention of central authorities in case of confl icts between diff erent actors of county level governance. the new patt ern was designed as a truly fused multilevel amalgam, where at the bott om was the plenary of municipal leaders and at the top was the county governor eff ectively checked by the central government. these mechanisms ensured an eff ective administrative balance of powers and also eff ective control by the authoritarian government over the self-government. we have to acknowledge that the estonian governing elite became experienced to be able to establish highly consistent fused patt ern of county governance. however, we cannot assure how it works in practice as two years later estonia lost its independence. this experience was however neglected after the restoration of independence. 3.2. patt erns of county governance after the new independence the main roles and competences of the sub-national government during the soviet time were concentrated to the county level whereas the municipal level self-government was de facto abolished. in the second half of the 1980s the democratization in ussr was paralleled by some decentralization in economy and signs of market economy. the control over local economic and administrative resources went partly into the hands of county elites, the majority of whom became what przeworski (1988) calls communist regime ‘soft-liners’ (sootla and katt ai, 2010). the county level became once more in estonian history a crucial link in public administration in the period of deep crisis as well as a target of political contest between elites of diff erent tiers of government. 3.2.1. the dual patt ern of county governance with strong elements of fused system in 1989, because of strong bott om up pressure by citizens and direct assistance of nordic local government associations, a diff erent – as compared to the interwar period – dual patt ern of central-local relations and two-tier self-government was established. however, due to the impact of interwar as well as soviet periods, strong elements of fused organization of county governance were introduced, which installed – like in the 1920s – implicit contradiction into the county governance. the main purpose of the reform and transition period (planned from 1989 to 1994) was to restore a strong municipal level of self-government and to transfer all local tasks from the county government to the municipal level, except those which municipalities cannot manage alone due to extensive scale or scope of resources and professionalism needed. county government was considered as a kind of substitute for central government and municipalities in compensating their temporary defi ciencies. 207 the actual devolution of county’s tasks to municipalities thus varied depending on optimism or cautiousness of county governors about the capacity of municipalities (saar, 2006). similarly, extensive tasks were left to the competence of counties because central government was not able to take responsibility for these due to substantial reforms of central institutions. therefore, the dual patt ern was obviously a temporary arrangement. moreover, because county government was a stronghold of communist soft-liners, but the new political elite considered the municipal level as a basis for its political power resource, a strong political cleavage – besides structural tensions – between tiers shaped the context for evolution of county governance. these tensions created an image of county governments and councils as temporary arrangements or even as obstacles of democratic reforms (cca, 1997). the rhetoric over the expediency of county self-government, instead of analyzing its actual and possible role, became a key focus of local government developments at the outset and it lasts up to the present days. like in the 1920s, the county governor and collegial government were appointed by the directly elected council which had considerable legislative autonomy. at the same time the governor was assigned the role of representative of the state. thus, the patt ern combined extensive autonomy of county self-government with fused roles of head of county self-government and prefect, which is inherently a controversial amalgam. designers of the reform were not ready at the time of democratic enthusiasm to introduce less politicized versions of council (indirectly elected or executive-council patt ern) which could have decreased tension between dual and fused patt ern elements. there were several other dimensions where the mechanisms of fusion of state/ self-governing roles were installed. first, similarly to the soviet period the fi ve largest cities had simultaneously the status of counties which substantially decreased the failures of public service provision in cities. later this arrangement, which would bett er balance local autonomy and fusion of roles, was abolished. second, collegial county government was established, appointed by the council (and majority coalition), however the chief of county offi ce (county secretary) was appointed by the cabinet (central government) at the proposal of county governor. third, county government was primarily a generalist offi ce for accomplishing many subnational tasks, which were still in the responsibility of central government. fourth, county governor and council had in this period extensive discretion in ex ante legal supervision over the decisions of county level public (state) and private actors, including supervision over municipalities. consequent disputes between diff erent tiers’ authorities on the legality of decisions were solved by the supreme council. similarly the cabinet had discretion to veto the decisions of the county council. this strengthened the tensions in central-local relations because the arbiter in confl icts was not the court but the administrative and representative bodies (lgfa, 1989). the county governor was responsible for the coordination of all public authorities in the county to ensure balanced and integrated local/regional develop208 ment. moreover, the county governor had discretion (lgfa, 1989, section 12) to give consent or not to the appointments of heads of ministerial fi eld offi ces and organizations. governors had also a right to participate at the cabinet sessions with advisory vote (lgfa, 1989). these powers make the county governor extremely powerful but at the same time a very autonomous actor vis-á-vis the central government. thus, like in the 1920s, the county governance in estonia contained profound tensions caused by the mix of principles of dual patt ern with rather strong elements of fused patt ern. the most controversial was the combination of roles of prefect (as representative of the state and coordinator of state agencies) and county governor (who has a strong political mandate from the council). these tensions amplifi ed by controversies between old and new elites which had dominant positions in diff erent tiers of local governance. 3.2.2. strong prefect in charge of generalist offi ce after the independence in 1991 the discussions at the constituent assembly in 1991 as well as the constitution of 1992 did not yet defi nitively exclude the possibility of county self-government. however, on 12 may 1993, before the local government act was adopted (on 3 june 1993),the parliament introduced a single-tier local self-government in estonia. this was a victory of new political elites. though, they still intended to develop in estonia a dual patt ern of central-local relations based (as in finland) on strong one-tier self-government and on inter-municipal cooperation arrangements (jürgenson, 2014). the new patt ern of county government was provided by a temporary act adopted in june 1993 (cga 1993) because the county government status was to be regulated in the government of the republic act (‘gra’). the gra was adopted in 1995 by another coalition in which dominated the old elite. for that reason there were some principal diff erences in the status and roles of county government in those pieces of legislation. counties were considered in previous laws and practices as historical and integrated territorial communities. the cga of 1993clearly redefi ned the county as a unit of the state administration and abolished the county council, whereas the county governor became appointed by the cabinet as a higher civil servant. in 1993 was established, as a compromise, a board of municipal leaders2 which had the right of consultative approval of the candidate of the county governor. it is important that the county government was still identifi ed as a generalist central government offi ce, which was responsible for the implementation of a large amount of tasks of central government at the county level, like infrastructure development, planning, environment protection, emergency service, labor market services etc. and the county governor was the head of that offi ce. his/her role as prefect (responsible for supervision over autonomous municipal level and coordination of functional ministerial offi ces) 2 this body was abolished in 1994. 209 was listed as subordinated to the administrative-managerial role. hence, it was not yet the classical prefect but more like a governor without council, which, as we saw in the 1930s, was a rather controversial patt ern. the collegial government was replaced by the governor although the term ‘county government’ is used up to the present day designating not the collegial cabinet but the governor’s offi ce. in the gra, adopted in 1995, the county government was defi ned primarily as the offi ce which assists the county governor (i.e., the prefect) – as representative of the central government at the county level. the gra did not includ eanymore the role of county government as responsible for accomplishing service provision tasks in the county. from 1993 the county governors had high status not only because they were appointed by the cabinet at the proposal of the prime minister, but they enjoyed high legitimacy largely inherited from the 1980s. they convened in regular (informal) county governors’ board which was a veto as well as a pressure group in articulating and channeling local level interests at the time when the legitimacy of national local government associations already declined. strong informal and collective powers of county governors were cautiously perceived, on the one hand, by municipal elites whose power resources declined due to declining popular democratic enthusiasm and due to increasing need for capacities which many of municipalities did not have. on the other hand, county governors were important actors in the central policymaking and were perceived by central government as contesting their supremacy. at the end of the 1990s a strong critique of county governors’ double and balancing role was launched in the press (e.g., postimees, 1998). county governors’ att endance of cabinet sessions was cancelled in 1999. this could be considered as a symbolic turning point in the transformation of county governor as the balancing and mediating actor between local and central government into the mere administrative offi cial of a ministerial unit. 3.2.3. deconstructing the county governance already in the mid-1990s was developed a kind of informal agreement between central and municipal elite to re-allocate the administrative and service provision tasks of the county governor’s offi ce to the county’s local government associations. this might result in the establishment of a kind of dual patt ern in which the county prefect’s state representative and supervisory roles and the county level self-governing roles are institutionally separated (ministry of interior, 1998). the structures of supra-municipal cooperation as substitute for county self-government are used also in finland. in estonia the county association has a status of ngo and its board is composed of mayors of municipalities, who represent municipalities’ interests. in finland joint municipal authorities are public agencies whose boards (and also regional (maakunta) councils) are elected by councilors according to overall party representation of municipalities (lga finland, chapter 10) and thus they can focus on the issues and interests of counties as a whole. this specifi city of estonian county’s association has been one of the main arguments against assigning them meaningful pub210 lic service provision responsibilities. however, the central government has resisted changing its status also. when the central government started to reduce powers and services provided by the county government, it transferred these not to the county associations but to branch ministries and their fi eld offi ces. this process was contested by the minister of regional aff airs in 2003 (toila, 2003), who was one of the leaders of local elites. four scenarios were proposed and debated, which included a completely dual patt ern as well as fused patt erns and also the introduction of the second tier of self-government. but proposals did not cross even the doorsill of the cabinet: central government elites have preferred purely functional organization of intermediate level governance. a similar package was proposed by the next minister of regional affairs in 2007 (reima, 2007) which resulted in his immediate dismissal. this is a good evidence that in case the (controversial) dual patt ern is not able to hold the balance of power between tiers the position and interests of the more powerful side – central government – starts to prevail and to shape the bias in central-local relations. the process of actual deconstruction of county politico-administrative space started in 2000 with the reorganization of administrative units of county administration, which commenced with the reorganization of environment protection units into ministerial fi eld offi ces and subordination of county level service agencies (rescue service, labor market service, environment protection fund, etc.) to branch ministries. hospitals became de facto subordinated to the national health insurance fund. true, nursing homes for the elderly were transferred to municipalities. the decisions upon the state budget investments for local and county level were transferred from the board of mayors presided by the county governor to the competence of ministerial units and bureaucrats. by the 2003 parliamentary elections the county governments had lost majority of their administrative tasks and many county governors entered into politics. in 2004 several amendments of gra were adopted which reduced considerably the autonomy of the county governor and its offi ce (gra as of 2 april 2004). first, a provision was introduced which enabled to dismiss the governor in case of lack of smooth cooperation with the central government, i.e., for political reasons. second, the selection of candidates for county governors was formally re-assigned from government offi ce to the minister of regional aff airs, but actually this was made in party headquarters based on political deals of coalition. third, as a result, the county governor’s offi ce became a deconcentrated unit to the ministry, and the governor became directly supervised by the ministry’s senior staff . in the middle of the 2000s, after eu membership, the abolishment of autonomous state fi eld agencies at the county level and the transfer of these agencies to four large city-regions have started. currently only few fi eld agencies are located at the county level. hence the county governor lost also the real capacity to coordinate the activities of state fi eld agencies. also the role of the prefect as a representative of the state in the county is diminished. in 2008 the ministry of interior commissioned an evaluation report which made a practical recommendation to decrease in the governor’s daily agenda the share of activities related to the representation of the state, and the ministry has approved it. 211 in september 2010, at the parliamentary hearings ‘partnership of central and local governments’ it was acknowledged that after the considerable diminishing of county governance capacity there have been important steps also towards the erosion of capacity of municipalities (estonian parliament, 2010). in 2009, the government unilaterally cut the proportion of personal income tax transferred to the municipal budget and de facto blocked local government borrowing except for eu funds co-fi nancing. since the end of the 2000s the government started to establish state-run upper secondary schools at counties’ centres, thus unilaterally taking over one of the core functions of municipalities. the president of estonia at the ‘day of rural municipalities and cities’ (march 2014) found that central government should be responsible for the provision of basic education (ilves, 2014). finally, in 2014 the post of minister of regional aff airs was abolished. surprisingly however, the most obvious scenario to abolish an already largely symbolical actor – county governor and its offi ce – is not seriously debated in estonia. why? first, it has become obvious in practice that functionally strong government fi eld offi ces cannot eff ectively accomplish these local (regional) tasks, which presume a territorial dimension and well-oiled coordination between county level actors to achieve expected outcomes like in regional transport and roads, matching education to the needs of the labor market, ensuring professional advice on social issues, developing local business environment etc. (sootla and katt ai, 2013). as indicated in an oecd report (oecd, 2011) public administration in estonia needs urgently eff ective coordination mechanisms to overcome functional fragmentation not only at national but also at subnational level. second, diff erently from those eu countries where counties were abolished, in estonia it is not possible to delegate those tasks and roles to municipalities because of their insuffi cient capacity; nor to the county’s associations which, as demonstrated, are not capable to articulate the interests of the county as a whole and do not have administrative capacity to accomplish consistent administration at the county level. third, the county governor’s offi ce has lost not only its administrative capacity but also its legitimacy in the eyes of local actors, especially after the political appointments of governors. local actors have few incentives and litt le trust to cooperate under the leadership of the politically affi liated governor and also to assign county level tasks to the governor’s offi ce. fourth, those tasks of territorial administration could not be delegated to regional self-government either, as it is currently happening in european countries, because this level of self-government is absent in estonia. 4. discussion and conclusion reforms of county governance in estonia provide rather rich and instructive lessons of institutionalization of county governance. these developments are summarized in table 1. we have made in the course of analysis of these patt erns some observations and some tentative conclusions. 212 in estonia the county level governance had high capacity and legitimacy in times of profound regime change when counties were subsidiary to the weak central and municipal government and ensured an extensive set of public services. with the stabilization in the country both – local as well as central government elites – started to contest the status and powers of county government. it was fi rst of all because established patt erns of actors and roles of county governance contained deep internal contradictions, which started to erode power position, capacity and legitimacy of county governance in estonia in the end of the 1920s and in the 2000s. we revealed that fused and dual patt erns should be combined very carefully and to limited extent because they are based on rather diff erent mechanisms of balancing intergovernmental relations. first of all, it is risky to assign to county governor simultaneously the role of representative of the state and executive of county council when the governor has strong direct political mandate from the electorate (council). second, in the 1920s and in the 1990s a strong political mandate was paralleled with strong mandate of administrative interventions into the every day aff airs of municipalities, which got political tone in the eyes of municipal elites. as a result, both central government as well as municipal elite’s pressures resulted in the abolishment of county council and in the establishment of a perfectly balanced and integrated fused patt ern, true, by authoritarian regime, and the dual patt ern in 1993. the same miscalculation, i.e. the institutional merger of state’s representation and electorate representation roles was made in the course of the 1989 reform. this controversy was amplifi ed by political rivalry between tiers, when elites with soviet background dominated at the county level and the municipal level became a stronghold for new political elites. this resulted in 1993 in abolishment of county council and establishment of a strong prefecture. prospects for the development of specifi c dual patt ern of county governance emerged through the strengthening of county’s municipal association’s executive roles. this patt ern of dual system, which was successful in diff erent versions in finland and enables to balance central-local relations, did not materialize in estonia. because estonian local governance does not meet two important preconditions for balances: strong and increasingly capable municipalities and consensual politics, and cooperation among them. besides, the pressures from municipal and central elites were targeted to weaken powers and legitimacy of a strong prefect. as a result of these trends we evidence today simultaneously, on the one hand, formally autonomous municipalities (i.e., formal dual patt ern) which due to decreasing capacity cannot ensure anymore central-local balances that is a function and sense of dual patt ern of governance at the county level. this becomes especially obvious from the beginning of 2001 after the central government failed to accomplish amalgamation reform in order to increase the capacity and political weight of municipalities, which in denmark (2007) and latvia (2009) enabled to abolish the second tier of government. in estonia the power balance became increasingly biased towards the central government and has resulted in its overwhelming dominance. on the other 213 hand, we evidence the emergence of a vacuum in the politico-administrative space at county level which cannot ensure integrated intergovernmental relations in the age of multilevel governance through tools of administrative politics and coordination, appropriate to fused patt ern of governance. it is a kind of deadlock which developed step by step by unintentional as well as politically motivated decisions. it is an instructive case: neglecting some of the basic premises in the design of one of the links in the chain of the politico-administrative system – county governance – can result in the need for a complete redesign of the whole governance machine. the need for redesign has got increasing support from diff erent parties and elites, e.g., estonian employers’ confederation, estonian chamber of commerce and industry, and trade unions presented a joint statement on state reform to the government in march 2015. possible solutions have been put forward by the state reform program issued by the estonian cooperation assembly (2014) at the president’s offi ce. table 1: summary of patterns of county governance in estonia unit / dimension 1917-20 1920-34 1934-38 1938-40 1989-93 1993-99 1999 … general pattern second tier indirect selfgovernment and separate prefect second tier self-government merged with prefect’s role prefect as the head of generalist fi eld offi ce prefect as the head of generalist offi ce and indirect selfgovernment second tier local selfgovernment and generalist offi ce merged with prefect’s role prefect as the head of generalist fi eld offi ce prefect as solely a representative of the state formal pattern of central-local relations fused fused fused fused dual dual (split hierarchy) dual (split hierarchy) head of government governor, collegial governor, collegial prefect, collegial prefect, collegial governor, collegial prefect prefect council indirectly elected direct elections no indirectly elected direct elections no no references: 1. aalbu, h., böhme, k. and uhlin, å., administrative reform – arguments and values, stockholm: nordregio, 2008. 2. act on temporary governance of counties 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monetary policies, we identify within the european construction a series of weak points generated by a highly heterogeneous fiscal environment, arguing that these deficiencies need to be swiftly addressed. last but not least, we set forth potential solutions that would promote euro zone fiscal discipline and would help eliminate asymmetric shocks, thus creating a more uniform economic environment in which member states enjoy an increased financial health and in which monetary policy can be more efficiently conducted. keywords: euro zone, fiscal policy, monetary policy, fiscal discipline. the euro zone – between fiscal heterogeneity and monetary unity horaţiu dan horațiu dan assistant professor, phd, faculty of european studies, babeșbolyai university, cluj-napoca, romania tel.: 0040-264-593.770 e-mail: horatiu.dan@euro.ubbcluj.ro transylvanian review of administrative sciences, no. 43 e/2014, pp. 68-84 69 1. introduction: general considerations on fiscal and monetary policies today’s macroeconomic context is more complex than ever, as ever stronger global interconnections create waves of external factors that influence local economies, thus putting pressure on domestic policy to mitigate unwanted effects and regulate the economic environment in the direction of achieving desired macroeconomic objectives regarding inflation, unemployment, consumption, investment or expenditure levels. such objectives are however influenced by two completely different sets of instruments, controlled by two completely different authorities. the first such set is of a fiscal nature and, in democratic states, which are the focus of our study, falls within the responsibility of people elected bodies, be them of an executive or legislative essence. the second set that holds great power in influencing economic variables belongs to the monetary area and is controlled by an independent central bank (even if some basic level of accountability to political bodies still exists). this dual situation may be the source of great synergies that come from an efficient combination of the two sets of instruments, but it can also prove to be negatively influenced by what can sometimes be a hard to manage relationship between political bodies and an independent central bank. this paper is aimed at exploring this duality in the case of the euro zone and at analyzing how a climate characterized by the existence of a unique monetary policy and an extremely low fiscal integration affects euro zone structural efficiency. but before plunging deeper into the analysis, let us briefly take a look at the main characteristics of each type of policy in general, fiscal and monetary. blanchard (2006, p. g-4) defines fiscal policy as a government’s choice with regard to taxes and expenses, while weil (2007) provides more details by adding that fiscal policy is composed of the government’s decisions concerning the goods and services that are being purchased, the transfer payments made and the taxes collected. all these directly affect the tax payers’ available capital and the demand for goods and services, and thus ultimately induce effects on the production level, the unemployment rate and inflation. basically, through fiscal policy the government manages a country’s processes, so that it reaches desirable effects from a social and economic perspective. in order to achieve these objectives, governments make use of two types of fiscal instruments, the first category linked to government spending (i.e., investments in infrastructure, education, health care, social transfers), and the second to government revenues. the revenue related fiscal instruments include the government’s practices regarding taxes and user charges, the latter meaning individual payments for services provided by the government (hagemann, 2012). however, a particularity of fiscal policy lays is the fact that its two categories of instruments are in an inverse relationship with each other, more precisely that the effects of the revenue based fiscal instruments are conditioning the use of spending based instruments. of course, intertemporal transfers of funds (i.e., government borrowing or lending generated by a deficit or a surplus in the budget) will alter this equation, but the nature of the relationship still holds. this puts fiscal policy making in the unique position of having to balance these two antagonist types of instruments and of combining them with 70 administrative and management skills that allow for greater efficiency in spending, on one side, and a non-disruptive influence of taxation and user charges, on the other. we will now turn our attention towards elements concerning monetary policy, which has a completely different structure than fiscal policy, but casts an important, often decisive, influence on many of the economic variables that are fiscally targeted by government bodies. according to labonte and makinen (2006), monetary policy is made up of the directives, policies, pronouncements and actions of the central bank that affect aggregate demand or national spending. taylor (1995) identifies the main goals of monetary policy as referring to controlling the real values of the gross domestic product and of the inflation level, while cecchetti (2000) takes a slightly different perspective by considering that monetary policy objectives are focused on the stabilization of the levels of production and inflation. however, the way in which monetary policy is being conducted, its objectives, and the instruments used to secure them have always been a topic of debate between economists and their different economic philosophies. in this sense, the words of milton friedman (1968) are emblematic: ‘there is wide agreement about the major goals of economic policy: high employment, stable prices, and rapid growth. there is less agreement that these goals are mutually compatible or, among those who regard them as incompatible, about the terms at which they can and should be substituted for one another. there is least agreement about the role that various instruments of policy can and should play in achieving the several goals.’ central banks conduct monetary policy by exerting control on interest rates. their main instruments focus on influencing the supply and demand for money and on setting interest rate benchmarks, i.e. unilaterally deciding how much they charge or pay credit institutions for borrowing or lending money from/to the central bank. all these actions alter directly only short term interest rates, but their effects are then being propagated through the interest rate and credit channels of the monetary policy transmission mechanism, eventually influencing long term interest rates and credit market conditions, which are crucial for the way in which the economy operates. evidently, this also casts a strong effect on the financing cost of the public sector, and thus influences fiscal policy. in addition to these traditional monetary instruments, the monetary practice from previous years has added another class of instruments, generically called quantitative easing, to the arsenal of central banks. according to blinder (2010, p. 1), quantitative easing measures are used to bring ‘changes in the composition and/or size of the central bank’s balance sheet that are designed to ease liquidity and/or credit conditions’. such instruments imply a direct participation of the central bank in the economy by creating new money, thus being considered by monetarists and market libertarians a breach of capitalist rules. quantitative easing is used when other monetary measures have already been exhausted, more precisely when inflation and investment levels are low even in a zero (or almost zero) interest rate environment. as roubini and mihm (2010, pp. 260-261) notice, by adopting such measures, central banks shift away from 71 their traditional role of lender of last resort to a not so long ago unconceivable role of investor of last resort – a somewhat fiscal attribute! fiscal and monetary policies represent two entirely different sets of powerful instruments that are responsible not only for modeling the macroeconomic environment, but also influence each other. in such a climate, which is characterized by simultaneous pressures from these two extremely different forces, we can define a fiscal – monetary dichotomy that characterizes economic development and which can either lead to an effective and efficient result or, on the contrary, can provide the premises for a confusing and uncorrelated set of decisions that generate a suboptimal outcome. 2. the fiscal – monetary dichotomy in the euro zone the european union is perhaps one of the most ambitious political and economical projects ever designed, as it brings under the same governance a continent that is historically heterogeneous, both culturally and politically, in an attempt to find, as its slogan so skillfully describes, unity through diversity. in this context, the creation of the single currency area is, without any doubt, one of the major accomplishments of the european project. however, there are still some unresolved issues, as the benefits of such a monetary arrangement, which according to krugman (2012) take the form of reduced transaction costs, the annulment of the exchange rate risk, greater transparency and a potential growth in competitiveness due to the fact that prices are easier to compare, are weighted by fiscal heterogeneity. the fact that the euro zone exists and functions with a certain degree of effectiveness does not mean that the monetary union is complete in every sense, as there are certain elements that question the efficiency of the system in its current state of development and call for further actions that would strengthen the economic environment. the challenges are however enormous, as sovereignty is something that national states are seldom willing to give up, nor should they be, at least not under any conditions. after more than six years of economic crisis, the creation of the monetary union is now, maybe more than ever, a controversial issue, the pro and con arguments fueling debates both at the level of the member states who already adopted or pledged to adopt the euro and in those who rejected the adoption of the single currency1. at the center of these debates stands the duality between fiscal and monetary governance. normally, the fiscal – monetary dichotomy arises because, on the one hand, monetary policy is controlled by an, at least partially, politically independent central bank, while fiscal policy decisions are taken by institutions of a political nature which are directly accountable to their voters and thus vulnerable to social pressures, with the advantages and disadvantages that this direct link to the people provides. main such advantages regard the increased accountability of government bodies, but sometimes politicians may fail in correctly evaluating the disadvantages arising 1 great britain, sweden and denmark, even though the latt er has pegged its currency to the euro. 72 from popular pressures to shift from a long term oriented strategy to one that favors the short term. the fiscal – monetary relationship is a bilateral one and, as practice from so many countries has suggested, can normally be managed by the involved institutions so that it generates effective and efficient economic outcomes. however, in the euro zone, the fiscal – monetary dichotomy exists under substantially different conditions, as a unique monetary policy interacts with eighteen different fiscal policies carried out by each of the national governments of euro zone member states. it is no longer a bilateral relationship, but a multilateral one, as on the one hand, monetary policy prerogatives are set centrally within the control of the european central bank (ecb), whose decision making process takes into consideration the interests of the euro zone as a whole and pays little attention to the individual needs of each of its members, and on the other hand, the fiscal policy approach allows each of the eighteen member states to devise its own fiscal strategy, focusing, unlike the ecb, strictly on the national interest. according to kennen (1969), the issue regarding potential peripheral inefficiencies generated by a unique centrally coordinated monetary policy may be addressed, at least partially, through fiscal policy decisions that would compensate for the lack of monetary policy efficiency. however, this compensation will seldom be complete, as the potential efficiency of fiscal measures in influencing macroeconomic variables is much weaker than that of the adequate monetary policy actions (cecchetti, 2000). let us now take a look at the euro zone’s currency union – fiscal autonomy arrangement from a different angle. the most influential research on the subject of the common currency areas is provided by mundell’s 1961 optimal currency area theory, which represents the theoretical core of the euro zone. as mundell (1961, pp. 660661) notes, ‘the optimum currency area is the region’ and ‘if regions cut across national boundaries or if countries are multiregional then the argument for flexible exchange rates is only valid if currencies are reorganized on a regional basis’. he then adds that ‘if the world can be divided into regions within each of which there is factor mobility and between which there is factor immobility, then each of these regions should have a separate currency which fluctuates relative to all other currencies. this carries the argument for flexible exchange rates to its logical conclusion. [...] but if labour and capital are insufficiently mobile within a country then flexibility of the external price of the national currency cannot be expected to perform the stabilization function attributed to it, and one could expect varying rates of unemployment or inflation in the different regions’ (mundell, 1961, pp. 663-664). as we can see, in his quest for currency area optimization, mundell is mostly interested in the free flow of capital and labor, components which are indispensable for a fully functional common currency area. but which are the structural elements influencing labor and capital mobility? we will argue that there are two elements that need to simultaneously exhibit a favorable status for factor mobility to exist and that they are primarily linked to legislation and cultural barriers. if the former has been clearly addressed by the eu treaties by setting down common rules that eliminate legal obsta73 cles2, the latter represents the result of centuries of historical evolution and cannot be so easily tackled, as european nations have developed individually and have often been in tensed relationships with one another, thus making national identity a much less abstract notion than a common european identity. in this context, the main cultural barriers, such as historical disputes and the multilateral resentments they generated, consistent linguistic differences, different national symbols and values, differences in cultural traits as defined by hofstede (2011) and attitudes towards immigrants, represent obstacles in the way of european integration (dan, 2013) and, more specifically, labor mobility. this is consistent with the findings of european commission scholars gáková and dijkstra (2008, p. 2), who show that more than 85% of the european union’s internal labor mobility is represented by movements between the regions of the same country. focusing on the eu – 15 member states3, holland and paluchowski (2013) find that, in 2010, cross-border labor mobility in this region (which includes 12 of the 18 euro zone members) represented just 0.35 % of the total labor force, highlighting the big difference to the 2.4% inter-state labor migration in the united states. looking at the supply vs. demand for labor, we find great differences between euro zone member states, as october 2013 unemployment levels range from relatively low levels of 4.8% in austria and 5.2% in germany to staggering 26.7% in spain and 27.3% in greece4, with a euro zone average of 12.1%, according to eurostat. in an environment of increased labor mobility, these differences would tend to level out, as idle workforce from high unemployment countries would migrate to low unemployment ones, where work would be easier to find, even if this would mean driving down wages. this is, however, not the case of the euro zone. consequently, even if it is hard to objectively determine which is the sufficient level of labor mobility so that the euro zone may function efficiently, we adhere to the conclusion of gáková and dijkstra (2008, p. 2), who concede that ‘labor mobility does not play an important role in reducing the disparities between eu regions, therefore other aspects need to be considered when designing policies to reduce economic and social disparities between regions’. this makes the current level of intra-euro zone labor mobility an element that hinders the functioning of the common currency area. an answer to this imperfect situation transpires from the work of kenen (1969), who studies the role of fiscal policy in the context of the optimal currency area, reaching the conclusion that fiscal unity may compensate, at least partially, the lack of labor mobility, thus adding another dimension to the mundellian concept. later, revisiting his 1969 ideas, kenen (2003, p. 150) shows that fiscal policy, and more precisely its tax 2 the last restrictions set by transitional agreements for romanian and bulgarian nationals expired on 1st of january 2014. 3 the countries that joined the eu prior to the 2004 enlargement wave: belgium, denmark, germany, ireland, greece, spain, france, italy, luxembourg, netherlands, austria, portugal, finland, sweden, united kingdom. 4 august 2013 level. 74 component, may be used to regulate available income as a function of the production level (i.e., an increase in taxes in the area where production levels are rising and a tax decrease in the area where the production dynamics are pointing at a lower level), with relevant effects on labor demand. this view places the burden of taking actions on the shoulders of fiscal policy makers, who should include the issue of labor mobility among their priorities with the goal of aiding monetary policy in its regulatory mission. however, in a european context characterized by an accentuated fragmentation of fiscal prerogatives between national governments, it is extremely hard to believe that a relevant number of national political entities will respond to such a request. we will next change perspective and look at the fiscal – monetary policy dichotomy from another point of view by analyzing whether an environment with increased labor and capital mobility is enough for a common currency area to function efficiently in the absence of fiscal integration, or at least a high degree of fiscal discipline. let’s just pretend that a certain euro zone member state is confronted, unlike the others, with high levels of public debt and budget deficit and is forced to respond to the situation with a certain type of fiscal austerity solution. this basically means that the country’s biggest consumer and employer, the government, has to either severely cut back on its expenses, or rapidly increase its revenues through superior taxation, leading to weaker demand (and consequently to a gdp contraction) through one or more of the following channels: 1) a direct channel based on the inferior purchase of goods and services by the government; and/or 2) a channel based on the decreased buying power of public sector employees; and/or 3) a channel based on effects of weaker demand due to increased taxes and their impact on the disposable income of consumers; and/or 4) a channel based on the negative effects that increased taxation has on investment levels. yet, due to the inevitable gdp contraction generated by such a course of action, austerity measures will most probably be insufficient in delivering economic redemption, in which case the classic, but still reliable solution lies within the depreciation of the national currency, thus making the debt inferior in real terms and consequently more bearable for the encumbered government. this however can never be an option for a state that is part of a common currency area, as it does not have control over monetary policy and has no ways of interfering by means of monetary policy in its currency’s exchange rates. another issue regards the fact that, within a common currency area like the euro zone, lack of fiscal discipline of one state will produce undesirable effects to other states participating in the monetary union. in other words, a scenario that is very similar to the greek situation, which was, at least in the short term, resolved by creating a temporary, unofficial and half measured common fiscal construction aimed at providing bailout funds that would keep greece out of bankruptcy. we say that this is actually some sort of a fiscal construction due to the fact that the bailout was organized using public european money and was clearly not an investment oriented decision, but a kind of fiscal transfer (even though money is provided as credit, at least declaratory), in the conditions in which interest rates are considerably lower than the ones charged by markets and it also remains unclear whether greece will eventually be able to return all of the borrowed sum or will get a debt cut-off, as it has gotten in 75 the past. the fact that the sovereign debt problem was, at least temporarily, tackled within the euro zone and the integrity of the monetary union does not seem to be in danger any more, does not however constitute an argument in favor of the existence, or at least of the irrelevance, of the fiscal – monetary dichotomy; on the contrary, the appearance of such events signals that the contrasting european arrangements regarding fiscal and monetary governance are a source of severe inefficiencies that cannot be overcome by an increased mobility in labor and capital. 3. fiscal discipline in the euro zone as we have already showed, the maastricht treaty brings clear provisions regarding national fiscal parameters, i.e. the budget deficit should not be greater than 3% of the country’s gdp and the government debt to gdp ratio should not be greater than 60%, provisions that have been undertaken by all, present and future, euro zone member states, at least formally. the real situation looks however entirely different. according to eurostat data for the period between 2008 and 2012, only 1 out of 17 euro zone member states5 has fully complied with the provision regarding the 3% budget deficit limit (latvia), while 11 out of 17 countries missed the target in at least 4 of the last 5 years, as it can be seen in figure 1 below. moreover, some countries, such as ireland, greece or spain, have registered enormous deficit levels, the irish staggering 30.6% budget deficit registered in 2010 being at the top of an extremely troubling list6. figure 1: number of times maastricht treaty yearly budget deficit provision was missed by eu member states between 2008 and 2012 source: author’s calculations based on eurostat data 5 due to the fact that it had just joined the euro zone in january 1st 2014, latvia has not been included in this analysis. 6 for a complete picture of the budget defi cits registered by euro zone member states between 2008 and 2012, please see annex 1. 76 things look in a similar fashion when analyzing the euro zone member states’ public debt levels. again, 11 out of 17 euro zone members have registered surplus debt when compared to the maastricht treaty provisions in at least 4 out of the 5 considered years, while only 5 out of 17 countries have managed to maintain a lower than 60% debt to gdp ratio throughout the 2008-2012 period. clearly, the complete situation of debt to gdp ratios registered by euro zone members, as shown in annex 2, reveals a bleak picture. figure 2: number of times maastricht treaty yearly debt to gdp ratio provision was missed by eu member states between 2008 and 2012 source: author’s calculations based on eurostat data moreover, in 2012, 9 out of 17 euro zone members7 registered surpluses from maastricht treaty provisions in both budget deficit and debt to gdp ratio. this fact, correlated with the fact that non-compliance had no administrative consequences whatsoever, leads to the obvious conclusion that the so called binding character of these fiscal requirements is, in fact, nothing more than a theoretical recommendation. taking our investigation deeper, we focus on the degree of heterogeneity in fiscal behavior across the euro zone8. for this purpose, we have calculated the standard deviations of the euro zone member states’ levels of government deficit and gross debt for each year between 2008 and 2012 and the results show quite clearly that fiscal behavior is very different across the euro zone and that fiscal discipline is, in practice, more of a theoretical principle. let us first refer to the criterion regarding the budget deficit and the actual situation concerning this requirement as detailed in table 1. a number of facts stand out. firstly, the standard deviations calculated for each year in the period 2008-2012 7 belgium, ireland, greece, spain, france, cyprus, malta, netherlands and portugal. 8 due to the fact that it had just joined the euro zone in january 1st 2014, latvia has not been included in this analysis. 77 are high (ranging from 3 to 6.8), pointing out to a very heterogeneous situation, with values as extreme as an irish 2010 budget deficit of 30.6%. secondly, the whole euro zone deficit was, in the last four years of the considered period, in excess of the 3% threshold, thus completing a somewhat desolating picture. table 1: general government deficit/surplus (% of gdp) across the euro zone year minimum value maximum value euro zone mean standard deviation 2008 -9.8 4.4 -2.1 -2.1 3.5 2009 -15.7 -0.7 -6.4 -6.5 4.1 2010 -30.6 0.2 -6.2 -6.7 6.8 2011 -13.1 1.1 -4.2 -4.5 3.7 2012 -10.6 0.1 -3.7 -4.3 3 source: author’s calculations based on eurostat data things look very similar when it comes to the government debt to gdp ratio, as shown in table 2 below: enormous variances between debt levels, observations as extreme as 170.3% and euro zone-wide indebtedness that was only in 2008 within the maastricht limits and, additionally, has risen constantly each year. table 2: general government gross debt (% of gdp) across the euro zone year minimum value maximum value mean standard deviation 2008 4.5 112.9 54.9 30.3 2009 7.1 129.7 64 32.2 2010 6.7 148.3 70.2 34.9 2011 6.1 170.3 75.3 38.9 2012 9.8 156.9 81 37.6 source: author’s calculations based on eurostat data in the light of all these elements, it can easily be concluded that the states which are part of the euro zone have very different fiscal behaviors, most of them severely lacking fiscal discipline in such a way that they somehow tacitly divert attention from the effort to actually comply with the maastricht criteria and instead steer it to a kind of acceptance of deviations from the maximum allowed levels as long as there are other euro zone members which are in a much worse fiscal shape. the system is flawed and practice has clearly shown that in numerous cases fiscal discipline cannot be effectively enforced in early stages, but just after things have already become critical and governments, unable to finance themselves from the market any more, seek last resort help from one or more of the institutions that make up what is so plastically called the troika (the international monetary fund, the european commission and the european central bank). in this context, it is clear that something should be done. 4. how euro zone fiscal integration may actually work even if embarking on a journey towards a complete fiscal union and taking consistent measures in order to get closer to such an objective would strengthen the structure of the european union and would provide economic advantages due to an in78 creased efficiency of governance and a more uniform and, therefore, more stable and predictable business environment, it is hard to believe that such an arrangement is, at this point in the existence of the eu, possible from a political perspective. an important issue is that national governments prove reluctant to transfer towards brussels such a big chunk of their prerogatives and therefore greatly decrease national sovereignty. indeed, taking into consideration the profound changes that took place within the eu in the last twenty years, which led to an increased role of central institutions, correlated with economic difficulties of the past period and their effects on citizen’s mentalities, it is somehow difficult to condemn this reluctance. however, measures do not necessarily need to be as decisive as implementing a full fiscal union, since certain measures of fiscal integration would dramatically improve the european economic environment while, at the same time, allowing member states to keep most of their sovereignty attributes. the first issue to be addressed is to effectively enforce the rules which already exist, i.e. the provisions of the protocol on the excessive deficit procedure, part of the consolidated version of the treaty on the european union, which clearly states that a euro zone member state should not have a budget deficit (planned or actual) greater than 3% of its gdp or a ratio between its government debt and its gdp that exceeds 60%. the problem lies in the fact that, in practice, these provisions seem mandatory only for member states seeking to adopt the euro, and less for member states who already use euro as their currency, as the provisions of the treaties (article 126) regarding fiscal discipline enforcement and the measures taken against those who are in breach of this discipline are vague and leave the final decision in the hands of the council of the european union9, which, as practice showed, does not act as an effective fiscal watchdog. the issue that arises is exactly how these provisions could be efficiently enforced, since it has been shown that the council’s supervision does not suffice. one idea consists in automatically imposing, without the interference of the council, financial punitive actions against member states that are in breach of these provisions. this course of action seems however a bit rudimentary and, in some cases, could do more harm than good, as it only further impairs an already delicate financial position. other punitive actions may target the member state’s representation rights at the eu level, imposing restrictions on voting rights within different european institutions. but such an approach also poses serious disadvantages, as it hinders democratic participation of european citizens to the decision making process, a dangerous endeavor that may produce devastating long-term effects and may prove to be a significant breach in the european construction. so perhaps solutions should not be sought in punishment and in the hope that government actions would be influenced by fear of brussels, but in other means of avoiding fiscal discipline breach. 9 through its economic and financial aff airs component. 79 one answer to this issue could lie in making these fiscal discipline related provisions of the treaties mandatory by developing a clearly defined european fiscal legislation and having it implemented in national legislation via a parliamentary vote. this way, national governments would lose legal authority to breach certain fiscal thresholds and would be bounded to respect euro zone fiscal discipline. however, since some cases may indeed require some degree of flexibility, temporary derogations could be granted by the european parliament at the proposal of the commission, a mechanism which would ensure that an overly rigid approach would not backfire in certain socio-economic contexts. another point of interest is related to the opportunity of issuing common euro zone bonds (eurobonds). the idea is not at all new, but it received extra attention and has become more widely discussed after a paper released by the european commission (2011) found that such instruments may bring ‘significant potential benefits’. also, mundell (2012), one of europe’s theoretical architects, identifies the lack of euro zone jointly issued bonds as one of the main shortcomings of the system. in the absence of such financial instruments, there will always be significant differences in interest rates borne by euro zone member states, with direct consequences on private funding also, a heterogeneity based on national criteria that leads to deficiencies in the euro zone monetary policy transmission mechanism due to very different sensitivities of credit to interest rates. according to de la dehesa (2011), eurobonds can bring key advantages, like decreasing fiscal vulnerability of member states and thus enhancing euro zone stability and increasing the size, depth, liquidity and diversification of the sovereign debt market, with beneficial cost effects not only to weaker euro zone member states, but eventually to financially sound members also. moreover, de la dehesa argues that such european bond market would be much more attractive to investors and would provide a viable alternative to us dollar denominated debt, enabling eurobond issuers to further benefit from increased demand. however, as wyplosz (2011) notices, the issue of common euro zone bonds could pose a serious moral hazard problem, as there is a chance that fiscally undisciplined countries would pass on the associated risks and costs to fiscally responsible ones – a great risk especially if national governments retain full decision making prerogatives with regard to their fiscal policy actions and debt to gdp ratio. in order to limit such behavior, delpla and von weizsäcker (2010) proposed a system that would increase fiscal discipline by allowing countries to cover debt via eurobonds only up to 60% of their gdp and would have to obtain national financing for debt that is in excess of this level, financing that will for sure be much less conveniently priced by the market. in conclusion, they propose a similar but less restrictive solution than the one we outlined earlier, which simply implies a 60% of gdp limit to all debt, corroborated with budged deficit that does not exceed 3%. the issuing of eurobonds and the advantages versus disadvantages discussion regarding a more integrated european financial market is, however, just part of the picture, the other part being related to what happens with the money that is being raised. all the options taken into consideration by the european commission (2011) imply 80 that the money is being channeled directly towards the national budgets of co-issuing member states, so that it covers their financing or refinancing needs. but the idea of joint debt can be taken a step further, so that financial instruments that are jointly issued by all euro zone members will be (at least partially) pooled in so that they constitute a common, jointly managed, euro zone budget. such a budget can be used for funding different actions that would eliminate asymmetric shocks of both real and financial nature, this enhanced uniformization enabling superior financial health of member states and the promotion of a more efficient monetary policy. currently, there exists only an eu wide budget that is made up of contributions coming from member states calculated according to the vat they collect and their gross national income, to which are added eu custom duties and levies. this budget can be accessed by entities, public or private, from all member states in order to finance their projects in different areas of activity. however, such a mechanism, although it represents one of the main tools of promoting general european integration, has only collateral effects on improving euro zone correlation between fiscal and monetary policy and eliminating asymmetric shocks. for this purpose, a parallel budget dedicated only to euro zone member states could be created, but not by asking each country to make a direct financial contribution, but by issuing eurobonds that, in some cases, should replace part of the individually issued national bonds so that the individual public debt of member states (individual debt plus share of the common debt) does not increase above the 60% of gdp threshold stipulated in the treaties. 5. conclusion in the last two and a half decades, the european union has made remarkable progresses in designing and implementing measures for a greater european unity, both politically and economically. however, these actions mark just the beginning of a long road towards european integration and further measures and reforms need to be devised. one of the main issues that require attention is the fiscal – monetary dichotomy in the euro zone, i.e., the existence of a single monetary policy, promoted by a single central institution, the european central bank, and of numerous individual fiscal policies promoted by each national government10, each with its own political agenda. especially in the context of a lack of enforceable eu fiscal provisions that would ensure stability and soundness of national budgets, the relationship between the monetary and fiscal policies, both influencing the same final macroeconomic variables, is a difficult and often inefficient one. in a euro zone environment where, despite favorable legal provisions, mobility of labor is not ideal, especially due to cultural related issues, finding solutions for improving the fiscal – monetary relationship is crucial for an efficient functioning of the euro zone. we find that this situation could be addressed by bringing substantial changes to the european legislation, so that euro zone members will be held to respect fiscal discipline provisions, and by issuing common eurobonds 10 when writing this article, there are 18 euro zone member states. 81 as an effective means of financing debt while at the same time decreasing vulnerability of member states and increasing the size, depth, liquidity and diversification of the sovereign debt market and benefiting from the increased demand for eurobonds generated by such improved market characteristics (de la dehesa, 2011). as a further step, eurobonds may be used to finance a euro zone budget, with the express function of allocating resources in order to eliminate asymmetric shocks and promote a more economically uniform euro zone. the european lesson with regard to common currency areas is becoming clearer, illustrating the weak points of what can be defined as a still fragile structure. as was the case of many other pioneer projects, initial planning and strategy making have proved to cover just a limited number of particular cases of an economic climate and the time invalidation of a series of predictions referring to it proved to have a strong destabilizing effect, thus putting in danger the whole european common monetary future. the evolution of the euro zone, far from being completed, signals a series of warnings generated by the confrontation between economic theory and the realities of its actual implementation. thus, the lack of fiscal integration represents an element of handicap which hinders any monetary union project and which needs to be responsibly 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the hofstede model in context’, 2011, online readings in psychology and culture, vol. 2, no. 1, [online] available at http://dx.doi. org/10.9707/2307-0919.1014, accessed on december 19, 2013. 15. holland, d. and paluchowski, p., ‘geographical labour mobility in the context of the crisis’, european employment observatory, national institute of economic and social research, u.k., june 2013, [online] available at http://www.eu-employment-observatory.net/resources/reports/esde-synthesispaper-june2013-final.pdf, accessed on december 20, 2013. 16. kenen, p., ‘the theory of optimum currency areas: an eclectic view’, in mundell, r.a. and swoboda, a.k. (eds.), monetary problems of the international economy, chicago: university of chicago press, 1969, pp. 41-60. 17. kenen, p., ‘what we can learn from the theory of optimum currency areas’, submissions on emu from leading academics, london: hm treasury, 2003, pp. 147-160. 18. krugman, p., ‘revenge of the optimum currency area’, the new york times, june 24, 2012, [online] available at http://krugman.blogs.nytimes.com/2012/06/24/revenge-of-the-optimum-currency-area/, accessed on october 15, 2013. 19. labonte, m. and makinen, g., monetary policy and price stability, new york: nova science publishers, 2006. 20. mundell, r., interviewed by corcoran, t., ‘robert mundell: euro is here to stay’, june 8, 2012, financial post, [online] available at http://opinion.financialpost.com/2012/06/08/ robert-mundell-euro-is-here-to-stay/, accessed on november 7, 2013. 21. mundell, r.a., ‘a theory of optimum currency areas’, 1961, american economic review, vol. 51, no. 4, pp. 657-665. 22. roubini, n. and mihm, s., economia crizelor: curs-fulger despre viitorul finanţelor, (crisis economics: a crash course in the future of finance), bucurești: publica, 2010. 23. taylor, j.b., ‘the monetary transmission mechanism: an empirical framework’, 1995, the journal of economic perspectives, vol. 9, no. 4, pp. 11-26. 24. weil, d.n., ‘fiscal policy’, in henderson, d. (ed.), the concise encyclopedia of economics, 2nd edition, liberty fund inc., 2007, [online] available at http://www.econlib.org/ library/enc/fiscalpolicy.html, accessed on november 7, 2013. 83 25. wyplosz, c., ‘eurobonds: concepts and applications’, in european parliament, directorate general for internal policies, policy department a: economic and scientific policies, eurobonds: concepts and implications, 2011, pp. 5-16, [online] available at http://www.europarl.europa.eu/document/activities/cont/201201/20120130att365 16/20120130att36516en.pdf, accessed on december 18, 2013. 84 annex 1 general government deficit/surplus (percentage of gdp) 2008 2009 2010 2011 2012 euro area (17 countries, not including latvia) -2.1 -6.4 -6.2 -4.2 -3.7 belgium -1 -5.6 -3.7 -3.7 -4 germany -0.,1 -3.1 -4.2 -0.8 0.1 estonia -2.9 -2 0.2 1.1 -0.2 ireland -7.4 -13.7 -30.6 -13.1 -8.2 greece -9.8 -15.7 -10.7 -9.5 -9 spain -4.5 -11.1 -9.6 -9.6 -10.6 france -3.3 -7.5 -7.1 -5.3 -4.8 italy -2.7 -5.5 -4.5 -3.8 -3 cyprus 0.9 -6.1 -5.3 -6.3 -6.4 luxembourg 3.2 -0.7 -0.8 0.1 -0.6 malta -4.6 -3.7 -3.5 -2.8 -3.3 netherlands 0.5 -5.6 -5.1 -4.3 -4.1 austria -0.9 -4.1 -4.5 -2.5 -2/5 portugal -3.6 -10.2 -9.8 -4.3 -6.4 slovenia -1.9 -6.3 -5.9 -6.3 -3.8 slovakia -2/1 -8 -7.7 -5.1 -4.5 finland 4.4 -2.5 -2/5 -0.7 -1.8 source: eurostat annex 2 general government gross debt (maastricht debt) (percentage of gdp) 2008 2009 2010 2011 2012 belgium 89.2 95.7 95.7 98 99.8 germany 66.8 74.5 82.5 80 81 estonia 4.5 7.1 6.7 6.1 9.8 ireland 44.2 64.4 91.2 104.1 117.4 greece 112.9 129.7 148.3 170.3 156.9 spain 40.2 54 61.7 70.5 86 france 68.2 79.2 82.4 85.8 90.2 italy 106.1 116.4 119.3 120.7 127 cyprus 48.9 58.5 61.3 71.5 86.6 luxembourg 14.4 15.5 19.5 18.7 21.7 malta 60.9 66.5 66.8 69.5 71.3 netherlands 58.5 60.8 63.4 65.7 71.3 austria 63.8 69.2 72.3 72.8 74 portugal 71.7 83.7 94 108.2 124.1 slovenia 22 35.2 38.7 47.1 54.4 slovakia 27.9 35.6 41 43.4 52.4 finland 33.9 43.5 48.7 49.2 53.6 source: eurostat 84 abstract this paper considers theoretical perspectives on the recruitment and selection of political party candidates, in order to analyze the recruitment and selection process of romanian mps during the last three legislative terms. the romanian proportional closed-list electoral system was replaced in 2008 by a majoritarian one, with single-member districts. in the wake of this change, party selectorates have loosened the admission criteria for candidates in parliamentary elections. selectorates started considering candidates mostly because of their fi nancial power and notoriety, while their education was overlooked. our analysis shows that the quality of mps’ diplomas has decreased signifi cantly since 2008. romanian mps complete their education, most frequently technical, with ma or phd degrees. some get a second ba in fi elds complementary to their activity in parliament – such as political, administrative or social sciences. these courses are usually taken later in life, at private universities, which are characterized by easy admission and graduation. since there is no general rule for submitting their cvs, some mps omit mentioning the information regarding the educational bodies that issued their diplomas. romania continues to be characterized by a heterogeneous parliamentarian elite, as opposed to solid democracies, where the elite is formed in renowned universities. the latter also share a common background and are thus rather homogenous. we consider that a successful political reform in romania should start within the party selectorates and their selection criteria of candidates for parliamentary elections. keywords: parliamentarian elites, elections, selectorates, candidates, negative selection, recruitment, selection criteria, competencies, education, political reform. why does romania have a negative selection in parliamentary elections? an analysis of the recruitment and selection system during the last three legislative terms ioana muntean marian preda ioana muntean phd, department of sociology, faculty of sociology and social work, university of bucharest, bucharest, romania tel.: 0040-757-056.223 e-mail: ioana_muntean@yahoo.com marian preda professor, department of sociology, faculty of sociology and social work, university of bucharest, bucharest, romania tel.: 0040-726-555.538 e-mail: marian.preda@sas.unibuc.ro transylvanian review of administrative sciences, no. 48 e/2016, pp. 84-103 85 1. introduction we aim to prove that, according to the public opinion, there is a negative selection in the romanian election process, and that the voting system, as well as the recruitment criteria of candidates, have led to low quality mps. after revising the models and theories regarding political elections we analyze the recruitment and selection processes of romanian mps during the last three legislative terms: 2004, 2008 and 2012. we highlight the consequences that stem from the 2008 change of the voting system for general elections – from the party-list proportional representation voting system, to the majoritarian voting system with single member districts. the mps formal competence level is evaluated by analyzing the diplomas mentioned in their offi cial cvs which are available on the parliament’s website1. next, the diplomas were ranked according to the 2011 romanian offi cial university classifi cation. our research is mainly focused on the selection of individuals promoted as election candidates, as well as on election results, without analyzing the election process. 2. theoretical perspectives on the recruitment and selection of political party candidates recruiting and training the parliamentarian elite are aspects specifi c to democracies and one of the functions of the political parties that propose and support candidates. the selection of candidates is an essential step for any party, as the infl uence of the party, as well as the quality of the future policies promoted by parliaments, all depend on the success of these candidates. this stage usually takes place within the parties and it does not depend on national laws, with a few exceptions – united states, germany, finland, norway, turkey and argentina (norris and lovenduski, 1995, p. 28). the recruitment of mps is a mix of political opportunities, usually managed by political parties, an individual’s traits at a particular moment, and their social background. the result of the interaction between the structure (the rules of the political establishment, the class structures, the power structures, etc.) and the agency (the candidates’ ability to act within these constraints, to break the resistance of the system’s structure, to impose themselves in the internal selection process, up until their names appear on the electoral lists) is then put to public vote. hazan and rahat (2006) propose that the selection of candidates should be analyzed considering four dimensions: (1) candidacy (who is eligible to be a candidate?); (2) selectorate (who chooses/selects the candidates?); (3) centralization vs. decentralization (are selectorates on a national or local level?); (4) appointing candidates vs. voting candidates. these four dimensions are situated on a continuum which starts at an inclusive point and goes all the way to an exclusive point; the selectorate (figure 1 we were only able to analyze the deputies’ cvs, since only a very small number of senators had submitt ed their details to the public. however, we do not expect any relevant diff erences. 86 1) may include the whole population of a state, particularly those who have the right to vote, or a single person, usually the president of a party. obviously, the latt er represents an exclusive selectorate. a diff erent political recruitment model for candidates is proposed by pippa norris and joni lovenduski (1995). the supply and demand model studies the recruitment process as the interaction between something supplied (the ones who wish to candidate) and something demanded (from the gatekeepers of the parties). norris and lovenduski (1995) also developed a comparative model of recruiting candidates (figure 1), which can be applied in several political systems. thus, the mps recruitment and selection process analysis is carried out while taking into consideration three categories of factors. firstly, any country places great importance on both the system factors in a broader sense (political system, electoral system, legal system) and the structure of opportunities (context structure). secondly, there are factors related to the party, from organization to ideology. thirdly, there are process factors which dynamically and directly infl uence the election process, the candidates’ motivations and resources in particular, as well as the party’s important decision-makers’ or the gatekeepers’ att itudes (norris and lovenduski, 1995, p. 183). political system system legislation factors electoral system structure of opportunities the context within the party party the organization of the party systems the rules of the party the ideology of the party process factors recruitment process eligible aspiring candidates mp motivation gatekeepers voters + resources figure 1: factors which infl uence the recruitment process. a comparative model (adapted after norris and lovenduski, 1995, p. 184) the system factors practically generate the rules of the game or the conditions established before the actual selection process. for instance, according to the romanian laws in force2, the minimum age for the members of the chamber of deputies is 23 2 article no. 37 of the romanian constitution. 87 years, while for the members of the senate, it is 33. moreover, the internal regulations of the parliament and a series of laws stipulate the incompatibilities of being an mp. all these preliminary conditions established by the system, as well as the inherent diffi culties of being an independent candidate, practically exclude potential candidates (aged 18-22, respectively 18-32,) from the very beginning or drastically reduce other people’s chances (those who are not supported by a registered party). the system and context factors, especially the structure of opportunities, have strongly individualized the parliamentary elections that took place in 2012. that moment had a great symbolic signifi cance. the challengers of the old majority, the alliance called social liberal union (usl/uniunea social liberală), which also governed before the elections, seemed a good alternative, a new beginning for a large part of romania’s population. this population segment had been fully aff ected by the crisis, the austerity and economic recovery measures adopted by the previous pdl (democratic liberal party) government. the electoral victory was almost formal3 (ionaşc, 2012), with many seats ‘secured’ for the usl candidates. thus, the leaders of the parties which formed usl could have used that moment in order to att ract new and competent people to the parties and to the parliament, as the process factors had an insignifi cant role regarding the fi nal results. apart from the possible shocks of an off er, the results of the selection are also infl uenced by the att itude of the party’s gatekeepers and by the suspicion regarding possible biases, in particular. theories and research on the topic of selecting candidates (hazan and rahat, 2006; norris and lovenduski, 1995) show that the factors which infl uence the candidature in itself are found especially in the area of the system (in a broader sense) and depend more on structure rather than on agency. we have also noticed that the selection process does not include – at least not in romania – rational elements, according to the opinions of our subjects and the empirical data used in our research. these elements refer to how suitable the candidate is for ulterior tasks (regarding their role as an mp, as a member of diff erent commissions, etc.) and are similar to the way in which, in business, the compatibility between a candidate’s competences and their future job tasks mentioned in the job description are correlated. 3. the role of educational background in the selection of parliamentary elite in consolidated democracies in strong western democracies, most members of the political elite have a clearly defi ned educational background, having studied at prestigious universities. for instance, in france, most members of the political elite and those of the administrative elite are trained by reputable schools, like ecole polytechnique and ecole nationale d’administration. candidates are admitt ed based on a strict examination process that 3 2012 parliamentary elections. the most optimistic polls: usl 62%, ard (right romania alliance) – 24%, ppdd (people’s party – dan diaconescu). 88 certifi es that they have superior intellectual abilities compared to the general population. bauer and bertin-mourot (apud coenen-huther, 2007, p. 172) claim that there is an impressive correlation between successful careers regarding high positions in the administrative, political and economic fi elds, and academic results. boudon claims that those who do not have a degree from a prestigious university can still have access to leading circles by taking a diff erent route: ‘the political route is the choice that best allows members of the sub-elite to enter the group of the elites, even by indirect means of militancy and elections’ (boudon, 1973 apud coenen-huther, 2007, p. 174). according to boudon, those with limited specializations or technical training will end up being a part of the intermediate level, because they lack the possibilities of inter-sectorial mobility. they will form the sub-elite, responsible for providing the elite with ‘observations, proposals and suggestions’. matt ei dogan (1999), referring to the particular case of france, describes two paths of access to the french political elite: an endogenous one and a lateral one, or through osmosis. the fi rst route describes the road of young people, who get a paid job within a party, without neglecting the professional aspect, ‘in order to ensure a stable situation, before launching themselves on a random political trajectory. thus, at any moment, the party has several potential candidates, internally trained as militants, and recruited in an endogenous manner’ (dogan, 1999, p. 32). the osmosis version – ‘a lateral loan from the civil society’ – cannot be applied in a similar manner to all social categories. thus, the permeability is higher for ‘the few professional categories, where work presupposes the necessity of having the same qualities as those of politicians. this is especially true in the case of professors, mandarins, lawyers, journalists, unionists.’ (dogan, 1999, p. 33) political absorption through loan is accomplished by taking into consideration the proximity of those fi elds and a clear affi nity among the professions, as dogan claims (1999). this also shows that, although the professional change or osmosis is a valid route, it will never be the one chosen by the most important representatives in the fi eld, as politics require time, which would translate in abandoning professions and business, with rare exceptions. in romania, however, there is a mutual dependence between the top managerial elite4 and the political environment. this dependence can be noticed through the direct or indirect involvement of businessmen, especially those handling projects funded with public money, in the political world. because of unclear property rights and an unsecure business environment, businessmen search either for the mps’ protection in exchange for their support, or for a seat in the parliament, in order to personally protect their business (protsyk and matichescu, 2011). 4 it is the well-known case of the richest romanian, the late dinu patriciu, who was involved in politics since 1990 and was a deputy during several legislative terms. other examples can be found in the article available at htt p://www.ziare.com/stiri/bugetari/5-la-suta-dintre-milionarii-romani-din-topul-forbes-sunt-angajati-la-stat-1048054 (ziare.com, 2010). 89 based on the observed legislative terms, the romanian parliamentary elite is heterogeneous in terms of the mps’ education and training. as opposed to consolidated democracies, where there is an educational and cultural similarity between the members of the legislative term, a fact which certifi es a pre-selection of candidates for political positions based on intellectual competences, already accomplished through the higher education system, before the electoral process, the romanian political elites are not pre-selected and are not structurally united at the level of abilities supplied by the formal educational system. in great britain, the political elites are trained at oxbridge5; in the united states, they are trained at ivy league universities; and in france, at ecole polytechinque and ecole nationale d’administration. as we shall demonstrate in the following pages, romania is very diff erent from these models. 4. methodology in order to understand whether romania truly has a negative selection in the parliament and whether the occurrence of this potential phenomenon has increased during the last legislative terms, we have formulated three research questions: 1. if and how the quality of romanian mps’ education, measured according to the quality of their diplomas, decreased from one term to the other? for the terms 2004-2008, 2008-2012 and 2012-2016, we have analyzed the percentages of deputies with fi rst class ba, ma or phd diplomas – issued by universities focused on advanced research and education – second class ba, ma or phd diplomas – issued by universities focused on scientifi c research and education – and third class ba, ma or phd diplomas – issued by universities focused on education. 2. has the percentage of mps who are not part of the elite of their generation increased? has the number of those who completed their ‘normal’ studies at a later age than usual increased? 3. how important is their suitability to the electoral competition, including the short-term interests of the party, compared to their suitability for the future mp position, during the selection process? in order to properly answer these questions, we have carried out both qualitative and quantitative research6. the qualitative research focuses on the recruitment and selection process of candidates within the party. the result of the process and the way in which our mps’ cvs look were analyzed by means of quantitative research. 5 oxbridge is a collective name for the elite universities oxford and cambridge, which great britain uses to diff erentiate from other universities. based on the same principle, ivy league is the name of eight top universities of the united states of america, considered together (brown, columbia, cornell, dartmouth, harvard, pennsylvania, princeton and yale). 6 as research methods, we have used document analysis (analysing the content of the curriculum vitae which the deputies published on the website of the chamber of deputies) and individual interviews. 90 at fi rst, the quantitative research included a longitudinal analysis of 981 cvs published on the website of the chamber of deputies7, taking into account all deputies from three legislative terms: 2004-2008, 2008-2012 and 2012 up to now. from the total number of deputies, we excluded the minority deputies, who benefi t from a specifi c selection and recruitment process, diff erent from other mps. while carrying out the quantitative research, we faced diffi culties due to the rather high number of those who supplied incomplete information about their studies in their cvs. we cannot prove a negative signifi cance of incomplete data, but we believe that no graduate with a diploma awarded by a prestigious national or international university would want to omit details about their studies from their cvs. moreover, in the private sector, an incomplete cv is usually not taken into account when someone applies for a job. the interviews for qualitative research were carried out with three categories of experts: current mps with broad political experience, human resources experts, and political systems experts from the academic environment8. the interviews were conducted in person, between may 1st and may 30th, 2014, based on a semi-structured interview guide. we chose to do the interviews face to face in order to capture bett er the complexity of the participants’ verbal and non-verbal reactions. overall, 15 individuals were chosen. some were members of political parties, some were not. the mps were selected as follows: three from each important parliamentary party, psd (social democratic party), pdl (democratic liberal party) and pnl (national liberal party). 5. financial power and notoriety – the main selection criteria for candidates during the latest parliamentary elections in romania according to the results obtained in the qualitative research, the selection of candidates is not institutionalized and does not really follow a model or a constant procedure; it follows fl exible rules which are adapted to the political conditions specifi c to each ballot. thus, the selection criteria for the 2004 elections, based on lists, are diff erent from the criteria used by selectorates in the 2008 or 2012 elections, when candidates were chosen by the uninominal voting system. in none of the electoral cycles were the criteria institutionalized, not even theoretically, in any public document which could clearly illustrate the steps one should follow in order to go to the polls. when they were asked about the criteria used in selecting candidates for the parliamentary elections, the parties’ respondents generally nominated the same att ri7 www.cdep.ro. 8 along with the mps, we have interviewed a head hunter, the hr manager of a large bank, and the hr manager of a large multinational corporation. we also chose to discuss with a former chief of a large party and university professor, a former president of the chamber of deputies who is also retired from politics, and a former fi nance minister, an important leader of a large party and university professor who no longer holds any positions in the party. they were each decision makers in their own parties at one point in their careers and we found their input valuable. 91 butes: notoriety, a good reputation, integrity, competence, communication abilities and support off ered to the party. however, when they were asked how the selection criteria changed following the new election system, all respondents agreed that the importance of these criteria was classifi ed diff erently starting with 2008, when the main criteria were fi nancial power and notoriety. we shall mention only a few examples of opinions, which mention fi nancial power and notoriety: ‘the criteria disappeared, as the focus was on fi nancial power (…) we have x constituencies and we need x rich candidates to win’ or ‘the parties’ identity has weakened a lot (…) when someone is chosen independently, he has no responsibilities towards a party, but maybe only towards his own conscience. everyone is looking for notoriety, even if it isn’t always notoriety regarding competence’ or ‘they have become weak in terms of what an eligible candidate means. the fundamental resources are quite limited and the criteria had to be less strict in order to att ract people’ or ‘it’s a step back, because the list helped to select bett er the value, in my opinion, as compared to the uninominal vote, when the material potential of the candidate may replace both competence and morality’. surprisingly, none of the interviewees voluntarily mentioned education as a criterion in the selection and recruitment of mps. when they were asked about the importance of education, most of the respondents stated that it is a necessary criterion, though not a suffi cient one, and that the lack of a diploma is ‘something sensational’. the ratio regarding the professionalization of the political career versus ‘last minute’ candidates is estimated at 50/50, based on what an interviewee says, as opposed to other countries, where it is at 80/20, as mentioned by a former party chief, a respondent included in the study. ‘the trouble is the clientelism that outweighs professionalism’, as stated by the same interviewee. in cases where the mps’ education is precarious, the interviewees all stated that it was outweighed by fi nancial criteria, the ability to ensure fi nancial support for the campaign, as well as other things. ‘the uninominal vote is at fault. the poor system which encourages such situations. their fi nancial business and the money with which they paid for the vote. you couldn’t fi nd such people on the lists, because competition was among professionals’. public trust in the parliament (inscop, 2015) is currently at 11%, a very low level even for this institution, after numerous corruption scandals, and the public perception of this body is negative. the professional elites are not interested in running for a mp position. good professionals would rather hold an executive position in the government, if they decided to give up their current career plans, as one of our respondents stated. that is because they feel they would not make an impact and would only ‘waste time’ in the parliament. the same respondent continued by pointing out that the parliament does no longer pass important/qualitative bills, but rather approves the bills ‘of the government’. in fact, as hințea (2011, p. 188) shows, the relation between the executive and the legislative bodies in romania is ‘dominated by the aggressive legislative activity undertaken by the government’, through emergency governmental ordinances. 92 as shown in the previous section, the system factors in the 2012 ballot were on the side of usl, the former opposition during the previous election cycle, which gained power in the year when the elections took place. the former governing party, pdl, was considered to be guilty of unpopular measures regarding the budget balance, so that, with the exception of the hungarian circumscriptions, as well as of one from the diaspora, all candidates of usl’s former opposition were placed fi rst among the election options, most of them reaching over 50% of the votes. however, the chance of this alliance to eff ortlessly win the elections did not lead to bett er selection criteria of the candidates. miroiu (2007, p. 226) talks about the ‘rational ignorance’ of the voters and also shows that romanians, similar to other european populations, are insuffi ciently informed regarding the options they have when voting. in the case of mature democracies, reputation and political platforms are coordinated, but there is no correlation between reputation and actions in the emerging economies. according to this theory, it appears that, at least in romania, people will continue to vote for lists and candidate groups as a whole package, regardless of the electoral system in force at the time. 6. the professional structure of the romanian parliament: from irrelevant diplomas in engineering to low quality diplomas in legal studies the structure of professions within the romanian parliament does not fi t the mission and the role of a parliament belonging to a democratic society. the most frequent specialization of deputies during all three legislative terms is engineering. younger mps fi nish their studies at private universities, where admission and graduation standards are relatively low. overall, most mps are graduates of universities found at the bott om of the classifi cation chart9. the data show that this tendency became more emphasized after the introduction of the uninominal voting system. the number of mps with no higher education is small and constant, while the ratio of graduates from low quality universities is high and growing. this structure proves that the quality of the candidate’s education is not an important criterion for party selectorates. professions such as engineers, economists and legal professionals represent the dominant profi le of an mp. the literature in this fi eld (jakob, 1962; weber, 1992; king, 1987) considers ‘a legal professional’ to be a profession complemen9 the universities in romania were classifi ed in 2011 (law no. 1/2011 on national education) in three groups: the fi rst includes the most renowned universities in romania, the ‘advanced research and education’ universities, state owned; the second group includes the ‘education and scientifi c research’ universities or ‘education and artistic work’ universities, also state owned, but less acknowledged; the third group is made of private universities ‘education-oriented’, with easy access. higher quality diplomas are those issued by universities belonging to the fi rst category and less competitive diplomas are those from ‘education and scientifi c research’ universities or ‘education and artistic work’ universities. the diplomas issued by universities belonging to the ‘education-oriented’ category have been considered rather low quality. 93 tary to that of an mp, along with professions such as journalist, writer or professor. in contrast with this patt ern, most mps in romania are engineers, followed closely by economists and, next, by legal professionals. other specializations are at a signifi cant distance from the fi rst three. as an explanation, we may consider the educational profi le of the communist elite and of the graduates from that period. before the fall of the former communist system, engineers were very sought after. the fact that engineering dominates the educational structure of the parliament shows that the technical and managerial elite of the former socialist economy became the new political elite of the market economy. some of these engineers later completed their studies, following specializations and courses that they considered useful for their career: economist, legal professional, political science expert, administrative expert, sociologist, etc. deputies specialized in fi elds incompatible with their new careers, as well as those who do not fi nish their studies on time, try to advance their education. in this sense, they either eventually enroll in tertiary education, they go for a second degree, or for an ma program. generally, the quality of these studies is quite low. deputies turn to educational institutions where both access and graduation are easy. a conclusive example is that of legal professionals from our current legislative term. the ‘parliament of legal professionals’ really is the parliament of legal professionals who graduated from faculties holding lower positions in the academic classifi cation of universities. we expected that, at least in the case of their later ba studies, those choosing to become mps would go for the complementary, so-called ‘brokerage occupations’ (jacob, 1962), meaning law, administrative and political studies or communication. regarding their second ba degree, the top specializations are: engineer, economist and legal professional. our expectations are confi rmed only regarding the ma studies, where the most frequent specialization in all researched legislative terms is administrative sciences, and political sciences is third. mba degrees in economy rank second, while communication and journalism specializations are absent. 6.1. mps with second and third class diplomas we analyzed the diplomas10 obtained by mps on several study levels. thus, we analyzed the quality of the ba diplomas11 obtained at the fi rst and second graduated faculty, the ma and phd diplomas, according to the university they graduated from. as part of our analysis, we excluded mps who obtained their diplomas before 1994. they were admitt ed to a faculty during the former system, before private universities 10 the analysis included 981 cvs, published on the website of the chamber of deputies, with deputies from three legislative terms: 2004-2008, 2008-2012 and 2012-present. from the total number of deputies, we have excluded the minority deputies, who benefi t from a specifi c selection and recruitment process, diff erently than other mps, and whom we considered irrelevant for our research. thus, we did not use the sampling method. instead, we analysed the whole population of relevant subjects. 11 according to the classifi cation of universities in romania as provided by law no. 1/2011. 94 emerged in 1990. as one needs at least four years to complete their academic studies, we considered those who graduated in 1994 to be the fi rst generation taught according to the new post-communist educational system. the deputies who did not post their cvs on the website of the chamber of deputies were also excluded. the reason behind this decision was our desire to obtain results which will exclusively cover the population comprised of deputies who graduated from universities referred to in the classifi cation made according to the law no. 1/2011, proposed by the ministry of national education. separately, we focused on deputies who graduated from a university before 1989, in order not to distort the data, meaning an artifi cial increase of the percentage of advanced research and scientifi c research universities, considering that the fi rst private universities emerged in romania in 1990. all private universities belong to the category of ‘education-oriented universities’. starting with 1990, those who wished to graduate from a faculty could choose from a wider range of study programs, including private universities12. in fact, the dynamics regarding the deputies’ higher education preferences after 1990 is quite clear. the private universities were preferred by an increasing number of individuals. during the last two legislative terms (2008 and 2012), the quality of the ba degree diplomas decreased dramatically, as compared to the 2004 legislative term. the data do show a clear increase in the percentage of low quality diplomas, issued by education-oriented universities (third class), when we compare legislatures. third class diplomas registered the highest increase: 13% more in 2008 and 17.7% more in 2012, as compared to 2004. the percentage of deputies with fi rst class diplomas dropped from 46.4% in the 2004 legislature to 34.2% in the 2012 legislature. table 1: ba diploma quality for the mps elected in 2004, 2008 and 2012 specializations year when the parliamentary legislative term (l) began changes as compared to the previous legislative term (pp) 2004 2008 2012 2008 vs. 2004 2012 vs. 2008 2012 vs. 2004 i. advanced research and education universities 46.4 30.5 34.2 -15.9 3.7 -12.2 ii. education and scientifi c research or education and artistic work universities 20.2 21.2 23.2 0.9 2.0 2.9 iii. education-oriented universities 10.7 23.7 28.4 13.0 4.7 17.7 graduated from a foreign universities 1.2 1.7 1.1 0.5 -0.6 -0.1 not listed in the classifi cation 2.4 3.4 3.2 1.0 -0.2 0.8 data not included in the cv 19.0 19.5 10.0 0.4 -9.5 -9.0 total 100.0 100.0 100.0 12 although these educational institutions were involved in several scandals during the last 25 years, some students still choose to follow their study programmes, because the admission does not involve any exam and the diplomas can be obtained more easily than in the case of stateowned universities. 95 the quality of mps’ ma diplomas is even lower than the quality of their ba diplomas, and lower than the whole population of ma graduates. with reference to their ma diplomas, most deputies from the 2004 legislative term (39%) received their ma diplomas from advanced research universities, followed closely by those who graduated from education-oriented universities. in 2008 and 2012, 60% and 61%, respectively, of the mps graduated from second and third class universities, while a few graduated from ‘ghost’ universities which cannot be found by either using google search or in the ministry’s classifi cation. table 2: the quality of ma diplomas quality of ma diplomas year when the parliamentary legislative term (l) began changes as compared to the previous legislative term (pp) 2004 2008 2012 2008/2004 2012/2008 2012/2004 i. advanced research and education universities 38.8 24.7 22.1 -14.0 -2.7 -16.7 ii. education and scientifi c research or education and artistic work universities 14.3 27.8 30.9 13.5 3.0 16.6 iii. education-oriented universities 24.5 32.0 30.1 7.5 -1.8 5.7 graduated from a foreign universities 4.1 3.1 6.6 -1.0 3.5 2.5 not identifi ed/not listed in the classifi cation 6.1 2.1 2.9 -4.1 0.9 -3.2 data not included in the cv 12.2 10.3 7.4 -1.9 -3.0 -4.9 total 100.0 100.0 100 if we compare the mp’s diplomas with the national results, we can observe that the quality of mps’ ma diplomas is lower than the whole population of ma graduates (table 3). table 3: the distribution of romanian mps’ ma diplomas, as compared to the general population of ma graduates in romania category of universities alma mater based distribution of deputies’ ma diplomas* alma mater based distribution of ma diplomas at national level 2012/2013** legislative term, percentage of deputies 2004 2008 2012 % % % % i. advanced research education universities 50.0 29.3 26.5 41 ii. education and scientifi c research or education and artistic work universities 18.4 32.9 37.2 43 iii. education-oriented universities 31.6 37.8 36.3 16 total 100 100 100 100 *authors’ calculations based on cv analysis ** authors’ calculations based on data obtained from the ministry of education after 2008, fi rst class universities started being underrepresented in the parliament by their ma graduates, while third class diplomas seem to have always been 96 two times more frequent than in the general population of graduates. even in this category we can see an increase in legislatures elected in single member districts, from 31.6% in 2004 to 36.3% in 2012. the number of diplomas that come from second class universities just catch up with national levels, although in the 2012 legislature they are twice as many as compared to the 2004 legislature. the quality of phd diplomas. in the case of each type of diploma and in all legislative terms, there are a certain percentage of deputies who do not include suffi cient data in their cv. this percentage is very high for doctoral studies. almost 41.6% of the 2004 legislative term, 24.3% of the 2008 legislative term and 30.8% of the 2012 legislative term use elliptic expressions, such as ‘doctor in sciences’, ‘phd diploma in engineering’, etc., without mentioning the university or at least the faculty where they obtained their diploma, while a certain percentage in each term did not off er any kind of information. table 4: the quality of phd diplomas quality of phd diplomas year when the parliamentary legislative term (l) began changes as compared to the previous legislative term (pp) 2004 2008 2012 2008/2004 2012/2008 2012/2004 i. advanced research and education universities 32.5 36.5 32.1 4.0 -4.4 -0.4 ii. education and scientifi c research or education and artistic work universities 20.8 27.0 24.4 6.2 -2.7 3.6 iii. education-oriented universities 3.9 9.5 10.3 5.6 0.8 6.4 graduated from a foreign universities 0.0 0.0 0.0 0.0 0.0 0.0 not listed in the classifi cation 1.3 2.7 2.6 1.4 -0.1 1.3 data not included in the cv 41.6 24.3 30.8 -17.2 6.4 -10.8 total (%) 100 100 100 considering those who display usable data, the phd diplomas of deputies from all analyzed legislative terms were obtained mainly from advanced research universities in the following comparable percentages: 32.5% in 2004, 36.5% in 2008 and 32.1% in 2012. the advanced research universities are the ones that have the right to hold doctoral studies in any specializations, while only the very advanced specializations of the other universities can hold doctoral studies. however, the percentage of deputies who do not name their alma maters is signifi cantly high in all legislatures studied. the data show a surprisingly large and increasing number of deputies that obtain their diplomas from third class universities, as compared to the general population of graduates. when we compare legislatures, we fi nd twice as many 2012 deputies that have graduated from third class universities, as compared to the general population and 2004 legislature. while the number of second class diplomas seems to have been stable over time, even if larger than the number of graduates at national level, phd diplomas from fi rst class universities have become largely underrepresented in the parliament. the decrease is of 8% from 2004 to 2012 and of 20% as compared to the general population of graduates. 97 table 5: the distribution of romanian mps’ phd diplomas, as compared to the general population of phd graduates in romania (academic year 2012/2013) category of universities alma mater based distribution of deputies’ phd diplomas* alma mater based distribution of phd diplomas at national level** 2012/2013 legislative term, percentage of deputies 2004 2008 2012 % % % % i. advanced research and education universities 56.82 50.00 48.08 68.30 ii. education and scientifi c research or education and artistic work universities 36.36 37.04 36.54 24.86 iii. education-oriented universities 6.82 12.96 15.38 6.85 total 100 100 100 100 *authors’ calculations based on cv analysis ** authors’ calculations based on data obtained from the romanian ministry of education third class legal professionals are the lawmakers of romania since the legal profession is the most relevant specialization of the mps, as it allows them to act as promoters and makers of the law, this section presents the results of analyzing diploma quality for the ‘legal sciences’ specialization. predictably, the quality of legal professionals has decreased dramatically. from 43.6% of law graduates before 1994, plus 12.8% of graduates from foreign universities and 20.5% of graduates from fi rst class universities after 1994, an approximate total of 77%, we now have a percentage of only 29% legal professionals with high quality studies (before 1994 or after, but having graduated from fi rst class or foreign universities), while the rest graduated from low quality universities or did not even mention the universities they graduated from. 0 10 20 30 40 i. advanced research univ. ii. education and sci. research univ. iii. education-oriented univ not listed in the classification graduated abroad data not included 2012 2008 2004 figure 2: the quality of diplomas obtained by legal professionals at ba level (except graduates before 1994) 98 in other words, the legal professionals who are elected in order to propose bett er laws or improve the existing ones are mainly graduates of universities from the third category. in the 2012 legislature, more mp’s are ba graduates of universities in the third category – 37.3%, than mps that had graduated from universities in the fi rst two categories or from universities abroad (30.6% all together). it is evident that a majority of romanian legal professional mp’s are ‘third category’ university graduates. 6.2. substitute diplomas obtained later, as proof of substitute capacities of the mps not only do deputies choose faculties where they can easily obtain a diploma, but an increasingly high percentage of deputies do not complete their studies when they should, graduating much later from various study programs. age categories for graduates. for this analysis, we took into account fi ve age categories. the fi rst includes deputies who completed their studies on time, meaning by the age of 25, which is the case of the ba diplomas. the second category includes deputies who graduated at ages between 26 and 30. this category shall be named ‘late ba graduates’. the category ‘quite late graduates’ includes those who obtained their ba at ages between 31 and 35. ‘very late graduates’ are those who obtained their ba diplomas aged from 36 and 40 and ‘extremely late graduates’, those who got their ba diploma after the age of 4113. regarding the age when deputies complete their fi rst degree, we notice that only 54-60% completed their fi rst degree ‘on time’, with an important percentage being late or quite late graduates. as for the second degree, only a third of the relatively small number of graduates (48 during 2008-2012 and 62 during 2012-2016) graduated ‘on time’, while the others were late or even quite late graduates. practically, if in the latest legislative term only 29% had graduated on time from a second degree, before 30, 60% graduated later, after being 30, with 29% having graduated after the age of 40. table 6: age categories in terms of graduation from the fi rst degree, ba level age legislative term 2004-2008 2008-2012 2012-present persons % persons % persons % 1 normal age graduates (≤25 years) 164 53.8 173 60.3 215 56.1 2 late (26-30 years) 71 23.3 56 19.5 86 22.5 3 quite late (31-35 years) 16 5.2 18 6.3 20 5.2 4 very late (36-40 years) 5 1.6 5 1.7 11 2.9 5 extremely late (≥41 years) 5 1.6 11 3.8 12 3.1 0 (no data) 44 14.4 24 8.4 39 10.2 total deputies 305 100 287 100 383 100 13 throughout this paper, we shall use the same categories, while the intervals shall be changed in accordance with the age when a second degree, an ma degree and doctoral studies are usually completed. 99 the situation is similar regarding ma degrees: only 20% of the 2004/2008 and 2008/2012 legislative terms and only 30% of the 2012/2016 legislative term obtained their ma diploma ‘on time’, while the rest are either late or quite late graduates (table 7). table 7: age categories in terms of ma graduation age legislative term 2004-2008 2008-2012 2012-present persons % persons % persons % 1 normal age graduates (≤ 30 years) 10 20 20 20.4 41 30.1 2 late (31-35 years) 4 8 10 10.2 20 14.7 3 quite late (36-40 years) 8 16 20 20.4 23 16.9 4 very late (41-45 years) 7 14 14 14.3 17 12.5 5 extremely late (≥46 years) 13 26 28 28.6 29 21.3 0 (no data) 8 16 6 6.1 6 4.4 total deputies 50 100 98 100 136 100 clearly, mps do not complete this study cycles on time, following the normal process of continuing their studies after a ba degree. ma degrees are completed much later after the ba graduation, probably to compensate for the lack of fi eld-related studies, relevant for the position of an mp. phd diplomas have a diff erent function from other diplomas: they prove more excellence than competence in a particular fi eld. from this point of view, the phd diploma is not a substitute for competence, but a form of legitimating or, rather, substituting excellence. while several politicians, including mps, obtained their phd diploma through fraudulent means (which were proved), including plagiarism, we cannot generalize these exceptions. over 80 mps from each analyzed legislative term, who have a phd diploma, might have been interested in the past in the 15% bonus added to the salary of public employees that held a phd degree (measure abrogated in 200914) and/or in obtaining/maintaining a position in the higher education fi eld, which is one of the few sources of income compatible with being an mp. data from table 8 show that most diplomas were obtained late or quite late, as is the case of the other mps’ diplomas. the fi rst or second ba degree for some, or an ma degree with a ‘proper’ title, but which was obtained later, often by paying tuition or by att ending a low quality university for others, were the solutions chosen by some mps in order to compensate for their lack of relevant competences. they are some kind of substitute diplomas standing as proof of substitute competences obtained according to the saying ‘bett er late than never’. 14 see law no. 330/2009, regarding a unitary wage system. 100 table 8: age categories in terms of graduation from a doctoral program age legislative term 2004-2008 2008-2012 2012 present persons % persons % persons % 1 normal age graduates (≤35 years) 15 17.2 15 18.3 17 20.7 2 late (36-40 years) 14 16.1 12 14.6 13 15.9 3 quite late (41-45 years) 12 13.8 12 14.6 14 17.1 4 very late (46-50 years) 9 10.3 12 14.6 14 17.1 5 extremely late (≥51 years) 12 13.8 10 12.2 7 8.5 0 (no data) 25 28.7 21 25.6 17 20.7 total deputies 87 100 82 100 82 100 6.3. in order to hide the insuffi cient, improper education, low quality diplomas or diplomas obtained later, some mps word the information in their cvs in an ambiguous manner the press presented several cases of mps who completed their ba studies very late as compared to an average student, thus we wanted to clearly see how deputies wrote their cvs in these particular cases. deputy g.v., a member of the 2004 and 2008 legislative terms, obtained his fi rst and only ba degree during his mandate, being over 40 years old. all that was writt en in his cv is ‘2008, faculty of political sciences’, with no information regarding the admission year or the university he graduated15. apart from the deputies who, intentionally or not, do not include certain aspects in their cvs, there is another category: deputies who graduated from universities which are not included in the law no. 1/201116 classifi cation. we cannot surely ex15 the same case was t.i., an mp of the 2004, 2008 and 2012 legislative terms; the press wrote about him that he had possibly obtained his fi rst ba diploma quite late. in his cv, he wrote that he has a ‘ba degree at the west university, vasile goldiș, arad, the faculty of law’ and that he has an ‘ma degree at the aurel vlaicu university in arad, the faculty of economic sciences, specializing in management and financing in public administration’, without mentioning the admission and graduation years in any of the two cases. it should be added that both universities are third class universities and that they are in the city and county, where the subject held political and administration functions and which he has represented in the parliament. deputy i.m., a member of the 2012 legislative term, aged 61 years, enrolled at a faculty in the year he became mp. thus, in 2012 he became a student of the ‘faculty of public administration and economy’. as in the case of many others, he does not mention the university he was supposed to get his diploma from (most probably) in 2015. the list could go on, as there are several examples in all legislative terms. 16 thus, during the 2008 legislative term, deputy p.v.s. stated that he graduated from ‘banat university in timișoara, the faculty of law’, at 48 years of age; however, there is no such university. deputy g.a. from the 2012 legislative term says in his cv that he graduated from the ‘agora university in oradea, bihor county’, a university which was offi cially accredited in the very same year, 2012. we should also add the case of deputy a.i. from the present term, who claims that he graduated from ‘uumv bucharest, as an economic engineer’; however, there were no results regarding this name or abbreviation, not even when searching for it on google. 101 plain why, in many cases, mps’ cvs include false or incomplete data. it is unknown if these situations result from wanting to hide embarrassing aspects which would be the delight of the press, or if it is all just lack of att ention when writing cvs. however, what is known for sure is that nothing has been done in order to provide correct information to the public opinion regarding the educational background of the mps. simple measures, such as a standard mandatory form of completing these documents by deputies and senators, as is the case of cvs used by those who apply for various positions in eu funded projects (the europass cv), could increase the amount and the quality of information concerning their education. 7. conclusions according to theories and research related to the selection of candidates for parliamentary elections (hazan and rahat, 2006; norris and lovenduski, 1995), the system and the structure infl uence the elections and their results more than the agency of the actors. in strong democratic states, the educational background of most members of the political elite is ensured by prestigious universities. this aspect is a type of precondition which guarantees a suffi cient level of general mp competences, which ensures a good quality political class. the responsibility of making decisions regarding other criteria, such as specifi c competences like morality, the ability to act as a politician and as a member of the legislative term, falls upon the parties and the voting population (the selectorates). in contrast with western democracies, the romanian parliamentary elite of the legislative terms we have studied above is a heterogeneous elite in terms of education. since it is not pre-selected in terms of educational background, it usually lacks the general competences off ered by an adequate system of formal education. the structure of professions in the romanian parliament is quite inadequate to an mp’s mission and role, as the deputies’ most frequent specialization in all three legislative terms is that of engineering. although the number of mps with no degree is very small in the analyzed legislative terms, the percentage of mps with low quality diplomas is increasingly high. this proves that the quality of the candidate’s education is not an important criterion for party selectorates. the selection of candidates for parliamentary elections is not institutionalized, it does not follow clear, transparent and constant models or procedures; instead, it follows fl exible rules which are adapted with each ballot, based on political circumstances. the already fl uid selection criteria were clearly infl uenced by the 2008 change concerning the voting system – from a party-list voting system to a uninominal voting system. all respondents interviewed stated that, starting with 2008, the main criteria considered when promoting candidates on electoral lists were their fi nancial power and notoriety. deputies with specializations in fi elds that do not correspond to the new career needs, as well as those who do not graduate on time, try to advance their education. 102 in this sense, they either enroll late, or they take a second ba degree or an ma program. deputies choose educational institutions where admission and graduation are both easy, usually by paying tuition and at a low quality university; these are substitute diplomas standing as proof of substitute competences. it can be said that the average quality level of deputies’ education during the last three legislative terms is inferior to the average level of education of ma or phd graduates, who completed state-fi nanced programs in romania. we also found an unusually high number of false or incomplete information in the cvs analyzed. it is unclear if these situations result from the wish to omit embarrassing aspects, or if it is just lack of att ention when writing the cv. what is known for sure is that nothing was done by the romanian parliament in order to correctly inform the public regarding educational background of mps. the selection and recruitment process of romanian parliamentary elite is corrupted, mostly due to systemic aspects: the laws, the parties and their functionality, the selection criteria, among which fi nancial power is too important, mostly because parties and electoral campaigns lack public funding. a reform of this system is highly recommended. the selection methods must become transparent, formal, and internal elections must include criteria about general competences and adequate education. the quality of legal professionals, which could be considered the most relevant specialization for an mp, who acts as a promoter and maker of the law, decreased dramatically. over the most recent legislative term, only 29% of the quite few legal professionals had ‘high quality’ higher education. another result of our research was that the abandoning of the uninominal voting system is one of the solutions proposed by all interviewees, in order to rebuild the reputation of the romanian parliament. returning to a party-list17 proportional voting system is one of the solutions proposed by the interviewees, along with implementing a mixed voting system. in addition, the salary reform, which could have an impact on the whole public administration, and the reform of the law regarding the fi nancing of political parties are two other proposals made by our respondents. however, all these conclusions and proposals are conditioned by the existence of a promoter interested in such a change. it is unlikely that the current political class, the parliamentary parties and the actual parliament would promote and vote laws which would act against them and lead to eliminating most of them from the next parliament. the possible public pressure coming from the emergent and increasingly active civil society, and from the recent anticorruption actions taken in romania, could determine a possible system change in the future. 17 the electoral law was amended in 2015. the 2016 parliamentary elections will be held following new rules. the senators and deputies will be elected according to law no. 208/2015, which means a return to a party-list proportional system, like in the 2004 elections. 103 references: 1. chamber of deputies, romania, [online] available at htt p://www.cdep.ro/pls/dic/site. home?idl=2, accessed on november 12, 2015. 2. coenen-huther, j., sociologia elitelor, iaşi: polirom, 2007. 3. dogan, m., sociologie politică, opere alese, bucharest: alternative, 1999. 4. hazan, r.y. and rahat, g., ‘candidate selection, methods and consequences’, in katz , r.s. and crott y, w.j., (eds.), handbook of party politics, london: sage publications, 2006, pp. 109-122. 5. hințea, c., ‘reform and management in romania. strategy and structural change’, 2011, review of research and social intervention, vol. 34, pp. 177-196 6. inscop, barometrul adevărul despre românia, september 2015, [online] available at htt p://www.inscop.ro/wp-content/uploads/2015/09/inscop-09.2015-%c3%8encre dere-institu%c8%9aii.pdf, accessed on november 12, 2015. 7. ionașc, s., ‘alegeri parlamentare 2012. sondajele cele mai optimiste: usl – 62%, ard – 24%, ppdd – 18%’, 2012, gândul, [online] available at htt p://www.gan dul.info/politica/alegeri-parlamentare-2012-sondajele-cele-mai-optimiste-usl-62-ard24-ppdd-18-10379506, accessed on october 7, 2013. 8. jacob, h., ‘initial recruitment of elected offi cials in the u.s. – a model’, 1962, the journal of politics, vol. 24, no. 4, pp. 703-716. 9. king, a., ‘the rise of the career politician’, in burch, m. and moran, m. (eds.), british politics: a reader, manchester: manchester university press, 1987, pp. 145-156. 10. law no. 1/2011 on national education, published in the offi cial journal of romania, part 1, no. 18 of january 10, 2011. 11. law no. 208/2015 on electing the senate and the chamber of deputies, and on the organization and functioning of the permanent electoral authority, published in the offi cial journal of romania, part 1, no. 553 of july 20, 2015. 12. miroiu, a., fundamentele politicii – preferințe și alegeri collective, iași: polirom, 2007. 13. norris, p. and lovenduski, j., political recruitment: gender, race and class in the british parliament, cambridge: cambridge university press, 1995. 14. protsyk, o. and matichescu, m.l., ‘clientelism and political recruitment in democratic transition: evidence from romania’, 2011, comparative politics, vol. 43, no. 2, pp. 207-224. 15. weber, m., politica, o vocaţie şi o profesie, bucharest: anima, 1992. 16. ziare.com, ‘5% dintre milionarii romani din topul forbes sunt angajati la stat’, 2010, [online] available at htt p://www.ziare.com/stiri/bugetari/5-la-suta-dintre-milionariiromani-din-topul-forbes-sunt-angajati-la-stat-1048054, accessed on november 6, 2013. 185 abstract the fi nancial crisis has once again brought up the question of the ‘perfect size’ of local governments and revealed a new dimension of the eternal question of fi nancing self-governing local communities. the paper presents a comparative overview of efforts to determine the ‘perfect size’ of municipalities and recent reforms in different countries aimed at enabling municipalities to ensure both local-level democracy and identity, and economic effi ciency in the delivery of public services. one of the most popular ways for achieving this goal is to promote various forms of inter-municipal cooperation. some forms of inter-municipal cooperation already exist in slovenia; a considerable breakthrough in this regard occurred in 2007, but such an approach would have been possible much earlier. analyses show that this change is due to changes in the rules regarding co-fi nancing. despite the fact that neither literature nor politics in slovenia sees inter-municipal cooperation as an alternative to merging municipalities, experiences show that practice will proceed in this direction. keywords: merging of municipalities, inter-municipal cooperation, joint municipal administration body, slovenia. inter-municipal cooperation: challenges in europe and in slovenia iztok rakar bojan tičar maja klun iztok rakar assistant professor, department of administrative law, faculty of administration, university of ljubljana, ljubljana, slovenia tel.: 0038-615-805.571 e-mail: iztok.rakar@fu.uni-lj.si bojan tičar professor, department of law, faculty of criminal justice and security, university of maribor, maribor, slovenia tel.: 0038-612-561.455 e-mail: bojan.ticar@fvv.uni-mb.si maja klun associate professor, department of economics and management of public sector, faculty of administration, university of ljubljana, ljubljana, slovenia tel.: 0038-615-805.400 e-mail: maja.klun@fu.uni-lj.si transylvanian review of administrative sciences, no. 45 e/2015, pp. 185-200 186 1. introduction the fi nancial crisis has put additional pressure on local self-government to reconsider the question of the eff ectiveness of local spending and service delivery. financing municipalities and the ideal size of municipalities have been the central questions in various research projects. most of these projects have focused on degrees of fi scal decentralization or adequacy of fi nancing (finžgar and oplotnik, 2013; bolívar et al., 2014) and on effi cient use in respect to municipality size (dahlby, 2011; pevcin, 2013). analyses of recent reforms in diff erent parts of the world show that all of the abovementioned problems were monitored during reform processes (paulikas, 2013; cogez and rabaey, 2013; razin and hazan, 2013; wollmann, 2012; cole, 2012; swianiewicz and mielczarek, 2010; kuhlmann, 2010; blom-hansen, 2010). meneguzzo et al. (2013) conclude their presentation of reforms in italy, germany, france and portugal by noting that reform processes have led to increased centralization. in his comparison of reform processes in india, brazil and south africa, do vale (2013) pointed out that tradition and the political environment are important elements in the success of reforms, and works on reforms in macedonia (kreci and ymeri, 2010), turkey (yilmaz and guner, 2013), latvia (king et al., 2004), and germany and france (kuhlmann, 2008) reached similar conclusions. challenges in fi nancing are interrelated with challenges in democratic governance – at the core is the tendency towards territorial changes of municipalities (the merging of municipalities) and the creation of forms of inter-municipal cooperation (hereinafter: imc) through which the decision-making function is at least partially transferred from local representatives elected directly by local residents to other institutions (inter-municipal structures). the main purpose of this paper is to present the challenges diff erent countries are facing in imc and municipal fi nances. we tried to present imc as an alternative to the merging of municipalities. data on imc are presented for slovenia. all the fi ndings serve as a starting point for designing solutions that could be applied to local self-government in slovenia. 2. overview of organization and the degree of fi nancial decentralization in selected eu member states local and regional authorities play a very important role in the eu – more than 91,000 authorities implement 70% of all eu legislation and represent 16% of the gdp, 56% of public employment, 33% of public spending, and 66% of all public investment expenditure in the eu (kuhlmann and wollmann, 2014, p. 22; committ ee of the regions, undated). principles of territorial organization vary greatly across the eu, both at the state and sub-national levels. in the eu, the municipality is considered the base unit of territorial organization. in 2011, the average municipality in the eu had 5,630 residents across a surface area of 49 km2. at the same time, substantial disparities exist from country to country: in france, the czech republic and slovakia municipali187 ties on average have fewer than 2,000 residents1, while municipalities in great britain have over 100,000 residents. the enormous range of municipality sizes in the eu is best demonstrated by data showing a ratio of 1 to 85 in terms of number of residents, and 1 to 310 in terms of area. in 2011, nearly 80% of all municipalities at the level of eu were in just fi ve states, with two states – france (41%) and germany (13%) – accounting for over half of all municipalities (council of european municipalities and regions, 2008, pp. 4-5; dexia and council of european municipalities and regions, 2011, p. 6)2. as with territorial organization, large diff erences can also be observed in the degree of fi nancial (de)centralization of municipalities (milunovič, 2012). the degree of centralization of local levels is usually measured using public expenditure and revenues collected at the local level as shares of the gdp. the two metrics generally match up, as diff erences only occur in the level of indebtedness on the local level. the share of local public expenditure and revenues in 2013 varied across eu: from 0.8% of gdp in malta to 37.5% of gdp in denmark. the countries noted above as having a large number of municipalities (france, italy, spain, germany and czech republic) show revenues as a share of gdp near the eu average, with shares ranging from 6.4% in spain to 15% in italy; the eu average was 11.6% (eurostat, 2014). comparing these shares with those of the states, one fi nds the highest degree of autonomy in italy (that is, relatively large local revenues as a share of gdp indicate the largest degree of decentralization among the selected countries). in slovenia in 2013, public revenues on the local level reached 9.5% of the gdp, which amounts to around one fi fth of all public revenues. a similar degree of autonomy can be found in france, where local revenues have a similar share among total public revenues. as noted above, italy has a higher share, followed by the czech republic. germany and spain have a lower share (around 7% of all public revenues). besides these diff erences, at the level of eu diff erences also appear in the position of local self-government within the state administrative systems and in the tasks of municipalities (kuhlmann and wollmann, 2014, pp. 14-28). in this respect, local self-government in the eu presents a very diverse picture wherein diff erences are more easily identifi able than similarities (hulst and van montfort, 2007, p. 1). 3. inter-municipal cooperation 3.1. introduction regardless of the diff erences between eu member states, they all have something in common: the search for the ‘perfect size’ of municipalities, which would facilitate both democracy and identity on the local level as well as economic effi ciency in the 1 this is considerably less than in slovenia, where there are around 10,000 residents per municipality. 2 data are valid for eu-27. 188 provision of public services (council of european municipalities and regions, 2008, pp. 5, 85; blom-hansen, 2010; pevcin, 2013). one of the most popular tools for achieving this goal is the merging of municipalities3. this is not exactly a new trend, as reductions in the number of municipalities have been underway for decades, beginning in austria and sweden in the 1950s, and reaching a peak in the 1960s and 1970s (wollmann, 2004; dollery et al., 2007). however, some states have experienced the reverse trend – a greater number of municipalities; this is particularly true of the former socialist states, including slovenia, and is often a reaction to earlier territorial consolidations introduced by the communist government in an undemocratic manner (swianiewicz, 2010, p. 1). there are other ways for achieving ideal municipality size, the most popular of which involve various forms of imc (hertz og, 2010, p. 286)4. such cooperation serves to preserve smaller municipalities and, in doing so, to avoid confl icts with the residents of these areas; at the same time, it enhances the economic effi ciency of the delivery of certain public tasks and services (painter et al., 2003; kuhlmann, 2008)5. accordingly, the number of forms of imc, seen from a comparative perspective, is also very large. these forms can be divided into four groups: 1) informal, 2) weakly formalized, 3) imc in functional ‘enterprises’, and 4) imc as a model of integrated territorial cooperation (local government and public service reform initiative et al., 2010, pp. 1314; hulst and van montfort, 2012). although the process of merging municipalities is picking up speed in most european countries, powerful resistance is still present (dexia and council of european municipalities and regions, 2011, p. 7). most authors specialized in comparative european studies agree that the process of merging municipalities is not easy and in many cases does not succeed (france and italy) (dexia and council of european municipalities and regions, 2011, p. 7). at the opposite end of the spectrum one fi nds cases of successful merger processes, for example the danish reforms of 2007, the latvian reforms of 2009 and the latest reforms in the austrian state of styria, which were introduced from 2010 to 20146. however, mergers bring up questions about the distance separating the residents of these areas and decision-making processes on matt ers aff ecting them – this is the so-called economic-political dichotomy of munic3 the terms ‘amalgamation’, ‘fusion’ and ‘up-scaling’ are also used. 4 in literature the term ‘intermunicipal/interauthority partnership’ is also used (denters and rose, 2005). 5 in france, for example, 93% of all municipalities and 87% of the population fall under one or more of the country’s 2,588 territorial inter-municipal structures (communities), and more than 15,000 functional cooperation entities (single and multipurpose unions) exist (council of european municipalities and regions, 2008, p. 6; hertz og, 2010, pp. 287-293). 6 the number of municipalities changed from 542 to 287 and the average number of inhabitants went from 1,747 to 3,293 (das land steiermark, 2015). 189 ipal mergers (swianiewicz, 2010, p. 17)7. limiting the discussion to the abovementioned successful merger processes in denmark and latvia, the share of local public expenditure in the gdp in denmark was reduced by a percentage point in 2007, but then increased considerably after 2009 (from 32.4% in 2007 to 37.7% in 2012). the increase was the result of a new distribution of tasks between the central and local levels whereby local budgets assumed the fi nancing of health care. as the roles of assigning tasks on the state/local community levels changed, so too did fi nancing, in order to accommodate the new arrangements. although reforms have brought about greater decentralization, the intermediary level has nonetheless lost a degree of autonomy, as provinces no longer have the ability to introduce taxes. at the same time, the collection of taxes has been centralized (blöchliger and vammalle, 2012). a different post-reform trend can be noted in latvia, where the share of local government spending in the gdp decreased from 12.8% of the gdp in 2009 to 9.9% in 2012, but increased again in 2013 to 10.3% (eurostat, 2014). regardless of the forms territorial reforms take, the authors agree with the view expressed by professor wollmann that in analyzing pros and cons, it is prudent to divide states into two groups: 1) western european, and 2) central and eastern european states. the motives and logic underpinning local self-government reforms, including territorial reforms, diff er in each case; in states that fall into the former category, processes are centered on existing local self-government units, while in states in the latt er category they are part of a general, extensive reconstruction of local self-government and as such are more complex. of the states in the latt er group, some are following a so-called northern european reform patt ern (e.g. bulgaria), and others are following the so-called southern european reform patt ern (e.g. slovenia) (wollmann, 2008, p. 84; kuhlmann and wohlmann, 2014, pp. 151-152). 3.2. a comparative overview an alternative or supplement to the so-called northern european reform patt ern is presented by the so-called southern europe reform patt ern (norton, 1994; page and goldsmith, 1987), which is characterized by the preservation of smaller municipalities and the establishment of new types of groupings that bring together existing municipalities (so-called ‘trans-scaling’ strategies) (kuhlmann and wollmann, 2014, pp. 150-152; hertz og, 2010, p. 286; european committ ee on local and regional democracy, 2007). france is a typical example. there, the legal bases for this process had already taken shape by 1890. single-purpose inter-communal bodies (syndicats á vo7 in denmark, a report ordered by the government found that territorial consolidation would not have negative consequences for the state of local democracy in the country (swianiewicz, 2010, p. 18). welling hansen (2013) has however found that, for example, changes in municipal size in denmark negatively aff ect local political trust. at the same time, some of researchers and experts suggest that in some cases, amalgamation could also have a positive impact on local democracy (houlberg, 2010). 190 cation unique) fi rst appeared, followed after 1959 by multi-purpose bodies (syndicats á vocation multiple) (wollmann, 2008, p. 87). in 2010 there were 10,473 single-purpose and 1,358 multi-purpose inter-communal bodies in france. besides these types, there are also mixed inter-communal bodies (syndicats mixtes) linking municipalities with other subjects of public law (departments, regions, chambers of commerce, etc.). in 1966, so-called urban communities (communautés urbaines) also appeared. the purpose of these organizations is to link suburban municipalities with urban ones through a urban agglomeration process (vlaj, 2013; moreno, 2012; cole, 2012; hertz og, 2010, p. 288). reforms followed a similar path in germany. some states retained smaller municipalities and at the same time created a new level of local bodies known as ‘offi ces’ or ‘administrative unions’ (burgi, 2012). the main purpose of these bodies is to strengthen the administrative and operational capacity of municipalities while providing an institutional framework for imc. inclusion took place in two phases, with a voluntary membership phase followed by a mandatory phase. in germany, 77% of all municipalities are linked in this way. besides this form of cooperation, municipalities are also free to connect and commence cooperation voluntarily, for example in the form of informal working groups or interest associations (wollmann, 2008; moreno, 2012; burgi, 2012). plans in italy foresee those municipalities with fewer than 5,000 inhabitants sharing resources through joint procurement and the establishment of inter-municipal structures, which is expected to lead to a reduction in the number of municipal councilors; in england, the government is proposing that districts sign agreements on the joint provision of certain public services (shared service agreements). even denmark, a country that is often cited in slovenia as a role model for the successful reduction of the number of municipalities, carried out a parallel process of inter-municipal grouping – as vlaj (2013) notes, small municipalities on the islands were allowed to remain independent, but were expected to join neighboring municipalities in inter-municipal structures. the state then transferred the management of certain tasks to these organizations (blom-hansen, 2010). in general, it is possible to conclude that imc in europe is a widespread phenomenon. in some states cooperation has a long history (e.g. france), while in others it is a relatively new phenomenon (e.g. slovenia); nowhere is it completely absent. imc can assume a wide range of forms and take place in very diff erent institutional confi gurations (žohar, 2011). regarding the latt er, diff erences can be noted in how closely linked the networks of local communities (policy networks) are on the one hand, and in how the independent organizations that perform tasks previously performed by individual local communities are designed on the other; formal agreements on service provision or policy design represent an intermediary level of institutionalization (hulst and van montfort, 2007). 191 4. the case of slovenia 4.1. legislation slovenian legislation foresees the following forms of imc: the creation of (1) public agencies, public funds, public institutes, public companies and institutions, (2) joint municipal administrative bodies that carry out individual tasks pertaining to municipal administration, (3) joint bodies for exercising the rights of municipalities to found joint public institutes or public companies, (4) joint bodies for legal defense for municipalities and legal persons founded by municipalities appearing before the courts or other state bodies, (5) interest groups for the joint management and execution of individual administrative tasks and for carrying out joint developmental and investment programs, and (6) organizations to represent and exercise local self-government and to coordinate and provide for common interests8. 4.2. empirical analysis of all the forms of imc found in slovenia, the creation of joint municipal administration (jma) bodies was revealed to be the most widespread. although the option for founding bodies of this kind was foreseen for smaller municipalities in the local self-government act of 1993, it was not until 1999 that the fi rst such organization was founded. the reason was a shortcoming of a provision in the law: it did not regulate the question of founding a joint body of this kind, and as such could not be put into practice9. although this shortcoming was addressed in 1997, and the option for founding bodies of this kind was no longer limited to smaller municipalities, this did not have a noticeable impact on the number of jma bodies. as can be seen in table 1, a breakthrough occurred in 2007. since then, the number of jma bodies has rapidly grown, as has the share of municipalities included in one of more of these bodies: at present, over 90% of slovenian municipalities belong to a jma body. empirical research has shown that the growth in the number of jma bodies was the result of a change in the law10 governing the fi nancing of municipalities which enabled co-fi nancing from the state for the operations of these bodies in the amount of 50% of the expenses incurred in the previous year by an individual municipality for the operation of such a body (rakar and grmek, 2011; mele and žohar, 2011, p. 105). 8 see local self-government act. for a detailed discussion see rakar and grmek, 2011, pp. 131-152. 9 the constitutional court of the republic of slovenia reached the same conclusion in decision no. u-i-98/95 of 11.7.1996. 10 the act amending the financing municipalities act, which was supposed to take eff ect on january 1, 2006 and which foresaw allocations of funds from the state budget, was not practicable, as adequate delegated legislation was not issued. it was not until the adoption of a new law on municipal fi nancing, complete with adequate delegated legislation, that the fi rst real steps in this direction were taken. the new law took eff ect on july 25, 2007. 192 figure 1: number of jma bodies founded by year source: ministry of interior of the republic of slovenia (2014) although the law was amended in 2007, table 1 and figure 1 reveal that larger numbers of jma bodies began to be founded in 2009. this lag can be att ributed to the fact that certain municipalities were slow in adapting to the new legislative framework. the co-fi nancing from the state was a key factor in the founding of new jma bodies, and it can be seen in the fact that the number of newly founded bodies already began to dip in 2010. it is therefore possible to conclude that those bodies founded largely because of fi nancial stimulus from the state were mostly founded between 2007 and 2009. table 2 shows the growth of funding from the state for the operations of jma bodies. table 2: amount of funds allotted by the state for co-fi nancing jma bodies year (t) funds from budget in (t+1), in 1,000 € 2005 466 2006 793 2007 855 2008 1,667 2009 1,668 2010 1,409 2011 2,552 2012 4,853 2013 6,476 source: ministry of interior of the republic of slovenia (2014) the empirical data shows that a large majority of municipalities were included in just one jma body (table 3). table 3: intensity of municipality involvement in jma bodies number of jma bodies in which a municipality is included number of municipalities 0 16 1 142 2 51 3 2 source: ministry of interior of the republic of slovenia (2014); authors’ own calculations. 193 figure 2: inclusion of municipalities in jma bodies source: fonda and žohar (2013, p. 179) an analysis of the tasks of jma bodies shows that most of these bodies (58%) are active in the fi eld of administrative tasks (inspection and local police activities, figure 3). figure 3: share of jma body tasks source: ministry of interior of the republic of slovenia (2014); authors’ own calculations. the reasons for the predominance of these types of tasks are of a 1) legal and 2) practical nature: 1) the financing of municipalities act stipulates that the state will co-fi nance inspection, local police, fi nancial services, internal audit, spatial planning and public services; 2a) through these bodies, these types of tasks can be handled in a more unbiased and objective manner, and 2b) the collected fi nes represent revenue in the municipal budget. figure 2 shows that most slovenian municipalities are included in one or more jma bodies. fonda and žohar (2013, p. 173) conclude that from a developmental 194 standpoint, most enrolments began within individual administrative units11, and then proceeded to include municipalities in areas covered by multiple administrative units; they then focused on narrower or broader sub-regional territories. this can be linked to the fact that the areas covered by administrative units overlap, to a large degree, with the territories of former municipalities12. the founding of jma bodies could indicate those areas where municipal merger and the establishment of a second level of local self-government could occur, as common needs and interests clearly exist between municipalities joined in a jma body. at the same time, the political and fi nancial dimensions of both processes need to be taken into account along with the administrative-organizational dimension13. the court of audit of the republic of slovenia (2012) feels that the option for founding jma bodies, together with co-fi nancing for the operations of these bodies as well as the entire system of fi nancing municipalities, in fact has the opposite eff ect: in its opinion, these factors are responsible for a lack of interest in mergers among smaller municipalities. on the basis of experiences so far we can conclude that the founding of jma bodies in slovenia presents the following strengths, weaknesses, opportunities and threats (table 4): table 4: swot analysis of the founding of new jma bodies strengths: cost effi ciency transparency and quality sharing best practices better lawmaking professional specialization weaknesses: frequent changes to state legislation and late issuance of secondary legislation hrm (motivation, training) project coordination distrust between municipalities lack of interest in tasks that are not co-fi nanced by the state periodical work overload opportunities: orientation towards highest and newest standards of quality in policy-implementation regional planning effective raising of eu-funds expansion to other tasks threats: misunderstanding of state and local legislation political, economic and other pressures on civil servants lobbying delays and unresponsiveness from bodies of state possible rise in costs source: adapted from bezjak and korpar (2014) 4.3. inter-municipal cooperation as an alternative to merging municipalities? in recent years the merging of municipalities in slovenia has become a subject of intensive debate. vlaj (2011) pointed out that there are numerous reasons for merging municipalities, e.g. many of the 212 municipalities are not able to perform tasks 11 administrative units as territorially organised state administrative bodies were established on january 1, 1995. 12 an exception is the area of the slovenian capital, ljubljana. 13 despite the existence of a constitutional basis since 1991, to date no regions have been founded. 195 set by the constitution and legislation (internal reason), the congress of local and regional authorities of europe (2011) has recommended that slovenia encourage the merging of local communities where needed. in 2013, the minister in charge of local self-government upset representatives of municipalities with his statement that in slovenia we could get along with about one hundred municipalities. after that, in october 2013, the government prepared so-called ‘points of departure’ for the preparation of a strategy for the development of local self-government of the republic of slovenia, in which imc and a voluntary approach to merging municipalities were highlighted, and the ministry was obligated to prepare a proposal for the territorial reform of local self-government and a framework for merging municipalities (vlada republike slovenije, 2013). to date, nothing has been adopted or prepared, and the government under which these developments occurred resigned in 201414. the new coalition has stressed in the coalition treaty for the 2014-2018 period: 1) imc, 2) merging of municipalities, 3) the parallel implementation of reforms of state administration and local self-government, and 4) interest associations of municipalities as a form of imc15. as we can see, imc is not seen as an alternative to merging municipalities. nevertheless, experiences to date indicate that this could happen in practice. in this respect, future discussions should be more open towards in-depth considerations of the potential of hitherto unused or underused forms of imc. namely, slovenian municipalities are already confronted by certain challenges, e.g. their developmental role and capacity, quality of governance (vlaj, 2011; rakar and benčina, 2014). if the strengthening of existing forms of and the creation of new approaches to imc is to take place, we will have to tread with caution, and take into account the negative experiences of other countries. some of the negative features of reforms of this kind, especially in cases where legally independent organizations with decision-making powers are created to perform the tasks previously performed by individual local communities, refer to: the absence of direct democratic legitimacy for inter-municipal bodies, a decline in the degree of inclusion of the local population in shaping decisions, confl icts of interest between members of these bodies, overlapping responsibilities and institutional overcrowding in public administration (vlaj, 2013; burgi, 2012, p. 297; wollmann, 2008, pp. 88-90; bekkers et al., 2007, pp. 203-207; hulst and van montfort, 2007, pp. 218-222). imc also provides a small space for the development of social dialogue at the local level, as municipalities are an organic sett ing for the development of civil-society institutions, e.g. social partners (vodovnik, 2013). 14 see also association of municipalities and towns of slovenia (2014). 15 a draft of reforms of public administration for the period 2015-2020 is in public consideration until january 26, 2015. in the literature interest associations of municipalities (slov. zveza občin) are seen as an important opportunity for imc (juvan gotovac, 2014). 196 according to data from the proposers of reforms, the merger of municipalities would cut costs by some 200 million euros. it would also reduce municipal indebtedness, although the data show that the trend of indebtedness among smaller municipalities only appeared with the fi nancial crisis, and that the highest levels of indebtedness are to be found in the large municipalities; data from 2012 even show that total local public fi nances are no longer posting a defi cit. 5. conclusion there is no magic formula for determining the optimal size of local self-governing communities. states follow diff erent reform patt erns in order to balance economic effi ciency of the provision of public services and democratic legitimacy of governance. in slovenia the so-called south european reform patt ern is being followed, and this is resulting in enhanced use of forms of imc. current legislation has led to the expansion of one particular form of imc, joint municipal administration bodies. despite the fact that political actors and literature recommend the merging of municipalities, experience and previous developments indicate that other forms of imc, particularly interest associations of municipalities, will take its place. in line with fi nancial restrictions, this will lead to additional eff orts for the development of imc. it seems that good practices from diff erent imc bodies result in the establishment of new bodies in the other parts of slovenia. imc can therefore potentially become a way to overcome the causes underlying merger tendencies. references: 1. association of municipalities and towns of slovenia, ‘resolucija skupnosti občin slovenije ob posegih v področje lokalne samouprave’, 2014, [online] available at http://www.skupnostobcin.si/fileadmin/sos/datoteke/skupscina_2013/skupscina _2014/resolucija_skupnosti_obcin_slovenije_ob_posegih_v_podrocje_lokalne_samou prave-18.4.2014.pdf, accessed on february 13, 2015. 2. bekkers, v., dijkstra, g., edwards, a. and fenger, m. 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(ed.), proceedings to the conference “posvet delovanje skupnih občinskih uprav v sloveniji”, dobrepolje, 2011, pp. 94-103, [online] available at htt p://www. mnz.gov.si/fi leadmin/mnz.gov.si/pageuploads/javna_uprava/svlsrp.gov.si/pag euploads/lok-sam05/obcine/sou/zbornik-sou-marec-2011.zip, accessed on february 26, 2014. 22 abstract this article shows that if, in a young democracy with weak institutions, one and the same party governs in virtually all upswings of the business cycle and promotes each time pro-cyclical fi scal policies, three serious negative effects emerge. the fi rst is the loss of fi scal policy; fi scal policy remains pro-cyclical during the downturn as well, deepening the recession and extending the period in which output stays below potential. the second effect is the loss of democracy; unable to use fi scal policy to help exit the recession and speed up economic growth, the parties governing during downturns compounded by the pro-cyclicality of fi scal policies are perceived by the public as impotent and are penalized accordingly through a lower share of parliamentary seats, until the party that governs exclusively during business cycle upturns fi nds itself without a real opposition. the third effect is the loss of conventional monetary policy, manifesting if interest rates and infl ation are low when recession sets in. under these circumstances, lowering the monetary policy rate to zero might no longer suffi ce to stimulate the exit from recession and the quick return of output to its potential level, leaving central banks no option but to resort to unconventional monetary policies, such as quantitative easing. keywords: fi scal cynicism, business cycle, pro-cyclical fi scal policy, monetary policy, democracy, political parties. with a permanently pro-cyclical fiscal policy, we could lose democracy and monetary policy lucian croitoru lucian croitoru senior advisor to the governor of the national bank of romania, bucharest, romania tel.: 0040-746-102.625 e-mail: lucian.croitoru@bnro.ro; lcroitoru2003@yahoo.com transylvanian review of administrative sciences, no. 54 e/2018 pp. 22-37 doi:10.24193/tras.54e.2 published first online: 2018/06/29 23 1. introduction over the past two decades, romania’s fi scal policy has been mostly pro-cyclical, i.e. its fi scal impulse and output deviation from potential have been concomitantly either positive or negative. pro-cyclical fi scal policies increase growth rates in the business cycle upswings and lower them even more to very negative levels in recessions. politicians in romania have not learned this lesson yet. in 2017, despite a gdp growth rate of about seven percent and an excess demand of about 2.9 percent of potential gdp, the government decided to administer the economy a positive fi scal impulse of about 1.4 percentage points. in this article i will focus on two issues. first, i will come up with two possible explanations for promoting a pro-cyclical fi scal policy in romania during periods of swift economic growth, at rates above potential, partially fueled by the fi scal policy itself. the need for such explanations arises because, unlike the monetary policy, which is partly insulated from political interference, the fi scal policy is formulated in an intricate political process. neglecting this process may lead either to misunderstanding or underestimating long-term trends which, as i will show, erode democracy or to unrealistic conclusions about how to preserve a correct fi scal policy stance at all times. then i will analyze the consequences of the expansionary fi scal policy separately for the ‘normal’ phases of the business cycle, when monetary policy rates are signifi cantly positive, and for the ‘abnormal’ phases, when policy rates are virtually equal to zero. experience so far has shown that, during normal business cycle phases, if the short-term phillips curve (the link between infl ation and excess demand) is not fl att ened (i.e. excess demand generates relatively high levels of infl ation), a pro-cyclical fi scal policy during the expansion entails a massive rise in infl ationary pressures, which calls for higher interest rates. then, when the economy inevitably enters the contraction phase, fi scal policy remains pro-cyclical, this time unintentionally, deepening recession and unemployment. in other words, the pro-cyclical fi scal policy in the expansionary phase of the normal cycle leads to the loss of fi scal policy during the recession and the exit from recession. i will show, however, that if the short-term phillips curve is fl att ened (excess demand generates relatively low levels of infl ation), then it is likely for infl ationary pressures that lead to higher interest rates during the normal phase not to emerge anymore. in an environment of relatively low infl ation and interest rates, along with a pro-cyclical fi scal policy, it is highly likely that the entry into recession triggers an abnormal phase of the business cycle, when monetary policy rates hit the zero mark without the economy returning to potential, which would entail the loss not only of the fi scal policy, but of the conventional monetary policy as well. 2. a cognitive explanation of pro-cyclical policies in democracies with weak institutions most economists and analysts have explained the pro-cyclical fi scal policy in romania during expansionary phases of the economy through populism and lack of 24 knowledge of the implications of a pro-cyclical fi scal policy. in other words, according to these authors’ explanation, the promoters of such a policy believe they are right in their actions, without realizing that they might add problems to infl ation management in the expansionary phase of the business cycle or that they defi nitely contribute to higher unemployment thereafter. this explanation is similar to that suggested by rogoff and reinhart (2008) through the phrase ‘this time is diff erent’, which also implies the lack of knowledge, not necessarily of the negative eff ects, but of the unavoidability of a crisis. however, part of this explanation – namely that regarding the obliviousness of the harmful eff ects or inevitability of a crisis – might not be correct. economists have repeatedly explained that, in an economy such as romania, a pro-cyclical fi scal policy in the expansionary phase is almost doomed to remain pro-cyclical during the downturn as well, deepening unemployment. figure 1 depicts the pro-cyclicality of the fi scal policies in romania through positive (negative) fi scal impulses and positive (negative) output gaps simultaneously at work. it can be seen that pro-cyclical fi scal policies in expansionary phases have remained pro-cyclical during downturns and for quite a while afterwards as well. this brings up the question of why a government would want to implement pro-cyclical fi scal policies if it can anticipate their detrimental eff ects on voters. in extremis, in a cognitive approach, like the one proposed herein, there can only be two answers: governments either use those detrimental effects as a means to a political end or believe they can dodge such eff ects. i will explore the two possibilities one by one. -10 -8 -6 -4 -2 0 2 4 6 8 10 -4 -3 -2 -1 0 1 2 3 4 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 pro-cyclical fiscal impulse (percentage points, lhs) countercyclical fiscal impulse (percentage points, lhs) gdp dynamics (percent, rhs) output gap (percent of potential gdp) source: author’s creation based on nis and ameco data and own calculations figure 1: pro-cyclicality of fi scal policies in romania determined based on the primary fi scal impulse and the output gap (forecasts for 2017) 25 2.1. the ‘fi scal cynicism’ assumption capitalizing on the harmful eff ects can be an end only in a democracy with weak institutions. my explanation, which i call the ‘fi scal cynicism’ explanation, is that – in such a democracy – there may emerge a logic of alternance in power whereby the costs of a pro-cyclical fi scal policy will be borne by the current opposition (future ruling party), which will weaken and reduce it in favor of the current ruling party (future opposition). by virtue of this logic, any party coming to power during the upswing of the business cycle would promote pro-cyclical fi scal policies. this explanation assumes there are political parties or coalitions that embark on a path of maximizing their political market share over the long term, and decide to govern, if they can, in all periods of economic expansion, which they amplify via pro-cyclical policies in order to weaken their political foes, and not to govern in any recessions. as i will show at the end of this section, in romania we can identify a party that has so far governed almost exclusively during upturns of the business cycle and promoted pro-cyclical fi scal policies each time. however, we have no grounds to claim that governing solely during upswings was or was not part of a strategy pursued by the said party or that it was guided or not by cynical or benevolent intentions. it is not the aim of this article to determine what intentions or strategies have guided or are guiding the pro-cyclical fi scal policies of political parties. the aim of the article is to identify the possible explanations for these pro-cyclical fi scal policies, and to infer the implications that arise if, for whatever reason, one and the same party governs during all business cycle upturns and promotes pro-cyclical fi scal policies. the objective of governing solely during periods of expansion (not at all in recessions) is rational from the perspective of a cognitive bias of the public: the signifi cance in terms of advantages and disadvantages that an unanticipated gain has compared with an unanticipated loss of equal magnitude is stronger in case of the loss. as i have shown in another article (croitoru, 2017), the fi rst economist to write about this cognitive bias was knut wicksell (1898, p. 3). in virtue of this cognitive bias, losses emerging in recession are perceived more strongly in absolute value than gains during upswings. thus, if a party that governs in the expansionary phase of the business cycle and promotes pro-cyclical fi scal policies were to govern during the ensuing contractionary phase as well, its image would be seriously dented. by contrast, governing exclusively during periods of upturn, there is increased likelihood for the respective party to be associated by the public with the idea of success and welfare. in the theory of fi scal cynicism there are no guarantees about how long an expansion can last. expansions can be very brief. for instance, in the us, the shortest upturn after world war i lasted 12 months. in theory, as time goes by, the economy nears a potential recession which can set in anytime. hence, for parties maximizing their market share by governing only in virtually all times of economic expansion, in the logic of fi scal cynicism there arises, on one hand, the need for fi scal policy to be pro-cyclical from the beginning and, on the other hand, the urge to step down from power immediately after the possible entry into recession. moreover, it is sensible 26 that the pro-cyclicality of fi scal policy should heighten towards the end of the governing period, which coincides in time with the approaching of parliamentary elections. heightened pro-cyclicality may ensure the success in the forthcoming elections of the party that governs solely in the expansionary phases, without any political damage in the future. if, after winning the elections, the economy is hit by recession, the logic of fi scal cynicism dictates that the respective party steps down, so as not to pay the cost of the expansionary fi scal policy it promoted. the explanation i have put forward triggers immediately two questions: why the ruling parties that promote fi scal cynicism are not penalized by voters? and why the other parties do not adopt strategies to prevent the governing of one and the same party only in the expansionary phases of the business cycle? the answer to the fi rst question is that the lack of sanctions from voters owes to the infl uence of three factors. one such factor is none other but the aforementioned cognitive bias of the public at large, to whom the signifi cance of losses is greater when compared to that of gains of equal magnitude. another factor is that, while almost all voters can understand during an economic upturn the immediate benefi cial eff ects of pro-cyclical fi scal policies, the majority cannot comprehend how the negative eff ects of these policies, which usually become manifest under a diff erent administration, during a downturn, are ascribable to the previous governance. briefl y put, most voters cannot understand that the negative economic eff ects in the contractionary phase are rooted in the pro-cyclical fi scal policy promoted during the expansionary phase. from a cognitive perspective, in the explanation put forward here, the administration is aware and voters are oblivious of the detrimental eff ects over the longer horizon of fi scal policy, meaning there is a cognitive asymmetry at work. finally, the third factor is short memory. most of the voters who understand would forget by the time of the following elections that the costs emerging in recession are partly rooted in the pro-cyclical fi scal policies pursued by governments during periods of expansion. the three factors listed here, i.e. cognitive bias, cognitive asymmetry and short memory, are mutually reinforcing. regarding the second question, the answer is that the lack of a strategy of the other parties to render it impossible for one and the same party to govern only during all business cycle upswings promoting pro-cyclical fi scal policies refl ects a coordination failure. essentially, the other parties (namely those that do not succeed in governing during upturns) fail to come up with a coordinated refusal to govern in recessionary periods. in our view, the underlying reason for this failure relates to the fact that institutions in our democracy are weak. that is why the complex structure of incentives prompting the decision to assume power is deeply skewed in favor of decisions spanning the short-term horizon. for those who repeatedly fail to govern during upswings, the incentives to rule in recessions are so strong that those who have a chance to do it cannot adhere to a strategy implying abstention from governing. this outcome is known to the party that governs only during all business cycle upswings by promoting pro-cyclical fi scal policies. the parties’ failure to coordinate, 27 in conjunction with the lack of sanctions from voters, generates – in democracies with weak institutions – a very serious consequence: a party that manages to govern from the very beginning in the expansionary phase of the business cycle and promotes pro-cyclical fi scal policies has the highest chances of governing during the next business cycle upturns as well, while it is optimal – for the reasons stated above – not to rule in recessions. the fi scal cynicism explanation implies various degrees of severity of the pro-cyclical fi scal policy. to refl ect the maximum damage, the explanation is worded as follows: in a democracy with weak institutions, the administrations in the expansionary phase of the business cycle use the pro-cyclical fi scal policy in order to cripple the administrations in the contractionary phase all the way to extinction. this severe form of pro-cyclicality might be the only one preferable for those who intend to govern solely during all periods of economic boom, since it leaves political adversaries with very litt le room for maneuver, while maximizing the public’s positive perception visà-vis the governance during the economic expansion. in romania, evidence seems to support the idea that the pro-cyclical fi scal policy pursued in all expansionary periods infl icted maximum damage on the parties that managed the eff ects during periods of recession and exit from recession. each recession occurring after 1990 that had been preceded by an expansionary fi scal policy ousted from the political stage either the party perceived as leading a governing coalition during the recession or the party that formed the government during the downturn. that is what happened to the christian democrat national peasants’ party (pnțcd) after the 1997-1999 slump, and to the democrat-liberal party (pdl) after the 2009-2010 recession. data in figure 1 validate the hypothesis that, in romania, the pro-cyclicality of fi scal policy emerges from the very start of governances in business cycle upturns and becomes more visible during the closing years of the respective tenures, as stated by our fi scal cynicism theory. at present, the ruling coalition in romania is pursuing a strongly pro-cyclical policy, as illustrated by figure 1. based on previous experience, it results that the party coming to power or leading a governing coalition after the 2020 parliamentary elections, or even sooner, if a crisis breaks out, will have diffi cult problems to solve if the economy enters a recession. the respective administration will not only be unable to use the fi scal policy to take the economy out of recession and speed up the return of output to potential, but it will delay these processes because it will be coerced to cut budget spending and raise taxes. such measures might trigger voters’ ultimate aversion, similarly to what happened after the parliamentary elections of 1996 and 2008. the founding elections of 1990 brought to power in romania a party which, either directly or by supporting parties that did not have a parliamentary majority, governed in virtually all expansionary phases of the business cycle, always promoting pro-cyclical fi scal policies, but almost never ruled when the economy was mired in recession. readers should be reminded that it is not our aim to determine whether governing solely during business cycle upswings and systematically promoting 28 pro-cyclical fi scal policies are part of a strategy or are the outcome of a cynical or benevolent intention. but, looking beyond intentions, the aforementioned fi ndings are the same as those that would come up if the respective party were to govern only in all expansionary phases and to implement pro-cyclical fi scal policies with the intention of gett ing rid of its foes, like in the fi scal cynicism hypothesis. if the trend persists, this particular party will become very big and will no longer have any real political opponents after 2024. a democracy where there is no political struggle will eventually be altered. essentially, this is the direst political cost that strongly pro-cyclical fi scal policies could entail in romania. 2.2. the ‘constrained responsibility’ hypothesis the other hypothesis i put forward in order to explain why the parties governing during economic upturns implement pro-cyclical fi scal policies is that pro-cyclicality advocates have the necessary knowledge to fathom the risks posed to infl ation and unemployment, as in the fi scal cynicism explanation, yet are benevolent. more precisely, the promoters of pro-cyclical fi scal policy are guided by the belief that the associated risks will not materialize before shifting to a correct countercyclical policy, later on, after they have reached the seemingly non-delusional objectives pursued, for instance, via tax cuts alongside signifi cant pay rises. this explanation assumes, similar to the fi scal cynicism theory, that detrimental eff ects (costs) may occur under the governance implementing the pro-cyclical fi scal policy in the expansionary phase of the business cycle. but, unlike the fi scal cynicism theory, it additionally assumes a ‘responsibility’ of the fi scal policy initiators towards the public and political adversaries. ‘responsibility’ is manifested in the intention of a ‘timely’ reversal of the pro-cyclical nature of fi scal policy, i.e. prior to the outbreak of a crisis that would halt the upturn of the business cycle. the timely shift would allow fi scal policy to become countercyclical, meaning that it can be used in the contractionary period to foster economic growth, thereby facilitating the task of the incoming government, which can be one and the same with the government having promoted the pro-cyclical policy. this ‘responsibility’ does not show up out of the blue. on the one hand, it might be generated if there were evidence prompting the governing party to believe it could stay in power for two successive electoral cycles. on the other hand, it is triggered by the awareness of a high likelihood that the business cycle upswing might be interrupted by the occurrence of a slump during that particular term in offi ce. we can now say that we are dealing with a responsibility ‘constrained’ by the prospects of recession. if we assume, without it being an assertion, that this knowledge and the belief in the ‘timely’ reversal of the fi scal policy nature – which i have already brought up – lie at the root of pro-cyclical fi scal policies in romania, then shifting to the implementation of the expansionary pro-cyclical fi scal policy as early as 2016-2017 would refl ect two implicit wagers. the fi rst is that monetary policy will somehow succeed in keep29 ing infl ation within the range targeted by the central bank, despite the relatively wide structural budget defi cit, without creating discontent for the public. the decision to tighten monetary policy is, however, not an easy one. on the one hand, if it did not raise the interest rate to tackle infl ation, monetary policy would contribute, as i am about to show, to the widening of the structural budget defi cit, while the leu would weaken in the anticipation that macroeconomic policies are unsustainable, which would be visible in infl ation. in this case, the infl ation wager would be lost and, from the perspective of those who bet on infl ation staying low, it would have costs in terms of future votes. alternatively, infl ation might continue to stay low for a long period if, following the earlier structural changes or those recently generated in the aftermath of the 2008 crisis, the link between excess demand and infl ation has been greatly weakened. thus, infl ation readings close to the lower bound of the variation band around the fl at infl ation target set by the central bank may coexist for a while with an infl ationary, even rising, output gap, without requiring a policy rate hike to narrow the output gap. that is why, alongside the widening of the private sector’s external imbalance, two highly costly consequences emerge from the relationship between monetary and fi scal policies. the fi rst is that, having no reasons given by prospects of higher infl ation to reduce the output gap to zero, monetary policy contributes to the strengthening of fi scal policy pro-cyclicality. this eff ect occurs if the headline budget defi cit becomes an implicit target. such a target appears when the adopted fi scal measures tend to raise the headline defi cit above a certain limit, for several years in a row, but there are forces (such as the rules in the european union) which impose sanctions that make the defi cit stay at the maximum admitt ed limit by rules. in this case, even if the headline budget defi cit remains constant for a number of years as a percent of gdp, the rise in the excess demand (gdp gap) leads to the widening of the structural budget defi cit from one year to another, as i have previously mentioned. in this way, by refraining from tackling excess demand, a pro-cyclical monetary policy in the expansionary phase of the business cycle would add to the severity of the fi scal adjustment in recession, contributing to higher unemployment. the second consequence, which i will dwell upon in the next section, is that a pro-cyclical fi scal policy may lead, with the entry into recession, to the loss of the monetary policy’s operational tool. on the other hand, tackling infl ation might require relatively large increases in the monetary policy rate in romania. this would strain the balance sheets of the indebted, likely to generate the emergence of the fi nancial frictions that will entail a slowdown in economic growth or, in the worst case, a recession. the second implicit wager i have referred to is that the expansion of the world economy will not come to a halt in the period when our fi scal policy is pro-cyclical and that, as it has happened in romania so far, a recession will not be generated exclusively on domestic grounds. in other words, it is a bet that global growth will extend beyond the moment marking the deliberate return of domestic fi scal policy 30 to the countercyclical profi le. it is a bet on the approximate date of the outbreak of the following crisis (recession) in a large country, which may infl uence the business cycle globally, meaning that it is a bet against the economic cycle. this bet refl ects the belief that, within the same expansionary phase of the economic cycle, fi scal policy can fi rst be pro-cyclical, in order to att ain some goals, and it can then be turned into a countercyclical policy even before the upturn has ended, in virtue of the constrained responsibility. from another perspective, fi scal policy is pro-cyclical from the beginning in order to maximize the chances of not facing a crisis during the deliberate period of pro-cyclicality and to stand a higher chance of being turned from pro-cyclical into countercyclical in due course. this belief is, usually, illusory. the data i have presented for romania in figure 1 show that our fi scal policy has never been relentlessly countercyclical. briefl y put, i call this belief the illusion of the ‘timely reversal’ of fi scal policy from pro-cyclical to countercyclical. since the illusion of the timely reversal cannot be done away with, the pro-cyclical fi scal policy pursued from the perspective of constrained responsibility would have the same negative economic eff ects for the following governance and for each and every one of us. however, it would not exert the same negative eff ects in the long run on democracy as fi scal cynicism, because presumably the party pursuing it does not wish to govern solely during expansionary phases of the business cycle. nevertheless, this neutral result on democracy would be diff erent if we were to change the constrained responsibility hypothesis to allow one and the same party to govern, with the benevolent intention of ‘timely reversal’, only during all business cycle upturns. we thus derive the ‘altered constrained responsibility’ theory, which is a particular case of the constrained responsibility theory, where the respective party is benevolent not only to the public and political foes, as in the initial defi nition, but also to itself, since it avoids governing in recession. with these changes, the constrained responsibility theory yields the same negative results with regard to democracy as the fi scal cynicism theory. in order to be clearer on the similar negative results on democracy of both fi scal cynicism theory and altered constrained responsibility theory, i reiterate that the founding elections of 1990 in romania made it so that, without governing during downturns, one and the same party governed directly or indirectly (by supporting a minority government) in virtually all business cycle upswings ever since 1990. assuming this party has so far always pursued and were to pursue from now on as well pro-cyclical fi scal policies with the benevolence implied by constrained responsibility, and were to continue to govern only during all expansionary phases of the business cycle, then it is highly likely the party will no longer have any real opposition starting 2024. it is the same result obtained in the logic of fi scal cynicism as well. now we can clearly state that it does not matt er whether a party is cynical or benevolent when pursuing a pro-cyclical fi scal policy. what matt ers is if, by pursuing the pro-cyclical fi scal policy, the respective party has the strategy, without governing in any recession, to govern in virtually all business cycle upturns and manages to im31 plement it. any political party or coalition meeting this condition will end up having no political adversaries that count. in this way, the said party or coalition may profoundly alter democracy. having defi ned the two hypotheses – that of ‘fi scal cynicism’ and that of ‘constrained responsibility’ –, it becomes clear that, in the cognitive approach adopted in this paper, if considering strictly a given governance, rejecting the ‘constrained responsibility’ hypothesis automatically means accepting the ‘fi scal cynicism’ explanation, and vice versa. however, if we have in mind the case in which one and the same party governs for a relatively long period in all business cycle upswings, and does not govern during recessions, it cannot be ruled out that certain governances might have been guided by fi scal cynicism, while others by ‘altered constrained responsibility’. irrespective of the correct explanation, the same party governing in all expansionary phases of the business cycle, without being in power during any recession, along with perpetually promoting pro-cyclical fi scal policies may lead to an alteration of democracy and, depending on the normal or abnormal character of the business cycle, to the loss of interest rate as a conventional monetary policy tool. 3. an assessment of risks of the pro-cyclical fi scal policy from the perspective of normal and abnormal phases of the economic cycle even though fi scal policy conversion from pro-cyclical to countercyclical within the same expansionary phase of the business cycle is generally illusive, it cannot however be ruled out. starting from the assumption that the current political coalition in romania is ruling guided by ‘constrained responsibility’, the aim of this section is to answer the question whether this time there are chances for the fi scal policy in romania to become countercyclical in the present expansionary phase of the economic cycle, thereby reducing the odds of losing the interest rate as a monetary policy tool. for this purpose, we shall analyze some traits of the global economic cycle and the conditions in which the next phase of the economic cycle could be ‘abnormal’ for romania. 3.1. the inevitable recession we know for sure that a new crisis will come, but we never know when; in principle, a crisis is necessary as it shows us what is wrong in our economic model, i.e. in our business model. provided we identify correctly what needs to be fi xed, we can lay the groundwork for a lasting expansion, in which imbalances build up slowly and economic growth is high. if we identify them incorrectly imbalances may build up fast and expansion will be brief. with a wrong identifi cation, even if the economy were to grow at a fast pace under the infl uence of incidental factors, the shorter duration of the upturn might make it so that the expansion-generated production gain trail behind the outcome of the correct identifi cation of the underlying causes and the adjustments needed. admitt ing that the experience will recur, romania’s economy will not enter recession before being forced by a crisis generated outside it. such a crisis aff ecting the 32 domestic economy as well should erupt in a large country, with strong ties to the european union, the main destination of romanian exports. such an economy is the us, which is the largest world economy and the leading trade partner of the european union. several parameters of this economy prompt us to believe it will not be long before a new crisis (recession) hits: a) the economic growth rate during the present expansion has been lower than in the previous two, which might be indicative of the fact that the us economy has not yet conducted all the adjustments required by the 2008 crisis, either because it has not properly identifi ed them or because it was unable to; b) non-fi nancial corporations embarked in 2011 on a new indebtedness cycle, with the annual pace of increase of debt exceeding 6 percent in 2015; c) the ratio of net debt to funds from operations has followed a steep upward path since 2015, and has exceeded 170 percent, above the 2009 reading; d) the average credit cycle spans 6-7 years, whereas the aforementioned expansion of credit to non-fi nancial corporations since 2011 shows that this cycle is drawing to an end of its average length; e) fi nally, although it is known that expansions do not die of old age, it is also worth mentioning that the longest expansion in us history lasted for 10 years; the ongoing one has already been around for 8 years. for the time being, the negative signals coming from these data are alleviated by the fact that the credit cycle is barely at the beginning in the euro area and japan, while in the us the government and households increase their debt at slow paces, of 5 percent and 3 percent per year respectively. under these circumstances, it may be assumed that romania’s fi scal policy might be caught on the wrong foot, meaning that it cannot be turned from pro-cyclical into countercyclical in due course, losing the implicit wager referred to above. moreover, turning the fi scal policy from proto countercyclical cannot be done overnight, it takes time. this shows that economic expansion might be halted by a crisis before the ‘timely reversal’ of the fi scal policy. 3.2. the emergence of the ‘abnormal-recessionary’ phase and the loss of conventional monetary policy in order to evaluate the consequences of the pro-cyclical fi scal policy during the economic boom, we should correctly identify the phase of the economic cycle that the economy will be in. i am not referring here to the uncertainties associated with the econometric estimation of the excess demand, which is an unobservable variable. i am referring to the fact that the business cycle is more complex than it was generally believed prior to the 2008 crisis. in light of the experience, the economic cycle can no longer be judged as a succession between the upturn and the downturn of the business cycle, in which monetary policy rates are signifi cantly positive. the crises – starting from that of 1929 and all the way to that of 2008 – have shown that the economic cycle has a ‘normal’ phase, in which policy rates are signifi cantly positive, and an ‘abnormal’ one, in which the said rates are zero or even negative. 33 in each of these phases, the periods in which the economy is in expansion alternate with periods in which the economy is in recession. thus, the economy can be in one of the four possible phases: (i) normal-expansionary, (ii) normal-recessionary, (iii) abnormal-recessionary, and (iv) abnormal-expansionary. the macroeconomic policy mix is conditional on the phase of the economy, which makes it so that the key role is not always assumed by the same policy (croitoru, 2016). an example of the four phases of the economic cycle for the us economy is shown in figure 2. having clarifi ed these phases, it can be seen that, once the economy enters a recession after a normal-expansionary phase, such as the one that started shyly in romania in 2011, and has already led to economy overheating in 2017, in which fi scal policy was pro-cyclical, the emerging eff ects depend on the phase that comes next. if the next phase is the normal-recessionary one, in the worst case fi scal policy might continue to be pro-cyclical during both the recession and much of the period when output would remain below potential, even if the economy grew at positive rates. but, very important for the reasoning here, monetary policy will have the necessary room to cut interest rates enough to help the economy exit the recession quickly. in other words, monetary policy will not lose its operational tool, namely the interest rate. -16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 18 20 19 14 19 18 19 22 19 26 19 30 19 34 19 38 19 42 19 46 19 50 19 54 19 58 19 62 19 66 19 70 19 74 19 78 19 82 19 86 19 90 19 94 19 98 20 02 20 06 20 10 20 14 interest rates on the secondary market for 3m t-bills (annual) annual gdp growth rate monetary policy rate (fed rate) consumer prices annual inflation % np ap ap source: author’s creation based on data available at fred figure 2: ‘normal’ phases (np) and ‘abnormal’ phases (ap) of the business cycle in the us nonetheless, the normal-expansionary phase may be followed by the abnormal-recessionary one, as it happened with the 2008 crisis, when aggregate demand witnessed a massive drop in developed countries. in this case, the asymmetric con34 tribution of the pro-cyclical fi scal policy can lead to the loss of the monetary policy operational tool. on one hand, in the expansionary phase, the pro-cyclical fi scal policy made a relatively small contribution to the increase in the interest rates, which created additional room for monetary policy. on the other hand, however, in the abnormal-recessionary phase, fi scal policy may remain pro-cyclical, substantially contributing to the deepening of the recession and of the unemployment, calling for a major cut in the interest rate, as in the case of the normal-recessionary phase, or it may remain insuffi ciently countercyclical. now, however, unlike the normal-recessionary phase, the interest rate cut to zero is no longer suffi cient to help the quick exit from the recession. now, since it widened too much in the normal-expansionary phase, the fi scal defi cit either needs to be diminished or can no longer be suffi ciently increased to make up for the decline in private demand, with monetary policy having to try to boost aggregate demand via quantitative easing. the less indebted in foreign currency the economic agents are and the larger the stock of instruments available for such operations, the higher the success of such a policy in romania. in the case depicted here, the monetary policy of quantitative easing is a consequence of fi scal policy pro-cyclicality. or, otherwise stated, monetary policy loses its operational tool because fi scal policy was pro-cyclical in the expansionary phase of the business cycle. this scenario was confi rmed after 2008 mainly by the developed economies, but also by an emerging one: the czech economy. in developed economies, the loss of interest rate as a monetary policy tool occurred because policy rates had been relatively subdued prior to entering the great recession of 2008, and fi scal defi cits could not be suffi ciently widened to make up for the fall in demand to levels at which the natural interest rate became too low. essentially, the suffi cient widening of defi cits was impossible either because, in some cases, fi scal policies had been pro-cyclical during the upswing or because of governments’ fear that an overly large increase in the defi cits might have not been fi nanced by markets, which would have also aff ected economic agents’ confi dence, already at very low levels. looking at the czech republic, structural budget defi cits before the crisis had been relatively wide, so that the entry into recession for the second time after 2008 called for fairly large cuts in the structural budget defi cit, of 1.5 percentage points in 2011, 1.1 percentage points in 2012, and of 1.6 percentage points in 2013. in other words, the czech republic lost fi scal policy because it could not expand the budget defi cit in order to stimulate the economy. the czech republic’ central bank bought a total of 76 billion euros, which was tantamount to injecting korunas into the economy, i.e. it pursued a less common form of monetary policy based on quantitative easing. 3.3. abnormal-recessionary phases will extend across countries and will become more frequent the discussion in the previous paragraph on pushing the economy by a pro-cyclical fi scal policy in the abnormal-recessionary phase and on losing the interest rate as a monetary policy tool was based on two hypotheses. the fi rst assumes a signifi cant 35 fl att ening of the phillips curve at the low levels of the infl ation rate, including in romania. were this fl att ening not to take place, infl ation would pick up at higher paces as output rises towards potential. the second hypothesis is that the natural rate of the interest might drop to very low levels. with these two assumptions, cutt ing the monetary policy rate to zero would not suffi ce to push the real monetary policy rate (which, in this case, is equal to zero minus infl ation) below the natural interest rate because infl ation would be too low. arguments and evidences to support these hypotheses are available in bernanke (2005, 2007 and 2015), borio and disyatat (2011, 2014), borio (2017), carney (2017) and croitoru (2015). these papers show that global factors and technological changes lead to: (i) the decline in the interest rates and in the natural rate of interest, (ii) the change in fi nancial conditions, and (iii) the fl att ening of the phillips curve. the materialization of these hypotheses is underway in romania, and they might fully materialize in the next two to three years. during this time span, as i have argued above, the us economy may enter into recession, triggering a recession in romania as well. with the aforementioned hypotheses materialized, and with a fi scal policy that seems programmed to stay pro-cyclical over the next two to three years, the upcoming phase of the business cycle is highly likely to be abnormal-recessionary, meaning that the interest rate can no longer play the role of a monetary policy tool. the low natural rates of interest and the fl att ening of the phillips curve will prompt the interest rates and the infl ation rates in various countries, romania included, to stick to relatively low levels. against this background, if recession sets in, our economy will need a relatively large policy rate cut to resume growth. since interest rates will probably be too close to zero, it is also likely that monetary policy might not be able to deliver the necessary reduction in the policy rate. after lowering the interest rate to zero, the real rate of the interest is equal to minus infl ation. if infl ation is low too, as we have assumed, then the real monetary policy rate is negative and relatively high (let us admit, for the sake of a comparison i am about to make, that it is, for example, minus one percent). from this point, the resumption of economic growth hinges on the level of the natural interest rate and on the fi scal policy. if the natural rate of the interest has dropped below the level to which the real monetary policy rate can be cut (minus two percent, for instance), then monetary policy (whose interest rate could only be lowered, in our example, to minus one percent) can no longer contribute via conventional tools to stimulating demand. now it takes expansionary fi scal policies to stimulate demand. this would shift the demand curve upwards enough to raise the natural rate of the interest to levels from which monetary policy would regain its strength with conventional means. the only thing is that, having been pro-cyclical during the economic upturn, fi scal policy is very likely to stay so in recession as well, unable to help with the resumption of economic growth and with the regaining of the monetary policy. this is the mechanism which may lead to the loss of monetary policy that i have referred to in the fi rst two sections of the article. 36 in this way, the pro-cyclical fi scal policy in the expansionary phase might push our economy into an abnormal-recessionary phase, which it can exit only by resorting to unconventional solutions. the loss of conventional monetary policy is the highest economic cost romania could pay for promoting pro-cyclical fi scal policies. 4. conclusion in this paper, i have shown that if, in a democracy with weak institutions, fi scal policymakers are aware of the potential negative eff ects associated with promoting a pro-cyclical fi scal policy, there are two explanations for accepting the pro-cyclicality of fi scal policy. when the ruling political coalition is not benevolent and succeeds in governing solely during virtually all normal-expansionary phases of the business cycle, ‘fi scal cynicism’ emerges: the pro-cyclical fi scal policy is promoted in the expansionary phase for the temporary benefi ts it brings to the ruling coalition and for the diffi culties it poses, thereafter, to the political opposition. when the ruling political coalition is benevolent, a ‘constrained responsibility’ occurs: the pro-cyclical fi scal policy is promoted in the normal-expansionary phase with the intention that, after meeting some economic and political objectives, it should be turned into a countercyclical fi scal policy well before the economy enters a recession. i have shown that the timely reversal of fi scal policy from proto countercyclical is illusive, so that negative eff ects emerge for those ruling in recession, as in the case of fi scal cynicism. thus, the constrained responsibility turns into an ‘altered constrained responsibility’ if the benevolent political coalition succeeds in governing solely during virtually all normal-expansionary phases of the business cycle. i have shown that, by practicing either fi scal cynicism or altered constrained responsibility, a political party or coalition will end up dominating the political stage, without any real opposition. both the theory of fi scal cynicism and that of the altered constrained responsibility explain well the disappearance of major parties from the romanian political stage after the recessions of 1997-1999 and 2009-2010, and indicate that a single very large party may end up dominating the stage, thus altering the democracy. it was not our aim to show which of the two theories bett er explains these outcomes, and which theory applied in various periods from 1990 onwards. the only real strategy that remains for avoiding the possible serious consequences of a pro-cyclical fi scal policy – erosion of democracy, loss of fi scal policy in recessionary periods and, therefore, possibly the loss of the interest rate as a monetary policy tool – is to strengthen institutions, whose improved quality should stand as a guarantee that good fi scal rules are applied, preventing the emergence of pro-cyclical fi scal policies. references: 1. bernanke, b.s., ‘the global saving glut and the u.s. current account defi cit’, remarks at the sandridge lecture, virginia association of economists, richmond, virginia, march 10, 2005, [online] available at htt ps://www.federalreserve.gov/board docs/speeches/2005/200503102/, accessed on february 19, 2017. 37 2. bernanke, b.s., ‘global imbalances: recent developments and prospects’, speech delivered at the bundesbank lecture, berlin, germany, september 11, 2007, [online] available at htt ps://www.federalreserve.gov/newsevents/speech/bernanke20070911a. htm, accessed on february 17, 2017. 3. bernanke, b.s., ‘why are interest rates so low, part 4: term premiums’, 2015, [online] available at htt ps://www.brookings.edu/blog/ben-bernanke/2015/04/13/why-are-inter est-rates-so-low-part-4-term-premiums/, accessed on april 15, 2015. 4. borio, c. and disyatat, p., ‘global imbalances and the financial crisis: link or no link?’, bank for international sett lements, working paper no. 346, may 2011, [online] available at htt ps://www.bis.org/publ/work346.pdf, accessed on february 17, 2017. 5. borio, c. and disyatat, p., ‘low interest rates and secular stagnation: is debt a missing link?’, june 25, 2014, [online] available at htt ps://voxeu.org/article/low-inter est-rates-secular-stagnation-and-debt, accessed on june 31, 2014. 6. borio, c., ‘through the looking glass’, omfif city lecture, september 22, 2017, [online] available at htt ps://www.bis.org/speeches/sp170922.pdf, accessed on september 25, 2017. 7. carney, m., ‘[de]globalisation and infl ation’, imf michel camdessus central banking lecture, september 18, 2017, [online] available at htt ps://www.bis.org/review/ r170920a.htm, accessed on september 18, 2017. 8. croitoru, l., ‘the tendency towards secondarity in managing global imbalances’, 2015, scientifi c annals of the ‘alexandru ioan cuza’ university of iaşi, economic sciences, vol. 62, no. 3, pp. 291-311. 9. croitoru, l., ‘ceva ce ar trebui reparat în gândirea noastră’ (something that should be repaired in our thinking), september 21, 2016, [online] available at htt p://www. opiniibnr.ro/index.php/macroeconomie/161-ceva-ce-ar-trebui-reparat-in-gandirea-no astra?highlight=wyjjcm9pdg9ydsjd, accessed on september 21, 2016. 10. croitoru, l., ‘two outstanding, less known contributions that wicksell has made for us’, march 28, 2017, [online] available at htt p://www.opiniibnr.ro/index.php/ english/197-two-outstanding-less-known-contributions-that-wicksell-has-made-forus?highlight=wyjjcm9pdg9ydsjd, accessed on march 28, 2017. 11. reinhart, c.m. and rogoff , k., ‘this time is diff erent: a panoramic view of eight centuries of financial crises’, nber working paper no. 13882, march 2008, [online] available at htt p://www.nber.org/papers/w13882, accessed on december 17, 2008. 12. wicksell, k., ‘interest and prices: a study of causes regulating the value of money’ [original publication date: 1898], translated by r.f. kahn, macmillan, 1936. 59 abstract this article aims to find whether the urbanized area experiences integration or disintegration of the ecological and urban functions of the river. the river has always played an important role in urban areas, although over the centuries, it has come through radical changes. at first, it decided on the location of the city, served as a defense and means of transport, and during the period of industrialization it became the technical base for the city. currently, the river has again come to be an important element of the urban landscape and it has a number of important functions addressed primarily to city residents and tourists. the study considers the polish perspective and was carried out on the basis of a case study of the city of toruń (an example of the post-communist city of medium size) and a part of the river vistula within it. keywords: river, ecological and urban functions of the river, tourism, city management, spatial planning, revitalization. integration or disintegration of the ecological and urban functions of the river in the city? a polish perspective*1 katarzyna kubiak-wójcicka justyna chodkowska-miszczuk krzysztof rogatka katarzyna kubiak-wójcicka (corresponding author) assistant professor, ph.d., department of hydrology and water management, faculty of earth sciences, nicolaus copernicus university, toruń, poland tel.: 0048-56-6112.586 e-mail: kubiak@umk.pl justyna chodkowska-miszczuk assistant professor, ph.d., department of urban studies and regional development, faculty of earth sciences, nicolaus copernicus university, toruń, poland e-mail: jchodkow@umk.pl krzysztof rogatka assistant professor, ph.d. eng., department of urban studies and regional development, faculty of earth sciences, nicolaus copernicus university, toruń, poland e-mail: krogatka@umk.pl * acknowledgement. the paper was partially funded by the grant for young researchers from faculty of earth sciences, nicolaus copernicus university, no. 2642-g (manager of the grant: krzysztof rogatka). transylvanian review of administrative sciences, no. 52 e/2017, pp. 59-76 doi:10.24193/tras.52e.4 published first online: 2017/10/31 60 1. introduction access to water was one of the primary environmental factors that were decisive in the location and development of cities. first cities on earth were located precisely near large rivers that served as the main axes of development, with key examples in the form of the most ancient civilizations of mesopotamia, egypt and ancient china (novaresio, 2006; yassin, bond and mcdonagh, 2012; cengiz, 2013). at first, rivers were a symbol of life, the main source of drinking water, but also had defensive functions. in the middle ages, most fortified settlements were built at riverbanks. the transport function of rivers was also important, as it was the spread of river transport that vastly contributed to the development of cities which became ports servicing inland navigation. consequently, cities located at riversides became important trade centers (may, 2006), and river valleys were among the first fragments of nature to be used and transformed by people (steiner, 2011). growing river traffic and vessel size required waterways to have sufficient depth. this was manageable only through regulation of rivers consisting in straightening the river bed, narrowing and deepening it and strengthening the riverbanks. such actions led to changes in water relations, both within the river bed and the whole river valley, which were not always beneficial. intensive industrialization and urbanization, started at the turn of the 20th century, led to further degradation of rivers and river valleys, and as a consequence to the loss of rivers’ priority in the development of cities. during the economic transformations of the late 19th and early 20th century, rivers supplied industrial plants with water and served as a place of discharge of industrial and municipal waste. thus, riversides became the technical base for the industrial zone. they had technical facilities in the form of roads, railway sidings, railways and docks. the situation changed radically when other means of transportation gained prominence, as along with the intensive development of the railway, road, and aviation infrastructure the role of the river diminished or even became marginal, as in the case of poland (kubiak-wójcicka, 2014). neglect over further years led to the degradation of riverside areas both in the technical and infrastructural dimension and in terms of quality and mentality of residents and visitors. the role of rivers in the city was deprecated and it even became visible that most cities in the world, including european cities, turned away from rivers. we are currently observing changes in the perception of rivers and river valleys in urbanized areas (everard and moggridge, 2012). in line with the global trends in planning and management of riverside areas, cities and their residents come back to the river or its proximity (timur, 2013). the whole world experiences the modernization of riverside areas (marshall, 2001). however, in terms of leadership, the most prominent examples are the cities in north america (bryant, 2006; hagerman, 2007; cook and ward, 2012; airas, hall and stern, 2015) and europe (gospodini, 2001; wood and handley, 1999; galland and hansen, 2012; debrie and raimbalut, 2016). although with less intensity, riverside areas are reorganized also in other parts of the globe, e.g. in asian cities (marshall, 2001; gunay and dokmeci, 2012; chang and 61 huang, 2011). sairinen and kumpulainen (2006) indicate that we may even speak about the phenomenon of revival of riverside areas. the revitalization of waterfront areas consists in a partial reconstruction of the river ecosystem, facilitating residents’ access to water and creating new attractive public spaces (hagerman, 2007). these are important actions because the river is capable of creating characteristic places which stand out due to the originality of form, function and content, unusual places which make the city recognizable both by its residents and by its tourists (bernat, 2010). in light of the above, this study aims to find whether we are currently experiencing an integration or disintegration of the ecological and urban functions performed by the river in the city. the study concerns the polish perspective and was carried out on the basis of a case study of the city of toruń (a typical post-communist medium-sized city) and a section of the river vistula within it. it will be helpful to answer the following questions: [1] which ecological functions are performed by the river in the city? [2] which urban functions are performed by the river in the city? [3] are ecological and urban functions performed by the river in the city mutually exclusive or complementary? 2. theoretical background issues related to ecological and urban functions of rivers were reflected in the literature on the subject in the end of the 1960s. during that time, papers were issued containing a comprehensive description of the landscape of river valleys. they covered both the economic functions of river valleys and selected elements of the natural environment in urbanized areas. it was noticed that due to their unique natural wealth, large water supplies and the role of main natural ecological corridors, rivers play a key role in the functioning of the whole ecological system of the country, region and city. as ecological corridors, rivers are invaluable in maintaining biodiversity (gacka-grzesikiewicz, 1995; bryant, 2006). the next research stage dates back to the turn of the 21st century. papers of that time not only identified the high natural value of rivers and river valleys, but also acknowledged their high ‘urban’ or ‘urbogenic’ value. literature regarding that subject contained numerous publications regarding exclusively the urban function of the river. as pointed out by francis (2012), urban rivers perform crucial ecological and social roles within broader urban systems. therefore, in order to understand the functions of rivers in urban systems we need to analyze explicit interactions and endogenous and exogenous relations between the society, i.e. residents of cities and the natural environment (rogatka and ramos ribeiro, 2015). education and participation of the society are an inextricable element here, and it consists in building public awareness regarding riverside areas, for instance (polajnar, 2008), and in determining the role of riverside areas as important elements of the urban landscape or even ecosystem (guntenspergen and dunn, 1998). the latest trends applied to the studies of river functions in urbanized areas are shown in an interdisciplinary research approach based on the cooperation of spe62 cialists in different fields, especially in the scope of urbanization processes and environmental issues (bunce and desfor, 2007; yue, 2012; francis, 2012; fumagalli et al., 2013; dyson and yokom, 2015). the observable effects of the conducted studies and research and development projects take the form of a renewal of waterfronts and their recreational use in connection with preserving the ecological function of the river (beatley and newman 2013; de groot, wilson and boumans, 2002; francis and lorimer 2011). it is a consequence of the concept of ‘opening the city to the river’ which is currently gaining prominence, and is implemented through the processes of revitalization and restoration of rivers and river valleys. during the first stage, these actions are technical and they eliminate obstacles which hamper the natural fluvial process, and in the second phase the restoration process is driven by the forces of nature (andersson, 2006). going even further, carmon and shamir (2010) propose to create open spaces available to the society along rivers in cities. such approach to the management of waterside areas helps preserve the role of rivers in flood protection while strengthening social and ecological functions (kenwick, shammin and sullivan, 2009; kostopoulou, 2013; baker, eckerberg and zachrisson, 2014; hall and stern, 2014). in light of the above, the role of local authorities seems important as they are responsible for implementing the development policy, including spatial policy, which is of key significance to the organization of space in cities, including in riverside areas (rogatka et al., 2015). 3. study area the issue of coexistence of ecological and urban functions of the river in urbanized areas was considered in the case of toruń, a city located in central poland on the banks of the largest river in poland – the river vistula. toruń is an example of the problem of coexistence between the river and the city, i.e. the urbanized and non-urbanized riverside areas in the city, and therefore is a representative case for poland. the study area was selected on the basis of the following premises: [1] in the perception of the polish society, the river vistula is one of the most important symbols of the country, it has an intangible value which impacts its position in the minds of the people (angiel and angiel, 2015). according to bernat (2010), the river is the symbol of national identity. [2] toruń is located on the river vistula in its lower section, on both banks. the length of the river within the administrative limits of the city is around 20 km, and the river bed inside the city is 355 to 440 m wide. [3] the river vistula valley is an ecological corridor of international significance. according to gacka-grzesikiwicz (1995), from the viewpoint of valorization of ecological corridors, the lower vistula valley was defined as an area with very high natural value. waterside areas function as ecological corridors and provide shelter for many animal and plant species. [4] there are legally protected areas within the city and the river. legally protected forms include the special protection area for birds – lower vistula val63 ley (plb040003) within the framework of the natura 2000 network (katalog obszarów natura 2000) and the natural reserve – ‘kępa bazarowa’ covering the riparian poplar and willow forest on the left bank of the river vistula. [5] toruń is a city which has served different functions since as early as the 13th century. its current functions are: administrative (it is the seat of the marshal’s office of the kujawsko-pomorskie voivodship), scientific (it hosts one of the largest universities in poland – the nicolaus copernicus university), cultural (toruń boasts a rich cultural and architectonic heritage – in 1997 the toruń medieval conurbation, the old town, was included in the unesco world heritage list), tourist (thriving urban tourism) and others. when analyzing the administrative role of toruń, we should note that the city is one of the two capitals of the kujawsko-pomorskie voivodship (nuts 2 – nomenclature of territorial units for statistics, european basic regions for the application of regional policies) located in central poland. toruń is a city with poviat rights (lau 1 – european local administrative units of the 1st order). the city area is 115.7 sq km which represents 14% of the total area of urban areas in the kujawsko-pomorskie voivodship. it has 203,158 residents, which makes 1,756 persons/sq km. after bydgoszcz, toruń is the second most inhabited city in the kujawsko-pomorskie voivodship. it is home to 9.7% of the residents of the voivodship and 16.2% of the total number of residents of all cities in the kujawsko-pomorskie voivodship (główny urząd statystyczny, 2014). like other large cities in poland, toruń is experiencing a decrease in population resulting from the developing suburbanization processes (szymańska, chodkowska-miszczuk and biegańska, 2013). it should be noted that in terms of transportation, toruń is located at the crossing of important international and national communication routes, including: a1 motorway (meridional direction) and express road s-10 (latitudinal direction). other advantages of the city include natural values, such as woodlands and the natural reserve. ‘kępa bazarowa’ is a unique area of special natural and historical importance. it is a river vistula island located in the center of toruń, near the left bank of the vistula. the island covers an area of 70 ha and is 2.5 km long, with a maximum width of 400 m. half of the island’s area is taken up by the ‘kępa bazarowa’ natural reserve which serves to protect a fragment of the riparian forest with preserved natural features. the natura 2000 area, lower vistula valley (plb040003), is among other forms of protected landscape present within the city of toruń (kubiak-wójcicka and adamska, 2013). therefore, the study area, i.e., the city of toruń, in particular in its central part determined by the location of the old town, is a combination, unique for poland and europe, of urban and ecological ecosystems which function within a relatively small area. the dual nature of the area covers the developed, urbanized bulwar filadelfijski on the right bank of the river, and the ‘kępa bazarowa’ natural reserve exactly opposite the boulevard on the left bank. in this respect, the river vistula is a characteristic link between the developed and undeveloped riverside zone (figure 1; table 64 1) (kubiak-wójcicka and adamska, 2013). the analyzed section is a fragment of the vistula valley with a length of 1.4 km, located between the railway bridge to the east and the road bridge to the west. in this section, the width of the vistula varies from 355 m (brama mostowa) to 440 m near the railway bridge. moreover, bulwar filadelfijski, which comprises the urbanized part of the research area, due to its central location and functions that it performs, is one of the top priority areas for the city authorities. the local authorities have undertaken extensive projects aiming at implementing a coherent concept of urban-architectural management of bulwar filadelfijski. the first stage, intended to select a contractor, has finished in 2015. the on-site construction work conducted as a part of the multi-stage revitalization of the waterfronts in toruń has started in 2017. furthermore, the city authorities, being aware that the medieval city center together with the river embankment comprise one of the advantages, which determine (among others) the city’s image, have started activities with a goal to create a local town planning scheme for the old town district together with its surroundings (city council of toruń resolution no. 321/12 from june 28, 2012). currently, there is a planning work underway, which eventually will create a document that will define urban-architectural and legal frames for all the activities, initiatives and investments in the above mentioned area. note: a-b: cross-section of the study area figure 1: study area – urbanized area (bulwar filadelfijski) and non-urbanized area (kępa bazarowa) located on the river vistula source: authors, based on resources of the urban planning office in toruń 65 figure 2: cross-section of the vistula valley in toruń source: authors 4. research methods due to the multifaceted nature of the issue, the authors have decided to apply a multistage research procedure. this study uses the following research methods: desk research, comparative studies, case study of integration/ disintegration of ecological and urban functions of the river vistula in toruń, swot analysis. on the basis of general trends in riverside space development and the functions performed by that space in the global approach, the authors studied local conditions of the city of toruń. the documents analyzed in this stage included various cartographic materials, e.g. historical and current topographic maps, aerial and satellite photographs and planning documents such as, for instance: development strategy for the city of toruń until 2020, study of conditions and directions of spatial development of the city of toruń, the local revitalization plan for the city of toruń, and master plans for the city of toruń prepared by the city urban planning office. the next step covered comparative studies which consisted in identifying and determining the most representative elements distinctive for the two waterfronts – the urbanized area of the right vistula riverbank (bulwar filadelfijski) and the non-urbanized left riverbank (kępa bazarowa). in order to fully understand the mutual relations of ecological and urban functions of the river on the example of toruń, the authors performed a swot analysis which helped show the: – s (strengths), i.e. the integration of ecological and urban function of the river; – w (weaknesses), i.e. the disintegration of ecological and urban function of the river; – o (opportunities) for the integration of ecological and urban function of the river; – t (threats) consisting in the disintegration of ecological and urban function of the river. the choice of the swot analysis was motivated by the fact that it is a complex method of strategical analysis which allows identifying the key advantages and disadvantages related to the coexistence of ecological and urban functions of the river in urbanized areas and current and future opportunities and threats related thereto. 66 5. analysis and results in an attempt to answer the questions presented in the introduction to this paper, the authors began with determining the functions served by the river in urbanized areas. on the basis of theoretical considerations backed by an in-depth review of literature and on-site inquiry, it was determined that the river performs various functions, primarily for cities and their residents. focusing on the main ecosystem elements of the river and the city, the authors made a general division into ecological and urban functions of the river. it was followed by a detailed classification of individual functions taking into account the relation between the city and the river and their recipients. the most important ecological functions of the river include (based on results of literature review and field studies): a) the hydrological function: – it gathers water in the vistula valley and river bed, which has a positive effect on water retention and leads to the increase of water resources; – it is the recipient of the surface runoff and drainage from the city area; – it is an element of the sewerage system; – it regulates the water level in the river bed depending on the supply; and – it impacts the level of groundwater; b) the biological function: – it is the natural habitat for numerous plant and animal species; and – it serves as an ecological corridor and facilitates the passage of different plant and animal species between isolated habitats and a free exchange of genes between populations. moreover, the corridors provide conditions for the formation of local vegetation; c) the meteorological function: – it improves the microclimate of the city of toruń by decreasing the amplitude of fluctuations in temperature and increasing air humidity; and – it impacts wind direction – ventilation of the city. the river defines the character of the city, determines its topography, impacts urban planning and architecture, life quality and social relations. thus, it performs many important urban functions which may be grouped as follows (based on results of literature review and field studies): a) socio-educational function: – it is a meeting place, and primarily a place integrating the local community; and – the banks of river vistula serve as places for nature trails and ‘green science rooms’; b) urban planning and aesthetic function: – it creates new public spaces; – it makes the urban landscape more attractive; – it is the exposure frontline in the panorama of the city of toruń; – it is the dominant element in the urban landscape; and – it forms the main compositional axis; 67 c) reservoir or investment areas (e.g., the so-called floating houses, parks on floating platforms); d) recreational function: – it is a place where sporting and recreational activities may be performed; e) culture-forming function: – it is a cultural heritage (former port buildings, water infrastructure elements); – it creates the genius loci of toruń and forms the identity of the place; – it impacts the city’s image – it is an element of toruń’s branding, marketing; and – it serves a representative role – boulevards, riverside areas are the lounges of the city; f) utilitarian function: – it is a reservoir of drinking water (supply for the population and animals, surface water intakes), water for commercial purposes; – it is used for fire protection purposes; and – it serves for communication and transportation (freight and passenger inland navigation). as follows from the above, rivers are a litmus test for all ecological, social and economic changes because they form a system of intertwined environmental, social, economic and cultural relations. the most important role in the integration of ecological and urban functions of the river is played by the waterfront, i.e. the sphere of contact between water and land. there are significant differences between the left bank (kępa bazarowa in the analyzed case) and the right bank (bulwar filadelfijski) of the river vistula, arising from the different nature of development and the resulting purpose of the vistula waterfront in the center of toruń (figure 1; figure 2). with the use of the comparative method, table 1 recognizes and defines the most representative elements of the waterfront development and physiognomy covering the urbanized area of the right bank of the vistula represented by bulwar filadelfijski and the non-urbanized left bank of the vistula – kępa bazarowa. the presented examples prove on the one hand that the river vistula in the section passing through the central part of toruń performs both ecological and urban functions, and on the other hand that to a large extent their execution is partially separated. ecological functions (including: natural habitat for numerous plant and animal species, ecological corridor, microclimate improvement) are characteristic of the non-urbanized left vistula waterfront with the natural reserve. in turn, urban functions (primarily integration of local communities, protection of cultural heritage, city image) pertain mostly to the right waterfront related to the urbanized, historical part of toruń. the identification of ecological and urban functions of the river vistula in toruń in connection with the development and purpose of the waterfront gives rise to the question of their coexistence. when analyzing the issue, the authors applied the swot analysis. based on previous results, they analyzed endogenous (strengths and weaknesses) (table 2) and exogenous factors (opportunities and threats) (table 3) of the (dis)integration of ecological and urban functions of the river. during the research 68 procedure, the authors determined the strengths and weaknesses in the performance of ecological and urban functions of the river vistula in toruń and assigned weights to them. strengths include six elements, and from the viewpoint of residents and tourists the most important of them are: a meeting place and place integrating the local community. among the five weaknesses established, the bad state of the water engineering structures was named as the most burdensome. table 1: differences between the urbanized riverside area (bulwar filadelfijski) and the non-urbanized area (kępa bazarowa) urbanised area (bulwar filadelfijski) non-urbanised area (kępa bazarowa) panoramic view entrance, the so-called ‘gate’ to the place characteristic greenery present in the area dominating road surface type 69 urbanised area (bulwar filadelfijski) non-urbanised area (kępa bazarowa) small architectural elements liaison zone: land-water (buffer zone) source: authors, 2016 table 2: endogenous factors of (dis)integration of ecological and urban functions of the river on the example of toruń on the basis of the swot method weight endogenous factors 1,0 s strengths 0,2 s1 a distinct element of the urban structure of the city 0,1 s2 convenient location in terms of urban planning and transportation 0,1 s3 microclimate improvement 0,1 s4 reservoir of investment, sporting and recreational areas 0,2 s5 ecological corridor (biodiversity) 0,3 s6 meeting place and place integrating local communities 1,0 w weaknesses 0,2 w1 neglected public space 0,2 w2 lack of sporting and recreational infrastructure 0,3 w3 bad state of the water engineering structures 0,1 w4 traffic noise near bridges (road and railway) 0,1 w5 bad communication between the right and left bank of the river (no ports and river docks, lack of modern naval fleet servicing passenger traffic, including: water trams, houseboats, floating hotels) 0,1 w5 bad physical and chemical state of the water source: authors 70 the functioning of the river in the urbanized area may (and does) undergo changes as a result of anthropogenic activities performed within its valley and drainage basin and as a result of natural changes in the climate, i.e. in an area exceeding city limits. moreover, changes introduced in the urban area of the river impact hydrological conditions not only locally, but also at the regional or national level. according to the suggestion of baschak and brown (1995) and silva et al. (2012), complete integration of the river-city system should be considered not only in the local scale, but also in the scales of the region and country. therefore, beside endogenous premises, a good recognition of exogenous factors helps properly answer the question of performance of the ecological and urban functions of the river vistula in toruń. while considering the endogenous factors of (dis)integration of ecological and urban functions of the vistula river in toruń, the authors determined the most important opportunities and threats. the most important among the three established opportunities is the existence of boulevards which are the showpiece of the city and determine the development of recreation and tourism. material threats to the integration of ecological and urban functions include the destruction of the river ecosystem caused by strong anthropopressure. table 3: exogenous factors of (dis)integration of ecological and urban functions of the river on the example of toruń on the basis of the swot method weight exogenous factors 1,0 o opportunities 0,4 o1 boulevards as the showpiece of the city creating city branding 0,4 o2 development of tourism and recreation 0,2 o3 development of inland navigation 1,0 t threats 0,2 t1 risk of overinvesting in riverside areas (over-revitalization) 0,6 t2 destruction of the river ecosystem through anthropopressure, municipal and industrial pollution, and pollution resulting from transport 0,2 t3 reduction of biodiversity and fragmentation of biologically active areas source: authors. both the endogenous and exogenous factors included in the swot analysis are mutually correlated. for instance, the bad state of the water engineering structures (w3) determines the development of inland navigation (o3). what is more, the lack of adequate infrastructure in the form of marinas, wharves, harbor master’s offices, parking spaces, etc. (w5) translates into scarce interest in transportation (passenger and freight) using inland navigation. from the viewpoint of the residents of toruń and tourists, the river vistula is a barrier in the free movement between the right and left riverbank. the interest of tourists and residents focuses exclusively on the right bank of the river due to the relatively easy access to the waterfront. when considering 71 tourist and recreational undertakings as an opportunity for the integration of ecological and urban functions of the river vistula (o2), we should note that toruń, similar to other polish cities, is only starting to implement changes to that end. municipal authorities recognize the potential, which is reflected e.g. in the promotion of the vistula waterfront as a meeting place and place integrating local communities (s6). on the other hand, there is a problem in the lack of sporting and recreational infrastructure (w2) or the still neglected public space (w1). the most important threats include the destruction of the river ecosystem through anthropopressure, in particular municipal and industrial pollution, and pollution resulting from transport (t2). increased pollution of the river ecosystem will lead to the decrease in biodiversity of species (t3). pollution of the river vistula in the analyzed section may result from local pollutants coming from within the city and pollutants released into the river in its upper reaches, as water quality in the river depends not only on local, but also on regional conditions. table 4: results of the swot analysis regarding the (dis)integration of ecological and urban functions of the river on the example of toruń results results of the swot analysis sum of interactions sum of products strengths/ opportunities 18.0 4.7 strengths/ threats 14.0 3.2 weaknesses/ opportunities 24.0 6.5 weaknesses/ threats 4.0 2.2 source: authors. results of the swot analysis (table 4) regarding the (dis)integration of ecological and urban functions indicate that the sum of interactions is largest in the relation between weaknesses and opportunities (24.0), which means that toruń has a large potential for development. the materiality of weaknesses of the study area and the related opportunities clearly point to the competitive strategy. this strategy is implemented on the basis of elimination of weaknesses and the simultaneous use of existing opportunities. in the analyzed example, the largest problems are generated through the lack of adequate recreational and tourist infrastructure in the area (w2); this is a barrier to development of all tourist and recreational activities (o2), the biggest opportunity for the development of riverside areas in toruń, a city opening to the river vistula in line with european and global trends. however, it should be noted that the role and development of the discussed area, including the abovementioned opening to the river vistula, is a priority in the urban policy – municipal urban planners began works to create a master plan (the primary tool for implementing spatial policy) for the area of the old town together with bulwar filadelfijski. a dual approach was proposed here. the study of conditions and directions of spatial development of the city of toruń prepared according to the spatial policy is protective, 72 sanctioning the existing condition (kępa bazarowa), and pro-development, providing for a supplement to land development and allowing certain investments boosting the attractiveness of riverside areas (bulwar filadelfijski). 6. conclusions in response to the fundamental question included in the title of the paper it should be stated that we are dealing with integration, or even synergy, of ecological and urban functions of the river vistula within the city of toruń. despite different development of both banks of the river vistula, the integration of urban and ecological functions is particularly visible in the riverside area of the city. the level of integration is not full because outdated technical infrastructure and/or the lack thereof hamper access to the waterfronts, and as a consequence suppress the development of urban functions for recreational, tourist and socio-economic activities. the conducted analysis shows that full integration requires eliminating weaknesses and making use of existing opportunities. the most important among elements which would significantly improve the integration of both banks and facilitate the performance of ecological and urban functions of the river is the investment in modern and functional marinas and wharves. they will help revive passenger transport on inland waterways, both within city limits and at a larger scale (local, regional, national, international) and will expand the tourist offer of the city by qualified water tourism and water sports. they will also cause tourists and residents to stay in the waterfront area longer than before. what is more, the improvement of the city’s riverside area will undoubtedly impact toruń’s image as a city open to water. in order that the riverside area may serve urban and ecological functions to the same extent, local communities should be included in the works on the development of the riverside space. moreover, a properly implemented urban policy with an integral element of social participation will help include the river into the urban tissue anew. success in the revitalization of riverside areas depends on the coordination and integration of works at the stages of planning, designing and managing. it may be achieved only through establishing teams of experts with relevant experience and commonly accepted principles in order to facilitate the performance of works. such works are performed by the municipal authorities of toruń, what foreshadows a rapid improvement in the quality of the riverside area and leads to the conclusion that the area located on the river is again becoming an important matter in the management of the city and impacts its development. such state may be achieved also by honest and comprehensive familiarization of the public with issues related to the functions performed by the river (ecological and urban) and the resulting challenges (investments). due to the fact that this research has focused on the plane of contact between ecological and urban functions of a river in the city, the analysis has a large utilitarian potential. it is because it may comprise a starting point for further analyses and work on waterfronts revitalization in many towns in poland and other post-communist countries. as indicated by research results, the topics related to return of cities to 73 rivers are an important part of urban policies in many post-communist countries because local authorities noticed opportunities for development through popularizing the new functions, including the touristic one, creating city brands or building a social climate. when observing global trends related to the development of cities, e.g. the urban sprawl, suburbanization, shrinking cities, we should 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[bydgoszcz-toruń f unctional (m etropolitan) a rea in the l ight of the s elected a spects], 2013, acta universitatis nicolai copernici, ekonomia xliv, no 2, pp. 319-332. 48. the local revitalization plan for the city of toruń. 2007-2015, [online] available at www.torun.pl/sites/default/files/pictures/zeszyt_glowny_lpr-t.pdf, accessed on august 30, 2017. 49. timur, u.p., ‘urban waterfront regenerations’, in özyavuz, m. (ed.), advances in landscape architecture, intech, 2013, pp. 169-206. 50. wood, r. and handley, j., ‘urban waterfront regeneration in the mersey basin, north west england’, 1999, journal of environmental planning and management, vol. 42, no. 4, pp. 565-580. 51. yassin, a.b.m., bond, s. and mcdonagh, j., ‘principles for sustainable riverfront development for malaysia’, 2012, journal of techno-social, vol. 4, no. 1, pp. 21-36. 52. yue, j., ‘urban rivers: a landscape ecological perspective’, 2012, hydrology: current research, vol. 3, no. 1, pp. 1-6. 23 abstract this paper investigates the territorial capital endowments across european regions. data are collected at nuts 2 level for all european regions, for the most recent year available, for several indicators that measure different components of territorial capital. our evidence reveals several patterns of regional economic development, with specifi c confi gurations of the territorial assets, which further shed light on the connection between location, competitiveness and development. keywords: economic space, regional policy, development, location. the geography of territorial capital in the european union: a map and several policy issues valentin cojanu raluca robu valentin cojanu professor, phd, department of international business and economics, school of international business and economics, bucharest university of economic studies, bucharest, romania tel.: 0040-729-919.980 e-mail: valentin.cojanu@rei.ase.ro raluca robu assistant professor, phd, department of international business and economics, school of international business and economics, bucharest university of economic studies, bucharest, romania tel.: 0040-770-278.768 e-mail: raluca.robu@rei.ase.ro transylvanian review of administrative sciences, no. 56 e/2019 pp. 23-40 doi:10.24193/tras.56e.2 published first online: 02/28/2019 24 1. introduction a competitive position can originate in multiple sources – managerial prowess, market structure, governmental intervention, or technological breakthrough, but one general term suffi ces to encapsulate them all: a favorable environment, internal and external to the company. this insight had been for long a staple of competitive analysis when michael porter (1990) turned it from a niche study of business strategists into a dominant topic of policy-making. as porter concluded, policy eff ectiveness in terms of raising a country’s living standards requires measures to unbind the competitive potential of domestic businesses. vital to this process is the impact of location factors. porter’s results resuscitated the tradition of ‘spatially oriented economic studies’ (huggins and izushi, 2015) and have since changed the way we relate competitiveness to development and to location. the conceptual trio has been an answer to account for the substantial transformations as to the organization of economic activities during the last decades. commenting on the geographical scope of competitive advantage, enright (1993) set the investigative questions in ‘a model of the features that give one location an advantage over other locations for a given industry or set of industries’. it is a model which is framed at the junction between fragmentation and globalization of the economic space and implies, in a brief description, that competition across territories is gradually replacing competition between countries in the role of allocating resources and creating market value. in this paper, we contemplate the model of locational features through the lens of the geography of territorial capital in the european union (eu). as we will explain in the next section, the dedicated literature sets forth one unambiguous conclusion – territorial capital represents a key asset to gain competitive advantage – as well as many research hypotheses that still await substantiation about how to provide a coherent policy template with a territorial approach to underpinning competitiveness. assuming we have become more knowledgeable about the causal nexus from location to competitive advantage to development, how are we supposed to turn this insight into eff ective policy-making? policy tasks for regional economies, especially for those cutt ing across national boundaries, do not yet converge towards an encompassing blueprint. to be sure, reviews inform regularly on the progress that has been made in regional policy development for domains such as environment, culture, innovation, energy or transportation; on its part, empirical evidence has been accumulating to defend the hypothesis regarding the positive role of territorial factors in supporting growth and competitive performance. relevant though they may be, were we to join all pieces together in an articulated mechanism, we would soon have to confront two impenetrable issues: benefi ts for whom and within what territorial confi nes? from this perspective, this study contributes with evidence regarding the endowment with territorial capital at eu regional level and the lessons we can draw to set a policy agenda for development and competitiveness. we defi ne territorial capital 25 along fi ve components and nine indicators, and collect data for the eu nuts 2 regions – national administrative units having a population between 800,000 and 3 million people. data are processed through a statistical cluster analysis to show how regions group themselves together based on similar territorial endowments. all this evidence reveals several patt erns of regional economic development, with specifi c confi gurations of territorial assets, which further shed light on the connection between location and competitiveness and development. for at least two reasons – absence of data for the entire sample and narrow scope of investigation – we have not been in the position to reach specifi c conclusions in respect to the impact of territorial assets on competitiveness and location. instead, we describe a panoramic view of the conditions of geographic distribution of territorial capital in the eu that sheds light on the premises underlying the application of the conceptual trio in policy-making. 2. distribution of territorial capital in the eu: background and methodology marketing has been the most important conduit for assimilating territory with a competitive asset. companies have made known for long the origin of their goods or services with distinctive marks of location, such as ‘made in…’ or ‘appellation d’origine protégée’. economists, however, have been slow at integrating it into a conceptual framework, ‘mostly taking it for granted’ (atz ili and kadercan, 2017) besides factoring distance in only for cost calculations. this is probably why, on their part, policy makers were not successful in transferring the business insight in relation to location into sensible public initiatives. the eu administration, for example, laid out a blueprint for a more competitive economy in two documents, the lisbon (on growth) and göteborg strategies (on sustainability), although ‘in neither case were the spatial impacts explicitly considered’ (servillo, atkinson and russo, 2011). similarly, the us department of commerce has been questioned about its capacity to support businesses in international competition on the argument that there are ‘379 separate economic development districts, many of which are too small to function as globally competitive entities’ (council on competitiveness, 2010). the recent period has shown, however, an increasing interest in documenting the role of territory as a competitive (and economic) asset. we att empt to highlight these contributions in the remaining of this section. 2.1. background in a celebrated passage of his principles, marshall yielded to a poetic exposition of the economic impact of location: ‘when an industry has thus chosen a locality for itself, it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighbourhood to one another. the mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously.’ (marshall, 1920, p. 271) (our italics) 26 in further paragraphs, marshall pinned down those mysteries to a set of three key factors – ‘the use of highly specialized machinery’, ‘a local market for special skill’, and ‘the growth of subsidiary trades’ – that account for the benefi ts of location, an observation which continues to stand verbatim for a textbook lesson even these days (krugman, obstfeld and melitz , 2012, p. 170). it is however his other locution – as it were in the air – which puzzled the economists trained in formal tradition. even for the fi rst geographical economists it was hard to overlook there is more than to reduce this apparently cloudy representation of proximity to no more than a physical concept. for example, lösch noted: ‘countries and economic regions do not necessarily coincide. but political boundaries could cut through regular market networks, which results in economic losses’ (lösch, 1940, p. 197). this insight led to an intense scrutiny of the concept of proximity that eventuated into varieties of proximities of ever more social and economic signifi cance: relational, technological, cultural or institutional proximity (ghemawat, 2001; tremblay, chevrier and rousseau, 2004). with the resurgence of the literature emphasizing the economic impact of location (perroux, 1954; porter, 1998; porter, 2000; oecd, 2001; camagni and capello, 2009; world bank, 2009; park, nayyar and low, 2013) in its various confi gurations – clusters, growth poles, learning regions, innovative milieu, territory as factor of production or territorial capital – has gradually become an indispensable part of an economist’s toolkit to diagnose the competitive potential for a regional economy. the oecd defi nition of territorial capital elaborates on marshall’s insight to a level of detail that gives credit to a remarkably large number of theoretical contributions. an area’s endowment with territorial capital is determined by factors, tangible and intangible, such as: ‘(1) the area’s geographical location, size, factor of production endowment, climate, traditions, natural resources, quality of life; (2) the agglomeration economies provided by its cities, but may also include its business incubators and industrial districts or other business networks that reduce transaction costs; (3) ‘untraded interdependencies’ such as understandings, customs and informal rules; and (4) ‘the solidarity, mutual assistance and co-opting of ideas that often develop in clusters of small and medium-sized enterprises working in the same sector (social capital)’ (oecd, 2001, p. 15). within this conception, each region has a diff erent potential to nurture economic initiatives whose success depends on the existence of certain territorial assets in a certain combination and the local institutional capacity to capitalize on these assets. the hypothesis has been tested for the impact of the endowment with territorial assets on regional economic development, in most cases with conclusive results (aff uso and camagni, 2010; brasili, 2011; brasili et al., 2012; veneri, 2011). one caveat is however due in interpreting them. diffi culty in collecting statistical data, on the one hand, and multitude and subtlety of forms that territorial capital can take, on the other hand, have led researchers to focus on a narrow set of variables and, at times, on narrow conceptual interpretations. this is how emphasis varied between selected components of ‘hard and soft territorial capital’ over large geographical areas (casi and re27 smini, 2012) and large sets of variables available for particular regions (pompili and martinoia, 2011; veneri, 2011) or cities (rota, 2010). the upshot of these investigations consists irrevocably in arguments underscoring the potential of fi rms and entrepreneurs to achieve economic performance in local environments where they share the same representations, rules of action, and values. territorial embedment, mostly represented by the connections created among local actors and between them and local immaterial infl uences, determines, to an important extent, the long-lasting prosperity of the local economies. far for suggesting a recipe of taking advantage of territorial assets, these studies (see aff uso and camagni, 2010) show only that competitive positions (or any other measure of economic success) can be achieved in diff erent geographical spaces only by correlating decisions to the unique territorial capital of local economies. despite the relative success of the empirical work, authors like sarmiento-mirwaldt (2015) point nevertheless to ‘a proverbial ‘solution chasing a problem’ approach to territorial development’ meaning that competing defi nitions of what territorial capital would mean in practice makes it diffi cult to assess the political feasibility of a policy proposal. it is about who are supposed to benefi t, the local social and economic subjects – easy to spot in industrial districts or administrative units, but diffi cult in regions of variable geometry; who is supposed to assume policy-making, the local institutions – ackrill and kay (2011, p. 75) defi ne the term ‘institutional ambiguity’ referring to a policy-making environment of overlapping institutions lacking a clear hierarchy; over which territorial confi nes, the economic boundaries – the regional area for the best conditions of competitive development on a regional basis, that is, an area suffi ciently large to allow for effi cient levels of production, but fi tt ingly small to capitalize on its specifi c territorial assets. these theoretical queries are not abstractions, but a theme resounding from the real economy. the broadness of the concept of territorial capital has permitt ed ramifi cations in many directions of research, while at the same time it apparently has made its practical implications more impenetrable. for example, creativity, a hype currently adopted by many empirical studies, is apparently a component hard to integrate. servillo, atkinson and russo (2011) remark that ‘the process by which pools of creative talent lead place economies to be competitive remains a ‘black box’’. at a more general level on the policy side, there is a widespread concern about the inability of locations of ‘deep-seated poverty’ to absorb and learn from the proximity to growth centers. the cause lies unambiguously with ‘the limit of these theoretical constructs to guide policy’ (oecd, 2001, p. 180), as does for the long-term evolution of polarized inter-regional growth (oecd, 2016, p. 26). the 2008 global crisis marked a point of critical assessment of economic theories in general, including the relatively recent researches on territorial capital. delgado, porter and stern’s (2015) study on region-industries in the united states from 2003 until 2011 shows that strong clusters improve not only the regional employment growth, but also the resilience of regional economies to downturns. evidence from france 28 (martin, mayer and mayneris, 2013) comes with a contrary result: it shows that during the recession period of 2008-2009, dependence on intra-fi rm linkages made fi rms in clusters that have benefi ted from targeted industrial policy implemented in 2005 to register lower resilience scores1. the range of practical issues points to the task of a renewed focus on the conceptual framework as illustrated in the queries we have suggested above. from that set, this paper chooses to narrow the investigation on the geographical aspect. 2.2. methodology and data collection the objective is to visualize endowments with territorial capital in the eu at regional level and reveal the patt erns that emerge from this geographical distribution. we defi ne territorial capital with the help of fi ve components or assets (see table 1), which are commonly acknowledged for their contribution towards creating a competitive environment and ultimately prosperity for a regional economy. to keep as large a geographical coverage as possible given the available statistics, we approximate the ‘regional economy’ to the administrative units nuts 2 for each eu member country, which eurostat, the eu’s statistical offi ce, defi nes as ‘basic regions for the application of regional policies’ in the eu (eurostat, 2017). the geographical scope of our analysis thus consisted of all 276 nuts 2 regions of the eu28. due to incomplete data availability, we were fi nally able to count only 138 of them. we input the values of the nine indicators for the 138 regions into a statistical cluster analysis using the ward method which permits to form clusters of regions based on observations that have the smallest variance without prior knowledge about the number of resulting groupings. the results are coloured distinctly for each cluster and drawn on a map indicating the distribution of territorial capital across european regions. the choice for the components of territorial capital results directly from the theoretical framework integrating location into development and competitive analyses. we call these components assets due to their role in translating a given endowment into a marketable resource (capital) in the marketplace. the relational asset of territorial capital is perhaps the most distinctive. it has a double nature, social and economic, refl ecting the twin determinants of interconnectedness – inter-personal relations and the material sett ing making them possible. creativity makes impact through locally inherited pools of skills and talent, as well as the ordinary industry of producing cognitive capital in educational and research structures. natural capital is the essential geographical feature of location, whereby the production processes assimilate its landscape and environment. finally, we have selected development to consider the characteristics of the existing development stage as a territorial asset, which infl uences local economies in a circular cumulative 1 measured in higher survival probability of fi rms on export markets and higher growth rate of their exports. 29 fashion as the created value is introduced back into the economy through expenditures, investments, and accumulated experience. making the right choice as to the variables quantifying the endowments with territorial capital was inevitably dependent on the research constraints and thus ran into diffi culties – of statistical and conceptual nature. on the statistical side, data could not be found for the whole range of our selected indicators for the regions of croatia, france, greece, portugal, uk, and, in part, germany. this absence of data reduced the number of observations from 276 to 138. as a result, the map we present in the fi ndings section contains notable empty spaces. important though they are for a complete spatial representation, these missing spots bear however litt le analytical table 1: the components of territorial capital and selected indicators components (assets) description indicators measurement unit (data availability) * (relational) social cohesion long term unemployment (12 months and more) by nuts 2 regions (unemployment) percentage of active population (2014) (relational) economic built capital (stock of capital) road, rail and navigable inland waterways networks by nuts 2 regions (motorways + total railway lines) (transport) kilometers per thousand square kilometers (2013) creativity creative employment tacit knowledge innovation share of creative workforce total intramural r&d expenditure (gerd) by sectors of performance and nuts 2 regions (all sectors) (research) patent applications to the european patent offi ce by priority year by nuts 3 regions (patents) number of jobs in the creative workforce per active population (change in the share of creative workforce population between 2001 and 2008) euro per inhabitant (2013) patent applications per million of active population (2010) natural landscape environment number of establishments, bedrooms and bed-places by nuts 2 regions (tourism) tillage methods: number of farms and areas by economic size of farm (so in euros) and nuts 2 regions (agriculture) number of bed-places (2014) utilized agricultural area (ha) (2010) level of development institutional capacity gross domestic product (gdp) at current market prices by nuts 2 regions income of households by nuts 2 regions (disposable income, net) euro per inhabitant (2013) euro per inhabitant (2012) source: in selecting the components and indicators, we have drawn on the following sources: affuso and camagni (2010), brasili (2011), brasili et al. (2012), camagni, caragliu and perucca (2011), casi and resmini (2012), pompili and martinoia (2011), rota (2010), veneri (2011). the data source was eurostat from the european commission (2016b), with one exception, for creative workforce, when we used the espon database portal (2011). * we considered the latest year for which data are available for all or most of eu’s regions 30 weight for at least two reasons. first, the sample is suffi ciently large to fi t adequately our methodological design. we have arrived at a set of clusters that, by number and composition, is illustrative for varying patt erns of economic agglomerations. second, the sample is suffi ciently diverse in terms of spatial representation and regional characteristics. consequently, the results should not be qualifi ed in respect to how and by how much the conclusions could have changed had we counted on data for all eu nuts 2 regions. on the conceptual side, the theory is by far richer in assumptions and hypotheses than one can adequately test empirically. what we have done was to select, given the statistical limitations, the variables that would resemble most faithfully each asset’s theoretical signifi cance. the relational asset is equated with ‘the concept of local milieu, meaning a set of proximity relations’ (camagni, 2007), which bring together and integrate social/ personal networks. its core att ribute is cohesion (casi and resmini, 2012) – the degree and quality of innumerable interdependencies taking form across a territory. arguably, scholars have argued that trust is probably the most important component of social capital, although other variables may be added such as ‘people at risk of poverty or social exclusion’, ‘personal networks’, or ‘values’. eurostat measures cohesion through long-term unemployment because ‘longterm unemployment would contribute to sustainable growth and cohesion’ (european commission, 2016a). long-term unemployment is a matt er that erodes relational capital from a social perspective. from an economic perspective, the choice of variables is admitt edly more generous. the stock of capital infl uencing cohesion may be found in business infrastructures such as global value chains or business networks, as well as transport and communication endowments. physical connectivity between regions and economic agglomeration and, implicitly, people and economic agents, depend on the density of the available transport infrastructure. basically, our choice for ‘road, rail and navigable inland waterways networks’ may serve well our purpose. creativity is similarly a broad concept integrating to some greater extent non-quantifi able descriptors like know-how, tacit knowledge, traditions etc. under this rubric, we include three indicators: ‘the share of creative workforce in the active population’, ‘research and development expenditure’ and ‘the number of patent applications’. these indicators cover all the aspects of the innovative potential: human potential to innovate, the support of cognitive knowledge, through expenditures in r&d (research and development), and the results of creative activity (patents). the natural capital is described through ‘landscape’, ‘urbanization’, and ‘environment’. we use proxies that capture the eff orts made by people to valorise certain natural resources, such as touristic and agricultural potential. the input from development consists generally of the quality of institutions – the capability of local government and business representatives to make most of the territorial endowments. our indicators – ‘gross domestic product (gdp) per capita’ and ‘income of households’ – represent a remote equivalent of the intended variable, but it is safe to assume that higher values are indicative of a superior institutional potential. 31 3. distribution of territorial capital in the eu: fi ndings the cluster analysis results in 14 clusters. their spatial distribution and country composition are depicted in figure 1, a and b, respectively. there are three patt erns that emerge from our map. 1a. map of regional clusters source: authors’ work 1b. cluster composition by country* cluster cluster countries cluster cluster countries 1 czech republic, estonia, hungary, latvia, lithuania, poland, romania 8 belgium, netherlands, slovakia 2 belgium, germany, spain, ireland, italy, netherlands 9 spain, italy 3 spain, italy, slovakia 10 czech republic, germany 4 austria, belgium, finland, italy, sweden 11 spain 5 spain, italy 12 spain 6 austria, belgium, finland, sweden 13 sweden 7 bulgaria 14 germany * annex 1 illustrates the cluster composition by region. source: authors’ work figure 1: distribution of regional territorial capital at eu regional level 32 first, the map reveals one homogeneous grouping represented by almost the entire area of the central and eastern european countries (ceec). the structural similarities inherited from the communist era still bind them together. the ceec cluster (#1) exhibits relatively small values for all indicators, the least ones for the level of development (gdp and income). it also contains the region with the lowest share of creative workforce – sud muntenia in romania. however, two cases deviate from the ceec homogeneity, although they do but prove the general observation of a three-pronged patt ern of distribution. first, bulgarian regions fi nd themselves in a cluster of their own (#7) as their indicator values are even lower than those of their peers. cluster #1’s average gdp/capita stands at €9,700 in comparison with €5,000 in cluster #7. the number of patents per million of active people and r&d expenditures are more than triple on average in cluster #1 than those for bulgarian regions. second, the regions of the czech republic and slovakia – known as one single country, czechoslovakia, before its dissolution in 1993 – fi nd their cluster place in a patt ern resembling our three-pronged typology. the regions containing their capitals belong to clusters of high locational advantages – either forming a compact territory like the case of prague adjoining berlin, bremen, and hamburg in a region of the densest transport infrastructure, or appearing as a disjoint location like the presence of bratislava in the same cluster with contiguous dutch regions. their other regions are found in cluster #1 for czech republic, or in cluster #3, for slovakia. the latt er grouping, which includes regions from spain (in north-east) and italy (two regions in southern italy, mezzogiorno), exhibits in fact values similar to those of cluster #1 for most indicators although at a sizeable higher level of development – the gdp and income levels are double than those of cluster #1 and higher than the average for the 138 regions. a second patt ern of regional confi guration consists in clusters where one region is the only member or joins other regions as a disjoint location. two reasons could explain why this patt ern is expected to be a pervasive rather than singular characteristic of the economic landscape. for one thing, geographical remoteness alone suffi ces to singularize regional economies – as in cluster #13, whose only region, övre norrland in northern sweden, with a very high gdp/capita and good values for research and patents, is scarcely populated and hence poorly endowed with transport infrastructure. for another, some regions appear insulated amid larger territorial blocs either in clusters of their own, or in clusters of geographically remote regions. an example of the former case is sachsen-anhalt in the centre of germany in cluster #14, a region with the highest share of creative work-force, almost seven times bigger than the second most performing region, stockholm. as for the latt er case, geographically disjoined regions, one or two in most cases, get themselves clustered with compact territories thanks to close indicator values as we exemplify further. finally, a third patt ern of clusters consists of a more varied territorial fragmentation that characterizes advanced economies or regions of relatively higher locational 33 att ractiveness. this variety, however, comes down to a limited number of cases as suggested by our evidence: 1. compact territories at country level the most visible examples are characteristic for countries of large territories like italy, spain, and sweden, although smaller country sizes – e.g., the netherlands, belgium, finland – may qualify too. italy is divided in almost three parts: northern italy in cluster #4, southern italy in cluster #5, in addition to the two southern regions in cluster #3, as well as a large area highly specialized in tourism – veneto, toscana, emilia-romagna, and lombardia in cluster #9. the map in belgium overlaps exactly the known division between the flemish and walloon regions: four regions in cluster #4 neighbour the netherlands, while three regions in cluster #2 border france, luxembourg, and germany. relatively large territories at sub-national level appear also in central spain – three areas of three regions each: in central spain, by far the most developed agricultural area in our sample, in a cluster (#11) of their own, bordering france in cluster #2 and the atlantic shore in cluster #3; in the netherlands – in cluster #8, a large compact area of seven dutch regions; in sweden – in clusters #4 and #6, finland or ireland. 2. disjoint territories at country level or european level in most cases, i.e. clusters #2, 3, 4, 5, 6 and 9, regions group together due to similar endowments, although their grouping bears no geographical interpretation. possibly, this is the most expected result: on a large territory, especially of common political, economic, and social heritage, there is rare a case when the regional economies would come apart so indistinguishably. in several cases, a country may exhibit one or two regional groupings in the same cluster, although not in geographical proximity. spain provides again some examples: two spanish regions, cataluña and andalucía, which are among the highest european touristic att ractions, form a cluster (#12) of their own or comunidad de madrid in cluster #2 joins other spanish yet not contiguous regions. other examples: austria – wien and steiermark alone in cluster # 6, the netherlands – groningen in cluster #8, etc. 3. compact territories at supra-national level on the assumption that territorial capital represents an essential component of an economic space, the fi ndings point emphatically to the existence of regional economies at supra-national level. the relentless removal of cross-border barriers due to european integration or merely geographical proximity ushered in cross-border economic confi gurations. in our sample, deprived of a large set of data though it may be, most visible is the case of the neighbouring regions of sweden and finland in cluster #4 and again in cluster #6, but also the space confi gured by the czech and german regions in cluster #10 or the proximity of balearic islands of spain to the touristic italian area in cluster #9 are equally worth remarking. 34 4. concluding remarks on policy issues when a certain level of detail is imprinted on a map, which is then scaled at geographically relevant size, that map may inspire practical action. this has been at least the premise of this paper – to work with location-specifi c data to highlight policy issues regarding the spatial distribution of territorial assets. the new direction of competition is not irreversible though – every step toward severing links within the global economy would make us adjust the theoretical framework from the outset that is thinking primarily from a nation-state perspective. for now, however, the conditions of production and trade favour a hub-and-spoke landscape, within which the economic space becomes increasingly important in creating value across rather than within national borders. our fi ndings suggest that fragmentation of the economic space – i.e., a compact territory of regions at either subor supra-national level with similar endowments – is almost inexistent in the territorial confi nes of former communist countries, but remarkably varied for advanced countries. we expect the regional confi guration of the ceec space to borrow in time features characteristic for the rest of european area because development is about to work gradually yet continuously on the quality and structure of territorial assets. as much as our map can reveal, what is to be expected from that transformation in terms of policy issues? on the one hand, perhaps the most obvious conclusion is that mapping territorial capital at regional level resembles the familiar picture of relatively large yet spatially confi ned regions endowed with similar assets. the key diff erence with past analyses consists in the change of perspective: national borders may or not may appear as common demarcations of similar endowments with territorial capital. except for the ceec space, the rule is that national territories are rather fragmented spaces revealing common historical, cultural or socio-economic legacy of certain neighboring regions. we described the main characteristics of each cluster showing the unique combination of territorial endowments in diff erent proportions. it follows that the old debate about a country’s ‘balanced development’ should be replaced by or at least complemented with a diff erent theme, namely the institutional and business local capabilities of translating the assets in increased economic value; in other words, we should consider the relevant spatial unit of analysis in terms of similar local conditions for business development rather than common macroeconomic constraints. although the new focus might well co-exist with policy initiatives at national level, it would address regional problems more directly and in a more eff ective way. more directly, because one-size-fi ts-all prescriptions degrades considerably when the needs of agglomerations are questioned: the territorial capital comes in many varieties and is usually tacit and territorially specifi c. in a more eff ective way because a questionable economic practice – i.e., redistributive funding from rich to poor regions – should be scaled back to the point of being irrevocably eliminated. the transfer of 35 resources between regions becomes visibly an economic non-sense when we view regional economies through the lens of low-high potential of territorial att ractiveness: the regions are not necessarily poor or rich, nor are they aligned in terms of business needs and capabilities with other economies. on the other hand, once we look beyond the national borders, we face equally a highly fragmented landscape, although this time we lack the conventional point of reference – a nation-state’s frontier. and this fi nding raises at least two policy issues. first, we should acknowledge the reality of cross-border regions with identarian characteristics in stark contrast with their country of origin. for example, remember that prague is, according to our analysis, part of a relatively advanced economy spreading well into german territory while the rest of its country’s regions belong to the ceec space. in this regard at least, local initiatives have made for long headway especially under the guidance and with fi nancial support of eu dedicated programs. it is in this context that specifi c territorial proposals have taken form from simple territorial arrangements to more complex ones. for example, luxembourg proposed the creation of a cross-border polycentric region in the grande région that spans luxembourg and parts of belgium, france and germany. from a trans-national perspective, a second policy issue is related to the case of isolated or disjoint regions. to put it diff erently, we confront the situation when a region does not fi nd its place – in terms of territorial endowments – within given borderlines (of a nation-state or neighbouring regions). the case of disjoint regions poses a diff erent challenge. as a patt ern of regional distribution of territorial capital, it is not an unusual fi nding insofar as similar endowments are expected to be revealed across large territories. one may fi nd parallels among regional economies from different continents (see dupeyron, 2008). however, as a policy issue, this case is more complex. when we illustrate the case of the two spanish regions in cluster #12, for example, we wonder how this analytical fi nding makes sense for policy-making. two scenarios may be considered. in one scenario, the existence of a regional economy as part of a national territory with diff erent local assets as compared to the neighbouring regions would make no diff erence to the policy approach as practiced so far at national level. perhaps, more sensible to the needs and potential of local economies, the policy-makers would try to 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(eds.), clusters in a cold climate: innovation dynamics in a diverse economy, montreal and kingston: mcgill-queen’s university press, 2004, pp. 165-194. 36. veneri, p., ‘territorial identity in italian nuts-3 regions’, 2011, paper draft, [online] available at htt p://www.grupposervizioambiente.it/aisre/pendrive2011/pendrive/pa per/paper_vert_an_june_2011.pdf, accessed on january 23, 2018. 37. world bank, ‘world development report 2009: reshaping economic geography’, washington: world bank group, 2009, [online] available at htt p://documen ts.worldbank.org/curated/en/730971468139804495/pdf/437380revised01blic109 7808213760720.pdf, accessed on february 23, 2018. 39 annex 1: clusters’ components at eu nuts 2 level eu region region cluster number eu region region cluster number strední cechy cz02 1 niederösterreich at12 4 jihozápad cz03 1 kärnten at21 4 severozápad cz04 1 oberösterreich at31 4 severovýchod cz05 1 prov. antwerpen be21 4 jihovýchod cz06 1 prov. limburg (be) be22 4 strední morava cz07 1 prov. oost-vlaanderen be23 4 moravskoslezsko cz08 1 prov. west-vlaanderen be25 4 eesti ee00 1 etelä-suomi fi18 4 közép-magyarország hu10 1 länsi-suomi fi19 4 közép-dunántúl hu21 1 pohjoisja itä-suomi fi1a 4 nyugat-dunántúl hu22 1 valle d’aosta/vallée d’aoste itc2 4 dél-dunántúl hu23 1 provincia autonoma di bolzano/bozen itd1 4 észak-magyarország hu31 1 provincia autonoma di trento itd2 4 észak-alföld hu32 1 småland med öarna se21 4 dél-alföld hu33 1 norra mellansverige se31 4 lietuva lt00 1 mellersta norrland se32 4 latvija lv00 1 comunidad valenciana es52 5 lódzkie pl11 1 canarias (es) es70 5 mazowieckie pl12 1 campania itf3 5 malopolskie pl21 1 puglia itf4 5 slaskie pl22 1 calabria itf6 5 lubelskie pl31 1 sicilia itg1 5 podkarpackie pl32 1 sardegna itg2 5 swietokrzyskie pl33 1 wien at13 6 podlaskie pl34 1 steiermark at22 6 wielkopolskie pl41 1 prov. vlaams-brabant be24 6 zachodniopomorskie pl42 1 helsinki-uusimaa fi13 6 lubuskie pl43 1 stockholm se11 6 dolnoslaskie pl51 1 östra mellansverige se12 6 opolskie pl52 1 sydsverige se22 6 kujawsko-pomorskie pl61 1 västsverige se23 6 warminsko-mazurskie pl62 1 severozapaden bg31 7 pomorskie pl63 1 severen tsentralen bg32 7 nord-vest ro11 1 severoiztochen bg33 7 centru ro12 1 yugoiztochen bg34 7 nord-est ro21 1 yugozapaden bg41 7 sud-est ro22 1 yuzhen tsentralen bg42 7 sud muntenia ro31 1 région de bruxelles-capitale be10 8 40 eu region region cluster number eu region region cluster number bucuresti ilfov ro32 1 groningen nl11 8 sud-vest oltenia ro41 1 overijssel nl21 8 vest ro42 1 gelderland nl22 8 prov. hainaut be32 2 utrecht nl31 8 prov. liège be33 2 noord-holland nl32 8 prov. luxembourg (be) be34 2 zuid-holland nl33 8 prov. namur be35 2 noord-brabant nl41 8 brandenburg de41 2 limburg (nl) nl42 8 mecklenburg-vorpommern de80 2 bratislavský kraj sk01 8 thüringen deg0 2 illes balears es53 9 país vasco es21 2 lombardia itc4 9 comunidad foral de navarra es22 2 veneto itd3 9 aragón es24 2 emilia-romagna itd5 9 comunidad de madrid es30 2 toscana ite1 9 border, midland and western ie01 2 praha cz01 10 southern and eastern ie02 2 berlin de30 10 piemonte itc1 2 bremen de50 10 liguria itc3 2 hamburg de60 10 friuli-venezia giulia itd4 2 castilla y león es41 11 umbria ite2 2 castilla-la mancha es42 11 marche ite3 2 extremadura es43 11 lazio ite4 2 cataluña es51 12 abruzzo itf1 2 andalucía es61 12 friesland (nl) nl12 2 övre norrland se33 13 drenthe nl13 2 sachsen-anhalt dee0 14 flevoland nl23 2 zeeland nl34 2 galicia es11 3 principado de asturias es12 3 cantabria es13 3 la rioja es23 3 región de murcia es62 3 molise itf2 3 basilicata itf5 3 západné slovensko sk02 3 stredné slovensko sk03 3 východné slovensko sk04 3 source: authors’ work 62 abstract the global economic crisis had a signifi cant impact on the fi scal stance of local government units. the literature discusses this issue by explaining that fi nancial crises change budget decisions of central state authorities towards the fi nancing of those priorities which could improve the economic situation at national level. the impact of the change in national government’s decisions infl uences local government units differently depending on the level of their fi scal autonomy. investments at the local level are below pre-crisis levels in most european union countries. this article analyzes the impact of the fi nancial crisis on the fi scal imbalance showing that there is a lack of fi nancial resources for investments. due to fi scal constraints and annual borrowing limits of regional and local public administration authorities, the affordability of projects and investments is limited. furthermore, the article analyzes the obstacles to investments at local level in croatia, a country belonging to the group of european union member states which was hit hardest by the crisis and experienced a larger drop in investments. the results of the survey conducted among members of regional assemblies have been analyzed with respect to the level of local development and other factors enabling to identify more precisely the obstacles to investment. keywords: local government units, economic crisis, fi scal imbalance, development index, investment. the impact of the economic crisis and obstacles to investments at local level sunčana slijepčević sunčana slijepčević phd, senior research associate, department for regional development, institute of economics, zagreb, croatia tel.: 00385-1-2362.234 e-mail: sslijepcevic@eizg.hr transylvanian review of administrative sciences, no. 55 e/2018 pp. 62-79 doi:10.24193/tras.55e.5 published first online: 2018/10/23 63 1. introduction the purpose of this paper is to analyze the impact of the economic crisis on the fi scal stance of local government units and their possibilities to manage the local development policy and fi nance capital projects. the economic crisis that began in 2007 in the u.s. has been considered within the economic literature as the worst economic crisis since the 1930’s and the literature suggests that, due to its depth and prolonged duration, its consequences could be felt for ten years (levine, justice and scorsone, 2013). the global fi nancial crisis has seriously deteriorated the fi scal position of governments in countries all over the world despite the level of their development. the general government defi cit rose due to the lower collection of revenues, as well as the rising expenses for additional social spending which are needed to alleviate the crisis’ eff ects (united cities and local governments, 2009). local economies were faced with rising unemployment, debt fi nancing problems, business closures and bankruptcies, investment decrease, drop of property values, reduction of demand and others (oecd, 2009; guidoum and soto, 2010). croatia entered the crisis in the period of unsustainable economic growth dependent on strong domestic demand, current account defi cit, and credit growth (bakker and klingen, 2012). high vulnerability and rather low external competitiveness of the economy further narrowed the maneuvering space to reduce the impact of the crisis (bakker and klingen, 2012). the case of croatia’s deep and prolonged economic decline in the period 2008-2014 has shown that eu membership did not reduce exposure to recession, neither has it buff ered the negative eff ects in the early membership phase. the countries and, within them, diff erent levels of government had at their disposal diff erent approaches to fi ght crises. clark’s (2009) analysis of 41 local economies’ responses on crises shows that they have conducted diff erent types of measures. however, measures aimed at mitigating the eff ects of the recession at local level could not prevent consequences on unemployment (oecd, 2009) and, consequently, on revenues from income taxes (jonas, 2012; guidoum and soto, 2010). although most of the transition countries conducted reforms of transfer of expenditure authorities to local government, decentralization reforms where mostly proceeded by the method of trial and error and, in some cases, with the lack of appropriate transfer of responsibilities, which caused that some local public services sometimes remained the responsibility of the central government and vice versa (international monetary fund, 1998). croatia, a country where the process of decentralization started in 2001, is not an exception. jurlina alibegović, slijepčević and kordej-de villa (2013) stress that the decentralization reform in croatia, in its fi rst phase, was directed both to administrative and fi scal areas, but that the transfer of responsibilities was not accompanied by the adequate transfer of fi nancial resources. despite that, a signifi cant part of public services remained under the control of local government units, while fi nancial resources remained mostly under the control of the central government. therefore, they could be easily aff ected by central state decisions. a similar problem of mismatch between local government responsibilities and fi nancial resources has been noticed in some 64 other european countries such as germany, sweden, and austria (pucher, martinos and schausberger, 2016). eyraud and moreno badia (2013) analyzed the local government budgets in eu15 countries in the period 2001-2011 and concluded that in the fi rst two years of the crisis (2008-2009) increases in local government expenses were fi nanced from transfers from the central government, while in the subsequent two years (2010-2011) there was no further increase in central government transfers, but also in local government expenses. their analysis also showed that in eu15 local government own revenues dropped during the crisis. jonas (2012) discussed the fi scal impact of the 2007-2008 recessions on state and local governments in the united states and showed the high volatility of revenues from income taxes. he noticed that the fi scal response to recession depended on fi scal rules on borrowings. reviving investments became the top european union priority and local government has an important role in it (committ ee of the regions, 2016). the level of investment in two-thirds of the european union member states, including croatia, remained below pre-crisis level (european commission, 2016; committ ee of the regions, 2016; pucher, martinos and schausberger, 2016). the purpose of this paper is to examine the impact of the fi nancial crisis on the fi scal stance of local government units in croatia and their possibilities to fi nance capital projects which are necessary for local economic development. researches about the regional impact of crises are rare. since there has been noticed an alarming drop of public investment at local level in the european union (pucher, martinos and schausberger, 2016) and the european commission (2016) stresses that the member states should put eff orts into identifying and removing obstacles to investment at regional and local level, the article analyzes obstacles to investment at the local level from regional councilors’ perspectives in the country belonging to the group of european union member states which was hit hardest by the crisis and experienced a larger drop in investments. the paper focuses on members of regional assemblies due to the fact that they have an important role in fostering public investments, creating a proper environment for fostering private investments and ensuring sustainable development at local level. the article consists of four parts. after the fi rst introductory part, follows an analysis of fi scal stance of local government units in croatia in the pre-recession and recession periods. in this part, the fi scal imbalance is analyzed in connection with the level of local units’ development as measured by the development index. the analysis of regional councilors’ att itudes toward possibilities and barriers to fi nance capital projects are provided in part three of this article. part four summarizes the results and presents the main conclusions. 2. fiscal stance of croatian local government units even though the level of decentralization in croatia is lower than in most of the other european union countries, the very long recession, which started in the fall of 2008, had a signifi cant impact on the local government. most of the local government units in croatia, in the pre-crisis period, enjoyed a relatively favorable fi scal stance, 65 even though it has to be emphasized that it was mostly based on central government transfers to local government and not on own resources. in croatia, local units use, for fi nancing their tasks and investments, tax and non-tax revenues, grants (mostly from the state budget) and capital revenues. however, local government units can infl uence only the tax on the use of public areas and, partially, the non-tax revenues which are in fact revenues whose purpose is prescribed through special regulations, while they do not have infl uence on most of the other revenues (jurlina alibegović, slijepčević and kordej-de villa, 2013; slijepčević, 2014). municipalities, towns, and counties can independently control the rate of certain types of revenues, but within the limits prescribed by the central government. they therefore have very limited local autonomy and, in spite of the decentralization process, the revenue side of the budget is still largely centralized and depends on decisions of the central government. the limitations of such policy could be especially perceived during recession. the total budget of 576 local and regional self-government units has been decreasing since 2008. during the recession budgets of all levels of local units decreased, but mostly those of the cities and municipalities. in 2016, budgets of cities and municipalities were still below the 2008 level, while a slight improvement of counties revenues could be observed (figure 1). total sub-national revenues were 7.6% lower in 2016 than in 2008. figure 1: change of the sub-national government budget in the recession period (2016/2008) source: author’s calculation based on the ministry of finance data in this article fi scal imbalance is measured by two indicators. the fi rst one is share of total local government units’ revenues in total expenses. the second is share of local government units’ revenues without grants in total expenses. figure 2 shows that the level of fi scal imbalance continues to be higher than in the most favorable year of the pre-recession period (2007). local government units’ were confronted with the highest fi scal imbalance in 2009 when total revenues without grant covered only 66 78% of total expenses. in 2016, local government units’ own resources were still lower than in 2008. figure 2: local government fi scal imbalance source: author’s calculation based on the ministry of finance data the fi nancial crisis had a signifi cant impact on the level and structure of local government budgets and infl uenced both sides of the budget (revenues and expenses), but also deteriorated the level of development of local government units. the level of local development can be measured with the offi cial local development index according to the regulation on the development index from 2010. the local development index is calculated as a weighted average deviation from the national average of fi ve socio-economic indicators. those indicators are: unemployment rate (30% weight), income per capita (25% weight), local government revenues without grants, shared tax revenues from central government and surtax on income tax per capita (15% weight), population (15% weight) and educational att ainment rate (15% weight). the local government index is calculated on the basis of data from the last three years or from census data. according to the level of development, counties could be distributed in the diff erent groups based on the deviation of their development from the national average (table 1). table 1: categorization of counties according to the development index level of development index number of counties in category, 2013 less than 75% of national average 12 between 75 and 100% of national average 3 between 100 and 125 % of national average 3 above 125% of national average 3 source: ministry of regional development and eu funds (2017) 67 according to the nuts system of classifi cation, croatia consists of the two nuts2 units: (i) adriatic croatia, which consists of 7 counties, and (ii) continental croatia, which consists of 14 counties. the next two figures present data about the impact of the fi nancial crisis on local government units’ resources and local development. data imply that the development level in almost all local government units in adriatic croatia increased, while own resources in most of them decreased during the recession. the situation is even worse in continental croatia where both the level of development and fi scal capacity decreased during the recession in all counties, except in karlovac and zagreb counties, where the development index improved. figure 3: impact of the fi nancial crisis on own resources and local development source: author’s calculation based on the ministry of finance and ministry of regional development and eu funds (2017) data although one of the main goals of european regional policy is to decrease the regional disparities, the long-term fi nancial crisis and the diff erent consequences that it had on local government units in croatia further widened the gap. the recession caused deepening of the imbalance in local government fi nances, as well as widening of the diff erence in their development dynamics (slijepčević, 2014). đokić, fröhlich and rašić bakarić (2015) used panel growth regressions to investigate the infl uence of the economic crisis on regional disparities in croatia and showed that average regional disparities increased during the 2008 recession. the literature shows that the impact of the fi nancial crisis on local government depends on many factors. roitman (2009) claims that the impact of fi nancial crises de68 pends on the level of decentralization and that it is stronger in countries with lower level of decentralization. davies, kah and woods (2010) claim that the crisis aff ected all regions to some extent, but it depended on the structure of economic activity. their analysis shows that the crisis had the strongest impact on the structurally weaker regions and manufacturing regions. the impact of the crisis on the regional development policy was diff erent across european countries depending on the response of national and regional authorities to the crisis. in some countries regional policy was used to respond to the crisis, while in others the crisis had led to cutt ing some components of infrastructure spending, which could have a negative eff ect on local economic development. eyraud and moreno badia (2013) used econometric models on the period 1995-2011 to analyze to what extent subnational governments contributed to fi scal vulnerabilities in the eu15 countries. the result of their analysis showed that expenditure decentralization fi nanced through transfers or borrowing, as it was mostly performed in the eu15 countries, lead to weaker fi scal outcomes. they state that a number of researches showed that local governments’ propensity to spend intergovernmental transfers is signifi cantly larger than the propensity to spend own resources. the economic crisis put additional pressures on local governments. european union countries which were harder hit by the crisis (greece, croatia, italy, latvia, cyprus, portugal, spain, finland, slovenia, denmark, estonia, hungary and ireland) were mostly those who were experiencing larger decrease in investments (committ ee of the regions, 2016). so the purpose of this article is also to investigate more deeply the major problems for reviving investments in one country which was hit harder by the crisis (croatia) due to the fact that its counties and local units within them require additional att ention and help for recovering. the council of european municipalities and regions (2015) warns that the european union’s fi nancial rules (such as the rule of the stability and growth pact, the treaty on stability, coordination and governance etc.), which have been introduced or modifi ed since the beginning of the recession, strongly infl uence local governments and their budgets and thus they limit local authorities in undertaking investments. 3. methodology and results 3.1. methodology and sample the previous sections of the article showed that the long recession had a signifi cant impact of deepening the fi scal gap at local level. the purpose of this section is to examine the local councilors’ opinions about the local government’s budget and diff erent options for fi nancing projects. even though the process of decentralization in croatia has begun more than 15 years ago, the degree of centralization has remained rather high. local units perform mostly tasks related to environmental protection, housing and community improvement, recreation, culture and religion, and, to a lesser extent, other tasks (bajo, 2014). counties are responsible for the functions of regional character, which include per69 forming certain tasks in the areas of education, health care, spatial planning, economic development, traffi c and transport infrastructure, public roads maintenance, planning and development of the network of educational, medical, social and cultural institutions, issuing of building and location permits and other documents in relation to construction in the county area excluding the area of the big city and others. regional assemblies in croatia are each a regional self-government body which adopts the statute, decisions and acts within the scope of the county, carries out other tasks in accordance with the law and acts as a representative body of the citizens. the effi cient performance of its tasks encourages local and regional development. within their tasks regional assemblies also decide about cooperation with other local units in the republic of croatia and other countries, execute the budget, regulate county tax rates, establish public institutions, companies and other legal persons to conduct economic, social and other operations of interest to the county. research on the obstacles for investments at local level is based on the survey conducted among members of regional assemblies1 in croatia during 2013. the questionnaire was developed in two steps. in the fi rst step, the larger international questionnaire for councilors at regional level was developed by the group of researchers as part of the project ‘policy making at the second tier of local government in europe. what is happening in provinces, counties, départements and landkreise in the on-going re-scaling of statehood?2. in the second step, additional questions necessary to get insight into their opinions about barriers to capital investments were formulated and added to the survey conducted in croatia. the survey covered all croatian counties. councilors from all counties, except from the city of zagreb, which has the status of town and county, answered the survey. the response rate was 36.9%. the sample characteristics are shown in table 2. the questionnaire consists of 7 questions in the form of a statement where the answers were measured by 5-point likert-scale, ranging from 1 (strongly disagree) to 5 (completely agree). the goal of these statements is to identify regional councilors’ att itudes on the main obstacles for fi nancing capital projects in croatia and diff erences in their opinions. the analysis has been conducted using spss and statistica softwares. 1 local representative bodies are regional assemblies and the zagreb city assembly, as well as the municipal and city councils (budgetary act, 2008, 2012 and 2015). 2 a group of scholars, including the author of this paper, has developed a comprehensive survey consisting of around 270 questions, aimed at enabling the researchers involved in the survey to analyze the position of the second tier of local government in european countries from a comparative perspective. the survey has been conducted in belgium, croatia, the czech republic, england, france, germany, greece, hungary, italy, norway, poland, romania, spain and sweden to investigate the att itudes of councillors at the second level of local government about democracy, public participation, administrative reforms etc. the original international survey has been expanded by further questions added only to the croatian survey in order to analyze more deeply councillors’ att itudes towards local economic development in croatia. 70 table 2: sample characteristics sample characteristics number of analyzed regional councilors 345 share of analyzed counties in the total number of counties in croatia 95.2 % share of regional councilors – respondents in the total number of regional councilors 36.9 % structure of regional councilors – respondents by nuts2 adriatic croatia: 31.0% continental croatia: 69.0% structure of regional councilors – respondents by region central croatia: 24.3% east croatia: 28.1 south croatia: 17.1% istria and primorje: 17.4% south croatia: 13.0% gender structure of regional councilors – respondents female: 23.5 % male: 71.3 % not answered: 5.2% structure of regional councilors – respondents according to the education level elementary school: 0.9% secondary school: 37.4 % university or higher education: 57.7 % not answered: 4.0 % age structure of regional councilors – respondents below 40 years: 12.9% 40-49 years: 19.6% above 50 years: 60.8% not answered: 6.7% political orientation of regional councilors – respondents left-wing: 24.9% center: 36.3% right-wing: 28.9% not answered: 9.9% structure of regional councilors – respondents by development of their county development index below 75% of national average: 70.8% development index between 75 and 100% of national average: 5.6% development index between 100 and 125% of national average: 14.9% development index above 125 % of national average: 8.8% source: author’s analysis the questionnaire consists of 7 questions in the form of a statement where the answers were measured by 5-point likert-scale, ranging from 1 (strongly disagree) to 5 (completely agree). the goal of these statements is to identify regional councilors’ att itudes on the main obstacles for fi nancing capital projects in croatia and diff erences in their opinions. the analysis has been conducted using spss and statistica softwares. 3.2. survey results the analysis of survey results consists of several steps. the fi rst step in the analysis was to assess which are the main obstacles for fi nancing capital projects from regional councilors’ perspective. the goal of the second step is to identify diff erences in their opinions and att itudes with respect to the diff erent characteristics of the county (level 71 of development of the county, nuts2 classifi cation, etc.) or respondent (gender, age and others). diff erences in regional councilors’ att itudes towards diff erent obstacles were analyzed using the anova and t-test. table 3: regional councilors’ attitudes toward obstacles for investments obstacles for investments: completely and strongly agree disagree and fully disagree lack of their own revenues; 67.54% 15.79% purpose of using non-tax revenues prescribed by regulations; 48.67% 21.24% weak tax collections; 53.67% 20.82% non-existence of necessary data and information about how to apply for european union funds; 45.56% 29.29% local government units’ borrowing restrictions which are prescribed by regulations; 35.21% 35.21% lack of transparent and sustainable system of getting grants from central government; 61.29% 8.50% large competition between local government units when they apply for borrowing approval. 27.08% 38.10% source: author’s analysis the results show that most of the regional councilors fi nd that counties are not able to fi nance capital projects from their own resources. the overall picture shows that most of the local units in european union countries have a small share of own tax revenues in their total revenues, while the majority of resources comes as transfers from the central state authorities or from revenues on which local government has no infl uence (base or rate). thus, it could be a large problem for local government units in other european union countries as well. european commission (2013), in the analysis of fi scal relations across government levels in the european union during the economic crisis, stresses that a signifi cant part of the deterioration in the fi scal position during the crisis occurred at the local level. however, they noticed that some local government units conducted the policy of waiting that the central governments cover the funding gap that occurred during the crisis because of the decrease of local government revenues. besides increasing fi scal autonomy at the local level, the european commission (2013) fi nds that it is equally important to introduce the performance-based transfer system. more than 50% of regional councilors fi nd that a transparent and sustainable system of gett ing grants from the central government is a necessary precondition for expense planning and planning borrowing on fi nancial markets. in croatia, a system of fi nancing community needs has been designed in such a way that grants are used solely as funds to support local government units with poor fi scal capacity3. in add3 every year the law on the execution of the state budget prescribes the criteria for allocating grants to the local government units. 72 0 10 20 30 40 50 60 be hr cz fr de gr hu it no pl ro es se note: be – belgium, hr – croatia, cz – czech republic, fr – france, de – germany, gr – greece, hu – hungary, it – italy, no – norway, pl – poland, ro – romania, es – spain, se – sweden, uk – united kingdom. figure 4: own tax revenues of sub-central government as % of the total local government revenue source: eurostat and the survey tion, equalization grants for decentralized functions are ensured from the state budget to cover public expenses in the area of primary and secondary education, social welfare and health care4. as shown in the previous section, the fi nancial crisis had a signifi cant impact on local government budgets. thus, it is not surprising that a weak tax collection rate has been seen, by 54% of regional councilors, as a signifi cant obstacle for planning capital projects and borrowing. apart from the aforementioned taxes and grants, local government units have introduced numerous other revenues on the basis of laws and/ or decisions of representative bodies, such as charges and fees, which are contained and stated in the non-tax revenues of their budget. the non-tax revenue is the autonomous revenue of sub-national government for which the purpose is set in advance. sub-national government units independently set the rate of the non-tax revenue and independently carry out the collection of this revenue. the main non-tax revenue consists of municipal utility charges and contributions. these funds are used for the 4 grant revenues from the state budget allocated to the counties, cities and municipalities which belong to the fi rst and second category of special state concern. grant revenues from the state budget allocated to the cities and municipalities for the personal income tax returns in the area of special state concern and in the hill and mountain areas. grant revenues from the state budget allocated to the cities and municipalities for the profi t tax returns in the area of special state concern and in the hill and mountain regions. grant revenues from the state budget of other public bodies allocated to the cities and municipalities for the local development projects. grant revenues from the state budget as equalisation fund allocated to the cities, municipalities and counties for fi nancing decentralized functions. 73 construction and maintenance of the utility infrastructure. this regulated purpose of using non-tax revenues is also seen as the large barrier for implementing capital projects in croatia (by 49% of respondents). general principles on local and regional government borrowing and borrowing restrictions prescribed by the budgetary act has been seen as the least signifi cant barrier for fi nancing capital projects in croatia. local and regional self-government units may incur debt in two ways: borrowing by taking a loan or issuing securities (municipal bonds). all borrowing, guarantees and obligations, cannot exceed the maximum rate prescribed by law and presented in table 4. a lack of transparency in fulfi lling the criteria that must be met for gett ing the approval from the government of the republic of croatia for issuing private or public debt by local units is the problem noticed within the literature dealing with public sector investment (e.g., grubišić šeba, jurlina alibegović and slijepčević, 2014). approvals for borrowings have been issued in the order of their submission until reaching the legally prescribed limits on borrowing. this means that approvals are granted according to the principle of the fi rst-comer and not based on the quality of the project and this could be a barrier for fi nancing capital investment projects. table 4: conditions for local government borrowing year annual debt service limit(annual commitment) additional restrictions 1998-2017 20% of realized revenues did not exist until 2002. from 2003 the boundary is prescribed on an annual basis. from 2007 to 2012 was set at 2.3% of realized current revenues in the previous fi scal year of all croatian local authorities. from 2013 it was increased to 2.5% and in 2017 to 3.0% of outturn of current revenues in the previous fi scal year of all sub-national government units. source: author’s compilation according to the data published in the offi cial gazette the goal of the second part of the analysis was to test the existence or non-existence of diff erences between the diff erent groups of respondents. the survey data was analyzed using one-way analysis of variance (anova) and t-statistics. one-way anova was used to test the existence of diff erences in respondents’ answers based on their age and political orientation, as well as the regional diff erences. in additional to the usual division of the country in two nuts2 regions, to analyze more deeply cross-regional diff erences, the country was divided into fi ve regions (central, north, south, east croatia, and istria and primorje). the literature suggests that such a division into fi ve spatial entities for the purpose of such analysis is justifi ed (rajh, budak and anić, 2016). t-test was used to test the diff erences in the average scores between two groups of respondents (based on gender, level of development of their county and nuts2). anova and t-test results are presented in table 5. 74 table 5: analysis of differences means st.dev. n anova/t-test dependent variable: lack of their own revenues independent variable: age less than 40 years old 3.7 1.2 44 f=1.97 p=0.14 40-49 years old 3.9 1.4 67 over 50 years old 4.1 1.2 208 dependent variable: lack of their own revenues independent variable: development index di 1 4.1 1.2 261 t=1.70 p=0.09di 2 3.8 1.3 81 dependent variable: purpose of using non-tax revenues prescribed by regulations independent variable: region central croatia 3.6 1.2 82 f=2.34 p=0.05 east croatia 3.5 1.2 97 north croatia 3.1 1.1 57 istria and primorje 3.6 1.2 60 south croatia 3.6 1.2 43 dependent variable: purpose of using non-tax revenues prescribed by regulations independent variable: gender male 3.6 1.2 244 t=1.62 p=0.10female 3.3 1.2 80 dependent variable: weak tax collections independent variable: development index di 1 3.7 1.2 260 t=0.12 p=0.12di 2 3.4 1.2 81 dependent variable: weak tax collections independent variable: region central croatia 3.8 1.1 83 f=1.85 p=0.12 east croatia 3.7 1.2 97 north croatia 3.4 1.2 57 istria and primorje 3.6 1.3 60 south croatia 3.3 1.2 44 dependent variable: lack of necessary data and information about how to apply for european union funds independent variable: political orientation left 3.5 1.3 84 f=8.10 p=0.00 centre 3.0 1.2 124 right 3.7 1.3 99 dependent variable: non-existence of necessary data and information about how to apply for european union funds independent variable: nuts2 continental croatia 3.5 1.3 234 t=1.72 p=0.08adriatic croatia 3.2 1.4 104 dependent variable: local government units borrowing restrictions which are prescribed by regulations independent variable: region central croatia 3.2 1.2 83 f=2.91 p=0.02 east croatia 3.2 1.3 96 north croatia 2.6 1.3 57 istria and primorje 3.3 1.4 59 south croatia 3.0 1.3 43 75 means st.dev. n anova/t-test dependent variable: local government units borrowing restrictions which are prescribed by regulations independent variable: age less than 40 years old 3.4 1.0 44 f=2.16 p=0.11 40-49 years old 3.2 1.3 67 over 50 years old 3.0 1.3 205 dependent variable: lack of transparent and sustainable system of getting grants from central government independent variable: region central croatia 4.0 1.0 82 f=1.88 p=0.12 east croatia 4.1 1.0 97 north croatia 3.7 1.1 58 istria and primorje 3.8 1.1 60 south croatia 3.7 1.1 44 dependent variable: lack of transparent and sustainable system of getting grants from central government independent variable: nuts2 continental croatia 4.0 1.0 235 t=1.75 p=0.08adriatic croatia 3.7 1.1 106 source: author’s calculations the results show that the lack of own revenues for fi nancing capital projects is considered a larger problem by regional councilors from less developed counties (counties whose value of development index is lower than the national average). younger regional councilors (less than 40 years old) fi nd the lack of local government unit revenues to be larger barrier for capital investment than respondents older than 40 years. in addition, younger regional councilors consider that local government units’ borrowing restrictions prescribed by regulations are larger barriers for investments than respondents older than 40 years. the results show that regional councilors from diff erent regions have diff erent opinions about the prescribed purpose of using non-tax revenues. councilors from north croatia consider that the prescribed purpose of using non-tax revenues by regulations is a less important issue when considering the sources for fi nancing capital investments than the other councilors. most of regional councilors fi nd the lack of a transparent and sustainable system of gett ing grants from the central government as a barrier for capital investment. however, councilors from continental croatia fi nd it a bigger barrier for investment. also, the same opinions have councilors from central and east croatia. the results confi rm that weak tax collection is a bigger problem for fi nancing longterm investments in less developed local government units. the analysis also shows statistically signifi cant diff erences in answers of respondents from diff erent regions about tax collection. respondents from central and east croatia consider poor tax collection as a barrier for fi nancing investments. this is in line with expectations, as local units with lower budgets are largely dependent on grants from the central government. on the other side, as noticed in jurlina alibegović, slijepčević and kordejde villa (2014) local government units in croatia are highly dependent on income 76 tax imposed by a rate defi ned by the central government and on which they cannot have an infl uence. from 2016, according to the law on financing of local and regional self-government units (offi cial gazett e 117/93, 69/97, 33/00, 73/00, 127/00, 59/01, 107/01, 117/01, 150/02, 147/03, 132/06, 73/08, 25/12, 147/14 and 100/15) income tax revenues are distributed among local units as follows: municipalities and cities receive 60% of income tax revenues generated in their area and counties receive 16.5%. in addition, the income tax is distributed in a manner that distinguishes whether the municipality, city or county fi nances or not decentralized functions in selected public services including education, health care, social welfare and fi re-fi ghting. the maximum amount for decentralized functions amounts to 6% (1.9% for primary and 1.3% for secondary education, 0.8% for social welfare, 1% for health care and 1% for fi re-fi ghting). local government units can also receive equalization grant for decentralized functions (165 of personal income tax) and grants for co-fi nancing projects fi nanced from european funds (1.5% of personal income tax). knowledge and data exchange and the sharing of best practices have been widely recognized as the important factors for increasing the absorption capacity of eu funds and almost half of councilors in croatia recognized it as the problem. right wing regional councilors fi nd that this is a larger problem than the others. also the results of the survey show that it is a larger problem for councilors from continental than from adriatic croatia. 4. conclusions global fi nancial crises deteriorate the fi scal position at central and local level across european countries. local government units’ fi scal autonomy is rather low and the decentralization process in many countries has been stopped due to recession. overlapping of spending functions across diff erent levels of government and mismatch between local government responsibilities and allocated fi nancial resources further aggravated the situation at local level. the analysis in this paper aims to investigate the impact of recession on the level of local economic development and obstacles for investments in the post-crisis period. the survey has been conducted in croatia, the european union country which has been hit hard by long recession. this is the country whose local government units were faced with similar consequences of the crisis as the other european countries. due to the crisis, the diff erences in local government units’ levels of development have widened and the level of fi scal imbalance became worse than in the pre-crisis period in croatia. the fi nancial pressure on the local level of government has increased. such a situation in croatia is similar to that in other eu countries. pucher, martinos and schausberger (2016) stress the signifi cant drop in public investments at the local and regional level across the european union and that both private and public investments remained at pre-crisis levels in most of the european union countries, including croatia. countries which are hit harder by the crisis are those who were experiencing larger decrease in investments (committ ee of the regions, 2016). 77 as stressed by council of european municipalities and regions (2015), underinvestment in the long-term has a devastating impact on the sustainable development at the local and regional level. the goals of the regional policy in europe are aimed at reducing regional disparities and this need is even more pronounced after the crisis. the budgets of many local units are small, and the level of fi scal autonomy is such that it does not allow them to cover the operational expenses and investments. given that the divergence between local government units further deepened, less developed local units are now in an even harder position than in the pre-crisis period. the results of the survey conducted among regional councilors show that there are two major obstacles to investment: the lack of own revenues and the lack of a transparent and sustainable system of gett ing grants from the central government. both of these obstacles are consequences of the way decentralization has been implemented in croatia. fiscal decentralization has been implemented only partially and with the maintenance of a high level of central government control over tax revenues. the disadvantages were especially evident during the crisis, when the central government measures had mitigated the decline of central government revenue. local units, on the other hand, had very limited maneuvering space to do the same and thus local budgets shrank. administrative decentralization should be accompanied by fi scal decentralization that would allow local units to realize larger own revenues. this kind of decentralization has led to the deepening of diff erences between local units, as well as their slow recovery, as could be seen in figure 3. investigating the variance in att itudes with respect to diff erences between the several groups of respondents enables to bett er identify the obstacles for investments from diff erent angles. the results show that less developed local government units have larger problems with lack of own resources and weak tax collection than others. also, in the policy att empt to revive investments at the local level, more focus should be placed on introducing a more transparent and sustainable system of gett ing grants from the central government and on increasing knowledge and exchange of data and information about how to apply for european union funds for fi nancing investments, especially in local government units in continental croatia. references: 1. bajo, a., ‘the eff ects of decentralization in the republic of croatia on economic and fiscal position of the istrian region’ (in croatian), zagreb: institut za javne fi nancije, 2014. 2. bakker, b.b. and klingen, c.a., how emerging europe came through the 2008/09 crisis: an account by the staff of the imf’s european department, washington: imf, 2012. 3. budgetary act, offi cial gazett e, 87/08, 136/12 and 15/15. 4. clark, g., ‘recession, recovery and reinvestment: the 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(eds.), contemporary trends and prospects of economic recovery, nice, france: cemafi international, 2014, pp. 696-714. 28. united cities and local governments, ‘the impact of the global crisis on local governments’, october 2009, [online] available at htt p://www.uclg.org/sites/default/ fi les/9225580315_(en)_uclgcrisis(eng).pdf, accessed on april 5, 2017. 126 abstract the quality and extent of traffic infrastructure has an immense influence on the development of tourist destinations and on tourism in general. transit tourism is a unique form of movement and represents a link between generating zones and destinations. the subject of this study is the planning and spatial organization along the route of highway е-75 thorough northern serbian province of vojvodina. the goal of the study is to scientifically assert that the route of highway is inadequately equipped as it lacks adequate hospitality services considering its significance and the needs of passengers in transit. the paper intends to analyze the growing tourists’ demands perceived in passenger numbers and the passenger vehicles turnover with existing tourist products. the spatial extent of the research comprises the section of highway е-75 through vojvodina (horgoš – subotica – bačka topola – vrbas – novi sad – beška – indjija – stara pazova). the study utilizes mixed quantitative and qualitative methods, and employs preliminary desk research, field work, comparative analysis, and a description to establish a critical synthetic narrative. the statistical method of pearson correlation was used for quantitative data analysis and to assess the relationship between overnight stays in places along the highway and the number of passengers travelling the highway. the results of the research pointed out that the initial hypothesis which refers to the lack of specialized accommodation capacity in the highway zone is valid. keywords: planning and spatial organization, passenger turnover in passenger vehicles, overnight stays, corridor 10, highway е-75, serbia, vojvodina. spatial planning for transit tourism on the highway: a case study of highway е-75 through vojvodina (horgoš – belgrade section) vuk garača gordana jovanović nevena ćurčić svetlana vukosav vuk garača assistant professor, department of geography, tourism and hotel management, faculty of sciences, university of novi sad, novi sad, serbia tel.: 0038-1214-852.837 e-mail: vuk.garaca@dgt.uns.ac.rs gordana jovanović associate professor, department of geography, tourism and hotel management, faculty of sciences, university of novi sad, novi sad, serbia nevena ćurčić associate professor, department of geography, tourism and hotel management, faculty of sciences, university of novi sad, novi sad, serbia svetlana vukosav assistant professor, department of geography, tourism and hotel management, faculty of sciences, university of novi sad, novi sad, serbia transylvanian review of administrative sciences, no. 44 e/2015, pp. 126-143 127 1. introduction numerous authors emphasize the significance and influence of transport and transport infrastructure on tourist development and tourism in general (khadaroo and seetanah, 2007; gunn, 1988; inskeep, 1991; štetić, 2003; ait, 1993; wto 2007; clements, 1989). transport is thus recognized as a factor and element of tourist movement and road transport development as a positive factor influencing faster tourism development (byung-wook and choy, 1993). to this effect, hall (1999) and page (1999) assumed that the interrelation of tourism and transport is obvious, whereas kaul (1985) was among the first to recognize the significance of transport infrastructure as an essential component of successful tourism development which influences creation of new attractions and development of the existing ones. thus, a road such as a corridor through which demand flows brings tourists to all the places in all the directions of their movement, which was recognized in the tourism task force (2003), wherein it has been stated that transport infrastructure is a huge system which connects a place of residence to a tourist destination. moreover, prideaux (2000) suggested that destinations and their surroundings primarily need to be easily accessible, which further implies that all places and resources along the roads could be activated as the elements of the offer. consequently, the objects, places or regions that support tourist products cannot be activated for tourism purposes unless they are connected to the sources of demand by means of transportation. to this effect, murphy, pritchard and smith (2000) associated tourist product with tourist demand, and described them as different components of a destination, among which transport infrastructure influences tourists’ experience. gunn (1988) held a similar opinion, defining tourist products as compilations of customer experiences, resulting from the process in which tourists use various services, including transport infrastructure. smith (1994) confirmed the role of service and accommodation infrastructure in creating customer experience. he further argued for the inevitability of efficient service and accommodation infrastructure which needs to be a constituent part of macro spatial environment of a destination where infrastructure and technology together form a key element of successful tourist experience. crouch and ritchie (1999), analyzing tourist product in the context of comparative and competitive advantages, claimed that tourism planning and its development could not be possible without roads, airports, ports, electricity, sewage systems, and pipelines. numerous authors concluded, based on case studies of different tourist destinations, that transport infrastructure is essential in creating a tourist product, in line with the experience of tourists as users of that tourist product (gearing, swart and var, 1974; tang and rochananond, 1990; kim, crompton and botha, 2000; mcelroy, 2003; witt and witt, 1995; naude and saayman, 2004; dredge, 1999; gomezelj and mihalic, 2008; kripendorf, 1982; taplin and qiu, 1997; miera and rosselló, 2012). when discussing tourism and type of transportation with highest application rate in this sector of the economy, it should be highlighted that the share of road transport in tourist turnover is constantly increasing. this transport branch recorded abso128 lute and relative increase in the number of passengers and registered motor vehicles during the last decade of the 20th century (ait, 1993). the world tourism organization estimates that 80% of the total number of tourists in the most developed european countries is comprised of motorized tourists (wto, 2007). the two most important characteristics of this type of movement are: highest turnover and massive expenditure. it has been confirmed in practice that a high percentage of tourist expenditure is realized during transit between the place of residence and tourist destination. therefore, to this form of movement and expenditure special attention should be devoted within the total tourism development in an area. with regard to transit movement, it should be highlighted that it is most frequently associated with road transportation, the main features of which are: high turnover, short stays, highlighted seasonal concentration, and massive expenditure compared to other types of transit. moreover, transit passengers unwillingly leave main roads which mean that optimal economic effects are achieved in objects having adequate offer and being located directly next to the roads (langer, 1996; štetić, 2003; kosar, 2002). it is widely considered that the issues regarding planning, spatial organization, and accommodation equipment of the highway area are usually solved incrementally and depending on the available investments and the interests of the free market. however, this is frequently insufficient for the successful functioning of adjoining services on the routes connecting a place of residence with a desirable destination. to this effect, mcelroy (2003) highlighted the importance of government-built infrastructure in successful development of a destination. numerous authors including gunn (1988) and inskeep (1991) assumed that the infrastructure network of a country represents a potential determinant of a destination’s attractiveness. this is best compared and applied to the area which is adjacent to transportation corridors (highways) which are used by masses of passengers on their way towards destinations. people spend significant time in transit and, accordingly, have various primary and secondary needs such as bodily nourishment, various physiological needs, requirements related to vehicles, etc. therefore, planning and spatial organization along highway routes represents a special form of aerial equipping which presupposes construction of specific facilities necessary to serve the passengers’ needs. specific features of the corridor 10 area arise from the function of this highway and its characteristics as the road of highest rank, exclusively intended for motor vehicles traffic, with physically separated lines and full access control (law on public roads, official gazette of the republic of serbia, no. 101/05). concordant with this law is the document called regulations of land use next to public roads and adjoining services, which further defines conditions and forms of land uses as well as the rights and obligations of adjoining services offered. pursuant to article 2 of this document, adjoining services are considered to be all services offered to drivers and passengers, which include food services, retail, various car services (such as refueling, repairing, etc.), advertising, and others. to the category of adjoining service objects belong all objects which offer various services sought by 129 drivers and passengers (petrol stations, restaurants, shops, motels, car repair shops, atms, etc.). the specific need for accommodation and other passenger services emerged with the adjustment of hospitality services to motorized passengers. this history is traced back to the early years of road travel and especially to the early and mid-20th century united states when the emergence of extensive motorized highway networks led to the massive development of those services. a unique feature concept known as motorist hotel, or motel, as a specific object for accommodating long-distance passengers on the transit routes, emerged in the united states at that time, first in the 1920s and more extensively across the country in the post-war decades. as a consequence of adapting to the needs of users, certain specific features of the motel emerged: its particular location, design, shape, size, capacity and services offered. the concept evolved over time and today some motels have features that are indistinguishable from those of most chain hotels. also, in the post-war years the motel concept spread to other parts of the world where extensive road and highway networks were being built. one crucial specific feature of motels is the quality and accessibility of parking spaces and garages for passenger motor vehicles even though their capacity and equipment may vary depending on the established category of the object. furthermore, in addition to accommodation it is essential that in close proximity to motels, gas stations, car wash and car repair shops, restaurants, and other additional services (shopping, sport and recreation) can easily be found. in addition, horticultural appearance of the immediate area is also one of the recognizable features of a motel (kosar, 2002). the purpose of this study is to address the absence of studies in the spatial planning literature that address specific issues of adequacy of existing hospitality and other services (needed by passengers and their vehicles) that exist along the horgoš – belgrade section (across the autonomous province of vojvodina) of this important european corridor. heretofore, the focus of the literature on this subject, in general, has been on transport and traffic infrastructure and their interrelations with tourism as social phenomenon (hall, 1999; page, 1999). the modelling of tourist movement at the local destination level was discussed in the study of lew and mckercher (2006) where it was determined that such movement was caused by physical conditions of tourists, attractions in the transit zone, and the location of accommodation capacities with regard to attractions. the issues of mobility of tourists during their holidays and their stays in destinations were described by morin (1984). khadaroo and seetanah (2007) pointed out the importance of transportation infrastructure in a small island country where tourism is completely determined by the development of infrastructure. garača, jovanović and zakić (2008) analyzed passenger and vehicle turnover on the highway е-75 section through vojvodina. however, on that occasion, the authors did not engage with issues of spatial planning and the existence of various services, even though they did perceive the deficiency of specialized accommodation facilities in the observed section of the highway. this previous perception led to this new comprehensive study of the facilities on this section of the highway. 130 this paper consists of seven sections: 1. introduction, 2. spatial plans for highway e-75, 3. initial hypotheses and assumptions, 4. methods of data collection and analysis, 5. results of the research, 6. discussion and 7. conclusion. section 2, on the spatial plan for highway e-75, examines old and current issues of spatial planning and equipping of the highway zone in vojvodina, which were addressed in the ‘spatial plan for the subotica – belgrade section of highway e-75’ from 1985 (further in text spatial plan of 1985) and the ‘spatial plan for the regional infrastructure on the subotica – belgrade section of highway e-75’ from 2003 (further in text spatial plan of 2003). the discussion of methodology is divided according to different stages of the research: secondary data research (4.1), observation and field research (4.2), and definition of the statistical instruments for data analysis (4.3). research results include the following subsections: spatial planning and conditions on the highway (5.1), comparative analysis of current conditions and previous and present plans (5.2), passenger turnover on the highway section through vojvodina (5.3), overnight stays recorded for places gravitating towards the highway (5.4), and finally, the results of statistical analysis (5.5). 2. spatial plans for highway е-75 there are several plans that address the issues of arranging and equipping the highway е-75 with various passenger services. the construction of the north and south sections of this international highway has repeatedly been delayed in the past, thus accordingly, the plans have changed over time. in the context of socialist economy and the role of state in spatial planning in former yugoslavia, it was by definition assumed that planning of hospitality and other services along road corridors was the responsibility of state authorities. the first plan for equipping the highway е-75 with various services emerged back in 1985. the second and most recent is the spatial plan of 2003 which refers only to the northern part of the serbian section of this international highway. however, the later plan underwent certain changes and the legal amendment officially known as ‘changes and amendments to spatial plan for the highway е-75 regional infrastructure on the subotica – belgrade section’ became part of the law in 2012. significant number of changes referred specifically to spatial arrangement and equipment of the highway route, primarily in the passenger services sector. 2.1. spatial plan for highway е-75 from 1985 this spatial plan established the optimum distribution of all facilities on the subotica – belgrade section of the highway. it was estimated that along the highway there should be rest areas established at regulated distances with facilities offering various amenities and quality services. in this regard it had been planned that there should be: 1. for every 25 km, a rest area with drinking water and toilet facilities (possibly replaced with a restaurant or a camping area). 2. for every 50 km, a motel of selected category, a currency exchange office, and other adjoining objects and facilities for vehicles (e.g. petrol stations and car 131 repair shops). four such facilities had been planned near feketić, kać and stara pazova. 3. for every 100 km, a motel with a wider range of facilities for passengers and vehicles: a restaurant, a café, a pastry shop, a shop, a petrol station, a car repair shop and first aid facilities. two motels had been planned near palić and beška. 4. for every 200 km, a tourist-motel complex which would include, in addition to the already mentioned, also various recreational and shopping facilities: playgrounds, jogging tracks, fitness centers, hairdressers, bookshops, bars, retail shops, tourist information desks, databases and information desks of serbian automobile association. three such motel complexes which were to represent the highest rank transit centers had been planned in vojvodina near horror, bačka topola and novi sad (romelić and tomić, 2001). 2.2. spatial plan for highway е-75 from 2003 in this plan services and amenities on the highway are divided in three different categories: motels, petrol stations and rest areas. however, this study focuses predominantly on motels as unique establishments of the hospitality industry. the plan introduces a principle that motels should be distinguished into two types on the basis of capacity and the scope of services offered. it further stipulates that motels are to be positioned at a functional distance of 30 – 60 km from each other. type i includes motels of higher category, a concept similar to the tourism-motel complex from the previous plan, with a capacity of 50 – 100 beds, as well as the indoor and outdoor restaurant seating for 100 – 120 guests, respectively. the areas of commercial activity, according to this plan, were to include essential components such as various retail shops, boutiques, banks, exchange offices, phone boots, etc. parking lots are divided according to the vehicle category: 50 – 100 for passenger vehicles, 10 for trucks, 20 – 40 for car carriers, and 5 – 10 for buses. other essential components of this motel type are toilets, drinking water faucets, as well as a tourist information desk at the exit point. next to each motel a petrol station with a sufficient number of fuel dispensers was required. it is also envisioned that a resting and recreation area should be part of the motel complex concept and its important functional segment. the proposed size of such complex is to be approximately 3 – 4.5 ha (spatial plan, 2003). type ii motel is a lower category motel complex, with a smaller capacity and scope of services offered. in that sense, this type of motel should have 50 – 60 beds, a restaurant seating for 80 – 160 guests inside and 100 – 200 at a restaurant’s terrace. parking space comprises 50 – 60 lots for passenger vehicles, 15 – 20 for trucks, and 5 – 8 lots for buses. other facilities would include toilets, drinking water faucets, a tourist information desk at the exit point, and a petrol station with sufficient number of fuel dispensers. the resting and recreation areas are also parts of the motel complex in the same scope as with type i motel. apart from smaller capacity with regard to accommodation and restaurant services there is a light difference in the planned size of the type ii motel which, according to this plan, should be up to 3 ha (spatial plan, 2003). 132 the changes and additions which emerged from the latter plan were not vital in regards to the provisions from the previous one. significantly, the plan increased the number of locations for motels and decreased the number of categories from three to two. thus, instead of 8 locations, the new plan suggests 13, which represents 40% increase compared to the previous plan. the plan stipulates that this quantitative increase in the number of motels will be followed by a total quality increase of the services available on the highway. finally, the quality and scope of offered services is significantly increased with the elimination of type iii motel (introduced in the spatial plan of 1985), which had the smallest capacity and scope of services, as well as from the introduction of more type i motels. 2.3. changes and amendments of spatial plan for highway е-75 from 2012 changes and amendments from 2012 highlighted the type, quality, and quantity of services available to passengers travelling through vojvodina on highway е-75. the same old understanding of a motel as an accommodation facility with specific location and purpose remained valid, but the classification practice according to quality and quantity of services was abolished. a new feature in planning services along the route of highway е-75 was the introduction of service center which would comprise the content of a type ii motel, having optional accommodation capacity, car service, and recreational facilities. the total area of the complex would be limited to 3 ha (changes and amendments, 2012). we observe that most of the planned objects, according to the 2012 document, have been built. the only difference is that service centers have failed to reach accommodation capacities intended by the spatial plan of 2003. the decision whether or not to build more service centers is left to potential investors. as a consequence of this decision, passengers are offered only two locations for a potential overnight stay, that are equipped with full and adequate hospitality services, on the entire horgoš – belgrade section of the highway. the two locations are only 13 km apart and both are situated on the right side of the highway. moreover, the most frequent service available is that of a petrol station. in practice, this implies smaller capacity and scope of services compared to those of service centers. it has been specified that petrol station includes a petrol station with eight fuel dispensers (out of which six for passenger vehicles and two for trucks), a parking space (with 40 lots for passenger vehicles, 16 lots for trucks and only 4 for buses), public water faucets and toilets, a tourist-information desk as well as a convenience store (changes and amendments, 2012). through this expansion of the petrol station concept the creators of the last document from 2012 essentially aimed to legitimize petrol stations as service centers, and avoid further responsibility on the part of authorities to implement specific provisions from the spatial plan of 2003. 3. research hypotheses and research predictions the subject of this study is spatial planning and hospitality services equipment of highway e-75 – corridor 10 route in the section through northern serbian autonomous province of vojvodina. the aim of the paper is to objectively establish that the 133 highway е-75 route area through vojvodina is inadequately organized and improperly equipped with regard to its significance and the needs of transit passengers. in other words, the authors have strived to emphasize the gap between the increasing tourist demand (observed in passenger and passenger vehicles turnover) in the last several years and the quality of tourist product, – i.e. the package of services offered on the highway. in order to be able to utilize various important statistical data on the number of overnight stays in nearby places, the authors have decided to create a buffer of 7 km on each side of the highway e-75 since all of the towns for which data are available are located within this buffer area. this geographical area, further in the discussion, will be referred to as highway e-75 zone or simply as the highway zone. the overall research was informed by theoretical attempts of murphy, pritchard and smith (2000), smith (1994), crouch and ritchie (1999), and gunn (1988). in that sense, two hypotheses were formulated: – h1: there is no adequate infrastructure intended for transit tourists on the entire section of highway e-75 between belgrade and horgoš. – h2: passengers on the highway will more frequently stay in accommodation facilities that are situated closer to the highway zone. in order to validate the initial hypotheses, it was necessary to perform several research tasks: – consider the current condition of spatial planning along the highway е-75 route; – compare the condition of spatial planning with the spatial plan of 1985 and newer spatial plans; – collect statistical data on passengers in passenger vehicles turnover for the period 2001-2010; – collect statistical data on the number of overnight stays for the same period; and – use appropriate statistical instruments to analyze and determine the strength of relationship between the turnover of passengers in passenger vehicles (independent variable) and overnight stays in the observed area (dependent variable). 4. the research methods and data processing several methods were used in the research process, such as: (1) desk research, (2) field research, and (3) statistical instruments for testing series of data. 4.1. desk research desk research involves the study of primary and secondary data. by means of desk research method we obtained data on spatial organization and planning of the highway route which was conducted by ugoprogres company. in this research phase, both the data on passenger turnover on the observed highway section and the data for overnight stays in nearby towns were collected. thus, there are two series of statistical data comprising the decade 2001 – 2010. the first series of data represent the turnover of passengers in passenger vehicles transiting the highway. 134 unfortunately, the highway pay toll stops do not record precise statistics on the number of passengers in passenger vehicles – the data which would be most desirable and valid for this research; instead, only limited data on the category of vehicles travelling the highway is available. finally, the authors were successful in obtaining data on the number of passengers in vehicles travelling the highway from the border police at the horgoš border crossing (hungarian-serbian border), which serves as the key control point for this research. such data are systematized and published by the republic statistical office of serbia in its annual publication ‘bilten – traffic and connections’. the second series of data consists of the number of overnight stays in places located within the highway zone: palić, subotica, bačka topola, vrbas, novi sad, inđija and stara pazova. these sets of data were collected from the republic statistical office of serbia, published in annual publication ‘municipalities of serbia’. in this paper the total passenger turnover on the highway е-75, measured at horgoš international border crossing represents the independent variable x1, and the number of overnight stays in places within the highway zone is the dependent variable x2. 4.2. observation and field research conducting field work was necessary in order to gain an insight into current conditions of planning and availability of services along the highway route. detailed observation of the existing accommodation and hospitality service facilities and their transit tourism usability (spatial allocation, condition of buildings and objects) was performed in situ, and the results are included in primary data. these observation records were important for comparing the situation anticipated in the spatial plans and the current existing conditions on the highway. field research was conducted during september 2012, when the highway section from horgoš to nova pazova (171 km) was travelled in a private car by the researchers, and all the observed objects intended for transit passengers on the section were recorded. regarding the geographical context, vojvodina is part of serbia, located north of the sava and danube rivers. most of the motorized travelers from central, northern and eastern europe, who are headed south or southeast towards attractive and high quality destinations of the northern coast of eastern mediterranean, pass through the observed territory. indeed, the highway е-75, as the most frequently used transportation route in the area, runs through vojvodina from north to south (đuričić, romelić and ahmetović, 1996). this road is part of primary road network of serbia and also a part of broader regional and european road network (štetić, 2003). with regard to road transit, the highway е-75 is invaluable for serbia, and its importance is intensified with the fact that it connects the largest towns in the country. moreover, the importance of joining the european system of road network can be discerned from the fact that europe is the most highly valorized area with regard to transit tourism since over 50% of world tourist turnover occurs in europe (wto, 2007). 135 4.3. statistical instruments for testing series of data statistical data collected in the first phase of the research were analyzed by different statistical methods. first, the method of correlation analysis was applied, by means of which the equation on the intensity of quantitative correlation of the observed phenomena was explored. a correlation is the relationship between the observed phenomena, where the impact of one phenomenon on the other, i.e. the impact of the dependent variable on the independent one, is being analyzed. the following is the scale of correlation: if 5.0r0 12  , the correlation is weak, if 7.0r5.0 12  , the correlation is significant, if 9.0r7.0 12  , the correlation is strong, if 1r9.0 12  , the correlation is very strong (stojković, 2008). 5. research results 5.1. spatial planning and conditions on the highway field observation showed that the spatial plan of 1985 is still unrealized. all the objects/buildings which represent the material base intended for transit tourism on the highway е-75 section through vojvodina were observed, and the assessment of the records is not satisfactory, especially in regards to motels as specialized objects for accommodation. only two motels were registered on the 171 km long section, while the spatial plan required there should be at least eight such objects differing in quantity and quality of traveler’s services. most of the facilities intended for passengers along the highway е-75 are concentrated next to petrol stations, which form a base for service and technical offer in the observed section. hence, none of the rest areas apart from petrol stations offer tap drinking water. also, there is a lack of atms, exchange offices, and post offices, all of which represents significant drawback for the highway of highest international significance. it is noticeable that the majority of facilities are located next to petrol stations, a fact which conforms to the assumption that those objects represent an essential material base of services needed by transit passengers, not the motels, as the spatial plan of 1985 presupposed. the facilities intended for vehicles are few and simple; surprisingly, there was only one car towing and repair service available while a car-wreck service was noticeably absent from the whole 171 km long section. 5.2. comparative analysis of the present condition and previous and current plans observation and field work offered an insight into the present condition of spatial planning and hospitality and other necessary services on the horgoš – belgrade section of the highway e-75. numerous shortcomings were revealed. on the other hand, if the present condition of the section is compared to the changes and amendments of 136 2012 (the year this field observation was conducted) document, it may be concluded that the changes and amendments of 2012, in essence, only attempt to give legal and political recognition to, and tolerate and make accommodations for, the existing non satisfactory state of the highway. in this manner, and exclusively through a political decision, the long-term problem of building and equipping the highway seems to be solved, and the section declared as completed, although it is not. what remains unaccomplished, even after the accommodations from 2012, is a whole gamut of essential communal and service amenities such as water faucets (a least three have been planned, but none has been built), exchange offices, banks, post offices, and first aid services. facilities providing commercial and financial services (including access to bank accounts, money transfer, etc.) should be available at least in their basic form, through combined banks – post offices. gas or petrol stations should be equipped with basic atm services. as it was mentioned before, according to the present legal practice, petrol stations which offer some basic additional services such as shops and cafés, are presently standardized as service centers, thus replacing the need for standard motel category and tourist-motel complex from the spatial plan of 1985, and type i or ii motel from the spatial plan of 2003, respectively. the latest document on spatial planning from the year 2012 anticipates three more service centers on both sides of the highway and one on the northbound side only, which are yet to be built. finally, neither of the two service centers with motels that were supposed to be built according to the stipulations made in the latest plan have yet been constructed. it is worth noting that both existing motels are located on the southbound (western) side of the highway while the northbound (eastern) side is still without such fac ilities. 5.3. passenger turnover on the highway section through vojvodina passenger turnover in passenger vehicles is of immense importance for our analysis as it is usually indicative of the intensity of tourist transit and the need for adequate spatial planning. the data for the 2001-2010 decade was collected in order to obtain the most recent portrait of the phenomena observed. data on passenger turnover in passenger vehicles reflect the values for turnover for all passenger vehicles which records identify as variously as passenger cars, buses, or motorcycles. due to the specific features of their job and vehicles they drive, the truck drivers, whose proportion in transit traffic is significant, have been excluded from this research. the authors believe that commercial and cargo traffic as a specific category deserves separate research. 5.4. overnight stays in places gravitating along the highway statistical data on the number of tourists and overnight stays along the studied section of the highway refer to all of the places in the highway’s gravitational zone and has been selected on the basis of reasonable assumption that transit tourists find accommodation in the nearby towns considering the lack of accommodation along the highway itself. the numbers for tourists and overnight stays are balanced, with the 137 exception of the city of novi sad, where there is a significant divergence. namely, the numbers for novi sad are expectedly high since it is the largest city, the administrative, commercial, cultural, and tourist center of vojvodina, with the population above 300,000. similarly, palić is a famous tourist destination for family weekends and short holidays, as well as a center of transit tourism. subotica, featuring attractive architecture and multi-cultural ambience is a particularly attractive tourist destination and/or a stopover. incidentally, it is also the largest city in northern vojvodina with the population of approximately 100,000. other places offer less significant tourist attractions and their data cannot be separately discussed. comparing the data on the number of tourist arrivals to the data on the overnight stays, it may be concluded that tourists staid mainly two to three nights in the selected places. it is certain that this data does not indicate transit tourists because their stays are shorter, up to one night in the areas closer to the highway. nevertheless, it is fair to assume that some of the presented values refer to transit tourists, even though those who qualify as tourists in destination may be among those who opt not to stay for more than a single night. thus, it is evident that the raw statistical data does not necessarily describe the real conditions of the problem since it is impossible to discern the exact numbers of transit tourists from the total number of tourists. however, the researchers believe that even such data is extremely valuable for an analysis which ultimately does significantly inform our knowledge and perceptions about the deficiencies of the current planning practice. 5.5. results of statistical data analysis statistical data on passenger turnover on the highway through vojvodina, as well as on the overnight stays in the cities and towns within the highway е-75 zone in vojvodina, were processed by means of pearson correlation method with the purpose to gain insight into the possible correlation between these two sets of data. the main indicator of such correlation is the correlation coefficient ‘r’, which shows correlation when coefficient values are 1r5.0 12  . the analysis of statistical data did, in many cases, show a certain level of correlation between the observed phenomena. a very strong correlation of passenger turnover and overnight stays in the highway zone is recorded for subotica, with the correlation coefficient r1.2 = 0.864. the coefficient value for palić is similar (r1.1 = 0.802), whereas for inđija and stara pazova correlation is significant (r1.6 = 0.545 and r1.7 = 0.518). as it has been assumed, the correlation between phenomena for novi sad is weak (r1.5 = 0.120), that being the consequence of high share of ‘real tourists’ who arrive to the city for a longer period and not for an overnight stay, as well as of the fact that transit passengers generally tend to avoid large cities (perhaps, due to higher accommodation prices). curiously enough, despite being located in close proximity of the highway, bačka topola and vrbas (r1.3 = -0.282 and r1.4 = -0.091) show weak correlation between the observed phenomena. in order to analyze statistical correlation between phenomena along the entire observed highway section total values for overnight stays were added 138 and checked against the values for passenger turnover on the observed highway section. in this step, a significant correlation was found r1.8 = 0.551, which was indicative for the goal of our research. however, keeping in mind that there are high percentages of shares of non-transit tourists, another correlation analysis was performed for sum values of overnight stays, with the data referring to novi sad (x1.5) being excluded. the final results were within the expected range since the correlation coefficient increased significantly, and its value reached the zone of strong correlation, where r1.9= 0.764. the same effect was achieved by excluding all the places (bačka topola, vrbas and novi sad), that for any reason failed to achieve significant correlation of the observed phenomena when correlation between x1.10 and the turnover of passengers in passenger vehicles was defined by correlation coefficient r1.10 = 0.824. 6. discussion of the results and the research the research has yielded significant results. there is significant correlation between passenger turnover on the highway е-75 section through vojvodina and overnight stays in the highway zone. this means that passengers were for certain reasons forced to leave the highway to search for overnight accommodation in nearby cities and towns. one reason is certainly the lack of adequate material base for hospitality services on the highway е-75 section through vojvodina. the absence of a strong correlation for novi sad is explained by the fact that high percentage of tourists in the total number of overnight stays in that city is a consequence of its natural, geographical, cultural and historical assets. thus, it is clear that elimination of data for novi sad from the total sum drastically increases the percentage of interdependence of overnight stays and passenger turnover, which is slightly over 76% in the case of this particular city. although palić is an important destination for excursion and family tourism, its location near the highway outweighs the significance of other tourism characteristics and intensifies its transit one. however, the data for bačka topola аnd vrbas, as smaller settlements situated near the highway, are completely unexpected. the obtained results may be explained by the absence of appropriate accommodation facilities which might potentially reduce the number of overnight stays in these places by transit passengers. an analysis of data obtained from the vojvodina chamber of commerce revealed that vrbas has only one dilapidated hotel of the lowest category, in which accommodation is less than adequate. on the other hand, there is a three star hotel in bačka topola which offers all the necessary amenities for transit passengers. nevertheless, the correlation coefficient is out of the range of a strong correlation. as it was remarked in the introduction, the passengers unwillingly leave the corridors they travel on, which would be necessary for finding accommodation in either bačka topola or vrbas, located about 7 km (on the fringe of the highway zone) away from the highway. such circumstances have negative impact on total correlation values; in case they are ignored, the impact of non-transit factors on total overnight stays is reduced by 27.3%. comparing data 139 on the correlation of observed phenomena, – i.e., the strength of their interrelation on one hand and the existing material base for hospitality services of tourism in the highway е-75 zone on the other, it is fair to conclude that the organization and hospitality service equipment of the highway section through vojvodina inadequately meet the needs of transit tourists in their passage through the territory of the province. occasional diversions into nearby towns and cities can be seen as a significant effect of the poor state and inadequacy of hospitality services provided along the highway e-75 – european corridor 10. there exist only two motels, of specialized accommodation type, intended for transit tourists and their vehicles in the entire observed section of the highway. moreover, there is only one camping site with bungalows and parking areas for recreational vehicles which is, unfortunately, out of use. even though the spatial plan of 1985 has been legally superseded, the theoretical and practical issues addressed there, as well as the development directions suggested in it, still possess significant validity. it is worth noting that the implementation of this plan failed due to lack of national interest for processes regarding planning and organization of areas for specific purposes which are of immense importance for the society. namely, the economic situation in the republic of serbia since 1991 has been unfavorable. since 2000, political changes on national and international level have resulted in neglecting active participation in the economy by the government. therefore, free and uncontrollably flowing market capital gained control over decision making regardless of the general interest and the needs of the society as whole. this new paradigm is obvious in the changes and amendments to spatial plan for the highway е-75 regional infrastructure on the subotica – belgrade section. nevertheless, the fact that variability between turnover for passenger in passenger vehicles and total overnight stays on the studied section of highway е-75 is about 55% is indicative. this is explained by the interdependence of overnight stays and passenger turnover. 7. conclusion the european corridor 10 – highway е-75, which crosses the territory of the republic of serbia lengthwise from north to south in the length of 582 km, represents an invaluable axis and pole of development for the country. this research confirmed that the highway, along the observed area, lacks adequate material base for hospitality services, something that is unjustified given the intensity and character of transit traffic and passengers’ needs and demands. hence, it is necessary to finally commence the implementation of spatial plan of 2003 which anticipated the network of motels together with fully equipped services to both passengers and vehicles. petrol stations alone are not sufficient in fulfilling the needs of passengers. according to the changes and amendments of 2012 the situation has largely remained the same. without motels, car emergency services, exchange offices, atms, and other similar services, the very importance of highway as a sufficient and well equipped system for transportation of people, goods, and services become affected. 140 it is common wisdom that adequate traveler services increase passengers’ satisfaction and experience. at the end, it is even fair to say that safe, convenient, and pleasant road experience positively impacts people’s desire to travel. as numerous shortcomings concerning the proper equipment of the subotica – belgrade section of the highway e-75 were observed (in addition to being previously legally recognized in the changes and amendments of 2012), it is necessary to apply regular legal procedure and initiate new public and professional discussion on the existing legal acts and work toward consensus on a new spatial plan that would strike a balance between the needs of transit passengers and tourists on the one hand, and the civil authorities and investors on the other. it seems difficult to accept and even imagine that there are only two spots on the entire 171 km long route in which a passenger can spend a night and have a proper meal. it is worth mentioning that the two motels, which were mentioned before in the text, were periodically closed due to the bankruptcy procedures which they were undergoing at the time. that fact impacted this study by showing weaker statistical correlation coefficient for vrbas (r1.4 = -0.091), whereas the correlation analysis for mali iđoš was not performed due to the lack of data for that town during the period 20012010. in that sense, it is difficult to discuss what the possible values of the coefficients could be if data for the correlation between overnight stays on the highway route and the number of passengers in passenger vehicles were available. all the overnight stays were made outside the highway itself, which means that passengers had to get off the road and search for a place to spend the night. in that regard, the highest role is assigned to places with recognizable features and established reputation which are still located in close proximity to the highway (such as palić and subotica). furthermore, municipal authorities of inđija and stara pazova, having realized the benefits of their relative geographic position (between two important highways, е-75 and е-70) and perceiving their own strategic interest and significance for transit tourism, increased marketing activities for the accommodation capacities within their municipal territories. this resulted in good correlation coefficient found for these two towns. however, it is fair to conclude that the lack of accommodation facilities and other accompanying services that are suited for the needs of passengers are an undisputable issue which needs to be clearly regulated by a legal document instead of being left to the whims of the investor’s personal choice. political aspect of large projects, such as the corridor 10, has always been important, and it was often evident through the roles and functions played by various ministries, traffic management and communication sectors, and capital investments of the state in infrastructure. since 2000, the government and its various bodies have been promising the completion of the works on the corridor even though the construction work on certain sections, especially in the southern part of serbia, is still in progress. as a result, and especially in regards to the equipment of the corridor, there are unfinished segments and a tendency to legalize present (unsatisfactory) conditions on the subotica (horgoš) – belgrade section as it is. however, the authorities seem to believe that their concern is only the quality 141 of asphalt on the highway and ‘wash their hands’ from responsibility on providing incentives for quality hospitality services on the highway. it is essential to advocate new public discussion and insist on a new document on spatial planning in the highway zone through vojvodina. proper spatial organization, planning and equipment of the highway, as conscious and planned activities based on valorization process and in accordance with previously established scope of demand, potential tourist offer and socio-economic goals of the society as a whole must demonstrate the direction that public policy is taking. the relevant public policy must be based on the needs of transit passengers and travelers in general, the nearby communities, and the society as whole. finally, it should be pointed out that this research confirmed both initial hypotheses. hypothesis h1, which deals with the issue of inadequate infrastructure intended for transit tourism, was validated in full by field work and observation, as well as by insight into and the analysis of the previous and the current planning documents. on the other hand, hypothesis h2 was not rejected even though practically all accommodation capacities 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possible ways of improvement of institutional framework of spatial and urban policy formulation in serbia in order to make the decision-making process on largescale retail building more effective and to adequately address the complex problems of this type of building. since neo-institutional theory considers institutions as series of formal and informal organizations, rules and procedures that build patterns of behavior within organizations, the paper includes the analysis of the efficiency in the existing institutional framework of large-scale retail policy formulation and problems occurring in that process; the actual roles of public, private and civil actors, the content of policies by which large-scale retail building is directed at different levels of spatial organization; the methodological and procedural framework of these policies’ formulation. possible directions for institutional framework redefinition are suggested in order to achieve more effective decision-making on the large-scale retail building in serbia. keywords: neo-institutionalism, institutions, large-scale retail, spatial policy, serbia. the neo-institutional framework of large-scale retail spatial policy formulation process in serbia milica maksić milica maksić phd, senior planner, institute of urban planning, city of niš, republic of serbia tel.: 00381-642-539.839 e-mail: mmaxic@gmail.com transylvanian review of administrative sciences, special issue/2014, pp. 90-110 91 1. introduction the structure of retailing in the republic of serbia has significantly changed in the last decade. participation of modern retail formats in the retail network such as western-style shopping centers, retail parks and hypermarkets has increased significantly, especially in belgrade as the capital city. the process of large-scale retail spatial policy formulation is researched in this paper in the theoretical framework of neo-institutional theory. with the new institutionalism as a theoretical framework, governance has become a key interest in the study of urban policy (stoker, 2000). the problem of large-scale retail is very complex, especially in relation to decision-making on different levels of government. the framework of neo-institutional theory enables, besides analysis of policy and decision-making problems at different levels of government, an analysis of roles of private and civil sector in this process. in the developed european countries the problem of large-scale retail policy has been analyzed for several decades and the institutional framework was formulated and changed in this area. during that time, numerous studies have been carried out to analyze environmental, social, as well as economic effects of large-scale retail building. in the beginning most of these studies dealt with economic effects (city centre decay, new employment, reduction of the existing trading area), whereas environmental and social effects (pollution from increased car usage, sustainable development, isolation of disadvantaged shoppers) subsequently gained significance (ibrahim and mcgoldrick, 2003). the effects of large-scale retail building were researched by guy (1998, 2007), england (2001), bromley and thomas (2003), timmermans (2004). they found numerous economic, social and environmental consequences of the construction of large retail stores in developed european countries. according to england, economic impact is concerned fundamentally with the consideration of changes in retail turnover or trading patterns in shopping centers as a result of new shopping development. the trend towards out-of-town retailing has raised concerns about the adverse employment effects of new retail developments (england, 2001). guy notes that social impacts relate to efficiency and equity aspects of the developments themselves and their trading impacts. this author notes that there have been unquestionable benefits for consumers from modern retailing, simply from ever-widening the choice of consumer goods available, and the increasing differentiation of both goods and shopping formats by life-cycle and lifestyle. equity aspects are concerned partly with the loss of retailing from traditional centers, and the impact of this on those who rely particularly on these shopping opportunities (guy, 1998). those who do not own cars have become polarized as a disadvantaged groups whose poor mobility constrains their access to urban facilities (bromley and thomas, 2003). according to england, out of town developments are attractive to many retailers and shoppers because of the availability of free car parking and good road access, 92 while at the same time, impacts relating to traffic generation, congestion and pollution in town centers are becoming much more significant (england, 2001). traffic impacts in terms of the immediate impact of several hundred vehicles per hour travelling to or from a decentralized store can be unpleasant to the local environment and may necessitate local road improvements (guy, 1998). decentralized retailing has been accused of encouraging private car travel at the expense of walking, cycling and public transport trips, and adding to the overall length of shopping trips by car. the counter argument, that further development of off-center retailing is desirable because it reduces average trip length, has also been debated (guy, 1998). already in the 1970s, research has shown that the commercial viability of inner-city shopping street is highly influenced by pedestrian movement and that the impact of new retail development is closely related to the locational patterns of magnet stores and the distribution of the transport termini (timmermans, 2004). guy says that the decentralization of retailing has allowed many town centers retail functions to become established in suburban or edge-of town locations, but in so doing has tended to divorce shopping from its wider business and recreational context. in this sense, shopping has become much more a single-purpose activity. this implied loss of social involvement in the wider community has to some extent been replaced by the involvement of other family members in the shopping trip (guy, 2007). also, the physical appearance of off-center retailing has been much criticized (guy, 1998). the impact of large-scale retail building on urban environment has been researched in post-socialist countries as well. in relation to motorization policy, the research of yaakov and dybicz shows that hypermarkets significantly reduce the number of trips made, but convert them into motorized and longer distance trips. in the extreme case in a motorized country, larger and more appealing retail will draw significant number of people from smaller towns on occasional trips that are hundreds of kilometers in length (yaakov and dybicz, 2006). the social impacts have been researched in post-socialist countries as well. the research of nagy, focused on the transition of the inner spaces of czech and hungarian cities that have been accelerated by large-scale retail investments, shows that local society has become strongly differentiated in terms of access to shopping facilities and consumer habits. the location of shopping becomes a marker of social status even in the case of daily consumption goods (nagy, 2001). in order to direct large-scale retail building, developed european states have adopted different types of regulation during the period of several decades. davies says that regulations, which are usually legally enforced documents, can range from zoning maps, which indicate where certain types of retail development may take place in an area, to stipulations about how large new store or shopping center proposals can be in an area (davies, 2004). baar divides west european legislation governing the construction of hypermarkets and large shopping centers into three general categories: laws which require con93 sideration of the impacts of major retail projects on town centers and the environment in the course of reviewing permit applications and mandate that center city preservation has a priority in retail policy; laws which require consideration of the impacts of proposed commercial projects on existing retail shops and laws which prohibit the construction of large retail outlets and shopping centers which are more than a specific size outside of center cities (baar, 2002). in developed european countries, linking transport policies with large-scale retail building policies is very important. for example, the key aim of national document planning policy statement 13 (pps13): transportation and land use, formulated by the department of communities and local government in england is social involvement and the need to provide that jobs, trade, recreation, and services are available by public transport, by bicycles, and by foot. this document emphasizes travel plans making for particular locations which are submitted with the application for the planning permission, for building projects which are likely to have significant transport implications (office of the deputy prime minister, 2005). in their comparative research undertaken in selected countries from northern, southern and eastern europe, fernandes and chamusca concluded that the cultural and socioeconomic specificities of each country (and those of each region, city or urban area) strongly influence the design and elaboration of public policies, plans and programs regarding urban spaces and the urban retail sector and that legal framework, which is established by public authorities, plays a decisive role in the development and location of retail structures (fernandes and chamusca, 2014). jackson and watkins say that the nature and scope of retail planning need to be understood in terms of the broad range of activities covered by planning policy guidance. their analysis suggests separation of local planning policies into several distinct influences (supportive property market context, promotional policies (including town-center management strategies), physical and land constraints (in town center and peripheral locations), and retail-specific policy measures) (jackson and watkins, 2005). although large-scale retail stores have been built for more than one decade in serbia, specific attention to this problem has not been directed in spatial planning through policy, regulation, laws, and overall assessment of economic, social and environmental impact of these stores. spatial plans in serbia at all levels of spatial organization do not deal with the issue of large-scale retail building (do not elaborate the themes of: large-scale retail distribution; the connection of large-scale retail building to the network structure of settlements; environmental, social and economic impacts of the construction of large retail). in the absence of national, regional and municipal rules in this area, location and rules for large-scale retail building are determined in specific, individual urban plans at the local level. one reason for not recognizing these theme in serbia may be found in the fact that, despite the development of a network of hypermarkets and shopping malls in the last decade, the number of large stores built in serbia significantly lags behind 94 advanced countries in transition, especially the most developed countries of the european union, so the effects of building large stores are less pronounced. according to jones lang lasalle offices data, in 2013, the total modern retail stock in serbia was estimated at 790,226 m2 out of which approximately 44% or 345,300 m2 comprises all types of shopping centers. translated into shopping center density figures, serbia disposes of 48 m2 per 1,000 residents, which ranks it at the very bottom of the european scale (the average density gla/1,000 inhabitants in europe is 185 m2) (jones lang lasalle offices, 2013). with the introduction of modern shopping formats, retail scheme and the use of existing retail space in serbia has changed. commercial spaces in belgrade and serbia built twenty or more years ago are now generally weak business (market network, 2011). belgrade downtown remains undersupplied, with less than 30,000 m2 of shopping center schemes available for tenants (cbre, 2013). high street rents in belgrade are showing a stable trend, with the main driver of the high street rental trend being the tenant mix and retailers’ positioning, visibility, size, layout and shop condition. over the past few years, demand for retail units on the high street has significantly decreased, mainly because retailers are more interested in space within modern shopping center formats (jones lang lasalle offices, 2013). in belgrade, as the capital city, the total retail stock remains at the level of 230,000 m2 of gla (approximately 66% of total retail space in serbia), or 140 m2 per 1,000 inhabitants. belgrade has not been developed at the same pace. location-wise, new belgrade area holds 60% of the total shopping center stock, amounting to more than 500 m2 per 1,000 inhabitants (cbre, 2013). two prime shopping centers in belgrade (delta city and ušće) dominate the market, attracting strong demand and maintaining zero vacancy rates (research & forecast snapshot, 2013). however, the other formats are noting the decline in vacancy levels, such as department stores (cbre, 2013). in addition to belgrade as the capital city, a number of large stores has been built in: novi sad (big shopping center, hypermarket centers rodić, shopping center mercator), niš (shopping center mercator, hypermarket tempo, hypermarket dis), kragujevac (shopping center plaza, hypermarket tempo), indjija (fashion park outlet), pančevo (aviv retail park), šabac (capitol park). retail parks that are traditionally occupied by mid to low-market brands are becoming an acceptable alternative to shopping centers outside belgrade, due to the lower purchasing power and lack of modern schemes. the total retail park stock in serbia increased to 64,126 m2 delivered over the past three years (jones lang lasalle offices, 2013). as influx of large-scale retail building is expected in serbia, serbia has a chance to learn on the examples of other developed european countries and post-socialist countries, and to establish adequate institutional framework in order to diminish the negative consequences other countries experienced. this paper has the aim to research institutional framework of formulation of spatial and urban policy related to 95 large-scale retail building in serbia, to note possible problems and constraints in this process, and to point out to possible improvement of this process in order to support market efficiently, but also to protect public interest. 2. neoinstitutional theory as the theoretical framework of the research the theoretical framework of this research is neo-institutionalism. neo-institutional theory is selected as the theoretical framework, because of its dinamic approach and the possibility of policy and decision-making problems analysis at different levels of government. by the 1950s, institutionalism was political science. since the 1980s, changes in the structure of local government encouraged critical analysis of institutions (lowndes, 2009). in urban planning, the planning activities were associated with broader governance context in which they take place. attention shifts from specific projects and outcomes to interventions in the institutional infrastructure, which provides the framework of project ideas, how to evaluate and who participates in the governance process through which governance methods (healey, 2006). institutions form the central part in neo-institutional theory. the term ‘institution’ in neo-institutional theory does not apply only to formal organizations, but includes a wide range of formal and informal organizations and the rules and procedures that build patterns of behavior within organizations. reimer points out that the neo-institutional shift in planning sciences, emphasizing the ‘hidden’ institutional patterns that determine spatial planning behavior under the surface of its more formal dimensions (planning laws and administrative organization, procedures and instruments) helps to shed light on planning cultures as an analytical concept (and not as a normative paradigm in theory and practice) (reimer, 2013). when analyzing a planning system, it is important to understand the interaction between formal and informal institutions as continuous reinterpretation: reinterpretation of the place, their strength, compatibility, meaning (van assche, beunen and duineveld, 2012). new institutionalists pay attention to the way in which institutions embody values and power relationships; and they study not just the impact of institutions upon behavior, but the interaction between individuals and institutions (lowndes, 2001). they locate the interplay of specific actors in social processes in the context of the ensemble of norms and discourses which shape the interests actors have, their conceptions of their strategies and their repertoires of action. institutionalists focus on interactions, not decisions (coaffee and healey, 2003). since recognition of the problems of large-scale retail building in serbia significantly differs from the developed european countries, and also varies in different areas in serbia, the local aspect is of great importance in our research. local aspect in neo-institutional approach in spatial planning is recognized by a number of authors (healey, 1997; lowndes, 2009; lang, 2011). healey recognizes that actual practices are deeply influenced by local histories and geographies, by the specific way in which broader forces impact particular places, 96 and by the capabilities of the actors involved (healey, 1997). lowndes states that local governance is embedded in locally specific institutional frameworks of both political and non-political nature (lowndes, 2009). place and time-specific institutional environments function as a strong frame of reference and are created as a result of earlier experiences and help structure the local decision-making process (lang, 2011). with the new institutionalism as a theoretical framework, governance has become a key interest in the study of urban policy (stoker, 2000). knill underlines that the definition of ‘governance’ varies from case to case because of its highly vague and open nature that account for its rapid international diffusion (knill, 2004). drechsler induces this concept as a neutral concept that focuses on steering mechanisms in a certain political unit, emphasizing the interaction of state, business and society players (drechsler, 2004). as the term ‘governance’ is used in this paper in the sense of a set of mechanisms that shape social action, whether by government, private sector or civil society associations (healey, 2006), the paper considers the ‘social’ modes of coordination in the process of spatial policies formulation related to large-scale retail building. salet and thornley identify three overlapping dimensions in shift occurred in the position of national governments in europe from the early 1980s: a reduction in the government’s proactive role in the economy and society, the rescaling and restructuring of intergovernmental relationships and the diversification of decision-making throughout a wide range of governmental and nongovernmental organizations. these authors say that the third dimension of institutional change is linked to the reduction of government and has given rise to a proliferation of ad hoc bodies and appointed organizations, or quangos: quasi-autonomous nongovernmental organizations and that these practices can take many forms (salet and thornley, 2007). in governance models, the interaction between multiple actors is regulated through a broad set of ‘social’ ways of coordination, rather than through a limited set of hierarchically defined organizational procedures. public and private actors form social ways of coordination in governance processes, through the establishment of partnerships, participation, and others (espon 2.3.2., 2007). governance approaches effectively put much more emphasis on dimensions, such as the multiplicity of players or stakeholders, the boom in partnerships between government institutions or players and private players, companies, and ‘partners’ (‘public-private partnerships’), the increasing complexity of political action, and especially of decision-making, the coordination problems to which this gives rise, questions linked to the imputation of the decision and thus accountability (damay and delmotte, 2010). espon project 2.3.2. ‘governance of territorial and urban policies from eu to local level’ holds an important position in the definition and elaboration of a common ground for investigating the institutional and instrumental aspects of implementation of territorial and urban policies in europe. an analysis based on a comparative review of the instruments used, and stakeholders involved in various policy areas, is being undertaken to draw some valuable conclusions of practical relevance on governance (espon, 2014). 97 espon project 2.3.2. emphasizes the importance of vertical coordination, horizontal coordination and participation in the governance processes. in territorial governance vertical coordination refers to actors and policies and is mainly related to public actors. it is associated with the principle of reorganization and redefinition of territorial levels involved in territorial transformation and government levels associated with them. in terms of governance as horizontal coordination, there are two aspects. one is governance as interaction between actors and policies on any given territory – coordination among multiple actors and across sectors. the second relates to the territorial integration – coordination of policies and actors in different territories (espon 2.3.2. 2007). lowndes emphasizes the importance of interaction ‘top-down’ and ‘bottom-up’ institutional influences and focuses new institutional perspective on urban policy analysis at multiple levels (lowndes, 2009). the extent of local distinctiveness in governance arrangements is related to the degree of autonomy and diversity that higher levels of government will tolerate and at the same time, the impact of higher-level regulation or influence is mediated by the strength of local institutional commitments (lowndes and wilson, 2003). crescenzi and rodríguez-pose also recognize making coordination between different policy actions and the reconciliation of top-down and bottom-up development policies as increasingly relevant and necessary (crescenzi and rodríguez-pose, 2011). un habitat states that participation in urban planning can appear in different forms and at different levels. it can be initiated by various actors, including government agencies, politicians, community and others. it appears in various stages in the planning process (identification of needs, preparation of plans and policy formulation, implementation and evaluation). it refers to the various processes of planning and decision-making, including the formulation of broad vision, plans or policies, proposals for specific activities or areas, or periodic allocation of resources through the budget process (un habitat, 2009). according to lowndes and wilson, for local authorities, participation initiatives may be managerial (to seek ‘customer’ information), instrumental (to meet statutory requirements), tokenistic (‘window dressing’), or even cynical (to legitimize decisions already taken or divert responsibility for unpopular policies). for citizens participation may relate to the defense (or pursuit) of individual or sectional interests, and may be divisive to the local community as a whole (lowndes and wilson, 2001). bryson et al. point out that participation is sometimes mandated; sometimes it is not mandated and is more bottom-up in nature; sometimes it is a combination of the two. these authors declare that in general, participation should be sought when it is required or when it is the only or most efficacious way of gaining one or more of the following: needed information, political support, legitimacy, or citizenship development (bryson et al., 2013). the governance processes differ in the developed european countries and post-socialist countries. increased accumulation of capital brought new groups of actors into urban development in post-socialist countries. the number of institutions and their 98 tendency towards networking is growing, but the private investors are the most active. the number of non-governmental organizations, interest groups, social movements is also rising, but with limited role in decision-making on urban policy, planning, development and governance (taşan-kok, 2006). the civil sector in post-socialist countries is often presented in the form of non-governmental organizations (mostly funded by western countries). hirt and stanilov state that the mere presence of such groups does not always reflect a strong civil society (hirt and stanilov, 2009). nedović-budić, tsenkova and marcuse note that although central governments in post-socialist countries continue to be stakeholders intervening directly, usually to facilitate or obstruct large-scale projects and often with a rigid managerial attitude preserved from the socialist past, such interventions have become scarce. contrary to state intervention, the local planning regulations became less strict, ad-hoc, driven by the opportunities and corrective mechanisms (nedović-budić, tsenkova and marcuse, 2006). 3. objective and methods of research the basic objective of the research is to explore possible ways of improvement of institutional framework of spatial and urban policy formulation in serbia in order to make the decision-making process on large-scale retail building more effective and to adequately address the complex problems of this type of building. as neo-institutionalism, which considers institutions as series of formal and informal organizations, rules and procedures that build patterns of behavior within organizations, is the basic theoretical framework of the research, the paper includes the analysis of actors’ behavior, rules and procedures. methods of research included: a. institutional analysis of the current roles of actors in the process of policies formulation related to large scale retail building in serbia and the problems encountered in the process; b. the analysis of policies content (plans, regulations) at different levels of spatial organization that directs the development of large retail stores in serbia; c. the analysis of relationships between different levels of government in decision-making process on large-scale retail building in serbia, the autonomy of lower levels, horizontal and vertical coordination, procedural problems in the process of policy formulation and large-scale retail building. 4. analysis of institutional framework in serbia 4.1. actors the planning system in serbia is set hierarchically. the basic legislation in the field of planning and building in serbia – law on planning and construction of 2009 states in article 33 that documents of spatial and urban planning must be harmonized so that the document of narrower area must be in accordance with the document of wider 99 area. planning documents must be in accordance with the spatial plan of republic of serbia, and urban plans must be consistent with spatial plans (zakon o planiranju i izgradnji, 2009). given that the planning system in serbia is set hierarchically, the content of planning policies at lower levels is limited by the content of planning policies at higher levels. lower levels autonomy in decision-making process is completely restricted by the content of higher levels policies. but in terms of large-scale retail building and policies related to this area, the planning system in serbia has certain peculiarities. national policies do not particularly consider large-scale retail building. although some guidance important for directing large-scale retail building can be found in the spatial plan of the republic of serbia from 2010 to 2020 (zakon o prostornom planu republike srbije od 2010. do 2020. godine), in different areas (direction of investments within existing urban areas, urban renewal, activation of brownfield sites), there are no clearly defined rules and criteria for large-scale retail building at the national level, and regional and municipal spatial plans in serbia are not required to develop this theme. aside from the lack of rules for large-scale retail building direction at the national level, this theme is not developed at the regional level of planning in serbia either. the regional level of government in serbia has not been established, but there is a regional planning level at which the regional spatial plans are prepared. as there is no regional administration, the holder of their preparation is the republic agency for spatial planning (actor at the national level) and the provincial secretariat for urban planning, construction and environmental protection (for the autonomous province of vojvodina, which has some mid-level government responsibilities). regional spatial plans in serbia are made for larger spatial units of administrative, functional, geographical or statistical character, which are directed toward common goals and projects of regional development. these are the documents, taking into account the specific needs arising from regional specificities, that develop goals of spatial order and determine the rational use of space, in accordance with neighboring regions and municipalities (zakon o planiranju i izgradnji, 2009). serbia should be covered with 10 regional plans. based on the definition established by the law on planning and construction, the regional spatial plans in serbia could establish guidelines, rules and policies for largescale retail building, especially considering the neighboring municipalities and regions. however, this is not the practice in serbia. this is concluded by the analysis of all adopted regional plans in serbia: the regional spatial plan for the municipalities of south pomoravlje (regionalni prostorni plan opština južnog pomoravlja), the regional spatial plan for the administrative districts of nišava, toplica and pirot (regionalni prostorni plan za područje nišavskog, topličkog i pirotskog upravnog okruga), regional spatial plan of the administrative area of the city of belgrade (regionalni prostorni plan administrativnog područja grada beograda), the regional spatial plan for zlatibor and morava administrative districts (regionalni prostorni plan zlatiborskog i moravičkog 100 upravnog okruga), the regional spatial plan for timočka krajina (regionalni prostorni plan timočke krajine), the regional spatial plan for the autonomous province of vojvodina (regionalni prostorni plan autonomne pokrajine vojvodine). none of the analyzed plans contains guidelines for the construction of large trades. a similar situation is happening at the local level of spatial organization in serbia as well. the law specifies that the spatial plan of the unit of local self-government that is adopted for the territory of the local self-government sets guidelines for development of activities and land use, and the conditions for sustainable and balanced development for the territory of local self-government (zakon o planiranju i izgradnji, 2009). spatial plans of the units of local self-government by law definition could develop guidelines for the construction of large retail stores. however, as in the case of regional spatial plans, this is not the practice in serbia. therefore, the processes of large-scale retail spatial policy formulation and the processes of decision-making on the construction of large retail stores in serbia, take place at the local level. policies are defined in general urban plans and plans for the general regulation. therefore, the key actors involved in the processes of their formulation are the actors involved in the formulation and adoption of these planning documents. so, in contrast to hierarchical tradition of serbia it can be concluded that there is a high degree of autonomy of local level in the process of formulating policies and decision-making in this area. the actors involved in retail policy formulation are the authorities responsible for the adoption of the local plan (municipal assembly, the assembly of the city), and local authorities responsible for spatial and urban planning (administration, services, secretariats), public companies or other organizations established by local self-governments to perform spatial and urban planning, as well as other companies that perform these tasks. the planning commission is included to perform professional duties in the process of formulation and implementation of planning documents. the planning commission provides expert supervision of the plan concept and the draft plan before exposing it to the public. after public inspection, competent authority or the planning commission makes a report with data on public release with all the comments and decisions for each objection (zakon o planiranju i izgradnji, 2009). agencies, organizations and public enterprises, which are authorized to establish specific requirements for the protection and physical planning and construction of facilities are included in the plan formulation process (institute for cultural heritage preservation, office for environmental protection, public utilities et al.). these actors are formally included in the spatial planning process. they should, upon request of the holder of the plan within 30 days, submit the requested information, without compensation (zakon o planiranju i izgradnji, 2009). although large-scale retail policies are formulated at the local level, there is control of higher levels of government. actors from the higher levels involved in the process of local level plans formulation are the minister in charge for spatial planning and ur101 ban development, or the competent authority of the autonomous province for plans for the territory of the autonomous region, because the general urban plan and the plan for general regulation of the seat of local self-government after public review shall obtain the approval in respect of compliance of these plans with planning documents of the wider area, the law on planning and construction and relevant regulations (zakon o planiranju i izgradnji, 2009). therefore, inclusion of public sector actors in large-scale formulation process is of a rather formal nature. in terms of private sector inclusion, in large-scale retail spatial policy formulation process, there is a lack of active involvement of private sector actors (small retailers, associations, investors, etc.) who can be particularly affected by the construction of large retail stores. instead, investors are engaged individually in the building process, trying to actualize their building rights and using a legal vacuum in the process of institutional reorganization (maksić, 2012). in addition, the role of civil society is very weak in large-scale retail spatial policy formulation process. citizens are involved in the planning process in the period of public insight. this type of participation is initiated by public governments to meet the legal requirements and is defined by law. there is a lack of their active participation in the process of formulation of spatial and urban policy. the process of decision-making on large-scale retail building is insufficiently transparent in serbia. there are examples where citizens protested because of the building in their environment, but these had no effect. common reason for the citizens’ protests was the change of urban plans due to the construction of large retail store, by which the construction of facilities in the public interest had originally been planned (schools, green areas, sports facilities, parking space). so the inhabitants of the settlement ‘centralna radionica’ in the city of kragujevac have protested two months during the summer of 2009 because of the hyper-market ‘dis commerce’ built in the field of residential construction, where according to the general urban plan for city of kragujevac valid until 2015 a school was planned to be built on the part of the site (kartalović, 2009). a similar example is the example of the construction of the hyper-market ‘super vero’ in belgrade when several hundred occupants of two skyscrapers in the street ‘vojvode stepe 251’ protested because of change of use of space and the loss of parking spaces for vehicles and green areas due to the planned construction of the mega-market (lucić, 2008). in both cases, the ability of citizens to influence the decision-making process was limited, and both cases ended with large-scale retail building. 4.2. rules in neo-institutional theory, the institutions do not include organizations only, but also the rules, norms and procedures. it is, therefore, very important, in addition to researching the role and relationships among actors, to research the content of policies and the procedures. we concluded in the previous chapter that spatial policy formulation related to large-scale retail takes place at local level in general urban plans and plans of general 102 regulation. by the analysis of general urban plans of three biggest towns in serbia: belgrade, niš and novi sad, we researched how this issue was developed in serbia, in what areas the construction of large stores was planned, which locations priority were given to. according to the general urban plan of belgrade 2021, the construction of large retail stores is allowed in two areas: ‘economic activities and economic zones’ (which include a wide range of activities such as industry, storage and trade) and ‘commercial areas and city centers’ (within the zone entrance routes into the city and areas of special business complexes) (generalni plan beograda 2021), while in the general plan of novi sad valid until 2021, large-scale retail building is possible in ‘business zones’ in general city centers, the entry routes into the city and within the work zone (zone for the development of secondary and tertiary activities and mixed-use zone) (generalni plan novog sada do 2021. godine). according to the general urban plan of niš, the construction of large retail trade is possible within the ‘business and working’ zone. within this zone, multiple purposes are given, including the possible development of large stores as predominant use in the following zones: ‘business-production-trading’ zone and ‘business-trading’ zone (generalni urbanistički plan niša 2025). while all three plans emphasize the importance of forming retail activity along the transportation corridors of the entrance routes into the city and within work zones, we can notice a great methodological diversity in defining purpose, location and construction criteria for large stores. the reason for this is the lack of rules at national level in this area, which would establish a framework for lower levels of planning (first the regional and then the local level). the unique methodology and directions from the higher levels would allow mutual comparison of plans during the formation of a unified information base in serbia. also, the investment process would be facilitated, as the investors could compare retail sites in different cities by clearly and uniquely defined zones. guidelines from the higher levels could define commercial infrastructure facilities that would suit a certain range center, as well as directions for location of retail with respect to certain defined parameters (transport accessibility, visual identification, access to less mobile social groups, etc.). 4.3. procedures in order to realize large-scale retail investment, the land is the key and initial factor for construction. one of the main problems related to construction in serbia are complex problems of solving property rights of land. in particular, the process of resolving property issues can last a long time. this process is difficult because of poor records in the land registry (if any) and cadastral, primarily because of the lack of citizens who did not report changes, so it often happens that the property is registered to the ancestors. it happened that the land owners often changed and factual possessors could not be registered as owners or users of the city construction land, because transactions of this land were not permitted. 103 according to the report ‘doing business 2013,’ made by the international bank for reconstruction and development and the world bank, which included an analysis of 185 countries in the world, as far as the issuance of construction permits is concerned, serbia takes the 179th place. to measure the ease of dealing with construction permits, ‘doing business’ records the procedures, time and cost required for a small to medium-size business to obtain all the necessary approvals to build a simple commercial warehouse and connect it to water, sewerage and a fixed telephone line. the case study includes all types of inspections and certificates needed before, during and after the construction of the warehouse (the international bank for reconstruction and development and the world bank, 2013). foreign investors council claims that the process of issuing construction permits in serbia is still not sufficiently transparent, it is lengthy and heavily burdened with bureaucracy. the major problem with respect to the procedure for issuing construction permits is still the fact that the major part of construction land is not covered by a relevant planning document, which is a precondition for the issuing of the location and construction permits. poor infrastructure and bureaucratic procedures in public utility companies involved in this process are still major problems in construction (foreign investors council, 2013). in the process of spatial policy formulation, which is considered in the theoretical framework of neo-institutional theory, relationship between different levels of government is very important. in this theory it is considered that the policies are not only formulated by a single actor or activities that are imposed ‘from above’, but also that interaction between different actors at different levels is very important for their formulation. it is, therefore, very important to research the roles of lower levels and to determine their degree of autonomy in making decisions about retail development. considering the content of the rules and policies that direct the development of large stores in serbia, we concluded that at the national level there are no clearly defined rules and criteria for the construction of large stores, and that regional and municipal spatial plans do not develop this theme. locations and rules for the construction of large stores are determined at the local level, in general urban plans and plans for the general regulation, so there is a high degree of autonomy of local levels in the process of formulating policies and making decisions in this area. in the governance processes, horizontal and vertical coordination of policies and actors at different levels is very important (espon 2.3.2., 2007). in terms of horizontal and vertical coordination in the processes of governance of spatial development, the spatial development strategy of the republic of serbia from 2009 classified serbia as a country with an insufficient degree of horizontal and vertical coordination (ministarstvo životne sredine i prostornog planiranja i republička agencija za prostorno planiranje, 2009). law on planning and construction from 2009 recognizes the importance of vertical coordination, but it defines it in a ‘top-down’ one-way. vertical coordination involves the establishment of links between all levels of spatial and urban planning and 104 spatial development, from national across regional to local level (zakon o planiranju i izgradnji, 2009). although a relationship ‘bottom-up’ is not formally defined in legislation, there is a practice in serbia, that lower levels of planning provide input to higher levels of planning in the preparation of plans (examples of making spatial plan of the republic of serbia, regional spatial plans, spatial plans for special purposes). especially in the field of large-scale retail building, as national level framework has not been formulated and regional spatial plans do not develop this theme, vertical coordination is not established. in terms of connecting spatial policy related to large-scale retail in serbia with relevant sector policy, we considered connection with transport policy and environmental policy. since the construction of large retail stores attracts large number of customers and produces increased traffic, the issue of connection between large-scale retail policy and transport policy is very important. this is achieved in serbia through spatial planning system. spatial planning is institutionalized at the national, regional and local level with binding effects of higher levels to lower levels of spatial development and transport policies are integrated into spatial plans at all levels. vertical connection of transport policy with spatial policy from national to local level is achieved in this way. nevertheless, for individual large-scale retail building proposals which generate large amounts of traffic, there are no obligations defined by law for investors to make traffic impact assessment studies, so it is not the practice in serbia for such studies to be formulated. environmental policies are very important in directing the construction of large retail stores. serbia is required, in accordance to the environmental impact assessment (eia directive) and strategic environmental assessment (sea directive), to consider impacts of certain construction projects (plans and programs respectively) on the environment. environmental policies have been integrated into the process of formulating plans in serbia. strategic assessment is carried out for plans, programs and strategies in spatial and urban planning (zakon o strateškoj proceni uticaja na životnu sredinu, 2004). in the assessment of environmental impact of individual construction projects, retail projects belong to list ii – list of projects for which the impact assessment may be required. if the total floor area is between 1.000 m2 and 4.000 m2, possible impact of project construction is estimated, and if the total usable area of 4,000 m2 or more significant impact is estimated (uredba o utvrđivanju liste projekata za koje je potrebna procena uticaja i liste projekata za koje se može zahtevati procena uticaja, 2005). so, environmental impact assessment is not obligatory for retail projects in serbia, regardless of their size. cities, in order to attract investments, usually do not estimate environmental impacts of this type of activity. we evaluate horizontal coordination in spatial policy formulation process and decision making related to the construction of large stores in serbia as very low. the construction of large retail stores in serbia takes place within the administrative boundaries, without assessing the impact these facilities could have on neighboring munici105 palities (especially if they are building near their administrative boundaries). also, the impacts of the construction of such facilities could have on neighboring settlements within the same administrative boundaries (municipalities, cities) are not estimated. 5. results summary the basic objective of the research was to explore possible ways of improvement of institutional framework of spatial and urban policy formulation in serbia in order to make the decision-making process on large-scale retail building more effective and to adequately address the complex problems of this type of building. as neo-institutionalism, which considers institutions as series of formal and informal organizations, rules and procedures that build patterns of behavior within organizations, is the basic theoretical framework of the research, the paper included the analysis of actors’ behavior, rules and procedures. the analysis of institutional framework showed that institutional arrangements in this area are underdeveloped. in terms of public sector’s actor participation in the process of developing these policies, actors from the local level are included, because the policies related to large-scale retail building are formulated in local plans. the inclusion of public sector at the regional level of government is missing (regional authorities, regional planning agencies), since this level of government is not formed in serbia. in addition, there is a lack of active involvement of private sector actors (retailers, associations, investors, etc.) who can be particularly affected by the construction of large stores. in particular, the role of civil society is very weak in this process. the citizens are involved in the planning process in the period of public insight and there is a lack of their active participation. even in the cases when citizens had the initiatives, their ability to influence the decision-making process was limited. the analysis of legislative framework in serbia showed the lack of national policies in this area, criteria and rules for the location and construction of large retail stores. some directions through the spatial plan of republic of serbia in other areas do not bound the regional spatial plans and spatial plans of units of local self-governments to develop policies for large-scale retail. locations and rules for large-scale retail building in serbia are determined on the local level in general urban plans and plans of the general regulation. these plans do not consider the impacts of building large retail stores on neighboring towns and neighboring municipalities, and they are very different from each other, in terms of defining zones and rules for large-scale retail, because there are no defined rules at the national level. the analysis of procedural framework in serbia showed insufficient degree of horizontal and vertical coordination of different levels and policies in serbia. in the field of large-scale retail building, as national level framework has not been formulated and regional spatial plans do not develop this theme, vertical coordination is not established. horizontal coordination is evaluated as very low. the construction of large stores in serbia takes place within the administrative boundaries, without assessing the impacts these facilities could have on neighboring municipalities (especially if 106 they are building near their administrative boundaries). also, possible impacts of the construction of such facilities on neighboring settlements within the same administrative boundaries (municipalities, cities) are not estimated. 6. conclusions the analysis of the process of formulation of spatial and urban policy related to large-scale retail building in serbia showed that the system has not proven effective in addressing the problem of building large retail stores. underdeveloped institutional arrangements in this area, the lack of active participation of stakeholders, especially civil society in addressing the problem of building large stores, the lack of national policies in this area and the criteria for the location of large stores, nonexistence of vertical and weak horizontal coordination in governance processes related to large-scale retail spatial policy formulation have shown that there are possibilities for improvement of the institutional framework of spatial and urban policy formulation in serbia. since the decision-making process of large-scale retail building is complex and related with different problems of economic, environmental and social nature, in order to build a more efficient decision-making and policy formulation in this area it is necessary to actively involve all relevant actors from public, private and civil sectors. this could be achieved in serbia by establishing various institutional arrangements in this area, both formal and informal. it is possible to create different advisory agencies, the agencies for discussion, to deal with security of consensus between different interests. forums, conferences involving different stakeholders (investors, experts) in which problems would be discussed, as well as locations for large-scale retail shops, could be organized. since large-scale retail produces significant effects, sometimes to neighboring municipalities, it is necessary to encourage inter-municipal cooperation in this field. the location of large retail stores, given the numerous and complex effects in the urban structure, cannot be left to specific, individual plans at the local level (as is the case in serbia nowadays), but it is necessary to develop different aspects of the problem at different levels of spatial organization under various laws, regulations, policies and measures. in order to adequately address the complex problems of large retail building, it is necessary to develop precise regulation and different aspects of this problem at all levels of spatial organization. the national level should play a key role in this process by setting the framework of laws, regulations, policies and measures and definition of general criteria for the planning and construction of large retail stores. also, it is necessary to develop regional instruments for large-scale retail direction. through the regional planning level, these policies could be implemented at the local level. in addition to precise elaboration of policies at all levels of spatial organization, it is also necessary to specify sector policies. in the environmental protection policy area we propose a detailed analysis of this type of construction on the environment and the introduction of mandatory assessment of environmental impacts if construction 107 projects area exceeds a certain number. in terms of transport policy, we propose the introduction of law obligation for formulation of traffic and transport study, when issuing a permit for individual retail construction projects whose area exceeds a certain number. the strength of existing institutional framework in serbia is legal framework and institutionalized spatial planning at all levels of spatial organization. the existing legislative framework (law on planning and construction, regulations), as well as spatial plans at all levels of spatial organization, can be used to elaborate large-scale retail building policies. furthermore, the existing institutional arrangements can be used for direction of this type of construction. on the other hand, threats in the institutional reform related to large-scale retail building process could be: the unfinished land reform process, the lack of market of construction land, incomplete information base about space, the time consuming process of issuing building permits, complex problem of solving property issues of land and frequent changes in planning legislation. as lazarević bajec points out in order to connect the changes of planning system of serbia to the basic characteristics of the market-oriented and democratic system at all, it is first of all primarily necessary to define the basic institutions of that system: the market, the private ownership and the rule of law (lazarević bajec, 2009). references: 1. baar, k., ‘land use legislation and controls of conflicts of interest in land use decision making. legislative tools for preserving 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director: ciprian tripon editor: cristina mora administrative director: ovidiu boldor editorial board: balogh marton, daniel buda, marius dodu, dacian dragoş, călin ghiolţan, veronica junjan, dan lazăr, elena minea, natalia negrea, liviu radu, sorin dan şandor, bogdana neamţu, bianca radu, raluca gârboan, adrian hudrea, cornelia macarie, dan balica, tudor ţiclău, cristina haruţa, horia raboca, raluca suciu, ana elena ranta, octavian moldovan, alexandru pavel issn 1842-2845 • accent publisher, 2019 babeş-bolyai university faculty of political, administrative and communication sciences department of public administration and management international advisory board carole neves, smithsonian institute, washington, dc allan rosenbaum, florida international university arno loessner, university of delaware roger hamlin, michigan state university laszlo varadi, corvinus university of budapest eric strauss, michigan state university gyorgy jenei, corvinus university of budapest adriano 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abstracted in the following: 1. social sciences citation index® 2. social scisearch® 3. journal citation report/social sciences edition transylvanian review of administrative sciences is also listed in ebsco, ibss – international bibliography of social sciences, elsevier bibliographic databases, pa@babel public administration’s database for accessing academic publications in european languages and doaj – directory of open access journals. 3 5 24 38 52 65 85 100 116 c o n t e n t s mojca biščak jože benčina the impact of hrm practices on the performance of municipalities. the case of slovenia oana maria blaga răzvan mircea cherecheș cătălin ovidiu baba a community-based intervention for increasing access to health information in rural settings emil boc the development of participatory budgeting processes in cluj-napoca andrei chircă dan tudor lazăr students’s visitors – among the unexplored types of local tourism? min-hyu kim factors infl uencing the propensity to contract out health and human services in response to government cutbacks: evidence from us counties mateusz lewandowski organizational drivers of performance information use: the perspective of polish local governments romea manojlović toman goranka lalić novak the (lack of) demand for performance information by the croatian parliament oleksiy polunin the case of ukrainian corruption: phenomenology and psychological insides 24 abstract the health information needs of people living in rural areas are unmet. we aim to report on the results of the iris institutionaland population-level intervention designed to improve access to health information in rural settings. the intervention consisted of three components: equip local libraries with health-related books, train librarians to refer them to locals, and enhance locals’ health information seeking behavior, self-effi cacy, and health literacy. data was collected using a mixed-methods strategy of inquiry in 2010 and 2011 from 822 adult inhabitants from four rural communities in cluj county, romania, using a nonrandomized control-group pretest-posttest study design. we used the kruskal-walis oneway analysis of variance to determine statistically signifi cant diff erences between the two study groups. results show that individuals from rural communities included in the intervention group were more engaged in health information seeking, had higher self-effi cacy in reading and understanding health-related materials, and reported higher frequencies of asking about and borrowing books on health themes from the village library as compared to respondents in the control group. as the iris initiative made use of available community resources and proposed only several incremental changes within the librarian system, this intervention has a major potential of sustainability and replicability. keywords: rural, health information, access, library, cluj county, romania. a community-based intervention for increasing access to health information in rural settings*1 oana maria blaga răzvan mircea cherecheș cătălin ovidiu baba oana maria blaga (corresponding author) research assistant, phd, department of public health, center for health policy and public health, college of political, administrative and communication sciences, babeș-bolyai university, cluj-napoca, romania e-mail: oana.blaga@publichealth.ro răzvan mircea cherecheș professor, department of public health, center for health policy and public health, college of political, administrative and communication sciences, babeș-bolyai university, cluj-napoca, romania e-mail: razvan.chereches@publichealth.ro cătălin ovidiu baba professor, department of public health, center for health policy and public health, college of political, administrative and communication sciences, babeș-bolyai university, cluj-napoca, romania e-mail: baba@fspac.ro * acknowledgement. this research project was fi nanced through the ‘access to health information in rural areas’ grant, funded by the romanian ministry of education and research, through the pnii-idei program, fi nancing contract 2450/2009. transylvanian review of administrative sciences, no. 58 e/2019 pp. 24-37 doi:10.24193/tras.58e.2 published first online: 10/15/2019 25 1. introduction despite their poorer health status and greater health-related needs (strasser, 2003; bennett , olatosi and probst, 2008), residents of rural and remote sett ings have limited access to health services (goodridge and marciniuk, 2016), healthcare workforce (steinhaeuser et al., 2014), and health information (carlson et al., 2006; smith, humphreys and wilson, 2008), especially in low and middle income countries such as romania (vlădescu et al., 2016). in this context, when facing health risk situations, rural residents commonly rely on family networks and friends for support and advice (wathen and harris, 2007). however, recent fi ndings suggest that libraries, through the help of trained librarians, could meet the health information needs of people living in rural and remote sett ings (mckeehan, trett in and may, 2008; morgan et al., 2016; zager et al., 2016). the rationale underpinning this type of initiatives is that, in order to ultimately promote and maintain the health of individuals and communities, providing health information should be complemented by increasing the health information seeking behavior of rural inhabitants. a coping strategy in threatening health-related situations, the health information seeking behavior encompasses purposive activities undertaken by individuals in order to manage their health symptoms and improve their health outcomes (weaver et al., 2010). by considering this defi nition, an active health information seeking behavior would be essential to ensure the use of health information available within libraries. in addition, there are at least two other concepts strongly related to health information seeking and conducive to access of health information: one’s self-effi cacy and health literacy level. by signifi cantly aff ecting people’s level of motivation, self-effi cacy can determine the choice of engaging in specifi c behaviors and the amount of eff ort committ ed to it (vancouver, more and yoder, 2008). furthermore, understanding health information is just as important as fi nding the most relevant sources. thus, an adequate health literacy level enables individuals to interpret and act upon the acquired health-related information (sørensen et al., 2012). therefore, self-effi cacy and health literacy should be taken into account when assessing health information seeking behavior and its role in strategies designed to promote public libraries as health information resources for rural inhabitants. to the best of our knowledge, there is no information available from eastern europe on the types of interventions that would prove to be effi cient in increasing access to health information and encourage health information seeking behavior in rural populations. in countries such as romania, with a large rural (trading economics, 2016) and aging population (marinca, 2017), and where resources invested in health promotion are scarce (european commission, 2017), such evidence is essential to advance population health. thus, this article aims to describe the evaluation results of exactly such an intervention. 26 2. methods 2.1. study design we employed mixed-methods, nonrandomized control-group pretest-postt est study design to evaluate the effi ciency of a participatory-based intervention, which aimed to improve access to health information in four rural sett ings. the main objectives were to (1) off er an institutional framework to facilitate access to health information (intervention at the institutional level), and to (2) increase community awareness, knowledge and skills to increase accessing of health information (intervention at the population level). thus, at 6-months post-intervention we assessed its impact on increasing hisb and self-effi cacy in searching for health information and improving health literacy. 2.2. sett ing, participants, and sample the study was implemented in four rural communities in cluj county, romania. two of these communes were included in the intervention group (sînpaul and petreștii de jos) and two in the control group (tureni and cătina). a short description of the four communes at the time of the study’s implementation (years 2010-2011) is presented in table 1. table 1: description of the communes included in the study intervention communes control communes commune sînpaul, village sînpaul commune tureni, village tureni population of the commune: 2,652 population of the village: 826 location: road e81 population of the commune: 2,209 population of the village: 929 location: road e60 commune petreștii de jos, village petreștii de jos commune cătina, village cătina population of the commune: 1,891 population of the village: 685 location: road 107/l population of the commune: 2,209 population of the village: 819 location: road 109c the study population consisted of a convenience sample of 822 community members, 18 and older, who consented to participate in the study after being approached in their courtyards or homes by trained study data collectors. in this paper, we report on the data collected in the post-intervention period only (n=416). we also conducted fi ve semi-structured interviews with local stakeholders (i.e. mayor, librarian, family physician). 2.3. the initiative for health information resources in rural areas (iris) the iris intervention was designed to improve access to health information in rural areas by facilitating the availability of reliable health information sources, training librarians to manage and refer them to locals, and enhancing rural inhabitants’ health information seeking behavior, self-effi cacy in searching health information, and health literacy. the intervention was structured on two levels: an institution27 al level and a population level, each being grounded in comprehensive theoretical frameworks. figure 1: the iris non-randomized control-group pretest-posttest study design (n=822) at the institutional level, we developed partnerships with local institutions in the two intervention communes, as well as with four national organizations willing to donate health-related books and pamphlets. the partnership with local stakeholders, such as town halls, libraries, schools, and family physician offi ces, was designed as a framework for the development of the population arm of the intervention. the collaboration with these institutions was established under the act ‘together for a healthy community’, signed within the framework of the iris initiative, a document stipulating both the general objectives of the agreement, as well as the responsibilities of each partner. the general objectives of the agreement were to (1) increase the number of health-related materials available in the local libraries and to (2) obtain the support of local stakeholders for the implementation of the intervention. at the population level, the intervention was theory-driven and developed based on the information collected during a formative research phase, having both a quantitative and a qualitative component and conducted in october-december 2010. a survey was used to evaluate the target population’s health information seeking behavior, self-effi cacy, att itudes, and barriers and benefi ts of health information seeking behavior. the qualitative component was developed on the results of the survey and consisted of two focus-groups (n=12). we sought to involve the members of the target audience in the development of the intervention, by determining approaches to reduce the existing barriers in seeking health information and maximize the perceived benefi ts of this behavior. also, the project team gathered information about the preferences of the target audience concerning the time and place for the development of intervention activities. nonetheless, these focus groups were used to pretest the printed intervention materials (brochures) and the visuals elements of iris (logo). 28 in order to maximize results, the intervention was branded under the name iris (the initiative for health information resources in rural areas), and pretested visual elements were designed in order to achieve high recognition among the target population. local libraries were equipped with more than 300 books on health topics and instruments to manage the collections. librarians were trained in administering the materials as well as collecting feedback from user for its improvement. two health workshops were conducted in each of the intervention communities with the scope of increasing health information seeking behavior, build health literacy skills, increase self-effi cacy in seeking health information as well as promoting iris. 2.4. data collection preand post-intervention data was collected in all four communities, by trained data collectors, in october-december 2010 and october-november 2011. data was collected using a structured preand postt est survey in the intervention group (n=209 preand n=212 post-) and in the control group (n=197 preand n=204 post-). a set of 5 individual interviews were also conducted in the post-intervention period with members of the local administration (i.e. mayor, librarian, family physician) in the intervention communes. in this paper, we report the data collected in the evaluation/ post-test phase. 2.5. data and measurements 2.5.1. the quantitative component the post-intervention survey consisted of seven sections. however, in this paper, we only report on the questions described below: (1) socio-demographics, such as age, gender, ethnicity, education, employment status, and monthly family income. (2) the health information seeking behavior of the respondents, assessed using 9 items measured on a 5-point liker scale (from 1=always to 5=never) and designed to evaluate the frequency of the respondents’ health information seeking behavior in the last 12 months (i.e. how often they watched a tv show on a health issue, read a brochure on a head issue, discussed with friends regarding a health problem, asked their physician for additional information regarding a medical problem). in addition, two dichotomous questions (0=no, 1=yes) were used to evaluate whether respondents have ever searched for information on a health problem from any source and if someone else has searched for health information on their behalf. (3) respondents’ self-effi cacy in searching and fi nding health-related information was assessed using a batt ery of 9 questions, grouped in three sub-scales. first, we evaluated subjects’ self-effi cacy in reading a book on health issues, in asking a friend or a family member to search for health information on their behalf, and in asking the librarian to search for health information on a 4-point likert scale from 1 (=unsure) to 4 (very sure). next, we inquired about individuals’ abilities to search for health information when they are concerned, depressed, tired, or busy, or when they have 29 to perform the search for several times until they fi nd what they need, using the same 4-point likert scale mentioned above. lastly, we asked participants to rate, on a scale from 1 (=very diffi cult) to 5 (=very easy) how diffi cult it would be for them to search for health information when they need it. (4) we measured health literacy within the sample by using a batt ery of 8 questions initially developed by chew, bradley and boyko (2004). in this paper, we report only 4 of these questions, measured on a scale from 1 (=always) to 5 (=never) and used to assess how often respondents ask someone else to read materials received from their doctor, understand writt en information regarding their medication, and understand prospectuses and physician indications. (5) respondents’ att itudes towards the community library were evaluated by assessing the frequency with which the librarian recommended them a book on a health topic, as well as the frequency of intending to borrow, asking about, and borrowing a book on a health topic from the local library in the last year, with responses for these questions ranging from 1 (=always) to 5 (never). nonetheless, we asked about the importance of the village library in having a well-informed community on health topics, with possible answer alternatives ranging from 1 (=very important) to 5 (=not important at all). 2.5.2. the qualitative component the qualitative component consisted of a semi-structured interview guide slightly adjusted based on the role of the subject in the local administration (i.e. mayor, librarian, or family physician). topics included the capacity of the iris intervention to facilitate access of rural communities to health information, recommendations on how to improve future similar initiatives, and sustainability issues. the interview guide was built to explore the specifi c role of the mayor, the librarian and the family physician in the delivery of the iris intervention, and the importance of the local library to have a well-informed community on health topics. 2.6. data analysis in this paper, we report analyses conducted on the post-intervention data only (n=416 surveys and 5 semi-structured interviews). for the quantitative component, we conducted descriptive statistics on the socio-demographic variables. we also used the kruskal-wallis one-way analysis of variance by ranks to evaluate the presence of statistically signifi cant diff erences on the variables of interest between the intervention and control communes in the pre-intervention phase (not reported in this paper). in the post-intervention phase, we conducted the same kruskal-wallis test specifi cally for the variables for which we did not fi nd any statistically signifi cant diff erences in the pre-intervention phase, in order to identify any possible eff ects of the iris intervention. for the quantitative component, we conducted verbatim transcription of the audio recorded semi-structured interviews and performed an inductive thematic analysis at the semantic level to identify codes and themes in the data. 30 3. results 3.1. results from the quantitative component the post-intervention sample consisted of participants with a mean age of 52.51 years (sd=17.51, range 18-87), with the respondents in the intervention communes being slightly younger than the respondents in the control communes (mean age of 51.11 vs. 53.34). most respondents were of romanian ethnicity (94% in the control communes and 68.6% in the intervention communes), had a high school education (38.7% in the control communes and 32.5% in the intervention communes), and a monthly family income below 700 ron (41.7% in the control communes and 48.5% in the intervention communes). a detailed description of the sample is available in table 2. table 2: post-test data, sample description (%, n=416) intervention communes (%) control communes (%) total (%) gender male 49.5 45.1 47.4 female 50.5 54.9 52.6 age (mean, sd) under 30 16.7 11.3 14 31-49 26.7 24 25.4 50-59 16.6 24 20.3 over 60 40 40.7 40.3 mean/sd (range) m=51.11 sd=17.31 (18-87) m=53.34 sd=16.98 (18-85) m=52.51 sd=17.15 (18-87) ethnicity romanian 94.8 68.6 82 hungarian 0.5 27.5 13.7 roma 4.2 3.4 3.8 missing 0.5 0.5 0.5 education no education 6.1 13.3 9.6 primary school 20.3 20.2 20.2 secondary school 25.0 30 27.5 high school 38.7 32.6 35.8 college or more 9.9 3.5 6.8 missing 0 0.5 0.2 employment status (multiple or no answers allowed) employed 22.6 17.3 20 student 1.9 0.5 1.2 retired 46.2 44.3 45.3 farmer 14.2 10.3 12.3 freelancer 20.3 17.6 19 estimated monthly family income 0-700 r0n 41.7 48.5 45.0 701-1,500 ron 37.4 37.1 37.3 1,501-3,000 ron 14.7 8.9 11.8 3,001-5,000 ron 0.9 0 0.5 missing 5.3 5.5 5.4 31 regarding the results of the kruskal-wallis one-way analysis of variance, these are presented in tables 3-6; it is apparent from table 3 that respondents from the intervention communes, as opposed to their counterparts living in the control communes, have searched more frequently for health-related information from any source in the last 12 months (χ2=19.735, p=.000, df=1), while the respondents from the control communes had someone else searching for this type of information for them (χ2=7.061, p=.008, df=1). on the other hand, participants from the control communes reported a higher frequency of reading the health section of a newspaper or magazine (χ2=8.148, p=.004, df=1) or of watching a tv show on health issues (χ2=7.321, p=.007, df=1) in the last 12 months. these statistically signifi cant diff erences in the favor of the respondents in the control communes might be due to the fact that they are relying more on other sources to get access to health-related information, while their counterparts in the intervention communes reply more on the local library to get this information (hypothesis supported by the results presented in table 6). table 3: diff erences in the health information seeking behavior of respondents from the control and intervention communes in the post-intervention phase (results of the kruskal-wallis one-way analysis of variance; n=416) variable control(mean rank) intervention (mean rank) kruskal-wallis test seeking health information from any source 181.24 220.21 χ2=19.735, p=.000, df=1 someone else searching for information on their behalf 149.33 131.59 χ2=7.061, p=.008, df=1 frequency of reading the health section of a newspaper or magazine 38.57 56.64 χ2=8.148, p=.004, df=1 frequency of watching a tv show on health issues 38.93 55.86 χ2=7.321, p=.007, df=1 frequency of reading a book (or fragment) on health issues 53.17 50.84 χ2=0.406, p=.524, df=1 frequency of reading a pamphlet on a health issue 49.02 51.80 χ2=0.072, p=.789, df=1 frequency of asking friends or relatives about health problems 47.69 53.01 χ2=0.306, p=.580, df=1 frequency of discussing with friends or relatives about health problems 49.22 52.40 χ2=0.049, p=.825, df=1 frequency of asking doctors extra information about a disease or medical problem problems 42.95 53.44 χ2=1.815, p=.059, df=1 as table 4 shows, there is a statistically signifi cant diff erence between the two study groups in terms of respondents’ self-effi cacy on reading a pamphlet with health information or a book/paragraph on health issues, with respondents in the intervention communes reporting bett er self-effi cacy (χ2=4.497, p=.034, df=1 and χ2=8.406, p=.004, df=1). similar results were reported by the subjects in the intervention communes when asked if they felt confi dent to research for health information even in situations when they are concerned, depressed, tired or busy. in addition, participants in the intervention communes reported bett er self-effi cacy in searching for health information when they need as opposed to participants in the control communes (χ2=11.676, p=.001, df=1). 32 table 4: diff erences in self-effi cacy of respondents from the control and intervention communes in the post-intervention phase (results of the kruskal-wallis one-way analysis of variance; n=416) variable control(mean rank) intervention (mean rank) kruskal-wallis test self-effi cacy on reading a pamphlet with health info 186.04 208.96 χ2=4.497, p=.034, df=1 self-effi cacy on reading a book or a paragraph on health issues 180.18 211.90 χ2=8.406, p=.004, df=1 self-effi cacy in asking a friend of a family member to search health information 195.39 197.61 χ2=0.042, p=.837, df=1 self-effi cacy in asking the librarian to search for information of health topics 188.49 201.55 χ2=1.184, p=.277, df=1 how diffi cult do you think it would be to search health information when you need them? 177.36 213.62 χ2=11.676, p=.001, df=1 i can search for health information even when (…) i am concerned 165.79 224.36 χ2=28.789, p=.000, df=1 (…) i am depressed 169.94 217.31 χ2=19.161, p=.000, df=1 (…) i am tired 174.93 216.29 χ2=14.355, p=.000, df=1 (…) i am busy 170.71 219.82 χ2=20.857, p=.000, df=1 (…) if i must try several times until i fi nd what i need 158.19 234.40 χ2=47.749, p=.000, df=1 from the data in table 5, we can appreciate that respondents in the intervention communes reported statistically signifi cant bett er results for the four questions assessing health literacy components as opposed to their counterparts in the control communes. more specifi cally, statistically signifi cant improvements have been observed between the control and intervention group in terms of health literacy. compared to the control group, respondents in the intervention group reported fewer problems in understanding writt en information regarding their medical conditions (χ2=6.679, p=.009, df=1) and feeling less unsure when taking their drugs because of diffi culties in understanding prospectuses (χ2=20.823, p=.000, df=1) or physician’s indications (χ2=20.602, p=.000, df=1). furthermore, they also reported needing less help from family members, neighbors or friends when reading materials received from their physician (χ2=6.679, p=.009, df=1). these results suggest that the iris intervention had positive eff ects on individuals’ health literacy levels. table 5: diff erences in the health literacy level of respondents from the control and intervention communes in the post-intervention phase (results of the kruskal-wallis one-way analysis of variance; n=416) variable control(mean rank) intervention (mean rank) kruskal-wallis test ask someone to explain written information regarding their medical condition 172.72 216.04 χ2=15.530, p=.000, df=1 feeling unsure when understanding prospectuses 171.14 220.98 χ2=20.823, p=.000, df=1 problems understanding physician indications 169.93 218.7 χ2=20.602, p=.000, df=1 help needed to read materials received from your doctor 184.39 213.68 χ2=6.679, p=.009, df=1 33 results in table 6 show that in the intervention group, the village library had a more important role in having a well-informed community on health themes (χ2=5.857, p=.016, df=1) as compared to the control group. furthermore, respondents in the intervention group reported higher frequencies of intending to borrow (χ2=6.361, p=.012, df=1), asking (χ2=10.869, p=.001, df=1) and borrowing (χ2=9.270, p=.002, df=1) a book on a health theme from the village library. the role of the village librarian in encouraging health information seeking through recommending books on health themes was grater in the intervention group (χ2=10.983, p=.001, df=1) as compared to the control group. table 6: diff erences in the attitudes of respondents from the control and intervention communes in the post-intervention phase towards the local library (results of the kruskal-wallis one-way analysis of variance; n=416) variable control(mean rank) intervention (mean rank) kruskal-wallis test importance of a village library to have a well-informed community of health topics 131.51 111.87 χ2=5.857, p=.016, df=1 frequency of intending to borrow a book on a health theme 126.75 112.51 χ2=6.361, p=.012, df=1 frequency of asking about a book on health themes 128.59 111.82 χ2=10.869, p=.001, df=1 frequency of borrowing a book on a health theme 128.95 114.98 χ2=9.270, p=.002, df=1 frequency with which a librarian recommended a book on health issues 130.91 115.12 χ2=10.983, p=.001, df=1 3.2. results from the qualitative component five broad themes emerged from the qualitative data analysis. these are summarized below. theme 1: the perception of the local public administration representatives regarding the iris strategy. a variety of perspectives were expressed by interviewees, who saw the iris intervention as: (1) a means of health education for individuals living in rural areas – ‘it is an educative initiative (…) and it fi ts into the specifi c of the activities designed to increase the awareness of the population in rural areas regarding what they need to do to maintain a good health, both from the perspective of prevention and treatment’ (mayor, intervention commune). (2) a support program for family physicians – ‘for me [the iris intervention] represents a support’ (family physician, intervention commune), but also (3) as a means to reduce disparities in the access to health information between rural and urban areas – ‘of course that the rural population is generally less informed, there is a gap between the city and the countryside (…) this project is very useful in this sense’ (mayor, intervention commune). theme 2: the capacity of the iris intervention to facilitate access of rural communities to health information. the analysis revealed that the iris intervention was eff ective in facilitating the access of rural inhabitants to health information. yet, two main discourses emerged from the data explaining the lack of interest and involvement of some villagers for the iris intervention: (1) that only some population groups are interested in such initiatives – ‘i believe that no program can have benefi ts for 100% 34 of the population, because not everyone participates’ (mayor, intervention commune) and (2) that individuals living rural sett ings prioritize working the land over their health – ‘people in the countryside do not postpone working their land for anything in the world. so this is more important for them than their health’ (librarian, intervention commune). theme 3: the involvement of the local institutional actors in the iris intervention. the direct and active involvement of the institutional actors in this initiative has been done by promoting the lending of health-related books from the local library and by recommending the participation in the iris health workshops: ‘we tried to be an active partner in this project. personally, even when i left the church on sundays, when it is fairly common to inform citizens, i promoted these activities (…) so we encouraged participation’ (mayor, intervention commune). theme 4: the sustainability of the project. the analysis revealed that there was a sense of support for the iris initiative even after the offi cial end of the project, but the need to continue the initiative has emerged from the discourse of the interviewees. as one of the interviewee said: ‘i hope you can continue this activity because they [people living in rural areas] have a constant need of support and motivation to access health-related information’ (family physician, intervention commune). theme 5: suggestions for future initiatives designed to increase access of rural populations to health information. in this respect, some interviewees argued that more should be done to involve the villagers in such activities by fi nding new dissemination and promotion strategies: ‘we have to fi nd some new ideas (…) something to att ract them (…) even if they don’t realize the importance [of participating in these activities]. it is diffi cult to gather people just by telling them you can off er them health-related information, because people don’t always appreciate gett ing information’ (mayor, intervention commune); others expressed the need for a bett er involvement of the local authorities in such initiatives, because time and eff ort are needed to ‘break down barriers of understanding and conception’ (family physician, intervention commune). 4. discussion the proposed initiative for health information resources in rural areas (iris), a pilot intervention implemented both at the population and institutional level in two rural communities in cluj county, has been proven eff ective in enhancing access to health information in rural areas by (1) ensuring the availability of health information and (2) increasing the health information seeking behavior of rural residents. in terms of the availability of health information, the access to reliable information resources was ensured by equipping local libraries with books on health topics and training the librarians activating within the formal frameworks of village libraries to recommend these books. regarding the health information seeking behavior of the population, the intervention was designed so as to increase individuals’ knowledge and build up their health information seeking skills, with the ultimate purpose to promote the access and utilization of the available health-related resources. to the best of our knowledge, based on a rapid review of existing health literacy programs 35 implemented in romania, there are no similar initiatives implemented in romanian rural or remote sett ings. the iris initiative and the results we are reporting are important from at least two perspectives: (1) they add to the body of information and literature on health literacy in romania, which is currently scarce (monceanu, 2015), and (2) they respond to the needs of rural inhabitants identifi ed in the only health literacy-based study conducted in romanian rural sett ings, which highlights low levels of health literacy among rural inhabitants (pop et al., 2013). while access to health information was also found to be limited in most transylvanian rural areas due to the lack of community libraries or the lack of health-related resources in the existing libraries (baba et al., 2010), no information is available on the level of self-effi cacy in searching for health information among the romanian rural population. in this context, our results have the potential to signifi cantly improve the current situation by enhancing rural inhabitants’ access to health information and ultimately improve their health status. more specifi cally, by employing the proposed population and institutional-level strategy, the intervention was successful in increasing the health information seeking behavior of the rural population, the self-effi cacy of the individuals in searching for health information, and health literacy levels in the rural communities included in the iris intervention. furthermore, as librarians were promoted as lay experts in health information resources, the role of village libraries in having a well-informed community on health themes was improved. as a result, individuals from rural communities included in the intervention group were more engaged in health information seeking and reported higher frequencies of asking about and borrowing books on health themes from the village library as compared to respondents in the control group. these results are similar with the ones obtained by similar programs implemented in the usa and designed to enhance the role of local libraries to improve population health (morgan et al., 2016; zager et al., 2016). as the iris initiative made use of available community resources and proposed only several incremental changes within the librarian system, this low-cost intervention has a major potential of sustainability and replicability in other rural and remote sett ings across romania. more specifi cally, the iris initiative was based on a collaboration between important community stakeholders (town halls, libraries, schools, and family physicians’ offi ces) in the two intervention communes, established under the act ‘together for a health community’. by signing this act, the stakeholders have agreed to voluntarily support the initiative by off ering their time and access to their facilities in order to support the implementation of the intervention. in addition, the intervention implementation costs were kept to a minimum by developing partnerships with four national organizations willing to donate the health-related books and pamphlets used to equip the local libraries participating in the iris initiative. this strategy made the iris initiative a fi nancially viable, easily transferable, and simple intervention that can be implemented by rural communities and stakeholders across romania to bring positive change in their inhabitants’ health literacy levels. 36 the intervention’s sustainability is ensured by the participation of both formal and informal community leaders, as well as inhabitants of rural areas in the process of development and implementation, in the formative research phase of the intervention. future interventions addressing the health information needs of people living in rural and remote sett ings should consider employing a twofold strategy designed to ensure both the access to health information resources, as well as the engagement of rural residents in health information seeking. in terms of the pursued strategy, the framework proposed and implemented at the institutional level within the iris intervention was successful in supporting the implementation of the intervention at the population level. in conclusion, the access to health information of rural inhabitants with no or poor connections to external health information sources (such as physicians or the internet) can be enhanced by making health information resources available, increase inhabitants awareness regarding the availability of health information, as well as by training local librarians to manage and refer health-related materials to people visiting community libraries. 5. limitations this study has several potential weaknesses. firstly, the proposed intervention addressed only specifi c aspects related to health literacy and failed to provide a comprehensive strategy designed to include this concept as a whole. secondly, due to limited resources, only four rural communities were included in the study. as a result, the impact of each intervention component on increasing access to health information could not be assessed. thirdly, the data collected and presented in this paper was based on convenience samples of the population in the four communities included in the study. references: 1. baba, c., brînzaniuc, a., șirlincan, e. and cherecheș, r., ‘access to health information in rural sett ings – the implementation of the library’s law no. 334/2002 in transylvania, romania’, 2010, transylvanian review of administrative sciences, no. 29e, pp. 30-38. 2. bennett , k.j., olatosi, b. and 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2010, american journal of public health, vol. 100, no. 8, pp. 1520-1525. 21. zager, s., haskins, a.e., maland, k. and holt, c.t., ‘the health and libraries of public use retrospective study (helpurs)’, 2016, health information & libraries journal, vol. 33, no. 3, pp. 190-203. 85 abstract public administration reform aims at the transformation of public institutions in business entities in which the principles that govern them are very close to the ones from the sphere of private entities. public valuation is an accepted and implemented concept in public administration as a condition for ensuring complete, accurate and transparent images of available resources and their use. the present research determines through an empirical approach the regulation convergence of valuation in the public sector and presents its determinant factors and effects. the referentials subject to comparative analysis are international valuation standards (ivs), the last two editions, and international public sector accounting standards (ipsas). the findings highlight the achievement of the objective of accounting and valuation standard setters, ipsasb and ivsc, with regard to the convergence of valuation concepts and tools, in its last edition from 2011; however, the findings indicate certain differences regarding the guidance extent and the reference to markets and atypical cases triggered by the global economic crisis. our research has further found that the public accounting referential is closer to ivs 2011 than to ivs 2007 in what concerns disclosure requirements. this is in favor of the requirements imposed by the current economic environment regarding financial reporting, namely to provide more detail on the process of value estimation, the hypotheses and predictions used in this respect, and the risk of change of the estimated value. keywords: public sector, effective governance, assets, liabilities, value, ivs, ipsas, convergence. valuation in the public sector. reference factor in a credible and fair administration adela deaconu cristina silvia nistor adela deaconu associate professor, department of accounting and audit, faculty of economics and business administration, babeșbolyai university, cluj-napoca, romania e-mail: adela.deaconu@econ.ubbcluj.ro cristina silvia nistor associate professor, department of accounting and audit, faculty of economics and business administration, babeșbolyai university, cluj-napoca, romania tel.: 0040-264-418.652 e-mail: cristina.nistor@econ.ubbcluj.ro transylvanian review of administrative sciences, no. 43 e/2014, pp. 85-102 86 1. introduction the use of correct and credible value in the public sector has at least three fundamental objectives (kaganova, 2012): the adequate management of government finance, which includes financial reporting, the decision making regarding the management of assets, and the transactions with government assets. the link between evaluation and the principle of fair and effective governance is obvious. kueng and krahn (1999) argue that if you cannot control, you cannot measure, if you cannot measure you cannot manage, if you cannot manage, you cannot improve and be performant. the last three decades have witnessed significant efforts to achieve a global reinvention of the public sector (wynne, 2008). policy paradigms have changed substantially from the ‘old public administration’, to ‘new public management’, and finally to the prospect of ‘good governance’. the scarcity of financial resources in all activities and areas, which has been emphasized by the present economic crisis, makes it necessary, now more than ever, to implement and apply corporative governance principles in the public sector (nistor et al., 2010). considering that the guidance of public institutions by the principles of private organizations implies a combination of a variety of areas such as social sciences, management, sociology, accounting, psychology, mathematics, it (mitu et al., 2007), this research discusses and compares two areas: accounting and (assets) valuation. from the beginning of the 1980s, the increasing need for reforming the public system led the world states to adopt in the public sector some accounting and managerial instruments that were widely used in the private sector. their implementation by worldwide governments involved in particular the accrual reform. the public sector financial reporting has been adapted and developed in accordance with the new public financial management and accrual accounting is probably the most obvious phenomenon in this shift of accounting (lapsley, 1999; guthrie et al., 1999). the debate on the accounting model of public organizations which would serve best new management is not recent. for the past decades a rich literature presented the advantages and disadvantages of the two concurred systems, cash and accrual accounting (goldman and brashares, 1991; guthrie, 1998; gillibrand and hilton, 1998; perrin, 1998; yamamoto, 1999; hodges and mellett, 2003; chan, 2003; van der hoek, 2005). without making a genuine literature review we could state that the opinions in favor of accrual accounting prevail as this system ensures, among other things, a clearer image of assets and liabilities of public institutions. the introduction of accrual accounting globally is considered by some a reform of financial management and accountability (scott et al., 2003). another term used to describe it was ‘new public financial management’ and it targeted significant change in the scope, scale and style of management and activity in the public sector (windels and christiaens, 2007). ipsas represents the ‘world revolution of public sector accounting’ (heald, 2003). therefore, there are several authors in the field of public sector accounting research who argue that national governments must apply a set of international accounting 87 standards for the public sector (adhémar, 2002; chan, 2003). pragmatically, the european commission (2013) argues that the adoption of a single set of accounting standards on an accrual basis at all levels of government throughout the eu would have undeniable benefits for public sector management and governance. in this context, the emergence of international public sector accounting standards (ipsas) designed by the international federation of accountants (ifac) for international public accounting standards – ipsasb represents a step towards standardization of the public accounting systems in the countries that are members of international federation of accountants (ifac). in order to develop a common reference base, ifac (2012) issued 32 ipsas which support the implementation of accrual basis accounting. ipsas are constantly spreading around the world as international organizations like the united nations, oecd or nato are in favor of their implementation. the same (economic) convergence process implies today that accounting regulators should be aware and correlate the content of their own standards to the content of the standards issued by professional organizations and related disciplines for the public interest. it is also the case for correlation between valuation in public sector accounting and the international valuation practice which is significantly influenced by the international valuation standards council (ivsc) both because of its largely spread presence and also mainly because of its actions in recent years (deaconu and buiga, 2010). in few words, the goal of the ivsc is to develop robust and transparent procedures for performing international valuations on the basis of a single set of globally recognized valuation standards that will be acceptable to the world’s capital markets. also, the valuation normalizator assesses annually each new edition of ipsas. ivs refers to these accounting standards each time they apply in the work of evaluators as ivsc recommends appraisers to be familiar with the accounting requirements concerning the results of their valuations. concluding, this research focuses on the normative analysis of the public accounting and valuation regulations in this respect; particularly, the aim is to observe and comment the level of convergence between these regulations. public accounting standards on value concepts and valuation process are going to be analyzed by comparing them with the international valuation standards (ivs), which are designed for financial reporting, particularly in the public sector. we used a set of standards which will be further referred to as accounting and valuation referentials. the rest of the paper is organized as follows. in section 2 we establish the themes of the analysis by correlating the content of accounting and valuation referentials analyzed with certain theses present in the literature or observations emerging from valuation practice which we consider applicable to value measurements in the present context. in section 3 we conduct the content analysis of the referentials in order to develop the databases which then will be statistically processed. in the last part (section 4) we will interpret the empirical analysis results in order to observe the status of the convergence process of accounting and valuation standards, and we formulate recommendations regarding future actions of the two standard setters in discussion. 88 2. analysis of the themes approached in the context of accounting and valuation referentials convergence the accounting and valuation referentials for the public sector, which cover assets and liabilities measurement issues, aim to clarify the definition of values (fair value, but also other types of value), to indicate the moment and methods for measurements and to present disclosures about these measurements. starting from these general objectives of the referentials that are the center of the comparative analysis conducted in this research, we established discussion themes. when we made this selection we took into account the findings in the literature regarding some weaknesses or needs in order to improve the quality of accounting and valuation standards, respectively themes already selected in studies related to the objective of this current research (for example, deaconu and buiga, 2010, respectively nistor et al., 2010). this enables us to determine the extent to which the content of the standards meet the requirements of financial reporting, with focus on the present period, and what is the common ground of them, which is important for obtaining quality information in the public sector. 2.1. guidance extent and quality accounting standards in general, and public sector accounting standards make no exception, were subject to criticism with conceptual arguments brought against them, but mostly technical and implementation related arguments (deaconu and buiga, 2010). their message brought forward the idea that valuation techniques need to be improved along with the frequency of valuations, finding technical solutions that are flexible in time and increasing the level of implication of a third party (the valuer) when assessing or confirming the valuation (kraft, 2005). in a similar manner, rérolle (2008) shows that accounting standards on valuation items did not took into consideration the reaction of valuation practitioners and financial reality, despite the logic of the definitions they present (rérolle, 2008). initially, ivsc standards were also criticized because they did not provide actual solutions for fair value estimation (market value or another current value), providing only the general objective and the basic principles, while the specific techniques had to be searched in manuals and other papers with technical characteristics (deaconu et al., 2009). as a consequence, in the past years ivs evolved in this direction. the 8th edition from 2007 comprised the standards per se, which were considered a basic and fixed part of the valuation set of standards, and served as basis for the applications and as guidance offering suggestions on specific matters of valuation and on how the standards should be applied in specific matters (such as financial reporting). however, in the current edition, 9th from 2011, ivsc turns back to the initial framework and basic principles, eliminating the technical guidance from its standards as it intends to transfer it in a distinct educational material. in the current research we try to answer whether or not this decision was appropriate and if it took into account the present requirements of accounting standards. 89 in this paper we first analyze the stipulations in the accounting and valuation standards regarding guidance extent, which we selected as proxy for definitions extent and complexity, respectively types of assets and transactions which are subject of explicit stipulations regarding valuation. with respect to definitions extent and complexity we determined the number of value types or procedures which were defined. then we determined which of the referentials provided a complete presentation supporting valuation reliability. furthermore, we tried to determine to what extent the analyzed referentials aid valuation with explicit stipulations, mostly for those elements that raise questions regarding the correct nature of the values obtained. thus, regarding guidance quality we considered relevant proxies the reference to measurement bases and valuation approaches and techniques, respectively the extent to which specific procedures were detailed. it is to be noted that valuation standards contain a description of essential ipsas elements with impact on valuation. we will not conduct a content analysis of ivsc stipulations regarding ipsas but only on those parts of the standards which refer to the valuer’s own actions. the content analysis of ipsas is conducted directly on the original documents issued by the ipsasb. we are interested only in the type of ipsas and assets that are important when selecting the paragraphs from ipasas by the ivsb, for example in the appendix of ivs 300 ‘valuation for financial reporting’. 2.2. disclosure requirements lately, in correlation with the effects of the global economic crisis, the need to extend public information is brought to discussion (deaconu and buiga, 2010). gottdiener (2008) argues in favor of this need by arguing that financial information transparency is vital so that investors can understand the methodology and make their own judgments. in this respect, the importance of international standards (accounting and valuation) needs to be underlined. dunckley (2000) considers the contribution of international accounting standards a critical factor, and the key to avoid crisis, in the context of global economy and uncertainty conditions, is better information in the case of valuation reporting, the standards stipulate that the valuation report must contain at least the requirements contained by ipsas. within the content analysis performed we did not take into account this stipulation so that we could analyze distinctively the content of each valuation and accounting standard (which are connected) regarding data disclosure, and observe similarities and differences. we selected as proxies for this analysis the conceptual, methodological and temporal stipulations. conceptual stipulations indicate the information to be disclosed, distinguishes between certain concepts, provide relevant classifications for understanding the values obtained for the elements of financial statements and imply the development of analytical valuation processes. we consider being methodological stipulations those disclosure requirements that illuminate the assumptions, approaches and techniques used. finally, temporal stipulations complete the image of the quantity and the nature of disclosed data by mentioning the moment when the estimation 90 of the appraiser is valid, a need that is triggered by one of the valuation principles, namely the validity of the valuation only at the valuation date. 2.3. markets and atypical cases the theme of this analysis refers to illiquid markets or atypical transactions, respectively less active markets specific to emergent economies, in line with deaconu and buiga’s (2010) study. several studies argue that exit price (market value) and the hypotheses on the perfect market are not applicable to every type of market or economy (hitz, 2007; ronen, 2008; whittington, 2008). in what concerns specific requirements for imperfect or incomplete markets, accounting standards on valuation features are designed to meet the needs of passive investors and creditors, or, in the mentioned cases, financial reports must meet the need of current shareholders by using entity-specific measurements capable to reflect the opportunities actually available to the entity (whittington, 2008). moreover, ivsc shows that in the falling markets prevalent in the past years, sellers are not willing to sell at the reduced price and therefore market values are not relevant to them (ivsc, 2009b). for the theme of this analysis we considered as proxies the consistency of stipulations regarding illiquid markets, not-ordinary transactions and specialized assets. in what concerns less active markets specific for emergent economies, ipsasb and ivsb as international organizations, do not deal with these cases by singularizing their valuation requirements and methods. thus, we were not able to include in our database a proxy for this situation. furthermore, in order to perform the content analysis, we divided this theme into stipulations regarding the content and the conclusions of the valuation according to the reference to these markets and atypical cases in the content of the referentials. specific elements to this theme were taken over from the assembly of investigated standards, even though they were included in the group of standards on valuation reporting which was the subject of theme b – disclosure requirements. in this case, elements that made reference to markets or atypical situations were not discussed within theme b, but in theme c. 3. research design 3.1. the study approach and the database in order to measure the convergence between public accounting and valuation referentials we analyzed the standards that serve the research objective. we selected, in relation to the observations regarding valuation of financial statements elements, 5 ipsas namely ipsas 12 inventories, ipsas 13 leases, ipsas 16 investment property, ipsas 17 property, plant and equipment, and ipsas 21 impairment of non-cash-operating assets. in what concerns the international valuation referential we decided to analyze the last two editions of ivs, the 8th (2007) (hereafter valuation referential 2007) and the 9th (2011) (hereafter valuation referential 2011). from each of them we selected ivs 91 which focus directly or indirectly on valuation for financial reporting purposes. valuation referential 2007 includes iva 3 – valuation of public sector assets for financial reporting, and ivs 3 – valuation reporting. valuation referential 2011 refers to ivs 300 – valuation for financial reporting/appendix: fixed assets in public sector. international accounting standards for public sector, and ivs 103 – valuation reporting. to be noted that we did not conduct a content analysis on the whole ivs 300 but only on the appendix dedicated to public sector and we referred to the main text of the standard only when in the appendix there was a reference to it. thus, we focused only on those stipulations regarding public sector in relation to valuation for financial reporting. we resorted to the content analysis of the referentials in order to identify and quantify the elements that could reflect the analysis themes presented in section 2, obtaining the database presented in appendix 1. according to the literature that describes it (see for example smith, 2003 or lye et al., 2005), the content analysis consists of comparing, sorting and synthesizing all the cases that imply valuation of the public institutions assets and liabilities. these work procedures were preceded by identifying the different elements that the standard setters mentioned in the analyzed referentials and which are connected to the themes selected for analysis. we copied these elements for each referential, through a vertical (within one standard) and horizontal (of all the standards which are subject to each of the referentials) analysis. the elements were embodied in the standards using a sentence or a phrase, for example ‘current replacement cost is the cost the entity [...]’, or ‘the financial statements shall disclose, for each class of property, plant and equipment [...]: (a) the measurement bases used for determining the gross carrying amount [...]’. we have separated the established themes in subthemes and topics. for example, theme c ‘markets and atypical cases’ was separated in the subthemes ‘stipulations in the content of the standards’, and ‘stipulations on presenting the valuation conclusion’. moreover, the subtheme ‘stipulations in the content of the standards’ included topics such as ‘reference to the specialized nature of certain class of assets and the implications for valuation’ or ‘reference to lack of transactions for an asset and indications on appropriate approaches’. from all the analyzed documents which formed the valuation referential we selected for analysis only those elements with direct reference to valuation in the public sector. for themes ‘a. guidance extent and quality’ and ‘c. markets and atypical cases’ data was processed from the 5 selected ipsas in the accounting referential, respectively from the valuation standards 2007 and 2011 which are dedicated to financial reporting in the public sector and the standards that treat valuation reporting in general. in what concerns disclosure requirements data was obtained from each ipsas subject of the present research and part of the public accounting referential taking into account the fact that international accounting standards do not contain a singular norm on valuation disclosure, but the concept appears in each standard with specific requirements. in what concerns valuation referentials, disclosure is referred to in a dedicated standard and in specific standards where information is required in addition to general stipulations. 92 data obtained after the content analysis has been transferred into two dimensions with binary variables (deaconu and buiga, 2010) which were allocated value 1 if the analysis theme exists and value 0 otherwise. 3.2. statistical tests according to the customs specific to economic and especially accounting literature (ashbaugh and pincius, 2001; deaconu and buiga, 2010; larcker and rusticus, 2010; nistor et al., 2010; deaconu et al., 2010), we have considered the similarity and dissimilarity measures as the best instruments for determining the connection between the analyzed referentials. from the diversity of this type of measures we selected in relation to the nature of the variables in the database, binary, for coefficients applicable to nonparametric correlations of distance type. thus, we used three similarity measures and one dissimilarity measure in order to reduce the risk of error and provide robustness to our findings. this is because these coefficients reflect possible asymmetries and therefore provide a different point of view for looking at the data (e.g. leisch et al., 1998). also, our selection focused on the optimal discriminative power of the coefficients, demonstrated by empirical studies (lourenço et al., 2004). in general, binary similarity measures are based on a contingency table that compares the feature values for each pair of cases x, and y, where: a – number of times ix = 1 and iy = 1; b – number of times ix = 0 and iy = 1; c – number of times ix = 1 and iy = 0; d – number of times ix =0 and iy=0 (deaconu and buiga, 2010). the computation formulas for these measures are combinations of values from a to d, considering the [0,1] range. we selected the following coefficients as similarity measures: simple matching (1958), rogers and tanimoto (1960), and sokal and sneath (1963). the dissimilarity measure used, the euclidean distance coefficient (edc), compares two cases x, and y. for a binary variable, edc = 0 if cases x and y both have a certain attribute k ‘present’ or both ‘absent’, or 1 if attribute k is ‘present’ in one case and ‘absent’ in the other case (deaconu and buiga, 2010). the greater the euclidean distance between referentials, the more dissimilar they are in terms of their characteristics. the coefficients were applied to previously standardized variables in order to avoid altering the findings in the case of extreme values. we preferred standardizing to z-scores, a procedure which is generally preferable to standardizing by range because the resulting values are not determined by the two extreme values, but by the dispersion of values on variable k. 4. analysis results 4.1. analysis of the general convergence between public accounting and valuation referentials appendix 1 with the elements a.1 to a.28, b.1 to b.18, respectively c.1 to c.11, was used to measure the proximity between the binary variables of the database. table 1 below presents the general values of similarity and dissimilarity measures. 93 table 1: general convergence of accounting and valuation referentials measures ipsas/ ivs 2007 ipsas/ ivs 2011 ivs 2011/ ivs 2007 simple matching coeffi cienta 0.642 0.453 0.434 rogers and tanimoto coeffi cienta 0.472 0.293 0.277 sokal and sneath i coeffi cienta 0.782 0.623 0.605 euclidean distance coeffi cientb 4.359 5.385 5.477 degree of convergence rank i ii iii asimilarity measure; bdissimilarity measure this first stage of the empirical analysis offers a general result regarding the convergence degree between the three referential in discussion. the values of the statistical coefficients applied to the binary variables in relation to the interpretation range for each of them are coherent in establishing the following hierarchy regarding the convergence level: ipsas/ivs 2007, ipsas/ivs 2011, respectively ivs 2011/ivs 2007. we note that this sequence is based on all four measurement coefficients used. binary euclidian distance coefficient needs to be interpreted opposed to the first three coefficients by the fact that the greatest proximity exists between those referentials for which this coefficient has the smallest value. we determined a high level of proximity between valuation standards, as we anticipated. however, the similarity is not perfect, which shows that the changes made by ivsc in the last edition of standards compared to the content of the previous edition are statistically relevant. the proximity degree between the two sets of valuation standards under analysis is fairly small, with values of 0.2 0.6 in the [0,1] range for the interpretation of similarity measures. the result is confirmed by the value of dissimilarity measure which shows a certain distance between the two reference systems. if each of the valuation referentials is compared to the public accounting referential, valuation standards 2007 seem to be quite compatible with accounting standards, at a smaller distance than 2011 standards (for example, the value of the coefficient simple matching is 0.642 for the valuation referential 2007 compared to ipsas, respectively 0.453 for the valuation referential 2011 compared to ipsas). thus, we observe a greater correlation of public accounting standards with the previous edition of valuation standards, which comprises a more consistent technical guidance, being more useful for valuations conducted for public accounting reporting. 4.2. analysis of the analytical convergence between public accounting and valuation referentials the empirical analysis of the discussion themes allows us to estimate the factors in the convergence hierarchy observed, our finding being presented in table 2. based on the data presented in table 2, the causes of the global status quo previously discussed are as follows. 94 table 2: analytical convergence of accounting and valuation referentials coeffi cients guidance extent and quality disclosure requirements markets and atypical cases ipsas/ ivs 2007 ipsas/ ivs 2011 ivs 2011/ ivs 2007 ipsas/ ivs 2007 ipsas/ ivs 2011 ivs 2011/ ivs 2007 ipsas/ ivs 2007 ipsas/ ivs 2011 ivs 2011/ ivs 2007 simple matching a 0.667 0.370 0.407 0.500 0.625 0.500 0.800 0.400 0.400 rogers and tanimotoa 0.500 0.227 0.256 0.333 0.455 0.333 0.667 0.250 0.250 sokal and sneath ia 0.800 0.541 0.579 0.667 0.769 0.667 0.889 0.571 0.571 euclidean distanceb 3.000 4.123 4.000 2.828 2.449 2.828 1.414 2.449 2.449 a similarity measure; b dissimilarity measure a. guidance extent and quality for the assembly of measurement coefficients used a high level of convergence is noted between ipsas and ivs 2007 at a fairly large distance from ivs 2011. correlated with the findings in appendix 1 this shows that the valuation referential 2011 does not provide sufficient conceptual details relevant for public accounting (for example, the definition of net realizable value, residual value, public business entities). also, certain technical solutions for determining the value are not sufficiently detailed. in what concerns assets and types of transactions presented, the 2011 referential focuses only on the ordinary types and does not mention leases, investment properties or other elements for which public accounting requires the use of fair value or current values, other than historical cost. finally, we note the lack of technical details which we included in the subtheme ‘measurement bases and valuation approaches/ techniques’. in what concerns guidance extent and quality, the proximity degree between ivs 2007 and ivs 2011 is situated on the second place, after ipsas and ivs 2007. b. disclosure requirements for this analysis the hierarchy is somewhat different from the findings of the other two analyses. the calculated coefficients indicate the highest convergence level between ipsas and ivs 2011, followed at relatively short distance by ipsas and ivs 2007. this suggests that the latest ivs edition meets better than the previous edition the disclosure needs specific to public accounting standards. this is also confirmed by the descriptive analysis in appendix 1 which indicates the presence of more common elements between the two referentials in general regarding the selected items related to conceptual, methodological and temporal disclosure stipulations. furthermore, appendix 1 shows that in some cases similarity manifested also as a result of lack of disclosure requirements of the referentials if we compare them to ivs 2007. for this analysis theme the proximity between the two valuation referentials is identical with the proximity between ipsas and ivs 2007 with respect to values of the similarity/dissimilarity coefficients. 95 c. markets and atypical cases for this analysis theme the value of the coefficients confirms the hierarchy identified for theme a. a higher convergence degree is noted between ipsas and ivs 2007, followed at a relatively large distance by the relation between ipsas and ivs 2011. these findings are explained both by the convergence between elements that present in detail markets and atypical cases and by the lack of certain stipulations which ivs 2011 provides. considering the assembly of items included in this theme, ipsas and ivs 2007 provide 7 stipulations while ivs 2011 provides 6. in what concerns the proximity between ivs 2007 and ivs 2011 this is equal in terms of value to the proximity between ipsas and ivs 2011. 5. conclusions and standard setting implications the study shows that public organizations of tomorrow will have to behave quite different from current ones: they must be able to change as a living organism, creating prototypes and evolving in such a way as to meet the needs of society as they grow up. the evolution process will provide an increased role for information. valuation and its correct form will represent a guarantee of credibility for accounting information, useful in decision-making process. carrying out processing will request a nimble and inspirational leadership, where the correct information will play a key role. valuation and its correct form will represent a guarantee of credibility of accounting information provided as support for decision-making capacities. the empirical analysis conducted in this study allows us to draw conclusions regarding public accounting and valuation regulation convergence, respectively the determinant factors underlined. starting from here we can conclude on the consequences of our findings over the relation between international public accounting referentials (a selection of international standards on assets and liabilities valuation issues), and then on the evolution of the international regulatory process for valuation (in this case the 8th and 9th editions of ivs). in what concerns the proximity between public accounting standards on value and valuation process and ivs, the latest and previous edition of the latter we determined, as expected, a smaller convergence degree compared to the convergence degree between the two editions of ivs. in general, the accounting referential is closer to ivs 2007 than to ivs 2011. we believe that the main cause of similarity is guidance extent and quality. it is noted that accounting standards need more details in what concerns the concepts and types of value, respectively more technical guidance than that provided currently by the 2011 edition of ivs. from this point of view the lack of details on valuation methodology, uncompensated by the issue of professional guides provided by ivsc, leads to the incomplete support of financial reporting in public institutions. thus, even though we understand the intent of the regulatory body of international valuation practice, we underline the need to standardize valuation methodology internationally, for the support of the two professions, accounting and valuation, and for the public interest. the actions taken by the ipsasb in recent years can be seen as 96 a clear intention to create a uniform accounting framework within public institutions. the intent stated in the ipsasb forum shows that ipsas will have a major part to play in the creation of any harmonized european union-wide public accounting rules. according to eurostat (2012), there are a lot of benefits for public sector management and governance in adopting a single set of accruals-based accounting standards at all levels of government throughout the eu. this approach also applies for the valuation process. regarding the analysis theme ‘markets and atypical cases’, which is the second theme to present similarities between the accounting referential and ivs 2007, we agree that these less common cases suffered a change in their approach, correlated with the period of elaboration/update of the two referentials, in the context of the global economic crisis. thus, we explain the greater distance between ipsas and ivs 2011 as the latter reflects the latest economic and financial reality. from this perspective we do not necessarily consider unfavorably the dissimilarity between ipsas and ivs 2011, moreover as the number of atypical cases regarding markets and types of assets are found in a relatively balanced number within the three sets of standards which we analyzed. furthermore, we would suggest the update of ipsas to more recent situations which do not always allow for market values determination, or the application of the most relevant valuation approaches, namely market comparisons. finally, the public accounting referential is closer to ivs 2011 than to ivs 2007 in what concerns ‘disclosure requirements’. this is in favor of the requirements imposed by the economic crisis regarding financial reporting, namely to provide much more details on the process of value estimation, hypotheses and forecasts used, respectively in what concerns the risk of change in the estimated value. from this perspective we support both the ipsas and the ivs 2011 approach. if we consider the valuation standards ivs 2007 and ivs 2011 our findings show the materialization of ivsc’s intention concerning the update of its referential. the difference from the previous edition, which is statistically significant, as shown by the content analysis, demonstrates that the objective of ivsc to update its latest edition has been reached. thus, according to the international regulatory body (ivsc, 2011) the standards are supposed to identify frequently used valuation methods without presenting in detail their application. also, the intent was to provide explicit comments in order to aid understanding of each standard in context, but without including technical guidance regarding valuation techniques. other objectives were the elimination of recurrent subjects and concepts and a bigger focus on principles. in conclusion, there are premises for the materialization of benefits provided by quality valuation standards, globally acknowledged, with a uniform approach on the classification of definitions and measurement principles, respectively stipulations on disclosure requirements concerning value. moreover, we note the partial convergence for one of the three analysis themes between public accounting standards and ivs 2011. we take into account the fact that this convergence process did not reach the end, and the two standard setters can still intervene in certain aspects where the 97 referentials are different, or in other aspects which could improve the usefulness of valuation accounting in decision making. mainly, we noticed that there are certain differences regarding guidance extent and quality which should be rectified in a short period of time by the ivsc with issue of additional professional guides. likewise, ipsasb should pay more attention to markets and atypical cases in the light of the global economic crisis. in this respect we recommend ipsasb to give valuation practice more preeminence. the results of this research should be interpreted in the light of a number of limitations, some of which leading to research perspectives. future research could extend the analysis in relation to macroeconomic and sectorial variables which could determine clusters with somewhat different needs of financial reporting and valuation issues. also, this research has limitations related to the inherent shortages of content analysis as a research tool, although we have tried to complete the empirical findings, in order to confirm their robustness, with elements of the context of accounting and valuation regulation obtained from additional information sources. references: 1. adhémar, p., ‘the public sector committee 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451, february 2007, gent university, faculty of economics and business administration. 43. wynne, a., ‘accrual accounting for the public sector – a fad that has had its day’, 2008, international journal on governmental financial management, vol. 8, no. 2, pp. 117-132. 44. yamamoto, k., ‘accounting system reform in japanese local governments’, 1999, financial accountability and management, vol. 15, no. 3/4, pp. 291-307. 100 appendix 1 database obtained by applying content analysis to accounting and valuation referentials analysis themes analysis sub-themes topic no. considered topics into the sub-theme referentials accounting valuation ipsas ivs 2007 ivs 2011 a. guidance extent and quality defi nitions extent and complexity 1 fair value defi nition 1 1 1 2 recoverable amount defi nition 1 1 1 3 value in use defi nition 1 1 1 4 net realizable value defi nition 1 1 0 5 residual value defi nition 1 0 0 6 public business entities defi nition 0 1 0 7 solution for determining value in use 1 1 0 8 solution for determining net realizable value 1 1 0 9 solution for determining residual value 1 0 0 10 defi nition and details on the concept of cash-generating assets 1 1 0 11 details on the usage of cost based techniques 0 1 1 type of assets/ transactions approached 12 property, plant, and equipment 1 1 1 13 assets impairment 1 1 1 14 leases 1 1 0 15 investment properties 1 1 0 16 inventories 1 1 0 17 business combinations 1 1 0 18 non-agricultural biological assets 1 1 0 measurement bases and valuation approaches/ techniques 19 reference to cost and fair value model 1 1 0 20 classifi cation of cash-generating assets and non-cash-generating assets; specialized assets; public sector assets; operating or nonoperating assets; 0 1 1 21 stipulations on fair value estimation based on the market conditions at the valuation date 1 1 0 22 stipulations on the fact that fair value is time-specifi c as of a given date and details on the probability of change 1 0 0 23 assets with different services potential than the equity value, with examples and solutions for valuation 1 1 1 24 types and content of leases 1 1 0 25 defi nition of accounting specifi c elements with implications in the valuation process (depreciation, impairment, amortizable value) 1 1 0 26 technical details for surplus assets valuation 0 1 0 27 technical details when there is no net cash-fl ow for monopoly 0 1 0 28 details regarding the test for the adequate services potential 0 1 0 101 b. disclosure requirements conceptual stipulations 1 type of value estimated or measurement basis 1 1 1 2 reference to observable prices or recent market transactions 0 0 1 3 mentioning if the market value was estimated or a different value from the market value 0 1 0 4 difference between fair value and cost model 1 0 0 5 difference between owner-occupied property and property held for sale in the ordinary course of operations 1 0 0 6 details on classifi cations with impact on valuation approaches (for example, cash or non-cashgenerating assets) 1 0 1 7 details on the effect of certain hypotheses on the valuation and the importance of this effect 0 0 1 8 analytical processes and empirical data used for value estimation 0 1 0 methodological stipulations 9 details on signifi cant assumptions 1 1 1 10 details on applicable methods 1 1 1 11 whether or not the valuation was conducted by an independent (external in the interpretation of ivsb) valuer, with relevant professional qualifi cation and recent experience 1 1 1 12 type of valuer, internal or external 0 1 0 13 details on the range of estimates within which fair value (market value) is highly likely to lie (their nature and effect) 1 0 0 14 details on deviations from the stipulations of ipsas/ivs in order to abide by local legislation, requirements or customs 0 1 0 15 details on the important arguments that support the valuation conclusions 0 0 1 temporal stipulations 16 valuation (revaluation) date 1 1 1 17 valuation report date 0 1 1 18 the date when the estimated value is valid 0 1 0 102 c. markets and atypical cases stipulations in the content of the standards 1 difference between assets and liquid market on the one hand and illiquid market on the other hand, with details on the value estimation methods 1 1 1 2 stipulations on the specialized nature of certain class of assets and the impact on valuation 1 1 1 3 details on the lack of transactions for an asset and the appropriate approaches for valuation 1 1 1 4 details on the lack of transactions for an asset as a result of its specialized nature, market data and technical guidance for value estimation (costs, indexed price, others) 0 1 0 5 the requirement of certain stipulations in the case of market value cannot be reliably determined 1 1 0 6 developing the methods for value estimation (as information sources), including less active markets 1 0 0 stipulations on presenting the valuation conclusions 7 indicating valuation’s sensitivity to change in the signifi cant entry data 0 0 1 8 indicating if the valuation was based on market evidence or other factors, as a result of the nature of the asset and lack of comparable market 1 1 0 9 indicating the case when fair value (market value) cannot be determined reliably 1 1 0 10 indicating the important uncertainty cases 0 0 1 11 indicating the nature and source of relevant information used in the valuation process, but which were not specifi cally verifi ed by the valuer 0 0 1 161 abstract as a highly specialized and relatively small sized public service (in terms of staff and budget), diplomacy has always been in a particular position within the administrative system of most countries. not only does diplomacy attract the pretended ‘elites’ of the public sector’s employees but also a lot of popular criticism with regard to its performances, transparency, dedication to public interest, procedures of recruitment, privileges, and sometimes moral exigencies. this paradoxical ambivalence of ‘elitism’ and public distrust coexists with variable degrees of tension between politicization and the need of effective technocracy. this article explores the concepts, delimitations and functioning of the political-ideological vs. administrative components of diplomatic systems, in the wider context of the administrative paradigms and political cultures to which they belong. while the theoretical distinction between foreign policy and diplomacy is way more developed in european classical approaches, though with controversial results, the american authors and officials traditionally use the two concepts interchangeably. notwithstanding this theoretical flexibility, the borderline between the political level of diplomatic representation and the professional diplomatic and consular corps is clearer and better regulated in the u.s. system than in most of the european countries. a case study focused on the reform of the romanian diplomatic service, in the preand post-eu accession years, serves as empirical analysis of this demarche. keywords: foreign policy, diplomacy, politics, bureaucracy, diplomatic service, romania, reform. diplomatic services today: between political decisions and administrative criteria valentin naumescu valentin naumescu associate professor ph.d., department of international relations and american studies, faculty of european studies, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-593.770 email: vnaumescu@yahoo.com transylvanian review of administrative sciences, no. 44 e/2015, pp. 161-179 162 1. introduction: diplomacy between politics and administration speaking about diplomacy as a specialized service of central administration is correct but not enough. it is however a challenging, multi-disciplinary enterprise at the same time. on the one hand, based on the general organization scheme of the government system, it is obvious that diplomacy is part of the civil service, like all other departments are, and therefore it should obey the same transparency rules and criteria of accountability as anyone else who spends tax payers’ money. on the other hand, because of the very special nature of its activities, relative small size in terms of staff and budget, sophisticated issues and the unique feature of acting abroad, in considerably different political, economic, social and cultural contexts, diplomacy is not really expected to deliver the goods in the same way as police, public education system or fiscal administration do in their homeland. almost everywhere in the world, diplomacy faces the paradox of being considered the privileged ‘elite’ of public administration but also being distrusted by ordinary people. how is this possible? in order to understand this ‘double standard’ assessment of diplomacy that stirs so much controversy on it, a definition of diplomatic service would be useful for a clear start of our analysis. according to g.r. berridge and alan james’s consecrated dictionary of diplomacy (berridge and james, 2003), the diplomatic service is ‘the bureaucracy of the professional diplomats of the state, usually embracing personnel in the ministry of foreign affairs as well as those employed at foreign postings’ (berridge and james, 2003, p. 83). various names and structures for the diplomatic services are met in different countries, such as the foreign service officers (fsos) in us. starting with the lisbon treaty (2009), the european union has developed the european external actions service (eeas) led by a high representative. in many countries, especially in europe, the law with regard to diplomatic and consular corps also includes the political level of the ministry of foreign affairs (the minister and secretaries or undersecretaries of state) within the diplomatic corps, during their term. it is the case of france, germany, romania, poland and other eu member states but not of the us and canadian diplomatic systems. the result of this amalgamation in europe is sometimes a confusing mix of politics and bureaucracy which will hallmark diplomacy in public’s eyes along its entire existence. on the contrary, in the united states not only they ‘exclude’ the political dignitaries from the diplomatic corps but also ambassadors, who – without hypocrisy! – represent a list of ‘reserved positions’ for the nominees of the head of the executive branch. beyond political appointments at designated levels, the diplomatic and consular corps remains in the ‘new world’ a real professional body, with very few (if any) political interferences. from this very simple perspective, at least people know what to expect from every level of diplomacy, in other words the public knows who is politically affiliated and who is a professional diplomat. in many european countries, there is a clear legal interdiction for professional diplomats (ambassadors included) to be members of political parties. regarding the politicization of ambassadors’ appointment, we learn from the website of the french ministry of foreign affairs that: ‘there is such a procedure in the 163 united states, where ambassadors change with the president. in france, it is rare. the choice is nearly always a diplomat with a good mastery of the profession, in other words diplomats that have reached the grade of envoy or at the very least the grade of counsellor (first class)’ (france diplomatie, 2014). it is nevertheless explained that these ‘diplomats with a good mastery of profession’ are appointed ambassadors by the president of the french republic in a meeting of the council of ministers, at the proposal of the government (ministry of foreign affairs). at the end of the day it is the same political decision in both situations, with the only difference that the french system insists that there are no other criteria than the professional ones. the enlargement of the list of ‘diplomatic actors’ in recent times, beyond classical diplomatic services run by governments, changes substantially the perspectives and shapes of nowadays diplomacy. ngos, multinational companies acting overseas, lobbyists, media, cultural or sports personalities etc. involving for one cause or another bring their own approaches and styles and draw a different picture of diplomatic processes. we witness a spectacular ‘contraction’ of time and distances but a widening of the spectrum of diplomatic actors. online communication, mobility of people and a greater access to prompt information speed up everything. globalization changed diplomacy more than someone ever predicted. but diplomacy in its turn is having an impact on governments, through various means. more than any other department, the diplomatic service floats more or less skillfully on a thin borderline between politics and administration. its specific ‘job description’ as well as external and internal pressures offer actually no alternative to this permanent ‘ballet’, with inevitable political and bureaucratic ‘figures’. the subtle and effective way in which a government manages to keep the fine balance of these two conflicting paradigms gives in fact the expression of its performances, coherence and public credibility. 2. theoretical framework of analysis recognized authors in the field of foreign policy and diplomacy propose a set of concepts, theories and criteria for describing the processes related to the activities conducted by the departments of foreign affairs. based on these analytical instruments, diplomatic services can be measured and evaluated today, at least from an administrative perspective (staff, budget, technical skills, consular services, infrastructure and logistics etc.) if not from a political one. the theoretical framework of this section is based on marijke breuning’s main findings from her famous book of 2007, foreign policy analysis. the author suggests that the decision making process actually looks like an iceberg, with the visible top represented by the decision-makers and the sunk bottom represented by the bureaucratic structures fuelling the decision flow (breuning, 2007, p. 88). usually, it is accepted (ciot, 2012, p. 115) that there are three decisional patterns: the rational actor model (in which the government acts solely, based on the national interest), the organizational behavioral model (in which a number of agencies and organizations act on the basis 164 of inertia and feasibility criteria) and the public policy model (in which a plurality of actors, including individuals pursue their interests based on complex negotiations). in fact, these three models are reflected in practice by the main versions of diplomacy’s conduct: the very politicized, the bureaucratic-inertial and the political-administrative or pluralist model. as we shall see later on, the first is the most disposed to reforms (but also to risks), the second is the most reluctant to change while the third is an intermediate and sometimes ideal model of foreign policy and diplomacy. christer jönsson and martin hall make a useful distinction between institutional and organizational dimensions of diplomacy. ‘diplomacy […] should be seen as an institution, understood broadly as a relatively stable collection of social practices consisting of easily recognized roles coupled with underlying norms and a set of rules or conventions defining appropriate behavior for, and governing relations among, occupants of these roles’ (jönsson and hall, 2005, p. 25). all these ingredients act in the sense of shaping expectations, prescribing behaviors, or limiting actions, as long as diplomacy is not only about what you can do but also about you cannot do. an institution in its largest meaning may involve one or more organizations. from this perspective, the two authors affirm, diplomacy is an institution while the foreign ministry is an organization. as i have mentioned before, globalization both challenged and changed diplomacy. during the lifetime of one single generation of diplomats, so many considerable changes occurred only in the past decades. some of them came out from new information technologies, others from increased mobility or even social and cultural mutations. but diplomacy survived, though it is not the one it used to be thirty or forty years ago. one possible description of this adjustment asserts that ‘the gradual unification during the twentieth century of the bureaucracy of diplomacy, including that of the diplomatic and consular services, no doubt played its part in enabling the mfa to resist the next challenge to its positions, which came in the century’s last decades, chiefly from ‘direct dial diplomacy’ (berridge, 2010, p. 8). starting with the 1960s and 1970s, the conceptualization of ‘public policy analysis’ came to give more structured and coherent instruments for assessing public activities of central or local authorities. at least four types of analyses have been identified: normative, legal, rationale, and empirical analysis (pal, 2002, p. 33). leslie pal explains what each of them means, from the moral foundations of a public policy and its legal dimension to logical considerations and practical consequences of that policy. let’s take the recent example of a western foreign policy dilemma: the military coup d’état in cairo, on 3 july 2013. according to any elementary political science handbook, the arrest of then-newly elected (june 2012) president morsi by the egyptian army and the abolishing the constitution (adopted in the december 2012 referendum) through a simple military decree clearly represented the defining ingredients of a coup. according to us legislation, washington would have been obliged to stop any financial support for an illegitimate regime if the ousting were recognized as coup. on the other hand, the advance of islamism in egypt would have threatened 165 the strategic position of egypt as a steady ally of us, israel and western states in the complicated region of middle east and northern africa. more than 1,000 supporters of the ousted president were later on killed in violent confrontations with the army on cairo streets. the massive protests were eventually contained only with exceptional military measures such as curfew and state of emergency. from this perspective, it simply looked like the west sacrificed the principle of democracy and human rights for defending strategic interests in the region. however, the situation was even more difficult because of the split of egyptian society between muslim brotherhood and morsi’s supporters, on one hand, and the opponents of morsi regime on the other hand. a ‘solution’ of either ambiguity or embarrassing silence was adopted by most of the western countries. among them, the united states and germany asked with halfvoice egyptian military to stop violent crackdown against protesters but eventually refrained from naming the intervention as coup d’état and did not officially condemn it, because of self-evident obligations in their future action. continuing the ‘public policy analysis’ with regard to the west’s foreign policy and diplomacy towards egyptian crisis of 2013 on the other three dimensions mentioned by leslie pal, we actually face the same essential difficulties. legal analysis: ‘coup’ or ‘legal restoration of order’? rationale: ‘military abuse’ or ‘public interest’? empirical evaluation: ‘bloody crackdown’ or ‘stability’? it depends on whose side is the narrator. from the military perspective, the intervention was legal, logical and with positive consequences. for morsi’s supporters, the coup was illegal, looking only for taking over power, and was disastrous in terms of political, economic and social consequences. concluding this miniature of analysis, the attitude of the west towards events of summer 2013 in cairo may seem correct or immoral, brave or coward, long term oriented or hypocritical, depending on the answers we favor at a number of key-questions. 3. no clear ‘borderlines’ between diplomacy, politics and administration the interference of politics and sometimes ideology with diplomacy as pretended neutral diplomatic service has several other faces. not only do politics affect diplomatic attitudes in relation to other foreign representatives (somehow understandable) but also parts of internal administrative processes like mechanisms of recruitment and promotion, financing or the way tax payers’ money are spent. to a larger or lesser extent, this influence is valid in north america as well as in europe, but specific features of different political cultures are identified. europe is more than any other part of the world under the conceptual influence of the nation-states (where this idea was born in the second half of the 19th century) and, consequently, under the influence of the cultural and administrative pattern of nation-states. for one reason or another, america is more ideological today (and so it was in the whole postwar period) than the ‘old continent’ which favored consensus and ideological convergence for almost five decades. the competing liberal and conservative perspectives have in the us and canada way more consistent impact on public policies than classical doctrines used to have in the post-wwii europe, al166 though europe is the cradle of modern ideologies. as i have mentioned earlier, the bureaucracy is not fully passive in this relation with politics and has its own ‘fettering’ and inertial effect, with a limiting action on government political strategies. henry kissinger, for instance, disliked administration. we can only suppose that his fabulous experience as us secretary of state was somehow marked by a tough meeting with the professional culture of foreign service officers (fsos) and their traditional, cautious reflexes. speaking about kissinger’s impressions after a number of years at the lead of the department of state, t.g. otte notes: ‘the spirit of policy and that of bureaucracy are nearly irreconcilable opposites. policy is contingent, creative, partly conjectural and involves a willingness to take risks; bureaucracy strives for safety, calculability, ‘objectivity’ and risk-avoidance. its essence is instrumental rationality and administrative feasibility; it is not concerned with ultimate values. bureaucratic edifices thus tend to introduce an element of rigidity into the political process’ (otte, 2001, p. 188). because of its british tradition, canada defines its executive branch of government in three instead of the two levels of authority which are specific to presidential systems, although the highest one is rather symbolical. they thus report decisions and public policies to: symbolic or ceremonial executive (the crown represented by the governor general), then democratic or political executive (the prime minister and the cabinet) and last but not least the permanent or administrative executive, the latter being formed by professional (non-elected) bureaucracy. it is to be noticed that public administration is in fact named ‘the government of canada’ (unlike continental europe, where ‘government’ is usually referring to the political level), sometimes known as the federal public service. ‘the chief public servant in canada is the clerk of the queen’s privy council. within departments, the minister is responsible before the parliament, in solidarity with the prime minister and the cabinet team, while the deputy minister is the highest public servant. the deputy minister is formally reporting to the clerk of the privy council and not to the minister, in order to make a clear distinction between political and administrative levels’ (naumescu, 2010, p. 57).these three levels of the executive power are also reflected in the field of foreign policy and diplomacy, each of them having responsibilities in the diplomatic process. from accreditation of ambassadors (the crown) to major decisions in foreign policy (the prime minister) or conducting day-to-day diplomatic duties (dfait, that is the department of foreign affairs and international trade, and diplomatic missions abroad), all three executive structures have their own responsibilities. despite a largely spread distrust in diplomacy, positive approaches are not completely missing. canadian authors suggest ‘ottawa should learn to love the department of foreign affairs’ (heinbecker, 2007, p. a21). more confidence in their national diplomatic service is thus deserved for the merits in strengthening the security and good international reputation of canada, considers paul heinbecker. the tremendous expansion of the welfare state model in postwar western europe changed the classical, weberian model of bureaucracy that used to be valid a hundred years ago. a growing public service is not limiting itself to implement political deci167 sions, but also to influence them, as yves mény and andrew knapp remark. ‘nowadays, each of their bureaucracies [with reference to western democracies] plays a role of crucial importance in public policy-making. according to western tradition, and also to cartesian view of the processes of decision-making, the role of administrations is to implement decisions taken elsewhere, usually by the political authorities. but, as many studies have shown, that view has not for some time corresponded to the real state of affairs. nowadays, bureaucracies are involved at every stage in public policy-making.’ (mény and knapp, 1998, p. 265). the two authors identify the following categories of intervention: shaping the political agenda, acting as gatekeepers of the state, determining the substance of political decisions by drafting bills, implementing government’s policies (the original function), and pursuing and maintaining the policies to which they have committed themselves. 4. the u.s. diplomacy: ideology and politics before bureaucracy one of the most notorious (recent) cases of ‘ideologization’ in foreign policy and diplomacy was the u.s. neoconservative administration of george w. bush. the socalled ‘hawks’ use to designate in america a traditional liberal approach that supports the use of force and military intervention in order to promote universal liberal values. the liberal interventionism was assumed in the 1990s and 2000s by the neoconservatives. first in 1992 under the name ‘wolfowitz doctrine’ (authored by then-under secretary of defense paul wolfowitz), then under the umbrella of ‘bush-cheney doctrine’ (after the return of the republicans in power in 2001), the hawkish foreign and security policy ‘argued for a long-term lock-in against any possible emergent superpower-like military threat, to include the use of preemptive war and unilateralism when required’ (barnett, 2009, p. 12). the whole series of political, diplomatic and military actions of the ‘bush-cheney-rumsfeld-rice’ leading group had followed and respected the principles of this doctrine, at least in conceptualizing the afghanistan and iraq wars. in zbigniew brzezinski’s words, ‘strategically, the ‘war on terror’ thus reflected traditional imperial concerns over control of persian gulf resources as well as neoconservatives’ desire to enhance israel’s security by eliminating iraq as a threat’ (brzezinski, 2007, p. 136). beyond ideological and strategic considerations, the u.s. diplomatic corps as an administrative service has participated in this costly operation meant to combat terrorism, paying an incredibly death toll as well as suffering tremendous individual and family sacrifices. to give just a well-known example, the assassination of the u.s. ambassador christopher stevens in benghazi, libya, in the 11 september 2012 attack, ‘could have been prevented’ (mazzetti, schmitt and kirckpatrick, 2014), as shown in a us senate report. with only a few weeks before, ambassador stevens sent two cables to foggy bottom in which he complained for insufficient security in libya but seemingly his reports were neglected by the department of state. in 2010, secretary of state hillary clinton launched a project of reform of two fundamental organizations of the american diplomatic system: the department of state and the us agency for international development (usaid), wanting them ‘more ef168 fective, accountable and efficient institutions’ (johnson, 2013, p. 7). with reference to that intended (but essentially failed) program of structural reforms in the realm of diplomacy, the president of the american foreign service association, susan r. johnson believes that ‘only the foreign service can bring to the conduct of diplomacy the agility, flexibility and suitability that come from worldwide availability, rotation and rank in person. […] after all, a diplomat should be a skilled facilitator with broad perspective and experience – qualities that are also important for those responsible for leading the institution and inspiring the diplomatic service.’ (johnson, 2013, p. 7) concluding over the cleavage between doctrine and neutral bureaucracy within us diplomacy, we may find again henry kissinger, the self-declared enemy of the reluctant administrative machine of the government killing great ideas and high strategic actions, defining the ‘new’ us foreign policy: ‘the united states need to design a diplomacy that prevents threat to fundamental american interests and values without designating a specific adversary in advance, and above all by a policy based on the widest possible international consensus on positive goals’ (kissinger, 2001, p. 318). once more, diplomacy without ideology seems impossible. the central and eastern european countries in their turn, now member-states of nato and the eu, underwent a long and difficult post-communist transition starting with 1990s, with a considerable dimension in administration and public service. for many sections of their administrative systems, the guidelines came from western institutions such as the european union, nato, the world bank and international monetary fund, the council of europe etc. the strengthening of the administrative capacity of the countries in the region and the modernization of their public service were seen in different interpretations, from rigid ‘best practices’ to more flexible ‘good fit’ (bondar, 2007, p. 106). it means that there was no absolute model to be assumed but a series of good practices from the west. according to historic and cultural influences of one country or another, there were some attempts of the great european powers to transfer their specific national system to the new central and eastern democracies, like france to romania or germany to the czech republic or hungary. before concluding this theoretical section, it would be useful to review the main models of decisions in foreign policy, according to breuning and ciot, the respective key actors and the motivating factors. all of them are present on the vertical as well as the horizontal dimension of analysis. the vertical dimension meets the three already mentioned models at different levels of the ministry of foreign affairs. within the diplomatic service, the organizational behavioral model prevails as in any other bureaucracy, while at the upper level of foreign policy’s decisional process both the rational actor and the public policy models are present, according to the cultural pattern of the respective administration. as for the horizontal perspective, from one country to another, we can find the dominance of one of the three types of decisional mechanisms. in transitional countries as well as in the most ideological regimes, the rational actor (political) model is prevalent. 169 5. case study: the reform of romanian diplomacy in the years of preand post-eu accession period (2005-2014) 5.1. pre-accession period (2005-2007) the structural reform of public administration, both at central and local levels, has been one of the most disputed, controversial and long debated programs of reforms within the public sector, not only in romania but in the whole region of central and eastern europe, probably comparable in its difficulty only with the judicial reform. under the influence and transfer of expertise from the european union to candidate states, central and local administration underwent a process of reform with successive phases. in romania, several foreign affairs ministers declaratively attempted to ‘renew’ and westernize the diplomatic system in terms of staff, norms and procedures, mainly because of the strong suspicion expressed by the civil society with regard to a consistent group of securitate officers infiltrated in the diplomatic and consular corps before 1989. referring to romanian diplomacy, the reform of the ministry of foreign affairs (diplomatic service included) can be divided in at least two main distinct phases: pre-eu accession years (up to january 1st, 2007) and the post-accession period. the date of accession into the european union is not only a symbolic moment that marks the passage from one chapter of national history to another, but in our case study a switch from a certain type of approaching the reforms to different political stakes and criteria. the major lines of the reforms in romanian post-communist diplomacy referred to: human resources (basically rejuvenation and replacing the compromised diplomats), eliminating political influences and wrong practices in diplomats’ selection and promotion, transparency and openness in terms of public diplomacy and improving relations with romanian citizens living abroad, modernizing the management of embassies and consulates, reducing the waste of resources, and improving the distribution of human, financial and logistical resources etc. starting with the outstanding intellectual andrei pleşu (foreign minister between december 1997 and december 1999) and, to some extent, the young yet long serving career diplomat mircea geoană (foreign minister, december 2000 – december 2004), the idea of reforming the ministry of foreign affairs as diplomatic service dominated the discourse of the heads of romanian diplomacy during the entire period of pre-accession to nato and the european union, and to some extent after 2007. it is thus not surprising that the paramount institutional change occurred in the last two years before eu accession, namely 2005-2006. we can hardly speak about real structural reforms and westernization in the romanian diplomacy before 2005, although foreign ministers pleşu and geoană had (at least declaratively) a number of good intentions. a change in the discourse of the head of the institution is not necessarily a change of the department’s deep habits and practices or of the diplomatic service’s performances. for many years after 1989, the ministry of foreign affairs remained one of the most ossified government structures in romania, notwithstanding the intellectual capacities and some good intentions of the post-communist foreign ministers. 170 mihai-răzvan ungureanu, who served as liberal foreign minister between late december 2004 and march 2007, and his team of collaborators (secretaries of state, directors and the newly appointed chiefs of missions) implemented the most consistent program of rejuvenating the diplomatic and consular corps as well as of reorganizing the ministry of foreign affairs before the moment of romania’s european integration. the first signs of ‘fresh air’ in the diplomatic system were noticed by western media shortly after the change of the government, in december 2004. important romanian political analysts also saw in bright colors the contribution of then-new foreign minister to romania’s eu integration: ‘ungureanu was the right man in the right place, in the crucial years which preceded romania’s eu accession’ (hurezeanu, 2008, p. 12). the personnel issue was from the beginning one of the thorniest on the ministry’s agenda, due to the fact that in romanian society pre-existed a long dissatisfaction with regard to the professional quality and moral integrity of the diplomatic corps. in february 2005, deutsche welle was appreciating that ‘foreign minister mihai-răzvan ungureanu has initiated the amplest reform since 1990. the purpose is to oust the ones formed in the communist period as well as those appointed by psd only on political criteria […] the entire leadership of the ministry was refreshed, the newcomers being a warranty for the continuation of reforms. ungureanu is assisted by teodor baconsky, valentin naumescu and anton niculescu, people with exceptional intellectual merits’ (pepine, 2005). the accelerated retiring process of long serving ambassadors and the reformation of the romanian diplomatic academy were among the first mentioned decisions by deutsche welle. restructuring the central unit of the ministry and refreshing the human resources went hand in hand. the foreign minister himself explains the essential purposes of the strategy: ‘our intention is that the new organization chart of the ministry will allow achieving a real reform, a deep one, seen as an institutional modernization meeting the new exigencies of our foreign policy as well as a factor of increasing performances, both deriving from assuming a new role in international politics by romania. we have already started the formation of a new category of diplomatic agents, particularly for nato and the eu structures.’ (ungureanu, 2008, p. 198) in the first year of reform, 2005, the statistics presented by the ministry of foreign affairs reveal that 56% of the romanian diplomats were under 35 years old, 52% of the diplomats sent to missions were under 40 (17% under 30), while 60% of the personnel recalled from missions were over 40 (ungureanu, 2008, p. 198). maybe for a western diplomatic system these figures could indicate too young diplomatic corps, an exaggeration of the idea of rejuvenation and the risk of having an unexperienced diplomatic service overseas, but in those enthusiastic circumstances of preparing the eu accession the change had positive effects over the image and performances of both the central ministry and the romanian diplomatic missions. it is also useful to mention that, because of high interest for a diplomatic career, for every session of admission to the ministry of foreign affairs the number of candidates was about 10-20 per post, depending on the chosen department: european affairs, global affairs, public 171 diplomacy, overseas romanians or consular affairs etc. due to a ‘historical’ lack of trust in a fair competition for entering the diplomatic corps, all these contests had a number of litigations and a lot of suspicion. the candidates with poor results and their families sometimes tried to suggest a lack of objectivity and neutral evaluation. to give just an example, at the contest of november-december 2005 there were 639 candidates for 54 diplomatic and consular posts but even so at one department none of the candidates met the minimal requirements of getting a grade of at least 7 out of 10 and the seats remained unoccupied (chiriţă, 2006). minister ungureanu personally assumed in an interview the ‘fair character of the competition’ and gave total credit to the admission committee, from which the vast majority had ‘academic background or spotless diplomatic records’ (chiriţă, 2006). the reform of the romanian diplomacy in 2005-2007 was both politically and administratively oriented. starting from a set of fundamental values and principles defining the strong western orientation of the government, the ministry of foreign affairs tried (and, to some extent, succeeded) to become an agent of modernization and a model of new attitude within central public administration of romania. in his farewell press conference in march 2007, foreign minister ungureanu reviewed some of the major chapters of romanian foreign policy in the pre-accession period as well as the key-issues of the administrative reform of the ministry. with regard to the diplomatic service, the theme of rejuvenation came almost as a leitmotif. in his words: ‘you know the problem at the beginning of my term, how the romanian diplomatic and consular representation looked like […]. today, the largest age category of diplomatic agents is between 25 and 35 – they represent 40% of the ministry, compared to 25% in 2004’ (ungureanu, 2008, p. 23). in the same context, the departing foreign minister was mentioning among his achievements the rise in salary both in the central ministry and the diplomatic missions. a good financial motivation, believed ungureanu, is positive for attracting young valuable professionals to a diplomatic career. then-head of diplomacy also mentioned that the ministry of foreign affairs was the only department of the government which asked the cnsas (the national council for the study of the communist archives) to check the whole list of ambassadors, secretaries of state and directors in order to identify the ones who collaborated with securitate as secret political police, according to the law. the political and moral meaning of this screening was to transmit the signal of a new, ‘lustrated’ diplomacy, having no personal connections with the instruments of ideological oppression from the past. the ambitious program of the diplomatic service’s reform in 2005-2007 was not unmolested by virulent rivals, from outside and from inside the ministry of foreign affairs. it is thus not surprising to observe that most of the criticism came from some senior ambassadors who suddenly saw themselves ousted from the diplomatic corps (retired) or from former ambassadors criticizing the actions of the new leadership, under the roof of political parties to which they were recently affiliated. as an example, the prm senator eugen mihăescu, former romanian ambassador to unesco, impugned several times the reform and the foreign minister, in his updated capacity of 172 deputy chair of the foreign affairs committee of the senate. senator mihăescu considered the reform as an ‘earthquake in the ministry of foreign affairs’ and wondered if the new team will be able ‘to replace the old generation with a new one, capable enough to cope with the exigencies of diplomacy’ (damian, 2005). the pre-accession period of 2005-2006 was benchmarked in romania both by major achievements (political, economic, administrative) culminating with joining the european union, and domestic political conflicts. the ministry of foreign affairs, as part of the government and central administration, implemented a program of reforms with recognized but also controversial outcomes. as i have presented, the political and emotional ‘atmosphere’ in which a reform is conducted is essential for the general public perception. the same managerial measures could be seen in positive or negative terms, depending on the political image of the respective cabinet, party or politician. a pure administrative analysis is almost impossible for the term of a government or minister, although any attempt to put decisions and consequences under technical criteria may be useful. concluding this section, there are a number of reasons for which we can affirm that reforms of the diplomatic service in romania were conducted based primarily on the rational actor model. the organizational behavioral and public policy models were not of a significant role. moreover, the bureaucracy of the department acted rather as a drag for reforms. the political will of the foreign minister and the second line leadership of the department pushed things in the right direction of change, sometimes paying the unpleasant price of making older diplomats angry. though it is hardly to be demonstrated, the fact that ungureanu was not a career diplomat but first of all an academic with a solid international experience made him more committed and prepared to assume courageous measures. being an ‘outsider’ as a basic profession (professor at the university of iaşi) and having no ‘complicity’ with the system, but also being a former secretary of state in the ministry of foreign affairs (1998-2001), ungureanu had both advantages of bureaucratic independence and know-how. 5.2. post-accession period (2007-2014) the post-accession period of reference in this article covers synthetically the first seven years of romania’s eu membership, until the beginning of 2014. as a general observation, political instability and relative frequent changes of governments or just reshuffles made very difficult any continuity of public policies or government strategies. a continuous climate of political tension moved real focuses from policy to politics in an extremely imbalanced proportion. beyond political confrontations and virulent rhetoric just a little attention was paid to real public policies and institutional reforms. the ministry of foreign affairs was both a privileged and vulnerable institution in this period of political tensions. it was a privileged one because, unlike other departments and agencies, the foreign policy did not suffer substantial alterations. the main directions of romania’s external strategy remained essentially the same, with strong and clear emphasis on eu and nato memberships, and that was the good news. the bad news for romanian diplomacy was the fact that the leadership 173 of the ministry, between 2007 and 2013, counted as many as ten ministers! sworn-in ministers (eight of them) or just acting ministers (two ad interim foreign ministers, in 2007 and 2009), covering the whole spectrum of mainstream parties (liberals, liberal-democrats and social-democrats) but also non-partisan career diplomats, the ten chiefs of romanian diplomacy in seven years could not properly develop long-lasting programs of reform. some of them did not even intend to start a reorganization or institutional review. most of them did not have eventually enough time to develop a strategy, ‘surviving’ in office for just a few months and usually being under tough political pressure. the ministerial terms were quite different as duration (except for interims, from a minimum of three months to more than two years) as well as notable performances. as always after a new minister investiture, the first two or three months are ‘dedicated’ to accommodation and replacing some key officials in the ministry’s apparatus, such as the chief of staff, the spokesperson and the political director, and also to remaking the chart of the ministry of foreign affairs. it is however still to be clarified why each new foreign minister wants to reorganize the chart of the ministry, since the updated formula does not necessarily means visible benefits. the only realistic answer refers to this method as a convenient procedure to replace directors general and directors, according to the minister’s preferences. the period between 2009 and 2011 has been profoundly marked by the economic crisis and budgetary cuts suffered by all ministries. the ministry of foreign affairs was not an exception to the rule. not only salaries have been diminished with 25% for diplomats serving in the central and external missions (as everywhere else in the public sector) but the staff was shrunk dramatically in embassies and consulates. it is therefore not a surprise to remark that diplomats and other professionals in the country were quite reluctant to support the austerity measures taken during the liberal-democrat government, despite efforts to explain the gravity of the crisis and the need of austerity, plunged to historic low levels of popularity. in december 2010, the foreign minister teodor baconschi declared that ‘the reorganization of the foreign ministry has ended, with a loss of 473 positions [out of 2,300] in total (including unoccupied positions), from which 155 represented effective lost jobs and fired people, both from central and diplomatic missions’ (cotidianul, 2010). with the same occasion, baconschi mentioned that, in the context of a severe financial austerity, he would prefer to close the ‘unprofitable diplomatic and consular missions’ than to affect the functionality of the embassies and consulates in the most politically important capitals and economic centers. unofficially, a short list with a few diplomatic missions (especially consulates outside europe) proposed for shutdown was circulated in media but eventually none of them was closed. many embassies and consulates lost one or two positions (diplomatic, administrative or both) so that in 2010-2012 the level of staffing in romanian diplomacy reached a minimum of the post-communist period. a number of embassies in central asia and africa worked with one single diplomat that is the ambassador. as a reaction to the announced layoff 174 of diplomatic and especially non-diplomatic staffers, the union leader valeriu smadu threatened with the possibility of suing the ministry of foreign affairs and also ‘going on strike to defend employees’ rights’ (evenimentul zilei, 2010). the idea of closing some inconsistent diplomatic missions did not get enough political support at the government and presidency level and it was not implemented, mainly because the counter-argument of high costs of reopening a diplomatic mission after years of suspension was prevalent. in 2011, consistent with the foreign minister baconschi’s prior statement, the reorganization of the foreign affairs department stopped and that was considered good news because of the relative end of the crisis. we learn that there were ‘2,077 employees envisaged for 2012, only one less than in 2011’ (razi, 2011). beyond obsessive quantitative dimension regarding spending cuts, it is almost self-evident that there was no time and energy for further serious qualitative discussions, while between the political leadership of the ministry and the diplomatic corps has already emerged a gap. an important political and administrative task with which the ministry of foreign affairs was charged by the government in the period of 2009-2011 was related to the objective of romania’s admission into the ‘schengen area’ agreement. from the administrative perspective, the program assigned to the department of foreign affairs referred to the technical preparation of romanian consulates and consular sections (the ones outside of the schengen area) in order to meet the list of the so-called ‘schengen criteria’. in march 2011, the european institutions (european commission, european parliament) concluded that romania fully meets the technical criteria to join the schengen area, but the european council eventually postponed the decision. one final observation with regard to romanian diplomatic service addresses the issue of specific legislation. although several foreign ministers attempted to make an essential reform of diplomacy as administrative public service, the dedicated law remained unchanged over the past decade. the so-called ‘statute of the diplomatic and consular corps of romania’ dates back to 2003. it is, in fact, one of the last pre-eu laws in the realm of public administration and government in the country. the fact that the key legislation regulating the diplomatic service did not suffer any change for more than eleven years (2003-2014) has two possible explanations: either the diplomats are satisfied with the law in terms of regulations and benefits or a new law would require a political and social consensus in relation to this profession which is unlike to be achieved in the midst of a long economic decline. it is quite difficult to find a key-idea to define the post-accession period in the romanian ministry of foreign affairs. stagnation? fatigue of reforms? lack of vision? demotivation? definitely it was not one of substantial progresses and reforms. the economic crisis that affected romania from 2009 to 2011 pushed inevitably the department and diplomatic missions in severe budgetary constraints. due to the 25% general cut of salaries in 2010, it was even more difficult if not impossible for the leadership of the ministry to ask home or dispatched diplomats for more efforts or improved performances. a kind of ‘survival strategy’ has installed in diplomacy and the organizational behavioral model returned in the ministry, after years of reforms. 175 5.3. romania’s diplomacy reform: a mixed case of the rational actor vs bureaucratic inertia concluding the case study, both the pre and post-eu accession periods of romanian diplomacy were based on the rational actor model (mainly), with the foreign minister’s political will in center stage, but also on the reluctance and inertia of the bureaucracy, as part of the organizational behavior. the one which actually missed and, to some extent is still missing, is the public policy model, involving a mix of voices and opinions from civil society and based on openness and consultation with non-ministry actors. the lack of experience for real public policy models of decision is in fact a general observation which can be extended for the whole range of public services in romania, not only and perhaps less in diplomacy than in other sections of the government. looking to the ambitious program of the romanian diplomatic system’s reform, mentioned at the beginning of this section, one can conclude that part of it has been achieved even from the pre-accession period, while other issues remained unsolved. first of all, the selection of permanent diplomatic personnel has been regulated and the general rule is the public contest. secondly, a new generation of diplomats got a chance in the mid-2000s, before the financial crisis severely reduced the opportunities for newly established positions. public and cultural diplomacy was massively used for foreign policy purposes in 2005-2006, before the eu accession moment of january 1st, 2007. a general feeling of openness and transparency appeared after 2005. the hard-core of the financial administration of diplomacy remained nevertheless unchanged. old rules, rigidity and bureaucracy, slow procedures and an excessive caution in approving funds for diplomatic missions could not be very much relieved by the successive foreign ministers, because of the resistance of other government departments, especially of the ministry of public finance. 6. general conclusion analyzing diplomatic services in modern politics is a matter related to the general theory of public policy analysis but also an issue of foreign policy assessment. one can hardly separate today diplomacy as bureaucracy from diplomacy as foreign policy results. from this perspective, the american approach is even more flexible: foreign policy is diplomacy and diplomacy is foreign policy. when speaking about diplomacy, henry kissinger is actually having in mind what here in europe we name foreign policy. more than everywhere in the world, because of its superpower status and leading role, the us diplomacy is associated with a set of fundamental values, principles and an ideological creed that are ‘coloring’ the performance of the department of state. the european rigid taxonomy with regard to the conceptual distinction between political decision and diplomatic service comes basically from the french tradition. more recently, analytical framework of diplomacy was enriched by the english school, as jönsson and hall explain: ‘diplomacy, in this perspective, is about dynamic relations that help differentiate political space. we have lamented the fact that no dynamic term, based on a verb, can be derived from the word ‘diplomacy’, but we will 176 pay special attention to such processes as the reproduction of particular international societies and the institutionalization and ritualization of diplomacy’ (jönsson and hall, 2005, pp. 24-25). undoubtedly, diplomacy and diplomatic service are endowed with norms, rules and roles. some of them may be neutral or pure technical, we admit, but the ones which actually make the difference between countries are loaded with political, ideological and, in a large sense, with a cultural pattern. more than any other public policy (education, health-care, transportation, environment etc.) foreign policy is inseparably bound to political processes, while diplomatic service seems to be less administrative and more political. despite many attempts of reformation and professionalization, meant to get diplomatic service away from politics and party influence, with some notable results in the postwar age, the activities of the ministries of foreign affairs remain captive in the political paradigm. the bureaucratic dimension of diplomacy resides not only in procedures, forms of communication and protocol, but mostly in the way human resources are managed and financial resources for administering missions are spent. even these aspects may be under political control in some countries, but generally speaking the advanced systems allow top bureaucrats from the ministry (secretary general, directors general) or heads of mission (ambassadors, consuls general) to take decisions, based on a limited mandate. as a macro-trend in governance and world affairs, valid for all categories of public policies, diversifying and increasing number of actors (state and non-state actors) have had an impact also for diplomacy. andrew f. cooper, john english and ramesh thakur offered, under the auspices of the united nations university, a pretty comprehensive view on enhancing global governance and the nascent diplomacy. according to this approach, governments are no longer single players in the field of diplomacy. they are still the most important voices but they lost the monopoly of representing interests. brian hocking and dominic kelly define the way old and new stakeholders inter-relate in the diplomatic arena: ‘in the case of governments, it is reflected in the reform of diplomatic services to enhance their interaction with civil society and reinforce and redefine the ‘public diplomacy’ function. in the case of ngos, it is reflected in debates about purpose, strategies, and engagement with both business and government and, for multilateral organizations, in reaching out beyond the realm of states in a search for funds, expertise, and legitimacy’ (hocking and kelly, 2002, p. 207). the mix of government and non-government actors could act as a constraining factor for the ministry of foreign affairs, in the sense that reaching a consensus in the specialized circles should be followed and respected by the diplomatic service. james reed explains this seemingly surprising phenomenon in which the government seems ‘captive’ in its political and diplomatic actions, in a mechanism of consultation and partnership reflecting in fact the natural consequence of a profoundly democratic society. in his words: ‘the policy-maker who would defy the consensus of opinion within the foreign policy public and among its opinion elites is running a considerable risk. in america, the foreign affairs bureaucracy is so politically vulnerable – and the american political class so transient – that foreign policy ideas generally trickle up, 177 as it were, into the state apparatus from the vigorous and always opinionated institutions and organs of america’s independent foreign policy community. hence the extraordinary collective influence of the think-tanks and academic research institutes, the council on foreign relations and the world affairs councils, and the journals foreign policy and foreign affairs’ (reed, 2002, p. 60). taking into consideration all changes and adjustments of the diplomatic services in the past decades, following globalization and diversification of stakeholders in world politics and diplomacy (international organizations, corporates, academia, civil society, media) we can conclude that analyzing the bureaucracy of diplomacy is more and more like peering a small part of a large mechanism. it could be technically an interesting exercise of administrative analysis but eventually it’s not enough to get a clear image. in order to get a full understanding of diplomatic processes we need the whole picture. even for a small/medium country like romania, not to mention the great powers, as i have presented in the previous sections, decision making process in foreign policy and diplomacy involves more than the ministries of foreign affairs and top officials. however, the road to a real public policy process is still long in romania, where decision making relies too much on political will of leaders and governments. the lack of an effective institutional culture makes the hard-core of the public institutions to act most frequently against rather in favor of the projects of reforms. on a long run, the ideal is to replace strong leaders with strong institutions, but with institutions that have incorporated the culture of public interest. the first steps have been already made in order to develop institutional reflexes towards accountability and respect for citizens and law. diplomacy is obviously part of this state modernization effort. alongside with politics and ideology of political actors, it becomes a self-evident truth that the civil society, including non-governmental sector, academic opinions, media and the business sphere have begun to influence diplomacy even in the countries that underwent a transition from totalitarian to democratic and pluralist regimes. references: 1. barnett, t., great powers: america and the world after bush, new york: g.p. putnam’s sons, 2009. 2. berridge, g.r. and james, a., a dictionary of diplomacy, 2nd edition, new york: palgrave macmillan, 2003. 3. bondar, f., 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(eds.), enhancing global governance: towards a new diplomacy?, new york: united nations university press, 2002, pp. 55-68. 26. ungureanu, m.r., întodeauna loial. note diplomatice pentru o românie modernă (20052007) (always loyal: diplomatic notes for a modern romania (2005-2007)), iaşi: polirom, 2008. 177 transylvanian review of administrative sciences, no. 36 e/2012, pp. 177-179 the fifth trans-european dialogue in public administration budapest, 1-3 february, 2012 the trans-european dialogue in public administration (ted) is an academic event co-organized each year by the two key professional associations of public administration in europe, the european group on public administration (egpa) and the network of institutes and schools of public administration in central and eastern europe (nispacee). each ted focuses on a selected key theme of contemporary public administration, and invites, or accepts contributions of, the leading scholars of the field. the venue of teds alternates between central/eastern and western europe. this year’s ted – the fifth one (hence ‘ted5’) – was hosted by the department of public policy and management, corvinus university of budapest. the choice of location in a way reflects the international esteem of the department’s academic quality by the leading european academic organizations of public administration and public management. in the following we give a brief account of this important event. our motivation for doing so is twofold. the contributions to ted5 (most of which will soon be, and some of which already are, available in print format) offer a distinctive opportunity for students and scholars studying central government structures and their politicization in a truly comparative and european perspective. in addition to this the papers may serve as a sort of exemplar, or ‘international best practice’ possibly benefiting other social science disciplines as well. two important events preceded the conference, and to some extent helped participants to prepare for, ted5. firstly, the transylvanian review of administrative sciences issued a special edition related to the topic of ted5 under the title: ‘agencies in central and eastern europe’. in the first place, this issue has contributed to the existing knowledge in the field, for example, in studying the impact of the european union and of the economic crisis on the (de)agencification process in countries of central and eastern europe. on the other hand, the special issue provided an important milestone in the preparation for ted5 discussions. secondly, ted5 had a special introduction on 1 february with a discussion entitled ‘a case for trans-european dialogue in public administration: the twenty years of the leuven-corvinus cooperation (1992-2012)’. ted5: the politics of agency governance this year’s ted focused on a key topic of contemporary government reforms, the ‘politics of agency governance’. ted5 hosted many of the most renowned european researchers of the field, the former and current leaders of the european (egpa) and global (iias) academic organizations of public administration, as well as prominent 178 american, chinese, and turkish scholars. hungarian researchers active in the field also participated at this event. why questions of agencification – and, within that, its political aspects – were chosen as the key theme of ted5? over the past three decades agencification – that is, increasing creation of, and reliance on, semi-autonomous agencies operating at arms’ length of the government and carrying out all kinds of executive and regulatory tasks – has become an important element of the government machinery all around the world. an important motive for agencification is the so-called logic of political credibility (majone, 2001). by creating an agency at arms’ length, politicians show their willingness to refrain from interference; the agency can thus carry out its tasks in an impartial and expert manner. in practice, however, we see that politicians keep on interfering and meddling with agencies (pollitt et al., 2004). moreover, many agency tasks are inherently political because they involve the implementation of policies, decisions about allocation or distribution of scarce resources, and delivery of goods/services to citizens/voters. there are many other ways in which politics and/or politicians (still) play a role in and around agencies. for example, agencies experience, at street-level, which policies work well and which do not. this information is necessary input for policy makers inside the government. however, this input is not always heard, processed or even appreciated by, for example, ministries. therefore, some agencies have developed new ways to influence policy debates and development themselves; they become active participants in the political or policy debate (verschuere, 2009). see for example the transnational networks of regulatory agencies, in which regulatory policies are shaped, outside of the influence sphere of national governments and politicians. a third way in which politicians can exert influence on agencies is through their role in the design of agencies. in many countries, the decision to establish an agency requires a political decision, for instance legislation. politicians can thus decide whether an agency is born, what its task will be, its legal form, governance structure, funding, and so on. politicians may also decide who is appointed as ceo and/or member(s) of the board; political appointments are of course the ultimate way to influence agency functioning on a daily basis. the latter aspect of the topic has been shown to be especially relevant for new or transitional states where the level of politicization of public administrations tends to be higher than in countries with long-established democracies (see oecd, 2009). ted5 focused on aspects of politics in and around agencies in cee, cis and western european countries, whereby ‘politicians’ include both ministers as members of executive cabinets, as well as the role of parliament and parliamentarians, as political parties. contributions focused on issues such as: the appointment of agency ceos and board members (including issues of patronage and politicization); the influence of agencies on the political and/or policy debate; the role of politics and politicians in the decision to create agencies; the role of politics and politicians in the governance (steering, control) of agencies; the merits of agencification for politicians and political parties (including shifting of blame and risks, direct influence through appointments, 179 assets in political bargains etc.); and the effects of interference by politicians in agency matters for the functioning of agencies. teds are intended to induce dialogue not only in the ‘east-west’ dimension – the relevance of which has been constantly diminishing anyway by giving room to other geographical clusterings – but also between related disciplines (such as ‘core’ public administration, political science, organization studies and constitutional/public law), between various research traditions, and between generations of academics. therefore it is particularly indicative of ted5’s success that the event was able to attract not only many of europe’s most prominent researchers of the field but also a significant number of young scholars – some of them still working on their ph.d. degrees or even being master’s students – both from western and eastern/south eastern europe. follow-up and dissemination activities it is the tradition of teds that one of the co-organizers, nispacee, through its ‘nispacee journal of public administration and policy’ (njpap) publishes a special issue containing a selected set of research papers underlying/summarizing the contributions of ted5 participants. in the case of ted5 this special issue – which will be also available as a separate book – can be expected to appear in fall 2012. in the case of ted5, given the impressive quality and quantity of contributions (both oral and written) the organizers are also contemplating the initiation of an additional symposium or special issue in an internationally renowned, blind peer reviewed academic journal other than njpap. decision on this second publication project will be made later this year. references: 1. majone, g., ‘two logics of delegation: agency and fiduciary relations in eu governance’, 2001, european union politics, vol. 2, no. 1, pp. 103-122. 2. oecd, sustainability of civil service reforms in central and eastern europe five years after eu accession, sigma paper no. 44, paris: oecd/sigma, 2009. 3. pollitt, c., talbot, c., caulfield, j. and smullen, a., agencies. how governments do things through semi-autonomous organizations, new york: palgrave macmillan, 2004. 4. verschuere, b., ‘the role of public agencies in the policy making process. rhetoric versus reality’, 2009, public policy and administration, vol. 24, no. 1, pp. 23-46. hajnal györgy department of public policy and management, faculty of economics, corvinus university, hungarian academy of sciences, center for social sciences, budapest, hungary tel.: 0036-14-825.032 e-mail: gyorgy.hajnal@externet.hu jenei györgy professor, department of public policy and management, faculty of economics, corvinus university, budapest, hungary tel.: 0036-14-825.093 e-mail: gyorgy.jenei@uni-corvinus.hu 57 abstract this article reviews the new public management (npm) literature in central and eastern europe, looking particularly at reforms in estonia, hungary and romania. it finds that research that assessed changes in internal processes and activities within the public sector by far outnumber research that assessed changes in outputs and outcomes. significant challenges in assessing impacts make sweeping claims about whether npm ‘works’ difficult to support with solid evidence. the paper shows that npm policy is still considered as an option for public sector modernization in central and eastern europe, and suggests that a number of components of npm, if not the model as a whole, are likely to continue to exert influence on the public sector in the future. keywords: new public management, estonia, hungary, romania, central and eastern europe, the future of npm. the new public management is not that bad after all: evidence from estonia, hungary and romania sorin dan sorin dan doctoral researcher, public governance institute, katholieke universiteit leuven, belgium tel.: 0032-16-320.179 e-mail: sorin.dan@soc.kuleuven.be transylvanian review of administrative sciences, no. 44 e/2015, pp. 57-73 58 1. introduction the adoption of new public management (npm) ideas has arguably been one of the major developments in public administration and management in the past decades. there has been an increasing need for evidence on the impact of these changes, especially outputs and outcomes beyond the administrative system itself. the interest exists but the evidence is still weak, fragmented, and sometimes contradictory (for example pollitt and dan, 2011; pollitt and dan, 2013; savoie, 1998). this is the case in countries which have experimented widely with this type of public policy, and even more so in central and eastern europe (cee) which began to make use of npm later. few public management reform initiatives have been successfully applied in the cee region (bouckaert et al., 2008; dunn, staroňová and pushkarev, 2006; nemec, 2008). although implementation issues are not specific to former communist countries alone, dunn, staroňová and pushkarev (2006) noticed a pattern of poor implementation across the region. past reviews of the impact of npm in cee have drawn mixed conclusions about its success (bouckaert et al., 2008; bouckaert, nakrošis and nemec, 2011; caddy and vintar, 2002; dunn, staroňová and pushkarev, 2006; nemec, 2010; nemec and de vries, 2012). a recent study has surveyed the empirical npm literature across central and eastern europe in the past ten years and has argued that ‘npm can work’ if the right context and adequate administrative capacity are in place (dan and pollitt, 2014). it is clear that npm has sparked a good deal of debate and controversy which have continued to this day, and are likely to continue in the future. this article reviews npm studies in central and eastern europe, looking particularly at reforms in estonia, hungary and romania. it distinguishes between effects on internal processes (or activities), outputs and outcomes, and codes the effects using these three dimensions. then, it distinguishes between improvements, deteriorations and lack of change, and codes the findings accordingly. after this general picture, the paper discusses patterns in the impact of npm policy, and provides specific examples of reforms implemented in the three countries. 2. setting the context: npm in estonia, hungary and romania npm-type ideas have found relatively more adherence in the small, decentralized administrative system of estonia than in other cee countries. it is common for the public management literature to portray estonia as the npm enthusiast in the region (for example, bouckaert et al., 2008, p. 352). a common theme of estonian public sector modernization has been to increase the efficiency of public institutions and decrease the role of the state by promoting market-type mechanisms (bouckaert et al., 2008, p. 352). unlike other former communist states, where social democratic ideas prevailed for much of the transition period (as in romania), estonia benefited (and still benefits) from a higher degree of market appreciation, sometimes even idealization (tõnnisson and randma-liiv, 2008, p. 95). despite this, estonian authorities failed to implement a comprehensive npm program, although they formally promoted it especially starting 59 with late 1990s and early 2000s. estonia, nevertheless, managed to implement specific npm tools such as performance-related pay, but these changes are just a part of larger public sector modernization efforts. they contained a mix of weberian, npm and post-npm initiatives. this makes the evaluation of the effects of npm difficult – npm is just a part of a bigger whole. distinguishing the reforms that managed to be implemented from those that did not is not readily straightforward. table 1 below includes a list of the main npm initiatives since the country’s independence in 1991 along with the implementation status of each initiative. to assess implementation status, i relied on existing academic sources. for each specific reform i checked more than one academic source. if all sources indicated that a policy was implemented, i followed this conclusion. however, the tables distinguish between partial and complete implementation, in line with the existing evidence. in the tables that follow, partially implemented initiatives are referred to as ‘partial’ while completely implemented reforms are denoted by the word ‘implemented’. if studies disagreed or were unclear, i drew the conclusion that the status was uncertain. this same approach was used for all three countries (reported in tables 1 to 3). hungarian npm shares many of the features common in estonia and the cee more generally. issues such as political instability, lack of a unified vision, implementation problems and limited administrative capacity have characterized the public sector in hungary (hajnal, 2008; hajnal and jenei, 2008). one of the central goals of state reform during transition was to create and consolidate a functional rechtsstaat, and address corruption. as in other cee countries, npm policies lacked the support of a fully functional bureaucratic system. a major difference between npm policy in hungary and estonia lies in the timing of its adoption. in estonia npm has partially lost momentum since no major, comprehensive reform program has been adopted in recent years whereas hungarian policy makers have increasingly appealed to npm ideas especially since the change of government in 2006 (as shown in table 2). rather than going down, interest in npm has gone up. this may be explained by the new prevailing political ideas as well as by an earlier and more dynamic adoption of npm in estonia compared to hungary and romania. in many respects changes in the romanian public sector resemble those in hungary, although the pace of change in the early 1990s was slower. during transition and europeanization, the main goals were (and to some extent still are) to build the legal and institutional framework of a democratic state and market economy (hințea, 2008, p. 277). there are a few characteristics that set romania apart, however. first, romania is a larger country and has a bigger administrative system. second, some have argued that the communist regime in romania became more intense in the 1980s compared to other countries in the region (for example molnar, 2000). while others were considering opening up, the romanian state was closing in. third, the political will to adopt ‘tough’ measures fluctuated during transition. whereas estonia rebuilt its public service on completely different grounds after independence, romania did not. the romanian approach was incremental par excellence, and relied to a large extent on 60 ta bl e 1: n pm in e st on ia , 1 99 120 13 ye ar np m in itia tiv e un de rly in g id ea a nd g oa l im pl em en ta tio n st at us 19 91 -1 99 6 be gi nn in g of d ec en tra liz at io n an d cr ea tio n of a ge nc ie s re st ru ct ur e th e so vie t a dm in ist ra tiv e sy st em a nd e st ab lis h it on d ec en tra liz ed gr ou nd s im pl em en te d 19 96 pu bl ic se rv ice a ct e st ab lis hi ng a m er itba se d civ il s er vic e im pr ov e civ il s er vic e pr of es sio na lis m a nd q ua lity un ce rta in 19 97 -2 00 4 cr ea tio n of a ge nc ie s cr ea te c ap ac ity c on sis te nt w ith th e eu a cc es sio n re qu ire m en ts im pl em en te d 19 99 1) p ub lic a dm in ist ra tio n de ve lo pm en t c on ce pt 2) p riv at iza tio n of te le co m m un ica tio ns in cr ea se e ffi cie nc y, cu st om er o rie nt at io n an d qu al ity 1) p ar tia l 2) im pl em en te d 20 00 ci tiz en -o rie nt ed p ub lic a dm in ist ra tio n st ra te gy in cr ea se q ua lity th ro ug h de ce nt ra liz at io n an d im pr ov e co or di na tio n an d in te gr at io n un ce rta in 20 01 1) h ea lth s er vic es o rg an iza tio n ac t ( fi r st a do pt ed in 1 99 4) 2) in tro du ct io n of m ar ke t m ec ha ni sm s in e m er ge nc y m ed ica l se rv ice (a bo lis he d in 2 00 7) 1) h ea lth ca re p ro vid er s op er at e un de r p riv at e la w bu t r em ai n pu bl icl y ow ne d; ho sp ita ls or ga ni ze d as a ut on om ou s fo un da tio ns o r j oi nt -s to ck c om pa ni es 2) im pr ov e ef fi c ie nc y an d ef fe ct ive ne ss 1) im pl em en te d 2) im pl em en te d 20 01 2 00 2 1) p ub lic a dm in ist ra tio n re fo rm p ro gr am ( in clu di ng p riv at iza tio n of e st on ia n ra ilw ay s, re na tio na liz ed in 2 00 7) 2) p er fo rm an ce -re la te d pa y wi th g en er al a nd in di vid ua l p er fo rm an ce ta rg et s 3) c om m on a ss es sm en t fra m ew or k se lfas se ss m en t in t he m in ist ry o f f in an ce 1) d e fa ct o de ce nt ra liz at io n, in cr ea sin g in te rn al a ud it an d co nt ro l, tra ns pa re ncy , co or di na tio n an d co op er at io n, d ev el op in g a re su lts -b as ed c ul tu re a nd in cr ea sin g fo cu s on q ua nt ita tiv e in di ca to rs a nd m er itba se d pa y 2) i m pr ov e re su lts t hr ou gh g re at er e ffi cie nc y an d re wa rd d ep ar tm en ts w ith ou ts ta nd in g re su lts 1) p ar tia l 2) p ar tia l 3) u nc er ta in 20 03 1) e st on ia n pu bl ic se rv ice q ua lity a wa rd p ilo t p ro je ct (1 0 pa rti cip at in g ag en cie s) 2) in tro du ct io n of f in an cia l c os t s av in g pr og ra m 1) r ew ar d ex ce lle nc e in q ua lity o f p ub lic s er vic es to in cr ea se p er fo rm an ce 2) r ed uc e co st s 1) im pl em en te d 2) u nc er ta in 20 10 st ra te gi c p la nn in g an d bu dg et in g re fo rm in ce nt ra l g ov er nm en ti m pr ov e pe rfo rm an ce m an ag em en t, st ra te gi c pl an ni ng a nd re po rti ng un ce rta in so ur ce : a da pt ed u sin g tõ nn iss on a nd r an dm ali iv (2 00 8) . o th er s ou rc es c on su lte d in clu de in st itu t d e g es tio n pu bl iq ue e t d u dé ve lo pp èm en t é co no m iq ue (2 01 1) , nõ m m a nd r an dm ali iv (2 01 2) , s ar ap uu (2 01 2) a nd s ta te a ud it o ffi ce (2 00 2) . c om pl em en te d by th e au th or w ith n pm in itia tiv es in h ea lth ca re 61 the same civil service apparatus as before 1989. the first attempt to develop an accelerated, comprehensive public administration reform came late in 2001 only, followed by a second major program in 2005 after negotiations with the european commission. in 2005 the european commission recommended three main areas for improvement: civil service, local public administration reform through accelerating the decentralization process, and changes in public policy formulation. none of these changes were pure npm (other than ad-hoc downsizing and restructuring in the context of budget deficits and the recent financial crisis). they have, however, contained certain npm measures such as experimentation with the common assessment framework (caf) and multiannual modernization plans (mmps). some authors have noted that the interest in npm has been growing in recent years and is expected to grow in the future (androniceanu, 2006, p. 94; hințea, 2008, p. 281). this may indicate that especially in a context of financial stringency and budget cuts following the 2008 financial crisis, romanian policy makers have considered using npm ideas to respond to fiscal pressures and modernize the public sector. in romania, as in hungary, rather than being something of the past, interest in npm has been on the rise across different sectors (table 3 below). for example, most public hospitals were decentralized (ownership was transferred from central government to counties or local administrations) in 2010 following a major public hospital decentralization law. furthermore, the new education law in 2011 emphasized institutional and individual performance and ranked higher education institutions in each field of study. table 2: npm in hungary, 1990-2013 year npm initiative underlying idea and goal implementation status 1990s; 2000s experimentation with performance management and quality techniques improve service quality partial 1992 creation of a typology of agencies through government decision no. 2040/1992 establish a legal basis for agency-type organizations partial 1995 bokros reforms downsize and restructure the public sector to reduce inputs and improve effi ciency uncertain 2001 modifi cation of civil service law by introducing performance appraisal and performance-related pay improve civil service professionalism and quality implemented 2006 central government reform regulate, classify and clarify the structure and types of central government agencies partial 20062007 1) ‘normalization’ of public sector employment; increased focus on performance management, quality and competitive recruitment 2) introduction of market-type mechanisms in education and healthcare 1) reduce costs and improve citizen responsiveness by using private sector ideas and practices 2) improve service quality through increased user choice and funding 1) partial 2) not implemented 2007 introduction of a new individual performance appraisal system in central government motivate and reward performance implemented source: adapted using hajnal (2008). other sources consulted include hajnal (2012) and linder (2011). 62 table 3: npm in romania, 1990-2013 year npm initiative underlying idea and goal implementation status early 1990s-present decentralization process increase local autonomy and respond more effectively to local needs partial 2001 government strategy for the acceleration of public administration reform some npm elements including decentralization, local autonomy, public-private partnerships, agencies and general interest in managerial techniques, performance and quality tools partial 2003 multiannual modernization plans in central and local government develop strategic thinking and planning through strategies, action plans and annual monitoring reports implemented 2004 decentralization strategy accelerate the decentralization process to build local capacity to meet the eu accession requirements partial 2004-present 1) experimentation with common assessment framework and multiannual modernization plans 2) introduction of the public manager concept 1) improve monitoring and evaluation capacity, develop focus on results, performance and quality 2) improve civil service professionalism through private sector ideas and practices 1) partial 2) partial 2010 decentralization of most public hospitals and interest in descentralized hospital management improve management and fi nd additional sources of funding locally in order to improve the quality of and satisfaction with hospital services implemented 2011 new education law clear interest in performance measurement both indi-vidually and institutionally implemented source: partially adapted from hințea (2008). other sources consulted include dragoș and neamțu (2007). complemented by the author with recent developments in healthcare and education 3. literature search the selection of the three countries follows both theoretical and practical reasons. first, estonia is typically considered to be a npm enthusiast in central and eastern europe, and is often used in comparative public management research. second, hungary adopted a more mixed and gradual model of adherence to npm principles, lower before 2006 and more confident after 2006. reforms in romania are closer to the changes in hungary and have increasingly incorporated npm ideas. third, at a high level of abstraction, all three countries share a relatively common historical legacy, which includes communist regimes, but goes beyond it to include common trajectories of democratization and europeanization. fourth, the administrative systems in cee have been characterized by legalism and a focus on procedure rather than results (nemec, 2008, p. 350). finally, i selected the three countries for practical reasons including native romanian language skills and availability of documents and local expertise through the network of the project coordinating for cohesion in the public sector of the future (cocops) (see pollitt and dan, 2011 for more details). the identification of npm studies included in this article followed two main steps: step a: creation of a database of npm studies across europe the database was identified as part of the comparative project on which this research is based. a set of criteria guided the search and selection. to increase the pop63 ulation of studies and portray a more comprehensive picture of the literature, the project team included both academic and practitioner work, such as relevant official evaluations and reports by international and non-governmental organizations. the process of identifying studies for the database consisted of the following sequential sub-steps: a) reviewed titles and keywords in articles published since 1980 (or later in case the first number of a journal appeared after 1980) in the following major public administration, policy and management journals: journal of public administration research and theory, public administration, governance, public administration review, international review of administrative sciences, international public management journal, public management review, public policy and administration and evaluation. the following keywords were used to guide the search: new public management (npm), managerialism, performance, public sector reform, and public management reform. b) decision for inclusion in the database the aim in compiling the database was to obtain a general picture of the diverse npm literature that exists in europe, most of which does not consist of quantitative, large-n or experimental studies. therefore the research adopted a flexible approach to empirical evidence in that it included both studies that used empirical original data (quantitative and qualitative) and analytical overviews that did not use original data but made strong, logical claims about the effects of reform. the same process and criteria were used to decide on non-academic studies, which represent 32% of the total database. in addition, the project team looked at publication lists of the following organizations: oecd, sigma, world bank, national government websites and national audit offices. by collaborating with research teams in other countries who submitted their selection of studies from their countries – following the same set of criteria – the project leaders were able to use both english literature and literature in various other languages represented in the project network. the result is a database of 519 studies of npm reforms across europe. out of the 519 documents, 20% used mainly quantitative methods, 37% employed single or multiple case studies and 44% were broad synthetic overviews that contained an analytic attempt to make an assessment. step b: selection of studies of npm in estonia, hungary and romania on the basis of the database of 519 studies, i selected those that included npm studies in estonia, hungary and romania, resulting in a dataset of 72 studies. out of the 72 studies, 44% referred to npm reforms in hungary while about 17% (12 studies) did so for estonia and romania respectively (table 4). the rest of 22% included comparative work. table 4: number of studies by country type of study country numberof studies % single-country studies estonia 12 17 hungary 32 44 romania 12 17 comparative studies n.a. 16 22 total number n.a. 72 100 64 4. patterns in the impact of npm this paper distinguishes between effects on processes, outputs and outcomes. processes include changes within an organization, such as the introduction of a performance management system. they are ‘internal’ changes. they may or may not lead to changes in outputs and outcomes. outputs are what the public sector organization gives to the outside world, for instance the number of surgeries in a hospital or permits in a business support agency. similarly, they may or may not lead to improved outcomes, which are construed as effects outside of the organization, such as improved health for patients in a hospital or jobs for new university graduates. this conceptualization follows an outcome-based approach according to which it is the outcomes that matter the most to service users and citizens. they represent the final ‘judge’. overall, there have been more studies finding positive than negative evidence of the effects of npm, but this evidence concerns mostly internal changes in processes or activities. much of this literature did not refer only to one type of effects (for example process only or output only) but to a plurality of effects. starting from this general picture, i identified the following patterns concerning the impact of npm in estonia, hungary and romania. in support of each of these patterns i provide specific examples from the set of studies. a. internal changes in processes, activities and structures virtually all studies reviewed discuss changes in the internal workings of public sector organizations. at a very practical level these consist of the introduction of new practices and tools to improve management and governance processes. examples include the introduction of performance-related pay (prp) in estonian central government (national audit office, 2002; nõmm and randma-liiv, 2012), multi-annual modernization plans and common assessment framework (caf) in the romanian administrative system (profiroiu et al., 2006; profiroiu et al., 2010). as important as these innovations may be for technical or political reasons, they have not necessarily resulted in qualitative improvements in processes and further in outputs and outcomes. nevertheless, it does not mean either that no improvements could be observed. evaluating the effects of public management reform is a complex task – inherent trade-offs need to be carefully weighed before a conclusion is made about success or failure. it may well be that the goals initially established have not been reached, and in that important sense it can be argued that the innovative practice was no success. however, improvements in other areas could still be observed in the short, medium or long term. for instance, järvalt and randma-liiv (2010), on the basis of a survey of public managers and senior civil servants, conclude that the decentralization of hrm in estonia lacked strategic and systematic planning. in this sense the reform did not reach a major goal. however, they argue on the positive side that reform created fertile ground for major reform in other areas. even at a technical level, not to mention politically, the initiative was not a total failure, especially when one adopts a long-term and broader evaluative framework. the challenge is, nonetheless, that the longer and 65 broader framework one adopts the more difficult it is to persuasively attribute certain effects to reform. some studies actively discuss qualitative changes in processes, activities or structures and very few link them convincingly with changes in outputs or outcomes such as improved services seen through the perspective of service users or citizens. profiroiu et al. (2006), for example, use a large-scale representative survey to measure the perceptions of mayors in local government and country-wide ‘modernizers’ in romania with respect to innovative npm practices, such as multi-annual modernization plans (mmps) and common assessment framework (caf). the study found that half of the sample perceived improved, smoother and more transparent hr processes and an overall impression of modernization. one can argue in this case, nonetheless, that the cup is only half full since half of the sample did not perceive significant improvements in these areas. nor can mayors necessarily be regarded as objective observers in this matter. similarly, profiroiu et al. (2010) survey the perceptions of members of the network of modernizers, and found that most of them consider that mmps and caf either already led to improvements or will lead to improvements in processes and overall effectiveness in the future. effects in other areas were perceived to be only moderately positive, and final outcomes were not directly addressed. thus the cup has been neither completely full nor completely empty. b. coordination, transparency and accountability some of the studies discuss changes in coordination, transparency, trust and accountability following public management reform (baba et al., 2007; jenei et al., 2005; osborne, jenei and fabian, 2008). baba et al. (2007) critically analyze the effects of decentralization and de-concentration in romania with an explicit focus on how these reforms influenced coordination between various government levels and public institutions. they identified multiple problems such as administrative bottlenecks, double subordination and redundancies following inadequate coordination. overall, they found insufficient cohesion and poor coordination in the system. jenei et al. (2005) looked at public-private partnerships (ppps) in policy making, fundraising and service provision locally in hungary. on the basis of a detailed analysis of one municipality only, they found positive developments in policy coordination, service integration and legitimacy in social services. overall, they claim that public-private cooperation has intensified and become more professional over time. by contrast, osborne, jenei and fabian (2008) similarly discuss ppps in local government in hungary, but found a limited role of civil society organizations in fostering transparency and accountability in policy making and service provision. c. efficiency, effectiveness and quality of public services npm overwhelmingly centers on improving savings, efficiency, effectiveness and service quality. above all else, it was expected that npm would foster positive change in these areas. this is evident in our database of studies. virtually all studies mention either actively or more often cursorily some underlying theory. much of this theory is economistic ‘make the managers manage’ or managerial ‘let the managers manage’ 66 (kettl, 1997, p. 447). for instance, it was expected that performance-related pay in estonian central government would improve efficiency and effectiveness by rewarding outstanding results (national audit office, 2002; nõmm and randma-liiv, 2012). similarly, the privatization of emergency medical services was supposed to control costs and improve efficiency and effectiveness by creating competition and market incentives (lember, 2006). in hungary performance-oriented reform was expected to improve efficiency and effectiveness of civil service (linder, 2011). similar expectations can be found in the romanian studies (for example baba et al., 2007; profiroiu et al., 2006; profiroiu et al., 2010; șandor and tripon, 2008). the picture is mixed, fragile, and brings into discussion the limitations and implications of evaluating public management reform in a changing administrative and political environment. it is important to note, however, that no specific quantitative measures of efficiency and effectiveness were reported. this is a common limitation of much of the public management reform literature both in the east and in the west of europe (jenei et al., 2005; linder, 2011; pollitt and dan, 2013). three of the studies that sought to evaluate the impact of reform in romania made claims about efficiency, effectiveness or quality (profiroiu et al., 2006; profiroiu et al., 2010; șandor and tripon, 2008). the former two found relatively more positive effects than the latter. half of the sample included in the survey of local government officials and modernizers reported improved efficiency and overall effectiveness, although no specific measure of efficiency or effectiveness is provided and, once more, the respondents are not necessarily neutral observers. șandor and tripon (2008) surveyed the perceptions of citizens and government officials and found no significant change in efficiency, effectiveness or service quality. the picture is thus ambivalent, with some studies reporting certain improvements and others reporting no significant change. 5. do npm reforms ‘work’? what can be concluded from this review is that the effects of npm are fragile and quite mixed. it is clear that npm reform is no panacea. it appears that in certain contexts npm is associated with certain positive effects while in others it fails to work as expected. therefore, the key question for research is to identify conditions that facilitate success or, in some cases, inhibit it. furthermore, it is important to identify the underlying mechanism through which contextual factors influence the success or failure of npm practices. many of the studies do not in fact theorize or analyze contextual factors and their underlying mechanisms in great detail. more often than not such influences are deemed important but are only cursorily mentioned. another observation is that there seems to be a bias in the literature towards treating contextual influences that inhibit success rather than those that support it. this is obvious in the studies that assess perceptions in romania which found that half of the sample perceived improvements while half were either more moderate or negative. little is said of factors that explained this partial success, and much is said about factors that constrained uniformly positive improvements. we can tentatively suggest that assess67 ing success on the basis of ambitious political goals, such as improved efficiency by x percent, or improved difficult-to-achieve outcomes, may explain this bias. more realistic goals may not be politically acceptable and therefore may hinder implementation in the first place, but it might be that such an approach would set evaluation efforts on a more realistic basis. examples of improvements following npm policies have been found across the three countries. jenei et al. (2005), for instance, found that a rich tradition of engagement in ppps in a hungarian municipality facilitated its further fruitful development over time. to this end, growing mutual understanding of needs and opportunities between public and private actors had a major contribution. on the negative side, they identified unclear goals and imbalanced power relations as factors that can jeopardize successful partnership. partial improvements in processes, efficiency and transparency have been reported in romania (profiroiu et al., 2006). however, no particular factor or mechanism was identified that can explain how and why this was the case. the study concluded that limited funding, poor implementation and a gap between legislation and practice restricted the development of reform, and its expected effects on a larger scale. other studies in the dataset mention contextual factors and corresponding underlying mechanisms that were found to inhibit successful policy and explain how and why reform did not reach its original goals. they can be grouped in the following categories. for each particular category i provide the underlying explanatory mechanisms (when available) and provide examples. a. insufficient administrative capacity and resources a number of studies point to insufficient administrative capacity and resources as a key explanatory factor (for example lember, 2006; linder, 2011; national audit office, 2002; profiroiu et al., 2006; randma-liiv, 2005). these reforms range from performance-related pay in central government in estonia to performance-oriented reform in hungary and romania. this work shows the mechanism through which insufficient capacity and resources hinder management reform. in estonia, performance-related pay (prp) did not reach the goals of improving processes, efficiency and effectiveness due to a poor link of prp with results and broader government objectives. results were unclearly defined, necessary information was not systematically gathered and analyzed, and as a result prp was paid almost universally regardless of actual performance (national audit office, 2002; randma-liiv, 2005). lack of capacity and resources to manage contracts and conduct ex-ante evaluation was also found to explain why the privatization of emergency medical service in estonia faced salient implementation problems (lember, 2006). in hungary performance-oriented reform (appraisal systems, prp and competency management) affected staff motivation in the long term after initial optimism (linder, 2011). limited administrative capacity to manage these systems was one of the key contextual factors at work (linder, 2011). similarly, in romania poor implementation capacity prevented reform from going forward on a larger scale (profiroiu et al., 2006). 68 b. frequent change, instability and lack of continuity the forms of instability that the literature mentions most frequently are frequent turnover of governments (for example järvalt and randma-liiv, 2010), frequent and incoherent amendments in legislation (linder, 2011) and lack of continuity and coherence in carrying out policy all the way through to completion (șandor and tripon, 2008). for example, decentralization of strategic hrm in estonia did not proceed systematically as frequent change in governments led to instability and inhibited a systematic approach to reform (järvalt and randma-liiv, 2010). similarly, linder (2011) argued that frequent, and in some cases incoherent, amendments in civil service legislation in hungary inhibited performance-oriented reform. within this same category, șandor and tripon (2008) found that romanian citizens perceived public administration reform as incoherent and lacking in continuity. c. fragmentation and insufficient coordination another category of key contextual factors identified in some of the studies pertains to issues of fragmentation and coordination. for instance, järvalt and randma-liiv (2010) show that fragmentation and insufficient coordination hindered a systematic adoption of decentralization of strategic hrm in estonia. fragmentation and poor coordination manifested through unclear division of work and coordination goals. organizational autonomy reinforced various working styles and policies at the ministry level at the expense of a coordinated and integrated approach. in romania, baba et al. (2007) demonstrate that the simultaneous use of the principle of decentralization and de-concentration reinforced various coordination problems through unclear definition of roles and tasks between various administrative bodies. d. need for ethical principles and professional attitudes some studies discuss explanatory factors such as civil service politicization, informality and favoritism and connect them with the implementation of state reform. they closely reflect the cultural institutional ecosystem of a particular organization or administrative system. linder (2011) mentions lack of objectivity in measuring performance as a main factor influencing the success of performance-oriented reform in hungary. osborne, jenei and fabian (2008) in their study of ppps argue that informal networks and channels affected transparency and accountability in managing public-private collaboration. in romania, șandor and tripon (2008) found that citizens perceived public sector politicization to affect implementation of needed reform and civil servants professionalism. 6. conclusions and thoughts about the future of npm this overview finds that the best way to describe the picture of the effects of npm, to use a metaphor, is that of a cup that is both half full and half empty. as a complex public policy, npm has led to a variety of effects, some of which are intended and a step forward compared to the status quo, while others are more difficult to control and potentially harmful. npm enthusiasts can look – and have tended to look – at the 69 positive evidence and argued that npm does work well. critics of npm, by contrast, may choose to look at its problems and ignore what works well about npm. the findings in this article do not support any of these two positions. there is evidence that npm has led to certain improvements in estonia, hungary and romania – particularly at the level of processes, structures and activities. however, some cases document insignificant changes or even deterioration. the evidence on outputs and particularly outcomes is limited, and patterns are difficult to identify at this level of analysis. the existing database is a result of a search for npm literature performed by the author and colleagues in the project network. identifying clear-cut, ‘causal’ relations between npm components of complex reforms and their specific impacts is difficult. there is limited evidence of this sort that can be used to convincingly demonstrate that a specific effect can be attributed to a certain type of change. for this reason, final conclusions about the success – or failure – of npm-type initiatives cannot be more than qualified. contextual variables are critically important to ‘go deeper’ and understand the circumstances under which reforms produce certain results. by looking at specific examples, this study identified a number of salient contextual factors that can affect how npm policies work in the context of the three administrative systems included in this article. the evidence is limited and various, and as a result it was not possible to quantitatively measure the size of effects. this may be a helpful avenue for future research into public sector reform in the region, should the research and evaluation capacities allow such endeavors. these conclusions lead us to a discussion of the future of npm in the three countries and in central and eastern europe more generally. a key question is: what is next? public management scholarship in the region is at a crossroads at the moment. on the one hand, npm has lost momentum compared to years ago in a context of changing administrative paradigms in the west. similarly, various academics have criticized npm as an administrative reform strategy and contested its ‘fit’ for the public sphere, especially in a transitional context. on the other hand, as various examples in this article show, policy makers still continue to use existing npm ideas and apply new ideas that resonate well with a npm philosophy. this is particularly the case in countries that adopted npm later such as hungary and romania. this has possible implications for the larger current debate in public administration and management. this study shows that at least in some new eu member states npm ideas are still being considered and implemented. core npm reforms such as performance management, quality improvement or decentralization are still up on the modernization agenda in various countries in the region, especially in eastern europe and the former soviet union. romania, for example, starting in 2010 decided to decentralize most of its public hospital network. the same is true in the higher education sector where there is growing emphasis on performance management. furthermore, there is on-going debate in the country about needed regionalization and taking more confident steps towards greater fiscal and financial decentralization and local autonomy. these are not new ideas, but have continued to remain salient matters on the policy 70 agenda. politicians across the political spectrum use them as electoral tools and it seems that in this respect they all think in the same way that what romania needs at the moment is more – not less – decentralization, autonomy and management. by emphasizing management, npm-type ideas therefore are likely to remain popular, at least in part, in such systems where there is pervasive perception that public-sector management needs serious improvement if citizen trust in the state is to be further cultivated. arguably, professional management is not an invention of npm theorists, but npm has promoted the importance of responsive and results-based management. furthermore, in a post-socialist context, central ideas of npm, such as customer focus, have increasingly fostered a change of interaction between the state and service users who have become familiar with democratic institutions and have increasingly raised their expectations as part of the big european ‘family’. therefore, when assessing public-sector reform in a post-communist, formerly-centralized system, i suggest it is important to keep in mind the status quo before the reform. the idea of customer focus does raise concerns in a public sector context, but it has the potential to underline the importance of serving the citizen and service user, and focusing more on results and less on process. these values are expected of the public sectors in the region, and one of the virtues of npm is that it has significantly fostered these values. therefore, the impact of npm is likely to endure beyond a specific reform program or political mandate. it is in this sense that i argue that npm ideas can have their advantages in central and eastern europe. the recent financial crisis has had mixed effects on the adoption of npm. on the one hand, the need for cost savings resembles npm thinking with its preference for savings and efficiency. performance measurement and quality improvement are likely to continue to be used in this context. on the other hand, policy makers in some countries have appealed to post-npm initiatives aimed at ‘joining-up’, integration, coordination and recentralization to save money and address some of the perceived problems following the use of npm practices. examples in the database pointed to issues of systemic coordination following disaggregation. it remains to be seen how these pressures will be reconciled and what components of npm will continue to be used or introduced in the future. will they be continually adapted as experience and lesson drawing accumulates and develops further? will key policies within npm, such as performance management and measurement systems and quality improvement tools, be abandoned altogether? this is unlikely. performance management may change by incorporating values other than cost-savings and efficiency, but the idea and practice of performance management is likely to continue to be applied and researched. therefore, some central elements of npm, if not the model as a whole, are expected to remain relevant. these constitute useful avenues for public management research and practice in the future. npm is not dead and it may well have many years ahead, but it is important that it matures and learns from its own mistakes and the mistakes of others as it ages. 71 acknowledgements christopher pollitt, trui steen, maria pietilä and richard stillman made helpful comments on an early draft. this project has received funding from the european union’s seventh framework programme for research, technological development and demonstration under grant agreement no. 266887 (project cocops). references: 3. androniceanu, a., ‘new public management impact on the romanian public administration’, 2006, administrație și management public, vol. 6, pp. 93-99. 4. baba, a., balogh, m., dragoș, d., marian, c., pop, d., renert, c. and suciu, a.m., impactul serviciilor deconcentrate ale ministerelor asupra politicilor publice locale (impact of deconcentrated services of the ministries on local public policy), bucharest: soros foundation romania, 2007. 5. bouckaert, g., nakrošis, v. and nemec, j., ‘public administration and management reforms in cee: main trajectories and results’, 2011, nispacee journal of public administration and policy, vol. iv, no. 1, pp. 9-29. 6. bouckaert, g., nemec, j., nakrošis, v., hajnal, g. and tõnnisson, k. 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(eds.) government agencies: practices and lessons from 30 countries, basingstoke: palgrave macmillan, 2012, pp. 277-287. 34. savoie, d.j., ‘fifteen years of reform: what have we learned?’, in peters, b.g. and savoie, d.j. (eds.), taking stock; assessing public sector reforms, montreal: mcgill-queen’s university press, 1998, pp. 394-414. 35. tõnnisson, k. and randma-liiv, t., ‘public management reforms: estonia’, in bouckaert, g., nemec, j., nakrošis, v., hajnal, g. and tõnnisson, k. (eds.), public management reforms in central and eastern europe, bratislava: nispacee press, 2008, pp. 93-121. 202 abstract using a principal-agent framework and multi-country survey data of over 400 public sector organizations, this article examines the effect of result control on the use of financial management techniques in public sector organizations. in order to avoid invalid conclusions, we test for heteroskedasticity and model residual variance using a heterogeneous choice model. this model yields important insights into the effect of result control that would be overlooked in a misspecified ordered logit model. our findings reveal that result control matters, although size and primary task of the organization also prove to be determinants of the use of financial management techniques. within the context of the continuous attempts being made to improve public sector performance, policy makers should thus develop different strategies for different (individual) agencies, while relying on a strong ex-post result control, when they want to stimulate the use of financial management techniques. keywords: financial management techniques, heterogeneous choice model, result control. using financial management techniques within public sector organizations, does result control matter? a heterogeneous choice approach jan wynen jan wynen dr., ku leuven public governance institute, leuven, belgium e-mail: jan.wynen@soc.kuleuven.be tel.: 0032-16-320.143 transylvanian review of administrative sciences, special issue/2014, pp. 202-222 203 1. introduction a well performing public sector is considered to be a prerequisite for the economic and democratic performance of countries. recent public sector reforms have been attempted in individual countries to achieve a better performing public sector. as such, the organization of the public sector in oecd countries has been subject to some major trends and shifts during the last 20 years (pollitt and bouckaert, 2004, p. 95; hesse and toonen, 1997, p. 26; halligan, 2002, pp. 20-50). new public management (npm) is the best known example of these reforms and led to several changes of the public sector in many countries. npm was a reaction to correct the irretrievable failures and moral bankruptcy of the ‘old’ public management (hood, 1991; keating, 1989). more in particular, npm formed an answer to the lack of result and customer orientedness of public organizations that delivered services to the public or implemented policy (verhoest et al., 2007). according to npm doctrines public sector performance can be improved by importing concepts, tools and values from the private sector. public sector organizations should be offered more managerial autonomy while being controlled by the government on the basis of results. by doing so public sector organizations are believed to be more likely to apply private-sector styles of management techniques, to be more customer-oriented and will be more likely accountable for results, leading to a higher efficiency and a better performing public sector organization. therefore, one of the central arguments of npm is that more managerial autonomy may enhance the use of private-sector style management techniques by public sector organizations only under the condition of result control. this argument is based on principal-agent theory and asserts that because of goal incongruence (or conflict) and information asymmetry between the agency and its political principals, there is a considerable risk of opportunistic behavior by the agency (pratt and zeckhauser, 1991). opportunism can take the form of adverse selection, moral hazard, and, in policy settings, can lead to a subversive or deviant policy implementation by the agent (waterman and meier, 1998). following this line of reasoning, public managers of autonomous public sector organizations will have no incentives to use management techniques within their own organizations. on the contrary, management techniques may enhance the information for the political principal about potential shirking or deviant behavior of the agency. the concept of management techniques is however very heterogeneous, and captures a large variety of techniques. sets of management techniques are frequently referred to as management systems or management capacity. based upon literature (pollitt, 1995; ingraham et al., 2003; flynn, 2002; verhoest et al., 2010, pp. 50-73) four management subsystems can be distinguished: financial management, performance management, human resource management, and quality management. for each of these subsystems a number of techniques are proclaimed as good practice by npm literature (naschold, 1989; pollitt, 1995). in this article we focus on financial management. whereby, following verhoest et al. (2010, p. 62), internal result-based allocation 204 of resources to organizational units and the development of a cost-calculation system are considered to be representative for the use of financial management techniques within public sector organizations. using multi-country data this article studies to what extent result control affects the use of financial management techniques. however, the paper also has a methodological goal, more precisely to make public sector researchers aware of the underlying assumptions of ordered models. indeed, most studies rely on likert-type data, making ordered and multinomial models increasingly popular. this paper will show that it is useful to subject a regression analysis to some additional scrutiny because a misspecified model may lead to erroneous inferences. the remainder of this paper is organized as follows: a theoretical model is developed in section 2 while in section 3 the data is described and descriptive statistics are provided. the methodological approach, discussion of the model and main findings are discussed in section 4, which is followed by some concluding remarks. 2. using financial management techniques: a principal-agent approach the relationship between the public sector organization and the oversight government is a typical example of a principal-agent relationship, whereby the public sector organization acts as the agent of their political and administrative principals. as such the agent, or in this case the public sector organization, enjoys some degree of managerial autonomy. this kind of autonomy can be defined as the level of decision making competencies (discretion) an organization has vis-à-vis superior levels, bodies and actors (verhoest et al., 2004). granting a public sector organization more managerial autonomy involves shifting decision making competencies from external actors (i.e. parent ministries, ministers) to the organization itself by delegation or devolution. principal-agent theory emphasizes that the agent may use his autonomy to behave opportunistically (jensen and meckling, 1976). therefore public sector organizations are also subject to various degrees of result control. result control is referred to in this article as the extent to which the ceo is accountable for results and whether or not this accountability is linked to sanctions or rewards. whereas managerial autonomy refers to the extent that public sector organizations have discretion on the choice and use of the inputs (resources) they use, result control refers to the mechanisms used by the political and administrative principals to control which outputs/results the public sector organization produces. according to bouckaert (1998) result control is believed to temper opportunistic behavior by the public agency and to enhance its performance in several ways. first, the information asymmetry between the government and the public agency as to the performance of the latter is lessened by the use of information revealing instruments. second, the goals of both parties are aligned more closely because clear objectives and targets are set and negotiated. third, result control instruments like performance contracts may set priorities among the objectives of the different involved ministers, reducing the ‘multiple principals’ problem’ (bouckaert, 1998). hence, the npm-doctrine, which propagates the delegation of task to autonomous agencies and managerial autonomy, stresses the need for a strong result 205 control by the ministers and parent departments of such agencies. agencies should thus be given clear objectives by ministers and their achievement should be monitored, evaluated and sanctioned in case of mal-performance (bevan and hood, 2004; verhoest et al., 2012). public agencies thus have to accept a rigid result control system, which includes performance indicators and performance monitoring and assessment in order to ensure that the agency uses its discretion to pursue the achievement of the objectives of its principal (christensen and lægreid, 2004, p. 102). following verhoest et al. (2010, pp. 50-55) we expect that agencies which are controlled to a large extent ex post for their results may be forced, or induced, to use management techniques when this is assumed to be beneficial for their overall performance. the use of financial management techniques can be regarded as some kind of monitoring, bonding. since financial management techniques might thus be helpful for the oversight authorities to control the organization’s activities, we believe these techniques to be used to a larger extent in organizations with a high level of result control compared to organizations with lower levels of result control. although scarcely studied, the independent influence of external result control of agencies is consequently considered to have a positive influence on the use of financial management techniques within agencies. an element in the principal-agent relation, as described above, is that the agent receives sufficient autonomy in order to be able to implement the principals’ demands in an efficient, flexible and specialized way. having autonomy or decision making competences in managerial affairs may thus be a facilitator, enabler or inducement of using management techniques (lægreid et al., 2008; christensen and lægreid, 2007). by applying modern management techniques, agencies hope to increase overall performance in response to the demands of result control. this argument is also central to npm doctrines, claiming that both managerial autonomy and result control are needed in order to stimulate the use of innovative management techniques. managerial autonomy combined with result control provides public managers with both the possibility and the incentive to introduce these kinds of management practices. we thus expect that not only result control has a positive influence on the use of financial management systems, but that the interaction of management autonomy and result control has an equally positive effect on the use of financial management techniques. this relationship is visually presented in figure 1. 3. data source, variables and descriptive statistics we focus on a specific type of public sector organizations, which we refer to as ‘public sector agency’. following pollitt and bouckaert (2004) and verhoest et al. (2010) we focus on public agencies with the following features: (1) they are public law bodies, (2) they are structurally disaggregated from other organizations and core ministries, (3) they have some capacity for autonomous decision-making with regard to management or policy, (4) they are formally under some control of ministers and ministries, (5) they have some expectation of continuity over time, and (6) they have some resources on their own (either financial or personnel). companies and corporations with a commercial focus which have to closely observe the laws regulating private 206 internal use of financial management techniques ‘managerialautonomy’ granted to the organization by ministerand parent department ‘external resultcontrol’ of organization by minister and parent department organizationallevel level of political and administrative principals figure 1: visualization of the relationship between result control, managerial autonomy and the use of financial management techniques companies or which are registered under company law as company and governmental foundations, trusts and charities are excluded from our understanding of agencies. data used for the analysis have been provided by the cobra-network (‘comparative public organization data base for research and analysis’). the cobra network aims to encourage and enable comparative research of public sector organizations1. it developed a common questionnaire in order to survey senior managers of public sector organizations in particular, (semi)-autonomous agencies located directly beneath ministries and ministers. in each state the top management (chief executive officers (ceos)) of the state agencies was asked to fill in a web-based questionnaire containing several types of questions (i.e. perceptions of autonomy and control, innovative activity, management and organizational culture). the joint dataset comprises unique agency-level survey data spread across 15 different countries. yet, the goal of this article is not to conduct a cross-country comparison of the effect of result control on the use of cost calculation systems but to examine this relation independently from country characteristics. consequently the selection of countries is not vested in theory but is based on maximizing the amount of data while maintaining a representative sample. for this paper we will use data on agencies from 6 countries: norway, belgium, the netherlands, romania, germany and austria. the organizations that responded proved to be representative of the total populations in each state, with a broad distri1 for more information see: htt p://soc.kuleuven.be/io/cost/index.html. 207 bution across type of agency, primary tasks, ministries and policy fields. out of the initial 669 observations, 238 organizations have missing data on the outcome, explanatory, and/or control variables, leaving us with a sample size of 431 state agencies. 3.1. measuring the use of financial management techniques the ordered variable ‘cost calculation systems’ refers to the use of financial management techniques and is the main dependent variable in our different models to be estimated. we investigate the development of a cost-calculation system based on direct survey evidence. in particular, agencies were asked the following question: ‘to what extent is there in your organization a development of cost-calculation systems?’ agencies were given the following three options: no/to a small extent, to some extent or to a large extent. the dependent variable is set to 0 if the agency indicated that it does not happen, to 1 if it only happens to some extent and to 2 if it happens to a large extent. we chose this management technique since we consider it to be a good example of financial management (see also verhoest, 2010). furthermore, since several management tools are included in the dataset, an explanatory factor analysis (using a polychoric correlation matrix, in order to account for the categorical nature of the dependent) has also been carried out in order to verify the fact that ‘cost calculation systems’ load on the same factor as another financial management technique namely the internal allocation of resources to organizational units on the basis of performance. since it does, we can consider them closely related. therefore, we consider the development of a cost calculation system to be a good and representative measure for the use of financial management techniques. we chose not to use an index of both management techniques in order to maximize the number of observations. our dependent is thus based on a single-item measure, which can be perceived as a weakness of our data. yet this is often not less reliable than multiple response items (e.g. bergkvist and rossiter, 2007; gardner et al., 1998; wanous and hudy, 2001). gardner et al. (1998) even point out that single item measures avoid the risk of aggregating multiple measures whose inter-item correlation is due to common method variance. furthermore, we rely on self-reported indicators. the dependent is the perception of one person at a particular level of the organization (the ceo) within the agency; this also brings limitations since it can lead to an upward response bias due to social desirability bias, rationalizing myth (meyer and rowan, 1977) and hypocrisy (brunsson, 1989). the motivation behind using the perception of the ceo within the agency is however the following: the perception of senior managers about the actual autonomy and control of their agency will heavily influence their actions and the way in which they manage their agency. in a previous and comprehensive case study by verhoest (2002), it becomes clear that the de facto autonomy and control perceived by the ceos may differ substantially from the formal autonomy and control of agencies (as set out in legislation and regulations). other studies came to similar conclusions (verhoest et al., 2004), or have shown that the behavior of senior management was guided by these perceptions (verhoest et al., 2004). consequently, perceptions of autonomy and 208 control give us insights about the room for maneuver that senior managers think they have, and hence about the actual functioning of agencies (verhoest et al., 2010). in the following subsections we will first discuss the operationalization of result control and management autonomy after which the control variables are discussed in detail. 3.2. operationalization of result control and management autonomy result control is based on (i) the accountability of the agency ceo for agency performance (results) to the government and (ii) the extent to which the organization faces sanctions or rewards for its performance. when accountability is linked to sanctions or rewards, result control is high and the variable is set to one. if ceo accountability is not linked to sanctions or rewards we consider result control to be low and the variable is set to zero. a high level of result control in this case equals a ‘hard’ form of performance contracting, in which underor over-performance leads to not only the accountability of the agency ceo, but also to sanctions or rewards (see verhoest et al., 2010, pp. 60-79). a score ‘0’ refers to no result control or ‘soft’ result control (meaning ceo is accountable for the results, but without sanctions or rewards being given). following principal-agent theory, we take two types of organizational autonomy concerning managerial decisions into account; personnel management autonomy (personnel management autonomy) and financial management autonomy (financial management autonomy). personnel management autonomy relates to the autonomy of an agency to make decisions concerning salary level, promotion, and evaluation of staff, in general (beyond individual decisions) without interference from ministries. financial management focuses on three dimensions; the extent to which the organization itself and without interference from superior bodies (ministries, ministers) is able to shift personnel and running cost budgets, to shift personnel-running cost and investment budgets, and set tariffs for services and products. in line with wynen et al. (2013), a dummy score is calculated for each form of management autonomy based on the aggregation of the three items; whereby score 1 indicates full autonomy on all three items. 3.3. control variables furthermore, we control for some other factors which are based on previous studies (e.g. verhoest et al., 2010; wynen et al., 2013) believed to influence the use of innovative management techniques such as financial management techniques. by controlling for these factors we want to reduce the possibility that the found influences of result control on the use of financial management techniques are in fact due to the influence of other variables which are not in the model. however, a comprehensive discussion of all possible determinants of the use of financial management techniques lies beyond the scope of this paper. instead, we will focus on variables that are available in our dataset and which will be incorporated in the subsequent empirical analysis. • measurability of primary organizational task: task characteristics and the related technical environment affect organizational practice, and hence the use of financial management techniques. these tasks may vary according to their measurability 209 (wilson, 1989, p. 83), their policy/political environment (bourdeaux and chikoto, 2008; dull, 2009) as well as their salience (pollitt and bouckaert, 2004, pp. 80-105). financial management techniques can be expected to be used more in organizations with more measurable tasks and tasks which face pressures stemming from market forces or political salience. in the field of agency studies, a study with agencies from belgium, norway and ireland found a positive effect of measurability of primary organizational task on the use of internal result-based allocation of resources to organizational units; however, no significant effect was found for the development of cost calculation systems (verhoest et al., 2010, pp. 105-120). nonetheless, we include a dummy (services) in order to examine the effects of primary organizational task. this dummy is set to one when the primary task exists of services (general public services and business and industrial services). • type of agency: also, the legal distance from government and the extent of structural disaggregation from the parent ministry has consequences for institutional norms and organizational cultures. we expect a stronger inclination towards using financial management techniques in organizations further away from government, especially when they have their own legal identity, vested in public law or private law (hammerschmid and geissler, 2010; lægreid et al., 2006). first, agencies which are structurally disaggregated from government and which have their own legal identity are more susceptible for demands of their customers and stakeholders and more visible for media and society, increasing the need for legitimacy. such organizations need to secure their existence by building strong linkages with and support from these external actors. hence, pressures to adopt and use modern management techniques which helps them to deliver services of a high quality and in an efficient way, are comparatively strong. units directly under ministerial responsibilities are more politicized and less in direct contact with citizens, which is typically seen as hampering managerial instruments (bogumil and ebinger, 2008; bouckaert and van dooren, 2003, pp. 20-30; bach and jann, 2010; hammerschmid and geissler, 2010). likewise, organizations further away from government are more likely to develop organizational cultures conducive to the use of financial management techniques. therefore, a dummy that is ‘public or private law based’ is included in the analyses. it is coded one if the agency is a public or private law based organization and is set to zero otherwise. • organizational age and size: based on sociological neo-institutionalism and focusing on path-dependencies and culture at organizational level, the history and culture of an organization can shape the extent to which it will use new management techniques (see cultural-institutional perspective by christensen and lægreid, 2007; selznick, 1957). although the survey used for data collection in this research did not measure organizational culture and institutional norms directly, we have data on aspects which can serve as proxies. in this respect, the age and size of the organization are important, as older and smaller agencies will have a more enshrined culture, values and norms, which make it harder to introduce and effectively use 210 instruments which are at odds with the present, strongly institutionalized culture. younger agencies will be more inclined to use financial management techniques, also because these younger agencies are still in the process of building a strong legitimacy and relations with their stakeholders, and have a more developmental culture (quinn and rohrbaugh, 1981). furthermore, it may be speculated that larger organizations have higher internal information asymmetry. larger organizations have a higher likelihood of having more hierarchical levels within the organization (e.g. kimberly, 1976; child, 1973; blau, 1970), sequentially leading to possible problems of information asymmetry and goal incongruence (eisenhardt, 1989). in order to overcome these issues, more structured management techniques will be more likely applied in large organizations. moreover, larger organizations will also have more capacity to implement management techniques than smaller organizations (e.g. lægreid et al., 2007). based on the above we expect that both size and age will have an effect on the use of financial management techniques. size in terms of number of staff, measured in fte (size (fte)), as well as agencies’ age (age), measured in years since founding (survey year minus year of set-up), are therefore included. since the distributions of size and age are highly skewed, we use the square root in our models. 3.4. descriptive statistics this subsection is devoted to a descriptive analysis aimed at investigating: (1) the representativeness of the subsample used in the regression analysis; and (2) possible occurrence of collinearity problems. table 1 shows summary statistics for the main variables. the purpose of this table is to test whether the estimation subsample used in the regressions continues to be representative of the entire sample or is instead biased in one or more variables, because of an unbalanced distribution of missing values. consequently, we compare the averages and standard deviations of the variables introduced in previous sections. overall, the values reported in table 1 in the original sample and used sample columns are very similar. this suggests that missing values were randomly distributed, and that the observations used to estimate the regressions constitute a representative subsample of all the agencies that were originally included in the survey. table 1 however indicates that public or private law based agencies are slightly underrepresented in our sample, yet the decrease in these types of agencies appears to be distributed evenly over all countries, thereby suggesting that there is no geographical bias in the distribution of missing values. when examining variables, we notice that agencies in our sample employ on average, in number of fte, 662 employees. the median corresponds to 118 employees, indicating that organizational size ranges from very small (0 fte) to very large (6,781 fte). agencies in our sample exist on average about 29.57 years. again the median is lower: 14 years. when it comes to type, only 43.2% appear to be public or private law based. from the statistics with regard to the organizational task it becomes clear that 211 ta bl e 1: d es cr ip tiv e st at ist ics o rig in al s am pl e us ed s am pl e (n =4 31 ) to ta l s am pl e hi gh re su lt co nt ro l= 0 (n =2 88 ) hi gh re su lt co nt ro l= 1 (n =1 43 ) di ff. va ria bl e m ea n sd p5 0 n m ea n sd p5 0 m ea n sd m ea n sd us e of c os t c al cu la tio n sy st em s 1, 84 2 0, 72 9 2 54 4 1, 85 8 0, 70 3 2 1, 78 1 0, 70 6 2, 01 4 0, 67 1 -0 ,2 33 ** * hi gh p er so nn el m an ag em en t a ut on om y 0, 54 0, 49 9 1 57 2 0, 49 9 0, 50 1 0 0, 51 0, 50 1 0, 47 6 0, 50 1 0, 03 4 hi gh fi na nc ia l m an ag em en t a ut on om y 0, 19 3 0, 39 5 0 55 3 0, 17 6 0, 38 2 0 0, 18 1 0, 38 5 0, 16 8 0, 37 5 0, 01 3 hi gh re su lt co nt ro l 0, 31 7 0, 46 6 0 53 6 0, 33 2 0, 47 1 0 0 0 1 0 pu bl ic or p riv at e la w ba se d 0, 56 4 0, 49 6 1 66 9 0, 43 2 0, 49 6 0 0, 41 0, 49 3 0, 47 6 0, 50 1 -0 ,0 66 se rv ice s 0, 55 6 0, 49 7 1 56 1 0, 55 9 0, 49 7 1 0, 54 9 0, 49 8 0, 58 0, 49 5 -0 ,0 31 si ze (f te ) 17 ,1 6 23 ,3 5 10 ,5 4 55 9 17 19 ,3 4 10 ,8 6 16 ,4 7 20 ,6 1 18 ,0 5 16 ,5 1 -1 ,5 8* * ag e 4, 61 2, 79 1 3, 60 6 62 6 4, 65 5 2, 81 5 3, 74 2 4, 91 6 3, 00 7 4, 13 2, 30 2 0, 78 6* ** be lg iu m 0, 18 5 0, 38 9 0 66 9 0, 23 2 0, 42 3 0 0, 20 1 0, 40 2 0, 29 4 0, 45 7 -0 ,0 93 ** g er m an y 0, 10 9 0, 31 2 0 66 9 0, 14 2 0, 34 9 0 0, 18 8 0, 39 1 0, 04 9 0, 21 7 0, 13 9* ** ro m an ia 0, 06 88 0, 25 3 0 66 9 0, 07 66 0, 26 6 0 0, 04 51 0, 20 8 0, 14 0, 34 8 -0 ,0 95 ** * ne th er la nd s 0, 30 8 0, 46 2 0 66 9 0, 12 5 0, 33 1 0 0, 14 2 0, 35 0, 09 09 0, 28 8 0, 05 11 au st ria 0, 09 72 0, 29 6 0 66 9 0, 10 7 0, 30 9 0 0, 11 8 0, 32 3 0, 08 39 0, 27 8 0, 03 41 no rw ay 0, 23 2 0, 42 2 0 66 9 0, 31 8 0, 46 6 0 0, 30 5 0, 46 1 0, 34 3 0, 47 6 -0 ,0 38 si gn ific an ce le ve ls ar e ca lcu la te d us in g a w ilc ox on m an nw hi tn ey te st fo r t he v ar ia bl es u se o f c os t c al cu la tio n sy st em s, a ge a nd s ize (f te ), a ch i-s qu ar e te st w as u se d fo r t he re m ai ni ng v ar ia bl es : * ** p< 0, 01 , * * p <0 ,0 5, * p< 0, 1 212 a majority (56%) of agencies is involved in tangible tasks (services). furthermore, we notice that most agencies have high personnel management autonomy (50%) while only 18% of them have high financial management autonomy. when looking at our main covariates of interest, we see that 33% of agencies indicate to be subject to high result control. mean use of cost calculation systems equals 1.858 with a median of 2, meaning that most agencies use cost calculation systems to some extent. more precisely, 141 (33%) agencies report to make no use of cost calculation systems, while 210 (49%) agencies report to use it to some extent and 80 (18%) indicate to make use of them to a high extent. the table also allows us to examine differences between agencies with high result control and agencies without high result control. differences were tested using a chi-square test, except for age, size (fte) and the use of cost calculation systems a (non-parametric) wilcoxon mann-withney test was used. interestingly, when comparing means, agencies with high result control prove to use cost calculation systems significantly more than agencies without high result control. furthermore, agencies subject to high result control are significantly larger and younger than agencies without high result control. a possible explanation could be that small agencies have a more homogeneous culture and a more distinct identity, and are therefore able to modify signals from above (verhoest et al., 2010). also, agency age can be linked to organizational culture. the development of a distinct culture and tradition within an agency takes time; consequently, older agencies will be more able to resist pressure from outside actors. finally, the table also shows that high result control differs significantly across countries. agencies in belgium or romania are in general faced with lower levels of result control, while agencies in germany are more often subject to high result control. the linear correlation analysis among the regressors is reported in table 2, showing that the value of the correlation between two regressors is not >0.26 (between no high financial management autonomy and services as primary task). this suggests that no collinearity exists between the regressors. table 2: pairwise correlation matrix variables (1) (2) (3) (4) (5) (6) (7) high personnel management autonomy (1) 1 high fi nancial management autonomy (2) 0,1715 1 high result control (3) -0,0329 -0,0157 1 public or private law based (4) 0,0863 0,2483 0,0626 1 services (5) 0,1008 0,2637 0,0302 0,1887 1 size (fte) (6) 0,0591 -0,053 0,0383 -0,0201 0,0018 1 age (7) 0,1032 -0,0052 -0,1316 -0,1848 0,0353 0,15 1 the dummies for the 6 counties were not reported to save space, the largest correlation coeffi cient for one of these dummies and the variables reported in the table equals 0,36 and corresponds to the correlation between the dummy for norway and high personnel management autonomy. 213 4. methods and results since the dependent variable ‘cost calculation systems’ is measured on an ordinal scale, we make use of an ordered logit model2. we add country dummies in order to take country clustering into account3. based on the finding that agencies with and without a high result control differ significantly, we model the regression separately for both groups. table 3 presents the results of the regression for agencies with and without high result control4. table 3: results of logit regression predicting the development of cost-calculation systems for agencies with and without high result control variables low result control high result control high personnel management autonomy 0.161 0.583 (0.311) (0.443) high fi nancial management autonomy -0.000505 0.591 (0.340) (0.491) public or private law based -0.289 0.202 (0.378) (0.580) services 0.450* 0.859** (0.248) (0.382) size (fte) 0.0118* 0.0318*** (0.00632) (0.0111) age -0.0157 0.0996 (0.0390) (0.0789) country dummies included included cut1 0.281 0.792 (0.396) (0.587) cut2 2.539*** 3.899*** (0.427) (0.697) observations 288 143 pseudo r² 0,0416 0,1413 log likelihood -282,034 -122,497 standard errors in parentheses; ***p<0,01; **p<0,05;*p<0,1 when examining table 3 we notice that size (fte) and services (measurability of tasks) prove significant for both groups. regardless whether there is high or low result control, size proves to have a significant positive effect on the use of financial management techniques. the larger an agency, the higher the likelihood that the agency will make use of this kind of management technique. the same holds for measurability of 2 ordered probit models were also estimated and produced very comparable results. furthermore the akaike information criterium (aic) and bayesian information criterium (bic) were almost identical. 3 other methods to deal with country clustering are the clustering of standard errors or the use of multilevel models. since we only have six countries in our analysis this however proves to be impossible. 4 an equivalent method is to test for interactions between particular predictors and dummy variables representing the groups. 214 tasks, regardless of the degree of result control, the variable services and thus measurability of tasks appear to have a significant positive effect on the use of financial management techniques. furthermore, table 3 shows that personnel and financial management autonomy do not appear to influence the use of financial management techniques regardless whether the subsample is defined by high result control or not. this indicates that the combination of high result control and personnel or financial management autonomy does not lead to an increased use of cost calculation systems. this finding does not support the traditional npm doctrine which claims that more managerial autonomy will lead to an increased use of innovative management techniques, such as cost calculation systems, under the condition of result control. table 4: ordered logit and heterogeneous choice models for estimating the development of cost-calculation systems variables ordered logit (1) heterogeneous choice (2) high personnel management autonomy 0.271 0.362 (0.250) (0.232) high fi nancial management autonomy 0.149 0.263 (0.272) (0.267) high result control 0.791*** 0.880*** (0.212) (0.202) public or private law based -0.186 -0.309 (0.313) (0.305) services 0.568*** 0.527*** (0.202) (0.193) size (fte) 0.0162*** 0.0152*** (0.00563) (0.00496) age 0.00386 0.0255 (0.0346) (0.0328) country dummies included included cut1 0.599* 0.844*** (0.338) (0.317) cut2 3.060*** 3.224*** (0.373) (0.414) variance high result control -0.421*** (0.142) belgium 0.499*** (0.175) the netherlands 0.462** (0.210) germany -0.387** (0.185) observations 431 431 pseudo r² 0,0697 0,1014 log likelihood -412,38 -398,31 model χ² 61,75 89,9 model df 12 16 standard errors in parentheses; ***p<0,01; **p<0,05;*p<0,1. a likelihood ratio test was estimated to test the fi t between the homoskedastic and heteroskedastic model, it showed that the heteroskedastic model has a signifi cantly better fi t (χ² (4) = 28.14***). 215 column 1 of table 4 presents the results of the regression for all agencies combined in order to examine the role of result control on the use of cost calculation systems in more detail. following this table, result control clearly impacts the use of cost calculation systems as do size and measurability of task. yet before discussing this table in more detail, we have to stress that these results are based on an ordered choice model, making it inconsistent if the statistical assumptions concerning unobserved terms in the model are incorrect (smith, 1989). one of these assumptions states that the variance of the disturbances should be constant across observations, in other words they should be homoscedastic (greene, 2003, pp. 100-150). for instance, unmeasured variables affecting the use of financial management techniques may be more important for agencies with low result control than for agencies with high result control or vice versa. the impact of this problem is however not limited to our analysis, but is linked to models using maximum likelihood models in general (greene, 2003, pp. 302-400; wooldridge, 2010, pp. 230-400)5. as williams (2010) points out, one rationale for the ordered logit model is that there is an underlying latent variable y*. as agencies cross a threshold on y*, their values on the observed value y change. for example if y* is smaller than 5, y will be equal to 0, but if y* is larger than 5, y will be equal to 1. thus, y tells us that y* falls within a particular range, but does not give us the exact value of y* (williams, 2009; long and freese, 2006). the model for the underlying y* can be written as: (1) where the x’s are the explanatory variables, the α’s are coefficients that give the effect of each x on y*, is a residual term with a logistic or normal distribution, and σ is a parameter that allows the variance to be adjusted upward or downward (williams, 2010). following amemiya (1985), allisson (1999) and williams (2009, 2010) we estimate parameters called β’s, whereby the α’s and β’s are related in the following way: k=1,.., k (2) normally, the residual variance is set to be equal to /3 (in logit models) or 1 (in probit models). when residual variances differ across groups, probit and logit estimates 5 examples of such models are the logit and probit model, the ordered logit, the ordered probit, multinomial models and the tobit model. the problem of heteroskedasticity is not limited to maximum likelihood models, ordinary least square models (ols) are also aff ected. yet the eff ect will be diff erent for these kinds of models since only the standard errors will be incorrect (cameron and trivedi, 2005). contrary to maximum likelihood models, the problem of heteroskedasticity in ols models can also be more easily corrected, namely by using robust standard errors. furthermore group diff erences are only one source of heteroskedasticity, as williams (2009) points out heteroskedasticity can also be a concern with continuous variables, where it may be unreasonable to assume that errors are the same in magnitude no matt er how large the value of the independent variable is. for a more detailed description of the issue of heteroskedasticity we refer to williams (2010). 216 however become unreliable. for example; two groups can have identical values on the α’s, but if their residual variance differs, their β’s will differ6. in such case, the model is suffering from heteroskedasticity and as hoetker (2004) notes ‘even small differences in residual variation can indicate differences where none exist, hide differences that do exist, and even show differences in the opposite direction of what actually exists’. consequently, standard errors will be wrong and the parameter estimates will be biased. a good example of this problem is presented by allisson (1999). when estimating the chances for academic promotion, he initially found that the effect of the number of articles differed significantly for women and men. given the oddity of this result, he claimed that this was the result of differences in the degree of residual variation between men and women. when examining this further he indeed found that women have more heterogeneous career patterns than men, and that unmeasured variables have a different effect on men than on women, leading to the observation that the number of articles is more important for men than for women. heteroskedasticity may also be a problem in our estimation. subsequently, we test for the presence of heteroskedasticity using a likelihood ratio test7. basically, the likelihood ratio test checks whether the heteroscedastic model has better fit than a homoscedastic model. the test confirms that this heteroskedastic model has a better fit than the homoscedastic model, χ² (4) = 28.14*** when the residual variance is modeled by high result control and the country dummies: belgium, the netherlands and germany. this is achieved by applying a heterogeneous choice model8. residual variability in using financial management techniques consequently differs for agencies with and without high result control and for the above mentioned countries. a wide range of easy accessible literature concerning this model is available; see for instance cameron and trivedi (2005) and williams (2010). the heterogeneous choice model is an improvement over the initial and often criticized approach of allisson (1999), see for instance keele and park (2006), and overcomes its most significant weaknesses (williams, 2009). these models allow for ordinal dependent variables and a much more flexible specification of the variance equation. as keele and park (2006) note, if this kind of model is correctly specified ‘the heteroskedastic ordered probit model can be given a clean bill of health, as both the level of overconfidence and coverage rates are close to ideal’. consequently, a heterogeneous choice model is presented in column 2 of table 4. we can note that the heterogeneous choice model produces a larger model chi-square (89.9 versus 61.75) but at the cost of 4 degrees of freedom. 6 this is a logical consequence since the β’s are calculated using α and σ, see (2). 7 more in particular we make use of williams (2010) oglm’s stepwise selection procedure. although stepwise selection procedures are often criticized as a model-building device because they are atheoretical and can capitalize on chance, they can be useful as a means for identifying heteroskedasticity. see williams (2010) for more information. 8 we make use of stata (12.1) and williams (2010) oglm command however, spss users can make use of the plum routine. 217 moreover, both the bic statistic as well as the aic statistic favor the heterogeneous choice model9. when examining the heteroskedasticity term of high result control we notice a negative significant effect, which means that there is less residual variability for agencies with high result control than there is for agencies with low result control when it comes to the use of financial management techniques. the effect of unmeasured variables on the use of financial management techniques is smaller for agencies with high result control than for agencies with low result control. in other words, other unmeasured factors have a stronger effect on the use of financial management techniques for agencies without high result control. intuitively this makes sense. the higher the accountability, the less important other factors are, while the lower the accountability, the more important other factors become. when comparing coefficients of the homoscedastic (regular ordered logit model) and the heteroskedastic model we notice that results appear more or less the same. nonetheless, the heterogeneous choice model yields important insights into the effects of high result control that would be overlooked in the misspecified ordered logit model (column 1). an examination of marginal effects helps to clarify what the substantive differences are between the two models. with marginal effects, all variables except one are set equal to their means, and we see how changes in the remaining variables affect the probability of each possible outcome occurring (williams, 2009). for a dichotomous regressor, we measure the effect as the variable changes from 0 to 1. for continuous variables, the instantaneous rate of change is measured. table 5 presents the marginal effects for the ordered logit and heterogeneous choice models. for the ease of interpretation only the variable with high result control is included. table 5: marginal effects for the ordered logit and heterogeneous choice models without interactions, focusing on the effect of high result control (1) (2) ordered logit heterogeneous choice no use of cost calculation systems high result control -0.160*** -0.261*** (6.97e-05) (4.22e-08) some use of cost calculation systems high result control 0.0434*** 0.221*** (0.00435) (0.000221) high use of cost calculation systems high result control 0.116*** 0.0398 (0.000581) (0.356) pval in parentheses. ***<p0,01; **p<0,05; *p<0,10 9 the aic statistic equals 852.77 for the regular ordered logit model and 832.63 for the heterogeneous choice model. the bic statistic equals 909.7 for the regular ordered logit model and 905.8 for the heterogeneous choice model. 218 high result control is significant in both models, yet the specific effect of the variable differs. according to the ‘regular’ ordered model (1), high result control has a negative effect on not using financial management techniques whereas it has a positive effect on using financial management techniques to some or a large extent. high result control consequently always leads to an increased use of financial management techniques. according to the heterogeneous model (2) high result control only has an effect on not using financial management techniques or using them to some extent. high result control has no effect on using financial management techniques to a large extent. moving from low to high result control when agencies already use financial management techniques to some extent thus has no additional effect. but also the strength of the effect of high result control on not u sing financial management techniques or using them to some extent differs significantly between the two models. the effect is larger in the heterogeneous choice model compared to the regular ordered model (-0.216 instead of -0.160, and 0.221 instead of 0.0434). the ‘regular’ ordered logit model overstates the general effect of high result control in terms of significance while the strength of the effect is consistently underestimated. based on the above, result control appears to be an important determinant of using financial management techniques. although principal agent theory dictates that autonomy will only work under the condition of accountability, we did not find any proof thereof. while both the ‘regular’ ordered logit model and the heterogeneous choice model agreed on the significance of result control, the precise effect of this variable differed between both models. in the end, result control mattered for not using or using financial management techniques to some extent. furthermore, the analysis leads to the observation that the heterogeneous choice model offers two great advantages. it can yield insight into the effects of group characteristics that would be overlooked in misspecified models and, as stressed by williams (2010), the variance equation makes it possible to examine the determinants of variability. at the same time, researchers need to realize that even with these models, misspecified models can be problematic. 5. discussion and conclusion overall high result control proved to have a positive effect on the development of cost-calculation systems and thus the use of financial management techniques. furthermore, size and measurability of task appear to have a positive effect on the use of financial management techniques. this article contributes to the literature in two ways. first, a new approach towards analyzing the use of a management technique is being introduced. not only does this method offer more correct and detailed information for the variables examined, but it also allows studying the determinants of residual variability. moreover, this approach is not only appropriate for studying the use of management techniques but it can also be used in the field of public administration in general. at the same time, researchers 219 need to realize that even with this method, misspecified models can be problematic. it is however important that researchers are aware of the potential pitfalls when estimating ordered models. following williams (2009) they can best estimate models with and without controls for heteroskedasticity. furthermore, we did find differences in residual variability across countries; it is therefore the opinion of the author that the possibility of differences in residual variability will be higher in crosscountry studies10. since cross country studies become increasingly important (see for instance the recent cocops project11) the use of heterogeneous choice models should certainly be well considered. the method described here can make the challenge of comparing (ordered) logit and probit coefficients across groups/countries more manageable. second, the results support the assumption that having more controls in place is likely to bring about an increased use of financial management techniques, which is in line with the principal agent theory. no evidence was found for the assumption that autonomy will only have an effect under the condition of result control. to end, some practical approaches might emerge from this study. based upon our results, the argumentation that organizations with increased levels of managerial autonomy and result control will automatically provide better services by e.g., the use of financial management techniques clearly needs to be reconsidered. when trying to encourage the use of financial management techniques within the public sector, policy makers should thus focus on result control, while taking into account the size and task of the organization. making agencies increasingly accountable for their results thus appears to be the most stimulating way to make agencies use financial management techniques. since the use of these kinds of management techniques are believed to increase efficiency and effectiveness, governmental action to fulfill such goals should thus focus on this kind of control. however, accountability in itself does not suffice; it should be linked to consequences. more precisely the sanctioning of bad performance and the rewarding of good performance appears to be of the utmost importance when trying to make senior management use financial management techniques. remarkably, the core idea of npm stating that managerial autonomy and result control are simultaneously needed is not supported by our data. in short, within the context of the continuous attempts being made to improve public sector performance, policy makers should thus develop different strategies for different (individual) agencies, while relying on a strong ex-post result control, when they want to stimulate the use of financial management techniques since straightforward npm recipes do not work. consequently, it seems that an increased use of financial management techniques, bringing about high quality services, can only be obtained when all the above mentioned factors are satisfied. 10 in economics heteroskedasticity often occurs on country or region level. see for instance; hott enrott h. 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‘innovation-oriented culture in the public sector’, 2013, public management review, vol. 16, no. 1, pp. 45-66. 53 abstract state and local governments across the united states of america (usa) were hit hard by the recent recession. the fi scal stress alerted the public to the increasing amount of public pension debt for which, despite snowballing levels of pension debt, the causes are unclear. this article examines the factors contributing to annual changes in unfunded public pension ratios, focusing in particular on public pension management (including investment performance, investment assumptions, and accounting practices). the data on pension debt for state defi ned benefi t plans comes from the pew charitable trusts for the period 2005 to 2015. two methods (random-effects and general estimating equation) were used to verify the consistency of the results. these results showed that investment return decreases the annual change in the public pension debt while using a project unit credit method, and the implementation of the government accounting standards board (gasb) statement 67 increase the annual change in the public pension debt. these fi ndings illustrate the importance of public pension management in explaining public pension debt. keywords: annual change in unfunded pension ratios, investment return, project unit credit, gasb 67. the determinants of public pension debt in u.s. states*1 jae young lim jae young lim senior researcher, community wellbeing research center, seoul national university, seoul, korea tel.: 82-2-880-8530 e-mail: jaeyounglim@yahoo.com  acknowledgments: this work was supported by the ministry of education of the republic of korea and the national research foundation of korea (nrf-2016s1a3a2924563). doi:10.24193/tras.60e.4 published first online: 2020/06/22 transylvanian review of administrative sciences, no. 60 e/2020, pp. 53-71 54 1. introduction when the housing bubble burst in the late 2000s, it devastated state and local governments across the us.  e nationwide fi scal stress this caused drew a ention to the problem of public pension liabilities1. some scholars estimate that state and local pension liabilities are as high as $4.43 trillion (novy-marx and rauh, 2011).  e gravity of the pension problems aff ecting state and local governments has led to an increase in research on public pensions. however, few studies have directly assessed the factors contributing to the annual change in unfunded public pension ratios at the aggregate state level.  is study therefore examines the factors that might infl uence unfunded public pension liabilities, focusing primarily on dimensions of public pension management. data on pension debt for state defi ned benefi t plans from 2005 to 2015 were obtained and two statistical methods were used to verify the consistency of the results (random-eff ects and general estimating equation).  e results show that public pension management plays a sizable role in infl uencing public pension debt across u.s. states. for instance, investment return reduces the annual change in public pension debt while using a project unit credit method to calculate pension costs along with the implementation of the gasb 67 increases the annual change in public pension debt.  is underlines the importance of public pension management, such as investment performance and accounting practices, in explaining public pension debt.  e presentation of the research is organized as follows: fi rst, i discuss factors that might contribute to public pension debt, focusing on public pension management and, secondly, i discuss the data and specifi c variables used in the model. finally, i present the empirical results along with a discussion of their implications, followed by several policy recommendations for public offi cials involved in public pension management. 2.  eory and hypotheses in recent years, an increasing number of studies have explored public pension issues; this refl ects the growing importance of such pensions in the public arena. from these studies, several themes have emerged. one such theme is the relationship between state politics and public pensions (coggburn and kearney, 2010; kiewiet, 2010;  om, 2013a and 2013b; anzia and moe, 2017). public unions have also been subject to scholarly inquiry (mitchell and smith, 1994; munnell et al., 2011a). a third, fl ourishing arena of research is the management of public pension boards concerned with public pension performance and state bond ratings (hess, 2005; andonov et al., 2018; dove et al., 2018).  e estimation of public pension liabilities with respect to discount 1 unfunded (public) pension liabilities refer to unfunded actuarial accrued liabilities for state defi ned benefi t plans. to avoid using technical jargon, the article refers to unfunded pension liabilities rather than the more technical term. in addition, public pension debt is used interchangeably with unfunded pension liabilities.  is la er term is limited to u.s. states; it is not applicable to local governments. 55 rates and their sustainability have also garnered scholarly a ention (brown and wilcox, 2009; novy-marx and rauh, 2009, 2011; waring, 2012; chen and matkin, 2017) as has an ideal funding level for public pensions (bohn, 2011; munnell et al., 2011a).  e investment pa erns of public pension assets have also raised concerns (lucas and zeldes, 2009; pennacchi and rastad, 2011). in addition, economists have examined the impact of public pensions on labor markets and practices (munnell et al., 2007; schieber, 2011; goldhaber et al., 2017) along with the political and economic aspects of public pension liabilities (schneider and damnanpour, 2002; glaeser and ponze o, 2014; kelley, 2014). scholars have also studied the impact of fi scal institutions such as budget stabilization funds and fi scal conditions on public pensions (clair, 2012; chen, 2018). several scholars have probed the legal structures of public pensions and the possibilities for pension reform (monahan, 2010, 2012, 2015, 2017; fitzpatrick and monahan, 2015; aubrey and crawford, 2017). despite a growing number of studies researching public pensions, few have examined the factors contributing to public pension debt using the ‘annual change in unfunded public pension ratios’ measure.  is study does so with a specifi c focus on the dimensions of public pension management. 2.1. public pension management: investment return and assumption monahan (2015) argued that it is not easy to compare the costs of pension plans due to diff erences in underlying investment assumptions. despite being ambiguous and o en mystifying, the investment assumption rate – o en used interchangeably with ‘discount rate’ – plays a vital role in determining pension costs. for the same pension plan, a stronger discount rate can make future liabilities seem much lower than they actually are (munnell, 2012). a majority of states and local governments have anticipated the expected return on pension assets to be approximately 7.5%.  is overly optimistic assumption enables states and local governments to put less than their required contribution into the pension pot. unlike public pension plans, private companies have, in recent years, discounted their pension liabilities at an average rate of 4.7% to account for real-life circumstances ( e economist, 2013). novy-marx and rauh (2009, 2011) have argued that the serious shortfall in pension funds facing states and local governments stems in part from optimistic actuarial assumptions over the years. although these assumptions might have been acceptable in the robust economy of the 1990s, such optimism could lead to a calamity in leaner economic times. with the application of a realistic discount rate, pension liabilities of around $900 billion can jump to $3.2 trillion or even higher to $4.43 trillion (novy-marx and rauh, 2011).  e former assumes that pension liabilities are equivalent to states’ general obligation debt; whereas, in the la er, a discount rate is considered a zero-coupon treasury yield. regardless of whether states should use a ‘risk-free’ rate actuarial – because a pension payment is bound to be made in the future – (novy-marx and rauh, 2011; waring, 2012), an optimistic rate is equated with a decline in pension liabilities. 56  e close relationship between an assumed rate and pension debt also applies to the relationship between an investment return and pension debt; in fact, a discount rate is a hypothesized rate while an investment return is a realized rate. as such, it is also critical in understanding the dynamics of pension debt. for instance, an improvement in investment yields on pension assets can signifi cantly shrink the size of the pension debt. a healthy economy and accompanying investment returns can hide the size of the public pension debt whereas a poor economy can quickly magnify the problem (monahan, 2017). based on reasonable expectations regarding the relationship between investment return, investment assumption rate and public pension debt, the following hypotheses were constructed for empirical testing: • hypothesis 1: an increase in investment return will be associated with a decrease in the annual change in unfunded pension ratios, and • hypothesis 2: an increase in investment assumptions will be associated with a decrease in the annual change in unfunded pension ratios. 2.2. public pension management: accounting practices accounting practices can signifi cantly infl uence the level of public pension debt. regarding the accounting method, state plans primarily use the entry age normal while approximately 13% of plans employ the project unit credit method. for the entry age normal, employers ‘frontload’ future benefi ts; whereas in the project unit credit employers are backloaded with pension obligations as a retirement horizon approaches (munnell, 2012, p. 52). assuming that employers fully fund their pension obligations, they would have to set aside fewer pension assets by using the project unit credit.  us, the project unit credit is a less stringent method of funding than using the entry age normal (munnell, 2012). however, having fewer assets to work with will dampen investment opportunities and eventually lead to larger public pension debt. it is also important to note any changes to accounting methods that infl uenced the way pensions were calculated during the period from 2005 to 2015.  e government accounting standards board announced the gasb 67 in 2012 and it took eff ect in 2014 (farmer and maciag, 2015).  e gasb 67 requires states to adopt a realistic discount rate.  e change adopted the blend rate whereby states that regularly make their full annual required contributions can use an assumed investment return, whereas those not doing so are forced to use a market rate. an optimistic discount rate with its overly positive assumptions about future investment returns conceals the true state of public pension funding.  e change exposed several states to the grim reality of worsening pension debt. for example, the state of kentucky had to lower its investment return assumption by 2%, which meant that it suddenly experienced a 6% increase in pension debt from 2013 to 2014.  e change in method could help explain the variations in unfunded ratios across states that occurred in 2014 and 2015 (farmer and maciag, 2015). as such, we arrived at: • hypothesis 3: states using a project unit credit method will experience an increase in the annual change in unfunded pension ratios, and 57 • hypothesis 4: implementing the gasb 67 will be associated with an increase in the annual change in unfunded pension ratios. 3. variables and measurement 3.1. dependent variable to test the hypotheses, the model, including the following dependent and explanatory variables, was estimated.  e dependent variable in the model was the annual change in unfunded pension ratios.  e unfunded ratio itself is equal to:   1 100 1 actuarial value of assets actuarial accrued liability           because the explanatory variables were annual measures, it was appropriate to use ‘the annual change’ in unfunded pension ratios to examine annularity rather than unfunded pension ratios because the la er is a cumulative measure.  e data came from the pew charitable trusts (2018), and covered the period 2005 to 2015.  ese variables accounted for all the defi ned benefi t plans (238 plans) to which the state contributes and/or is legally liable for benefi ts ( e pew charitable trusts, 2015, 2018). figures 1-3 show the magnitude of public pension debt where figure 3 in particular illustrates the trajectory of the dependent variable from 2005 to 2015. 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1091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091109110911091 0 10 00 20 00 30 00 40 00 50 00 b ill io n 2005 2010 2015 year pension assets actuarially accrued pension liabilities unfuned pension liabilities figure 1: change in pension assets, actuarial accrued pension liabilities, and unfunded pension liabilities, 2005-2015 58 18.23 17.94 16.65 19.48 24.87 26.95 27.64 29.49 28.98 24.11 27.06 0 10 20 30 a ve ra ge u nf un de d p en si on r at io s 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 figure 2: average unfunded public pension ratios, 2005-2015 -6 -4 -2 0 2 4 6 a nn ua l c ha ng e (% ) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 figure 3: annual change in unfunded pension ratios, 2005-2015 59 3.2. explanatory variables five variables were employed to explore public pension management: investment return, investment assumption, project unit credit, gasb 67, and active plan members. because the dependent variable was an aggregate measure, it would have been ideal to have state-level aggregate data available. unfortunately, however, most states manage multiple pension plans, and it is diffi cult to derive aggregate state-level measures.  us, for each state, i used the largest representative defi ned benefi t plan (in terms of total pension assets) for the variables noted above.  e investment return is a fi ve-year return and a ratio; the investment return assumption is also a ratio.  e project unit credit was a dummy variable coded as 1 if the representative plan in each state employed the project unit credit method to estimate actuarial pension costs and 0 otherwise. active plan members were logged to correct for the skewness resulting from large numbers.  e fi nal public pension management variable was the gasb 67, which was a dummy variable coded as 1 if implemented in a given year and 0 otherwise. table 1 shows the 50 representative plans that were selected to identify plan-specifi c pension management characteristics (public plans data, 2001-2016). table 1: representative largest defi ned benefi t plans in each state states plans alabama teachers retirement system alaska public employees’ retirement system arizona state retirement system arkansas teachers retirement system california public employees retirement system colorado school division connecticut teachers’ retirement system delaware state employees’ pension plan florida retirement system georgia teachers’ retirement system hawaii employees’ retirement system idaho public employee retirement fund – base plan illinois teachers’ retirement system indiana state teachers’ retirement fund iowa public employees’ retirement system kansas public employees’ retirement system kentucky teachers’ retirement system louisiana teachers retirement system of louisiana maine public employees retirement system maryland teachers’ retirement and pension system 60 states plans massachusetts teachers’ retirement system michigan public school employees’ retirement system minnesota teachers retirement fund mississippi public employees’ retirement system missouri public school retirement system montana public employees’ retirement system – defi ned benefi t retirement plan nebraska public employees retirement system-schools nevada public employees’ retirement system new hampshire employees group new jersey teachers’ pension and annuity fund new mexico public employee’s retirement system new york new york state and local retirement system north carolina teachers’ and state employees’ retirement system north dakota teachers’ fund for retirement ohio public employees retirement system oklahoma teachers’ retirement system oregon public employees’ retirement system pennsylvania public school employees’ retirement system rhode island employees’ retirement system – teachers south carolina south carolina retirement system south dakota south dakota retirement system tennessee state employees, teachers, and higher education employees’ pension plan texas teacher retirement system utah public employees noncontributory retirement system vermont teachers’ retirement system virginia virginia retirement systems washington public employees’ retirement system west virginia teachers’ retirement system wisconsin wisconsin retirement system wyoming public employees’ pension plan for control variables, i relied on the state’s fi scal constraints, state politics, and state fi scal conditions. scholars argue that fi scal constraints such as tax and expenditure limitations (tels) play a substantial role in explaining a state’s fi scal behavior (poterba, 1994; alt and lowry, 1994; matsusaka, 1995; alesina and bayoumi, 1996; mullins and joyce, 1996; shadbegian, 1999; pollack, 2003; rose, 2006; brunori, 2007, 2011; martin, 2008; mathews and paul, 2010). to capture institutional fi scal constraints for each state i used the tax and expenditure limitations (tels) index developed by 61 kallen (2017).  e data ranged from 0 (states such as alabama and north dakota) to 28 (missouri), and the total score was built on the following six categories: ‘type of tel,’ ‘statutory/constitutional’, ‘growth restriction’, ‘method of approval’, ‘override provisions’, and ‘exemptions’.  is measure of tels is superior to the simple dummy variable used in many other studies (e.g., mason, 2005; mcguire and rueben, 2006) as it refl ects the diversity of tels measures across states. state politics and public unions were also accounted for in the model. scholars have found that states controlled by the democratic party tend to spend and tax more, and are more likely to support employee-friendly policies and public unions than the republican party (blais et al., 1993; poterba, 1996; shadbegian, 1999; marschall and ruhil, 2005). popular media outlets continue to blame public unions for their outsized pension benefi ts and debt (lowenstein, 2008; greenhut, 2009; malanga, 2010; erie et al., 2011), although empirical fi ndings on the eff ects of public unions on public pension debt and benefi ts are inconclusive (mitchell and smith, 1994; munnell et al., 2011b).  us, public unions may cut both ways and therefore it was appropriate to see what the data would reveal. state political party variables were lagged at t-1, as decisions regarding current budget outcomes are made in the previous year (budge and hoff erbert, 1990).  ese variables included democratic membership in the state house at t-1 (%), democratic membership in the state senate at t-1 (%), democratic governor at t-1 (dummy), unifi ed democratic control at t-1 (dummy), and unifi ed republican control at t-1 (dummy).  e public union variable consisted of public union membership (%) (hirsch and macpherson, 2003; updated). an interaction term between unifi ed republican control at t-1 and public union membership was also included in the model to account for potential relationships between politics and public unions. finally, the model accounted for fi scal conditions that may infl uence public pension debt. unlike federal governments, states and local governments are constrained by having to balance their budgets, even in the midst of a fi scal crisis, and o en cut spending or raise revenue during economic downturns. as such, it is critical to account for the fi scal conditions of states when accounting for fi scal outcomes such as public pension debt. well-known variables for identifying fi scal stress include unemployment rates (mitchell and smith, 1994), year-end general fund balance (wilson, 1983; wilson and howard, 1984; national council of state legislature, 1987; raman and wilson, 1990; chaney et al., 2002), and long-term debt (wilson, 1983; denison et al., 2006). both long-term debt and year-end general fund balance were expressed as a share of total state revenue to avoid severe right skewness due to the large numbers involved. table 2 shows the measurement and data sources for the variables while table 3 presents the descriptive statistics. 62 table 2: measurement of dependent and explanatory variables variable measurement sources and remarks annual change in unfunded pension ratios percentage the pew charitable trusts (2018) unfunded ratio: 1 100 ) actuarial value of assets actuarial accrued liability           5-year investment return percentage public plans data. 2001-2016. center for retirement research at boston college, center for state and local government excellence, and national association of state retirement administrators. investment assumption percentage public plans data. 2001-2016. center for retirement research at boston college, center for state and local government excellence, and national association of state retirement administrators. project unit credit indicator public plans data. 2001-2016. center for retirement research at boston college, center for state and local government excellence, and national association of state retirement administrators. gasb 67 indicator gasb (2012) logged active plan members values ranging from 9.17 to 13.67 public plans data. 2001-2016. center for retirement research at boston college, center for state and local government excellence, and national association of state retirement administrators. tax and expenditure limitation index values ranging from 0 to 30 kallen (2017) democratic membership in the state house at t-1 percentage national council of state legislatures (2015) democratic membership in the state senate at t-1 percentage national council of state legislatures (2015) democratic governor at t-1 indicator national council of state legislatures (2015) unifi ed democratic state at t-1 indicator national council of state legislatures (2015) unifi ed republican state at t-1 indicator national council of state legislatures (2015) public union membership percentage percentage of public employed workers who are union members hirsch and macpherson (2003; updated) unifi ed republican state at t-1 * public union membership values ranging from 0 to 70 interaction term unemployment percentage local area unemployment statistics (2017) long-term debt as share of total state revenue percentage state and local government finances by u.s. census bureau (2016); fiscal survey of states (2016) year-end general fund balance as share of total state revenue percentage fiscal survey of states (2016) 63 table 3: descriptive statistics for all variables variable n mean sd min max annual change in unfunded pension ratios 490 0.88 4.94 -14.69 32.00 5-year investment return 490 6.79 4.18 -1.23 16.20 investment assumption 490 7.81 0.36 6.70 8.50 project unit credit 490 0.10 0.30 0.00 1.00 gasb 67 490 0.20 0.40 0.00 1.00 logged active plan members 490 11.54 0.99 9.17 13.67 tax and expenditure limitation index 490 9.12 8.36 0.00 28.00 democratic membership in the state house at t-1 490 51.25 16.32 13.33 92.00 democratic membership in the state senate at t-1 490 49.80 17.89 13.33 96.00 democratic governor at t-1 490 0.48 0.50 0.00 1.00 unifi ed democratic state at t-1 490 0.34 0.47 0.00 1.00 unifi ed republican state at t-1 490 0.37 0.48 0.00 1.00 public union membership (%) 490 33.11 18.35 2.70 72.40 united republican state at t-1 * public union membership 490 8.35 14.08 0.00 70.00 unemployment 490 6.56 2.16 2.40 13.90 long-term debt as share of total state revenue 490 170.84 89.73 34.01 621.60 year-end general fund balance as share of total state revenue 490 4.97 9.96 -118.70 65.08 * note: nebraska is not included in the model due to its unicameral legislature. 4. findings  e model was estimated using two methods: random-eff ects (re) and general estimating equation (gee).  e two models also controlled for year dummies, whose results are not reported in the table.  e results from the two models were consistent and only a few diff erences were evident in terms of coeffi cients and standard errors. although the fi xed eff ects model is ideal for eliminating potential sources of omi ed variable bias, a hausman test result (probabilities= 0.72) indicated that the re was appropriate in this case.  us, the re model was used fi rst, rather than a fi xed-eff ects model, with standard errors clustered around states.  e results from the gee equation are also shown here as they provide signifi cant advantages for the panel data.  e gee equation is an extension of a generalized linear model (liang and zeger, 1986; zeger and liang, 1986) and was also appropriate, especially given that cross-sectional panels are fraught with correlated data.  is often leads to the violation of homoskedasticity and, consequently, introduces correlated error terms (kmenta, 1986; liang and zeger, 1986; zeger and liang, 1986). because variance within each panel was likely to be heteroskedastic, huber-white standard errors were employed to produce a robust estimate as well as correlational error structures of ar(1), assuming that data in the previous year infl uence the 64 current year’s data and lead clustered errors (zorn, 2001). table 4 shows the results for the two models.  e χ2 statistic was 503.84 for the re model and 594.20 for the gee model; both numbers indicate that the two models fi t the data well. table 4: factors contributing to the annual change in unfunded pension ratios (re and gee) explanatory variable annual change in unfunded pension ratios (re) annual change in unfunded pension ratios (gee) 5-year investment return -0.493 [0.129]*** -0.486 [0.123]*** investment assumption -0.228 [0.401] -0.177 [0.381] projected unit credit 1.208 [0.355]*** 1.302 [0.314]*** gasb 67 5.042 [0.648]*** 5.045 [0.627]*** logged active plan members 0.246 [0.182] 0.240 [0.173] tax and expenditure limitation index -0.027 [0.020] -0.029 [0.019] democratic membership in the state house at t-1 0.002 [0.027] 0.003 [0.026] democratic membership in the state senate at t-1 -0.006 [0.020] -0.007 [0.019] democratic governor at t-1 -0.760 [0.684] -0.845 [0.659] unifi ed democratic state at t-1 0.364 [0.415] 0.460 [0.399] unifi ed republican state at t-1 0.535 [0.747] 0.582 [0.752] public union membership (%) 0.020 [0.012]* 0.019 [0.011]* unifi ed republican state at t-1 * public union membership -0.017 [0.018] -0.014 [0.018] unemployment -0.072 [0.129] -0.057 [0.122] long-term debt as share of total state revenue -0.002 [0.002] -0.001 [0.002] year-end general fund balance as share of total state revenue 0.017 [0.021] 0.018 [0.020] constant 2.592 [4.138] 2.281 [3.958] wald χ2 503.840*** 594.200*** observations 490 490 states 49 49 – standard errors clustered around states in parentheses. – year fi xed effects are included in the model but not shown in the table. – nebraska is not included in the model due to its unicameral legislature. – * p ≤ 0.10, ** p ≤ 0.05, *** p ≤ 0.01.  e two models show that the four variables signifi cantly infl uenced the annual change in unfunded pension ratios. in terms of the main explanatory variables, the investment return was negatively associated with the annual change in unfunded pension ratios.  is means that as an investment return increases, it helps slow the annual increase in public pension debt.  is has implications for offi cials responsible 65 for managing public pension assets in that it implies they should derive strategies or mechanisms to improve investment performance (discussed further in the fi nal section).  e two variables were positively associated with the annual change in unfunded pension ratios: project unit credit and the gasb 67. as hypothesized, using the project unit credit method infl ates the unfunded liabilities vis-à-vis the entry age normal, as states put aside fewer assets with which to gain sizable investment returns.  e gasb 67, the implementation of the accounting change that began in 2014, appears to infl uence the way states estimate their unfunded liabilities.  is contributes to an increase in the annual change in unfunded ratios, worsening the level of pension debt.  e negative impact of project unit credit and the gasb 67 raise two key points for offi cials in public pension management. first, they need to avoid using the project unit credit and instead adopt the entry age normal, which is a more robust accounting method for calculating public pension costs at the beginning of public employment. second, public offi cials need to apply more a realistic investment assumption rate to their pension assets.  e fact that using the gasb 67, which is more honest than the previous unconstrained investment assumption rate used by states, revealed a darker picture of public pension debt and should inform public offi cials of the need to adopt honest accounting methods and practices. finally, public union membership was also positively associated with the change in unfunded ratios, albeit at a weak, ten percent level.  is indicates that increased public union membership increases the annual change in public pension debt.  is highlights the need for public offi cials to work with public unions to fi nd ways of dealing with public pension debt.  e results imply that the annual change in unfunded ratios is heavily infl uenced by dimensions of public pension management such as investment returns and accounting practices. except for public unions (via public union membership), the lack of signifi cance of other variables shows that fi scal constraints, state politics (except for public unions), and fi scal conditions do not play an important role in controlling the public pension debt aff ecting u.s. states. although media outlets have decried political meddling with public pension management in the current pension crises, these political factors did not have any impact when combined with public pension management variables in the model. 5. implications for public offi cials  is study sheds some light on factors aff ecting the annual change in unfunded public pension liabilities.  e results show that dimensions of public pension management – such as investment returns, accounting methods (project unit credit), and accounting changes (gasb 67) – heavily infl uence public pension debt.  e results have important implications for the public offi cials responsible for managing public pension plans, who therefore need to adopt sound policy options. first, the results suggest that public offi cials need to work hard to boost their investment returns by scrutinizing their investment portfolios. one way to accomplish this 66 is to diversify their pension asset investment strategies. in recent years many plans have relied too heavily on alternative investment methods, which entail paying heavy fees to investment fi rms. moreover, this information is o en hidden from the watchful eyes of the public ( e pew charitable trusts, 2015), eroding the accountability of public pension plans, especially in the eyes of current and retired public employees. if states invest too heavily in risky projects that produce few investment returns, they need to shi their assets to more stable choices such as index funds that correspond to stock market performance and those producing a stable, fi xed income such as a treasury bond. similarly, public offi cials need to adopt ways to regularly monitor public pension asset management. if investment returns do not achieve the yields expected in terms of previously-established standards, stakeholders in public pension management need to determine what did not work and devise alternative strategies to improve pension performance. naturally, there has to be a formal rule specifying this type of activity. comparing the investment performance of pension plans with that of other states will also be benefi cial for public offi cials aiming to improve pension asset performance. enacting legislation that covers all these aspects will help bind public offi cials to be er forms of public pension management. second, as monahan (2015) argued, public offi cials need to adopt several enforcement mechanisms to ensure sound public pension management.  is means that major decision makers in the public sector need to adopt state-of-the-art accounting management standards and practices.  ere should also be enforcement mechanisms to prevent public offi cials from utilizing accounting gimmicks for their own political gain. for instance, a practice such as the entry age normal method would ensure that states face larger pension liabilities at the beginning of public employment than would be the case for the project unit method.  is would help states deal with such liabilities and enable them to build large pension assets for the investment of assets. more importantly, by clarifying the true state of their unfunded pension liabilities, sound accounting methods and practices will help states confront where they actually are in terms of numbers and what needs to be done. adopting an accounting change such as the gasb 67 is also benefi cial for public offi cials; although it generates worse numbers than when states were free to adopt their investment assumption rate, confronting this darker picture will eventually help public offi cials to prepare necessary strategies for dealing with public pension debt. by forcing public offi cials to use honest numbers, optimal accounting methods and practices will provide opportunities for public offi cials to alleviate public pension debt. using a market rate for investment returns rather than the blended rate suggested by the gasb 67 is one option that can be used to reveal the true condition of the public pension debt and uncover the harsh reality for each state. legislating enforcement mechanisms that force states to adopt best accounting methods and practices will go a long way in enabling states to identify problems and formulate solutions. 67 although this study has several merits, it also 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results outline only the infl uence of tourists’ travel characteristics on their interest to buy cultural routes and tourist cards. leisure travelers should be the main targeted segment, as their probability to buy such products is higher than in the case of business or vfr (visit friends and relatives) tourists. these results can assist the destination management organizations (dmos) regarding the choice of marketing strategies aimed at integrating cultural routes in a tourist card. keywords: tourist card, cultural route, tourism destination, destination management organization, tourists. an examination of visitors’ interest in tourist cards and cultural routes in the case of a romanian destination ana ispas cristinel petrișor constantin adina nicoleta candrea ana ispas (corresponding author) professor, transilvania university of brașov, romania tel.: 0040-722-133.054 e-mail: ispasana@unitbv.ro cristinel petrișor constantin associated professor, transilvania university of brașov, romania tel.: 0040-727-392.380 e-mail: cristinel.constantin@unitbv.ro adina nicoleta candrea lecturer, transilvania university of brașov, romania tel.: 0040-744-587.182 e-mail: adina.candrea@unitbv.ro transylvanian review of administrative sciences, no. 46 e/2015, pp. 107-125 108 1. introduction the development of city-based heritage or cultural tourism off erings is a newer trend for east european urban tourism destinations. cultural tourism’s popularity continues to increase as visitor and local value systems collide (martin, sirakaya-turk and cho, 2013). to achieve competitive advantage for its tourism industry, a cultural destination must ensure that its overall att ractiveness and the tourist experience are superior to those in the many alternative destinations available (dwyer and forsyth, 2011). local public administrations play a key role in the management of tourist destinations as they can strengthen the link between diff erent stakeholders. as representatives of public administrations, destination management organizations (dmos) can be considered as ‘a mirror of the organizational aspects of tourism destinations’ which should constantly re-engineer and adapt their tourist off er to changing market conditions (beritelli and reinhold, 2010, p. 137). in areas with signifi cant cultural heritage, dmos should create cultural routes, aimed at connecting geographically scatt ered tourism att ractions while enhancing collaboration and clustering among tourism stakeholders. currently, most of the cultural routes and the smes involved apply a rather fragmented approach in their product/ service information-delivery strategies. there are no established delivery strategies and/or broad-based actions, mapping target audiences are marginal, and investigation of their preferences and motivations is rare (european commission and council of europe, 2010). while these facts can be regarded as drawbacks in cultural routes’ product and service marketing, they also indicate an opportunity for innovative lowcost solutions using modern information technology and marketing tools. tourist cards can be effi cient promotional and placement tools for cultural routes and provide an integrated approach in their implementation. using the latest information technologies (e.g., mobile applications), tourist cards can create more value for visitors by staying ahead of the evolving needs of consumers, and providing innovative solutions. in the romanian city sibiu there is a resource center which was founded as an antenna of the european institute of cultural routes (eicr) in luxembourg. the center is a source of information, advice and exchange of best practices as well as a meeting point which welcomes organizations (associations, federation of associations, public institutions, private operators, etc.), who are interested in the european cultural routes and who want to put them into practice in their territory. one of the initiatives of this romanian resource center is the promotion of a cultural route dedicated to the saxon fortifi ed churches in south-eastern transylvania. the fortifi ed churches from the south of transylvania are remarkable and unique, but most of them are situated in rural areas. the implementation of the cultural route is diffi cult due to the lack of collaboration between local authorities as the fortifi ed churches are situated in three diff erent counties. we consider that a possible way to solve this problem is to include the cultural route of the saxon fortifi ed churches in the tourist cards of the main urban des109 tinations in southern transylvania (brașov, sighișoara and sibiu) in order to retain visitors in the region and increase the average length of stay. recently, the local dmo in brașov county has launched the idea of implementing a tourist card. we consider this initiative an excellent opportunity to promote the cultural route of the saxon fortifi ed churches situated within this region. as neither the tourist card nor the cultural route have been implemented so far in the studied destination, the results of our study can assist destination managers in the pre-testing phase of these two concepts. incorporating cultural routes in the tourist card may increase their att ractiveness and stimulate regional networking in the tourism industry. consequently, the main goal of this study is to fi nd information regarding: tourists’ interest to purchase a potential brașov tourist card, the appropriate distribution channels for the tourist card, the types of services and facilities that should be included in the tourist card as well as tourists’ interest in cultural routes. the paper starts with an overview of the research background focused on the role of cultural routes and tourist cards in destination marketing followed by the methodology used for research. further on, the main results of the research are presented and discussed, while the fi nal section includes a series of conclusions. 2. background local authorities play an important role in developing policies to promote and shape the development of tourism in their areas. place marketing has been a defi ning entrepreneurial feature of urban governance (kavaratz is, 2004), and it is defi ned as a management process (kotler et al., 1999) which encompasses the att empts of place diff erentiation for competitive advantage over other places. diff erentiation occurs with the collaboration of all actors and the enclosure of local activities to meet the demands of targeted consumers (ashworth and voogd, 1994). this is a rather new function of public organizations and the public sector is struggling with such tourism-related responsibilities – including city branding and other place-based strategies. tourism administration and policy in a region can be substantially infl uenced by tourism policy with the import of ideas with respect to innovation, especially the experience economy, as well as place promotion and greater emphasis on tourism marketing than policy capacities in public agencies (hall and zapata campos, 2014). interest in networks and the role of public-private partnerships in tourism has also refl ected the changes in theory and practice of governance and shifts in the nature of government intervention in diff erent states. interests in networks as well as community-based approaches to intervention are also of signifi cance in tourism public administration (hall, 2000). a dmo may best serve to facilitate dialogue among the private sector, public sector, and other stakeholders that may otherwise never collaborate or understand how their decisions reverberate down a destination’s long tourism value chain (stange et al., 2011). dmos have evolved so that, especially in countries with a high level of 110 economic activity, their role has changed from that of a public administration model to one based on partnerships involving local authorities and the private sector (hall, 2000). ideally, the primary role of a dmo is to act as the coordinating body for many public and private sector organizations with an interest in tourism while other key themes include (pike, 2008): coordination, strategy, stakeholders, economics, marketing, product development, lobbying, information provision, protection, research, and the host communities. flagestad et al. (2005) and zach and fesenmaier (2009) believed that a destination management organization (dmo) acts as a link between diff erent actors, plays a decisive role and is an essential function for innovation processes. the public administration literature defi nes innovation within the framework of a public organization as ‘an idea, practice, policy (program), structure, method, product or process perceived as new by an individual or other relevant unit of adoption’ (khovanova apud european commission and council of europe, 2010, p. 48). generally, innovations in private and public organizations can take diff erent forms. the confi guration of separate products and services into coherent packages and off erings with greater added value for consumers is considered an innovation (european commission and council of europe, 2010). another form of innovation (according to the european commission and council of europe, 2010) is the joining of forces between separate actors either from the public or the private sector, independent of locality (municipality, region) in view of providing bett er services or support and development actions in tourism destinations. consequently, we consider that the inclusion of a regional cultural route in a city tourist card might be considered an innovative approach aimed at inducing visitors to visit cultural tourist att ractions in the areas surrounding urban destinations. considering these issues, this section of the paper has two purposes: (1) to provide an overview of the main european cultural routes; and (2) to outline the role of tourist cards in destination marketing. 2.1. an overview of the main european cultural routes due to the fragmented nature of the tourism industry, a substantial degree of coordination and collaboration among the variety of diff erent players in destination marketing is required (hall, 2000; roberts and simpson, 1999; wang and fesenmaier, 2007). tourism suppliers need to understand that they should not compete with each other at the destination level; they should join forces and pool resources to develop and implement comprehensive marketing strategies which could enable them to compete with other destinations. this is a key problem in diff erent cultural destinations, where there are scatt ered providers with limited resources for promotional purposes. we consider that integrating these cultural and services providers (accommodation, restaurants, artists, artisans, cultural att ractions) in cultural routes benefi ts these stakeholders and increases the destination’s att ractiveness. in tourism terms, a cultural route can be defi ned as a path or route of historical signifi cance that can be presented as a whole with a common thematic denominator 111 (european commission and council of europe, 2010). it can be also a themed route that has a cultural value or an element of cultural heritage as its focus, and that assigns a key role to cultural att ractions (puczko and ratz , 2007). the program of cultural routes was launched by the council of europe in 1987 aiming to raise awareness of europeans about their common heritage, interreligious dialog, protection of the minorities through exchanges between people and ideas, and cultural cooperation as a major resource of democracy. in 1997, the council of europe entrusted the eicr to follow up the already elected routes, to co-ordinate and provide technical aid to networks, to initiate new proposals as well as to disseminate information and set up a database that will constitute the memory of the program of the cultural routes. consequently, there are currently 29 routes which were certifi ed by the eicr, which are presented on a dedicated website (www.culture-routes.lu). these cultural routes are a complex combination of culture, history, tangible and intangible heritage. their wealth of themes and places weave a rich tapestry depicting europe’s towns, villages and countryside and crossing its waterways (eicr, 2012). one of the criteria for certifi cation as a cultural route of the council of europe is that routes must off er ‘tourist products’ to visitors. the aims of this requirement are threefold (eicr, 2012). firstly, to ensure that visitors have suffi cient information, can travel to, from and along the route, that they fi nd local food and a place to stay, and possibly something to bring back with them from their unique trip. secondly, the route should provide a holistic full immersion in the spirit of the particular cultural experience proposed. and last but not least, sustainable, respectful tourism is a proven way to promote regional economic and social development around lasting values and authentic heritage. the development of cultural routes starts with creating awareness, visibility and recognition of such routes. neither the council of europe nor the eicr have the capacity to act as fully fl edged dmos, therefore it is important not to forget the role of national, regional and city marketing organizations and their value for cross-linking and referencing (european commission and council of europe, 2010). certain european best practices have proven that national, regional or local public administrations play a key role in the implementation of cultural routes. a relevant example in this context is the implication of the spanish public administration in the development of the routes of the legacy of al-andalus. the legacy of al-andalus is a foundation created in 1995 by the government of the spanish autonomous community of andalusia (junta de andalucía), with special participation from the andalusian ministry of tourism, commerce and sport, and the andalusian ministry of culture. the foundation aims to contribute towards the structuring of intercultural co-operation and dialogue in the mediterranean by means of the concept of transnational cultural itineraries, and by the creation and promotion of the routes of alandalus in the iberian peninsula (european commission and council of europe, 2010). cultural itineraries and routes are one of its major programs with actions to promote cultural and rural 112 tourism, traditional arts and the protection and restoration of cultural heritage, articulating a supply of cultural and educational tourism, and creating cultural corridors between major andalusian tourist destinations to promote small and medium towns. despite their increasing popularity, several of the european cultural routes suff er substantially from ‘missing links’, that are geographically scatt ered networks, which, in some cases, are a result of uneven development of the routes in diff erent countries (european commission and council of europe, 2010). this can prevent visitors from following the entire path of the route and results in poor smes development in the ‘missing links’ areas. a possible solution to integrate cultural routes in a destination’s marketing approach is to include them in the off er and facilities of a tourist card. the tourist card can be an effi cient promotional and placement tool. including cultural routes as tourism packages in city tourist cards may increase the visibility of surrounding rural areas and assure a sustainable exploitation of their cultural heritage. as fuglsang and sundbo (2006) have suggested, tourist products are mostly behavioral and dependent on user needs and reaction. prahalad and santos (2009) state that customers and users can be involved in product and service development in early stages of the innovation processes by tapping tacit knowledge from them, and businesses can also get inspiration in customers’ new solutions to problems. thus, we consider that an examination of tourists’ interest in cultural routes is needed before the actual launch of this type of tourism products. 2.2. the role of tourist cards in destination marketing the tourist card is a destination marketing tool which integrates a variety of tourism services provided by several operators at a discount inclusive price (montorsi, 2010). the main off ers included in tourist cards are: free admission or discounts at museums, churches, monuments, free use of public transportation, a guidebook with map and in some cases discounts in restaurants, shops, leisure parks, guided tours, events, car rental, bike rental, urban parking, etc. tourist cards have proven to be eff ective marketing instruments in worldwide tourism destinations, although there are still international tourists who are less familiar with this concept or reluctant to this idea. considering the multitude of tourist services and facilities included in a tourist card, the collaboration between public administrations and diff erent local tourism stakeholders (e.g., museums, theme parks, transport companies, tourism services providers, etc.) is of great importance for the success of such a marketing instrument. tourist cards are used to commercialize a territory and its resources by bonding together a series of tourist services, commercializing them under just one product and making it possible to market an att ractive and unique local experience. the card gives the holders a series of benefi ts and advantages in terms of time and cost savings, and it is also a very effi cient information medium addressing tourist fl ows to minor sites and att ractions. the combined eff ect is therefore a bett er tourist experience, valoriz113 ing the destination and improving the destination’s image; for destination management the card ensures, instead, a control over tourist fl ows, data collection, and the integration of scatt ered actors (montorsi, 2010). the european cities marketing association has created a web portal (www.europeancitycard.com) for the promotion of 36 tourist cards from 24 european countries as well as a free application for iphone and android which allows users to explore the visitor att ractions available in the selected european cities. in order to have a benchmarking vision of the main european tourist cards, we have analyzed the off ers of the 36 cities, as well as their validity period, prices, discounts for children or families, and commissions for the travel industry intermediaries. the main off ers included in the analyzed cards are: free admission or discounts at museums, churches, monuments, free use of public transportation (with the exception of antwerp, bruges, dijon, nice, prague, turku), a guidebook with map (an audio guide in vilnius), and in some cases discounts in restaurants, shops, leisure parks, guided tours, events, car rental, bike rental, urban parking, etc. as the costs of public transportation may increase the price of a tourist card and make it less att ractive for low and medium budget tourists, or tourists may prefer their own car when visiting certain city destinations, it has given tourists the possibility to purchase a discounted card which does not include public transportation (london and vilnius). despite the diff erent initiatives in the implementation of tourist cards and cultural routes, there is a lack of interest in the academic literature concerning these tourism marketing tools. according to the authors’ knowledge, tourists’ interest in cultural routes (ticr) and their interest in tourist cards (titc) have not been investigated, nor the interdependence between these variables and visitors’ demographic and travel characteristics. thus, the present paper aims to fi ll this gap and proposes a theoretical model which integrates these variables (ticr and titc). in addition, the paper aims to assist destination management organizations in their eff orts towards the implementation of tourist cards and cultural routes. 3. research framework and hypotheses the present study aims to examine the tourists’ interest in a city card and a cultural route from a romanian urban destination brașov, and to provide the dmo in brașov with useful information concerning: tourists’ interest to purchase a tourist card, the types of services and facilities which should be included in the tourist card, the preferred distribution channels, and tourists’ interest in cultural routes. consequently, we have conducted a visitor survey, the most usual way of pre-testing tourism marketing tools. we have interviewed 431 tourists visiting the city of brașov, which were approached in their accommodation location based on a randomly selection and asked to fi ll a questionnaire. it contained 23 questions measured with diff erent nominal, ordinal and interval scales, aiming to provide information about the image of brașov as a tourist destination, and about certain marketing tools that can be used by the public administration and private operators in order to devel114 op local tourism. in this paper we have analyzed the questions concerning tourists’ interest in cultural routes and tourist cards, measured with a binary scale and certain questions measured with the nominal scale, including tourists’ demographics. collected data was analyzed using spss through various univariate, bivariate and multivariate methods. using frequency distributions we have analyzed respondents’ interest in cultural routes and tourist cards, the types of services and facilities which should be included in the tourist card, as well as the preferred distribution channels. in order to identify and validate various relationships between variables, the cross tabulation and binary logistic regression model were used. thus, we have formulated two sets of hypotheses that arise from the main scope of our research: one set concerns tourists’ intentions to buy tourist cards and cultural routes, and another one refers to the infl uence of tourists’ demographic and travel characteristics on their interest in tourist cards and cultural routes. set 1. hypotheses regarding tourists’ intentions: h1: the majority of the respondents are interested to buy a potential brașov tourist card. h2: the majority of the respondents are interested to buy cultural routes. h3: travel agencies are considered the most appropriate distribution channels for the tourist card in the city of brașov. h4: the types of services and facilities that tourists prefer to be included in the brașov tourist card are access/discounts at museums, castles, entertainment parks, spa and wellness facilities, and accommodation. set 2. hypotheses regarding the infl uence of tourists’ demographic and travel characteristics on their interest to buy tourist cards and cultural routes: h5: tourists’ demographics have a strong infl uence on tourists’ interest to buy both tourist cards and cultural routes. h6: travel characteristics have a strong infl uence on tourists’ interest to buy both tourist cards and cultural routes. in case the same demographic and travel characteristics infl uence tourists’ interest to buy tourist cards and cultural routes, we have formulated a fi nal hypothesis: h7: tourists who are interested in cultural routes are also interested in tourist cards. the demographic characteristics we have considered were: age, marital status, gender, education, monthly income, and the analyzed travel characteristics were: tourists’ visit purpose and their familiarization with tourist cards and cultural routes. considering the above mentioned hypotheses we have created a theoretical model, which we have tested using the data collected in the research. the model is presented in figure 1. according to this model we assume that tourists who are interested to buy tourist cards have the same demographic and travel characteristics as those who are interested in cultural routes. we consider that it makes suitable an integration of these marketing tools because they address the same tourist segments. 115 tourists’ demographics travel characteristics interest to buy tourist cards (titc) interest to buy cultural routes (ticr) the integration of tourist cards and cultural routes h5 h5 h6 h6 h7 h7 figure 1: the theoretical model regarding the integration of tourist cards and cultural routes 4. findings 4.1. testing the hypotheses regarding the interest to buy ticr and titc the results of the present research reveal tourists’ poor knowledge of tourist cards as a small percent of the respondents (22.7%) are familiarized with such a concept. in spite of this fi nding, 66% of the respondents would be interested to purchase a tourist card if it would be available in the city of brașov. however, 14% of the interviewed respondents were undecided, and 20% were not interested in using a tourist card. in order to test the statistical signifi cance of the above results according to our fi rst hypothesis, a t-student test was computed after the transformation of the initial variable into a binary one with the answers ‘yes’ = 1 and ‘the others’= 0. we have considered a test value of 50%. the results of this test are presented in table 1. table 1: one-sample ttest for the percentage of tourist interested to buy a tourist card test value = 0.5 t df sig. (2-tailed) mean difference 95% confi dence interval of the difference lower upper interest to buy a tourist card 6.839 430 .000 .15661 .1116 .2016 the results of the t-student test (p<0.05) confi rms the fi rst hypothesis (h1), which states that the majority of the respondents intend to purchase a potential brașov tourist card. we have also investigated tourists’ interest in cultural routes. in this respect, the interview operators have explained the cultural route concept to the respondents. in order to measure this variable we have used a binary scale, and the results revealed that 72% of the respondents were interested in cultural routes. aiming to verify whether the second hypothesis of the research (h2) is accepted, we have also used the t-student test (table 2). table 2: one-sample ttest for the percentage of tourist interested in cultural routes test value = 0.5 t df sig. (2-tailed) mean difference 95% confi dence interval of the difference lower upper interest to buy cultural routes 10,385 430 ,000 ,22390 ,1815 ,2663 116 the results show that the percentage of tourists interested in cultural routes is signifi cantly higher than 50%, and the second hypothesis (h2) is accepted. this high percentage of tourists interested in cultural routes allowed us to conclude that such tourism products could be developed. a cultural route could become a strong incentive for local development in southern transylvania. tourists’ interest regarding tourist cards should motivate the local dmo to develop such a product, which could have real success in the future. in order to benefi t from this opportunity, the local dmo must choose proper marketing strategies meant to promote the card, and place it through the best channels. in this respect, we asked tourists which are the most appropriate distribution channels for a brașov tourist card, giving them multiple choice answers. the results are presented in table 3. table 3: tourists’ preference concerning the main distribution channels of the tourist card responses distribution channels n percent percent of cases tourist information centers 143 24.0% 48.0% accommodation units 228 38.3% 76.5% museums 40 6.7% 13.4% travel agencies 165 27.7% 55.4% others 19 3.2% 6.4% total 595 100.0% 199.7% these results indicate that accommodation units are considered the most appropriate distribution channel for the brașov tourist card, as this answer was mentioned by 76.5% of the respondents. thus, the third hypothesis (h3) is rejected. travel agencies and tourist information centers have also recorded a high number of answers, being mentioned by about 50% of the respondents. the fourth hypothesis (h4) is confi rmed as tourists’ opinions regarding the facilities which should be included in the tourist card (table 4) are focused on certain price facilities for accommodation and leisure services (museums, castles, entertainment services, spa and wellness). however, certain respondents are interested in discounts for foods and beverages consumed in local units (23.2%) or discounts for public transportation (12.6%). table 4: the facilities which should be included in the tourist card facilities responses n percent percent of cases access/discounts at museums, castles, entertainment parks, spa and wellness 224 30.9% 78.3% discounts in accommodation units 224 30.9% 78.3% discounts in bars, restaurants, coffee-shops 168 23.2% 58.7% access/discounts for public transportation 91 12.6% 31.8% others 18 2.5% 6.3% total 725 100.0% 253.4% further on, we have tested the infl uence of demographic and travel characteristics on respondents’ interest in both tourist cards and cultural routes. 117 4.2. testing the infl uence of demographic and travel characteristics on titc and ticr in order to fi nd the most important determinants of respondents’ intention to buy tourist cards and cultural routes, we have chosen the binary logistic regression model. this model off ers the advantage of using categorical variables as independent factors that infl uence a binary dependent variable (constantin, candrea and ispas, 2012). first, we have analyzed tourists’ intention to buy a tourist card as a dependent variable in relationship with diff erent characteristics of the respondents as independent variables. these characteristics are: respondents’ awareness concerning tourist cards, the main purpose of their visit and certain demographic characteristics (see table 5). table 5: variables included in the binary logistic model variables frequency are you familiarized with the concept of tourist card? no 333 yes 98 visit purpose leisure 259 business 94 visit friends-relatives 56 other 12 age 16-24 years 107 25-34 years 144 35-44 years 107 45-54 years 52 55-64 years 9 over 64 years 2 marital status single 103 married 106 married with children 82 in a partnership 120 divorced 10 education below high school 5 high school 111 college/degree 200 postgraduate and beyond 105 monthly income low income 96 medium income 211 high income 114 gender male 217 female 204 from the total of seven variables (binary and categorical) included in the model only two signifi cant factors have been retained: the familiarization with the tourist card concept (famil) and visit purpose (visit_purp). we have estimated this model using a stepwise approach (table 6). the visit purpose variable (visit_purp) was transformed into several binary variables according to each response category, and we have obtained the model coeffi cients (b) presented in table 6. these new variables have been coded as follows: 118 familiarization with the tourist card concept (famil), leisure (leis), business (bus), visit friends and relatives (vfr). table 6: variables in the model equation for titc b s.e. wald df sig. exp(b) step 1(a) famil 1.362 .311 19.240 1 .000 3.905 constant .405 .113 12.823 1 .000 1.500 step 2(b) visit_purp 13.876 3 .003 visit_purp (leisure) .034 .707 .002 1 .962 1.035 visit_purp (business) -.925 .725 1.630 1 .202 .396 visit_purp (visit friends and relatives) -.241 .750 .103 1 .748 .786 famil 1.437 .318 20.466 1 .000 4.209 constant .627 .696 .812 1 .368 1.872 a variable(s) entered on step 1: familiar. b variable(s) entered on step 2: visit_purp. considering the above mentioned variables, the binary logistic model has the following equation: )241.0925.0034.0437.1627.0exp(1 )241.0925.0034.0437.1627.0exp( )4,3,2,1/1( vfrbusleisfamil vfrbusleisfamil xxxxyp ⋅−⋅−⋅+⋅++ ⋅−⋅−⋅+⋅+ == (1) according to the results of equation (1), respondents’ familiarization with tourist cards and leisure visit purpose increases signifi cantly the probability to buy such a card. these results support partially the sixth hypothesis (h6) of our research which states that travel characteristics have a strong infl uence on respondents’ interest to buy tourist cards. in this respect, tourists who are travelling for leisure purposes are mostly interested to buy tourist cards. the probability decreases in the case of business travelers or those visiting friends/relatives due to the negative values of the ß coeffi cients estimated for these variables. according to the values of the odd coeffi cients mentioned in table 6, if a tourist is travelling for leisure purposes, the probability to buy a tourist card is increasing with 3.5% (exp (b)=1.035). however, if a tourist is travelling for business purposes, the probability to buy a tourist card is decreasing with 60.4% (exp (b)=0.396). respondents’ familiarization with tourist cards has the strongest infl uence on the probability to buy such a product as its odd coeffi cient is 4.209. some simulations of tourists’ probability to buy a tourist card are presented in table 7. table 7: simulations of the probability to buy a tourist card visit purpose familiarization with tourist cards yes no leisure 0.81 0.51 business 0.62 0.28 visit friends and relatives 0.77 0.44 thus, for leisure tourists who are familiarized with tourist cards, the probability to buy such a product is 0.81 while for leisure tourists who are not familiarized with tourist cards, this probability is 0.51 (table 7). 119 in order to outline the probability for tourists to buy cultural routes according to their demographic characteristics and visit purpose, we have used a logistic regression model, similar to the one applied in the case of titc, taking into consideration the same variables used in table 5. in this case, tourists’ familiarization with tourist cards was replaced by their familiarization with cultural routes. table 8: variables in the model equation for ticr b s.e. wald df sig. exp(b) step 1(a) visit_purp 49.201 3 .000 visit_purp(leisure) .434 .686 .400 1 .527 1.543 visit_purp(business) -1.399 .699 4.009 1 .045 .247 visit_purp(visit friends and relatives) .098 .738 .018 1 .895 1.103 constant 1.099 .667 2.716 1 .099 3.000 a variable(s) entered on step 1: visit_purp. according to the results presented in table 8 only one signifi cant factor has been retained-visit_purp: leisure (leis); business (bus); visit friends and relatives (vfr). considering the above mentioned variables, the binary logistic model has the following equation: ))098.0399.1434.0099.1exp(1 )098.0399.1434.0099.1exp( )3,2,1/1( vfrbusleis vfrbusleis xxxyp ⋅+⋅−⋅++ ⋅+⋅−⋅+ == (2) the probability for tourists to buy a cultural route, calculated using equation (2), is higher in the case of leisure travelers (0.61) and lower for business (0.20) or vfr (visit friends and relatives) tourists (0.52). this confi rms the sixth hypothesis; tourists who are travelling for leisure purposes are mostly interested to buy tourist cards and cultural routes. 4.3. the empirical model considering the results of the two logistic regression analyses we have found that only travel characteristics infl uence titc and ticr. the infl uence of demographic characteristics on titc and ticr is not statistically signifi cant, which means that the fi fth hypothesis (h5) is rejected. thus, the empirical model which resulted from testing the second set of hypotheses is presented in figure 2. familiarization with tourist cards travelling for leisure interest to buy tourist cards (titc) interest to buy cultural routes (ticr) the integration of cultural routes in tourist cards figure 2: the empirical model regarding the integration of cultural routes in tourist cards 120 considering the fact that leisure travelers are mostly interested to buy cultural routes and tourist cards, we can conclude that this is the main market segment that the dmo should focus on when promoting them. the marketing eff orts for the two products (the tourist card and the cultural route) should be based on proper processes meant to inform tourists regarding the existence of tourist cards and their benefi ts for cultural routes. 5. discussion the research results reveal the following conclusions regarding respondents’ interest in tourist cards (titc) and cultural routes (ticr): – tourists’ poor knowledge of tourist cards as a small percentage of respondents (22.7%) are familiarized with such a concept. these results outline the need for a bett er promotion of tourist cards in romania as most tourists are not familiar with their characteristics and benefi ts. – considering the fact that 66% of the respondents would be interested to purchase a tourist card if it would be available in the city of brașov, the local dmo has the opportunity to develop such a product, which can enjoy a real success in the future. as the most likely interest for a tourist card could be shown by well-informed tourists, the main marketing actions should be focused on a proper process meant to inform tourists regarding the existence of tourist cards and their benefi ts. – accommodation units were considered the most appropriate distribution channel by 76.5% of the respondents while about half of the respondents would prefer travel agencies. tour operators and travel agencies should be motivated to distribute the tourist card in exchange for a commission between 10-15%, negotiable depending on the sales volume. we recommend that the local dmo should consider the distribution using a dedicated webpage or even a tourist card hotline. – as 78.3% of the respondents have shown their interest in price facilities for accommodation and leisure services (museums, castles, entertainment services, spa and wellness), we consider that including the saxon heritage cultural route in the tourist card might make it att ractive for visitors who want to discover brașov region. – respondents’ familiarization with tourist cards and leisure visit purpose increase signifi cantly the probability to buy such a card. – as 72% of the respondents have shown their interest in cultural routes we recommend that such a cultural route should be included in the tourist card off er of brașov city. – the probability for tourists to buy a tourist card and cultural route is higher in the case of leisure travelers. – travel characteristics infl uence titc and ticr, while the infl uence of demographic characteristics on titc and ticr is not statistically signifi cant. 121 considering the fact that leisure travelers are mostly interested to buy cultural routes and tourist cards, we can conclude that this is the main market segment that the dmo should focus on when promoting them. based on the results of the present research, the major fi ndings have signifi cant managerial implications for the analyzed tourist destination. we consider that the development of tourism in brașov should be based on integrated marketing initiatives that promote both existing and new tourism products. however, these initiatives cannot be implemented by the local dmo without the collaboration of local tourism stakeholders. although the local dmo has organized monthly meetings with tourism stakeholders, their participation and support seems to be limited, causing diff erent problems in the cooperation framework of the destination. potential customers’ preferences concerning brașov tourist card give opportunities for an integrated development of local tourism industry, requiring a strong cooperation among service providers, which can assure a fair contribution in sustaining the required facilities and discounts. the coordination of this process by the local dmo is very important as it can assure a proper framework of cooperation focused on equal benefi ts for all partners that promote these cards. fragmentation in the supply chain is a huge problem holding back the cultural routes from packaging an att ractive tourism off er. the creation and marketing of networks, comprising stakeholders from diff erent geographical locations, across diff erent sectors and with diff erent business priorities is a real challenge. consequently, our recommendation concerning the inclusion of the cultural route of the saxon fortifi ed churches in a potential brașov tourist card might solve this challenge, as the local dmo would be in charge of their promotion. in order to assure the success of a cultural route in southern transylvania, we have formulated several recommendations for the local dmo which should be in charge of their implementation. these recommendations are based on several good practices found in certain european cultural routes and in previous studies: – the identifi cation of diff erent smes from the destinations included in the cultural route, which might be interested in off ering diff erent tourism services or local products. as clustering is one way in which sme activity and knowledge exchange can be stimulated, the local dmos in each of the main urban destinations in the region (brașov, sibiu and sighișoara) should play an important role in stimulating cluster development. incentives could be provided for the establishment of specifi c clusters covering cultural, tourism and business operators at key locations along the fortifi ed churches cultural route. – raising tourists’ awareness of the cultural heritage in the region through diff erent cultural events. in most of the rural communities included in the route there are several traditions and customs especially during the summertime and religious holidays (easter and christmas). – interpretation of the local cultural heritage in the rural communities included in the route (dramatic art, interpretative panels, etc.) in an integrated manner, 122 which may outline the inclusion of the fortifi ed churches in a cultural route and motivate tourists to visit the other churches. – marketing: a well-defi ned target market is one of the key elements of a marketing strategy. an effi cient communication is also necessary in order to facilitate easy access by all tourists, and thus avoids wasting time and physical eff ort in searching out that information once they have arrived at the chosen destinations (ortega and rodriguez, 2007). marketing through mobile service off ers the possibility to provide information along the central roads (parking lots, rest areas). in this way, through gift package, prizes and interactive marketing campaigns, tourists’ att ention can be att racted, and they can be interested to visit some of these destinations. this especially applies to the ability to link several smaller destinations, with the purpose of providing substantial benefi ts to tourists. the present research has identifi ed a high interest of tourists to buy cultural routes and tourist cards, especially in the case of leisure travelers. we have also found that well-informed tourists are more likely to buy tourist cards. thus, we have identifi ed the necessity of a good promotional strategy focused on the segment of leisure travelers, using advertising in magazines, guidebooks, leafl ets or the creation of cultural events and tourism fairs. as suggested by ekinci, sirakaya-turk and preciado (2013), tourism destination marketers should also create travel forums and communities of travelers who visited the destination (in this case, following the cultural route) in order to provide pride for the members, encouraging outside observers to develop and enhance positive images and identity. ultimately, potential visitors are likely to identify themselves with the groups of travelers who visit the destination (following the cultural route) and create additional positive word-of-mouth communication. destination marketing strategies should also focus on raising the internet visibility of the cultural route. the european experience in developing cultural routes has shown that these routes had developed their own websites. in this sense, besides their own websites, the use of social media (transmitt ing the information via facebook, youtube) as well as a dedicated consumer portal, where both the cultural route and the tourist card can be presented to the potential tourists on a single website, can become powerful marketing instruments for the dmo. a specifi city of brașov tourism market is the proliferation of small tourism companies, characterized by a strong individual business vision. they are reluctant to establish collaborations and build up an integrated system, making the tourist off er too fragmented to be competitive. in the context of a fragmented off er and less coherent marketing eff orts, a tourist card including a cultural route can be a useful marketing tool contributing to an integrated development of brașov as a tourism destination as diff erent local manufacturers and service providers could benefi t from the inclusion in the cards’ network. thus, the local companies can have more information about tourism demand and they can improve short and medium terms planning processes, leading to a successful management for both companies and destination. 123 based on the good practices identifi ed in the specifi c literature and on the results of the survey among the visitors 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of central and eastern european countries. this paper discusses the new emergence of ghetto spaces in romania, analyzing different administrative policies and their effects after 1990. it develops around an ethnographic approach and reviews the actions of local administrations, aiming to assess the most signifi cant interventions. the main fi ndings show that the political involvement in the administrative policies focused on ghettos occurs only in certain conditions, while emphasizing the lack of coherent strategy to solve these expanding spaces. the evaluation of administrative policies identifi es that rroma resettlement is an exclusion and ghettoization policy, the only one that suggests durability for local administrations. keywords: administrative policies, urban segregation, ghettos, romania, central and eastern european countries. administrative policies in urban segregated spaces. the case of the romanian ghettos*1 viorel mionel alexandru gavriş viorel mionel lecturer, department of tourism and geography, faculty of business and tourism, bucharest academy of economic studies, bucharest, romania, tel.: 021-319.19.00 / int. 202, 340 e-mail: viorel.mionel@rei.ase.ro alexandru gavriş lecturer, department of tourism and geography, faculty of business and tourism, bucharest academy of economic studies, bucharest, romania e-mail: alexandru.gavris@rei.ase.ro * acknowledgements: the authors would like to thank anonymous reviewers for the invaluable comments and to adele youmans for her support to improve the quality of this text. transylvanian review of administrative sciences, no. 45 e/2015, pp. 116-135 117 1. introduction diff erent causes of urban crisis and civic involvement, based on impoverishment, poverty and stigma, fi nd their roots within the ghett o spaces (bauman, 2001; dreier, 2003; sugrue, 2005). the spatial segregation of rroma1 populations has generated many ghett os or the so-called areas ‘of second hand’ in the cities of romania. the reality of living inside ghett os is marked by poverty, people on social assistance, lack of proper education and working skills, lack of basic utilities, increased birth rate, high density of the living space, spatial degradation, sanitation and epidemic risks, crimes and local confl icts, drugs use and begging (mionel, 2012a). with the help of a ‘circuit of disadvantages’ (omenya, 2003, p. 13), we argue that romania is the scene of a fast process of auto-reproduction in the case of urban ghett os. moreover, many people on social assistance live in these poor spaces, triggering the alarm of intervention for the urban administration. the scene of administrative policies resembles that of many cities of central and eastern europe (cee), both as action model as well as result. urban administrations try to get involved actively inside communities, especially of those spatially segregated, to improve the living standards and to diminish inequalities among areas under their responsibility. the romanian case adds value not only through diversifying the context, but exploring and establishing a typology of the directions of intervention. the analysis of administrative policies in segregated urban spaces involves anchoring the topic in the fi eld of rroma segregation. while the number of rroma communities is controversial within the offi cials’ discourse, their segregation expanded in many romanian cities, despite the authorities att empt to remodel the urban image by blocking the housing access of rroma into the cities. it challenges the sustainable policies which fi ght against poverty and marginalization around rroma communities. the paper develops around the characteristics and the process of segregation between romanian cities and communities marginalized to live inside ghett os. the segregation of rroma population has occurred naturally through spatial concentration, but some cases emerged when urban administrations developed and maintained segregation. another goal of this paper relates to the target of administrative interventions and their motivations, to see the resemblance with areas of other cee countries. our third focus is to identify and classify the administrative policies which target the life of the ghett o. for these, the next section explores the segregation concept, emphasizing the spatial segregation of rroma in cee countries and romania. the methodology section develops around an ethnographic approach, exploring the media storytelling experiences and reports, to analyze the policies applied by urban administrations. it leads to the evaluation of the most signifi cant interventions of the local urban management, which try to grasp sustainable ways that contribute to the 1 we use rroma and not roma or rromani or gypsies, to bett er identify diff erent concepts and to be close to the way in which this ethnic group identifi es itself. 118 improvement of living conditions. then, we discuss the administrative policies, emphasizing the evaluation of policies. the conclusion section wraps up the evaluation of policies about their success, promoting critical refl ections on studied cases. 2. literature analysis segregation aff ects at diff erent stages and with diff erent intensities almost all countries (feitosa and wissmann, 2006). white (1983) suggests two types of segregation: social and geographic, which are intertwined. in general, social segregation analysis relies on the representative dimensions that generate categories; ethnicity, race, confession, alongside education, income and sexual minorities, all these represent parts of the general process of social segregation because each involves and defi nes population. racial segregation analysis has been the focus of many studies, with the main focus on the segregation of the black population (massey and denton, 1993; collins and williams, 1999; maly, 2008). ethnic segregation has also gained the att ention of many researchers (gültekin and güzey, 2007) who have analyzed, described and mapped levels of separation of ethnic groups in their living environments. yet, kain (2003) argues that socio-economic segregation and diff erent ways of measurement of the socio-economic status have received less att ention in academic studies. in the case of income distribution developed through global economy, musterd and ostendorf (2013) identify a strong emphasis on social inequalities and the emergence of socio-economic segregation. other studies (santos, 1979) mention the structuring of urban society in social classes that appear and develop simultaneously because of the income distribution. finally, confessional segregation has received lesser att ention (knox, 1973; glasze, 2005). this notion involves those cases where religion has generated spatial rupture of the population, causing a real social phenomenon. unlike social segregations, geographic segregation deals with urban morphology (sinha and sinha, 2007; latham et al., 2008). although social segregation implies many meanings, it is usually used for geographical separation of diff erent social and spatial groups. urban diversity and heterogeneity originate from the evolution through time of the social and geographic components of urban segregation, marking the urban landscape with diff erent shapes. in other words, geographical segregation defi nes spatial forms of urban landscape and the quality of living in such spaces. in this context we focus on the geographical segregation of poor people, identifi ed as ghett o. 2.1. what is a ghett o? wirth (1928) has suggested that the ghett o existed long before it was named like this. its origin remains unclear, but it has been in use for over 500 years. some time ago, the ghett o meant a jewish neighborhood in a city. starting with the middle ages, the presence of jews in italy was cited to be high in the neighborhoods of the outskirts and to a lesser extent in the main parts of the city. this infers that stigmatization and discrimination, main factors for the existence of the ghett o, have an old history. 119 through a detailed analysis of the etymology of the ghett o, cuceu (2010) suggests the separation of the word at its root. despite the evidence of its italian origins – ‘campo ghett o’, which represents the place where iron is melted, some researchers have suggested that ‘get’ comes from the hebrew language, meaning separation (cuceu, 2010). therefore, campo ghett o evolved to nuovo ghett o to reveal the jewish space in an institutional way and, fi nally, it has become the well-known ghett o. other studies have advocated for the word ‘borghett o’ (wirth, 1928), because this form has close resemblance to a small village or even small neighborhood; as such, it suggests the creation of small urban sett lements by the jewish population, where they were forced to live. the social life of the ghett o gravitates around two coordinates of composition, which are simultaneous: the enhancement of integration and cohesion from within, and acceleration of isolation from the outside space (wacquant, 2011). after a detailed description and analysis of the jewish community from the ghett o of venice, he emphasizes four grounding elements: stigmatization, constraint, spatial confi nement and institutional parallelism. with the exception of these elements, the ghett o reveals to the outside world – almost everywhere – a distinct space with unique characteristics: poverty, which seems a derivative element (wacquant, 2011); segregation not all segregated spaces are ghett os, but all the ghett os are segregated; a ghett o is diff erent of an ethnic enclave; a ghett o is isolated from the outside and congregated within; social sustainability and ghett o represents two diverging issues. even if the spatial process approached by this paper was not named ghett o in the countries where it has developed, this does not mean its denial. famous cases from venice (wirth, 1928; wacquant, 2011; kessler and nirenberg, 2012), rome (mionel, 2012a; mionel, 2013), from the history of japan (de vos, 1971; shirasawa, 1985; lie, 2004) or us (wirth, 1928; ward, 1989; wacquant, 2011) off er plenty of arguments for ghett o analysis. romanian ghett os manifest a certain patt ern that is conceptualized and customized in accordance with the spatial and social dimensions found in the analyzed cases. poverty, segregation and exclusion are among the factors that favors the emergence and the continuation of stigma in many romanian urban ghett os. here, the poverty is not necessary a derived phenomenon, but one that has mainly implicit values and that seems perpetual. the causes of poverty from ghett os alter profoundly any relation to the outside: from equal access to the working market, education, to the simple social contract. in romania, the ghett os are urban spaces that concentrate dynamic rroma communities, unfolding through three facets: they evolved steadily over a long period of time, they developed through misused administrative policies, or they are formed through a combination of the previous two. transposed in the segregation framework of ethnic communities, the facets of ghett os involve two types of segregation (voluntary and involuntary), as well as a mix of the two. without the use of force over the decision of localization, the ethnic concentration means a voluntary ghett o (wirth, 1928; bauman, 2001) and relates to the individuals’ preferences. the romanian urban 120 ghett o plays a specifi c role of social and economic coercion on one side, while on the other side it acts its institutional role (mionel, 2013). communities from these areas lost their economic utility for the host cities (wacquant, 1993). in the case of some families, children’s education does not involve leaving poverty with the help of education. transmitt ed from generation to generation, the ‘culture of poverty’ adds to the rroma’s particular way of living and to their social environment. it forms a dynamic process with aggravated consequences which, in no way, diminishes the social eff ects. this cultural system of learning poverty is well established in ghett o communities. it is without doubt that ghett os concentrate many social assisted individuals because of poverty or other occurring disadvantages. the diff erent culture of these communities is of poverty and stigma. it becomes radical against the outside space and towards other communities, while acting in unity. the community chain consists of each member and is made with each one individually. rroma individuals display impressive cohesiveness when anything seems to change their interest in the community. therefore, personal interest gains justifi cation through group actions (mionel, 2013). antisocial behavior antagonizes the relationship between neighbors and rroma communities in the ghett os. the presence of social confl icts between rroma living in ghett os and the population of the host cities, in general, and the population living nearby in particular, is the source of social confl icts and the main agent of unrest against the rroma’s spatial concentration. 2.2. rroma segregation and administrative policies in central and eastern europe considered pariah among ethnic groups (vassilev, 2004), the rroma populations remains the largest ethnic group to date in cee. it shapes ethnic segregation, one of the most important ‘unsolved’ issues of the local administration of the post-socialist cities (sobotka, 2006). the academic literature shows the actuality of rroma segregation in the countries of cee (barany, 2000a; zoon, 2001; guy, 2001; vašečka, 2003; vassilev, 2004; scheff el, 2008; toušek, 2011; ruzicka, 2012). the amplifi cation of segregation has evolved into an accentuated ghett oization (farnam, 2003; imre, 2006; mionel, 2013). the fall of communism in cee has marked the social and geographical segregation of rroma population in cities from poland (puckett , 2005; sobotka, 2006), czech republic (guy, 2001; toušek, 2011), slovakia (cangár, kotvanová and szép, 2003; farnam, 2003; guy, 2001), hungary (barany, 2000a; barany, 2000b), bulgaria (vassilev, 2004; camerer, 2012) and romania (rughiniş, 2007; creţan and turnock, 2008; mionel and neguţ, 2011; mionel, 2013). these countries and others in the region represent the only instance in postwar europe where ghett os have reemerged (wacquant, 2005). the amplifi cation of segregation has evolved into an accentuated ghett oization (farnam, 2003; imre, 2006; mionel, 2013), indicating that a new residential form of segregation and ghett oization has emerged in the cee after 1990, without clearly saying if such segregation practices existed during the communist period. the dynamics of segregation belong to a cultural purifi cation, which was on a freewill basis, but unwillingly in the case of space (toušek, 2011). this approach fac121 es many critics, research showing that rroma segregation relates to policies of the local administrations (vašečka, 2003). she argues about a ‘wall strategy’ used by local authorities in ústí nad labem to separate the rroma inhabitants, and to create a border dividing them from the rest of the population. the containment policy or the wall strategy is known in hungary (cangár, kotvanová and szép, 2003), as well as in many locations in slovakia. all these examples of segregation suggest a strict social control of rroma by authorities (barany, 2000a). the resett lement from cities to other locations corresponds to another form of social control. this policy has been analyzed in slovakia (farnam, 2003) and it has been active for over 15 years. only in 1997, over 25000 ethnic rroma were evacuated from the city of košice (guy, 2001; farnam, 2003). today, between 4000 and 5000 rroma of those evacuated live in one of the largest ghett os of slovakia, at the city outskirts (zoon, 2001). regarding the large number of rroma in a segregated space, the best example is bulgaria, where over half of the population lives in ghett o neighborhoods (camerer, 2012; vassilev, 2004). bulgaria has the largest ghett o out of the former communist countries: fakulteta in sofi a comprises informal housing with over 35000 people (vassilev, 2004). other studies suggest that rroma’s ghett oization has expanded from cee to the west (berescu, 2011). niculae (2013) argues that rroma segregation in france and italy is dressed up through names as: campi nomadi and les villages d’insertion. these spatial products of administrative policies are in fact ghett os. the argumentation supports on the obvious containment of rroma population: far away from cities, surrounded by three meters fences, guarded access points, lighting systems to help ‘vigilantes’ patrol during the night (niculae, 2013, pp. 49-50). 2.3. rroma segregation in romania segregation in romania received inputs from local researchers (rughiniş, 2007; creţan and turnock, 2008; mionel, 2012), as well as from an international perspective (tátrai, 2011; marcińczak et al., 2014). fleck and rughiniş (2008) explored the residential segregation, arguing that ethnic-spatial segregation is a key element of understanding the lack of interaction between rroma communities and the rest, and that ‘social distance and geographical separation are mutually reinforcing’ (p. 123). at national level, creţan and turnock (2008) indicated a particular development of rroma segregation exists in romania. auto-segregation develops when some parts of rroma population try keeping at all cost its ‘identity’, despite the progress of the country or the nearby communities, involving a ‘separation from the mainstream in terms of the modernizing ethos and the rule of law’ (creţan and turnock, 2008, p. 274). their mapping of rroma segregation included almost all the urban spaces of the current study in which the rroma segregation has (been) transformed into ghett os. at local level, tátrai (2011) explored the eff ects of administrative policies of three cities where rroma segregation is high. he argues that ‘the residential segregation of 122 r(r)oma is spectacular’ (p. 189), but it is challenged by the lack of data. that is why segregation cannot be fully explored, because the quantitative analysis does not have support. 3. methodological clarifi cations the fi rst goal of the paper is to account for the administrative interventions of local authorities in urban ghett os. then, it highlights the target of these interventions and their motivations to see the similarity to those from other cee countries. the viability of these interventions is the last element of the analysis. the methodology involved discarding the taboo of many romanian researchers when they tackle urban ghett os, and to follow the journalists’ path (mionel, 2012b). reporters interested in the ghett o phenomenon succeeded in displaying a vast amount of information, resulting from their semi-ethnographic research. the mass-media reports were our local sensors for information gathering, supporting the understanding of ghett o life recent dynamics, while we critically examined the data and connected it to the academic framework. the geographical analysis of romanian urban ghett os introduces the ghett os characteristics developed by wacquant (2011), respectively wirth (1928) and bauman (2001, pp. 82-91). the ghett o concept involves a geographical space, mainly urban, in which a minority of a certain ethnicity, race or other type, concentrates and is forced to live there. some caveats do arise, because of the mass-media methods of using and presenting information that makes the concept to look diff erent from the academic defi nitions. parts of mass-media write about some urban areas and considers them to be ghett os just for being physically degraded, while others suggest that a ghett o is a space with trash and squalor. therefore, the essence of the ghett o is ignored: spatial concentration of a minority and the shortcomings it faces. it is obvious that the degradation of houses and spaces are characteristics of these spaces, but they are not the main ones (mionel, 2012b). 3.1. data collection the data were collected from internet, seen as the best alternative to process information in unreliable situations as that of rroma dynamics. the reason lies in the poor support of institutions to provide and manage data referring to ethnic groups. moreover, the administrative terminology avoids the word ghett o and focuses on ‘community of poor rroma’ or ‘pockets of poverty’. we explored every space identifi ed as ghett o through newspaper articles published on the internet, containing the word ghett o in the title or in the body of the text, acknowledging the following characteristics: spatial segregation of rroma population, poor contact with the community, physical bordering against the nearby spaces, lack of basic public facilities, impoverished population, poor housing conditions, high criminality, low employment. those articles covering only a characteristic of the ghett o were not included. even if some areas (chercheci) do not have a clear spatial 123 border, they were considered a ghett o by having all the other characteristics. the lack of one characteristic does not aff ect the complex defi nition of the ghett o. the only exception is the spatial segregation of rroma or their low proportion within the overall population of the area discussed as being ghett o. such areas are not ghett os, but pockets of poverty even if all the other conditions are fulfi lled. gathering information for ghett os involved the period of august 2012 – december 2013 during which we assessed articles in relation to ghett os. this interval comprised two phases for identifi cation and examination of changes inside ghett os. we used google search engine to collect articles, based on a patt ern containing romanian key words: ghetou or ghetou and romi or ghetou and ţigani or ghetoizare or ghetoizare and ţigani or ghetoizare and romi or comunitate de romi or romi and segregare or ţigani and segregare. the results helped us to identify urban spaces described by the inquired words and where local administration acted through diff erent policies. for each identifi ed space with characteristics belonging to a ghett o, we developed a collection of articles inside a database. the number of articles diff ers from one ghett o to another, ranging from over 50 (pata rât, craica, horea, tineretului, turturica and muncii) to 22 (zăvoi). each space was coded to contain the accepted characteristics, while the papers were constrained accordingly. we found other urban spaces conforming to these requirements, but which involved some issues: the number of articles was low and the writing subjective, they approached a specifi c issue of the ghett o and the social component was confusing. subsequently, at least 20 articles from three diff erent authors was the threshold for ghett o identifi cation. most of the gathered articles approached both segregation and ghett oization of rroma communities, as well as administrative actions of local authorities. the articles showed how the interest for rroma segregated communities rose in direct proportion with the administrative actions. monitoring the administrative policies, identifi ed in the fi rst phase, was specifi c for the next period of analysis, when a new set of articles was analyzed, writt en mostly by other reporters and after at least one year has passed from the policy implementation. we assessed the success of administrative policies according to particular changes that occurred inside ghett os, showing improvement or decay of living status. for example, in the cases of bârlad and drobeta turnu severin cities, when local administration tried to solve the housing issues of their respective ghett os, we followed the way in which this policy generates bett er housing and living conditions. if housing improved for the corresponding ghett o during the analyzed interval between the fi rst articles and the last ones, we accepted the fulfi llment of the criterion. if nothing changed, we synthesized the results of administrative policies in table 2. the cities of the study originated from the analysis of the whole content within the aforementioned methodology. the number of romanian cities with their respective ghett os may diff er from other approaches, giving the fact that much data is missing or ambiguous and few detailed research projects exists on the living conditions inside these segregated urban space. all these diminish the chance of an exact mapping, but 124 our investigation into the rroma’s urban ghett o helps authorities for bett er policies of integration, while it also enlarges the academic literature. 4. results romanian ghett os are small and display well framed spatial landscapes. their presence is contagious and aff ects the nearby spaces, especially the market value of nearby housing units. the rroma’s concentration in ghett os hastens mobility in the vicinity and housing devaluation. the wish to sell a household faces stigmatization spread from the ghett o. the eff ect of tainted vicinity emerges from a popular culture of fear against the ghett o; for the urban community, the ghett o signifi es the place that, because of its high risks, has to be avoided at all costs. many ghett os are located in peripheral or semi-peripheral areas, with fewer than 3,000 rroma. in bucharest it is impossible to estimate the rroma from each ghett o because they are seen as a whole, given their proximity; the exception is the ghett o from valea cascadelor. these ghett os record a variable ratio of rroma, but they appear to be dominant within the total rroma population of all these environments in the country. the romanian urban ghett o shares similar characteristics to the concept developed by wacquant (2011), which is ethnic homogeneity. craica, horea, colonia de la kilometrul 10, zăvoi, munţii tatra are urban spaces where the rroma population reaches a distribution of over 50%, refl ecting the overwhelming dominance of the rroma population. the nato ghett o belongs to the city of oradea and recorded 405 rroma from a total of 574 people, with 167 hungarians and 2 romanians in 2006. the inference on these data suggests a high homogeneity and an ethnic concentration of rroma. other information that delineates the romanian ghett o demography is the ghett o of satu mare, where the rroma population is over 90% and comprises 100 families with rroma origins. spatial location of the ghett os within the city limits diff ers from case to case (table 1). with some exceptions, urban ghett os from romanian cities are new and structured after 1990. among the generating factors of the ghett os the most active ones are institutional policies, poverty and the new dimension of the neoliberal economy, which has fl ourished especially after 2000. the economic downturn and the unequal free market competition have set the stage for poverty and exclusion in the rroma communities (stănculescu and berevoescu, 2004; wacquant, 2005), who were deeply aff ected by the new economic dimension. the lack of education, their hard skills proved of litt le use in the new environment and so, the labor utility of the rroma population was not found useful anymore, generating ruptures. inside the romanian urban ghett os, local authorities display a wide range of actions (table 2). they were analyzed and then identifi ed and classifi ed accordingly into: inventory of informal households; demolition of informal households; sanitation and garbage collection; environmental public awareness; implementation of projects; partial or total rehabilitation of households; moving into new homes; training courses 125 ta bl e 1: r om an ia n ur ba n gh et to s no . na m e ho st c ity re la tiv e lo ca tio n lo ca tio n wi th in ur ba n sp ac e es tim at io n of in ha bi ta nt s 1 cr ai ca * ba ia m ar e ne ar p ăl tin işu lu i s tre et , w ith in v as ile a le cs an dr i n ei gh bo rh oo d, in th e so ut h of th e cit y, al on gs id e th e cr ai ca b ro ok ou ts kir ts 58 2 (c ra ica a re a) a nd 1 10 0 (w ith th e on es m ov ed a t c up ro m ) 2 ch ec he ci* ** ar ad w es t, be tw ee n co nf ec ţii an d şe ga n ei gh bo rh oo ds ou ts kir ts 3 co lo ni a de la k m . 1 0* br ăi la 10 k m d ist an ce o f t he c ity , ne ar th e ch em ica l in du st ria l p la nt c hi sc an i ou ts id e th e cit y 70 0 4 w as te wa te r p la nt * m ie rc ur ea c iu c w es t p ar t o f t he c ity , n ea r t he w as te wa te r t re at m en t p la nt ou ts kir ts 20 0 5 ti ne re tu lu i p ar k* bo to şa ni pa rk a re a ne ar by c en te r 25 00 6 m un ţii ta tra s tre et * co ns ta nţ a pa la s ne ig hb or ho od , w es t o f t he c ity ou ts kir ts ov er 1 00 7 ză vo i* si bi u ne ar z ăv oi s tre et fr om t ur ni şo r n ei gh bo rh oo d ou ts id e th e cit y 15 0 8 g 1* bâ rla d cp t. g rig or e ig na t s tre en , n e of th e cit y re se ttl ed fr om c en te r to o ut sk irt s 50 0 9 g 4* g al aţ i so ut h of th e cit y, at th e lim it of m icr o 19 n ei gh bo rh oo d ou ts kir ts 12 00 10 ho re a* ba ia m ar e w es t o f t he c ity ou ts kir ts 75 0 11 is tru * g iu rg iu sw , n ea r s lo bo zia s tre et ou ts kir ts 50 0 12 l2 ** * dr ob et a tu rn use ve rin se rp en tin a ro şio ri st re et . re se ttl ed to ou ts kir ts 28 0 13 na to ** o ra de a ne ar v ol ta ire s tre et , s w o f t he c ity ou ts kir ts 57 0 14 o st ro vu lu i* sa tu m ar e so ar el ui n ei gh bo rh oo d ce nt er a re a 40 0 15 pa ta r ât * cl uj n ap oc a la nd fi ll a re a ou ts kir ts 20 00 16 tu rtu ric a* ** al ba iu lia ar ns be rg s tre et o f t he c en tra l n ei gh bo rh oo d ce ta te ce nt er ov er 3 00 17 g he tto ‘b er lin w al l‘* * sf ân tu g he or gh e va ra di j oz se f s tre et , o rk ő ne ig hb or ho od ou ts kir ts 10 00 18 m un cii * pi at ra n ea m ţ ne ar 1 m ai a nd m ăr ăţ ei n ei gh bo rh oo d re se ttl ed to ou ts kir ts 10 00 19 sp er an ţa * pi at ra n ea m ţ 3 km o ut sid e th e cit y ne ar th e ne w re al e st at e sp er an ţa ou ts id e th e cit y 17 5 20 ză br ău ţi* bu cu re şt i fe re nt ar i n ei gh bo rh oo d ou ts kir ts 10 00 21 so ut h fe re nt ar i* bu cu re şt i fe re nt ar i n ei gh bo rh oo d ou ts kir ts 12 .0 00 (l ive zil or , t un su p et re an d am ur gu lu i s tre et s) 22 va le a ca sc ad el or * bu cu re şt i m ilit ar i n ei gh bo rh oo d ou ts kir ts no te s: * fo rm ed a fte r 1 98 9; ** fo rm ed d ur in g co m m un ism ; * ** b ef or e co m m un ism ; 126 for inhabitants, containment of rroma population. these measures were further explored and, when more ghett os were involved, the degree of success is emphasized. – inventory of informal households. the offi cials of baia mare city hall took accounting of the houses of the ghett o craica in 2010. all poor households on craica streets were checked, each person was identifi ed and the shanty houses were tagged. this was the solution for keeping at bay the rroma concentration of the largest ghett o of the city. – demolition of informal households. the cities of baia mare, satu mare and bucharest took accounting of demolitions of shanty households. in baia mare, three years after the inventory, the local offi cials demolished the makeshift housing. the fi rst phase recorded the demolition of rromas’ households, then followed the houses where people lived illegally. the ostrov ghett o encountered a similar action when about 50 individuals were left aside from the households of the two block of fl ats found in the ghett o. mainly rroma, they built illegal barracks on the nearby public space. in 2010, the city hall of satu mare decided to demolish the barracks. the bucharest case was similar, but the two ghett os that were demolished every year, reappeared after some time. – sanitation and garbage collection took place in three of the ghett os analyzed: craica, ostrovului and g4. the fi rst two recorded frequent actions of sanitation because of the amazingly fast accumulation of garbage in the area. the garbage and pollution are striking in the ostrov ghett o, where the level of ammonia in the air is three times higher than the accepted standards. for example, in one of the sanitation procedures from the ostrov ghett o a volume exceeding 6m3 of garbages was gathered (satu mare city hall, 2009). it is the same case as in craica, where the sanitation eliminated massive quantities of garbage. and in the g4 ghett o, the ecological mess from the underground level of the block of fl ats pushed the limits of the assigned workers, who in two consecutive years, struggled to extract the huge amount of garbage. – awareness and reports on environmental protection. while the above locations required environmental reports and information, litt le has changed. the colonia de la km. 10 ghett o was the only one where such actions did take place. the brăila city hall and the romanian association of nature lovers started a project to improve ghett o life. with 160,000 euros, the partners tried to inform inhabitants and raise their awareness of the local environment, which should be clean and without garbage. – implementation of projects. the fi rst and the biggest project started in a romanian ghett o is turturica. this one diff ers from brăila, being developed through a detailed analysis of the ghett o and involved the whole neighborhood. the project (stănculescu and berevoescu, 2004) brought a new philosophy to change the behavior of tenants and, as a consequence, the housing conditions of the whole cetate neighborhood. despite the proven quality of the project and the rewards proposed to the people, the results were not the expected ones. 127 ta bl e 2: t he a dm in ist ra tiv e po lic ie s an d th ei r r es ul ts na m e of th e gh et to ad m in ist ra tiv e po lic ie s th e re su lt of a dm in ist ra tiv e po lic ie s cr ai ca i nv en to ry o f i nf or m al h ou se ho ld s; d em ol itio n of in fo rm al h ou se ho ld s; m ov in g in to n ew h om es ; s an ita tio n an d ga rb ag e co lle ct io n. i nv en to ry o f i nf or m al h ou se ho ld s wa s pr ec ed ed b y th e de m ol itio n of h ou se s; m an y re se ttl ed fa m ilie s re tu rn ed a nd re bu ild th ei r s ha ck s. ch ec he ci s an ita tio n an d ga rb ag e co lle ct io n. g ar ba ge re ap pe ar ed . co lo ni a de la k m . 1 0 t ot al a nd p ar tia l r eh ab ilit at io n of h ou sin g; a wa re ne ss a nd re po rts o n en vir on m en ta l p ro te ct io n; s kil l t ra in in g co ur se s. l im ite d re ha bi lita tio n. t he c la ss es o f e nv iro nm en ta l a wa re ne ss a nd p ro te ct io n ar e nu ll, as g ar ba ge is a ll ov er th e pl ac e. o nl y 40 p eo pl e fro m 7 00 . g he tto o f w at er tr ea tm en t p la nt c on ta in m en t. e xt re m e m ar gi na liz at io n at th e cit y ou ts kir ts , n ea rb y th e wa te r t re at in g pl an t. g he tto o f pa rc ul t in er et ul ui t ot al a nd p ar tia l r eh ab ilit at io n of h ou sin g. b ui ld in gs w er e de va st at ed a nd s an ita tio n in st al la tio n br ok en . g he tto o f m un ţii t at ra s tre et s an ita tio n an d ga rb ag e co lle ct io n. g ar ba ge re ap pe ar ed . g he tto o f z ăv oi i nf or m al s et tle m en t i s th e re su lts o f t he e xp ul sio n of s oc ia l a ss ist ed r ro m a fa m ilie s by a dm in ist ra tio n. g 1 m ov in g in to n ew h om es ; c on ta in m en t. e xt re m e m ar gi na liz at io n at th e cit y ou ts kir ts ; t he n ew b ui ld in g we re s ha tte re d. g 4 t ot al a nd p ar tia l r eh ab ilit at io n of h ou sin g; s an ita tio n an d ga rb ag e co lle ct io n. s am e lo ok , d es pi te th e re ha bi lita tio n; g ar ba ge re ap pe ar ed . ho re a c on ta in m en t. t he fe nc e fu lly is ol at e th e rr om a ho us es . is tru s an ita tio n an d ga rb ag e co lle ct io n. g ar ba ge re ap pe ar ed . l2 m ov in g in to n ew h ou se s t he r ro m a we re m ov ed o ut sid e th e cit y; d eg ra da tio n of th e ne w bu ild in g. na to s an ita tio n an d ga rb ag e co lle ct io n o st ro vu lu i d em ol itio n of in fo rm al h ou se ho ld s; s an ita tio n an d ga rb ag e co lle ct io n. t he s ha ck s re ap pe ar ed in th e sa m e da y of d em ol itio n; g ar ba ge le ve l is h ig h. pa ta r ât m ov in g in to n ew h om es . r ro m a we re re se ttl ed n ea rb y th e cit y du m p, w he re o th er tw o co m m un itie s liv e. tu rtu ric a i m pl em en ta tio n of p ro je ct s. s am e be ha vio r o f t he p op ul at io n; g ar ba ge le ve l is s till h ig h. zi du l b er lin ul ui / be rli n w al l c on ta in m en t. p hy sic al b or de rs ; m un ci i m ov in g in to n ew h om es ; c on ta in m en t. m ov in g to s ev er al k ilo m et er s ou ts id e th e cit y. sp er an ţa s an ita tio n an d ga rb ag e co lle ct io n; c on ta in m en t. g ar ba ge le ve l is s till h ig h. p hy sic al b or de rs . g he tto s of b uc ha re st d em ol itio n of in fo rm al h ou se ho ld s. s ha ck s re ap pe ar ed . 128 – total and partial rehabilitation of housing took place in the following ghett os: parcul tineretului, g4, colonia de la km. 10. g4 recorded not only sanitation in 20072008, but the blocks of fl ats received consolidation. colonia de la km. 10 involved much more att ention: 20 households from four block of fl ats entered a rehabilitation program, alongside the nearby green spaces. the largest administrative actions were in the parcul tineretului ghett o, where, inhabitants received new heating systems in 1998 and then, in 2000-2004 a new investment focused on sanitation and heating. the fi nal intervention was in 2007, when a renewed thermal rehabilitation and an overall facade restoration brought improvements to the buildings of the ghett o. – moving into new homes. only a few inhabitants of the ghett os (g1, l2, muncii, pata rât) received such an opportunity. the new homes were equipped with modern features and installations, everything with money from the city halls budget. the case of pata rât brought some issues, though, as the people were moved to container modular houses located near the city garbage deposit area. – skill training courses were only in brăila, where about 40 persons received support for diff erent occupations. – containment of rroma population was applied by four local administrations: baia mare, piatra neamţ, sfântu gheorghe and miercurea ciuc. romania is not the only case where such actions took place. similar actions occurred in slovakia and the czech republic (guy, 2001). in romania, the oldest example of spatial exclusion is the ‘berlin wall’ from sfântu gheorghe (kovacs, 2009; mateescu, 2010; székely, 2012). it started during 1985-1987, when local offi cials built a wall in the last 200 meters of váradi józsef street, on its axis, a wall separating ‘local rroma community from the ‘civilized world’’ (kovacs, 2009). on one side of the wall there are blocks of fl ats with ethnic hungarians and romanian, while on the other side are lined the rroma houses. miercurea ciuc records another example of the containment of rroma behind a wire fence. the rroma population of about 140 people was moved near the wastewater treatment plant, outside the city, in an area of about 800 square meters. another example is of the horea ghett o, where the local offi cials declared the necessity of the wall because of the risk of accidents, which seemed high for children playing near the national road. similar to the sfântu gheorghe case is the ghett o of piatra neamţ, which has a wall separating the romanian villas and blocks of fl ats from about 160 rroma people. these rroma live in reequipped buildings, which belonged to a former poultry farm. 5. discussions based on the goals of the local administration, three main characteristics emerged from the administrative policies undertaken in the segregated urban spaces of romanian ghett os; they are: administrative policies for the improvements of living conditions inside the ghett o; administrative policies for population control and sur129 veillance; mixed administrative policies, which target improvements of living conditions and population control. the fi rst category includes sanitation and garbage collection, actions of environmental protection information; total or partial rehabilitation of housing and inhabitants training. the second gathers policies of counting the informal housing, demolition of insalubrious shelters and wall-separating building. meanwhile, the third includes only the movement action. in the ghett o, improvement of living conditions displays a diff erent situation from the one expected. policies of the fi rst category are the ones considered to be essential. but did they reach the goals pursued by offi cials? is there any improvement in the life of the ghett o? is there the same intensity of poverty, degradation and misery? what has followed allows a no answer to the fi rst two questions and a yes to the third. we explain why in the following analysis. the eff ects of administrative actions have left many caveats. limited or temporary results have materialized from the fi rst category. regular visits showed the everlasting presence of garbage and that the reckless behavior has remained unchanged, even in turturica ghett o. the project suggested clear regulations for inhabitants, which were followed for a period, but one year later, old habits returned to previous (ab) normality. interviews confi rm that ‘the regulations were followed, to clean daily, but, you see, [people] adhere to it for some months and then the mess sett les once again... that you are terrifi ed to enter the block of fl ats, given the garbage and squalor’ (bumb, 2010). the meeting between the mayor and inhabitants of turturica confi rmed the deterioration, the mayor reminding inhabitants that the assets gained through the project have to be maintained clean and functional (stanciu, 2010). neither did the actions taken in brăila have produced consistent and positive outcomes. the ghett o of this city looks like nothing has ever changed or that the results are indistinct, given the amount of money used ‘73,0000 euros... for access to sanitation and for rehabilitation of the spaces they live in’ (butnaru and şerban, 2008). yet, the rroma community does not have more access to sanitation in comparison to the past and the same things happened to cleaning and employment. among 700 members of the active population of the ghett o, only 40 individuals gained working skills. another fi nding is that housing rehabilitation caused, surprisingly as it seems, a new degradation. the investments from parcul tineretului ghett o, proved the lack of sustainability of such approaches. the three rounds of renovation were futile; after each intervention for rehabilitation, the inhabitants devastated the new installations and households. after the project was completed and all the reparations done, the ghett o looks the same, like no improvements or interventions have ever been addressed there (sauciuc, 2008). further results have shown that the second administrative set of actions, directly coordinated by local administrations, accomplished their goals. the accounting of households, which happened only in craica, seemed a soft policy in comparison to the containment one; in fact, it was a transitional policy. the accounting was the fi rst action part of a more general policy, which targeted the rroma concentration and 130 the demolition of the ghett o. the second action was to move a part of the rroma of craica, not to new homes, but to the so-called ‘necessity households’ erected inside the former offi ce building of the cuprom company. there were some families that returned to the ghett o to rebuild their informal houses. the action to move the rroma from their hovels was on the same day of elections, suggesting that the accounting was a premeditated procedure of resett lement, an action of control in fact. the demolition of hovels, which belonged to the people, who did not fi nd a place in the two blocks of fl ats of the new ghett o, was a failure in satu mare. according to local police, who supervised each action, such procedures do not have success, because the rroma (re)build hovels on the same spot. policies of social control are common in cee (barany, 2000a; vašečka, 2003). they are retrogressive at their core, but building walls of separation or total containment truly represents an administrative policy that leads to the ghett o. their viability exhibits the way of permanent control that was applied in several cities and that triggered controversies, intensifying the national and international wave of critics towards the administrative actions. the wall durability implies the success of the policy and, for local offi cials, the alleviation of fear that rroma might trigger new troubles. it is the same patt ern of containment encountered in the fi rst dated ghett o of venice. an rroma from miercurea ciuc ghett o, compares the ghett o to a penitentiary, adding that ‘the only diff erence is that, there (in prison), there are guards. here there aren’t and you may go outside. except for this, everything looks the same’. and he remarks more: ‘in the prison there is food and you have an address, but no when you live in the ghett o’ (mionel, 2013). the ghett o location is relative, being presented as somewhere near the wastewater treatment plant. similar is the case of horea ghett o that has raised the biggest controversies. in spite of the fi ne received by the mayor from the national council against discrimination and of diff erent recommendations, which suggested the demolition, the wall of two meters tall is still in place. the analysis of the third category of measures raises some questions. is the classifi cation of administrative policies of this category a constrained action? the resettlement is without doubt a segregation and control step. in all the cases, local offi cials built houses in the city outskirts and not somewhere else. the fi nding is true for cluj-napoca in the same degree as for drobeta turnu severin, bârlad or košice in slovakia (zoon, 2001; guy, 2001; farnam, 2003). the building of new houses is a trick which diverts att ention from the real goal. the quality and the features of the new houses (pvc windows, new sanitary installations, showers, hot water and many others) aim to exhibit how well the offi cials care for the ‘outcasts’ (wacquant, 2011). even so, the new houses bring an added value to the living environment. for a while, the resett lement has removed the shortcomings of the old space. a second question addresses how much success did the resett lement action gain. we foresee two paths of evolution. the positive path reveals a normality, in which the population looks after households in the spaces nearby, and everything develops 131 normally. the second path is negative, because the people transform the living space into a poor and squalid one, where living is no less than an ordeal. many journalists’ predictions, foreseeing the transformation of the houses into a new ghett o, become true. in this context, the ghett o concept has been used to describe the squalor, garbage, chaos, degradation and decay of the new housing estates. this reenactment adds to the reality of the ghett o spaces of the analyzed cases. resett lement in the outskirts reinforces rroma segregation towards the urban space and people living at urban standards. old ghett os recompose themselves in the new addresses, not only because of the segregation caused by resett lement, but because of the garbage and decay produced by residents. the decay of the new households unveils a new caveat of the administrative policies: lack of investment in people and their education. 6. conclusions two directions resulted from the three categories of administrative intervention: actions of social interventions and improvement of living conditions is the fi rst one, while the second refers to monitoring and segregation. while welcomed, new houses located at the outskirts of diff erent cities produced only more separation between rroma and the rest of population. this last direction has a long lasting eff ect as long as the resett led population is poor and without any alternative. but we cannot conclude the same for the fi rst mentioned directions. the administrative policies of ghett os in romania remains blurred. in some regards, similar solutions were applied in many ghett os and the results look similar, which is no change. the viability of diff erent programs and administrative investments rely a lot on their harmonization and hierarchic structuring in time. thus, scattered projects and incoherent actions will bring again futile and limited results that will show no sign of intervention in that respective space. administrative policies targeted obvious issues which were monitored for short periods of time, without considering a broader strategy. the results were transient and their aftermath become visible in most of the analyzed ghett os. degradation and squalor, which were troublesome for offi cials before resett lement, have returned inside the households, as well as in the nearby space. we argue that the old ghett os have been resett led with all their components. likewise, solving the ghett oization involves hiding these spaces. once evicted outside the city, their control becomes a powerful administrative intervention. the resett lement of rroma population outside the urban space in ‘new’ houses is a cynical action of social control that empowers the invisible wall of separation. the current situation, which is the failure of many administrative policies, has its origins in the administrative chaotic system and poor fi nance management. the analysis showed that administrations lack vision and develop limited actions; their actions targeted specifi c issues and did not involve the larger framework of segregation. many times, administrations appeared overwhelmed by the extent of the phenome132 non, or they did not truly wish to act accordingly to an european framework. to reach social sustainability, some actions were required, but they have exceeded the physical structures of consolidation and housing repairs, resett lement and others alike. to eliminate the poverty spaces many years are required in romania, which involves a visionary policy on the long term. but it overlaps many electoral cycles and political interests, hindering the solutions. policies have to emerge from the space facts and be transplanted into them. for example, a rroma who collects materials informally should receive administrative policies helping his/her integration into a specifi c company. hence, interventions and policies should emerge from the local characteristics. not all the ghett os develop at the 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human experience is diverse, states lyotard, and it is precisely this diversity that reformulates and re-legitimizes the variations of the above mentioned principles. this is why they are said to be fabricated, to have no equivalent in ‘reality’, and what is to ‘blame’ is today’s understanding of representation. here is what baudrillard states on the matt er: ‘[…] the whole system becomes imponderable, it is no longer anything but a gigantic simulacrum […] representation stems from the principle of the equivalence of the sign and of the real (even if this equivalence is utopian, it is a fundamental axiom). simulation, on the contrary, stems from the utopia of the principle of equivalence, from the radical negation of the sign as value, from the sign as the reversion and death sentence of every reference. whereas representation tries to absorb simulation by interpreting it as false representation, simulation envelops the entire edifi ce of representation, turning it into simulacrum’ (baudrillard, 2008b, p. 8). consequently, affi rms the french sociologist in simulacra and simulation (2008a, pp. 41-42), ‘[f]or me there is no truth of america […] america is neither a dream nor reality; it is hyperreality. it is so because it is a utopia that has lived as fulfi lled from the very beginning. here everything is real, pragmatic and everything makes you dream’. how should then one read democracy today, or, to be more specifi c, tocqueville’s democracy in america? 2. diff erence, individual/ community, identity politics, cultural pluralism humans, as social and cultural constructs, are devoid of individual selves and values, they are the products of contextualization, assumes the anti-humanist, antienlightenment postmodern theory. furthermore, today, ‘one’s identity, value, and civil rights are accidents of cultural origin, not some property intrinsic to human nature’ (leff el, 2015). the center collapsed and margins are diff used; ‘old’ identities vanish and new ones emerge; alterity, diff erence, multiculturalism, pluralism become 78 topical; nations and nationhood are redesigned… all in all, identity has become ‘the touchstone of the times’, in richard jenkins’ consideration of the issue (1996, p. 8). ‘a new politics of identity’ results from rapid change, which induces a sense of ontological insecurity (in anthony giddens’ understanding of the term) (jenkins, 1996, p. 7). identity is paradoxical, for ‘je est un autre’, with rimbaud, i.e. identity is dialectical, an ongoing process of preservation and change, of alternations of sameness and uniformity with diff erence and uniqueness. in other words, i is/becomes the other since identity construction is possible only in dialogue with the other. as p. blanchet and m. francard explain the term, the identity of an individual equals the plurality of belongings or rather of ‘feelings of kinship’ that imply recognition in between i and the other (2005, pp. 330-331); self-image or self-consciousness is molded in the dialogue with alterity, requiring and negotiating the recognition of (the same) values and worldview; this is the fundament of individual and social identity construction and it is from here that convergence or divergence results. postmodernity registers an outburst of (re)negotiations of multiple identities (individual, group and even national identities) due to accelerated intercultural communication. today, ‘[w]e still lack a true culture of diversity’, affi rms guy jucquois and he explains: ‘thus, the building of a multiethnic and multiracial society becomes an urgent goal everywhere in the world. the major diffi culty of such a process resides in the necessary change of mentality that it entails […] there is no democracy without pluralism, which is the political expression of diversity. and yet, there is no mentioning of any of the solutions that must be implemented in order to facilitate the political participation of all the interested parties’ (jucquois, 2005, p. 220) (emphasis added). moreover, the question is if there is a limit in recognizing cultural diff erences in a multior pluri-cultural democratic society and if individualism has a say in this matt er. the problematics is three-fold: democracy, multi-/ pluri-culturalism and individualism – translated in democracy, equality, freedom. democracy is a form of government in which ‘people rule’, or a political community in which there is some form of political equality among the people (held, 2006, p. 1). to complicate matt ers: what precisely is the meaning of people and of rule? for alexis de tocqueville, the answer is simple and pointed: ‘at the present day the principle of the sovereignty of the people has acquired in the united states all the practical development that the imagination can conceive’; ‘the nation participates in the making of its laws by the choice of its legislators, and in the execution of them by the choice of the agents of the executive government; it may almost be said to govern itself […] the people […] are the cause and the aim of all things; everything comes from them, and everything is absorbed in them’; ‘it is possible to imagine an extremepoint at which freedom and equality would meet and blend. let us suppose that all the people take part in the government, and that each one of them has an equal right to take part in it. as no one is diff erent from his fellows, none can exercise a tyrannical power; men will be perfectly free because that are all entirely equal; 79 and they will all be perfectly equal because that are entirely free. to this ideal state democratic nations tend’ (tocqueville, 1998, pp. 32-33; p. 201). in tocqueville’s belief, democratic nations ‘show a more ardent and enduring love of equality than of liberty’. to entangle issues even more, there have been numerous debates on the dichotomy liberty – equality. do the two exclude each other or are they interdependent, as tocqueville assumed? the manifestation of individual freedom (in the liberal understanding of individual autonomy) often comes against egalitarianism, which entails the sharing of common tenets and which, correspondingly, prioritizes group values over individual ones. the dilemma here comes from the current defi nition of social justice understood as the virtual reconciliation of the sense and need of belonging to a community, the common good (and this encompasses equal values, equal rights and equal status), with self-determination and individual liberty, according to alain policar (2005, p. 248). ‘the community or the individual?’, that is the question! there is no such question for joseph raz who understands that ‘personal autonomy depends on the persistence of collective goods’, which is why ‘the notion of the inherent general confl ict between individual freedom and the needs of others are illusory’ (raz, 1986, p. 250). raz argues that an individual’s freedom (personal autonomy) might be in confl ict with the interests of the others but it also ‘depends on those interests and can be obtained through collective goods which do not benefi t anyone unless they benefi t everyone’ (p. 250). multiculturalism and cultural pluralism, as phenomena, have redesigned the debates on the above-mentioned dichotomy. a. policar distinguishes two directions in the institutionalization of multiculturalism in the usa; on the one hand, there is the affi rmative action policy, focusing on social equality; within it, positive discrimination is meant to restate equality; this means that a moral issue is at the origin of public action; on the other hand, there is what charles taylor calls the politics of recognition, i.e. the recognition of diff erence as the basis of human dignity; such identity politics implies the political acceptance of rights and privileges granted by the specifi city of the group; this results in social visibility and access to the public space (policar, 2005, pp. 450-451). in taylor’s terms, multiculturalism is built on the principles of the politics of equal respect, respect for diff erence and uniqueness: ‘just as all must have equal civil rights, and equal voting rights, regardless of race or culture, so all should enjoy the presumption that their culture has value’ (taylor, 1994, p. 68). as mentioned before, recognition implies multiple negotiations of affi nities and oppositions among identities (individual and/or group ones) in the context of intercultural relations and these construct a ‘new reality’ carrying the imprints of the ‘new identity’ (blanchet and francard, 2005, p. 335). in addition, where in the process of negotiation, forces/ groups are balanced and ‘exercise a limited measure of democratic control through their access to the major elites’, in which no group ‘wields dominant power’ (swingewood, 1994, p. 114), we speak about cultural pluralism. this comprises, in monique deveaux’s defi nition (cultural pluralism and dilemmas of justice), six components: (1) ‘the importance and value to individuals of cultural identity and 80 of membership in a respected cultural community’; (2) ‘liberal democratic states […] have reasons to value, and to protect, cultural diversity within their boundaries’; (3) ‘respect and justice for cultural minorities includes their right to challenge and to help shape the public and political culture of the society in which they live’; (4) ‘liberal democratic states cannot (justly) defi ne which diff erences they have reason to recognize politically without fi rst deliberating with those involved’; (5) ‘a satisfactory defense of the importance of certain group cultural rights and limited forms of community autonomy and of the need for allocation of state resources to support such special arrangements’; (6) ‘an adequate account of where to draw the “limits of tolerance” and how we are to decide which cultural practices democratic polities cannot protect or accept’ (deveaux, 2000, p. 35). such a defi nition bonds cultural pluralism, identity politics and the law, which is the subject that austin sarat and thomas r. kearns focus on in their endeavor to prove that today’s democracies need ‘a form of citizenship that recognizes diff erence but nonetheless claims equality’ (2004, p. 3). cultural pluralism and identity politics are ‘integral parts of something called american culture’, state sarat and kearns, ‘a hybrid nation’ in which ‘individual and cultural diff erence, as well as the confl icts and disputes they generate, has been a part of the cultural life of americans since the nation’s founding’ (p. 8); the question to ask is if the law can foster a society in which ‘cultural pluralism and identity politics could fl ourish’, and sarat and kearns say this is not possible because‘ [l]aw, in theory, knows no culture and recognizes no identity’, since it is, presumably, neutral (p. 11, p. 13). if, as tzvetan todorov assumes, ‘diff erence is corrupted into inequality, equality into identity’ (1999, p. 146), how can the law contribute to a bett er enforcement of democratic norms meant to enable social justice and to protect freedom and equality in a pluralist society? 3. social justice, equality, religious freedom, the law it is especially today that the problem of social justice and social rights encompasses the problem of individualism and diff erence in terms of identity construction and recognition. one of the most famous considerations on social justice comes from friedrich hayek. for him, social justice (the principle of equality included) is a mirage and it does nothing else but destroys individual freedom. hayek’s equation (one of them) is simple: ‘from the fact that people are very diff erent it follows that, if we treat them equally, the result must be inequality in their actual position, and that the only way to place them in an equal position would be to treat them diff erently. equality before the law and material equality are therefore not only diff erent but are in confl ict with each other; and we can achieve either one or the other, but not both at the same time’ (hayek, 2006, pp. 76-77). john rawls, on the contrary, demonstrates that justice comprises both liberty and equality, the latt er implying equality of opportunity and the principle diff erence; there are two tenets of justice in his view: (1) ’[e]ach person has the same indefensible claim to a fully adequate scheme of equal basic liberties, which scheme is compatible with the same scheme of liberties for all’; and (2) ‘[s]ocial 81 and economic inequalities are to satisfy two conditions: fi rst, they are to be att ached to offi ces and positions open to all under conditions of fair equality of opportunity; and second, they are to be to the greatest benefi t of the least-advantaged members of society’ (rawls, 2001, pp. 42-43). in defi ning social justice, david miller particularizes liberty and equality, in his design of a pluralist theory; thus, social justice should not only guide politicians but it should also constrain everyday behavior, which means that social justice and individual liberty are ‘at odds with each other’ (miller, 1999, p. 13). there are two conceptions of social justice that aff ect one’s understanding of liberty, says miller: (1) the basic rights of citizens include rights to liberties (such as the freedom of speech, for instance); (2) lack of resources could constrain freedom (only law counts as constraint or lack of material means also counts here). consequently, states miller, ‘an obstacle to someone’s action counts as a constraint on their freedom if and only if another agent (or set of agents) is responsible for the existence of that obstacle’, and here responsible means morally responsible; eventually, concludes miller, what counts as liberty depends on the very defi nition of justice (p. 14). as previously mentioned, joseph raz’s understanding of freedom in relation to justice and rights clarifi es the dichotomy. the autonomous individual and his/ her freedom depend on his/ her integration into a community where collective goods are shared; rights should not articulate fundamental moral or political principles or protect individualistic personal interests but they should rather ‘maintain and protect the fundamental moral and political culture of a community through specifi c institutional arrangements or political conventions’ (raz, 1988, p. 245). religious freedom is among those rights that call for a discrimination between individual conscience and communal peace, says raz (p. 251); in his point of view, since religion is a social institution that embraces a community, ‘the right to free religious worship’ is not only ‘a right of communities to pursue their style of life and aspects of it’ but also ‘a right of individuals to belong to respected communities’; in other words, explains joseph raz, even if religious freedom was conceived of in ‘terms of the interests of individuals’, it actually depended on the existence of a public good, namely: ‘the existence of religious communities within which people pursued the freedom that the right guaranteed them’ (p. 251) (emphasis added). the dichotomist perspective is, nevertheless, still active when it comes to cultural pluralism (in terms of religion, race, ethnicity, gender etc.) and identity politics, and the way in which institutions facilitate the recognition of distinctiveness (thus, of autonomy), and at the same time ensure equality. among them, law (legal policy and doctrine) is expected to respond to such challenges. in the opinion of a. sarat and t. kearns, there are two aspects to consider here: (1) the way in which law understands the antidiscrimination principle, and (2) how particular groups could seek exemptions from the reach of state regulations in order to preserve an element of their culture, thus of their identity (2004, p. 11). sarat and kearns even formulate an ultimate recommendation: ‘[t]he demands of cultural preservation or cultural expression [religious freedom included] have to give way to the uniform obligations 82 of citizens before the law’ (p. 11). in a more pessimistic tone, winnifred fallers sullivan demonstrates that religious freedom is impossible. she explains in the introduction to her book (the impossibility of religious freedom, 2005) that there are ‘many laws, constitutions, and international treaties today’ that ‘grant legally enforceable rights to those whose religious freedom is infringed’ but there have been many ‘stories of confl ict between the demands of religion and the demands of law’ (p.1). sullivan goes on to say that ‘[n]owhere, as americans understand it, is religion so strong and so free’, not even in europe. nevertheless, despite the fact that ‘a commitment to religious freedom is a taken-for-granted part of modern political identity in much of the world’, and that religious freedom is one of the fundamental rights of a free democratic society, it seems religious freedom is impossible to realize even in the united states. the impossibility that she speaks about derives precisely from particular matt ers, local tales of dispute that are ‘arguably of wider signifi cance’ (sullivan, 2005, pp. 1-2). these confl icts, in the line of the present paper, are reformulations of the dilemma freedom vs. equality, individual vs. community, minority vs. majority. is this the situation with the indiana religious freedom restoration act? rfra is actually brought forward by sullivan as one of the arguments in her approach. ‘most laws aff ecting religion are’, she says, ‘state laws governed by state constitutions, state constitutions that have also guaranteed freedom of religion’ (p. 25). religious freedom is a right constitutionally provided by amendment i: ‘freedom of opinion’ (1791). religion, speech, press, assembly, petition. congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof’ (apud bragdon and mccutchen, 1964, p. 132). amendment xiv grants the equal protection of the laws, therefore religious civil rights as well: ‘all persons born or naturalized in the united states, and subject to the jurisdiction thereof, are citizens of the united states and of the state wherein they reside. no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the united states; nor shall any state deprive any person of life, liberty, or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws’ (apud bragdon and mccutchen, 1964, p. 138). in addition, the declaration of independence sees men as ‘created equal’, having ‘certain unalienable rights’ (life, liberty, and the pursuit of happiness) and: ‘to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed’ (apud bragdon and mccutchen, 1964, p. 734). is it possible or necessary to separate religion and the state, consequently? moreover, should government involvement in religious matt ers be limited? alexis de tocqueville identifi es a paradox in this: on the one hand, religion and politics should not interrelate (‘[i]n proportion as a nation assumes a democratic condition of society and as communities display democratic propensities, it becomes more and more dangerous to connect religion with political institutions; for the time is coming when authority will be bandied from hand to hand, when political theories will succeed one another, and when men, laws, and constitutions will disappear or be modifi ed from day to day, and this not for a season 83 only, but unceasingly’); on the other hand, religious practices regulate community customs and, accordingly, it administers the state (‘[i]n the united states religion exercises but litt le infl uence upon the laws and upon the details of public opinion; but it directs the customs of the community, and, by regulating domestic life, it regulates the state’) (tocqueville, 2015). 4. research questions and method the present paper tries to answer two questions: (1) since law is meant to regulate contemporary social realities (in matt ers of identity politics and cultural pluralism), how does american legislation encompass representations of individual/ community identity?; (2) how does the media refl ect and construct such social representations? by means of a qualitative content analysis, in an descriptive and exploratory approach, the intention is to delineate the grounding of public opinion regarding the recent indiana law on the restoration of religious freedom starting from articles writt en in response to the network of issues that the matt er involved, all published in the new york times. moreover, it is to identify some representations of equality, freedom, pluralism, diff erence, democracy as resulting from the complex perspectives and meanings that the media (the new york times’ articles) generated on rfra, which could have followed or directed the course of interpretations. the search engine of the new york times website generated 137 articles on the topic ‘indiana religious freedom’ between may 2014 and april 2015. for the present paper, 20 articles were selected on the criteria of topicality and relevance to the matt er. to see the gradual development of the formation of representations, the articles have been sorted chronologically. the fi rst set of articles consists in news informing on the events preceding the enactment of rfra. the content analysis in this case is focused on the contextualization of the phenomena, which eventually generates some frames. the second set of articles consists in columns that opinionate and argue on supporting or opposing the indiana rfra, providing a subjective perspective on the dichotomy, more or less under the infl uence of the media frames. 5. the indiana religious freedom restoration act the 1993 religious freedom restoration act was meant to regulate government involvement in religious issues, namely to ensure that religious freedom is protected. gregory c. sisk explains in litigation with the federal government (2006) that the law was formulated in response to a decision of the supreme court that ‘narrowly interpreted religious freedom rights under the constitution’, namely under amendment i and xiv; this is why it ‘has occasioned constitutional controversy from its inception’ (p. 213). religion and the law: an encyclopedia of personal belief and public policy (2007) details the origin and implications of the regulation. it was meant to overturn the employment division v. smith case; two native americans used peyote in a religious ceremony and they were fi red after testing positive for mescaline; further on, they were refused unemployment benefi ts on this ground; 84 peyote had been banned in oregon. the case held that a state ‘could outlaw peyote use without violating the first amendment’s freedom of religion’ (merriman, 2007, p. 431); in other words, religious practices are protected through the free exercise clause of amendment i on condition that they do not contradict a generally applicable law; this resulted in outrage and some consistent criticism of the idea that states could pass laws that limited religious freedom. consequently, with rfra, the congress wanted to reverse smith and to restore the possibility of legal exemptions for religious matt ers; the core dispute revolved around the idea that the state had to prove a ‘compelling government interest’ if a law substantially burdened the religion. rfra declares: ‘government shall not substantially burden a person’s free exercise of religion even if the burden results from a rule of general applicability, except as provided in subsection (b). (b) exception: government may substantially burden a person’s exercise of religion only if it demonstrates that application of the burden to the person – (1) is in furtherance of a compelling government interest; and (2) is the least restrictive means of furthering that compelling government interest’ (apud merriman, 2007, p. 432). in 1997, in the case boerne v. flores, the supreme court and justice kennedy held that rfra was unconstitutional (not because the smith case was wrong but because the congress wanted to guarantee the first amendment rights based on section 5 of amendment xiv which says: ‘the congress shall have the power to enforce, by appropriate legislation, the provision of this article’, implicitly, section 1, i.e. no state shall enforce any law that shall ‘abridge the privileges’ of the citizens). as kennedy put it, a law that ‘alters the meaning of the free exercise clause cannot be said to be enforcing the clause. congress does not enforce a constitutional right by changing what the right is. it has been given the power to “enforce”, not the power to determine what constitutes a constitutional violation’ (apud merriman, 2007, p. 432). nevertheless, since the states could do what the congress could not, because they ‘were not inhibited by the limits of amendment xiv’, explains w. sullivan (p. 29), the same rfra was upheld as constitutional in 2001 and has been applied in twenty states so far. another controversial case should be mentioned here, burwell v. hobby lobby, which overpowered the contraceptive mandate, extending religious exemptions from federal laws to for-profi t corporations. the recent and still controversial indiana rfra was signed on 26 march 2015 by governor mike pence, 12 years after the formulation of the act. is this an anti-gay law? why is this regulation a reason for holding that religion is a cover for bigotry? why should it interfere with big businesses? why would the ‘conscience of a corporation’ matt er here? does this law mean that religious liberty comes against equality, or that religious freedom opposes individual equality? all these questions arise from the headlines of some articles published in the opinion sections of the new york times after the enactment of the indiana rfra. the fi rst set of articles analyzed in the next section consists in some news stories that explain the background of the controversy for they bring forth several frames that guided the constructions of representations. the fi rst article to draw att ention on 85 the topic is titled ‘republicans rallying behind religious liberty’, published on 26 september 2014, by the associated press; as formulated, religious liberty is one of the favored themes that republicans are to rely on in the 2016 presidential contest; it appears they need religious liberty ‘to improve their brand’, says the text; the lead associates religious liberty with divisive social issues; to be more specifi c, the next paragraph names abortion and gay marriage and it juxtaposes them with ‘the persecution of christians and their values at home and abroad’; this is, as the article puts it, ‘a message gop offi cials hope will help unify a divided party and appeal to new voters’; to give it credibility, the article quotes texas senator ted cruz (who is said to have stated ‘[w]e need a president who will speak out for people of faith, prisoners of conscience’), and also other representatives of the ‘religious conservatives’; the article does more than informs on a ‘friday gathering of evangelical conservatives’ hosted by family research council; it constructs several frames on the problem of religious freedom, connecting it with election goals, rightist ideology, religion as prior to social issues, conscience; from the quote ‘without religious freedom, we lose the ability to even address those other issues’, the text goes on to explain that ‘the party platform formally opposes same-sex marriage and abortion rights’ and that for the future elections, as resulting from an internal audit, candidates should be ‘more “inclusive and welcoming” on social issues’; as a matt er of fact, at a metadiscursive level, in an apparent game of prioritizing the issues at stake, the article satirizes the priorities of the republicans: ‘abortion and gay marriage were not forgott en on friday, however’, the reader is told; as regards indiana, the text only refers to indiana rep. marlin stutz man who pleaded for a war against abortion. it would be important to mention that in the background, in 2014, according to procon. org, same-sex marriage was legalized in 26 states (9 of them in october 2014, by court decision). as a consequence, the next article, provided by the search engine, announced, on 7 october 2014, ‘gay marriage decision reignates gop debate’; the same divisive social issue is presented against religious conservatives, named ‘a vocal minority’; the text quotes ted cruz’s remarks on the court’s decision on gay marriage: ‘judicial activism at its worst’; moreover, the law and its representatives (‘elected offi cials, att orneys and judges’), i.e. ‘a court ruling’, should not have ‘the fi nal word’ in such matt ers, states the senator; his plea is for a constitutional amendment meant to ‘limit the court’s ability to strike down the remaining state laws blocking gays and lesbians from marrying’; the article underlines that actually the ‘matt er is over’ in as much as 30 states, which means that 60% of the americans live in states ‘where gay and lesbian people can marry’, and this idea comes against what happened ten years ago when, ‘[p]resident george w. bush won reelection in part by supporting ballot initiatives in several states seeking a constitutional ban on gay marriage’; indiana is mentioned in the article through gov. mike pence who is quoted with his beliefs in ‘traditional marriage’ which is not above ‘the rule of law’ because ‘people are free to disagree with court decisions but we are not free to disobey them’. in framing the ‘religious freedom – social issues’ disunion, another article of the associated press, 86 published on 23 december 2014 (‘church-based institutions ponder same-sex benefi ts’), signals the problems of ‘church-based institutions’ that ‘are facing the thorny question whether they have an obligation – morally or legally – to extend health care benefi ts to spouses of gay and lesbian employees’ amid the ‘dramatic expansion of same-sex marriage’; some institutions are described as being pro off ering benefi ts to such couples either in order to comply with laws or to sympathize with marginalized or ostracized ‘brothers and sisters’; this even if such action could send ‘a confusing message on church teaching’; despite the acceleration of the same-sex legalization process by federal court decisions, at the lower level of religious-based institutions, changes will come ‘at a slow pace’, concludes the article. the discord on the problem equal rights vs. individual autonomy (through religious freedom) would decrease in intensity if civil rights bills (non-discrimination ordinances) were introduced in the house and the senate, affi rms an article published on 1 january 2015 by the associated press (‘beyond marriage, challenges ahead for gay rights groups’); 2015 begins with some new challenges generated by the fact that ‘same-sex marriage edges [are] closer to becoming legal nationwide’; even if the bill passed, republicans controlling both chambers would not advance the bill; consequently, without such a federal law, the reader is explained, the solution resides at the state and local levels for the passing of nondiscrimination laws; the text further explains that the sexual discrimination issue seems to deepen with such particular cases as ‘transgender people serving in the military’, transgender restroom use, transgender teen suicide; the problem of religious freedom is, evidently, linked with the conservatives, and it refers to ‘“religious freedom” bills designed to give more legal protections to people who might be accused of discrimination for actions they took in accordance with religious beliefs’; indiana, says the article, is drafting a broader bill that ‘would protect business people who refuse to serve same-sex couples on the basis of their religious faith’, an affi rmation that comes three months before the enactment of rfra; marriage equality for lgbt actually means ‘full equality’, the text assumes. at the beginning of march 2015, two articles reignite the same issue: religious freedom bills are designed against gay couples; the article signed by the associated press states that ‘ga. senate ok’s religious freedom bill feared by lgbt groups’, which is ‘one of a wave of measures surfacing in at least a dozen states that critics say could provide legal cover for discrimination against gays and transgender people’; the reader is mentioned about some institutions that came out against the law: national gay-right groups, human rights campaign, the american civil liberties union; this article also associates these religious freedom bills with measures of the conservatives against a ‘possible u.s. supreme court ruling legalizing samesex marriage nationwide’, confi rmed by state sen. elena parent (atlanta democrat); in opposition, the reader is given the statement of senate majority leader bill cowsert (republican) according to which: ‘[t]his is not a vehicle for discrimination’, the issue just being ‘one of those fascinating areas where you have competing constitutional rights’; in other words, the religious bill has no connection with the legalization of 87 same-sex marriage; it is a controversy because of the nature of constitutional rights. the second article mentioned here (‘states weigh legislation to let businesses refuse to serve gay couples’) works on the same idea, adding that such measures ‘would make it easier for businesses and individuals to opt out of serving gay couples on religious grounds’. later, on 23 march, a news story signed by reuters announces that ‘indiana house passes controversial religious freedom bill’; the text begins by connecting the law with the idea it ‘could protect business owners’ against gay couples; the news announces that ‘senate bill 101, known as “religious freedom restoration act”’ ‘was approved by the republican-controlled house by 63-31’; republican governor mike pence is said to have considered that the law ‘is about respecting and reassuring hoosiers that their religious freedom are intact’; the article clearly formulates the pros and cons regarding the event: supporters consider the bill ‘will keep government entities from forcing business owners […] from acting in ways contrary to strongly held religious beliefs’, which means, as the text formulates it, that bakeries and fl orists who do not want to provide service to gay couples are protected by this law, this because gay marriage became legal in indiana in 2014; the text concludes, by quoting the national director of lambda legal’s law and policy project, that this bill, paradoxically, actually facilitates religious discrimination. on 24 march, an associated press article informs on the indiana senate voting for rfra (‘indiana lawmakers send religious objection bill to governor’); it is this article that fi rst mentions not only same-sex marriage issues in relation to religious freedom but also ‘other activities’ that could become ‘objectionable on religious grounds’; the text builds on both pros and cons the law, focusing on arguments that try to de-prioritize gay marriage; it speaks about rallies in support of and against the indiana bill that ‘drew hundreds of people to the statehouse in recent weeks’, mentioning christian and jewish clergy members on each side; the argument added in support for the bill is the idea that the law was passed in 1993 and since then 19 other states have enacted it, long before they began allowing gay marriages, which is why it should not be connected to same-sex issues; it mentions senate majority leader brandt hershman’s statement that ‘the proposal sets a standard for courts to review government actions and that groups against it have stirred up fears for nothing’; in opposition to this the reader is given the affi rmation of eunice rho (american civil liberties union) regarding the fact that religious bills are a response to gay marriage legalization because ‘the context of the debate is much diff erent than when many of the existing laws were enacted in the 1990s and the early 2000s’; the article ends with the same sets of oppositions: pros explain that the law is not meant to discriminate but to ensure the ‘free exercise of religion’, cons plead for the idea that such state proposals go beyond the federal law. some articles focus on some eff ects that the law had on public issues, such as the fact that a major gaming convention threatened to move its annual event out of indiana, or that some leaders of the christian church reconsider their plan to hold their general assembly in indianapolis if gov. pence signs the bill. furthermore, an article signed by reuters on 25 march (‘indianapolis mayor says 88 religious freedom bill sends wrong signal’) mentions that legal experts believe the indiana rfra ‘sets a standard that will allow people of all faiths to bring religious freedom claims’ and it mentions the ‘legal intricacies’ involved which is why the law sends the wrong message. on 26 march, a piece of news announces that as ‘dispute swirls’, the indiana religious objections bill is signed by mike pence, adding that this is the fi rst act signed in 2015 on the issue and that it would probably be followed by other states where such proposals have been introduced; the article quotes pence who refuted opposing arguments: ‘[t]here has been a lot of misunderstanding about this bill’; the ‘bill is not about discrimination, and if i thought it legalized discrimination in any way i would’ve vetoed it’; this is followed by the opposite idea that the bill is a reaction of the conservatives against a ‘possible u.s. supreme court ruling legalizing same-sex marriage nationwide’; it mentions the pro and con reactions of institutions on the ground of the two arguments. what followed in the course of events, after rfra was signed, is a set of reactions, opinions of institutions or individuals representing institutions regarding the impact of the law, all of those mentioned by the articles being against rfra: ncaa, other sports entities, the christian church, gen con, salesforce, many tech ceos. moreover, ‘indiana law denounced as invitation to discriminate against gays’, signed by m. barbaro and e. eckholm and published on 28 march, also informs on protests and rallies from the worlds of arts, business and college athletics and on ‘threats of boycott from actors’; it adds that some legal experts say‘ the potential reach of the indiana law, and many like it, has been exaggerated by opponents’, quoting law professor douglas laycock (from the university of virginia): ‘[t]he hysteria over the law is so unjustifi ed’; ‘[i]t’s not about discriminating against gays in general or across the board’; ‘[i]t’s about not being involved in a ceremony that you believe is inherently religious’. three days after the bill was signed, a new subject arises: most states with similar laws have nondiscriminatory bills, which is not the case of indiana; when asked about it, m. pence mentioned ‘that’s not on my agenda’ and ‘is tolerance a two-way street or not?’ (reuters in ‘indiana governor defends religious freedom law’). on 30 march, the associated press publishes an article entitled ‘a look at widely criticized indiana law on religious freedom’ which summarizes the history of the bill, explains why it is associated with same-sex marriage and mentions in brief some of the reactions and impact of the bill. the next set of articles to analyze here consists in opinion pieces writt en on the topic. the intention is to go beyond news objectivity into personal, subjective (and yet public) perspective on the controversy in order to identify further frames, meanings and understandings of equality, civil rights, individual liberty and religious freedom in relation to law. the editorial published on 31 march (‘in indiana, using religion as a cover for bigotry’) starts with a label: the religious-freedom law was signed by mike pence ‘driven by bigotry’ mentioning that opponents ‘are spreading “misinformation”’; the article assumes that the law does not specifi cally permit businesses to refuse gays and lesbians but this lack of direct reference to gay 89 discrimination in the content of the law is intentional because ‘drafters were too smart to make it explicit’ and ‘nobody is fooled as to the law’s underlying purpose’; moreover, the enactment of the law is seen as a tactic meant to ‘justify and support anti-gay discrimination’, which is relatively new; new because a decade ago states could openly ban such marriages but since in recent years federal and state courts have struck down the interdictions as unconstitutional, this law on religious freedom is only another ‘strategy’ for the fi ght against same-sex marriage; what is special about this indiana law, affi rms the editorial, is that it came along with gay rights and marriage equality, whereas in the other 19 states where the law was adopted it was applied to disputes between individuals and the government; the tone is more sarcastic when the text refers to mike pence who is said to have affi rmed that the law ‘“is not about discrimination” but about ‘empowering people”’; irony and accusation become more evident when the article mentions pence’s refusal to consider a nondiscrimination law and his statement with regard to the clarity of the bill: the ‘freedom to exercise one’s religion is not under assault in indiana or anywhere else in the country’, for religious people ‘may worship however they wish and say whatever they like’; all in all, the reader is told that religion is only a weapon, a ‘cover for discrimination in the public sphere’. david brooks signs a column titled ‘religious liberty and equality’; as the intro announces, it is all about ‘a great struggle to balance civil rights and religious liberty’; in his rhetoric, brooks uses some of the aristotelian pathos when formulating: ‘[w]e are to be judged by how we love, not by whom we love’; denying civil rights to gays and lesbians is ‘wrong’, affi rms the author, adding they should be ‘honored’ for marrying and living as they want; the counterargument is ‘this was a nation founded on religious tolerance’, the ‘ways of the lord are mysterious’ and ‘americans have always believed that people should have the widest possible latitude to exercise their faith’; bigots are opposed to ‘people worthy of tolerance, respect and gentle persuasion’ when it comes to heterosexual defi nitions of marriage; the text of the law is understood by brooks as a ‘moderate, grounded, incremental strategy’ that ‘has produced amazing results’; among its benefi ts: ‘[f] ewer people have to face the horror of bigotry, isolation, marginalization and prejudice’; as regards the indiana bill, the matt ers mentioned are ‘no tension between religious pluralism and equality’ as well as ‘religious liberty as cover for anti-gay bigotry’, which are the two arguments of the opposing parties; brooks calls them unwise ‘deviation’ for it seems the acute problem is the lack of tolerance for both sides; religious liberty and civil rights should be balanced or else ‘the cause of gay rights will be associated with coercion, not liberation’; any movement that stands for tolerance would be against a government that compels people to do what is against their beliefs, adds brooks; people should be respected for their religious creeds or else this ‘would only halt progress’: ‘religious liberty is a value deserving our deepest respect, even in cases where it leads to disagreements as fundamental as the defi nition of marriage’; the set of theorems that brooks off ers is simple and pointed: tolerance is linked with morality and the ‘politeness of the soul’, which also means ‘creating 90 accommodations’; ‘basic truths are inalienable’, discrimination ‘is always wrong’, bigotry is even worse, but what matt ers most is to ‘seek a creative accommodation’ – this ultimate value being the fundament of a pluralistic society, in which ‘we try to turn philosophic clashes (about right and wrong) into neighborly problems in which diff erent people are given space to have diff erent lanes to lead lives’, concludes david brooks; the greatest mistake of the two parties involved is taking an ‘absolutist position’, which is not pragmatic, virtuous or true ‘in a clash of values’, emphasizes the journalist. this invitation for ‘deep politeness’ rather than compulsion is refuted by a comment on brooks’ text which explains that in the civil rights movement the key was ‘confronting the evil’ not ‘courtesy toward the antagonist’, which is why anti-discrimination laws would be a necessity. charles m. blow opposes religious freedom to individual equality in an opinion piece published on 1 april (‘religious freedom vs. individual equality’); it starts from mike pence’s belief that the controversy over the law is caused by a ‘perception problem’ of the law meant to protect the ‘heteronormative construct’, which is explicitly denied by blow: ‘there is no perception problem’ but rather a ‘detection problem’ because people ‘detected precisely what the bill was designed to do, and they objected’; the journalist argues that the law is all about ‘the possibility that religion could be used as a basis of discrimination against some customers’, which is ‘repulsive and deserving of all manner of reprobation’; to support his belief, blow mentions a source that sustains that rfra is diff erent in indiana, compared to the other 20 states, because it applies to for-profi t business and because the free exercise right could become a ‘defense against a private lawsuit by another person, rather than simply against actions brought by government’; in denouncing the bill, blow uses such terms as ‘statesponsored discrimination’ which is ‘blatant and codifi ed’, ‘discordant with current cultural norms’ and ‘anathema to universal ideals of fairness and human dignity’; moreover, the journalist also mentions ‘a moral issue driven by consumerism considerations’, explaining: ‘[b]ig business had more to lose by appearing intolerant than small business had to gain by hewing to an exclusionary holiness’; further, this law is connected to good will and good public relations since equal treatment is ‘the appropriate moral position’; the problem is tolerance, so it seems, because those who do not confront and are pious, to paraphrase blow, actually want to hate and to discriminate; they are bigots; blow’s rhetorical question is: [w]here are the lines between religious rights, business rights and human rights?’; what the journalist penalizes comes through a harvard law school quotation which stipulates that the first amendment is wrongly interpreted because it shifts from the protection of individual freedom to business freedom; the conclusion is even more rhetorical: ‘one person’s opinion’ vs. ‘another’s personal liberty’? in ‘indiana loses its game’, gail collins emphasizes one interpretation of the discord that came along in media: the indiana law was similar to the federal religious freedom act but it extended to businesses and it was used by conservatives as a pretext for covering their ‘inability to ban same-sex marriage’. timothy egan (‘the conscience of a corporation’) is witt y 91 and harsh in looking down upon businesses that mix consumer goals or moneymaking with religious convictions due to their ‘deeply held relationship with god’, which he calls ‘corporate consciences’; in other words, he criticizes the law for giving religious rights to entities without a soul, which is the hypothesis for a debate on the understanding of ‘person’ in juridical terms: ‘apple, nike, yelp, gap, paypal […] have rebelled. they are saying: no, don’t give us the power to discriminate. we’d rather remain soulless purveyors of product to the widest possible customer base’; the conclusion of the article is irrevocable: even if endowed with conscience and a soul, ‘a corporation will never truly be a citizen’. this article identifi ed the role that companies play in the political process. the editorial published on 3 april (‘big business and anti-gay laws’) debates on this issue calling it a ‘bargain’ in which companies simply react to ‘the change in public opinion about same-sex marriage’; since corporations have infl uential voices on the political stage, once they ‘are embarrassed by religious freedom laws’, they should consider when to support political interests, underlines the editorial board of the new york times. in ‘bigotry, the bible and the lessons of indiana’, frank bruni formulates the polemic around the incompatibility of ‘homosexuality and devout christianity’; what sin is, opinionates bruni, is a matt er of decision and of choice, opposing ossifi ed beliefs and ancient texts to the advances of science and knowledge, for ‘all writings refl ect the biases and blind spots of their authors, cultures and eras’ whereas ‘interpretation is subjective and debatable’; diff erences, like all humans, are ‘magnifi cent riddles’, says the journalist; the object of his argumentation is prejudice and in support of this he brings several considerations of church fi gures who opine on prejudice and the understandings of the bible, such as an evangelical christian who teaches ethics at mercer university: ‘[h]uman understanding of what is sinful has changed over time’, i.e. contraception, slavery, gender roles ‘have moved far beyond scripture’. ross douthat imagines a platonic dialogue with a member of the press in an ‘interview with a christian’; the fi rst topic is on businesses and customers and the notion of identity; declining service for a reason (‘religious scruples included’) relates to belief and not identity, believes douthat, for ‘[d]enying service to gays is like denying service to blacks under jim crow’; this means that refusing service does not apply to an entire class because it is not ‘a structural system of oppression’ but a ‘handful of shops across the country’, i.e. the issue at stake is not group identity (therefore it is not a community problem) but rather a problem of individual discrimination and tolerance (‘these issues are diffi cult and personal’); when compared to race marriage, douthat explains that interracial marriage was not a ‘biblical meta-narrative’ or a christian inheritance, whilst the traditional view on male-female marriage is a ‘radical idea separating the early church from roman culture’, consequently, heterosexual marriage is a biblical metanarrative; another debatable aspect that is brought up is the idea that ‘homosexuality isn’t chosen’ and it should not be a reason for cruelty; this is overturned by the reason that ‘we are all in the grip of an unchosen condition’ (emphasis added); the recent and modern views on sexuality are, as the journalist names them, ‘post-biblical’ and ‘post92 christian’; moreover, having to ‘live with the tension between their att ractions and their faith’ is ‘a cruel delusion’, ‘an impossible position’, which actually is the condition of all humans, i.e. this controversy is not new; it’s all about the duality sacred-secular, humanity-god: ‘the christian idea is that god asks the seemingly impossible of all of us – and, fortunately forgives us when we fail’. 5. conclusions the recent intense debates in the media on the religious freedom restoration act confi rm the initial hypothesis of the present paper: the dispute over the understanding of democratic norms continues and will never come to an end, for it is rooted in ancestral dichotomies, more or less religious. that the ‘sacred vs. secular’ is in the human condition is true, but what is interesting is what new meanings this truism receives once democracies and creeds advance. as regards the fi rst research question, rfra is one of the laws that try to give juridical form to current american representations of freedom and rights in terms of religion; it is about granting the ‘free exercise of religion’ to ‘persons’ (individuals, organizations, companies, entities, etc.) and about litt le (‘in the least restrictive means’) involvement of the government in burdening this free exercise unless there is some ‘compelling government interest’. it has been controversial from the very beginning for it mingles religion and the state, opposing individual (religious) freedom and ‘government interest’. moreover, it is a matt er of discord for it establishes limits in matt ers of tolerance, a fundamental creed in a pluralistic democratic society; it places a moral issue at the origin of public action and it intertwines morality and legislation. it has become even more litigious because exercising religious beliefs that could come against other beliefs or practices could mean discrimination, whether we talk about individuals or groups involved, i.e. a ‘person’s liberty’ here comes against another ‘person’s liberty’. in other words, it is a law that elaborates on the recognition of diff erence (on religious grounds), which is an imperative for human dignity, but it could infringe on the very recognition of diff erence. furthermore, the free exercise of religion could imply exemptions from state regulations, which means that such regulations are not for all, i.e. inequality. as for the second research question, the media representations of rfra have given voice to some contemporary realities related to the tenets involved. most texts debated on several interpretations of the law, based on its legal intricacies and mostly based on the eff ects that contextualization had on the representations of values. the news stories provided several frames that directed the course of meanings. months before the enactment of the indiana rfra, news spoke about republicans, divisive social issues and christianity, mentioning religious liberty among their campaign themes for the future elections, i.e. religious freedom is not only a constitutional right, it is also an electoral weapon; moreover, another frame resulting from this is its connection to same-sex marriage, hence the discord religious freedom – lgbt rights; moreover, rfra is described as a ‘cover for discrimination’, religious freedom 93 is called discrimination, and even ‘state-sponsored’ discrimination; discrimination is opposed to fairness and human dignity but the solution to this, it is suggested, would be non-discrimination ordinances, which means that the law is expected to solve the dispute it initiated; another frame resulted from the discussion on the extension of religious freedom to businesses, namely the ridiculing of juridical vocabulary, and of law in general, around the meaning of ‘person’, for companies are att ributed religious beliefs, consequently souls and conscience, an argument against the interfering of law and politics in religious matt ers; connected to this is also the representation of religious freedom as conscience vs. for-profi t companies, meaning money, bargain and consumerist goals, casting doubt upon the ‘conscience’ of such corporations that may only want to express their opposition to the law in order to adapt to the changes in public opinion regarding social divisions in general, and same-sex marriage in particular; the strongest argument of those in favor of the law was that rfra is not a new bill and it applied in 19 states without involving gay issues; this is refuted by the idea of contextualization, more important than the text itself; another frame is that of conspiracy, tactic, strategy, underlying purpose (of the republicans) in seeing that the law is directed against the forthcoming nationwide legalization of same-sex marriage; a democratic pluralistic society, underline some articles, means tolerance, respect, accommodation, and this is as an argument against both religious freedom (and rfra) and lgbt rights for they are both absolutist in their fi ght; the dispute also revolved around religious freedom as bigotry and prejudice having no place in an evolving society; another understanding of the tenets in discussion saw this law as only responding to individual identity problems that do not concern any community. a new historicist perspective on the debated values would explain the phenomenon: it is the context that constructs the text, eventually the meaning, regardless the nature of the text (legal, political, economic, cultural, social, etc.). whether values have a correspondence in ‘reality’, i.e. arguing on the nature of the correspondence between representation, simulation, simulacrum, has not been the issue here; 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tocqueville, a. de, democracy in america, wordsworth classics of world literature, 1998. 48. todorov, t., the conquest of america. the question of the other, norman: university of oklahoma press, 1999. 93 abstract in modern democracies, senior civil servants have outgrown their classic role of mere implementers of orders given by politicians. both senior civil servants and politicians serve the same democratic state, and both are heirs to the democratic evolution. our hypothesis is based mainly on the historically developed division of labor between bureaucracy and politics. senior civil servants have never been tasked with creating the conditions for more democracy in the state, but instead with creating the conditions for a more effective and successful state. given that political bodies in which politicians operate have been established as the institutionalized personification of democracy, the task of politicians is above all the promotion of democracy, its values and norms. we have tested that hypothesis on the case of slovenian senior civil servants and politicians and found out, that both elites are favorable to political freedoms and political equality. keywords: slovenia, senior civil servants, politicians, political freedoms and political equality. the commitment of senior civil servants to democratic freedoms and equality miro hacek miro hacek associate professor, department of political science, faculty of social sciences, university of ljubljana, ljubljana, slovenia tel.: 0038-65-805.179 e-mail: miro.hacek@fdv.uni-lj.si transylvanian review of administrative sciences, no. 35 e/2012, pp. 93-106 94 1. introduction and theoretical base how can a complex contemporary state be governed in a democratic manner? this question has long been of vital concern to political science researchers. elitist theorists have argued: “every system of leadership is in fact incompatible with the most essential postulates of democracy” (michels, 1962, p. 364). more expatiating reformers have conceived a long list of institutional devices made to ensure government responsiveness towards the general public. but the still more rapid expansion of the bureaucracy and its apparently increasing insulation from popular control seem to render the underlying dilemma ever more difficult (aberbach, putnam and rockman, 1981, p. 170). many researchers have come to the conclusion that the central piece of the puzzle involves the norms and values that guide decision makers. for instance ronald pennock (1979, p. 244) has argued “a commitment of the elite to democratic principles and procedures and a willingness to do all in their power to support the democratic regime is virtually a necessary condition for a stable democracy”. in contemporary democracies, senior civil servants have outgrown their classic role of mere implementers of orders given to them by politicians as their nominal masters. civil service has outgrown its instrumental role as a personnel system, and is now playing an increasingly important role in the exercising of authority – a role that heavily depends on politicians. heady (1991, p. 448) defined the relationship between civil servants and politicians using six configurations, later combined by hojnacki (1996, p. 144) into two basic configurations: in one, politicians, in the pursuance of their political aims, dominate civil servants who have lost much of their independence and are only a tool in their hands. in the other, civil servants have maintained a high degree of their independence and power, which they use in the pursuance of their own aims as opposed to those of politicians. throughout the processes of democratic transition and consolidation, civil service systems in central european countries have been above all marked by the need for rapid depolarization of public administration, lack of legal instruments to safeguard civil servants against political abuse, significant dependence upon legalism, and application of employment legislation without regard for the specifics of civil service (verheijen, 1999, pp. 2-3). we will base our analysis on the classic hypothesis put forward by aberbach, putnam and rockman (1981, p. 171) that “the level of democracy (also) depends on the commitment of senior civil servants and politicians to democratic principles”. the idea that democratic ideals and values affect the development of democratic tradition and democratic institutions is manifested in the history of western constitutional democracy. each important institutional development was preceded by philosophical exploration of the underlying social and moral principles. such ideals and values then gradually spread to the general public and were finally embodied in institutional form. the democratic institutions themselves have made a powerful independent contribution to government responsiveness, and democratic practice has influenced the theory, as well as other way around (kwang-hoon and raadschelders, 2008, p. 422). we can note that much of the discussion about democracy in theory 95 and practice can be cast in terms of two fundamental themes. from the philosophical perspective, we can point out that pennock (1979, p. 16) stresses out that “liberty” and “equality” comprise the basic elements of the democratic believes. both liberty and equality are often used as symbols of democracy, as standards of judging the policies of government. but our concern here is with standards for judging the process of government – political liberty and political equality. in this sense liberty refers to those freedoms of political thought and action that have been broadly proclaimed in the west in the 19th century, though not universally implemented. political equality refers to the distribution of access to these political freedoms, the sharing of political influences among all of the citizens (aberbach, putnam and rockman, 1981, p. 172). dahl has drawn a distinction between two somewhat theoretical dimensions of democratization from a more institutional perspective. the first (contestation) refers to the extent to which at least some members of society are guaranteed those political rights that enable them to contest the conduct of government. the second dimension (participation) refers to the proportion of the general public entitled to participate on a more or less equal level in controlling and contesting the conduct of government (dahl, 1971, p. 5). in our research of commitment of slovenian political and bureaucratic elites to democratic principles, we will focus above all on two key dimensions of democracy, i.e. political freedoms (or contestation) and political equality (or participation). given that all countries included in the study1 are representative democracies, we can assume that their (political) leaders generally support these two basic democratic values2. both senior civil servants and politicians serve the same democratic state, and both are heirs to the democratic evolution. our hypothesis is based mainly on the historically developed division of labor between bureaucracy and politics. as several studies have pointed out (aberbach, putnam and rockman, 1981; page, 1988; stillman, 1996), the growth of electoral democracy and the growth of professional bureaucracy are more or less coeval processes. on the other hand, several indicators lead us to raise the hypothesis according to which we expect politicians to be more enthusiastic supporters of democratic values than the senior civil servants. firstly, senior civil servants have never been tasked with creating the conditions for more democracy in the state, but instead with creating the conditions for a more effective and successful state. given that political bodies in which politicians operate have been established as the institutionalized 1 for the comparative aspects we have also included some data on elites in several western european countries and the usa according to the empirical research conducted by aberbach, putnam and rockman (1981). 2 however, we must point out that the length of democratic tradition significantly differs among western countries with long democratic traditions on one side and slovenia as a relatively new democracy on the other. also political freedoms and political equality are not absolute but relative dimensions, matters of a degree, and are as such not equally accepted among individuals. 96 personification of democracy, the basic task of politicians is above all promotion of democracy, its values and norms. secondly, this assumption is expected to be even more valid in a country with relatively short political tradition. slovenia is a democratic european country, member of the european union, but only two decades ago slovenia was a part of the communist bloc, where democratic ideals, values and institutions were non-existent for over half of century. and thirdly, elected political bodies are designed as an institutional embodiment of democracy, but bureaucracy on the other hand, is supposed to make the state more efficient and effective, not more democratic. politicians seeking another election may be more likely to appreciate the rights to contestation. bureaucrats bear responsibility for carrying out policies that are being contested, so they may see less virtue in contestation and conflict. to verify our hypothesis, we will use several mutually complementary methods and techniques, among them also detailed empirical research. participants in two slovenian empirical studies, one conducted in 2003 and the other in 2009 were divided into two main groups, one consisting of senior civil servants and one of politicians. the purpose of this division was to establish whether there existed different images and perceptions about the role these two principal groups of actors played in the political process, and to find out about the relationship between them. in the first empirical study, the senior civil servants group consisted of 469 persons, i.e. of all secretaries general of ministries and of all undersecretaries. under the then valid civil servants act (2002, article 80), both groups occupied the highest positions within the slovenian civil service system. the politicians group consisted of 228 persons; of these ninety were from the legislative branch (i.e. members of parliament) and 138 from the executive branch of government. we conducted the survey towards the end of 2003 and at the beginning of 20043. in the second empirical study, the senior civil servants group consisted of 173 persons, i.e. of all general directors, secretary generals in governmental ministries, directors of ministerial sectors, and heads of administrative units across the country. under the current civil servants act (2007, articles 80-82), all stated groups are considered administrative managers, highest-ranking civil servants within the slovenian civil service system4. the politicians group consisted of 132 persons; of these ninety were from the legislative branch (i.e. members of parliament) and 42 from the executive 3 the response rate (numbers in brackets) was very good: we received 342 completed questionnaires (49.1%), of these 233 came from senior civil servants (49.7%), 64 from politicians employed in the executive branch (46.4%), and 45 from members of parliament (50.0%). see hacek (2005) for full results. 4 it should be clearly stated that senior civil servants groups from 2003 and 2009 are not entirely comparable, because of different normative frameworks in both periods. the normative framework that changed in 2005 brought considerable instability to the top of bureaucratic apparatus, the main reason being the introduction of time limited mandate for senior civil servants and limited influence of politics on the process of senior civil servant’s selection. 97 branch of government. in both studies we were mainly interested in the executive branch, for two obvious reasons: first, because it also employs senior civil servants, and second, because research of relationship between senior civil servants and politicians would usually focus on this branch (peters, 1988, p. 17). we conducted the survey towards the end of 2008 and at the beginning of 20095. 2. support to political freedoms and competition freedom of political expression is the oldest in the set of democratic values. the nominal commitment to freedom of speech is wide-spread in democratic states; in one of the studies made by aberbach, putnam and rockman (1981, p. 175), which involved a sample of adults from great britain, all respondents agreed with the following statement: “the possibility to ever learn the truth decreases without the freedom to express different views.” a majority of western european countries have lasting experiences with democracy, but historical experience in democracy in slovenia is brief. slovenia gained independence from the former yugoslavia and established the democratic political system only back in the early 1990s. with this distinction in mind, we strive to estimate the attitude of the general public towards democracy and democratic norms and then, at least indirectly, compare it to the attitude of administrative and political elites. table 1 explains the relationship of the general public towards political freedoms and equality. we can notice that the majority of slovenian population is benevolent toward political freedoms (76.8% believe that democracy and political equality should go hand in hand), social equalities, multiparty system and equality of all people before the law. another survey (tos, 2004, p. 465)6 has investigated the attitudes of the slovenian public towards different forms of political participation. the findings were not surprising. the slovenian public (91.3% of respondents) does not agree with revolutionary activity as the possible form of society transformation, but general elections as the form of political participation are generally accepted by the majority (84.3% of respondents) of population (tos, 2004, p. 513). the survey “slovenian public opinion 2008/1”7 investigated the attitude of the general public towards the democratic political system; 87.7% of the citizens see democracy as a positive political system. also another most recent survey, “slovenian public opinion 2011/2”8 confirms the findings above, as a majority of slovenian 5 the response rate (numbers in brackets) was very good: we received 154 completed questionnaires (50.5%), of these 87 came from senior civil servants (50.3%), 21 from politicians employed in the executive branch (50%), and 46 from members of parliament (51.1%). see hacek (2009) for full results. 6 the question was “do you agree or disagree with the following forms of political participation?” (n=1042). 7 see “slovenian public opinion 2008/1”, (n=1288). 8 the survey was conducted in spring 2011 by the faculty of social sciences in ljubljana. the questions were “do you believe that essential part of democracy are the following (among others): a) elections, where people can freely choose their leaders; b) political freedoms that protect people from state violence and c) higher social equality” (n=1069). 98 citizens (84.5%, 74.8% and 60.1% respectively) do see elections, political freedoms and higher social equality as an essential part of democracy. table 1: attitude of the general public towards the political freedoms and political equality (n=1073, in %) i think that democracy should include… strongly agree agree disagree strongly disagree do not know … political freedoms 37.7 39.1 11.9 1.1 10.1 … higher social equality 14.0 44.4 26.6 4.9 10.2 … equality of all people before the law 36.3 36.6 14.1 3.5 9.5 … multi-party system 29.1 34.9 17.5 4.7 13.8 source: slovenian public opinion survey, see tos (2004, p. 455). of course, all these questions to the general public are very general in their nature, so it is not possible to compare them directly with the much more specific questions we posed to the administrative and political elites. that was never our intention, anyway. we merely attempted to expose the general attitude of the slovenian public towards democracy and the values it represents for two decades after the change of the political system. with this in mind we have successfully demonstrated that the majority of general public is strongly in favor of democratic political system and democratic values. table 2 shows the statements that slovenian administrative and political elites were asked to agree or disagree with. our intention was to establish how firmly they defended the right to express an objection, to criticize, and to have a different view. the first statement (a) refers to the possibility that “certain extremist organizations” engage in “unfair or illegitimate tactics”. the question that administrative and political elites were asked was whether more control over such activities should be necessary. the question was intentionally formulated in this way in order to explore whether respondents thought such destructive measures should be left uncontrolled. we were almost asking our respondents whether subversives should be allowed free play. the aim was to press support for civil freedoms to the breaking point9. the second question (b) explored whether respondents thought the freedom of political propaganda should be let unlimited. table 2 also enables comparison with some western european examples from the research done by aberbach, putnam and rockman (1981) in the late 1970s. 9 although the wave of political terrorism had not yet crested europe at the time of our survey, the large number of our respondents noted the need to control physical violence, even if it was politically motivated. 99 table 2: support of administrative and political elites to political freedoms and pluralism (in %) statement answers in selected western countries 1977-1980 (in %) ** slovenia 2003 slovenia 2009 * scc p scc p scc p a. some maintain that certain extreme organizations use dishonest or illegitimate measures. is enhanced control over such measures necessary in your opinion? yes, unconditionally necessary. yes, under certain conditions. no, no control is required. 26 43 31 (n=242) 23 41 36 (n=249) 50 45 5 (n=226) 37 57 6 (n=107) 56 41 3 (n=86) 43 54 3 (n=65) b. freedom of political propaganda shall not be unlimited; it shall be carefully controlled by the state. i agree. i disagree. 40 60 (n=254) 27 73 (n=277) 37 63 (n=218) 39 61 (n=102) 43 57 (n=84) 46 54 (n=59) c. confl icts in a society are negative. i agree. i disagree. can’t say. 24 44 32 (n=373) 19 50 31 (n=388) 23 71 6 (n=232) 30 63 7 (n=109) 33 65 2 (n=85) 36 49 15 (n=67) d. modern societies develop mainly as a result of social confl icts. i agree. i disagree. 55 45 (n=256) 64 36 (n=263) 45 55 (n=225) 45 55 (n=103) 42 58 (n=85) 44 56 (n=59) * scc = high civil servants; p = politicians ** evenly distributed samples from great britain, germany and italy were included in the first two questions; evenly distributed samples from great britain, germany, italy and the netherlands were included in the third question; evenly distributed samples from great britain, germany and the netherlands were included in the last question. source: aberbach, putnam and rockman (1981, p. 177); for slovenia, hacek (2005; 2009). we can see that the majority of european elites rejected the possibility of control over political freedoms, however without expressing an anti-liberal attitude; only a minority of elites (though a slightly larger proportion of members of the administrative elite) did express an anti-liberal attitude10. three quarters of european leaders (at least partly) opposed the restricting of the right to different views, even in the case of extreme organizations. we can see that the attitude of slovenia’s administrative and political elite is slightly more anti-liberal with strengthening anti-liberal trend forming in the period 2003 to 2009, in particular as regards members of the administrative 10 as aberbach, putnam and rockman (1981) found out later, “anti-liberals” are well represented particularly among italian civil servants. 100 elite, (over) half of whom speak in favor of unconditional restriction of political expression. further, slightly more slovenian politicians (again, with strengthening anti-liberal trend) than their european colleagues are of the opinion that the freedom of political propaganda shall be controlled by the state. the next two questions (c and d) measured the support of administrative and political elites to political freedoms and pluralism and explored the desirability or harmfulness of social conflict. table 2 shows that more than a half of members of administrative (55%) and political (64%) elites in four western european countries thought that, in a modern society, social conflict suggested development. in slovenia, a slightly smaller proportion (45% in 2003; 42% and 44% in 2009) of administrative and political elites shares the same opinion. we can also see that slovenian politicians give slightly more support to political freedoms and pluralism than slovenian senior civil servants. it goes without saying that with the four variables used, we were not able to determine the absolute support to political freedoms and pluralism, but were still able to highlight some differences between both slovenian elites and between slovenia as a relatively new democracy and some traditionally democratic western european states. 3. support to political equality and participation similarly as when measuring the support to political freedoms and competition, we used several questions to measure the support of administrative and political elites to political equality and participation. the simplest of all was the first question that explored the role the public should play in politics in general and more specifically in policy-making process. we can see that slovenian elites (in particular when compared with the western european) give relatively high support to direct public involvement in politics, whereby there are only slight differences between the views of slovenian senior civil servants and politicians. as one could expect, the political elites are more inclined towards direct public involvement in politics; but this is hardly a surprise in a country where “direct democracy” has been the primary guidance in reforming and reinventing political system on different levels of government (brezovsek and nahtigal, 2011, p. 148; baclija, brezovsek and hacek, 2008, p. 229). 101 table 3: support of administrative and political elites to political equality and populism (in %) statement answers in selected western countries 1977-1980 (in %)** slovenia 2003 slovenia 2009 * scc p scc p scc p e. what role shall the public play in politics in general and in policy-making? 1. its role shall be limited to participation in elections. 2. the public shall take interest in politics and communicate its opinions to its representatives. 3. the public shall be directly involved in politics. 16 45 39 (n=388) 9 30 61 (n=434) 2 36 62 (n=227) 2 32 66 (n=104) 1 37 62 (n=84) 3 27 69 (n=62) f. for several years now, there has been an ongoing debate in some countries on increased control of the public over authorities and increased public participation in the exercising of authority. what is your opinion in this regard? 1. favorable 2. undefined 3. not favorable 44 26 30 (n=478) 66 18 16 (n=532) 87 13 0 (n=232) 87 11 2 (n=109) 84 13 3 (n=86) 96 3 1 (n=66) g. elitist index*** 1. high 2. medium 3. low 15 46 39 (n=330) 6 36 58 (n=361) 18 51 31 (n=159) 13 52 35 (n=77) 19 63 18 (n=83) 20 55 25 (n=60) h. we are interested in your opinion on your own role. in comparison with the broader public, how do you feel as regards your know-ledge, skills and sense of respon-sibility? 1. very superior 2. superior in a limited sense 3. not superior 20 58 22 (n=481) 8 42 50 (n=539) 6 36 58 (n=232) 3 38 59 (n=108) 6 47 47 (n=87) 0 35 65 (n=65) * scc = high civil servants; p = politicians. ** evenly distributed samples from great britain, germany, italy, sweden and france were included in the first question; evenly distributed samples from great britain, germany, italy, the netherlands, france and sweden were included in the second question; evenly distributed samples from great britain, germany, italy, the netherlands, france and sweden were included in the last question. *** elitist index is an aggregate index composed of answers to six statements, whereby the inclusion to the three categories is conditional upon an affirmative answers to six questions. source: aberbach, putnam and rockman (1981, pp. 182-183); hacek (2005; 2009) 102 table 4: support of administrative and political elites to political equality and populism between politicians compared (in %) statement slovenia politicians from executive branch 2003 politicians from executive branch 2009 politicians from legislative branch 2003 politicians from legislative branch 2009 e. what role shall the public play in politics in general and in policymaking? 1. its role shall be limited to participation in elections. 2. the public shall take interest in politics and communicate its opinions to its representatives. 3. the public shall be directly involved in politics. 2 28 70 (n=61) 0 40 60 (n=20) 2 37 61 (n=43) 5 21 74 (n=42) f. for several years now, there has been an ongoing debate in some countries on increased control of the public over authorities and increased public participation in the exercising of authority. what is your opinion in this regard? 1. favorable 2. undefined 3. not favorable 86 12 2 (n=64) 95 0 5 (n=21) 89 9 2 (n=45) 96 4 0 (n=46) g. elitist index*** 1. high 2. medium 3. low 14 51 35 (n=49) 18 48 34 (n=21) 11 53 36 (n=28) 23 46 21 (n=42) h. we are interested in your opinion on your own role. in comparison with the broader public, how do you feel as regards your knowledge, skills and –sense of responsibility? 1. very superior 2. superior in a limited sense 3. not superior 0 42 58 (n=64) 0 24 76 (n=21) 7 32 61 (n=44) 0 41 59 (n=44) source: hacek (2005; 2009) the first category, which comprises members of administrative and political elites who are least enthusiastic about political equality, is almost undetectable in slovenia, in both 2003 and 2009 surveys. in western european countries there are twice as 103 many senior civil servants as politicians among the “opponents” to political equality, who are also less favorable to direct public involvement in politics. their answers suggest that slovenia’s administrative elite is more in favor of – in comparison with the western european colleagues – an active role of the public in politics in general and also in policy-making. politicians lead (as compared with senior civil servants) both in western european countries and in slovenia, but their precedence over senior civil servants in slovenia is fairly unpretentious. in the next part of the study (f) exploring support of administrative and political elites to political equality and public participation, we asked a less philosophical question, probing the attitude of respondents towards participatory democracy. looking at the results obtained in western european countries, we can see that two thirds of politicians and almost half of senior civil servants in six western european countries are favorable to increased public participation and control over authorities. the results obtained in slovenia are quite different; namely, a great majority of administrative and political elites are favorable to increased public participation and control over authorities, whereby there are practically no differences between the views of senior civil servants and politicians in either of surveys. the third part of the study (g) exploring support of administrative and political elites to political equality and public participation was labeled “elitist index” (aberbach, putnam and rockman, 1981, p. 183). the index is composed of affirmative answers to six statements. a high elitist index suggests that administrative and political elites feel superior to “ordinary” citizens. both in western european countries and in slovenia the proportion of those included in high or middle elitist index based on their answers is larger among senior civil servants, albeit just slightly in 2009. compared with their western european colleagues, higher portions of slovenia’s elites are included in both high and middle elitist index, especially among politicians. there are just slight differences between slovenian senior civil servants and politicians, latter being more elitist. the only difference worth mentioning was observed in connection with the last statement11; in slovenia, 79% of senior civil servants, 95% of members of parliament, and 95% of politicians from the executive branch agreed with this statement in survey, conducted in 2009. more politicians (95%) than senior civil servants (83%) also agreed with the statement that “all people shall be given an equal opportunity to exercise influence over authorities” but, as said, the differences are not too big. full political equality is a commendable ideal, still very alive in a relatively new democracy as surely is slovenia, but results from traditional and long-lasting democracies are more realistic. people cannot be equally competent to deal with the complexities of public issues. some efforts to increase public access to government are useful, but some form of leadership from the top will most likely always be present. in stating this modal view, we can expect also that more and more bureaucrats in slovenia will start to 11 i.e., “all people shall be given the opportunity to vote, although they may not be capable of doing this competently”. 104 emphasize the “realistic” need for competence and leadership, whereas politicians will always be more in favor of the “idealistic” goals of ever greater political equality (aberbach, putnam and rockman, 1981, pp. 182-187). the last part of the study (h) explores support of administrative and political elites to political equality and public participation and inquires whether members of the elites feel superior in comparison with the broader public on account of their roles12. the answers suggest that the majority of members of slovenia’s elites in both surveys from 2003 and 2009 do not feel superior, but in any case they feel less superior in comparison to their western european colleagues. those who feel most superior are senior civil servants in the survey conducted in 2009, although their proportion is lower when compared with their western european colleagues13. 4. final observations let us remember that in exploring the commitment of both elites to democratic principles, we focused on two key dimensions of democracy, i.e. political freedoms and pluralism on the one hand and political equality and populism on the other hand, all of which was the main hypothesis of this paper. our analysis gave the following answers: both slovenian senior civil servants and politicians are generally favorable to political freedoms and equality, even more so than their western european colleagues included in the study of aberbach, putnam and rockman (1981); also the general attitudes of the both elites are not much different from the general attitudes of the general public, who is, in large proportion very much in favor of democracy and its ideals and values. the differences between the two elites are relatively small and are most noticeable with regard to the question about control over certain extreme organizations. here, more than a half of senior civil servants (50% and 56% from both surveys conducted in 2003 and 2009, respectively) expressed their support to unconditional restricting of political expression14. further, we established that compared with their western european colleagues, higher portions of slovenia’s elites are included in both high and middle elitist index, with highest portions among politicians. at the same time, the similarity of democratic values of both elites points towards the village life model of relationship between civil servants and politicians (peters, 1988, p. 150), but there is not enough evidence to confirm that presumption. based on their perception of their 12 the question was: “we are interested in your opinion on your own role. in comparison with the broader public, how do you feel as regards your knowledge, skills and feeling of responsibility?”. 13 in western european countries, the proportion of those who feel superior is the largest among members of the administrative elite (20%). the proportion of those who do not feel superior is the smallest among members of the administrative elite (22%). 14 the same support was expressed by 37% (2003) and 43% (2009) of politicians. members of parliament (32% in 2003 and 50% in 2009) were recently more supportive to unconditional restricting of political expression, whilst politicians employed in the executive branch were recently less supportive (41% in 2003 and 29% in 2009). 105 own role, slovenian senior civil servants feel slightly more superior, but still far less when compared with their western european colleagues. what is interesting is that these findings are based on the elitist index, whereby respondents had to answer a set of indirect questions, but to a much smaller degree to the question directly asking about their feeling of self-superiority15. to conclude, slovenian politicians are slightly more favorable to political freedoms and political equality than senior civil servants. however, the difference is not dramatic so that the general impression that both elites are favorable to political freedoms and political equality prevails16. the question remains, however, why both slovenian politicians and senior civil servants differ from their colleagues in western democracies. the bullet-proof answer will require further data collection, in-depth analysis and also some more time flow, but we can (try to) ascertain that the differences are as follows: a) the consequences of a half-a-century long undemocratic tradition and (slowly falling) enthusiasm about a relatively new democratic political system, and b) of semi-consolidated political and, especially, bureaucratic elites that are still not fully prepared to be responsible for dealing with realistic and complex public issues. references: 1. aberbach, j.d., putnam, r.d. and rockman, b.a., bureaucrats and politicians in western democracies, cambridge: harvard university press, 1981. 2. adp, social science data archive, ‘slovenian public opinion 2008/1’, [online] available at http://www.adp.fdv.uni-lj.si/opisi/sjm081/opis-podatkov/, accessed on november 23, 2011. 3. baclija, i., brezovsek, m. and hacek, m., ‘positive discrimination of the roma minority: the case of roma local councilors in slovenia’, 2008, ethnicities, vol. 8, no. 2, pp. 227-250. 4. brezovsek, m. and nahtigal, l., ‘2010 local elections: a serious warning to parliamentary political parties’, 2011, lex localis, vol. 9, no. 2, pp. 145-162. 5. civil servants act, official gazette of slovenia, no. 56/2002 (upb-1). 6. civil servants act, official gazette of slovenia, no. 63/2007 (upb-3). 7. dahl, r.a., polyarchy: participation and opposition, new haven: yale university press, 1971. 8. hacek, m., politika birokracije, ljubljana: modrijan, 2005. 9. hacek, m., politiki in visoki javni uslužbenci: kdo vlada?, ljubljana: publishing house of the faculty of social sciences, 2009. 15 the question was: “we are interested in your opinion on your own role. in comparison with the broader public, how do you feel as regards your knowledge, skills and feeling of responsibility?”. 16 aberbach et al. (1981, pp. 205-208) made the same conclusion, i.e., that politicians were slightly more favorable to political freedoms and political equality than senior civil servants, with the only difference that differences between the two elites were slightly bigger in western european countries than in slovenia. 106 10. heady, f., public administration: a comparative perspective, 4th edition, new york: marcel dekker, 1991. 11. hojnacki, w.p., ‘politicization as a civil service dilemma’, in bekke, h., perry, j. and toonen, t., (eds.), civil service systems in comparative perspective, bloomington and indianapolis: indiana university press, 1996, pp. 137-164. 12. kwang-hoon, l. and raadschelders, j., ‘political-administrative relations: impact of and puzzles in aberbach, putnam and rockman, 1981’, 2008, governance: an international journal of policy, vol. 21, no. 3, pp. 419-438. 13. michels, r., political parties: a sociological study of the oligarchical tendencies of modern democracy, new york: collier books, 1962. 14. page, e.c., ‘political authority and bureaucratic power’, in peters, g.b., (ed.), comparing public bureaucracies: problems of theory and method, tuscaloosa and london: the university of alabama press, 1988, pp. 13-32. 15. pennock, j.r., democratic political theory, princeton: princeton university press, 1979. 16. peters, g.b., comparing public bureaucracies: problems of theory and method, tuscaloosa and london: the university of alabama press, 1988. 17. stillman, r.j., (ed.), public administration: concepts and cases, 6th edition, boston and geneva: houghton mifflin company, 1996. 18. tos, n., (ed.), vrednote v prehodu iii, ljubljana: the publishing house of the faculty of social sciences, 2004. 19. verheijen, t., (ed.), civil service systems in central and eastern europe, cheltenham and northampton: edward elgar, 1999. 125 abstract since 1990, the number of local public transport passengers has been steadily decreasing with a simultaneous increase in the number of residents using individual transport. since that process has contributed to an increase in traffic congestion and the deterioration of air quality in cities, local governments have tried to reverse that negative trend. a few years now, a reversal of this trend has been observed in some cities. this article, using data on the number of passengers in over 80 polish cities, presents regression models explaining the factors influencing the demand for public transport services, and it estimates the demand elasticity related to various independent variables. the explanatory model refers both to the features of the cities’ socio-economic environment and to the organization of the service. the results indicate that local policies matter: the density of the public transport network is the most important factor in relation to the volume of demand, while the ticket price level is almost irrelevant. demand is also clearly increasing in the largest cities, but the relationship between demand and population size is not a linear one. keywords: local public transport, demand elasticity, price elasticity, local government, poland. demand elasticity for local public transport in polish cities: do local policies matter? paweł swianiewicz agata brzóska paweł swianiewicz (corresponding author) professor, department of local development and policy, university of warsaw, warsaw, poland tel.: 0048-22-552.0650 e-mail: p.k.swianiewicz@uw.edu.pl agata brzóska department of local development and policy, university of warsaw, poland research assistant, institute of rural and agricultural development, polish academy of sciences, warsaw, poland e-mail: abrzoska@irwirpan.waw.pl doi: 10.24193/tras.61e.7 published first online: 10/28/2020 transylvanian review of administrative sciences, no. 61 e/2020, pp. 125-142 126 1. introduction the development of individual motorization combined with cultural changes has led to a decrease in the level of public transport services in cities in different countries, including poland. according to dargay and hanly (2002), the average decrease in the number of passengers carried by public transport in british municipalities was 20% in 1986-1996. this phenomenon had numerous negative side effects. excessive concentration of private transport resulted in traffic jams, inconvenience due to scarcity of parking spaces, reduced attractiveness of cities for pedestrians, excessive noise and increased air pollution, which was dangerous not only in terms of immediate consequences for residents but also in terms of the negative impact on global climate change. there is therefore a need to develop urban policies that increase the attractiveness of urban public transport. the question arises as to why it has been possible to stop the trend of the decrease in the number of passengers in some cities, while in others the negative trend continues. is it determined by the policies implemented by local authorities and, if so, which of them are likely to be the most effective? or is the social context related to the characteristics of individual cities predominant? we try to answer these questions in this article, which goal is to find factors that determine the elasticity of demand for urban public transport services. the article consists of five parts, beside the current introduction. in the second section, we discuss the theoretical framework based on the results of previous research. in the third one we formulate hypotheses, while the fourth section focuses on the presentation of data sources and empirical strategy. the fifth part presents – mostly in a descriptive manner – general changes in the use of local public transport in polish cities in recent years and the sixth part includes hypothesis testing. finally, the seventh section is a discussion of the results of the empirical tests conducted and conclusions. 2. the factors affecting demand for local public transport in the light of past research given the high and growing political relevance of the topic in recent years, empirical studies of demand determinants in urban public transport are surprisingly scarce. this statement definitely applies to poland, where the existing studies are either a discussion of research conducted in other countries or model considerations based on theoretical concepts, but poorly supported by methodologically solid data analysis (bąkowski, 2014; dydkowski et al., 2018). however, available empirical tests are not very numerous in the international academic literature either. holmgren (2007) points out that until the end of the 20th century, price elasticity studies dominated, while relatively recently there have been more studies analyzing other factors of elasticity of demand for local public transport. one of the most frequently asked questions is that of the effectiveness of different types of urban policies. the focus is, therefore, on estimating the demand function by determining its elasticity in relation to various explanatory variables. 127 the level of demand may be affected by two types of variables (brechan, 2017). the first refers to the organization of transport itself and can, therefore, be shaped to some extent by urban policy. the two most important factors highlighted in previous studies are the quality of service and price. the former is measured in a variety of ways. in a study of the madrid region, matas (2004) uses the variable of the length of all courses. its high value may indicate both a satisfactory coverage of the area by a transport network (network density) and a high frequency of travel by means of transport, which is one of the main demands made by passengers in relation to urban transport (hebel, 2014). in his study, matas also tests average speed, average frequency and the number of kilometers travelled. the latter variable is also used by dargay and hanly (2002), romilly (2001) and bresson et al. (2003), referring it to the population of the city examined. in turn, daldoul et al. (2016) and deb and filippini (2013) define the quality of service as the density of the communication network. romilly (2001), on the other hand, also uses a variable concerning the age structure of rolling stock (bus fleet). according to available tests, the quality of communications – though measured differently – is positively correlated with demand. often (e.g. matas, 2004) it is the most powerful independent variable. some studies show that quality (in this case measured by the frequency of travel) has a stronger impact on passenger numbers than a reduction in ticket prices (brechan, 2017). holmgren (2007) also concludes that the availability of a service (measured in terms of vehicle-kilometers) has the greatest impact on demand – higher than price and other variables he considers in his study. however, holmgren (2013) notices a methodological problem related to the study of the impact of the quality of services measured by the frequency of operation as his variable, as well as some others included in various studies, is not fully exogenic; for example, the frequency of operation of city buses depends also on past demand, so it cannot be treated exclusively as a variable related to urban policies. as holmgren (2013) states: ‘there are good reasons to believe that although quality of service certainly affects demand, the level of demand also affects the level of service (…). despite this, the most common practice in statistical/econometric applications is to assume that quality causes demand and not the other way around’ (p. 102). our model is based on a similar assumption; however, the direction of the causal relationship may influence the policy implications stemming from the study to a very limited extent only. several studies indicate the elasticity of demand in terms of price: the higher the ticket price, the fewer passengers are carried. according to dydkowski et al. (2018) price elasticity of demand in urban transport in poland is low (-0.38) and is associated with a low level of fares. but holmgren (2007) identifies even higher price elasticity (although lower than the elasticity with respect to service quality), additionally pointing to differences between different parts of the world. above a certain threshold the price elasticity of demand is increasing (dargay and hanly, 2002). alternative costs (time value, cost of nuisance) should also be considered in order to take full account 128 of the demand response to the factor in question. in empirical studies, they are expressed as costs associated with owning and using a car. matas (2004) and holmgren (2017) use the petrol price index here, while dargay and hanly (2002) as well as romilly (2001) use more general automotive costs that reflect both car purchase and day-to-day maintenance costs. increasing these costs may be one of the ways of influencing the demand for public transport (bąkowski, 2014). the instruments available to city authorities in this respect include, for example, the policy on the number and cost of parking spaces as well as charges for entering the city center. the second group of factors is related to the environment in which the urban transport company operates, i.e. the economic situation of the city and the socio-demographic status of residents. holmgren (2007), in his meta-analysis of earlier studies, considers the income of residents, the price of fuel (affecting the cost of alternative transport) and the number of private cars. in a study of the madrid region, matas (2004) indicates that the growing level of suburbanization (expressed in the suburban population in relation to the total population of the region) has a positive impact on the demand for urban transport services. some studies also point to the economic activity of the society in question, especially commuting to work (matas, 2004; deb and filippini, 2013; daldoul et al., 2016). as regards the characteristics of the demographic and social structure, dargay and hanly (2002) study the impact of the increase in the number of pensioners: they assume that seniors, due to a greater amount of free time, use public transport services more often. daldoul et al. (2016), in a study of tunisian public transport, test the impact of feminization. recalling the results of previous studies (de palma and lindsey, 2001), they suggest that time is of greater value to men, which can be justified by the statistically higher salaries of men (so the cost of the per hour labor force is higher). they assume, therefore, that the demand for public transport should increase with a higher number of women in the population (public transport is more time consuming), but their empirical test did not confirm this relationship. the wealth of the population is a very good example that demonstrates how the direction of dependency can vary in different local (cultural) contexts. higher incomes may limit the demand for public transport, but the relationship may also be positive: the increased wealth of the population may result in more users of public transport services. in a study on india, deb and filippini (2013) consider the literacy rate, which is positively correlated with the wealth of the population. they refer to dargay and hanly’s (2002) thesis that describes public transport as an inferior good, for which demand decreases along with an improvement in the material condition of the population. however, a situation in which the increase in income is accompanied by an increase in demand for passenger transport services may occur in large cities, where the quality of urban transport is high. at that time, it is treated as a substitute for a car, the possession of which is not significantly sensitive to changes in the financial situation of the population (asensio et al., 2003 apud matas 2004). this phenomenon intensifies particularly in cities with a high population density, where public 129 transport seems to be a more attractive solution due to numerous side effects related to congestion or a shortage of parking spaces. bąkowski (2014) notes that even within a single city, a two-way impact of the affluence of residents on demand can be distinguished, depending on whether they belong to a specific socio-economic group. our study refers to this earlier research but it provides new elements in at least two respects. first, in terms of geographical coverage. there have been no similar studies published so far in international journals, not only concerning poland but also the wider region of central and eastern europe. and – as has been demonstrated by earlier studies – factors influencing demand for city public transport are sensitive to the context of local culture and economic development. all countries of the region have experienced a rapid increase of private car ownership in the early stages of the economic and political transition of the 1990s at the same time as the painful transformation of inefficient publicly owned companies, including those responsible for urban public transport. both of these factors have had a direct impact on changes in the demand and supply of transport services. therefore, checking these factors in a polish context provides interesting, new knowledge. second, the most comprehensive meta-analysis providing information on demand elasticity of public transport in cities, performed by holmgren (2007), is based on empirical research published at the turn of the 20th and 21st centuries. there are not many studies that rely on data from recent years, while the changes in recent years have been very dynamic. the dominant trends in thinking on urban planning, the importance of climate change and environmental consciousness have changed a lot during the last two decades, and all of them are of crucial importance for transport policies and for the demand for public transport services. so, conducting a study based on the most recent data may provide a new insight into the studied topic. 3. research questions and hypotheses the factors discussed above will be used for the empirical test in our article. we are interested in estimating how the selected factors influence local public transport demand in polish cities. our research focuses on the period 2014 2017. the collected data allowed us to analyze the trend of changes in a relatively short period of time. in order to verify to what extent the analysis of such a short period may be generalized, in section 4 (see figures 2 and 3) we try to confirm the observed trends based on data for a smaller group of cities but covering a longer period. the first hypothesis concerns the socio-economic environment in which the transport functions, while the second is directly related to the organization of urban transport. hypothesis 1: the demand for urban transport services is positively influenced by the following socio-economic features of cities: – 1.1. city size; – 1.2. population density; – 1.3. wealth of urban budget; 130 – 1.4. affluence of local population (in this case we may expect the relationship to be both positive and negative); and – 1.5. unemployment rate (in this case – negative correlation is expected). the impact of city size on demand for public transport can be considered in relation to economy of scale, which determines the relationship between the size of a local government unit and the present value of benefits. due to the lower marginal cost, we can expect that in larger cities it will be possible to establish a lower service charge, which in turn will be an attractive solution for residents. in addition, in large centers, encouraging public transport is a way to reduce the negative externalities generated by car traffic. another argument pointing to the positive impact of polish city size on demand refers to the issue of education of residents. the level of education – according to data from the national census 2011 – positively correlates with the size of the city. the largest proportion of inhabitants with higher education (30.1%) is in cities of more than 250,000 inhabitants, while in cities between 150,000 and 250,000 it drops to 21.8%; it is measured at 19.7% in other regional and sub-regional centers, and at 12.7% in rural districts. this may be influenced by the fact that the inhabitants of the largest cities, who are concerned about the environment as a result of their deeper ecological awareness, more often (than the inhabitants of smaller cities) choose to travel by public transport. an important factor may also be the high population density, which is conducive to keeping the costs of urban transport at a lower level. at the same time, the higher the population density in the city the greater the intensity of traffic, which translates into traffic jams. on the other hand, low density indicates the existence of dispersed development and longer distances connecting particular points in the municipality, which translates into higher marginal costs of service provision. we also expect that the demand may be positively influenced by the affluence of municipal budgets. this service usually requires significant subsidies from the municipal budget. in recent years, a systematic increase in local government subsidies for this purpose has been observed in poland (dydkowski et al., 2018). local governments that do not want to significantly increase ticket prices have to consider the higher budget burden that communications will generate. such a policy can be pursued by large cities, which, while maintaining a certain level of service without changing tariffs, are able to maintain a high network density. it may be more complicated to take the level of wealth of the inhabitants into account. the affluence of the population can have a two-way effect on demand. first, it may increase the number of passengers. this may be the case in cities where urban transport, due to its high quality, is a substitute for the car. as already mentioned above, this effect intensifies in cities with a high population density (matas, 2004). greater wealth can also increase demand through greater environmental awareness and the trend towards eco-friendly living. on the other hand, as many previous studies have shown, the healthy material situation of the population may also contribute to a decrease in demand due to the perception of urban transport as an inferior good 131 (dargay and hanly, 2002). the material situation of particular social groups may, therefore, determine different transport behavior. also, holmgren (2007), in his review of earlier studies, points to a very significant difference in the results in this respect – in various studies, the elasticity of demand in relation to the income of residents is different. the last factor examined in the first hypothesis refers directly to the professional activity of the society in question, as we assume that working residents positively influence the demand for urban transport services due to their regular use of commuting services. this factor turned out to be important in previous empirical studies (dargay and hanly, 2002; daldoul et al., 2016). hypothesis 2: the demand for urban transport services is positively influenced by the organizational characteristics of public transport: – 2.1. ticket prices; and – 2.2. quality of urban transport services. the first part of the second hypothesis refers to the economic assumption of the price elasticity of demand. as the price of goods increases, demand decreases. this is not necessarily related to the price of rides only. discounts or exemptions for certain social groups or, in extreme cases, the establishment of free public transport for all may also be important for stimulating demand. the second part of the hypothesis refers to the quality of transport services, which often consists of elements such as journey duration, comfort and safety (hebel and horoń, 2002), as well as network density, which is one of the most important and frequently reported demands for urban transport. according to some earlier studies (e.g. matas, 2004; holmgren, 2007), the quality factor is the strongest determinant of demand. in our study we measure quality by the network density as well as by the availability of alternative (to the bus) means of public transport (e.g. tram, underground, which play a role in avoiding traffic jams). initially, we planned also to take the mean age of the rolling stock into account (newer buses usually provide more comfortable travel conditions), but eventually this variable was omitted due to problems with data availability (a relatively high number of missing values in our sample). however, our partial analysis of that variable has shown a low correlation with the dependent variable. 4. scope and method of empirical testing the research covers a sample of 86 polish cities that organize public transport. according to menes (2016) there are 260 polish cities that organize local public transport. therefore, our sample is one third of the total population. however, our coverage of the largest cities is much higher – our sample includes 64% of all cities with a population of over 100,000, 53% of cities with a population of between 50,000 and 100,000, 24% of cities with a population of between 30,000 and 50,000 and only 13% of smaller towns that organize their public transport systems. due to problems with comparabil132 ity, we have omitted the cities in which local public transport is organized by municipal associations. the basic source of data were bulletins published by the chamber of commerce of urban transport (izba gospodarcza komunikacji miejskiej), in some cases supplemented by data obtained directly from municipal companies or city councils. the remaining data used comes from the main statistical office of poland. demand for local public transport is expressed relatively as the number of passengers in relation to the number of inhabitants. this method of measuring demand refers to measures used in previous studies. the number of passengers (in relation to the population) was used, among others, by dargay and hanly (2002) and the number of journeys by matas (2004) as well as by romilly (2001). such operationalization has limitations, e.g. it omits the length of each trip (deb and filippini, 2013) or generates errors in the correct estimation of the exact value resulting from measurement difficulties. however, these imperfections have been considered acceptable in most earlier studies, as they have not produced bias in the final results. tables 1 and 2 show the operationalization of the factors influencing the demand for urban transport services. table 1: operationalization of factors influencing demand in the 2014-2017 period – factors related to socio-economic environment factors independent variables infl uencing demand city size (l.1.1.) population population density (l.1.2.) population per km2 affl uence of city budget (l.1.3.) per capita budget own revenues affl uence of local population (l.1.4.) per capita personal income tax unemployment rate (l.1.5.) index of unemployment table 2: operationalization of factors influencing demand in the 2014-2017 period – factors related to urban transport policies factors independent variables infl uencing demand ticket prices (l.2.1.) price of single ride ticket allowing for 30 minutes ride at least other than resulting from national law exemptions from paying for tickets introduced for large social groups* (binary variable 0.1) quality of urban transport services (l.2.2.) density of network and frequency of operation number of vehicle-kilometers per capita existence of other means of city public transport (than buses, e.g. tram, underground) (binary variable) note: * e.g. for school students, unemployed or – in extreme cases – public transport free of charge for all citizens. the method of testing our hypothesis is panel data analysis, based on the fixed effects model (fe)1. the selection of fe model was based on results of the hausman 1 as a robustness check we also used the random effect (re) and ordinary least squares (ols) models. their results confirm the most important conclusions of our test. 133 test. various sets of independent variables (from among those listed in tables 1 and 2) were tested, out of which we present only those that provided the greatest explanatory power of the model. we are aware of some of the shortcomings of the model. one of them is taking mainly bus travel into account as the means of public transport. in general, in most polish cities the main means of local public transport is the bus. but there is also a group of cities where the number of trips is an aggregate of bus, tram, underground trips and even bikes. therefore, vehicle-kilometers are also aggregated over different means of transport. following holmgren (2013) we must also consider another potential problem concerning the existing differing preferences between inhabitants of municipalities. but, because we are using the fe model, there is a municipal-specific effect in the model). this makes it possible to include unobserved factors, specific for each municipality, that influence the demand, which correlate with another independent variable. these factors might be related to, for example, demographic structure (this concerns the age structure or number of students), geographical or infrastructural factors. due to the fact that the distribution of most of our independent variables deviates significantly from normal, the variables which are used in the model are logarithms of the raw variables (the distribution of variables was analyzed through the jarkue-bera test). as mentioned above, all independent variables enumerated in tables 1 and 2 have been tested in the constructed equations; however, results presented in this article concentrate on the set of variables that brought the best results in terms of the explanatory power of the model. that final selection includes the following four variables: (v) number of vehicle-kilometers per capita, (i) per capita personal income tax, (p) price and (d) population density; the equation has the form: , 1 , 2 , 3 , 3 , , i t i t i t i t i t i i tln q lnv lni lnp d           comparing ticket prices is complicated as very diversified tariff systems in individual cities are used. even the category of ‘single ride ticket’ is not easy to define because it may depend on how long the trip is, and definitions applied in individual cities vary significantly. in our model we consider the price of tickets that allow for a single ride of at least 30 minutes. the median price for such a ticket in poland is just 2.7 złoty (less than 0.65 euro) and varies in our sample from 1.6 złoty (0.35 euro approx.) to 4.6 złoty (1.05 euro approx.). it is relatively low compared to mean gross monthly income, since it allows users to purchase more than 1,850 tickets per month. in fact, the real cost of using public transport is even lower, since most cities have introduced various forms of monthly or quarterly passes with preferential prices. for example, in warsaw the full price of a quarterly ticket is equivalent to just 19 single ride tickets per month. the dominant means of public transport in poland is the bus; in our sample just 11 out of over 80 cities provides an alternative (usually trams). taking the tested variables illustrating the organization of public transport into account, the largest variation can be found in the number of vehicle-kilometers per 134 capita. the median value is 27 but, in our sample, it varies from 7 to 144, i.e. the highest value is over 20 times higher than the lowest. 5. local public transport in polish cities – changes in demand polish cities enjoy considerable discretion in organizing their public transport services. most of the largest cities have created transport authorities, which contract transport services either from municipally owned companies or from private sector companies. in other, mostly mid-sized cities the transport services are directly organized and provided by municipal companies or in-house departments. in some cases, transport is organized through inter-municipal cooperation (the largest of such inter-municipal institutions operates in the agglomeration of upper silesia) and several smaller suburban municipalities purchase transport services from their larger neighbors. but, regardless of whether the service is purchased from private or delivered by municipally owned units, in each case the local government decides upon tariffs and indirectly controls the route network as well as the frequency of operation. demand for public transport services in poland has drastically decreased over the last 30 years. the decrease in the number of passengers by almost 60% between 1986 and 2017 is a result of many factors (figure 1). menes (2016) mentions several factors, including the economic crisis of the late 1980s and early 1990s, the crisis in urban transport related to the transfer of new tasks to local governments under the act on local government of 1990 without additional support from the central government, socio-demographic changes (e.g. an ageing population), a reduction in the quality of means of public transport with a simultaneous increase in service charges and the dynamic development of individual motorization. as regards this last factor, dydkowski et al. (2018) note a faster increase in prices of urban public transport in relation to fuel prices (their analysis covers the years 2007-2016). this contributes to a reduction in the attractiveness of public transport compared to the alternative of using a private car; on average more than every second resident in poland has their own car (dydkowski et al., 2018). the problem related to the dependence of the population on individual motorization is common throughout europe and was earliest recorded in western europe. in 2014, the share of car journeys in relation to all journeys made was 20 percentage points higher than in central europe (poliak et al., 2017). however, this is more the heritage of the distant past than the result of the processes taking place in recent years, in which the comparison of trends looks to be the other way around. in the years 2000-2014 the increase in the share of private car journeys was higher by more than four percentage points in the group of central european countries compared to western europe. this may mean that the number of motor vehicles in western europe has reached saturation level (in some large cities it has even started to decrease), in contrast to central and eastern europe, where it has continued to grow (poliak et al., 2017). analyzing the dynamics of the demand for urban transport services in poland, we can see that the declining trend has slowed down significantly in recent years. the 135 number of passengers carried in 2004 decreased by 54% compared to 1986. however, over the next 13 years (2004-2017) the decrease amounted to less than 10%. what could have caused this change? on the one hand, it may be the effect of the slow saturation with individual cars as discussed above. on the other hand, it may result from a change in the perception of urban transport services. some studies indicate that for several years now, there has been an increase in demand for this service in poland, mainly in the largest urban centers (wolański et al., 2016). in the next section of the article, examining the factors that influence the changes in demand for local public transport services, we limit ourselves to the relatively short period of 2014-2017, for which we managed to collect data covering a significant group of cities. the question arises as to what extent the trends of change in this period are representative (typical) compared to a trend that is characterized by a longer period of time. in this case, however, it was possible to collect data covering 2009-2017 period for a much narrower sample of 23 cities, additionally divided – in accordance with the suggestion from the above-mentioned work by wolański et al. (2016) – into two groups: smaller cities and cities with more than 150,000 inhabitants. as can be seen in figure 1, since at least 2009 a stable number of passengers has been observed. but the demand has been slowly growing in this period in large cities (figure 2), while in smaller cities it has been constantly decreasing (figure 3). thanks to this analysis of a longer trend, we can formulate our conclusions based on the empirical study presented in part 5 with a greater amount of certainty. 0 1 2 3 4 5 6 7 8 9 10 1986 1990 1994 1998 2002 2006 2010 2014 2017 figure 1: demand for urban public transport in poland 1986-2017 – number of passengers (in million) source: own calculations based on menes (2016) and main statistical office data 136 340 350 360 370 380 390 400 410 420 2009 2010 2011 2012 2013 2014 2015 2016 2017 figure 2: number of passengers per number of population in 2009-2017 in cities over 150,000 source: own calculations, n=10 60 65 70 75 80 85 90 95 100 105 2009 2010 2011 2012 2013 2014 2015 2016 2017 figure 3: number of passengers per number of population in 2009-2017 in cities below 150,000 source: own calculations, n=13 6. results of empirical analyses 6.1. city size as a factor explaining the demand for local public transport the data presented in the previous section suggest a closer look at the impact of city size on the changes in demand and size for local public transport is necessary. in the sample of cities surveyed the change in 2014-2017 period ranged from a decrease of 19% to an increase of 18%. in over 60% of cities there was a drop in demand. however, in less than 40% of cities we observed a reverse trend: figure 4 suggests that the observation of wolański et al. (2016) about the special situation of the biggest cities is to a large extent correct. however, this dependence is not linear and, therefore, the correlation coefficient between the size of the city and the change in demand for public transport turns out to be at a low level. 137 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% <50,000 50-100,000 100-150,000 over 150,000 decrease over 5% modest decrease (1-5%) stabilization (+/1%) modest increase (1-5%) increase over 5% figure 4: changes in number of passengers in 2014-2017 period and city size source: own calculations on the basis of data from the chamber of urban public transport, n=85 the 150,000-inhabitant level turns out to be a significant threshold. the change in demand is greater than zero in more than two-thirds of the cities belonging to this group. meanwhile, in all groups of smaller cities, there are predominant cases where the downward trend in the number of urban transport passengers continues. additionally, this dependence is confirmed by the results of the t-student test for independent samples, which show that in cities above 150,000 inhabitants, the annual change in the relative number of passengers is higher than in smaller cities. the impact of the size ceases to be so clear when we compare individual groups of cities with less than 150,000 inhabitants. while the percentage of cities with a significant decrease in passenger numbers decreases significantly with the population growth, the distribution of cities with a growing demand for local public transport is much less clear. these observations are only a starting point for further analysis, in which we examine the impact of the various explanatory variables on the volume and changes in demand for local public transport services more systematically. 6.2. factors affecting demand for local public transport services – explanatory model the constructed regression model shows significant predictive power. the adjusted r2 indicator is as high as 0.68 and the whole model has significant explanatory power (important at the level of 0.001). the most powerful independent variable is the quality of urban transport, measured in our model by the volume of transport work (translating into the frequency and density of the network). an increase in urban transport performance results in an increase in demand for this service. 138 on the other hand, the results concerning the ticket price are surprising. the variable is not significant. this is a different result from the one obtained earlier in many analyses conducted in other countries (matas, 2004; deb and filippini, 2015; dargay and hanly, 2002; brechan, 2015; daldoul et al., 2016). this suggests that in polish conditions the ticket price is not very important for the passenger, probably since it does not exceed the threshold at which demand becomes sensitive to change (cf. dargay and hanly, 2002). another positive (though rather weak) impact on demand is the population density. in cities with a higher population density, there is a higher nuisance associated with increased traffic and in this case public transport can be a more advantageous alternative. moreover, personal income is of weak significance. it is positively correlated with our dependent variable which means that the greater the welfare of the inhabitants, the higher the demand for public transport. it suggests that city public transport has stopped being considered an inferior good, although this relationship is very weak. the population size requires a separate comment. we know from earlier discussion that size makes a difference in the demand for public transport; however, the relationship is not linear. but, due to very high collinearity with other independent variables, it was eventually excluded from our model, so its role is reflected in an indirect way only. table 3: results of the fixed effects modela explaining demand for local public transport in 2014-2017 variable coeffi cient level of signifi cance of regression coeffi cient ln (vehicle-kilometers per capita) 0.178 0.001 ln (per capita personal income tax) 0.0028 0.071 price -0.035 non-signifi cant density 0.00001 0.028 note: a f(4,85) = 12.31. r2 = 0,68 (r2 within = 0.133). number of observations: 331. number of groups: 86 source: own calculations in addition, for those independent variables which turned out to be significant we have calculated coefficients of demand elasticity, which are based on single independent variable regression models, constructed for those variables which proved to be significant in our main multi-variable regression (see table 4). the increase of frequency of bus operation stimulates the demand – one more vehicle-kilometer per capita results in 0.678 more journeys per year for the average resident of the city. the effect of population density is similar – an increase by one (person per square kilometer) translates into 0.008 additional journeys by the citizen. finally, increased personal income generates additional journeys also, but in this case the relationship is very weak. 139 table 4: coefficients of demand elasticity for city public transport in poland demand elasticity coeffi cient signifi cance of the model vehicle-kilometers per capita 0.678 0.0003 per capita personal income tax 0.018 0.127 population density 0.008 0.000 source: own calculations 7. discussion and conclusions the study confirms that when estimating the parameters of the demand function for public transport services it is necessary to consider both the environment in which urban transport functions (to which our first hypothesis referred) and the factors related to the policy pursued by the city (to which the second hypothesis referred). this does not mean, however, that all the detailed hypotheses have been confirmed. the most powerful independent variable – as in some previous studies conducted in other countries – is the density of the network of city public transport (measured in our study by the total transport work). similar observations have appeared earlier in polish literature in relation to railway connections – increasing the frequency of connections often turns out to be a recipe that helps to reverse the trend of falling passenger numbers (król and taczanowski, 2016; trammer, 2019). as in several earlier studies, we treated this variable as an estimate of the quality of the service offered. the very strong impact of accessibility on demand growth may indicate the desired direction of local authority transport policy. as shown in section 4, the decline in demand most often appears as a problem in the group of medium-sized cities (between 60,000 and 100,000 inhabitants). our results show that actions aimed at reducing the frequency of journeys or eliminating some connections may exacerbate the problems to a greater extent, and not constitute their remedy. they will not solve the problem of the decreasing number of passengers using public transport. this type of action – although in the short term contributes to the reduction of the cost of the service – in the long term will cause the deepening of negative downward trends and will contribute to the eventual marginalization of the urban transport service. indirectly, it will generate a spiral of problems related to the congestion of streets with passenger cars, increased noise and air pollution. interestingly, out of the two quality operational variables tested at the model building stage, only the availability measured by the amount of transport work turned out to be relevant. the existence of alternative (to buses) mean of public transport has not improved the prediction power of the model. similarly, the variable expressing the rolling stock age structure (tested in our study to a limited extent only, due to problems with data availability) – similar to the romilly study (2001) – turned out to be insignificant. this is an important result in polish conditions, since public intervention in public transport often targets this factor. only in 2018 did municipalities invest pln 2.15 billion (about 500 million euro) in the purchase of rolling stock and 140 the development of public transport networks, and in the last five years (2014-2018), a total of pln 6.9 billion2 (more than 1.5 billion euro). this, of course, does not mean that rolling stock renovation does not make sense, but indicates that this is not a major factor in attracting new passengers. far from the decisive role of the rolling stock age in generating demand for public transport was also indicated in some earlier studies (wolański et al., 2016). as in the earlier brechan (2017) study, it is quality, not price, that plays a more important role in generating the volume of traffic. the price of a single ride on local public transport in poland is not very important for residents, nor is the introduction of various kinds of discounts and exemptions from fares. in any case, the impact of such measures cannot be quantified using the chosen statistical methods. of course, the situation could change radically if budget subsidies for the operation of public transport were eliminated. the price would need to rise about three times its current rate and it would significantly exceed the price elasticity threshold, so the demand would start to fall rapidly, with all the negative consequences of such a trend. public transport is a merit good and subsidizing its operation, which allows tariffs to be kept at an acceptable low level, remains an important element of transport policy. the impact of the wealth of the population on demand is perhaps the most difficult to interpret. in our main model a higher level of personal income translates into a higher demand for city public transport, but the relationship is of very low statistical significance (close to the 0.1 threshold). and, depending on the exact model specification in some other variants, it turned out to be insignificant or – in some others – the sign was changing to negative (with a similarly low level of statistical significance). we believe that it reflects the ‘transitional’ character of the variable. until recently in poland, public transport used to be – similar to results of previous research (e.g. dargay and hanly, 2002; bresson et al., 2003) – an inferior good. along with the increase in wealth, preferences regarding the choice of means of transport were changing; wealthier people often decided to move by car. but in recent years the cultural shift related to increasing climate change and environmental consciousness, as well as increasing traffic jam problems and the increasing quality of public transport in many polish cities, a change of attitude has come about. using public transport has become increasingly popular (or even fashionable) among middle class citizens. another illustration of the changing perception of private cars as a major means of city transport is provided by the extremely fast development of city bike rentals in several major polish cities over the last few years. but the shift started relatively recently and has not been completed yet, so there are two competing views of public transport at the moment that coexist in local communities. this complex interpretation explains why the relationship is weak, and swings between negative and positive depending on the detailed model specifications. 2 own calculations based on cities’ reports on budget execution. 141 the size of an urban center is also important – maintaining high demand is easier in the largest urban agglomerations. however, the impact of this variable is non-linear. it is important when we are talking about a group of the largest cities, roughly coinciding with regional capitals. 15 out of 18 regional capitals have over 150,000 inhabitants, and it is in this group that the changes consisting in the increase in demand are the most dynamic. however, when we are dealing with a city only slightly or much smaller than this size threshold, it is no longer of great statistical significance. contrary to the original assumptions, other features of the social and economic environment, such as the wealth of the city budget or unemployment levels, turned out to be irrelevant in relation to the demand for local public transport. in conclusion, research on demand determinants is an important element of urban transport policy planning and our results confirm that city policies do matter in the generation of demand for local public transport. this study helps to fill a gap in the existing knowledge on the actual impact of various factors on the demand for public transport services in polish cities and, at the same time, it opens the space for further research in this area. one potential improvement of our results might be provided by the collection of data, which is currently missing, but which may have a significant impact on the demand for public transport. the speed of city trams and buses is a good example of such missing information. in the future it would be also worth taking into consideration the impact of variables that are not directly related to the public transport offer, but to activities in its environment, such as road construction, parking policy or the development of bicycle paths and city bike systems. we do not think that this research would radically change the meaning of the conclusions of this article, but it could enrich and complement them. aknowledgement: this work was supported by national science centre (narodowe centrum nauki) under grant no. 2015/19/b/hs4/02898 (‘fees for local public services – financial and political importance’). references: 1. bąkowski, w., ‘metodyka badania wpływ segmentów rynku na popyt w miejskim transporcie zbiorowym – ujęcie modelowe’ [research methodology on the impact of market segmentation on the demand on urban public transport – a model approach], 2014, transport miejski i regionalny, vol. 3, pp. 4-8. 2. brechan, i., ‘effect of 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of entrepreneurship presents a real challenge, given that today’s labor market is highly dynamic. projections made for the next twenty years indicate important changes. the present study capitalizes on a research carried out in the romanian academic environment, within three universities. the sample included students and employers from the public sphere. our research reveals that the services available in three romanian universities are developing in two main directions: one concerns working with students and developing their skills to become attractive on the labor market. another direction is one that mediates between the academic world and the business environment. the results obtained through our research capture the policies and services of higher education in order to better train students and increase their employment opportunities. the options and expectations of students regarding the insertion on the labor market are contrasted to those of employers. this is the only way we can think of functional and flexible models for educating future employees in order to be able to face the new challenges of the labor market. keywords: employability, expectation structure, entrepreneurship, public policies, local policies, sustainability. the labor market, employability and entrepreneurship in the romanian public sector nicu gavriluță nicu gavriluță professor, department of sociology and social work, alexandru ioan cuza university, iași, romania e-mail: nicolas@uaic.ro doi: 10.24193/tras.61e.3 published first online: 10/28/2020 transylvanian review of administrative sciences, no. 61 e/2020, pp. 46-69 47 1. current challenges concerning labor market dynamics the insertion of youth on the labor market is a present-day issue, being debated at european and global level. due to the multitude of factors influencing the evolution of the labor market, the impact of new technologies and artificial intelligence occupies an important place on the public agenda. every year in davos, switzerland, the world economic forum discusses, among other things, the developments and implications of a number of global changes in the labor market. the most important political leaders, specialists and influential executives correlate climate change, economic and banking changes, migration, but especially new technologies with the serious readjustments of the labor market in the coming years. thus, the theme of the 2016 edition of the world economic forum was the fourth industrial revolution. the unanimous opinion of the participants was that we are at the beginning of the fourth industrial revolution, and the first effects will be seen in maximum 10 years. this revolution will produce visible changes in terms of lifestyle, especially in the labor market. new professions will appear and many more will disappear. for example, the report ‘the future of jobs’, published by the world economic forum, shows that 65% of children who start school now will have professions that do not exist today. similarly, following the analysis of an important database (15 global economies representing 65% of the global workforce), it has been predicted that around 7.1 million jobs will disappear in the next 5 years and 2 million new jobs in the it and engineering sectors will appear instead. in the report, the forecasts for romania are quite worrying: 60% of existing jobs will disappear in the coming years due to the development of new technologies. the effects of these shifts on the labor market can be dramatic. a european commission study, for example, shows that 41% of employees in romania are ‘digitally illiterate’. how do we meet these challenges triggered by the new technologies? are we ready to face reconfigurations of such magnitude? in fact, two scenarios have been set up in davos: an optimistic one (manufactured work will disappear, and people will work more lightly, will be better paid, will have more free time which they could dedicate to hobbies or creative activities) and a pessimistic one (social inequities will deepen, i. e. the poor will become poorer and the rich will become even richer). the fact that the great challenges are triggered by the field of technology and artificial intelligence (chiacchio, petropoulos and pichler, 2018; gavriluță, 2018) is also demonstrated by the european commission (2018) report ‘employment and social developments in europe’. the report’s figures show that the labor market is in a swift rearrangement, with the services sector thriving to the detriment of production. in the european union, the it sector registered an increase of 80% in 2015 compared to 2000. according to the same report, significant increases were reported in the financial sector, in professional, scientific, research and technical activities or real estate. on the same note, that of the changes initiated by technology, is the interview given on july 25, 2017 by dieter zetssche, the ceo of daimler ag, a concern that 48 owns the well-known automotive brand mercedes-benz. his predictions are much more direct and he announced a future world completely different from the one we know today. ‘from 2020 onwards, the car industry will change completely and our children will call cars by means of an application, cars that will, of course, not require a driver. no one will own cars anymore, but we will all have access to them. we will only need 5% of the parking space we need today. 90% to 95% of parking lots will become playgrounds. 1.2 million people die every year in traffic accidents. the accident rate is now 1/100,000 km; once we will have autonomous cars on the entire earth, the rate will be 1/10,000,000 km’ (delahunty, 2017). the changes will affect insurance agencies (lower accident rates), the real estate market (people will prefer rents due to greater mobility in the labor market), health and medical services, justice, agriculture and other fields of production. for example, dieter zetssche announced in his 2017 interview: ‘tricorder x will be launched this year, a digital mechanism similar to those in star trek. it analyzes the retina, the blood sample and the breath by his smartphone. this is how medical tests will be carried out. in a few years, a significant part of the medical system will disappear (collection and interpretation of tests). 54 markers will give verdicts in various diseases’. in court, lawyers will be replaced by specialized software, which will reduce their number by 90%. in addition, legal solutions will be given in just a few seconds with an accuracy of 90% compared to the advice received from lawyers that has an accuracy of 70%. farmer robots and the introduction of 3d printers in the industry will transform the two fields by making a significant human workforce available. for example, ‘in china, they have already printed in 3d and built a complete six-story office building. by 2027, 10% of everything that is produced will be printed in 3d’, says dieter zetssche in the same source. the scenario described by the daimler ag ceo seems to come from a sci-fi film, as it breaks the boundaries between fiction and reality (gavriluță, 2017). however, it is based on a series of real data in the current field of technology and covers precise periods, estimated between 5 and 20 years. therefore, it needs enough attention. carl benedikt frey and michael osborne also published ‘the future of employment’ (frey and osborne, undated); the two build a mathematical algorithm based on which they calculate the probability that some professions will be completely computerized. therefore, the transformations triggered by the field of high technology require a keen interest, both from economic agents and scientific research. in this respect, according to the report of a project carried out by the romanian academy in 2015, it is expected that the interest for education will increase ‘in the context of a dynamic society, subject to technological pressures’ (vlad, 2015, p. 24). if this hyper-technological world is overlapped by a number of demographic changes (birth, mortality, migration), climate change (global warming) or a series of cultural, political and ideological factors, we could get an extremely complex picture in terms of the labor market’s evolution in the foreseeable future. research conducted in this regard highlights this dynamic of the labor market in recent years among 49 higher education graduates (mora, teichler and schomburg, 2007, pp. 11-34; schomburg and teichler, 2016). is the young population ready for such changes? can the existing education system deliver a workforce capable of meeting these new challenges? do current public policies favor adaptation and ongoing professional training? these questions target the young population who is going through a full cycle of educational training and who, naturally, should be well connected to the social and labor market realities. we will take into account first and foremost the data regarding romanian youth. a study conducted by ins (the national institute of statistics) in 2016, later published under the title ‘youth access to the labor market’ and capitalized in the report ‘forecast of developments and trends in the labor market – threats and opportunities. 2018’, highlighted an interesting situation regarding young people between 15 and 34 years old in romania. it is described in the figure below. figure 1: youth breakdown according to education and economic activity, on age groups (%) source: ins, 2018 the image clearly shows us that in today’s romanian society, education training does not have a continuous character. it is structured as a distinct period in professional training and only overlaps to a very small extent to the activity on the labor market. once they finish their studies, young people look for jobs and no longer dedicate time to their professional development. education may be given a utilitarian role, as it is perceived as a passport to occupying positions in society and on the labor market. at least for some young people, access to higher education involves the acquisition of a cultural and educational capital that can be exploited in the realm of power and symbolic exchanges, ‘allowing access to dominant positions’ (bourdieu, 1999, p. 4; bourdieu, 1970). 50 of course, in addition to the symbolic and cultural dimension (social prestige, the prospect of accessing high social positions, social recognition, etc.), academic education has a practical dimension as well, given by the specialization in different fields. however, this practical dimension also contains a symbolic layer. our research shows that their choices are not entirely rational. they are not the result of a one hundred percent precise, pragmatic calculation. this refers to a research carried out in 2018 in several academic centers in romania where we organized focus groups and discussions with students and employers. the topic dealt with the projections and expectations of university students and the labor market. part of this research was carried out in a larger project conducted by the romanian academy entitled ‘developing the capacity of the ministry of national education to monitor and forecast the evolution of higher education in relation to the labor market’ – sipoca 3, funded by the european social fund through the operational program administrative capacity (romanian academy, undated). the theory of rational choices is practically refuted in this case. our research shows that the actions of actors are not always rationally shaped by precise ideals (scott, 2000). many students choose their faculties and majors according to certain models they have (friends, acquaintances, etc.), depending on the ideals and projections of their family with regards to professional achievement, depending on the professional prestige and opportunities the programs offer on the labor market, etc. the formative and continuous role of education emerges too little from the data provided by ins in 2016. figure 2: distribution of unemployed youth not included in formal education, by level of education (%) source: ins, 2018 the same source indicates a relatively low share of young graduates of secondary and higher education who are employed. this draws attention to secondary and post-secondary education and to how it relates to our labor market. practically 37.7% of high school graduates did not occupy any place on the labor market in 2016. ins figures also show that graduates with a general background have a lower absorption on the labor market than those who are trained in specialized fields. among 51 the latter, fluctuations are quite small, especially concerning it, followed by health, social assistance (d9), business, administration and law (d4) (see figure 3). although the information processed and provided by ins does not reveal anything about the activity of young people in the fields in which they were trained or in related fields, we can easily conclude that the labor market in romania values specialized training. figure 3: share of unemployed youth among those not included in education, by areas of training according to the highest level of education completed (%) source: ins, 2018 a rather interesting prediction, launched in 2017 in ‘occupational structure in european countries: what do forecasts predict?’ (vishnevskaya and zudina, 2017, pp. 109-129) announces important changes in the structure of the labor market in eu countries, members of the oecd (organization for economic cooperation and development). thus, in the next 10 years the share of white-collar workers (i.e. highly qualified people) on the labor market will increase, as well as the segment of specialists in technical fields and engineering. according to the same study, areas such as health and technological innovation will produce a demand for specialists on the market, and the number of blue-collar workers will be declining. at eu level, forecasts are made by the european center for the development of vocational training (cedefop, 2018), based on data provided by eurostat. the forecasts made by this center distinguish between newly created jobs and those that require replacement. figures for 2018 show that the workforce is steadily declining (from 8.8 million in 2020 to 8.2 million in 2030). the most dramatic decrease in employment for the next 10 years will be recorded by the age groups 25-29 years old (13%) and 30-34 years old (28%). the age range 20-24 will benefit from a slight stability and growth on the labor market over the forecast period. 52 cedefop (2016) forecasts for romania show a general downward trend in the case of people with secondary education and an increase in the percentage of those with higher education, but also those with a low level of education. this may be a consequence of the demographic decline, but also of the reconfiguration of the labor market in the next decade. figure 4: employment forecast by level of education, romania (thousand people) under these circumstances, we wonder: what is the answer of romanian universities, as pools for the training of future specialists? what is students’ perception of labor market opportunities and what are their expectations? what is the opinion of employers and the business environment? with all these in mind, the aim of our research is to follow to what extent the expectations of employers and students connect with the strategies of large romanian universities in order to employ people and ultimately develop a set of appropriate public policies. 2. the methodology of research our research was exploratory and took place on three main levels: the study of university strategies to increase employability; students’ expectations regarding employment opportunities; and employers’ expectations of future graduates with higher education. the sample was random and it was formed on the institutional-educational level made up of three representative romanian universities (the university of bucharest, ‘alexandru ioan cuza’ university of iași and ‘babeș-bolyai’ university of cluj-napoca). there were 12 focus groups with students from different academic centers and 12 focus groups with employers from the same academic centers. the empirical research took place in 2017-2018. 53 the general objectives of the research were: – identifying the strategies and services offered by the three universities to students in order to increase employability; – identifying the structure of students’ expectations regarding employment on the labor market; and – identifying the expectation structure of employers in terms of training/formation within universities, but also in terms of students’ abilities. the research hypotheses were the following: – employers’ expectations regarding the profile of higher education graduates differ from the current offer; – the three universities have special services and programs that support students and graduates; – students’ expectations regarding future jobs exceed the supply on the labor market; and – students show a certain pessimism regarding employment opportunities on the romanian market, in accordance with the type of studies completed. the methods used are limited to a qualitative approach, one that involves combining documentation with the focus group. the choice for these methods is owed to the fact that, now, there is a multitude of statistics at national and european level concerned with the employment of young higher education graduates. but they do not offer the perspectives of the social actors directly involved: universities – students – employers. here is the novelty brought by our study. through our approach, we want to highlight the fact that social policies in romania must take into account the actual situations and exploit the expectations of the social actors involved. table 1: the document analysis grid academic strategies in order to increase employability topic typology actors involved activities career orientation studies student programs to increase employability relations with the business environment source: the author the documentation took place in two stages. the first stage involved a statistical documentation on the employment situation of graduates in romania, in relation to what is happening in europe. the second stage involved identifying the main strategies to enhance employability proposed by the three universities. given that the focus group is a method used in qualitative research – especially when talking about homogeneous groups (bulai, 2000; chelcea, 2007; morgan, 1998) – the technique has proven very effective in studying the expectations of students and entrepreneurs. in our research, the focus group also gave us the opportunity to observe how some ideas circulate within the group, then they are owned 54 and eventually form group opinions (krueger and casey, 2005; de singly, gotman and kaufmann, 1998). the number of participants varied between 8 and 12, and the questions launched for discussion were limited to the following topics: (a) academic education and labor market requirements; (b) employment opportunities on the romanian labor market; (c) skills and expectations on the labor market; and (d) services and support programs for cooperation between universities, students and employers. table 2: the analysis grid used for students students’ expectations regarding employment opportunities topics sub-topics remarks perceptions on academic studies reasons for choosing to further the studies choosing a fi eld evaluating opportunities offered by academic training relations between theory and practice ongoing training and specialization relations with the business environment types of hands-on experience in the fi eld of study internships attending programs, workshops and other activities perspectives and opportunities future projections in career expectations contexts and realities short-term projects long-term projects source: the author table 3: the analysis grid used for employers employers’ expectations regarding employment opportunities topics sub-topics remarks perceptions on the students theoretical knowledge practical training specialization and ongoing training skills required from employees human quality goal-oriented communication skills teamwork abilities willingness for professional development creativity future projections expectations contexts and realities short-term projects long-term projects source: the author 55 the duration of the focus groups varied between 1 hour and 30 minutes and 2 hours. the analysis of the discussions highlighted certain typologies, perceptions and aspects among the population investigated. starting from the above-mentioned analysis grids, our research insisted on the sub-topics that enjoyed the greatest interest and benefited from a clear and edifying approach from the focus group participants. we then tried to build a series of typologies and a grid of criteria that can better explain, from the perspective of training and expectations, the employment situation of higher education graduates on the romanian labor market. 3. universities, students, employers. expectations, requirements and strategies on the labor market 3.1. academic strategies to enhance employability during 2017-2018, we carried out a research that focused on identifying the strategies of three romanian public universities on stimulating career development and entrepreneurship; the sample included the university of bucharest, ‘alexandru ioan cuza’ university of iași and ‘babeș-bolyai’ university of cluj-napoca. thus, the university of bucharest has a career counseling and orientation department (dcoc) whose organizational structure includes: information center, professional guidance and counseling (ciocp) and the labor market relations office (brpm). the department develops on three main pillars: counseling and career orientation services, training and workshops for information and promotion. the career counseling and orientation department of the university of bucharest conducts a whole series of activities that follow a well-developed strategic plan aimed at developing the services offered to students and graduates, strengthening the university’s relations with the business environment and developing projects or events for an easier transition from student life to employee life (university of bucharest, 2018). dcoc provides students with a guide that includes details on the usefulness of counseling services, various forms of professional experience that students can access (volunteering, internship, company visits, etc.) and provides examples of drafting cvs and letters of intent. the guide is interactive because students can present their personal experiences from internships or volunteer programs. at the same time, the university of bucharest manages a website that presents career opportunities (university of bucharest, undated 1 and 2). among the events organized by the university of bucharest through the department of career counseling and guidance, there are: unibucpm (interactions between employers, teachers and students), career days (professional training, presentation of opportunities, internships, volunteering and practice), meetings of the education-industry council (meetings between potential employers, teachers and students), career education caravan (seminars with high school students on decision management, self-knowledge). 56 ‘alexandru ioan cuza’ university of iași through the department of services for students and graduates (dssa) provides services such as: educational counseling, psychological counseling and career counseling (focuses on the main aspects of career projects, identifying opportunities and strategies for presenting individual skills and potential). within dssa there are a number of centers such as the center for educational, psychological and special needs counseling – ccepp, center for professional information, career guidance and placement – cipo (provides professional planning services), alumni center (facilitates the process of communication between graduates and academia); insert center (conducts studies and thematic research focused on investigating the insertion of students and graduates on the labor market). the activities regarding the face-to-face interaction of students with professionals and representatives of public and private institutions are: the living library – read a professional (2011-2016); having tea with a professional; uaic career days (trainings and workshops on career development); open doors days at uaic; freshmen days; university caravans; welcome to uaic; trainings and thematic meetings. the insert center periodically prepares a report on the insertion of uaic graduates on the labor market, a document that includes information on the rate of professional absorption of former students of the university. ‘babeș-bolyai’ university (ubb) in cluj-napoca has the center for career, alumni and business relations (ccarma), accredited by ajofm cluj-napoca. it is noteworthy that the ccarma website hosts an online recruitment platform called smart dreamers (undated) which posts constantly updated job announcements, online counseling services, a platform with announcements on career related events in ubb. the career, alumni and business relations center organizes thematic workshops, trainings, services for companies/ institutions that want to promote their job offers. ubb focuses on a series of hands-on activities with students, aimed at preparing them for the labor market: correct drafting of cvs, swot analysis, design of smart objectives (specific, measurable, accessible, relevant and time-bound objectives), identification of personal skills, obtaining recommendations, outlining a correct personal image in the online environment, uploading cvs on various specialized platforms, following the activities of professionals in the field of interest, identifying events and opportunities in career development. in general, the services offered focus on career guidance, thematic workshops, evaluation and testing, internships and job promotion activities. therefore, the services available in the most important romanian universities aim at two main directions: one concerns work with students and the development of skills that make them attractive on the labor market. another direction is the one that mediates between the academic world and the business environment. thus, in all three public universities, the services want to be an interface between academic training and professional life, between the academic environment and employers. the relationship with them and the business environment is materialized in promo57 tion activities, partnerships, internships (moldovan and raboca, 2019, pp. 67-85) and training, etc. the information provided to students, the databases and the consulting services offered become important resources in making the right career decisions. equally, these services can provide employers with concrete feedback on students’ professional expectations. we consider, as well, that the analyzed universities continue to exploit the image capital given by the academic tradition and the cultural patterns on the labor market. other services and programs developed quite well within european universities, which can be a source of inspiration for us, are the following: – promoting and sustaining contacts between successful alumni and current students (oxford university careers service, 2018); – developing the entrepreneurial(ship) environment in universities; – increasing the number of successful startups based on innovation and technological development (for instance the exist program in german universities); – development of a service-learning type education that focuses on the community, on its opportunities and needs (for example, the knowledge antennas program thanks to which the university ‘roviri i virgili’ in spain organizes various actions and events within and for the community aimed at mutual learning, organizing internships in the community, support services, etc.); and – development of mentoring networks for young would-be entrepreneurs. the above-mentioned romanian universities continue to function as elite institutions of romanian academic education (in official rankings, but also through openly assumed missions). they focus on the training and education process, managing to adapt to the new challenges of the labor market. today, romanian universities are looking for solutions to better manage the absorption of graduates on the labor market. the services provided to students, the establishment of new specializations or academic modules, the relations with the economic environment are just some of them. basically, the humboldian university model has undergone transformations over time. today, concepts such as multiversity or entrepreneurial universities are taking shape in institutional constructions that develop a high adaptability, following the transformations on the labor market (ișan, 2008). under these conditions, the initial ideals of the university to deal with the ‘development of the moral culture of a nation’ (sîrghi, 2017) are turned into utilitarian ideals that meet the demands of the moment. so, a dilemma arises: does today’s university train young people with high morale, able to develop permanently, or rather specialists for the labor market? 3.2. students’ expectations regarding employment opportunities we conducted several focus groups with the students, looking into their career options and projections. the answers are extremely varied and describe patterns and expectations that create, in our opinion, distinct typologies of the romanian student. 58 3.2.1. students with a well-defined career project they show curiosity, the desire to learn more and to do research. ‘i want to study and gain as much knowledge as possible by applying for scholarships at various european universities and pursuing a master’s degree. i think it is very important to be well prepared and always follow your dream. i want to become a very good journalist’ (d.i.). ‘since high school, i have set precise career goals and i think i am on the right track. i’m getting ready for that’ (m.r.). young people who show a clear orientation come with high grades in high school, have good results in both high school and college, benefit from a classic family education and have solid role models of professional success. this clear career orientation characterizes students from all specializations and, in particular, from the faculties where the selection is made based on an exam. this requires better prior information and greater awareness of and commitment to professional training. ‘i knew from the very beginning what i was committing myself to. i know what opportunities the college i attend offers me. anyway, i will make the most of all the opportunities, and my parents are very supportive’ (a.a.). the expectations of these students from their careers are quite high, and future projections target the peak of professional achievement. 3.2.2. nonconformist students they do not necessarily have high grades, but they distinguish themselves by an unusual ingenuity and curiosity, are extremely creative, mobile and difficult to include in a pattern. ‘i did not know what to expect. i said i would give it a try. now i see it’s interesting. i have some professors that i like a lot and they advise me. i don’t really know what will come out, but i like experimenting. the world is evolving and i will figure it out as i go along’ (g.t.). ‘i enrolled in college just like that ... without anyone telling me what i could do. i don’t have a clear career plan, but i like to find out what’s around me, what my colleagues from other faculties are doing. it’s interesting to know how others are doing. maybe i’ll open a business … i don’t know yet. i like to combine things. i will try a master’s degree in another field. i feel that will help me’. these students can offer pleasant surprises in their professional development and can make a passion for research. 3.2.3. students who discover themselves our meetings with students show that quite a number of them do not come up with a clear career plan. some young people choose a specialization by chance, others as a result of recommendations or the wish of their parents. others end up in college accidentally, because they failed in other specializations due to competition. in such cases, marked by uncertainties regarding their career, the student ends up discovering affinities with the specialization he(she) is pursuing. ‘i hardly knew anything when i came here. it was quite hard … little by little, i realized i could learn interesting things and make plans. it’s true, i also have the chance to have supportive 59 teachers and my colleagues are ok. i know many colleagues who started just like me. now they’re going to internships, they have scholarships and have more insight into how things work’ (t.p.). under such conditions, the student begins to accumulate knowledge and develops constantly. we are dealing with a certain perseverance and determination that produce spectacular effects at the level of each training cycle. 10 years later, at graduation reunions, we find that some of these students have very successful careers. 3.2.4. careless students they pursue university studies for various reasons: because it is what their parents wanted; they were bored; because it ‘works well’ from the point of view of the resume; because the diploma can be, after all, a useful symbolic capital, etc. ‘everyone has diplomas these days. it is no big deal … i don’t know what i’ll do. i’m still having fun and i will figure it out later’ (l.s.). in general, these students have a low performance and no projects in terms of their professional career (‘we will figure it out on the spot’ d.r.). their professional development is random, being left to chance. 3.2.5. pessimistic and complaining students they are average and mediocre students. some of them make a certain effort to meet the requirements of university education and have very high expectations. in general, they are dissatisfied with the education system, teachers, the assessment system, the opportunities offered to them, the economic environment and the labor market, etc. ‘it is very difficult to find a well-paid job where you can practice what you learnt. if you don’t have connections or political support, it doesn’t work’ (c.t.). ‘everything is going bad here. we will have to emigrate in order to accomplish something. the school always stresses us with theory, not with concrete things that are required on the market’ (b.a.). in this case, the blame for all the failures and disappointments of life is placed outside, and one’s own responsibility is much diluted. the number of such students increases as their knowledge and performance at the university decrease. such attitudes can be explained from the perspective of social psychology by the fundamental error of attribution. this approach was first mentioned by lee ross in 1977 and explains people’s tendency to underestimate contextual, institutional situations in personal success, and to overestimate their own qualities (ross, 1997). beyond these typologies that outline a certain mentality regarding education and the students’ status in the equation of professional training, the reaction of concern regarding their professional future is extremely common. but what do students really want? (onofrei et al., 2017). the answers can be summarized as follows: well-paid jobs in the fields in which they were trained or in related fields, career development opportunities, flexible schedule, healthy working environment and safe working conditions, stable jobs ensuring a good work-life balance, jobs located close to home, and bonuses, incentives and other facilities. 60 this synthesis of students’ individual desires for their professional future indicates a somewhat conservative outlook for a highly flexible, ever-changing labor market. basically, the romanian student wants material satisfaction, stability, predictability, safety and enough time for personal and family life. risk, initiative, challenges or professional mobility are variables found to a lesser extent in the discourse of students who are asked to make individual professional projections. these requirements are observed by human resources specialists and employers. of course, there is also research at the organizational level that somewhat changes the perspective on students’ relationship with the labor market. a series of research evoked by the national alliance of student organizations in romania (anosr) brings to attention the idea of entrepreneurship among students. thus, the barometer of entrepreneurship education among romanian students (2014) highlights very interesting facts: – 52% of students want to have their own start-up; – 57% of students want to be entrepreneurs rather than managers; – 97% of students are willing to work hard to obtain what they want; – 82% consider that they have at least one entrepreneur among their acquaintances; – 56% of respondents say they have at least one entrepreneur in the family; and – 44% of respondents believe that universities prepare them to become entrepreneurs only to an average extent. we must mention that the research aims at assessing students’ views on entrepreneurship, and the working tool was designed specifically for this purpose. another research (onofrei et al., 2017) carried out on a representative sample at the ‘alexandru ioan cuza’ university of iași in 2017 presents the students’ preferences in accessing information about the labor market: – use dedicated websites such as best jobs, ejobs, hipo: 79,68%; – apply to different companies: 51.58%; – access their own social network (friends, acquaintances, family): 47.62%; – follow the careers section of various companies: 45.51%; and – attend career fairs and events: 41,68%. given the figures and information presented here, we can get an idea of how students project themselves on the labor market. thus, we can say that the concept of professional success dominates, in particular, by making the most of the graduation diploma on the labor market. according to wallerstein et al. (2015, pp. 57-107), the diploma becomes a currency of social respectability that helps to secure jobmatching, as much as possible, the training. in an extremely competitive job market, those who have additional skills and qualifications will have more chances to make a difference. in general, the idea of mentoring or internship post-graduation disappears from the students’ projections. this is rather the case in the german education system, considered more egalitarian and focused on the acquisition of skills (titieni (hatos), 2016). the answers received show the idea of acquiring a specialization or doing fur61 ther studies is more and more popular, in order to harmonize the training with the demands of certain positions. often, undergraduates do a master’s degree or return to complete their studies due to the demands of the professions they have in mind. some of them participate in training modules offered by employers (especially large companies), as they want to improve and advance in their careers. transition periods (unemployment or temporary employment) are perceived as failures and lack of adequate support (fecioru, 2008) in accessing professional positions. on the other hand, furthering studies could also be a disguised form of unemployment. this would attract an inflationary spiral in schooling figures, doubled by the decrease of performance and promotion standards (wallerstein et al., 2015, p. 80). or, this would involve a series of conductive measures and policies that may affect labor market mobility. 3.3. what do employers want? in the employment equation, in addition to professional training and the expectations of students from the labor market, potential employers also play an important role. the way they design their development strategies and staff policies, the requirements for recruiting future employees, their involvement in the development of quality staff, all these become important variables in the analysis of the labor market and the employability of graduates. there are, without a doubt, a series of specifics of employers’ expectations towards future employees depending on the size of the company, the field of activity or the nature of the job. thus, smaller employers, especially private ones, often require previous work experience and the willingness to respond to tasks other than those required by professional training. all these requirements are due to a fairly small turnover and a rather light staff training policy. the focus is on the concrete skills and experience of the future employee. in addition, such requirements also betray an insufficient staff training and development policy on the part of the employer. in the case of large companies with many employees and tailor-made logistics (multinationals, for example), personnel policy is clear and well defined. the emphasis is on the quality of training the future employees, on their personal qualities and availability to grow. the job description and the selection of future employees are well developed. in our focus groups with the employers, we reached the following results. 3.3.1. education employers require a general culture and a basic professional culture in the respective field. lack of education, say human resources experts, heralds a poor willingness to learn something new later or a reduced ability to analyze and know certain things, accompanied by certain difficulties in making the right decisions. ‘from personal experience i noticed that well-trained graduates learn details specific to the job more easily. they combine their theoretical training with the hands-on part more effort62 lessly. we provide them with internships during college and after hiring they all participate in training courses where they practically learn the ropes’ (s.n.). the requirement of an adequate education has in view theoretical training. in the opinion of employers, the future employee can work and develop professionally based on this. ‘in recent years we have noticed a decrease in theoretical training and this creates problems for us in our training courses. if there is no base, there is nothing to build upon …’ (b.p.). employers actually refer to a series of knowledge and skills that students can acquire during school training: the ability to be interested in news from the field, to be informed, to make a logical synthesis of a material, the ability to design different solutions, to use appropriate professional language and basic knowledge in the field, etc. employers say that only these graduates show ‘greater adaptability to the workplace and acquire practical skills more easily’ (g.d.). in what concerns smaller companies, the emphasis changes slightly. they do not have resources to allocate to training and therefore focus on practical training. ‘i don’t care what grades he got in school. i want to know exactly what he can do. i don’t have time to teach them what they haven’t learnt. nowadays, it is very difficult to meet a truly skilled person. the good ones have left the country and we are struggling here with what is left. only the last year we had three people filling the same position! they just come and go!’(l.p.) therefore, depending on the recruitment capacity, training and loyalty, but also on the size of the organization, the requirements for education vary. 3.3.2. human quality it is one of the important factors, frequently mentioned by employers and human resources specialists in various fields. in the opinion of most, this is closely related to certain values in future employees: reliability, punctuality, respect, enthusiasm and motivation. along with all this, the research carried out also includes the ability to react quickly as an absolutely necessary skill (onofrei et al., 2017). the lack of reliability of the new employees appears as the main problem. it generates a lack of trust and is, in the view of employers, the main source of poor performance. ‘how do i perform well if my employees are late for work or on the phone all the time?’ (g.t.) moreover, job interviews sometimes betray ‘lack of interest and seriousness’. ‘i almost got used to meeting people who are late for the interview, who don’t show interest in questions, make unjustified claims or show disrespect’ (a.b.). 3.3.3. having clear goals meetings with employers also highlight the importance they attach to the skill of having clear goals. ‘i ask them what their medium and long-term goals are ... some don’t know what to answer me. they look at me in surprise’ (c.l.). the answers received from the focus groups with employers reveal that many young people are insecure. they have no plans or a clear path they want to follow in life. human resources experts say that the image of a generation ‘without an ideal’ is emerging. it is 63 about a lack of being grounded, realistic, it is about indifference in approaching one’s own professional development. 3.3.4. communication skills our research has shown that employers aim to hire people who show ‘a real ability to communicate’ (mm). this would involve: ‘willingness to listen to your interlocutor until the end, as well as the ability to provide appropriate answers’. due to the development of virtual communication, young people may lose their ability to convey something and to communicate directly, face to face. in fact, the interviews conducted with graduates reveal a reduced capacity for synthesis and clear formulation of thoughts, information or knowledge. there are, say the same recruiters and human resources specialists, multiple situations when there are obstacles in the recruitment interview. at other times, candidates ‘do not have the slightest knowledge about the nature of such an interview’ (a.b.). 3.3.5. teamwork skills this is not just an indicator of sociability. it is also a prerequisite on the part of employers in order to ensure a coherent, efficient professional environment, safe from conflicts or personal hostilities. ‘i ask them from the very beginning if they previously worked in a team and i ask them to give me examples. that says a lot about them’ (b.s.). this requirement is very common among employers. volunteering, internships and various teamwork experiences are very important. it is important for the employer that the future employee does not develop in isolation, but that he (she) is mindful of the existence of a team and a professional group. ‘i have the best performances with people who cooperate, communicate, with people who exchange ideas and experience’ (e.l.). 3.3.6. willingness to grow and develop professionally this is, in the eyes of the employer, an indicator of competence and interest towards the profession. ‘if they don’t display curiosity, desire for permanent training, they are outdated in a few years. this is especially valid in our field, in computers. but i believe this is becoming a standard requirement for even larger fields’ (l.p.). 3.3.7. creativity it is a variable that appears more and more often in entrepreneurs’ requirements, especially in areas where a lot of imagination and intellectual brightness are needed. ‘i had an extremely reliable employee. he managed to find solutions to almost all difficult situations … great man! then he went abroad for a much higher salary. we couldn’t offer him that much. those who stayed are not as good or as dynamic’ (b.s.). the idea of creativity was also emphasized at the davos meeting in 2016. bryn jolfsson, for example, argued on that occasion that human creativity remains the main capital in the age of new technologies: ‘it is difficult to teach machines to be truly creative. it is virtually impossible for a robot to come up with a new business idea’. 64 3.3.8. the relationship with the academia in this regard, entrepreneurs belong to several categories. in a first category are those who have a traditional collaboration with universities and who appreciate that this collaboration is useful and can develop on different levels. ‘i have participated in job fairs, presentations and workshops for several years and i already know how to select my people’ (a.l.). ‘i know university professors, i attend conferences and i started to get more insight into how my field is evolving and how i and future employees can adapt. mind you, that is not easy and without real policies, the competition will shatter you’ (g.c.). then there are those who have infrequent collaborations with the university and consider that their activity is too modest to insist on developing relations with the academic environment. ‘i have few employees, some very good at what we do and i can’t afford to grow. i need money, technology, skilled people and a market. it’s hard’. those who don’t collaborate with universities are generally small companies that simply survive on the romanian market. they do not require a specific background from their employees and do not have personnel policies or development plans. salaries are quite low and employees don’t keep their job for too long. as can be seen in the above synthesis on employers’ expectations, the emphasis is mainly on the socio-human dimension of the candidate’s training. hence, the need for courses in the socio-human field that can prepare the student for the future socio-professional life. these courses have the capacity to develop the student’s skills in relationships, professional socialization, communication, assuming values and principles of professional ethics, etc. large corporations and well-developed companies are willing to invest in the training of future employees, provided they meet a number of basic conditions. therefore, continuous professional training revolves around responsibility, collaboration, respect, availability and seriousness. all these skills can be doubled by continuous training programs that the university and companies can design for the professional development of employees and for their permanent adaptation to new changes. all these, together with other aspects, can constitute real ‘strategic choices’ (hințea, 2013, pp. 294-309) in the educational reform policies of the romanian public sector. 4. public policies for increasing the insertion of higher education graduates in the public sector our research in the academia and entrepreneurship clearly highlights a joint effort by universities, employers and students to find the best solutions in order to cope with a constantly moving and changing labor market. the main coordinates for increasing the employability of graduates in the public sector revolve around several elements. the professional training and the human quality of the future employee are important landmarks of absorption in the labor market. the results of the research con65 ducted by the ernst and young (2017) confirmed these realities. ‘for the first time in the ey indicators dedicated to entrepreneurs, but also compared to the first edition of the ey barometer and impact hub of startups, bureaucracy decreases significantly in the options of entrepreneurs, precarious education taking first place in the top of the most important obstacles for those who want to start and develop a business in romania’ (ernst and young, 2017). until recently, the education system provided the labor market with sufficient knowledge, skills and abilities that did not raise problems in their integration and professional training. this leads to the conclusion that repeated changes in education did not necessarily have positive effects. in this regard, we propose a series of public policies aimed at educating, training, and increasing employment on the labor market. they are as follows: – coherent educational policies attained through the restructuring of curricula and harmonization of learning cycles that involve the development of human qualities and basic general knowledge. in the academia, the evaluation of universities and rethinking of funding, together with a more rigorous selection of candidates, can lead to a better performance in terms of graduates’ training; – in addition, greater flexibility of training modules/courses comprising a core of general and specialized courses and the opportunity to supplement one’s credits with any other courses from the curriculum could broaden students’ horizons and increase creative approaches, so necessary today; – initiating and funding internships and exchange programs for students; – facilitating partnerships with employers and supporting them in order to train and hire graduates (internships); – financing joint projects between universities and employers; – creating platforms for students containing information necessary for the development of careers in different fields and access to jobs. – developing an entrepreneurial spirit. research has generally shown a rather weak concern for entrepreneurship among students. however, there are exceptions. this fact is also noticed by the research conducted by ernst and young in 2017. the reticent opinions of entrepreneurs regarding the ability of students to develop their own businesses relate to the lack of an adequate entrepreneurial education. as a solution, we propose the development, promotion and support of courses and practical initiatives on entrepreneurship in the academia and beyond. equally, a series of public support policies (co-financing, advantageous loans, facilitating access to a number of projects, bureaucratic facilities) for young graduates with entrepreneurial initiative can be a positive signal for those who want to become entrepreneurs. – appropriate economic policies and incentives to stimulate employability and continuous training on areas of activity. on the other hand, the issue of student employability in romania must be viewed in a broader social and economic context. many romanian graduates are recruited by large companies abroad. they receive bonuses, facilities, opportunities for professional growth and career de66 velopment. this top includes those who study in the fields of high technology: it, automation, physics, engineering, medicine, advanced scientific research, etc. – increasing the undergraduates’ employability in romania can also be accomplished by means of public policies that stimulate the development of certain promising sectors (it, tourism, ecological agriculture, medical services, etc.). here, we can provide a qualified human resource. to these can be added a number of facilities (bonuses, the possibility of continuous improvement and working with modern technology, flexible schedule, living facilities) to increase the attractiveness of positions for highly specialized graduates who usually choose to emigrate. in conclusion, the figures concerning the status of employability on the romanian labor market could indicate a crisis of skilled labor, doubled by one of the education system in terms of preparing students to increase their employability and to practice entrepreneurship. sometimes the crisis is induced by the effect of simple economic calculations: foreign employers prefer a skilled and highly skilled labor force that costs much less than the labor force in their countries. in fact, this may be also symptomatic of a crisis of the system of selection and promotion of valuable specialists, as well as the absence of providing incentives in the local economic and research environment. in essence, our research reveals another side of the romanian social reality. highly trained and highly qualified graduates prefer well-paid careers abroad. obviously, the labor market in romania is not an attractive one for them. it does not offer them material, symbolic satisfactions or real opportunities for developing and capitalizing their potential. other graduates choose jobs in the country, but their motivation, knowledge and skills do not always live up to the expectations of the employers. this can lead to disinterest, lack of involvement and neglect. in order to avoid all these 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[does capitalism have a future?], bucharest: comunicare.ro, 2015. 71 abstract in the early 1990s, large spanish cities began to apply the fi rst strategic plans to initiate transformation processes in their physical spaces and productive sectors. the second generation strategic plans launched in the following decade includeed more immaterial objectives associated with improving citizens’ quality of life and involved key social actors from the city in their design and implementation. the case of móstoles, located in the metropolitan area of madrid, is an example of a city that undertook a process of strategic planning, based on the active participation of its citizens, to develop the city in the long term. this planning process has become a tool for transforming the administrative culture of the city hall and for government accountability to citizens regarding the degree to which the objectives of the plan are fulfi lled and its political performance. keywords: strategic planning, citizen participation, local government, accountability, local governance, urban policies. local strategic planning in spain. a case study josé manuel ruano josé manuel ruano professor, department of political and administrative sciences, faculty of political sciences and sociology, complutense university of madrid, madrid, spain tel.: 0034-91-394.2634 e-mail: jmruano@cps.ucm.es transylvanian review of administrative sciences, special issue 2015, pp. 71-85 72 1. introduction strategic planning is understood here as an instrument for intervention in a city territory, based on citizen participation and the public-private pact that makes it possible to formulate shared visions of the future and to design the necessary actions and projects required to achieve the anticipated objectives. thus, it involves a considered and consensual response of the main actors of the city to the main urban challenges. while it is true that strategic planning is an instrument that has traditionally been used by private enterprises, its application to the public sphere in spain has been delayed, perhaps due to a great extent to the greater weightiness of administrative procedures and to the observance of strict normative legality, which made it diffi cult to apply forms of direction that involved actors, external to the bureaucratic organization, in decision-making about its future. the fact is that strategic planning tries to integrate the interests and needs of the main actors in the city, and it tries to establish, in a single instrument, the objectives and actions that should be initiated to achieve a harmonic development of the city in the long term. to this end, it is essential to identify the main urban actors, to design and apply a methodology that makes consensual decision-making possible, and to involve local actors throughout the process (fernández, 2006). based on this defi nition, this article analyzes the experiences of strategic planning in spanish cities, and then goes on to present in greater detail the case of the city of móstoles, the second most populated city in the madrid region, with over 200,000 inhabitants, where strategic planning is being used as an instrument to design the city’s future. the methodology used is the study of the academic bibliography on this subject and the analysis of strategic planning documents in the main spanish cities and, specifi cally, in the city of móstoles. in this last case, the document analysis (ayuntamiento de móstoles, 2011) has been completed with in-depth interviews with the people responsible for designing and implementing the strategic plan1. 2. experiences of local strategic planning in spain while the fi rst strategic urban plans began to be applied in north american cities in the 1980s, as a way to deal with the eff ects of the economic crises of the 1970s and 1980s on these cities, the fi rst strategic plans for cities in spain were designed and applied in the 1990s, mainly as tools for physical regeneration. this is partly due to the fact that the more traditional kind of planning for cities is urbanistic planning, linked to the approval of ‘urban plans’. at any rate, the main objective of the municipal governments was to capture economic resources from the private sector 1 i would particularly like to thank manuel arenilla sáez (director of the team from the universidad rey juan carlos in charge of the methodological design of the plan) and josé enrique díez (from the general directorate of modernization and quality of móstoles city hall). 73 to construct new infrastructures in order to stimulate economic development and to provide the cities with the equipment they lacked. however, the second generation of strategic plans launched from 2000 onward includes other strategic objectives related to citizens’ quality of life and adopts a broader perspective of territory. this broader perspective is no longer restricted to the administrative limits of the city, but takes into account the cities’ interactions with their environment. that is, it goes from a vision based on a main objective to a vision that contains multiple objectives, and from a strictly urban perspective to a focus on the city’s territory as a metropolitan region, insofar as the solutions to the city’s problems can be found in its relations with the metropolitan environment. thus, the fi rst plans implemented in spanish cities, such as in the cases of bilbao and barcelona, tried to transform old, declining industrial cities and alleviate the insuffi ciencies of basic infrastructures as a way to stimulate their productive sectors and promote their economic recovery, while at the same time regenerating the city physically. the main objective was to go from cities that were dependent on traditional industries on the decline (shipyards, the textile sector, heavy industry, the iron and steel industry) to cities based on more diversifi ed productive sectors, with the service sector as a clear leader. however, the fi rst plans of the 1990s were not clearly defi ned, nor were they based on any consensus, and they gave too much weight to individual physical transformation projects compared to other more immaterial objectives. as it can be seen in the following table, the fi rst strategic urban plans applied in spain in the 1990s focused mostly on investment in new infrastructures as a basis for economic development, while the second generation plans, applied from 2000 onward, give greater importance to social cohesion, sports, culture, research and development, education and to the quality of life in cities; as such, they try to make economic development compatible with integration and social cohesion. besides, from the point of view of the methodology used, the new plans are based on more fl exible methodologies to achieve their goals and include more actors and interests to increase the coherence of the diff erent strategic axes of intervention. thus, while leadership and implementation fell almost exclusively on the city government in the 1990s, the role of urban actors, particularly business organizations and unions, gains importance in the second generation plans, as well as, on a second level, universities, neighborhood associations, fi nancial entities, ngos, and consumer associations. in the end, these plans’ greater internal complexity refl ects the very social complexity of the city, which is seen as a dense network of relations and interests with multiple actors who intervene simultaneously in a cooperative way (ruano, 2010a). we must keep in mind that, in the spanish case, urban areas experienced one of the highest population growth rates in europe, from the mid-1990s to the middle of the fi rst decade of the 21st century, with yearly growth rates of over 2%. it is, then, in this context of rapid population increase, the result of economic growth and the arrival of immigrant population, when local governments begin to lead their cities’ 74 transformation processes using second generation strategic plans that try to organize the provision of public goods and services, facilitating decision-making regarding the future by means of participatory processes that involve diverse social sectors, in order to anticipate the changes and demands of the environment. this policymaking exercise is based on the acknowledgement that all cities have physical and economic resources and possibilities for development, and that the interactions among the diff erent actors who make up the city are a key element for carrying out the planning. thus, from the 1990s onward, 60.85% of the spanish cities with over 50,000 inhabitants (that is, 166 cities) have carried out some kind of exercise of strategic planning, although with diff erent approaches and results (prado and garcía sánchez, 2006, p. 661). table 1: main areas of interest of local strategic plans in spain strategic plans in fra st ru ct ur es en vi ro nm en t ec on om ic de ve lo pm en t q ua lit y of l ife sp or ts a nd c ul tu re r & d so ci al c oh es io n ed uc at io n bilbao i bilbao ii saragossa i saragossa ii san sebastian i san sebastian ii malaga i malaga ii seville i seville ii valencia barcelona i barcelona ii source: prepared by the author based on the information found in the strategic plans. therefore, the strategic plans implemented from 2000 moved on from the development of urban infrastructures to immaterial objectives meant to guarantee the competitiveness and future of the cities. as mentioned earlier, this was the case for bilbao and barcelona, and for the rest of the large cities: zaragoza committ ed itself to linking territory, activities, and people in order to achieve a technological city, taking advantage of the momentum of the 2008 international exposition. the fi rst plan in 75 san sebastian (2003) was developed along the axes of science and innovation, people and information society, as well as fomenting numerous social, cultural, and sports infrastructures. malaga (2006) focused its second strategic plan on objectives related to social, economic, and environmental sustainability and on citizen participation. the 2010 seville plan tried to defi ne the city of the future from an urbanistic, cultural, and productive perspective, but it was also concerned about favoring the participation of citizens and of economic and social agents. with its 2007 plan, valencia tried to create a network for managing knowledge in technological sectors, giving the university and its research centers a revitalizing role in the creation of a progressive city in the areas of information society and knowledge. 3. the case of the móstoles strategic plan 3.1. the economic and social context móstoles is the city with the second largest population in the madrid autonomous community, aft er the capital. it is located 17 kilometers outside of madrid and is, therefore, part of the madrid metropolitan area. it went from having 196,173 inhabitants in 1996 to 206,478 inhabitants when it began to prepare its strategic plan in 2009. the economic crisis that began in 2008 caused a slight reduction in its population, to 205,712 inhabitants in 2014 (ine, 2015). the city had undergone strong economic growth in the decade of 2000, until 2008 when the property bubble burst in spain. in this year, the city government became aware that it was necessary to undertake a process of collective refl ection regarding the model of the city in the next decades. the challenge was to defi ne a model of the city that would contribute to the population’s wellbeing by establishing the bases of a comprehensive development plan built upon a planning process that would include the citizens, individually and collectively. the economic and population growth of the city was a challenge for the municipality’s environmental sustainability and aff ected land use, water management, air quality, waste management, and energy effi ciency. on the other hand, the previous economic growth turned the city into a magnet for foreign population, which went from 5.32% of the population in 2002 (10,586 people) to 13.99% in 2009 (28,889 people), that is, a positive variation rate of 162.96%. the integration of the foreign population was, thus, an important challenge for local government. its proximity to spain’s capital was seen as an opportunity to take advantage of investment fl ows and the concentration of resources in the city of madrid. however, these opportunities also presented challenges to móstoles’ public transportation and infrastructures. finally, local government’s capacity to lead this process of change, whether it would be capable of reinforcing its power to drive collective action, was unknown. to achieve this, móstoles had an important network of associations: 286 associations registered in the municipal registry, 1.39 for every 1,000 inhabitants, which was higher than the average of nearby cities, including madrid (with 0.44 associations per 1,000 inhabitants). out of this total number of associations, the most important ones 76 were the parents’ associations (19.6%), sports associations (19.3%), and neighborhood associations (13.6%). less numerous were the political associations (0.4%), youth associations (0.7%), immigrant associations (0.7%), and associations against drug addiction (0.7%). 3.2. the plan’s organizational structure in order to launch the strategic plan, an organizational structure that would guarantee the success of the planning process, which intended to involve public and private actors in the city, was necessary. to this eff ect, the fi rst intangible resource was the political will of the mayor as a key factor for involving key actors. the second step was to decide which part of the organization would be in charge of directing the process, that is, the issue of defi ning the management structure upon which the plan would rest. this decision was important because, in order to gain the support and participation of all of the political groups represented on the municipal council and the support of social agents, it was essential to integrate them into the decision structure of the plan, meaning that the characteristics of the organism responsible for directing the plan could encourage or discourage their participation. the possibility of assigning the process to one of the city hall’s already-existing general directorates could be perceived as just another policy of the city government, with the risk of distancing citizens and political and social actors. this risk explains the creation of a specifi c entity to manage the planning process, providing it with the human and fi nancial resources to function properly. as a result, the directive committ ee of the strategic plan (‘comité de dirección del plan estratégico’ in spanish) was created as an organism of coordination and deliberation, presided over by the mayor and made up of the political groups with representation on the municipal council, neighborhood associations, business associations, unions, and the university. in addition to this political organism, a coordination committ ee was created as a technical support agency responsible for carrying out operational tasks. in short, the creation of an ad hoc organism made it possible to avoid the symbolic risk of the plan being associated with a monopolizing policy of the municipal government. 3.3. methodology the methodology was based on the fi ve classic planning steps, as it can be seen in the figure 1. for the organization and presentation step, six work groups (one for each of the following dimensions: economic, social, transport and mobility, urbanism and town and country planning, culture and sports, and environmental sustainability) were created in the coordination committ ee and put in charge of preparing studies on the characteristics of the municipality and its national and international context, according to the dimensions chosen. in addition, the committ ee tried to articulate the available technical information with citizens’ ideas and proposals, by means of 77 participatory mechanisms. in this information-gathering phase, the city hall areas of government played an important role for obtaining and exchanging information with the actors involved. in addition, key actors were identifi ed and they participated actively in the formulation of the plan, contributing with ideas and relevant information on the city’s problems. the actors were identifi ed based on the work dimensions selected and their capacity for action. to present the plan, a communication strategy that had been specially designed to promote the strategic plan among the inhabitants of the municipality was launched. media coverage was employed, informative materials were produced, citizens and key actors in the city were summoned, and alliances were created with some of the local institutions (merchants’ associations, neighborhood associations, youth associations, etc.). the second step consisted of an intense exercise of refl ection regarding the data obtained in the internal and external analyses. the purpose was to defi ne a series of scenarios regarding the present situation and the future situation of the city, to analyze the viability of the proposals, and to construct a general framework for action on specifi c issues (francés, 2001, p. 57). it is important to indicate that, in this second step, it was necessary to consider the existence of strategic resources (the use of new technologies, communication strategies, citizen participation, and alliances among actors) to ensure the fi nal objectives. that is, it was a matt er of ensuring the elements necessary to make the experience successful, elements such as institutional capability, indispensable for guaranteeing any initiative by any government (van den meer, braun and van den berg, 1999). organization and presentation september 2009-january 2010 definition of the strategic framework december 2009-may 2010 plan design may-november 2010 approval and dissemination december 2010-january 2011 monitoring and assessment rom 2012 onwards figure 1: steps of the plan source: arenilla sáez, 2012, pp. 71-101 78 in this step, the external factors aff ecting the city and its internal characteristics (economic, social, environmental, institutional, etc.) were identifi ed in order to design scenarios and strategies. the point was to identify móstoles’ diff erential features compared to other commuter towns and the ‘vision’ of the municipality was created, as a portrait of the desired future to be achieved. aft erwards, initiatives (norms, policies, and plans) undertaken by other administrations which had had an eff ect on the city were identifi ed. finally, the external analysis also included global and national (demographic, economic, social, and ecological) tendencies that had an impact on the environment and the internal functioning of the municipality. in the internal analysis, reference was made to the characteristics of the locality and to citizens’ main problems, in order to determine the strengths of the city and the threats to it, using a swot analysis. citizen participation, the participation of neighborhood associations, and that of other actors who shape the city were decisive in this analysis, and were carried out through the habitual organisms of participation and thematic forums. the information provided by the swot matrix served to fi x the strategic lines that guided the plan’s design and which, in turn, marked the trajectory of the actions needed to guide the achievement of the plan’s objectives. the third stage consisted of defi ning objectives, describing concrete actions to achieve them, and designing a set of indicators that would be needed in the assessment phase. specifi cally, and fi rst of all, objectives derived from the strategies that the government hoped to reach over the duration of the plan were set, linking indicators for assessing them. actions were derived from this set of objectives and translated into specifi c projects assigned their corresponding resources (see figure 2). in the end, the plan included 27 strategic lines, 75 objectives, and 223 indicators. strategic lines aims projects indicators resources figure 2: relations between strategic lines, aims and projects the approval and diff usion of the plan underwent an important debate within the municipal council, and activities to disseminate its contents throughout the city were approved. however, we must remember that the incorporation of city actors throughout the process continued during the dissemination step of the plan, too. 79 the participatory methodology was decisive, allowing all the social actors to give their opinions on the contents and to contribute to improve the plan in the discussion forums created especially for the plan and through the citizen participation structures that already existed in the city. naturally, the opinions received were analyzed by the members of the working groups, following criteria of power, technical, and fi nancial feasibility, which conditioned, in the end, their inclusion in or exclusion from the plan. finally, the strategic plan was understood as a continuous process of refl ection which did not end once the fi nal document was approved; it was considered necessary to establish activities that would make it possible to update it by including relevant information, produced aft er the document was fi nished, that was important for making decisions and assigning resources according to the needs of the strategic lines (bonnefoy and armij o, 2005, p. 66). 3.4. the plan’s contents and its internal coherence as mentioned earlier, the strategic plan set the foundations for city development by defi ning a set of collective objectives that were to guide the actions of the public and private actors who make up the city. to this end, six work groups were created, organized along six dimensions (economic, social, transport and mobility, urbanism and town and country planning, culture and sports, and environmental sustainability). this procedure was very useful for gathering information and distributing tasks, but during the planning process they turned into closed boxes that made it hard to integrate the contents of the plan. this made it necessary for the director of the technical team to undertake the integration of the contributions of each dimension and give them coherence. in eff ect, one of the risks of strategic planning in cities which should be avoided is incoherence among the objectives, actions, and expected results due to this lack of articulation of their contents. in order to avoid this, the strategic lines must be articulated and made coherent with the diff erent objectives defi ned within the work groups. these strategic lines were: to turn móstoles into a prosperous city, oriented toward the population’s wellbeing, socially cohesive, connected, so that infrastructures and transport would favor development and reduce the diff erences among neighborhoods, with talent, where culture and sports would contribute to the population’s wellbeing and foment its quality of life, and green, where economic development would not be incompatible with the best use of environmental resources. however, as the planning process continued, the technical team realized that one of the central aspects for a city’s progress that is not taken into account in other strategic plans is the political and institutional aspect. in fact, political-institutional factors had, in the past, a limited infl uence when it came to launching local development policies, but today these institutions are key actors for energizing their territories through cooperation with other public and private actors by means of interactions and relations that can be summarized in the concept of governance (ruano, 2010a). 80 as a result of this refl ection, the technical team decided to include the dimension of governance in order to strengthen the relations of public and private actors in the territory, orienting their particular interests to the achievement of the common interest. in order to defi ne this dimension, the concepts of leadership, legitimacy, citizen participation, and institutional capacity were used. in eff ect, it was no use having a set of strategic lines for developing the city if the city hall did not have suffi cient institutional capacity to implement the actions and achieve the objectives set forth. at this time, the importance of having skills and resources to establish alliances with other actors, of the characteristics of the administrative structure, and of the competence of the city hall staff , were acknowledged. thus, the plan incorporated institutional strengthening as a strategic line to guarantee a proper implementation. this institutional strengthening included objectives such as reorganizing the administrative structure in order to make it more effi cient, promoting the use of and fomenting it, improving the quality of public services and the training and professional development of public employees. in addition, it was concluded that citizen participation was a valuable instrument to strengthen democracy in the municipality, but that it was necessary to manage the risk of citizens’ expectations not corresponding to the objective results, which could seriously damage trust in the city hall. 4. citizens’ central role once the advantages and risks of citizen participation in the planning process were acknowledged, the fi rst option that the offi ce of coordination of the plan considered was to base the model of participation on the city’s already-existing institutional resources, that is, on the traditional system of participation. up to this time, the participatory model of móstoles was based on the activities that the districts carried out as territorial subdivisions of the city (territorial participation) and on the contributions of the municipal associations and organizations in diff erent deliberative spaces according to their specifi c interests (sectorial participation). in addition, a city council seat of citizen participation existed in the organic structure of the city hall, which was responsible for implementing the initiatives of the local government resulting from the relations with civil society in the territorial and sectorial deliberative spaces. however, the city government felt that it was necessary to diff erentiate the municipality’s habitual participatory activities from the other participatory activities that the process of the strategic plan needed, while taking advantage of the structure of the city council seat of citizen participation and its members’ experience. thus, one of the fi rst aspects taken into account was the reduction of costs of participation, in terms of time and individual eff ort. the city government felt it was important to reduce the barriers that tend to prevent some social segments from participating in decision-making. thus, the model of participation adopted combined individual participation and the participation of associations. similarly, it combined in-person 81 participation with electronic participation and, in order to involve the greatest number of citizens, fl exible schedules were adopted for calling meetings and inperson activities with short schedules, using facilities that the inhabitants could access easily. thus, in order to involve citizens in the step of diagnosing the city, a telephone survey was carried out to fi nd out inhabitants’ needs, gather their suggestions for approaching the city’s main problems, and assess the functioning of public services. a total of 810 people were interviewed over two months, a digital version of the survey was included in the city hall webpage, and an ‘idea bank’ was created so that citizens could participate electronically, including proposals gathered by these means in the set of proposals analyzed during the preparation of the plan. the results of the telephone survey and the idea bank were used to prepare a report that the city hall published and that was presented to the mass media and civil organizations of the city. the information obtained by these means was complemented with a citizen consultation, with participation points installed in diff erent parts of the city where citizens could pick up and fi ll out the questionnaires that had been prepared to identify the main problems of the city and possible solutions. even though the city hall carried out a strong promotion campaign in the media and mailed the questionnaire to all the homes in the municipality, only 506 complete questionnaires were collected. the incorporation of the city’s social organizations was achieved by creating thematic forums on each of the plan’s dimensions. the offi ce of coordination of the plan felt that it was essential to promote the participation of the city’s organizations, as they had been convoked to work on a strategic plan at the beginning of the decade of 2000, but had never received information on the implementation and results of this strategic plan due to the change in city government. because of this, it was understood that this negative precedent could discourage social organizations from participating. in addition, the 2011 local elections were coming up on this occasion, and the hope was to prevent the strategic plan from being perceived as an electoral initiative of the city government. as manuel arenilla sáez, director of the technical team, commented: ‘it was necessary to strengthen the associative network’s trust in the local government and consolidate the idea that participation was the only possible way to promote a true transformation of the municipality. trust was fundamental to advance in the construction of collaborative models that would favor the exchange of strategic resources among the actors involved in the planning process and manage to extend them to other initiatives of the local government. the leadership exercised by the mayor of the city was a key element. he made the commitment to include the viable proposals of the civil organizations into the strategic plan and to extend citizen participation to all the steps of the planning process, including the monitoring and assessment phases.’ 82 for each forum, two rounds of deliberation were carried out, with the intervention of the university team. in the fi rst round (the diagnosis), the participants presented and debated the problems of the municipality and their possible solutions. thus, documents were created in a consensual way, summarizing the proposals made and agreed upon by the participants. the second round coincided with the step of preparing the plan and made it possible to present a draft of the objectives and strategies containing the model of the city to the representatives of the civil organizations. in the end, 93 city groups participated in the forum. the challenge of the participatory process consisted of taking advantage of the endogenous potentials of the city using strategies that made it possible to coordinate the key actors of the municipality (arenilla sáez and llorente, 2012, p. 47). nevertheless, there are many risks that can result in participatory processes aff ecting the legitimacy of the plan as a whole (ruano, 2010b). one of these is if individual citizens and civil organizations do not have the same chance to participate. another is if the most powerful or infl uential organizations monopolize the participatory process in the name of the entire community. yet another one refers to the lack of implication of a suffi cient number of people in the participatory initiatives, reproducing the elitism of traditional politics. it is a fact that citizens generally do not participate very much in decision-making regarding public policy and that, when they do, it is in the implementation phase, respecting the hierarchy of organizations in the territorial and sectorial forums. thus the importance given to transparency in all the steps of the process, as the city government was aware that any failure in the development of the plan or any participatory bias would have a high political and social cost. the objective, therefore, was to include all the relevant economic and social agents of the city in the process, seeking maximum plurality, as the defi nition of a project for the future is only eff ective if all the public, private, and social actors are mobilized (borja, 1997, p. 18). because of this, the participatory model adopted in móstoles included new initiatives such as consulting citizens and thematic forums, but it also favored deliberation by means of stable organisms of participation that already existed in the city. in addition, individual and association participation were combined, as well as territorial and sectorial logics (garcía vegas, 2012, p. 95). 5. the monitoring and assessment of the plan once the formulation of the plan was completed and aft er it had been approved by the municipal council in january 2011, the next step was to stimulate its implementation. following the planned methodology, each area of government had to take on, according to its powers, the corresponding strategic objectives, and to develop a short-, middle-, and long-term program of actions. however, the citizens expected something more than a plan on paper: in order for the strategic plan to be a true tool for transforming the city, a monitoring and an assessment plan had to be designed properly, with the participation of civil organizations and citizens. the mayor had made a commitment to the urban actors to extend the participatory process beyond the creation of the city model contained in the strategic plan. the 83 social agents themselves expected transparency and accountability to guide the results of public action. because of this, the assessment was understood to be an exercise in political responsibility that intended to account for the achievement of local government’s commitments to the citizens and social organizations. as such, it was necessary to develop tools for carrying out the monitoring and assessment. there were two alternatives: to create a specifi c system for the plan that included the indicators of each of the objectives, or to create a comprehensive system for measuring all municipal public action, including the strategic plan as well as the commitments included in the government plan. the option chosen was this last one. the system for monitoring and assessment needed to allow the continuous supervision of the projects planned, the implementation of any adjustments necessary (if deviations from the plans occurred), and the incorporation of new objectives and actions. these measures were important for designing the measurement system because, on one hand, when the strategic plan was fi nished, the economic crisis was becoming acute in spain and future scenarios were not optimistic. as manuel arenilla sáez, director of the technical team, acknowledged: ‘the will to promote a model of city like the one presented in the strategic plan clashed in an untimely fashion with the reality of a hostile economic environment where the government’s capacity to maneuver was limited.’ on the other hand, for the local government, the implantation of the system of monitoring and assessment was a tool that would allow them to continuously review the strategic plan, as well as adapt its objectives and strategies to changes in the environment, especially any changes that might aff ect the stability of the budget. but this meant a new challenge. the implementation of tools for assessment in public administration requires a transformation of the bureaucratic-technical culture. thus, josé enrique díez, technician of the general directorate of modernization and quality, explains the following: ‘one of the main challenges was to involve the entire municipal organization in the tool for strategic planning, for all the parts of the organization to make it their own, understand it, and participate.’ measuring the results of public action in terms of effi cacy, effi ciency, and, mainly, eff ectiveness and impact would become a central element in the decision processes and meant a change in administrative culture. the assessment system has a framework in which clear criteria are established, criteria which make it possible to interpret reality and the changes observed aft er a public intervention. this is the reason why the monitoring and assessment system was created following the same logic that had been used to systematize the strategic plan: it was constructed based on the dimensions selected in the work methodology, so that each strategic line contained a series of strategic objectives upon which concrete actions and intervention projects depended. finally, indicators that made it possible to measure the degree of change operated upon reality were assigned to each of these projects. so the importance of a proper selection of indicators and of persons responsible for carrying them out can be understood: a good list of indicators can 84 register the true extent of public action and foment the decision-making process, while a bad selection of indicators can distort the knowledge of social reality and fail to provide relevant information to public managers. in this regard, indicators of effi cacy and effi ciency, economic indicators, indicators of time and quality, and, mainly, indicators of impact that made it possible to assess the degree of transformation of social reality were incorporated. it is evident that the implementation phase of the plan as initially designed is highly important because the means necessary to achieve the strategic objectives must be specifi ed, despite the fact that, as josé enrique díez says: ‘determining the fi nancial and human resources necessary in the implementation phase of the plan is diffi cult because, in addition to the need to coordinate diff erent areas of government, it is hard to quantify ahead of time the means necessary to achieve the objectives.’ the mayor of móstoles himself insisted that part of these indicators of the assessment system be obtained from citizen surveys. the objective was for the inhabitants themselves to be able to assess the rendering of municipal public services and express their degree of satisfaction with government action. in short, the assessment system was conceived as a tool for accountability. so much so that two assessment reports are prepared each year, with information on the degree to which the plan and the government’s political commitments are fulfi lled, and they are published on the city hall webpage and sent to the civil associations. in addition, citizen forums are organized at the end of the legislature, in which the political offi cers of the diff erent areas of government present their achievements and failures, as well as the indicators and the degree to which they have been fulfi lled. individual citizens, unions, business associations, ngos, neighborhood associations, etc. participate in these forums and they can propose changes and improvements. this procedure refl ects the fact that the strategic plan is not only a technical instrument for improving internal management, but has become an enormously valuable document for assessing the political performance of government action. 6. conclusions the strategic plan of the city of móstoles was imagined and implemented as a valuable instrument for social change based on the active participation of the city’s key actors, in order to respond to citizens’ demands and to the challenges of the next decades. the strategic plan has made it possible to orient the eff ort of all the public, private, and social agents of the city toward achieving collective objectives, thanks to its inclusion of individual perspectives and interests in the agenda of public action. the plan has been imagined as a learn-by-doing tool for organizing the city hall insofar as all the areas of government have internalized the plan’s philosophy and have learned to work using a long-term road map for achieving strategic objectives. in addition, the strategic plan has been a tool of government accountability, as it includes the commitment to periodically present the results of the plan’s implementation and the degree of fulfi lment of the indicators associated with the 85 objectives to the citizens and to key municipal actors. accordingly, one of the original aspects of the plan is the inclusion of a political-institutional dimension that includes factors of governability of the city and the government’s institutional capacity to carry out the planned tasks. this accountability process is only possible due to the political commitment to a transparent, participatory process in which citizens have access to all the information generated at every step of the process, from formulation to assessment. the use of the new technologies, the creation of strategic alliances with key actors in the city, and the design of a proper internal and external communication strategy were essential in this eff ort. references: 1. arenilla sáez, m. (ed.), ciudad, gobernanza y planifi cación estratégica, madrid: dykinson, 2012. 2. arenilla sáez, m. and llorente, j., ‘las ciudades de hoy y la planifi cación estratégica’, in arenilla sáez, m. (ed.), ciudad, gobernanza y planifi cación estratégica, madrid: dykinson, 2012. 3. ayuntamiento de móstoles, plan estratégico de móstoles. la ciudad que queremos, móstoles: ayuntamiento de móstoles, 2011. 4. bonnefoy, j.c. and armij o, m., ‘indicadores de desempeño en el sector público’, 2005, serie manuales de la cepal, no. 45, [online] available at htt p://repositorio.cepal.org/ bitstream/handle/11362/5611/s05900_es.pdf; jsessionid=5b8fa2cfe94bc129bbe7323 38aa22d05?sequence=1, accessed on november 17, 2015. 5. borja, j., ‘las ciudades como actores políticos’, 1997, américa latina hoy, vol. 15, pp. 15-19. 6. fernández, j.m.g., planifi cación estratégica de ciudades: nuevos instrumentos y procesos, barcelona: editorial reverté, 2006. 7. francés, a., estrategia para la empresa en américa latina, caracas: ediciones iesa, 2001. 8. garcía vegas, r., ‘el proceso de planifi cación en las ciudades medianas’, in arenilla sáez, m. (ed.), ciudad, gobernanza y planifi cación estratégica, madrid: dykinson, 2012. 9. instituto nacional de estadística (ine), censos de población, 2015. 10. prado, j.m.l. and garcía sánchez, i.m., ‘la utilización de la planifi cación estratégica y de los indicadores de gestión en el ámbito municipal: análisis empírico de los factores que afectan a su implantación’, 2006, revista española de financiación y contabilidad, vol. 45, no. 130, pp. 645-672. 11. ruano, j.m., ‘acción pública y gobernanza: desafíos gerenciales y consecuencias políticas de la coproducción de servicios públicos’, in arenilla sáez, m. (ed.), la administración pública entre dos siglos, madrid: instituto nacional de administración pública, 2010a, pp. 301-322. 12. ruano, j.m., ‘contra la participación: discurso y realidad de las experiencias de participación ciudadana,’ 2010b, política y sociedad, vol. 47, no. 3, pp. 93-108. 13. van den meer, j., braun, e. and van den berg, l., ‘competitividad y cohesión metropolitanas. la exigencia de capacidad de organización y redes estratégicas’, 1999, papeles de economía española, no. 80, pp. 248-265. 22 abstract the coronavirus disease 2019 (covid-19) affected almost all activities worldwide. the medical sector was one of those which were most significantly impacted because the medical infrastructure was not sized for such a high scale shock, specialized human resources and medical infrastructure proving to be much undersized and with slow growth potential. many changes were required, important financial resources being mobilized in order to motivate medical staff, offer treatments for the most severely affected patients, but also to create new facilities where the increasing number of sick persons could be cured. in our research we want to offer a hospital cost perspective based on empirical analysis of the covid-19 impact on different categories of expenses made by romanian hospitals that treated patients with covid-19 in different stages of their disease. the period analyzed was january 2019 to december 2020 on a monthly basis. our results showed that expenses with goods and services, drugs, reagents and human resources are influenced by covid-19 in a significant manner. keywords: hospital costs, covid-19 impact, resilience in hospitals, expenses. the impact of covid-19 on the romanian hospitals’ expenses. a case study toward the financial resilience after the pandemic attila györgy iliana simionescu attila györgy (corresponding author) associate professor, finance department, bucharest university of economic studies and state secretary, ministry of finance, bucharest, romania tel.: 0040-21-319.1900 e-mail: attila.gyorgy@fin.ase.ro liliana simionescu associate professor, finance department, bucharest university of economic studies, bucharest, romania tel.: 0040-21-319.1900 e-mail: liliana.simionescu@fin.ase.ro doi: 10.24193/tras.si2021.2 published first online: 12/15/2021 transylvanian review of administrative sciences, special issue 2021, pp. 22–36 23 1. introduction the coronavirus disease 2019 (covid-19) affected unexpectedly the current activities worldwide. in a short time, governments had to react in order to offer treatment to those affected by this virus and mitigate its effects in almost all fields of activity. thus, governments introduced gradual measures as they managed to identify levers presumed to be effective; these measures ranged from the simplest to the most drastic lockdowns for quite significant periods of time. under the aforementioned unpredictable and uncertain environment, different activities from various domains had to change and adapt in order to survive, to further offer the goods and services for which they were established, and to be in line with the needs of clients and beneficiaries. the medical sector was one of those which were most significantly impacted because the source of the problem was the pandemic of coronavirus disease. the medical infrastructure was not sized for a high scale shock, specialized human resources and medical infrastructure proving to be much undersized and with slow growth potential in comparison with the evolution of specialized medical needs. hospitals were the frontrunners in this field, taking into account the needs for long-lasting treatment and recovery, in many cases with connectivity to oxygen facilities for invasive or non-invasive ventilation. thus, activities specific to infectious diseases have exploded, being offered in spaces that were not long ago used to treat other types of diseases. in order to realize such shifts, important financial resources were reoriented in this regard. in our research we want to offer a slightly different perspective and fill a gap in the literature because ‘a detailed analysis of hospital cost structure remains an unexplored area in the literature’ (bai and zare, 2020, p. 2807). thus, we analyze the impact of covid-19 over the main categories of expenses of all romanian hospitals which were designated to officially hospitalize patients with symptomatic covid-19 and provide treatment for moderate, severe and critical forms of the disease in order to explain the variance of hospital expenses, helping to understand how medical sector resilience can be faster and better fulfilled and offer a tool for predictability of expenses. in this regard, in the second section we presented the relevant literature which focuses on hospital costing, especially during pandemics. in the third and fourth sections we presented two case studies which highlight the impact of covid-19 on different variables that explain the variance of hospital expenses using the ols method with fix effects. in the fourth section we selected for each hospital, on a monthly basis, the expenses related to compensation of employees, use of goods and services, depreciation of fixed capital, drugs, sanitary materials, reagents, disinfectants, and laboratory materials, in order to compare with the monthly number of sick cases due to covid-19, respectively with the number of deceased due to covid-19. 24 2. literature review international health regulations adopted by the world health organization (who) define officially what public health emergencies of international concerns are (who, 2016, p. 9). since its revision in 2007, nine health events were counted: the influenza a (h1n1) pandemic, the middle east respiratory syndrome coronavirus (mers-cov) outbreak, the international spread of poliovirus, the west africa ebola virus disease outbreak, the zika virus outbreak, yellow fever, the 9th and 10th ebola virus disease outbreak, and the on-going epidemic of covid-19 (mullen et al., 2020, p. 2). covid-19 generated a change in the activity of hospitals, the number of patients they treated, the ailments which needed medical support. all these caused changes in the level and structure of the expenses; all the main categories (staff remuneration, consumables, and fixes assets) were affected, but each category reacted differently. in periods of severe pandemics, authorities can decide that selected hospitals will cease all day-to-day activities and shift completely to fight against the challenge represented by the new virus. as in the case of the influenza pandemic, this is happening because ‘hospitals will need to allocate limited healthcare resources in a rational, ethical, and organized way so as to do the greatest good for the greatest number of people. this can be done by deferring nonemergency care and, if necessary, instituting alternative patient care routines’ (toner and waldhorn, 2006, p. 400). staff remuneration expenses increased in some cases because in many countries new health workers were hired (hernández-quevedo et al., 2020, p. 42), and in other cases bonuses were approved for existing workers. from the perspective of medical supplies, covid-19 required larger quantities of oxygen for ventilation, specific drugs recommended for treatments, but also different sanitary materials, reagents, disinfectants, and laboratory materials. for example, al-gheethi et al. (2020, p. 10) pointed out that ‘the survival of the virus on surfaces requires effective disinfection to ensure that the virus has become inactive’, a process which generates costs. during covid-19, respiratory therapy was an important component of healing many hospitalized patients. a similar situation was also due to 2009 h1n1 influenza, when wiesen et al. (2012, p. 7) compared the consumption of resources, as measured by hospital charges, in the case of patients with acute lung injury (ali) or acute respiratory distress syndrome (ards) confirmed or suspected h1n1 infection vs. ali/ ards arising from other etiologies (non-influenza group); the authors concluded that ‘respiratory charges are more likely a reflection of duration of mechanical ventilation rather than the degree of ventilator support necessary’. but, absolute intensive care unit (icu) ‘charges for room and board, blood products, pharmacy, radiology, average daily charge, and overall charge per patient were larger in the noninfluenza group. icu charges for blood products in the noninfluenza group were greater by a factor of four, and pharmacy charges double that of the h1n1 group. this finding is likely a reflection of the higher prevalence of underlying comorbid medical con25 ditions in the noninfluenza group, such as malignancy and cirrhosis, which require expensive medications and predispose to anemia. moreover, the high mortality in this cohort likely precluded even higher hospital charges. nevertheless, the h1n1 cohort amassed charges of similar magnitude to the most ill and expensive patients in the icu, indicating the abundant health care resources consumed by severe pandemic influenza infection’ (wiesen et al., 2012, p. 7). fixed assets are the main component of the infrastructure used by medical units to offer services. catană (2020, p. 172) highlighted the fact that the historical investments in the healthcare system in eu countries did not lead to a limitation of the number of deaths. in regard to the efficiency of measurement of medical outputs in a pandemic, it could be based on the number of sick cases and the number of deceased due to covid-19. this approach was also used by dan et al. (2009, p. 1911) when they quantified how the virulence or case-fatality rate of a respiratory viral infection had a serious impact on the hospital infection control response using the actual number of deaths and ill persons. 3. covid-19 impact on expense aggregates in this section, our goal is to reveal the impact of the recent sanitary crisis on hospitals, respectively on the expenses of romanian hospitals most involved in treating covid-19 patients. in this sense, our sample consists of all 10 healthcare units which hospitalized patients with symptomatic covid-19 and provided treatment for moderate, severe and critical forms of the disease, in accordance with the designation made by the ministry of health through order no. 555 from april 3, 2020. the 10 hospitals included in our sample are representative for romania, being the only hospitals considered by the ministry of health prepared from all perspectives to deal with moderate, severe and critical forms of the disease. these hospitals are located in baia mare, brașov, bucharest (two hospitals), cluj-napoca, constanța, craiova, iași, suceava, and timișoara. nine of them are infectious disease hospitals, while the tenth was serving the area of suceava declared in lock-down for a long period during 2020. from a geographical point of view, all regions were covered in a balanced way, although each hospital had to take cases from any region if some of these hospitals reached their maximum capacity. these hospitals were best prepared to fight covid-19, being mainly situated in important medical university centers, having strong teams specialized in infectious diseases, and more than 4,000 beds in these hospitals (in some periods of time dedicated mainly, or even exclusively, to treat covid-19 cases). a limitation of our study regards the number of icu beds due to the lack of data for each hospital. although, the ministry of health named the aforementioned hospitals to treat most affected patients with covid-19, the number of icu beds available for covid-19 patients is absent. thus, it was impossible to construct a correlation between the registered cases of covid-19 and the number of icu beds during the sanitary crisis. 26 3.1 research methodology our case study starts by analyzing the impact of the covid-19 evolution on different expense categories in the previously mentioned covid-19 hospitals. the period analyzed is on monthly basis starting from january 2019 until december 2020. the dependent variables of this research are different expense items classified taking into account the methodological guidance offered by the latest edition of imf’s government finance statistics manual (imf, 2014). we offer a separate analysis on large aggregates composing total expenses (adjusted total expenses, constant human resource expenses, use of goods and services, and depreciation of fixed capital), but also distinct analyses for components of human resource expenses and different medical supplies. the adjusted total expenses include all the expenses made by the hospital in the reference period, but exclude non-depreciable assets (non-depreciable assets in hospitals are represented mainly by goods that belong to the public domain and lands). the exclusion is justified because these items are recorded with the whole value as expenses in a single month, although they are used on a long term basis. due to this accounting treatment, the values from certain months may present significantly deviated values compared to the previous and following months. constant human resource expenses, use of goods and services, and depreciation of fixed capital were proposed as the main components of the adjusted total expenses. we opted for those aggregates because they are reflecting costs with very different types of resources used in the activity of hospitals. besides, these elements are consecrated in financial research, since in the medical sector it is well known that ‘key hospital inputs are salaries, supplies and funding for capital investment’ (hassan, 2005, p. 131). medical human resources are very important in fighting covid-19. for this reason we analyzed the correlation of the main categories of expenses with the compensations of hospital’s staff. under ‘constant human resource expenses’ we included all payable amounts in cash or in kind offered in return for work performed (salaries or resident doctor scholarships, including social security schemes and vouchers), while only the special allowance for treating covid-19 were considered separately. this allowance was introduced in mid-2020 and it was paid only in certain months depending on the available budgetary resources. the quality of healthcare services is closely linked to the usage of medical supplies. in this regard we looked for the correlation of expenses with the consumptions of drugs, sanitary materials, reagents, disinfectants, and laboratory materials. we opted to emphasize and detail this structure having in regard the specific needs generated by covid-19 from the perspective of personal protective equipment, respectively the perspective of the patients. in the category of procurements of personal protective equipment who issued very detailed technical specifications regarding gloves, goggles, face shields, masks, scrubs, aprons, gowns, hand rubs and so on (who, 2020, pp. 4–6). in the case of treatments, numerous drugs were recommended during the 27 pandemic, a full treatment might have varied between less than 1 usd and several thousands of usd (hill et al., 2020, p. 63). the econometric method employed is ols on panel data. the general equation of the model is as given bellow in equation 1: y it =α+βx1+δ it (1), where: – i = number of hospitals, thus i=1...10; – t = period analyzed, respectively monthly data, thus t=1…24; – y – is the dependent variable consisting of different expense items; – α – intercept term; – β – coefficient of xs; – x – independent variable, respectively proxy for covid-19; – δ – error term. all the data has been collected from the hospitals’ balance sheets prepared on a monthly basis according to the official accounting standards using accrual accounting principles. the variables used in the regression models are listed in table 1. table 1: variables used in the regression models and their acronyms variables acronym type of variable dependent variables adjusted total expenses logate dependent compensation of employees logce dependent use of goods and services logugs dependent depreciation of fixed capital logdfc dependent constant human resource expenses logchre dependent special allowance for treating covid-19 logsa dependent expenses with drugs loged dependent expenses with sanitary materials logesm dependent expenses with reagents loger dependent expenses with disinfectants logedi dependent expenses with laboratory materials logelm dependent covid-19 variables type of hospital th dummy (if in the analyzed period there was a hospital providing healthcare to patients tested positive for covid-19 it had a value of 1 or zero otherwise) and independent number of monthly sick cases due to covid-19 lognb independent number of monthly deceased due to covid-19 lognd independent source: made by authors 28 table 2 reveals the descriptive statistics for the variables considered in the regression models. thus, the number of observations is between 86 and 90, while the minimum value for covid-19 variables (lognb, lognd) are between 3.8 and 2.8 whereas their maximum values are 5.3 and 4.1 with a standard deviation of 0.5 and 0.4. table 2: descriptive statistics variable obs. mean std. dev. min. max. lognb 90 4.544 0.541 3.846 5.369 lognd 90 3.540 0.426 2.841 4.197 logate 90 0.483 0.342 -0.132 1.764 logce 90 0.326 0.227 -0.172 1.219 logugs 90 0.915 0.843 -0.410 3.936 logdfc 90 0.415 1.096 -8.771 2.326 logchre 90 0.272 0.213 -0.151 1.196 loged 90 0.251 0.734 -0.824 2.687 logesm 90 11.612 10.967 -19.554 54.544 loger 88 4.509 9.723 -1.111 82.640 logedi 89 5.341 14.541 -0.163 108.896 logelm 86 1740.763 16065.76 -4.134 148995.6 source: made by authors table 3 shows the correlation matrices for variables considered in the regression models. in this paper we considered that coefficients with a value higher than 0.7 are highly correlated and therefore will not be used in the same regression model. table 3: pearson correlation matrices lognb lognd logate logce logugs logdfc logchr loged logesm loger logedi logelm lognb 1 lognd 0.948 1 logate 0.45 0.44 1 logce -0.04 0.01 0.53 1 logugs 0.52 0.50 0.88 0.19 1 logdfc -0.10 -0.13 -0.34 -0.12 -0.33 1 logchre 0.08 0.12 0.52 0.89 0.26 -0.16 1 loged 0.63 0.60 0.63 0.06 0.73 -0.22 0.12 1 logesm 0.04 0.01 0.38 0.29 0.30 -0.10 0.32 0.01 1 loger 0.19 0.19 0.42 0.10 0.55 -0.25 0.15 0.30 0.15 1 logedi -0.04 -0.05 -0.05 0.13 -0.07 0.06 0.13 -0.08 0.09 -0.05 1 logelm -0.14 -0.21 -0.003 -0.02 -0.04 0.09 -0.04 -0.04 0.26 -0.007 0.01 1 source: made by authors 29 3.2 regressions results and discussion the aim of this research is to examine from an empirical point of view the impact of covid-19 on different variables that explain the variance of hospital expenses using ols method with fix effects. in this sense we considered a sample of 10 hospitals where patients with covid-19 symptoms received treatment for different stages of the disease. the analyzed period was january 2019 to december 2020. when we consider the impact of covid-19 on different categories of expenses in table 4, the type of hospital has a negative impact on the adjusted total expenses. the number of deceased and sick cases due to covid-19 virus has a positive impact on total expenses (model 1 and 2). the first 2 models from table 3 have an r-squared of 0.54, respectively 0.44. this means that the variation of type of hospital — th and number of monthly deceased due to covid-19 — lognd, explains the variation of adjusted total expenses in a proportion of 54%, whereas the variation of th and the number of monthly sick cases due to covid-19 — lognb explains the variation of adjusted total expense in a proportion of 44%. in the models with depreciation of fixed capital as dependent variable, th did not reveal any statistical significance to explain the impact of covid-19 on adjusted total expenses (models 7 and 8). moreover, lognb also showed no statistical significance whereas lognd is statistically significant at 10%. therefore, the number of monthly deceased due to covid-19 influences positively the depreciation of fixed capital. the model 6 explains the variation of dependent variables of 61% by the variation of independent variables. moreover, the number of monthly deceased and the type of hospital are strongly significant, respectively at 1%. furthermore, th has a negative impact on the use of goods and services while lognd have a positive impact. the governments around the world took measures in order to prevent the spread of covid-19. the fact that our results reveal a positive impact between covid-19 patients and hospital expenses, is underlined by the financial effort of the romanian government. as our sample comprises all hospitals approved by the romanian government to treat patients affected by moderate, severe and critical forms of covid-19, our outcomes show that, in line with each country around the word, romania also took measures to counteract the spread of this new pandemic virus, among which the increase of all the expenses within a hospital are imperative during sanitary crisis. in table 5 we analyzed the impact on human resources expenses. we found a positive and statistically significant relation of th on constant human resource expenses and on special allowance for treating covid-19 as well. models having as dependent variable special allowance for treating covid-19 have the greatest impact when th and number of monthly deceased due to covid-19 virus was considered (model 11). furthermore, model 11 reveals that the lognd has a negative impact on logsa. the number of sick cases due to covid-19 has a negative and statistical significance on special allowance for treating covid-19, but the impact is less than lognd which showed a greater impact on dependent variables. the expense with human resources is statistically significant as in 2020 the ministry of health required romanian gov30 ernment to allocate special allowance for medical personnel that work in the hospital, respectively departments that treat patients affected by covid-19 due to risk exposure. subsequently, these results reinforce the allocation of this special allowance as well as law enforcement. table 5: fixed-effects regression outcomes regarding the impact of covid-19 on human resources expenses (9) (10) (11) (12) log chre log chre log sa log sa th 0.065* 0.073** 0.079* 0.085** (2.341) (3.291) (1.240) (2.803) lognd 0.012 -1.143** (0.760) (-3.804) lognb 0.003 -0.704** (0.521) (-3.197) _cons 6.619*** 6.635*** 9.093*** 8.715*** (186.460) (372.172) (10.040) (9.088) f stat 9.490*** 18.52*** 14.48*** 10.22*** r-squared 0.177 0.274 0.475 0.390 obs. 100 110 27 27 n 10 10 10 10 note: t statistics in parentheses, * p < 0.10, ** p < 0.05, *** p < 0.01 source: made by authors table 4: fixed-effects regression outcomes regarding the impact of covid-19 on category of expenses (1) (2) (3) (4) (5) (6) (7) (8) log ate log ate log ce log ce log ugs log ugs log dfc log dfc th -0.059* 0.032 0.104*** 0.107*** -0.252*** -0.051 -0.053 0.006 (-2.098) (1.148) (3.871) (5.025) (-5.165) (-0.967) (-0.777) (0.120) lognd 0.139*** -0.003 0.317*** 0.093* (8.318) (-0.217) (11.013) (2.321) lognb 0.036*** -0.002 0.088*** 0.023 (4.368) (-0.374) (5.560) (1.419) _cons 6.650*** 6.822*** 6.651*** 6.648*** 5.902*** 6.279*** 4.921*** 5.044*** (186.087) (306.858) (197.203) (391.888) (95.845) (148.928) (56.984) (114.933) f stat 52.34*** 37.99*** 15.08*** 30.03*** 70.14*** 31.27*** 3.645*** 3.081** r-squared 0.543 0.437 0.255 0.380 0.614 0.390 0.0765 0.0591 obs. 100 110 100 110 100 110 100 110 n 10 10 10 10 10 10 10 10 note: t statistics in parentheses, * p < 0.10, ** p < 0.05, *** p < 0.01 source: made by authors 31 from the point of view of the expenses regarding the use of medical supplies, the regression results having as dependent variable consumption of drugs, sanitary materials and reagent showed an r-squared of 55% (model 13), 51% (model 16) and 24% (model 18). these results are listed in table 6. in the last two models mentioned earlier, correspondingly 16 and 18, lognb is statistically significant at 1%, respectively 10%. thus, an increase in the number of sick cases due to covid-19 would increase the consumption of sanitary materials and reagent. on the other hand, the expenses with sanitary materials are proven to have a higher impact than reagent as the coefficient of lognb is greater in model 16. the model with the highest r2 from table 6, namely model 13, showed that lognd has a positive statistically significance on drugs consumption. therefore, an increase of lognd would enlarge loged with approximately 49%. likewise, if the number of covid-19 cases increases the expenses with sanitary materials, drugs and reagent enhances as more of this supply is used in order to treat and to prevent the virus. table 6: fixed-effects regression outcomes regarding the impact of covid-19 on expenses concerning the use of medical supplies (13) (14) (15) (16) (17) (18) (19) (20) (21) (22) loged loged logesm logesm loger loger logedi logedi logelm logelm th -0.539*** -0.223* 0.0401 0.102 -0.0007 0.168 -0.041 -0.020 0.343 0.343 (-6.590) (-2.542) (0.3572) (1.0772) (-0.005) (1.362) (-0.477) (-0.263) (1.410) (1.410) lognd 0.496*** 0.141* 0.266** 0.0428 -0.146 -0.146 (10.278) (2.123) (3.075) (0.829) (-1.002) (-1.002) lognb 0.106*** 0.152*** 0.0814* 0.0821*** (3.988) (5.329) (2.194) (3.569) _cons 5.198*** 5.934*** 5.332*** 5.015*** 5.009*** 5.293*** 4.640*** 4.377*** 4.317*** 4.317*** (50.418) (84.580) (37.674) (66.430) (27.121) (53.877) (42.035) (71.746) (13.803) (13.803) f stat 53.87*** 8.462*** 6.288*** 51.78*** 10.38*** 15.36*** 0.363 15.17*** 0.996 0.996 r-sq 0.550 0.147 0.125 0.514 0.193 0.241 0.008 0.236 0.024 0.024 obs. 100 110 100 110 99 109 100 110 92 92 n 10 10 10 10 10 10 10 10 10 10 note: t statistics in parentheses, * p < 0.10, ** p < 0.05, *** p < 0.01 source: made by authors 4. covid-19 severity impact on expense aggregates this section proposes to emphasize the changes of hospitals’ expense items considering the severity of covid-19. in order to take into account seasonality, the assessment was made by comparing a certain month with the similar month of the previous year. the analyzed hospitals are the same as the ones described in the previous section. 32 4.1 research methodology data is presented on a monthly basis. the period analyzed covers april to december 2020 (months in which covid-19 patients were treated in hospitals), percentage changes being computed having as reference april to december 2019. dependent variables are the percentage changes of expense items described in the previous case study. table 7: variables used in the regression models and their acronyms variables acronym type of variable dependent variables change in adjusted total expenses %ate dependent change in compensation of employees %ce dependent change in use of goods and services %ugs dependent change in depreciation of fixed capital %dfc dependent change in constant human resource expenses %chre dependent change in expenses with drugs %ed dependent change in expenses with sanitary materials %esm dependent change in expenses with reagents %er dependent change in expenses with disinfectants %edi dependent change in expenses with laboratory materials %elm dependent covid-19 variables number of monthly sick cases due to covid-19 lognb independent number of monthly deceased due to covid-19 lognd independent source: made by authors 4.2 regressions results and discussion in order to examine if there were changes in hospitals expense categories, we ran regressions by comparing with 2019. table 8 shows that lognb influence positively %ate and %ugs (model 1 and 5). the number of monthly deceased due to covid-19 variable has a positive impact on %ate and %ugs in models 2 and 6, while the number of monthly sick cases due to covid-19 has a negative impact on %ce and %dfc is not statistically significant (model 3 and 8). the increased expenses are associated with the number of sick and deceased persons due to covid-19 as the romanian government made a great financial effort to stop (as much as possible) the spread of the virus. therefore, the results confirm the government financial effort in order to protect the population from getting infected with covid-19. 33 table 8: fixed-effects regression outcomes regarding the impact of covid-19 on category of expenses for changes in 2020 vs. 2019 (1) (2) (3) (4) (5) (6) (7) (8) %ate %ate %ce %ce %ugs %ugs %dfc %dfc lognb 0.286*** -0.0144 0.806*** -0.195 (5.9400) (-0.3553) (7.5828) (-1.0003) lognd 0.360*** 0.0102 0.984*** -0.318 (5.8652) (0.1969) (7.0954) (-1.2937) _cons -0.817*** -0.791*** 0.392* 0.290 -2.749*** -2.567*** 1.299 1.541† (-3.7062) (-3.6153) (2.1085) (1.5787) (-5.6486) (-5.1930) (1.4598) (1.7582) f stat 35.28*** 34.40*** 0.126 0.0388 57.50*** 50.34*** 1.001 1.674 r-sq 0.309 0.303 0.00160 0.000490 0.421 0.389 0.0125 0.0207 obs 90 90 90 90 90 90 90 90 n hospitals 10 10 10 10 10 10 10 10 note: t statistics in parentheses, * p < 0.10, ** p < 0.05, *** p < 0.01 source: made by authors in table 9, the result regarding the impact of covid-19 on human resource expenses and use of medical supplies for 2020 vs 2019 are shown. the models with the highest r-squared are 11 and 12, respectively between 0.44–0.39. variable lognb and lognd are statistically significant at 1% level of significance and positively influence ‘change in medical expenses with drugs’ — %ed. our results are supported by the literature in the field as well. dalu et al. (2021) analyzed the italian region lombardy, table 9: fixed-effects regression outcomes regarding the impact of covid-19 on human resource expenses and use of medical supplies for 2020 vs 2019 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) %ed %ed %esm %esm %er %er %edi %edi %elm %elm lognb 0.857*** -0.193 3.515* 0.204 -1012.1 (7.891) (-0.097) (2.081) (0.077) (-0.309) lognd 1.029*** -1.590 4.449* -0.363 -1711.3 (7.173) (-0.632) (2.087) (-0.109) (-0.410) _cons -3.644*** -3.392*** 12.49 17.24† -11.44 -11.23 4.414 6.627 6340.6 7801.6 (-7.329) (-6.629) (1.3754) (1.9241) (-1.482) (-1.478) (0.367) (0.558) (0.424) (0.524) f stat 62.27*** 51.45*** 0.009 0.400 4.332*** 4.357*** 0.006 0.011 0.096 0.168 r-squared 0.441 0.394 0.0001 0.005 0.053 0.053 0.00007 0.0001 0.001 0.002 obs. 90 90 90 90 88 88 89 89 86 86 n hospitals 10 10 10 10 10 10 10 10 10 10 note: t statistics in parentheses, * p < 0.10, ** p < 0.05, *** p < 0.01 source: made by authors 34 respectively the luigi sacco hospital which had, in the highest influx of covid-19 patients, a number of 280 beds out of which 30 in the intensive care unit (icu). the authors’ research underlines the importance of medical attention and drugs during the pandemic. therefore, the increased expenses with drugs in the face of such disease which spreads exponentially is crucial in order to decrease the number of sick or deceased persons due to covid-19. 5. conclusions resilience after a huge shock such as covid-19 and the predictability of expenses in hospitals is vital for a better financial management. if recent balance sheet data can be used in order to estimate future changes that will help hospitals prepare the organization for the future challenges that are expected to happen. our study presented, for the first time as far as we are aware, the structural modification of different expense categories in public hospitals as a result of shifting their activity to fight exclusively against a pandemic. having in regard that any expense category reacts differently and presents different correlation strength, we captured the connection of the most important expense categories with indicators reflecting the magnitude of the pandemic. we found that the romanian hospitals used in our sample, dedicated to treating the covid-19 cases showed, from a statistical point of view, that adjusted total expenses is positive and stronger related with the number of monthly deceased persons than with the number of monthly sick cases due to covid-19. similarly, a positive and statistical significant relation has been identified between the use of goods and services with the number of monthly deceased due to covid-19. from the human resources expense point of view, the independent variable that underlines the number of monthly deceased due to covid-19 confirms the previous results, respectively it has been shown to be statistically significant at a 5% level but it has a negative impact on the expenses with special allowance. in these models both variables that are used for covid-19, namely the number of sick persons and deceased due to the pandemic are statistically significant and have a negative impact on the special allowance received by the hospital personnel. however, the model where the number of deceased persons due to covid-19 had been considered better explains the variance of special allowance expenses, respectively with approximately 48%, representing the highest value. regarding the medical supplies, only expenses with drugs and sanitary materials seem to be strongly significant with covid-19 outputs, while expenses with reagents, disinfectants, and laboratory materials were not directly influenced by the magnitude of the pandemic. furthermore, when we compared the changes in expenses, the impact of covid-19 over the period of 2020 vs. 2019, our results were reinforced by the previous outcomes, respectively the expenses by category where the number of monthly sick 35 cases and deceased due to covid-19 has a positive impact on %ate and %ugs at 1% level of statistically significance. also, the outcomes of the regressions revealed that the models with the monthly sick cases variable better explain the variance of expenses (adjusted total expenses and the use of goods and services). on the other hand, the results concerning the medical supply expenses hold only for drugs whereas the models with sanitary materials as dependent variable barely showed values for r-squared (0.01% and 0.5%). instead, models having as dependent variable expenses with reagents are influenced by the number of monthly sick cases and deceased at the same level of statistically significance and r-squared. lastly, the present paper reveals the measures and financial effort made by the romanian government in order to prevent the sanitary crisis. the empirical outcomes may be biased since the selected balance sheets refer to entire hospitals and not only the departments and/or sections concerning covid-19. however, the aggressive transmission of the virus by air led to the decision that, in the vast majority of time, the sampled infectious disease hospitals were dedicated exclusively to the treatment of covid-19. references: 1. al-gheethi, a., al-sahari, m., malek, m.a., et al., ‘disinfection methods and survival of sars-cov-2 in the environment and contaminated materials: a bibliometric analysis’, 2020, sustainability, vol. 12, no. 18, art. no. 7378. 2. bai, g. and zare, h., ‘hospital cost structure and the implications on cost management during covid-19’, 2020, journal of general internal medicine, vol. 35, no. 9, pp. 2807–2809. 3. catană, ş.a., ‘coronavirus (covid-19) pandemic – effects and correlations in the european union countries’, 2020, sea practical application of science, vol. 8, no. 23, pp. 169–174. 4. dalu, d., rota, s., cona, m.s. et al., ‘a proposal of a “ready to use” covid-19 control strategy in an oncology ward: utopia or reality?’, 2021, critical reviews in oncology/ hematology, vol. 157, pp. 1–6. 5. dan, y.y., tambyah, p.a., sim, j., et al., ‘cost-effectiveness analysis of hospital infection control response to an epidemic respiratory virus threat’, 2009, emerging infectious diseases, vol. 15, no. 12, pp. 1909–1916. 6. hassan, m.k., ‘management accounting and organizational change: an institutional perspective’, 2005, journal of accounting & organizational change, vol. 1, no. 2, pp. 125–140. 7. hernández-quevedo, c., scarpetti, g., webb, e. et al., ‘effective contract tracing and the role of apps: lessons from europe’, 2020, eurohealth, vol. 26, no. 2, pp. 40–44. 8. hill, a., wang, j., levi, j., heath, k. and fortunak, j., ‘minimum costs to manufacture new treatments for covid-19’, 2020, journal of virus eradication, vol. 6, no. 2, pp. 61–69. 9. international monetary fund, government finance statistics manual, washington, d.c.: international monetary fund, 2014. 10. mullen, l., potter, c., gostin, l.o., cicero, a. and nuzzo, j.b., ‘an analysis of international health regulations emergency committees and public health emergency of international concern designations’, 2020, bmj global health, vol. 5, art. no. e002502. 36 11. toner, e. and waldhorn, r., ‘what hospitals should do to prepare for an influenza pandemic’, 2006, biosecurity and bioterrorism: biodefense strategy, practice, and science, vol. 4, no. 4, pp. 397–402. 12. wiesen, j., komara, j.j., walker, e., wiedemann, h.p. and guzman, j.a., ‘relative cost and outcomes in the intensive care unit of acute lung injury (ali) due to pandemic influenza compared with other etiologies: a single-center study’, 2021, annals of intensive care, vol. 2, no. 41, pp. 1–8. 13. world health organization, international health regulations (ihr), geneva: who, 2016. 14. world health organization, technical specifications of personal protective equipment for covid-19, geneva: who, 2020. 178 abstract having in view the low absorption of european funds, it is extremely necessary to have a regional administrative system put in place. the present paper, based on a many-sided critical study of functional relations among human settlements, offers a viable alternative to current controversies concerning romania’s administrative-territorial organization. proceeding from regional, county and local polarization cores, a four-level type of regional administration has been devised, namely, the region, the county, the small rural district (rom. plasă) and the town/commune, among which clear-cut hierarchical relations of decentralization and concentration of services are to be established. what has emerged is a number of eleven administrative-territorial structures worth being vested with regional administrative status. these structures are based on the historical regions developed over time as homogeneous mental and functional spaces. keywords: administrative organization, regional converging centers, relations, territory, romania. a proposal for romania’s administrative organization based on functional relations in the territory radu săgeată radu săgeată researcher, institute of geography, romanian academy, bucharest, romania tel.: 0040-213-135.990 e-mail: radu_sageata@yahoo.com transylvanian review of administrative sciences, no. 46 e/2015, pp. 178-196 179 1. introduction regional development over the last twenty years has been focusing the interest of scientifi c research, becoming a major topic of discussion for the central and local authorities, for entrepreneurs and public opinion alike. the reason for assessing the economic and social disparities of regional development is twofold. in the fi rst place, the offi cial documents elaborated in romania after 1990 show that interand intra-regional gaps have widened because, despite all the policies trying to equalize development opportunities, regional polarization is still powerful. in the second place, traditional regional disparities across the romanian territory continued to exist in the second half of the 20th century despite declared eff orts to att enuate them (antonescu, 2003). the steep economic decline of the 1990s was amply refl ected also in the political-administrative decisions which shifted from the ideological perspective to a dominantly economic one. a fi rst step in this direction had in view the principle of restitutio in integrum which characterized most political decisions in matt ers of legislation up to the mid-1990s, when a number of laws were passed regulating the situation of nationalized houses, rehabilitating some political personalities of the inter-war period, stipulating the objective presentation of romania’s contemporary history and of the communist system, in an att empt to correct the arbitrary decisions made by the regime abolished in 1989. in line with this rehabilitation policy, they decided to re-establish the administrative-territorial structures dismantled in 1950 (săgeată and simileanu, 2007). romania’s offi cial request for eu membership lodged on june 22, 1995 opened up the road to negotiations for assuming the european community aquis. as regards the administrative-territorial structures, that moment marked the development of initiatives to set up territorial units comparable in area and demographic size to regions in europe. the idea of integrating former administrative structures gained ground against proposals of fragmentation based on the former county patt ern. as a result, the eight development regions emerged in 1996 constituted the territorial framework for the implementation of development policies. they were mentioned in the green paper. regional – development policy in romania, elaborated by the government and the european commission, the 1997 phare program and sanctioned by law no. 151/1998 on regional development in romania (benedek, 2004; bakk and benedek, 2010). now and then, the regional development policy catches public att ention and fundamental questions are being raised concerning the legitimacy, representativeness and functionality of these regions. those contesting these att ributes are reminded of the necessity to have a regional framework capable to meet also eu requirements. supported or criticized, regional development still poses many questions that need to be answered, moreover so, as the process of integration will turn the continent into a ‘europe of regions’ (labasse, 1991). the poor absorption of european funds at local level has re-opened the polemic about the viability of existing counties. within the current territorial patt ern, counties 180 are not large enough to allow small, local projects to become part of comprehensive regional strategic projects. besides, a more effi cient absorption of european funds devoted to local development projects requires the substantive reduction of costs and of public administrative bureaucracy, a bett er correlation between public decision-making, the specifi c needs and problems of local communities and their particular development opportunities distinctively diff erent for each of them (www.advocacy. ro). att aining these goals implies forming regional territorial structures (nuts 2) by amassing existing counties or new ones, the viability of which depends on creating administrative regions matching territorial functional relations and fl uxes among the regional sett lement system. proceeding from the european and romanian experience in the political-administrative regionalization of the territory, the work suggests an administrative-territorial outline of romania based on the functional relations between sett lements and the distance between polarization cores and subordinated sett lements. the main administrative-territorial regionalization models of eu-member states according to their particularities, as well as the main post-1989 directions and trends of manifestation within this area have been considered. in view of it, the author advances an alternative solution for romania’s administrative-territorial regionalization, relying on the functional relations set at the level of the human sett lement system. 2. european experiences regions in the eu vary widely in terms of origin and structure. the great territorial and demographic disparities between regions in the eu member states, as well as between those within individual states are the outcome of the specifi c way in which each of them was formed and evolved in the course of history. in view of this reality, some unitary principles of regional development policies were being elaborated for the entire space of the european economic community (eec) as early as 1972; in 1975, the european regional development fund (erdf) was created with the aim of implementing regional development and eliminating territorial unbalances (antonescu, 2011). a unitary basis for analysis of all the economic and social phenomena throughout the eec space was developed as late as 1988, when the european statistical offi ce (eurostat) issued the nomenclature of territorial units for statistics (nuts). initially, it contained three hierarchical levels (nuts i – macro-regional, equivalent to federal; nuts ii – regional, and nuts iii – department or county level) distinguished by certain demographic thresholds (table 1). this working tool facilitated the correspondence between regional levels in the eu states, on the one hand, and between them and the administrative structures of national states, on the other (alexandru, ivanoff and gilia, 2007). this standardization has led to distinguishing two categories of regions: – administrative or political-administrative regions with a deeply-rooted regional identity built over some long periods of time, that also have a unitary cultural, ethnical and linguistic background (the lands in germany, the regions and depart181 ments in france, the regions and provinces in italy and belgium, the autonomous communities in spain, etc.); – statistical-territorial regions, kind of artifi cial make-up, devoid of any regional personality or historical antecedents, the outcome of the aggregation of existing lower-rank territorial-administrative units (zeat in france, regieungsbezirk in germany, landsdelen in the netherlands, standard regions and groupings of comitats in the united kingdom, amter groupings in denmark, groupings of development regions in greece, groupings of autonomous communities in spain, or development regions in romania) (săgeată, 2008a). later on, this hierarchization was supplemented with other two statistical-territorial levels: nuts iv, based on inter-commune structures, and nuts v, based on the commune. at present, the romanian regional system has the following statistical-territorial levels: nuts ii (sanctioned by law no. 151/1998, comprises 8 development regions without administrative and juristic person status, average population number / region 2.8 million inhabitants); nuts iii (41 counties and bucharest municipium, represents romania’s administrative-territorial structure) and nuts v (320 towns, among which 103 municipia (except bucharest) and 2,859 communes with 13,285 villages (on january 1st, 2013). the romanian regional structures, patt erned on the british model of inter-communal association, are marked by higher inter-regional disparities than the intra-regional ones, a situation that restricts the degree of territorial cohesion and implicitly of functionality. therefore, in the author’s opinion, a regional outline based on historical regions, which in time have developed individual traits according to traditions, urban polarization areas, complementary social-economic particularities and a homogeneous cultural and spiritual heritage, would be the solution (săgeată, 2004a). the functional att ributes of these regions are embedded in the inhabitants’ psyche, the region becoming actually a mental space, a space of reference for the locals, of communion between man and his life environment, a fundamental element for any space structure to be sustainable. mental spaces are also functional spaces, as well as homogeneous ethnical and cultural spaces, structured from bott om to top according to the relationships established among the local communities (cocean, 1997, 2002). most regions in europe are largely mental spaces, shaped by a long-lasting historical process (duby, 1995). there are cases when the locals’ regional identity is stronger than their national identity (flanders and wollonia in belgium, the länder in germany and austria, the regions in italy and france, or the autonomous communities in spain). table 1: the demographic thresholds of the fi rst territorial-statistical levels statistical territorial levels demographic thresholds (inh.) maximum minimum nuts i 3,000,000 7,000,000 nuts ii 800,000 3,000,000 nuts iii 150,000 800,000 source: eec report (1991) 182 therefore, we would say that the regions which have become mental spaces are also the most viable ones for gett ing administrative status. romania’s territory has three types of mental spaces corresponding to three distinct spatial levels: macro-territory – the historical provinces; middle territory – the historical lands (the former small rural district seats, e.g., the land of vrancea – ţara vrancei), and micro-territory (communes) (cocean and ciangă, 1999-2000). 3. an administrative-territorial history of regions in romania the territorial evolution of romania has been very much infl uenced by the country’s geographical position at the cross-roads of central, southern and eastern europe. in view of it, the geopolitical context of the evolution of the romanian national state has been a complex and unstable one. having as neighbors the most powerful empires in mediaeval and contemporary times (the habsburg empire in the west, the ott oman empire in the south and the russian empire in the east), the country inevitably fell into their sphere of infl uence. the mix of population and the geopolitical pressure produced multiple cultural infl uences of diff erent origin and impact: graeco-byzantine, slav and turkish in the south; turanian and russian in the east; polish and austrian in the north; hungarian and german in the west and center, adding to the romanian people’s latin and orthodox substrate. like in many other states, and especially in those of central and eastern europe, romania’s territorial make-up was a stagewise process that began in 1859 with the unifi cation of the two romanian principalities – moldavia and wallachia. as early as 1862, the fi rst legislative initiative concerning the administrative-territorial organization expressed the necessity for the creation of some space units, the size of regions, capable to administer the territory effi ciently. the bill drafted by barbu catargiu had in view to establish a bett er link among the country’s regions, between the central power and the local administrations. it provided for the establishment of four general prefectures (north, maritime, central and east) including 6-9 counties (rom. judeţe). the idea of delimiting some regional areas is constantly advanced in most of the future administrative-territorial units (rom. general căpitănii); in 1907 and 1912, p.p. carp suggested still other units (rom. dregătorii), and regional circumscriptions, respectively (erdeli, 1997). in 1918, as a result of the peace treaties signed at the end of the first world war, the greater union added new provinces (basarabia, bucovina and transylvania) to the national territory, fact that highlighted inter-regional disparities not only in the economy and in the social and transport infrastructure, but also in the administrative-territorial divisions. the long period of time in which the romanians cohabitated with other nationalities in territories administered by diff erent imperial capitals made them have diff erent opinions on administration than the central-based ones promoted in the ‘old kingdom’ of romania (formed of wallachia and moldavia). as a consequence, the political class, the representatives of the national minorities and the romanians who lived in transylvania, basarabia, bucovina and the cadrilat183 er (south dobrogea) sustained that the best environment in which national cohesion and a climate of tolerance between the majority population and the minorities could develop was a decentralized administrative structure that would allow inhabitants from diff erent parts of the country to keep their old institutions, distinguishing their culture and traditions from those of neighboring regions. they considered that true unity could not be att ained by ignoring the diff erences existing between various parts of the national territory, because they had evolved under distinct political systems; neither by trying to equalize all existing systems, because the main goal of government should be to ensure national unity in diversity (săgeată, 2006). this distinct legacy refl ected in the administrative map of romania (1918-1925) on which the heterogeneous administrative-territorial structures that were formed and developed under diff erent political-administrative systems were associated (săgeată, 2008b). this is why, in the inter-war period, almost all the important political parties and the scientifi c elite used to elaborate projects of administrative unifi cation; some of those projects had in view the creation of a centralized system, others promoted administrative regionalism based on decentralization and local autonomy. this desideratum was passed into the 1925 law for administrative unifi cation which established that romania’s territory would be divided in 71 counties through the unifi cation of six counties in bucovina (cotmani, gura humorului, siret, văşcăuţi, vijniţa and zastavna) and the separation of caraş-severin into two counties: caraş and severin. the existence of a large number of counties whose area, economic potential, demographic potential and number of fi rst-rank administrative-territorial units was distinctively diff erent, made it imperative to associate in order to create the optimal environment for a bett er collaboration in sett ing up, or maintaining, social-economic and cultural institutions (săgeată, 1999). association did not imply territorial merging, but the creation of a judicial and institutional framework to att ain a series of specifi c objectives. this process materialized in the inter-war period by the successive formation of macro-regional administrative structures through the aggregation of counties: ministerial directorates (1929-1931) and lands (rom. ţinuturi) (1938-1940). when, on march 6th 1945, the fi rst pro-soviet communist political party came to power, ample mutations in the administrative-territorial organization of the country took place. they did not constitute an immediate priority as the 1948 constitution preserved the former classifi cation into communes, plase (small rural districts) and counties. the political subordination of the territorial-administrative structures became a reality only on september 8, 1950, when the law stipulated that the country’s territory was to be divided in 28 regions and, following the soviet model, in rayons (districts) and communes. these divisions were not based on geographical or historical criteria as in 1929, but only on considerations of ‘social-economic complexity’. the only units that met this criterion were those ‘directly supporting the state’s central bodies in implementing state or party policies’ (oroveanu, 1986). their confi guration 184 did not resemble the former counties, which had been delimited mostly by natural borders, basically the carpathian arc and the danube. the rationale behind sett ing up administrative units twice larger than the former counties was to subordinate the agricultural regions to the larger urban centers and in this way achieve an integrated agri-industrial complex and strengthen the infl uence of the proletariat over the peasantry who was reluctant to accept the ‘reform’ imposed by the communist political class. the establishment of large administrative divisions instead of the 58 counties had considerably reduced the number of administrative centers, so that investments were to be earmarked mainly to the former units. the 28 regions were outlined on economic criteria, in line with the soviet administrative patt ern, but they soon proved to be a much too fragmented structure, incapable of coping with the political requirements of the time. they could not survive the 1952 constitution which, more than the 1948 one, copied the soviet model. thus, different processes of unifi cation caused the disappearance of 12 regions, two new ones being formed: craiova through the merging of dolj and gorj regions, and the hungarian autonomous region, a copy of the oblasts (soviet administrative units), bringing together the territories inhabited by the szecklers of covasna, harghita and mureş. these new regions were not large enough, so that four years later, in 1956, two of them, arad and bârlad, were dissolved. at the same time, the former patt ern suff ered some changes, in that districts from one region were incorporated into another. after the retreat of the soviet troops from romania (1958) and the elaboration of a policy pinpointing on national values, old national names reappeared on the country’s administrative map. the transition was thus made from a soviet-type communist stage, characterized by stalinist uniformity and rejection of the ‘bourgeois’ past, to a nationalist communist stage of respect for the national past and its connotations, rejecting the russo-soviet cultural model of stalinist inspiration. so, the year 1960 witnessed a new administrative reform that modifi ed once again the structure and confi guration of the 16 regions, by eliminating some of them or shifting some districts from one region to another (helin, 1967). the idea of regionalization had been accepted and debated ever since the foundation of the romanian national state until the communist political system came to power. it appears, however, that the region was a space unit romanian rulers were not familiar with, nor were they ready to administer it. larger than the county (deemed to be the traditional administrative-territorial unit in romania), the region failed to become an operational notion. moreover, being patt erned on the soviet model contributed to its loss of popularity with both planners and public opinion (enyedi, 1992). the administrative organization into regions and rayons (districts) in 1960 and 1968, had in view a series of particularities of the romanian territory, such as traditional relationships between the regions in terms of effi cient subordination to the central political authorities. this would explain recurrent ‘administrative readjustments’ 185 of a non-viable structure. it was a situation artifi cially maintained by the sovietization of the entire cultural, economic and social life given that the red army troops were stationed on romanian soil. the political events that had marked the former communist bloc between the 6th and the 7th decades, correlated with the retreat of the soviet army from romania (1958), enabled bucharest’s policy to distance itself from moscow and revert to national values. against this background, the premises for a new administrative-territorial organization of the country were in place and the law for the administrative organization of the socialist republic of romania was passed on february 17, 1968; it stipulated a two-level territorial organization, an upper level, the city and a lower, local level, the commune (oroveanu, 1986). the 39 counties were based on the inter-war patt ern inspired by the french department model. whereas the regions created in 1950 were based on the principle of a homogeneous economic potential, the counties established in 1968 were intended to be functional structures, including several types of geographical units with varied resources liable to facilitating economic complementariness (argeş, dâmboviţa, buzău, prahova, vrancea, gorj, bihor, timiş, satu mare, maramureş, etc.) (stahl, 1969). even the counties with an apparently uniform relief, such as those situated in the lowland, had a variety of microforms on their territory, resulting from the association of meadows and of the two lakes formed by the danube. the counties were conceived to be, in theory at least, diff erent in terms of structure and potential (judeţele româniei socialiste, 1969). as far as surface-area was concerned, the counties did not vary so much as they had used to (the ratio between the two extremes – timiş and covasna being 2.37 to 6.6 at the administrative organization of 1925), but signifi cant numerical diff erences among communes did exist: e.g., 33 communes in covasna county and 125 in ilfov county. the oversized ilfov county, conceived to be polarized by bucharest, the capital of romania, was not viable, being reorganized in 1981. the absence of major administrative decisions between 1968 and 1988 led to the accumulation of tensions in inter-sett lement relations when, at the beginning of 1989, the urban network was enlarged and 23 sett lements were raised to town status, most of them discharging agri-industrial functions. these new towns were situated in poorly polarized areas, deeply rural, and the counties they were part of had no urban network of their own. suburban communes, arbitrarily included into the urban area, were to become rural communes. after 1990, several currents of opinion on the administrative-territorial organization of romania would emerge. one of them, vocal right after that year, upheld the multiplication of the number of counties by re-establishing the ‘counties dismantled in an abusive manner’ under the 1950 administrative reform which copied the soviet model (iordan and alexandrescu, 1996). others contended that the number of counties should be halved, in keeping with eu nuts, otherwise they might ‘suff ocate local autonomy, turning counties into poorer territorial communities, hence more state-dependent’ (popescu, 1999). a third set of opin186 ions, solidly substantiated by geographical studies, maintained the delimitation of the administrative-territorial structures proceeding from the main polarizing centers (which could be assigned an administrative function), and the relations among them (săgeată, 2000, 2006, 2011a, 2011b). 4. an analysis of the main post-1989 opinion currents concerning regionalization in romania while before 1989 stress was laid on the fragmentation of administrative-territorial structures and a comeback to the interwar patt ern (iordan and alexandrescu, 1996; iordan, 2003) in 1995, when romania became a eu candidate state, the situation was reconsidered, the majority of options being for macro-regional structures larger than counties, comparable in terms of surface-area and demographic size with the regional structure of most european union member states. so, law no. 151/1998, modifi ed and updated by law no. 315/2004, sanctioned the formation of eight development regions. however, they have no administrative status, being now simply statistically reported territorial units (dumitrescu, 2008). what current polemic is about is just the transformation of these units into counties. swift proposals, underlain by political reasons, have been made without specialist advice or public opinion views. proposals to amass present counties into regional structures (nuts 2) two political parties have already advanced proposals in this direction: 1. the democrat-liberal party wishes the present development regions to be given administrative status (cozmei, 2012); 2. the magyar democratic union in romania and the magyar civic party, agreed by hungary, insist on the formation of a ‘szekler’ land patt erned on the former magyar autonomous region (1952-1960), and a new administrative delimitation at romania’s north-west frontier similar to the 1940-1944 one (vulpe, 2011). a much more realistic proposal, fi tt ing into the present-day economic-social realities of this country, upholds an administrative re-organization into 10 regions (şoica, 2012; cocean, 2013). this regionalization model proceeds from the historical regions, which had been functional territorial structures, a quality acquired by a long experience. with a few exceptions, this proposal suggests amassing existing counties into regional territorial structures that do not coincide with the polarization areas of county-seats. in our view, an administrative-territorial organization should partially overlap with the historical provinces, without ignoring the hierarchy of administrative centers of urban polarization areas, nor the functional relations established among them, either. as a matt er of fact, except for the last proposal (cocean, 2013), all the other proposals have been made by the representatives of some political parties. thus, the liberal democratic party – pdl suggested reducing the administrative apparatus and have a bett er control over the central administration in the territory; the 187 magyar democratic party – udmr and the civic magyar party – pcm would like a magyar minority-dominated administrative structure. 5. a proposal for an alternative solution of regional delimitation based on functional relations in the territory the evolution of the romanian urban system in the last 50 years gave birth to ample mutations in the relationships between human sett lements, because investments were preferentially directed towards certain urban centers (fi rst towards county-seats and, after 1968, towards the newly-appointed county-seats), a situation that contributed to increasing the infl uence of urban areas. at macro-territorial level, in order to simplify the implementation of regional development policies, adjacent administrative units with similar social-economic profi les had to be identifi ed and grouped into historical provinces, well individualized by common traditions, socio-economic complementarities, as well as cultural and spiritual heritage. since their functional particularities were refl ected in the inhabitants’ psychology, the region became a mental space, the space which the inhabitants used to refer to for their identity and communion between man and his/her environment, as a fundamental element for the sustainability of any spatial structure (cocean, 2002). in view of it, the present article aims at establishing a regional-based administrative planning system of romania’s territory, based on the historical provinces which correspond to well-established mental frameworks, and have specifi c functional relations (infrastructure and human interaction systems) that should be augmented. the proposals put forward herein suggest an administrative organization of the romanian territory proceeding from a regional system. thus, the intermediate (department) level would be represented by counties (some of them divided in smaller units of the inter-war plasa type), and the lower level by towns and communes. clearcut hierarchical relations will be established between these levels, namely either decentralization, or deconcentration of services: 1) decentralization between the national and the regional levels and, wherever possible, the principle of subsidiarity will be applied; 2) deconcentration of relations between the intermediate levels and the lower levels. while previous proposals proceed from historical or ethnical arguments, studies of regional boundaries, established on the ground of inter-sett lement relations, are much fewer, and they are authored by geographers (săgeată, 2000, 2006; ilieş and wendt, 2012; cocean, 2013), or economists (otiman, 2013; otiman et al., 2013). the fi ndings reported in the latest studies, in particular, are questionable insofar as the validity of ensuing territorial structures is concerned, and have already been commented in detail elsewhere (săgeată, 2011a, 2011b). besides, all these studies have preserved the current county boundaries, their authors proposing only various ways of amassing regional-type territorial units. our study is among the fi rst that goes beyond this level, suggesting corrections of the dysfunctions existing in the present county system. 188 to this end, regional, department and underdepartment convergence, as well as the respective theoretical polarization centers have been identifi ed on the basis of the distances between these centers and the subordinated sett lements along the main routes of access. in this way, the bounds of urban infl uence zones, and implicitly of the polarized administrative structures, have been delineated (e.g., if subordinated sett lement x, situated between a and b polarizing centers, lies at 15 km from center a and at 16 km from b, it will fall into a polarization area; subordinated sett lement y, situated between the same polarization centers, lying also at 16 km from center a and at 15 km from b, will be included in area b, between the two subordinated sett lements x and y – transcending the boundary between the polarization area of a and b and implicitly of the administrative units established on their basis). furthermore, polarization areas were hierarchically ranked by the functional relations existing between polarizing centers. the outcome is the creation of administrative levels (e.g., if sett lement x is polarized by center a which, in its turn, is subordinated to b, which discharges territorial functionsregional metropole, then sett lement x is part of a county-type administrative structure (department) co-ordinated by center a, but included into a regional administrative unit co-ordinated by center b). 5.1. methodology in order to establish the confi guration of the proposed administrative patt ern, three distinct stages had to be covered: 1. the identifi cation of regional and local converging centers capable of being vested with an administrative function, by hierarchical levels, in terms of their polarizing potential. assessing the polarizing potential was based on three categories: demography, economy and localization, selected in the light of historical records and their present geographical position within the urban system. in this way, four samples have been outlined (c 1 – c 4) (table 2 and figure 1): 2. polarizing areas of selected urban centers were established based on the travelling distance between them and the adjacent sett lements. when inter-sett lement distances could be covered by several routes (motorway, highway and railway), the bett er ones have been taken into consideration, having in view natural favorable and restrictive factors (relief patt ern and water network). depending on the distance to the polarizing urban cores, the polarizing administrative units have been grouped into several categories: administrative units situated in the immediate vicinity of the polarizing urban center (less than 10 km away), most of them being former suburban communes; strongly polarized administrative units (less than 25 km from the polarizing urban centers), their polarizing degree depending on the polarization potential; moderately polarized administrative units (between 25 and 50 km from the polarizing center) include rural sett lements and small towns, secondary local polarizing cores also emerging from this category; poorly-polarized 189 table 2: regional converging centers suitable to being vested with a political-administrative function (c 1 – c 4) city samples city names observations c 1 : former countyseats (1960-1968) bacău, baia mare, braşov, bucureşti, constanţa, craiova, cluj-napoca, galaţi, deva, iaşi, oradea, piteşti, ploieşti, suceava, târgu mureş, timişoara. this category of urban centers continued to be fi rst-rank administrative centers throughout the 20th century c 2 : current residential seats alba iulia, arad, alexandria, bistriţa, botoşani, brăila, buzău, călăraşi, focşani, giurgiu, miercurea ciuc, piatra neamţ, reşiţa, râmnicu vâlcea, satu mare, sibiu, sfântu gheorghe, slobozia, slatina, târgovişte, târgu jiu, drobeta turnu severin, tulcea, vaslui, zalău all these towns lost the regional or department administrative center status, with negative consequences for their socio-economic development c 3 : former underdepartment seats (1925-1950) bârlad, blaj, caracal, câmpulung, câmpulung moldovenesc, dej, dorohoi, făgăraş, fălticeni, huşi, lugoj, odorheiu secuiesc, roman, rădăuţi, râmnicu sărat, sighişoara, sighetu marmaţiei, turda, tecuci, turnu măgurele for most of them, the result was stagnation, even regression, despite of rehabilitation attempts to assign them municipality status and/or preferential industrial investments, which actually imbalanced the respective towns c 4 : potential administrative centers are local polarization towns suitable to gaining local administrative center status1 brad, calafat, caransebeş, carei, câmpina, cugir, curtea de argeş, drăgăşani, feteşti, hunedoara, medgidia, mediaş, olteniţa, oneşti, paşcani, petroşani, reghin, roşiori de vede, sulina, târnăveni, urziceni, vatra dornei these are generally urban centers with more than 30 000 inh. which, with a few exceptions, became municipalities after 1990 due to their location potential (in depressions, deeply rural, or hardly accessible areas – sulina, calafat, brad, vatra dornei, urziceni, etc.). 1 urban centers with a restrictive location potential (mangalia, câmpia turzii, aiud, orăştie, năvodari, and mioveni), situated close to regional or local polarizing centers have been eliminated from this category. figure 1: regional converging centers suitable to being invested with political-administrative function (c 1 – c 4) and their inter-relations c 1 – county-seats between 1950 and 1968; c 2 – current residential-seats, gaining or regaining this status after the 1968 administrative reorganization; c 3 – underdepartment seats between 1925 and 1950 not regaining this status afterwards; c 4 – potential administrative centers, local polarization towns suitable to gaining underdepartment administrative center status, 1. subordination, 1 a. diffuse subordination, 2. competition. 190 administrative units (more than 50 km from a polarizing urban core), defi ne deeply rural areas with diff use polarization (figure 2) (săgeată, 2004b). figure 2: diffuse urban polarization areas versus potential administrative centers in order to assess the infl uence areas of potential administrative centers, the road-distance model has been correlated with accessibility to the railway network (figure 3). figure 3: administrative-territorial units with free access to the railway network 191 since some towns, selected as potential administrative centers, are situated at the periphery of the current counties (especially those in samples c 3 and c 4), their infl uence areas transcends the limits of current administrative structures. besides, the percentage of intra-county and inter-county polarizing cores is sensibly equal. 3. the quantifi cation of existing relations between urban centers considered viable for being vested with administrative function (samples c 1 – c 4). three types of relations have been distinguished, namely, subordination, competition and indiff erence, whereby the resulted territorial structures, based on polarizing areas, have been hierarchically organized by administrative levels. thus, subordination relations at the level of the urban centers determined integration relations at the level of the polarizing territorial structures, which, in turn, generated administrative department and local levels; competition and indiff erence relations produced fragmentation relations that outlined the limits among regional administrative structures. 5.2. results and discussions on the basis of historical regions formed in the course of time as homogeneous functional and mentally-perceived spaces, and proceeding from the relationships established at the level of regional sett lement systems, as well as from the road distance between communal centers and the local polarizing cores, a number of eleven macro-territorial structures, considered viable to have regional administrative status, have been distinguished. the administrative structures, relying on regional converging polarizing cores and the relations among them, could be named after the historical provinces they are located in: bucovina (northern moldavia), sustained by co-operation between the towns of botoşani and suceava; central moldavia between iaşi and bacău; the lower danube centered on the galaţi-brăila conurbation; dobrogea on constanţa; muntenia on bucharest; oltenia on craiova; banat, primarily on timişoara and secondarily on arad; maramureş, relying on the co-operation between baia mare and satu mare; transylvania, including crişana, centered on cluj-napoca; south-eastern transylvania, based on the co-operation between braşov and sibiu (figure 4). regions are formed of counties, themselves delimited by zones of infl uence polarized by regional centers given county-seat status. at a lower level, counties include smaller units of the so-called plase type, corresponding to the infl uence zones of major towns subordinated to county-seats; at the base-level, counties consist of the present-day communes. changing inter-communal boundaries could be done in a second phase of administrative reform and only at the proposal, or with the agreement, of the respective local communities. since both the local level (commune) and the number of existing counties, and therefore of seats, are being maintained, implementing the model proposed by us does not imply great costs, because no new locations for mayoralties, prefectures, etc. are necessary. what is important is the clear-cut delimitation of the tasks, devolving on the regional authorities, from those assigned to county and local authorities. 192 the main advantage of our model is its functional capacity in the territory, given that distances between administrative centers and subordinated sett lements are being optimized, which is an essential prerequisite for a more effi cient administration. the map in figure 10 is the only administrative-territorial outline of romania achieved by measuring all rail-and-road distances between administrative centers and subordinated sett lements, established by hierarchical levels in terms of subordination relations in the national sett lement system. that is why, this proposal is fundamentally diff erent from other proposals based either on political affi nities, or on a desire to re-establish the former territorial structures, but without adequately assessing the changes occurred in the romanian urban system over the last fi fty years. a fi rst step to inform decision-makers on the advantages of this empiric model was the publication of a comprehensive synthesis study (romania’s administrative-territorial organization. evolutions. optimization proposals) on the internet site of the ministry of regional development and public administration, in which a critical-objective analysis is made of the advantages and disadvantages of each model of romania’s administrative-territorial reorganization proposed after 1990. 6. conclusions having in view previous experiences both in europe and romania, as well as the current features of the country’s urban system, the present work advances a new figure 4: proposed administrative-territorial reorganization based on relationships established among regional settlements 193 three-level administrative-territorial hierarchy, by region, department (rom. county) and underdepartment (rom. plasă) based on polarizing cities, themselves arranged hierarchically by levels and infl uence zones. this is one of the fi rst scientifi c studies in 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audierii publice ‘regionalizarea româniei – între pericole şi oportunităţi’ [the regionalization of romania – why?, annex 1, rationale of the public hearing titled the regionalization of romania between hazards and opportunities], academia de advocacy, timişoara, [online] available at htt p://www. advocacy.ro, accessed on february 20, 2013. 62. strategia naţională pentru dezvoltare durabilă. orizonturi 2013-2020-2030 [national sustainable development strategy for 2013-2020-2030], 2008, romanian government, environment ministry, united nations development programme romania, [online] available at htt p://www.undp.ro, accessed on june 2, 2012. 63. strategia pentru consolidarea administraţiei publice 2014-2020 [strategy for strengthening public administration, 2014-2016], ministerul dezvoltării regionale şi administraţiei publice, [online] available at www.mdrap.ro/userfi les/consultari_publice/30_06_14/ anexa1.doc, accessed on october 14, 2014. 5 abstract the aim of this paper is to analyze the particularities of human resources management in the public institutions from bihor county (romania) and hajdu-bihar county (hungary). the comparative dimension of our study is framed in hofstede’s categories of cultural differences in organizational culture. the data presented is derived from a broader study conducted on the implementation of new public management at local public administration institutions in romania and hungary. the project entitled ‘establishment of r&d programmes in the fi eld of new public management between economic faculties of higher education in hajdu-bihar and bihor counties’ (huro/0901/277/2.2.2) was developed in partnership between faculties of economics from the universities of oradea and debrecen. our results on public human resources provide relevant insight in the processes regarding personnel in the public institutions in this region and propose solutions for improvement of the observed weaknesses. the employees of the 60 public institutions included in this research consider themselves participants in the decisional process, yet the evaluation process needs to be reshaped in order to provide a better balance between performances and the rewards system. keywords: human resources management, new public management, public institutions, hungary, romania. obstacles, realities and opportunities in human resources management in public administration institutions from bihor county (romania) and hajdú-bihar county (hungary)*1 maria-madela abrudan tomina gabriela săveanu mirabela matei mária ujhelyi maria-madela abrudan (corresponding author) associate professor, department of management – marketing, faculty of economics, university of oradea, oradea, romania tel.: 0040-259-408.798 e-mail: mabrudan@uoradea.ro tomina gabriela săveanu researcher, research center for adult education, university of oradea, oradea, romania mirabela matei teaching assistant, department of management – marketing, faculty of economics, university of oradea, oradea, romania mária ujhelyi associate professor, department of management – marketing, faculty of economics and business administration, university of debrecen, debrecen, hungary * acknowledgements: the project ‘establishment of r&d programmes in the fi eld of new public management between economic faculties of higher education in hajdu-bihar and bihor counties – huro/0901/277/2.2.2’ is fi nanced by the european regional development fund as part of hungarytransylvanian review of administrative sciences, no. 45 e/2015, pp. 5-25 6 1. introduction in both romania and hungary there are still problems in the functioning of public institutions, both countries still adapting to the principles of new public management (npm). the challenges of npm are refl ected in the need for the human resources, at both individual and institutional levels, to be bett er prepared to answer to the demands of clients as well as to fi nd best solutions for the underlying practices within each institution (androniceanu and sandor, 2006). effi ciency, effi cacy, fl exibility, transparency and other npm principles (oecd, 1995) must be put into practice by the employees of public institutions, thus all policies and regulations in this direction must take into account the way these employees are prepared and motivated to act upon these principles. in our study we start from the new coordinates of public management, the new model actually surpassing the traditional model of public administration. it’s certainly a results orientation and not a process oriented approach, as in traditional administration. as the scientifi c literature shows: ‘an effi cient administration can’t be built only through the development of laws and decrees, but with the support and considering of the people working in this fi eld, supporting directly the civil servants who are facing increased responsibilities, with fewer resources, and which are confronted daily with the rising expectations of the client-citizen’ (minică, 2004). at present, the human resources (hr) function in the public services is focused on relations between employees that can be characterized as being impersonal. the recruitment and selection process is made through a formal competition; promotion is closely related with age and political affi liation. organizational structure is developed at central level and imposed to decentralized units. in all these institutions the strict compliance with the procedures and norms is emphasized and, thus, the place and duties of each civil servant are set by diff erent rules. this approach has a major drawback – it is not stimulating for public managers, in terms of motivating the employees they lead, because they focus more on the rules and traditions. regarding motivation, in terms of new public management, the actions of human resource managers must take into account each employee as a distinct individuality and create a performance evaluation system in close correlation with an incentive system in order to reward the results of employees (androniceanu, 2007; băcanu 2008; parlagi, 1999). marius profi roiu (2011) considers that in order to combine the modern creative management with the classical administrative hierarchy changes must be implemented in several directions such as: the labor contracts in the public sector, the decisional system, performance measurement systems, the system of objective sett ing, responsibility, and control. to these we add the selection process and motivational aspects, as romania cross border co-operation programme 2007-2013, value: 80,818 euro, duration: 1 year (2011-2012), coordinator: faculty of economics and business administration, university of debrecen, hungary, project partner: faculty of economic sciences, university of oradea, romania. 7 these are directly linked with performance measurement and job satisfaction (abrudan, 2005). this is why, in this phase of our research, we focused on several key directions: motivation, selection and evaluation, professional development, decisional process and trust. starting from these general assumptions this paper presents the strengths and weakness of public human resources management from romania and hungary. the data presented are derived from a broader study on the implementation of new public management principles in local public administration institutions in bihor county (romania) and hajdu-bihar county (hungary). in this study 60 mayor’s offi ces were investigated, 30 in each country. out of the twelve research topics within the npm paradigm, three were specifi cally devoted to diff erent aspects of public human resources management (abrudan et al., 2011). the article fi rst presents the particularities of human resources management (hrm) in public institutions as concluded from an in-depth literature review. cultural specifi cities of romania and hungary from the organizational culture point of view are presented in order to frame the comparative analysis conducted within the empirical section. the research results provide relevant insight in the processes regarding personnel in the public institutions in this region and propose solutions for improvement of the observed weaknesses. the employees, both managers and their subordinates, included in this research consider themselves participants in the decisional process, yet the evaluation process needs to be reshaped in order to provide bett er balance between performances and the rewards system. the concluding section synthesizes the main fi ndings and emphasizes concrete proposed solutions. 2. trends in public hrm research results of work undertaken in an institution or public authority is subject to a greater extent to how public managers manage, train and develop competence, professionalism, intelligence and creativity of human resources (androniceanu, 2008). public managers and human resource professionals in public institutions have general and specifi c powers and responsibilities regarding grounding strategies and hr policies. the process involves special att ention to each activity, namely: recruitment and selection, performance evaluation, motivation, professional training, participation in decision-making process and establishing trust and mutual respect between managers and subordinates. 2.1. particularities of specifi c activities in public hrm when studying public administration, one of the fundamental questions is how to motivate employees to work in public services and towards achieving public purposes (steen, 2006). public service motivation occupies a central place in research and writing in the fi eld of public management. public service motivation refers to the kind of motivation (such as altruism or public interest) that determines an individual to carry out activities related typically to the public sector (vandenabeele, scheepers and hondeghem, 2006). 8 the scientifi c literature underlines that work motivation among public employees and managers is diff erent from that of private sector employees (wright apud islam and ismail, 2008, p. 346). diff erences in hierarchical level are stronger determinants of work motivation than diff erences in sector, which is not surprising considering the fact that, regardless of the sector in which they work, employees have the same human needs, possess similar social characteristics, and work in organizations that rely mainly on the same control methods (matheson, 2012). most of the diff erences between public and private sector employees can be fully or partially explained by diff erences in work content rather than by diff erences in work sector (nawab, ahmad and shafi , 2011, p. 110). about the perceived importance of intrinsic incentives, there are no signifi cant diff erences between public and private sector employees according to nawab, ahmad and shafi . they argue that the level of work motivation is infl uenced by factors such as: gender, age, hierarchical level, work characteristics. yet, another study validates a series of hypotheses, such as (buelens and van der broeck, 2007, p. 70): – public sector employees are less motivated by wage. – employees on higher hierarchical levels are more motivated by wage. – employees with a high level of education are less motivated by wage. – younger employees are more motivated by wage. – male employees are more motivated by wage. however, several researchers argue that private sector employees value fi nancial incentives more than public sector employees. direct economic benefi ts are less important for public sector employees (houston apud buelens and van der broeck, 2007, p. 65). leete (leete apud buelens and van der broeck, 2007, p. 67) argues that just like in the case of nonprofi t organizations, public sector organizations tend to rely mostly on intrinsic motivated employees. most studies have concluded that public sector employees are more intrinsically motivated and, thus, extrinsic rewards have a diminished eff ect. public sector employees are more likely motivated by job characteristics, personal development, recognition, autonomy, interesting work and the opportunity to learn new things (houston apud buelens and van der broeck, 2007, p. 65). on this basis, there is also evidence that clerks with higher hierarchical positions are more satisfi ed with their jobs than the romanian average (saveanu and saveanu, 2011). regarding motivation, in terms of new public management, human resources managers’ actions need to set aside: ‘the traditional concept of employee administration that is technically one that treats the data, do analysis and draw notes, consisting of operational decisions in proceedings, but must be aware of promoting personalized dimensions in relations with its employees.’ more, managers must consider each person as a distinct individuality and create a performance evaluation system, closely correlated with an incentive system to reward employees (minică, 2004). the involvement in decision making and establishing communication channels based on manager-subordinate trust and mutual respect can certainly contribute to 9 increased intrinsic motivation of employees in public institutions as well as on increased performance (roman, 2004). regarding recruitment and selection in public administration, the real challenge is to fi nd the answer to the question from where and how it is possible to att ract a larger number of competitive and motivated candidates from which to select those required. hence, the need is to establish and identify ways of att racting potential candidates to prove actual skills and motivation for a career as a civil servant. also, eff ective tools for selecting suitable candidates who best meet the requirements of vacancies have to be identifi ed. in the new public management approach, the professional development of public employees shall consist of a coherent process and ongoing programs in order to develop their knowledge and skills. this objective can be achieved through specifi c programs integrated in global strategies and policies that can reshape and adapt public sector employees’ training and behavior in order to meet the new requirements (verboncu and deaconu, 2008). also, performance evaluation process of employees has to be an objective one and must refl ect the actual results of the work of public employees. when not seen as a pretext, a meaningless action, or as an administrative task, performance evaluation turns out to have a great infl uence on activities and organizational framework of a public institution, with repercussions on effi ciency in general. 2.2. national culture and its infl uence on employee work behavior. diff erences between romania and hungary 2.2.1. national culture and work motivation when dealing with comparative studies in diff erent countries it is not recommended to ignore or neglect the cultural particularities of the countries studied. cultural values infl uence how an individual perceives and understands a situation, and therefore aff ects the behavior and work motivation of that individual. cultural values serve as criteria for assessing the meaning of various motivating factors and other work related factors (erez, 2008). since people from diff erent cultures use diff erent cultural values to interpret the same situational factors, is to be expected that what is perceived as a motivating factor in some cultures may be perceived as a de-motivator in other cultures. some steps to identify the relation between national culture and motivation have been made, but not enough to clarify this issue. several researchers believe that there is a direct link between cultural dimensions and key motivational factors (marinaș, 2010). for the past two decades, geert hofstede’s cultural dimensions theory (hofstede, hofstede and minkov, 2010) has been used extensively to explain diff erences in work behavior and management practices in diff erent cultures. hofstede’s theory consists of four original cultural dimensions, i.e.: individualism versus collectivism, power distance, uncertainty avoidance, masculinity versus femininity. subsequently, two new cultural dimensions have been added: long term orientation versus short time orientation and indulgence versus restraint (bibu, 2003). 10 hofstede’s approach is not singular in this domain. based on hofstede’s dimensions, the globe survey (house et al., 2002) conducted in 62 countries has extended the typology of cultural dimensions, and fons trompenaars in his research (trompenaars and hampden-turner, 2004) has identifi ed seven dimensions of culture. 2.2.2. cultural diff erences between romania and hungary for a complete and accurate insight on work related aspects in romania and hungary it is necessary to take into account the cultural specifi cities of the two countries. as seen in figure 1, despite geographical proximity and historical background, there are signifi cant diff erences between the values of the cultural dimensions of the two countries. figure 1: hungary versus romania – cultural dimensions values source: the hofstede centre, [online] at http://geert-hofstede.com/romania.html the cultural dimensions traditionally taken into account (hofstede, hofstede and minkov, 2010; erez, 2008) in explaining the diff erences in the work motivation fi eld are: individualism versus collectivism, masculinity versus femininity, and power distance. for romania and hungary, the particularities of these cultural dimensions are summarized below. power distance (pdi) romania scores 90 on power distance which means that people accept a hierarchical order in which everybody has a place and which needs no further justifi cation. subordinates expect to be told what to do and the ideal manager is a benevolent autocrat (hofstede, hofstede and minkov, 2010). hungary scores lower on this dimension (46) which means that power is decentralized and managers count on the experience of their team members. hungarian employees expect to be consulted, while communication is direct and participative (the hofstede centre). individualism versus collectivism (idv) with a score of 30, romania is considered a collectivistic society which fosters strong relationships where everyone takes responsibility for fellow members of their 11 group (hofstede, hofstede and minkov, 2010). hungary, with a score of 80 is an individualistic society. this means that individuals are expected to take care of themselves and their immediate families only (the hofstede centre). masculinity versus femininity (mas) romania scores 42 on masculinity/femininity dimension and is thus considered a relatively feminine society. confl icts are resolved by compromise and negotiation and free time and fl exibility are valuable incentives (the hofstede centre). hungary scores 88 on this dimension and is thus a masculine society in which managers are expected to be decisive and assertive. organizations focus on equity, competition and performance (hofstede, hofstede and minkov, 2010). 3. research methodology this paper presents some of the research results obtained within the project ‘establishment of r&d programmes in the fi eld of new public management between economic faculties of higher education in hajdu-bihar and bihor counties’ (huro/0901/277/2.2.2). the main objectives of the project were: (1) the analysis of european best practices in the fi eld; (2) the identifi cation of problems, needs and training topics in public administration in the two regions; and (3) grounding a common training program for specialists in the fi eld. especially for the second objective, a common research was conducted in order to identify the main challenges public administrations in the two countries face in implementing the new public management approach. in the framework of this pilot project, researchers from university of debrecen and oradea took the fi rst steps in the development of a common methodology for the analysis of the implementation of new public management (npm) in mayor’s offi ces from urban and rural areas from romania and hungary. these instruments were tested within 30 public administration institutions in both counties involved in the project: bihor on the romanian side and hajdu-bihar from the hungarian side. in the fi rst stage of the study, the team selected a list of twelve topics derived from the general topic of new public management, relevant for the local level. concretely, within this project there were developed and tested three research instruments used to collect information from mayor’s offi ces from rural and urban localities in the two neighboring counties. these instruments were: (1) the general information sheet, (2) questionnaire addressed to managers of public institutions (civil servants as mayors, head of departments with a minimum of 5 subordinates), (3) questionnaire for the employees, executive civil servants. the last two were developed symmetrically to gather information from both parts regarding the processes within each institution, while the fi rst refl ected factual information regarding the institution. regarding the general topics refl ecting aspects related to human resources, planning and managerial style there were a total of 39 questions, 21 addressed to the managers and 18 to employees. a complete description of the instruments and research topic can be found in abrudan et al., 2012. 12 this set of instruments was administered in 60 mayor’s offi ces from urban and rural areas, 30 in romania and 30 in hungary. the questionnaires were self-administered, after being explained by a researcher from the project team. depending on the size of the institution there was a diff erent number of questionnaires to be fi lled in: from one and up to fi ve for managers (the mayor and chiefs of diff erent departments having at least fi ve subordinates) and from three to fi fteen questionnaires were gathered from employees in each institution (employees with no coordination att ributions, all public servants). the localities which took part in this study will not be mentioned as requested by some of the representatives of the participant institutions. the general structure of the sample is presented in table 1. table 1: distribution of responses on sub-samples no. of valid questionnaires sample romanian sub-sample hungarian sub-sample rural sub-sample urban sub-sample total managers 60 31 42 49 91 employees 85 82 77 90 167 the romanian sample included 10 mayor’s offi ces from urban localities (municipalities and towns) and 20 from rural areas, while the hungarian comprised of 12 urban and 18 rural mayor’s offi ces. the data was analyzed by the project team using spss package, in two separate data bases for managers and employees. in this paper we present the general samples, including both the romanian and hungarian responses. we made comparisons between the two national samples, and, where relevant, also between the rural and urban sub-samples from the study. 4. human resources management in local public administration insti tutions in bihor county (romania) and hajdu-bihar county (hungary). research fi ndings 4.1. motivation challenging for the employees of the public institutions included in our study were the questions regarding the way in which they can express their creativity at the workplace, and in carrying out their duties and responsibilities, as an element of intrinsic motivation. the data collected in the common study reveals the fact that a comparable percentage of managerial staff and of public servants from romanian and hungarian public institutions consider that they can express to a great extent their inventive, creative spirit at the workplace. as shown in figure 2, the managers appreciate these elements of intrinsic motivation as stronger than their subordinates: 63.7% of managers affi rm that the employees can express totally and to a great extent their creative spirit, while only 25.9% of employees give the same answers. there is no signifi cant diff erence between rural and urban sub-samples, yet the t-test analysis shows that the hungarian managers report signifi cantly (f=0.535, 13 figure 2: expression of inventive, creativity and personality at work, aggregated results (ro&hu). sig=0.00) lower levels for expression of employees inventive and creative spirit at their workplace (mean value of responses in hungarian sub-sample – 3.23, while in romanian subsample – 3.83 (on a scale from 1 meaning not at all, to 5 meaning totally) – detailed responses presented in figures 3 and 4. on the one hand, we consider that this response can be determined by the high desirability rates of the answers on the romanian side. also, this response can be att ributed to the diff erences in culture between the two countries. hungarians may have scored lower because of the high score of individualism in their country (hence, the greater need for expressing personality and individuality) and lower power distance index (hence, the managers’ expectation that employees would express their inventive and creative spirit). figure 3: expression of inventivity, creativity and personality. managers’ responses from romania and hungary figure 4: expression of inventivity, creativity and personality. employees’ responses from romania and hungary as the diagrams clearly show, the initial hypothesis, below 10% of employees can express freely their innovative spirit, their creativity and even their personality, can be refuted. on average 55% of managers consider their employees are provided with a creative work environment, while only 10% of the employees feel that way, as shown in figure 2. such a big diff erence can be explained most probably by a combination of 14 desirable responses provided by managers, along with a diff erence in understanding the elements of freedom of expression of inventivity, creativity and personality. it is important to underline the fact that the diff erences between responses are quite relevant: 78% of romanian managerial staff consider that the employees – public servants of the institution can express totally or to a great extent their inventive, creative spirit at the workplace and only 39% of hungarian managerial staff consider it, while 59% of the romanian executive public servants and 40% of the hungarian executive public servants consider the same. regarding the position of managerial staff , the responses are in contradiction with the romanian (90) and hungarian (46) pdi score which may suggest a lack of sincerity. the employees’ position regarding their individual level of motivation in accomplishment of their tasks, confi rms that most subordinates from both target groups (55% from the general sample), do not consider themselves motivated in their work. figure 5: opinions regarding the motivation function (ro&hu) the motivational mechanism used, the most frequently mentioned by both romanian and hungarian managers were: verbal appreciations, interest in creating an adequate climate for achieving the objectives (cheerfulness, enthusiasm, balanced behavior, harmonious environment etc.), involvement of subordinates in decisional process, discussions with employees, fi nancial incentives in the limits prescribed by the law, etc. on their behalf, employees that answered to this question, mentioned they are motivated at organizational level with: fi nancial incentives, moral and spiritual incentives such as appreciations, work environment, and also at individual level by their wish to gain their superiors’ trust, personal development plans, etc. in this regard there is a signifi cant diff erence between the romanian and hungarian samples: the employees from the hungarian public institutions consider in a much higher degree that they are motivated to achieve their goals (p=21.107, sig=.000). on the other hand, the employees of the mayors’ offi ces from the urban localities are the ones which are signifi cantly less motivated (p=4.95, sig=.029). the managers’ re15 sponses do not vary signifi cantly. this could be explained not only by the cultural diff erences that exist between the two countries, but also by the diff erences in living standards. romanian employees value to a greater extent fi nancial incentives (the use of which is restricted in the public sector). table 2: use of motivational function, on groups and countries managers employees hungary romania hungary romania no 35.48 37.50 37.04 72.62 yes 64.52 62.50 62.96 27.38 4.2. recruitment, selection and evaluation a signifi cant number, more than 80% of both managers and public servants from both romanian and hungarian public institutions, consider that the methods and procedures of recruiting and selecting human resources should be changed – this means that only persons showing real skills and motivation for a career as a public servant have to be hired. figure 6: satisfaction with recruiting and selection of human resources (ro&hu) there is a positive association (p=0.20) between the perceived need to change the recruiting and selecting human resources within the institutions and countries, as romanians answered affi rmatively to this question in a signifi cantly higher percentage. nonetheless, it is known that one of main problems of public administration is represented by the personnel – which often do not prove the abilities and competences required for the position they occupy. in this regard, our answers prove once more the need to redesign the policies for recruiting and selection of public servants, the elaboration of transparent selection criteria correlated with the job descriptions, in order to ensure the selection of persons which prove real competences, aptitudes and motivation. however, there are only a few negative answers and we consider that generalizations should be based on higher samples. 16 the professional performance assessment – as a distinct and major activity in human resource management – was emphasized within this project using several questions. the viability of answers is supported by the common points of view presented by the two groups: managers and employees. accordingly, personnel with managerial positions were asked the following questions: do you think performance evaluation of the employees of the institution you activate in is characterized by a high degree of objectivity?; to what extent do you consider that performance indicators are established for each post and show in a coherent, right and transparent way the level of achieved results/performances?; and do you discuss with every single employee subordinate to you about the results of the evaluation you’ve made?. employees were asked: do you think professional performance evaluation refl ects in an objective way your activity, the achieved results, your implication for achieving objectives?; do you discuss with the person evaluating you about the results of this evaluation?; and do you think the diff erences coming out in the process of performance evaluation on behalf of the employees can be completely justifi ed?. the research results show that there is no signifi cant diff erence between the romanian and hungarian samples, or between rural and urban sub-samples, regarding the objectivity level of performance evaluation in the considered institutions. as figure 7 and table 3 show, around 70% of managers and almost 90% of employees – public servants from both samples consider that the evaluation system is an objective one. nevertheless the 30% of managers who responded negatively to this question should not be neglected, indicating there is a felt need for improvement. figure 7: opinions on the performance assessment of human resources (ro&hu) table 3: objectivity of performance evaluation process managers employees hungary romania hungary romania no 35.48% 31.58% 12.5% 9.76% yes 64.52% 68.42% 87.5% 90.25% 17 more, approximately 74% from subordinated public servants from romanian and hungarian public institutions from this analysis, consider that the diff erences resulting from the evaluation process are fully justifi ed, sustaining the appreciation of the objectivity of this process. figure 8: appreciation of fairness of performance evaluation on behalf of employees (ro&hu) as shown in table 4, hungarians view the evaluation results as more accurate and relevant in signifi cantly higher degree then romanians (p=7.75, sig=.007). as already stated, organizations in masculine cultures (as is the case of hungary) focus on equity, competition and performance (hofstede, hofstede and minkov, 2010) which could explain the diff erences in employee perception of the evaluation process. table 4: objectivity of performance evaluation process hungary romania no 16.3% 35.3% yes 83.8% 64.7% one must not ignore the 26% from this category of employees which answered negatively to this question. this reveals that there is still some reluctance, explicable by the inherent nature of the evaluation process which, being conducted by people, will always have some degree of subjectivity. an adequate evaluation process entails discussions between the people who conduct the evaluation and the person under evaluation, between managers and employees, in order to clarify and explain possible diff erences in the assessments. from this perspective, the managers’ answers and the ones from employees revealed that in the institutions included in the analysis these types of discussions were held. as shown in figure 9 presented below, 80% of managers claim they discuss the evaluation results with each of their subordinates, statement supported by 66.5% of the employees, proving the viability of responses. the answers of employees to this question vary signifi cantly (p=7.72, sig=.008) between the two countries – the romanians reported higher rates of discussing the 18 figure 9: discussion of evaluation results (ro&hu) results of evaluations with their chiefs. any generalization in this direction must be tested on a larger sample and the verifi cation of actual practices in each institution. table 5: discussion of evaluation results, on groups and countries do you discuss with your employee / your manager about the results of evaluation? managers employees hungary romania hungary romania no 22.58% 18.33% 43.90% 23.53% yes 77.42% 81.67% 56.10% 76.47% regarding the exercise of the motivation function, one of the fi ve managerial basic functions, the position expressed by managers and their subordinates do not coincide. the managers from both target groups, in a proportion of 63% declare that, despite the rigidity of the legislative system, they can act upon this function, as they can infl uence / determine their subordinates to achieve the targeted objectives. the high rate of non-responses to this question (13%) raises suspicions regarding the level of understanding of the fundamental elements of the managerial act, at least regarding motivation. the responses regarding the correlation between the awards system and the achieved results are in the same line: 58% of employees from romanian and hungarian public institutions affi rm that there is no such correlation, while a high percentage (25%) do not respond to this question. there is a signifi cant association (p=11.5; sig = .001) between the perceived fairness of rewards allocation and the two countries. as table 6 presented below shows, the romanian employees consider in a much higher degree that the relation between evaluation results and rewards is not fair, which means that the evaluation system is not working correctly and has implications for employee motivation. under the condition of the recognized and highly debated lack of motivation of personnel in romanian and hungarian public institutions, our fi ndings prove that in this fi eld, the public human resources management still has to catch up. the moti19 figure 10: opinions regarding fairness of incentives used (ro&hu) table 6: opinions regarding fairness of incentives used, employees on countries hungary romania no 63.49% 89.06% yes 36.51% 10.94% vational policies for the personnel in the public system have to be reshaped, starting with the real needs of employees and their performances. 4.3. professional development regarding the professional development programs for the employees, 56% of managers included in the study, from both countries consider that these are well designed and cover both the individual and institutional needs for development. we must emphasize that these individual needs should be derived from the evaluation of achieved performance. figure 11: personal development (managers – ro&hu) 20 there is a signifi cant association (p=22.009, sig=0.000) between the answers of romanian managers and their hungarian counterparts: more romanians respond positively to this question, as table 7 shows below. table 7: personal vs. institutional development, managers on countries – are the programs for employees’ development conceived to the same extent according to their individual and the institution’s needs for development? hungary romania no 79.31 26.67 yes 20.69 73.33 the employees’ responses from romanian and hungarian local public institutions, regarding the question on satisfaction with professional development programs, are equally divided: 50% are satisfi ed, while 50% are not. this neither confi rms, nor supports the affi rmations of managers. the diff erences between the romanian and hungarian responses are not signifi cantly diff erent. 4.4. decision making referring to the decisional process, our common fi ndings reveal that 55% of managers consider they have autonomy (48% to a great extent, and 7% total autonomy). the subordinates’ position is similar as 54% declare their managers have decisional autonomy. these opinions prove that the decisional system succeeds to adapt, even if in an incipient manner, to the patt erns of modern public management. however, it is important to note that 34% of managers are skeptical and affi rm that this autonomy is limited, and 26% of employees do not formulate a position – which indicates either they did not understand the question, either they could not identify this characteristic. figure 12: opinions about autonomy of managers (ro&hu) regarding the fl exibility of the decisional process, again, the opinions of managers and employees coincide to a great extent: 54% of managers consider they have a fair amount of fl exibility, while 73.8% of the employees support this statement. in both cases, there are no signifi cant diff erences between romanian and hungarian samples. 21 figure 13: opinions about fl exibility of managers (managers – ro&hu) managers in rural localities consider themselves more fl exible in a signifi cantly higher degree then in urban localities (sig. = .000; mean in urban =3.43; mean in rural =3.98). regarding the responses of the employees, there are no diff erences between rural/urban nor between romanian and hungarian subsamples. the opinions of managers’ that consider there is a lack of fl exibility coincide to a great extent to the ones that are skeptical about autonomy. more, the high percentage of non-responses (28%) of employees can be explained as in the case of autonomy: either lack of understanding, either impossibility to assess this characteristic at their work place. the results underline the fact that the decisional processes in public institutions from our study are grounded in modern trends. figure 14: opinions involvement in decision making (ro&hu) regarding participative management – there is also a common point of view: of course managers (90%) are more likely to declare it but, as we can see in figure 15 22 below, the percentage of public servants (63%) declaring the same is a signifi cant one. there are no associations regarding this question between romanian and hungarian samples, nor between rural and urban ones. in this case, the second hypothesis formulated within our study, namely that less than 50% of public institutions’ employees consider that the manager involves his/her subordinates in the decisional process – can be refuted. a more participative managerial approach was observed in both romanian and hungarian institutions, practices which are in line with the new principles of public management. 4.5. trust the perception of managers and employees (public servants) from both romanian and hungarian public institutions, regarding the need for developing a policy in order to win the employees’ trust and fellow-feeling is the same – over 86% of the managerial staff and over 78% from employees gave an affi rmative answer to this question, suggesting there is a high perceived autonomy of local representatives regarding the policies in their institutions. figure 15: the need for policies to develop employee fellow-feeling and trust (ro&hu) as our results shown, the formulated responses highlight the fact that human resources management, as a clearly cut activity within new public management, is understood through values that constitute the foundation of the organizational culture oriented towards own employees. 5. concluding remarks and future recommendations because cultural values aff ect behavior and other work related aspects by infl uencing how an individual perceives and understands a situation, when conducting a comparative study one must take into consideration the cultural particularities of the countries studied. although our fi ndings show that the diff erences in the perception of romanian and hungarian employees on hrm practices in local public administra23 tion institutions in bihor county (romania) and hajdu-bihar county (hungary) are rather minor, this could be explained by cultural diff erences. concretely, the diff erences between the responses from the two samples refer to the motivational levels, as the hungarian subordinates declare in a signifi cantly higher percentage that they are motivated to achieve their tasks (the fi rst dimension of our study). this result is directly linked with the second dimension regarding the evaluation system where signifi cant diff erences were also reported, namely that it is perceived as less fair in the romanian case. these fi ndings indicate that the hungarian public system, at least as refl ected in our sample, adheres to a greater extent to the principles of new public management, as the professional performance assessment, the systems of rewards and consequently employees’ motivation are bett er developed. as stated in the analysis section, these diff erences can be explained also as a consequence of the ‘masculinity’ that characterizes the hungarian organizations, a culture that focuses on equity, competition and performance. referring to the human resources strategies and policies, the problems already identifi ed in the literature are persistent: the employees of public institutions confi rm the need for the elaboration of personnel recruiting and selection policies in order to ensure the employment of people which prove real abilities and motivation for a career as a public servant. employees are not suffi ciently motivated in caring out their tasks; there is no correlation between the level of awards received from the organization and results or performances achieved. nevertheless, our research highlights the fact that regarding performance evaluation improvements were made, increasing the level of objectivity of this process. this positive outcome demonstrates that eff orts are made with good results in improving the management of human resources in the public system, based on the principles of new public management. the fi nal conclusions regarding the decisional process, the fourth dimension under study, are somewhat optimistic as over 50% of employees from romanian and hungarian public institutions from both counties declare that autonomy and fl exibility characterize their work. however, managers refl ect a higher involvement of subordinates in the decisional process than the reported percentages from employees. the result of our research also shows that the managers and subordinates from the romanian and hungarian public institutions consider that the policies in their institutions are focused on winning the employees’ trust and fellow-feeling which constitute the foundation of the organizational culture oriented towards employees. the main limits of our research are derived from the low representativeness of our data, as this was conducted as a pilot study. consequently most of our results should be tested on larger samples, including both more respondents from the same institution as well as more public institutions. nonetheless, our data bring more insight in an area of study which is still under development. the main conclusion of our study is that in the fi eld of human resources the public system has still to put in consistent eff orts, towards: (1) the creation of mechanisms 24 which will allow the real exercise of managerial function of motivation, (2) sett ing a fair correlation between rewards and performances, as well as (3) the conception of directions regarding the management of individual and organizational careers etc. all these proposals refl ect the principles of a professional human resources management. consequently, the solutions can be found in the development within public institutions of a managerial culture based on performance, and the implementation of a critical analysis mechanism for the public administration. references: 1. abrudan, m.-m, managementul resurselor umane, oradea: editura universităţii din oradea, 2005. 2. abrudan, m.-m, ujhelyi, m., dodescu, a. and szilágyi, e., ‘knowledge sharing for the public sector: cross-border cooperation between hungarian and romanian academics in the field of new public management’, proceedings of icickm 2011 the 8th international conference on intellectual capital, knowledge management & organizational learning, the institute for knowledge and innovation southeast asia of bangkok university, thailand, 2011, pp. 829-832. 3. abrudan, m.-m., săveanu, t. (eds.), dodescu, a., pop-cohuţ, i., sasu, d. and giurgiu, a. studiu aplicativ privind noul management public în instituţiile administraţiei publice din judeţul bihor. raport de cercetare, oradea: editura universităţii din oradea, 2012. 4. androniceanu, a. and sandor, a., ‘impactul ‘noului management public’ asupra administraţiei publice din românia’, 2006, revista administraţie şi management public, no. 6, pp. 13-19. 5. androniceanu, a., ‘noul management public, un posibil model pentru reforma managementului public în sistemul administrativ din românia’, 2007, revista administraţie şi management public, no. 8, pp. 52-57. 6. androniceanu, a., noutăţi în managementul public, bucharest: editura universitară, 2008. 7. băcanu, b., organizaţia publică. teorie şi management, bucharest: polirom, 2008. 8. bibu, n., management comparat, timişoara: mirton, 2003. 9. buelens, m. and van der broeck, h., ‘an analysis of diff erences in work motivation between public and private sector organizations’, 2007, public administration review, vol. 67, no. 1, pp. 65-75. 10. erez, m., ‘social-cultural infl uences on work motivation’, in kanfer, r., chen, g. and pritchard, r.d. (eds.), work motivation: past, present, and future, siop organizational frontiers series, new york: routledge, 2008, pp. 501-538. 11. hofstede, g., hofstede, g.j. and minkov, m., cultures and organizations: software of the mind: intercultural cooperation and its importance for survival, mcgraw-hill, 2010. 12. house, r., javidan, m., hanges, p. and dorfman, p., ‘understanding cultures and implicit leadership theories across the globe: an introduction to project globe’, 2002, journal of world business, vol. 37, no. 1, pp. 3-10. 13. islam, r. and ismail, a.z., ‘employee motivation: a malaysian perspective’, 2008, international journal of commerce and management, vol. 18, no. 4, pp. 344-362. 14. marinaş, c.v., managementul comparat al resurselor umane, bucharest: editura economică, 2010. 25 15. matheson, c., ‘the motivation of public sector employees: an outline of six orientations to work’, 2012, administration & society, vol. 44, no. 2, pp. 207-237. 16. minică, m., ‘managementul resurselor umane în administraţia publică’, 2004, revista transilvană de știinţe administrative, no. 3(12), pp. 128-135. 17. nawab, s., ahmad, j. and shafi , k., ‘an analysis of diff erences in work motivation between public and private sector organizations’, 2011, interdisciplinary journal of contemporary research in business, vol. 2, no.11, pp. 110-127. 18. oecd, governance in transition: public management reforms in oecd countries, paris: oecd, 1995. 19. parlagi a. (ed.), managementul administraţiei publice locale, serviciile publice, bucharest: editura economică, 1999. 20. profi roiu, m. (ed.), andrei, t., dinca, d. and carp, r., reforma administraţiei publice în contextul integrării europene, institutul european din românia, studiul nr. 3, [online] available at htt p://beta.ier.ro/documente/studiideimpactpaisiii_ro/pais3_studiu_3_ ro.pdf, accessed on may 5, 2015. 21. roman, t., ‘knowledge management – miza strategică a organizaţiei’, 2004, revista de management intercultural, vol. vi, no. 1 (10), pp. 13-19. 22. saveanu, t. and saveanu, s., ‘do we really hate our jobs? determinants of job satisfaction in romania’, 2011, annals of university of oradea – economics section, tom xx, no. ii, pp. 723-729. 23. steen, t., ‘public sector motivation: is there something to learn from the study of volunteerism?’, 2006, public policy and administration, vol. 21, no. 1, pp. 49-62. 24. the hofstede centre, [online] available at htt p://geert-hofstede.com/romania.html, accessed on november 5, 2012. 25. trompenaars, f. and hampden-turner, c., managing people across cultures, chichester: capstone, 2004. 26. vandenabeele, w., scheepers, s. and hondeghem, a., ‘public service motivation in an international comparative perspective: the uk and germany’, 2006, public policy and administration, vol. 21, no. 1, pp. 13-31. 27. verboncu, i. and deaconu, a., ‘managerial valences of the post sheet in a public institution’, 2008, revista calitatea – acces la succes, no. 10, pp. 13-17. 71 abstract the aim of this article is to develop the fi ndings of a previous research on policies regarding proactive information disclosure, both voluntary and mandatory. we present and analyze new evidence on the factors that infl uence decisions taken in this respect. this study is focused on mercosur area, a region that has received little previous research attention on these issues. to achieve the study goals, we analyze the proactive information disclosure made by local authorities, regarding both the degree of compliance with legal requirements and whether these local authorities are voluntarily and homogeneously implementing the proactive information disclosure policies recommended by the organization of american states (oas). finally, with respect to the voluntary information provision, we determine the infl uence of environmental factors on information disclosure. the results obtained show that transparency is more an issue of attitude than of laws, and highlight the existence of a large gap between legal requirements, the oas requirements and actual performance. finally, it can be seen that fi ve factors are statistically signifi cant for the voluntary disclosure of the oas recommended items: corruption, technology, size, mandatory disclosure policy and socio-economic development. keywords: factors, foi act, transparency policy, harmonization, website. proactive transparency policy in the mercosur local governments: regulation vs. self-regulation*1 manoli garcía-tabuyo alejandro sáez-martín maríadel carmen caba-pérez manoli garcía-tabuyo university of almería, la cañada, almería, spain tel: 0034-950-015.191 e-mail: mtabuyo@ual.es alejandro sáez-martín university of almería, la cañada, almería, spain tel: 0034-679-591.179 e-mail: alejandro.saez@ual.es maríadel carmen caba-pérez (corresponding author) assistant professor, department of economy and company, faculty of economic and business studies, university of almería, la cañada, almería, spain tel: 0034-630-811.523 e-mail: ccaba@ual.es * acknowledgement: this research was carried out with fi nancial support from the regional government of andalusia (spain), department of innovation, science and enterprise (research projects p10-sej-06628 and p11-sej-7700). transylvanian review of administrative sciences, no. 46 e/2015, pp. 71-90 72 1. introduction increasing perceptions among stakeholders that public funds are being mismanaged have eroded confi dence in and credibility of public institutions (tolbert and mossberger, 2006). to restore this confi dence, numerous authors consider that public bodies should be more transparent and allow greater access to public information (cuillier and piotrowski, 2009; relly, 2012), and the development of a legal framework to support such access is of fundamental importance (spahiu, 2012). as regards legal requirements on access to information, two facets of transparency can be distinguished: proactive and reactive (darbishire, 2010). the fi rst of these is the obligation to disclose public information, without prior request, while the second means that information on government activity will only be provided when specifi cally requested. in this context, xiao (2010) observed that legislation is placing ever-greater emphasis on the inclusion of policies promoting proactive transparency. according to relly (2012), such policies benefi t citizens and government; stakeholders can thus obtain information more conveniently and at no charge, while public bodies, by making information available at all times, are freed of the burden of responding to numerous requests. to implement proactive policies on transparency, new technologies such as internet websites are being used as a means of disseminating information without prior request (cuillier and piotrowski, 2009), and this circumstance has led to diverse legislative frameworks being established to regulate and enhance access to public information. in latin america, the organization of american states (oas) recently called for information disclosure laws to be adopted, taking into account the benefi ts of proactive disclosure based on the use of information and communication technologies (ict). accordingly, the oas has issued a model inter-american law (lmi, spanish initials), as a blueprint for countries wishing to draft a national law in this regard (or to amend an existing one), with the aim of fostering a more homogeneous culture of transparency in latin america. application of the lmi could make a vital contribution to political, economic and social integration in contexts such as mercosur, whose goals include the harmonization of legislation within its member countries (mercosur, 2010). furthermore, globalization is spurring demands for greater transparency, because economic and fi nancial decisions or events in one area may impact on other countries (florini, 1999). currently, some mercosur member countries (for example, argentina) do not have information disclosure laws, and those that do may not have followed the lmi blueprint; this is the case of uruguay, which adopted its legislation in this fi eld before the model was published. therefore, the legal situation regarding proactive policies on transparency varies considerably within the region. another point that should be taken into account is that the lmi, and laws based on it, merely stipulates minimum policy requirements. information disclosure at this 73 level might be insuffi cient to achieve the legitimation sought by public bodies, which therefore may decide, voluntarily, to publish complementary information (neuman, 2006). thus, public authorities in the mercosur region may be complying with lmi recommendations on proactive transparency (or exceeding them) even if this is not called for under their national legislation. the factors and motivations that could infl uence self-regulation policies on information disclosure by public bodies vary widely, and have been addressed in many studies, especially in developed countries. however, litt le is known about the factors that may infl uence an organization’s voluntary decision to apply the proactive transparency policies recommended by supranational bodies, especially when national laws in this respect must also be complied with. in view of these considerations, the present study has a threefold objective: fi rst, with regard to facilitating citizen participation in government aff airs, to analyze the degree of compliance by local governments in mercosur countries with national laws on proactive information disclosure. second, to consider whether these local authorities are voluntarily and homogeneously implementing the proactive information disclosure policies recommended by the oas, and to identify the measures still to be applied, in order to comply with the lmi guidelines on proactive transparency. finally, as some of these recommendations may be followed voluntarily, we also examine whether local authorities in countries where the lmi is incorporated into national legislation are more likely to follow it, and whether they are also aff ected by other factors. the fundamental aim of this study, thus, is to contribute to our understanding of mandatory policies on proactive transparency in contrast to self-regulation. in doing so, we present new evidence on the factors that infl uence a local government’s decision to voluntarily apply the proactive transparency policies recommended by supranational bodies. 2. regulating access to public information: case study of the mercosur countries the national constitutions of many countries include the right of access to public information. however, experience has shown that this right is merely hypothetical in the absence of appropriate legislation, ifstakeholders cannot readily access their constitutional courts (neuman, 2006). the existence of a law on access to public information induces public servants to act in accordance with applicable laws in their area of responsibility (coglianese, 2009). therefore, the existence of a law guaranteeing this access can make a major contribution to the democratic development of a country (piotrowski and van ryzin, 2007). additionally, these laws benefi t the economy, as public-sector transparency and information contribute to achieving a climate of trust, because the positive evolution of the market largely depends on the reliable provision of information (mendel, 2003; 74 islam, 2006; spahiu, 2012). moreover, regulation of this area is a means of combating corruption, since the very act of requiring information alerts public servants that they must act in the public interest and not seek private gain (bertot, jaeger and grimes, 2010). however, as each country is sovereign in regulating this right, large asymmetries can arise in terms of legislative content, and various international agencies and ngos are seeking to overcome this imbalance. in order to support the development of national laws, papers have been presented, focusing on general principles and requirements in this area. such documents include the open society justice initiative (2005), article 19 (2007) and the council of europe (2009), together with model laws (oas, 2010). in many cases, these publications seek to contribute to standardizing the concept of transparency within a specifi c region (commonwealth; african commission on human and peoples’ rights). in 2009, aware of an absence of harmonization in the content of their laws in this fi eld, the oas member states approved resolution ag/res. 2514, which called for the preparation of a model inter-american law (lmi) on access to information, to provide member states with the legal framework to support this right, together with an implementation guide to ensure its proper functioning. the lmi was also intended to assist countries that had already adopted legislation in this area to harmonize their transparency policy with that of the other countries. after a year of preparation,the lmi was adopted by the oas (as resolution ag/res. 2607 (xl-o/10). among the mercosur countries – argentina, brazil, uruguay, venezuela, paraguay and bolivia (the latt er two, currently in a transitional stage of membership) – not all national constitutions incorporate the right of access to public information (figure 1). moreover, despite the important benefi ts believed to be obtained from information disclosure legislation, not all mercosur countries have enacted such laws. thus, only uruguay (2008), brazil (2011) and most recently paraguay (2014), have adopted laws on public access to information. bolivia regulates access to public information through supreme decree 27329/2004, as amended by supreme decree 28168/2005. nevertheless, for decades all the mercosur countries have given international undertakings to guarantee access to public information, by ratifying international agreements in this respect, such as article 13 of the american convention on human rights (1969), article 3 of the inter-american convention against corruption (1996) and the un convention against corruption (2003), article 10 of which obliges each state party to ‘take such measures as may be necessary to enhance transparency in its public administration, including (...)procedures or regulations allowing members of the general public to obtain, where appropriate, information on the organization, functioning and decision-making processes of its public administration (...)’. during the early years of the century, att empts by mercosur countries to comply with these international commitments led to the parliamentary discussion of access to public information, but litt le was achieved until late 2006, when the pace quickened. two events were probably responsible for this acceleration: fi rst, in 2006 the 75 inter-american court of human rights handed down its fi rst judgment on the subject, ruling against the state (in claude reyes vs. chile); second, the special rapporteur for freedom of expression, of the inter-american commission on human rights, required the 32 member countries of the oas to implement legal mechanisms to guarantee access to public information. paraguay pioneered action in this fi eld, with its administrative transparency act (1728/01). however, this law actually limited freedom of access to information, and was repealed only two months later. subsequently, in 2005, the steering group on access to public information (giai, spanish initials), presented a bill in parliament, but this failed to advance. finally, in september 2013, the organization seeds for democracy and giai sponsored another bill, which was approved one year later. in uruguay, the initiative was taken by an ngo, the archives and access to public information group (gaip), composed of various human rights groups and media associations, which prepared a draft bill in 2005. this was presented to parliament in 2006 and approved two years later. in brazil, several organizations (the brazilian association of investigative journalism, transparency brazil and contasabertas, among others), began work in 2003 to promote a culture of transparency. the fi rst bill was drafted in 2006, but it was not presented to parliament until 2009, and was fi nally approved two years later. in other mercosur countries, all parliamentary initiatives on access to public information have failed to prosper, due to a lack of political will that neither parliamentary debates nor pressure from other member countries have been able to overcome. thus, although bolivia pioneered initiatives in this area in 2000, all successive att empts have failed. although the att empt made in 2004 was unsuccessful, it did lead to supreme decree 27329/2004, which aff ected only the executive power. in argentina, the fi rst att empt to regulate information disclosure took place in 2001, when the anti-corruption bureau presented a draft document, but disagree(2000) 1st init. (2005) 2nd init.. 2011 decree legislative initiatives on information disclosure law (2001) 1st initiative (2010) 2nd initiative (2004) 2nd init.. (2008) 3rdinit. (2013) 4thinit. (2006) 1st initiative constitution (article) country argentina bolivia brazil paraguay uruguay venezuela 1994 ------- 2009 article 21.6 1988 article 5 1992 article 28 1997 --------- 1992 article 28 (2001) 1st init. (2013) 3rdinit.. (2005) 1st initiative (2008) 1st initiative (2010) 2nd initiative 2004 2001 revoked 2014 2008 figure 1: information disclosure legislation in mercosur countries source: authors’ own calculations 76 ments between the government and the opposition prevented it from coming into law, and parliamentary procedures were abandoned in february 2006. after several years of neglect, the issue was revived in 2010, when a new bill was passed by both houses. nevertheless, as had happened previously, the initiative ultimately failed. despite these setbacks, argentina does have some legislation in this respect, such as act 25.188/99 on public service ethics and decree 1172-1103 to improve the quality of democracy and its institutions. in addition, regional legislation has been enacted in provinces such as entre ríos and córdoba. the country that was slowest to consider legislating on access to public information was venezuela, where in 2008 the pro-access coalition, together with venezuelan journalists, presented a draft law to parliament, without success. in 2010, another proposal was presented, by transparency venezuela and public space, but again nothing came of it. nevertheless, as in argentina, some regional initiatives have been taken to increase public sector transparency, in the states of anzoátegui (2007) and zulia (2010), among others. the proactive information policy incorporated in the laws or decrees on access to public information that have been approved in mercosur countries (i.e., bolivia, uruguay, brazil and paraguay) is very limited and undemanding, tending to favor a very conservative policy; thus, only 7, 11, 9 and 13 requirements, respectively, are imposed, and so public bodies are largely free to regulate themselves. it is noteworthy that paraguay has adopted policies on proactive information that vary depending on the public organization in question, with demands being less stringent for local authorities. this contrasts with lmi recommendations on proactive information disclosure. the oas is aware of the benefi ts of the latt er, according to its content analysis of the lmi, and has urged that all laws drafted in this respect should incorporate the mandatory disclosure of at least 46 areas of information. the nature of the proactive information required is shown in table 1, where the data are distributed, following transparency international (2010), in four groups. the lmi calls on local authorities to provide 15 specifi c items of proactive information, while the laws adopted actually require between 2 and 8 such items. proactive information on institutional relations with citizens and society is virtually ignored in the regulations currently in force in the mercosur countries, since only uruguay and paraguay take this question into consideration, although the lmi requires the proactive disclosure of 10 items in this respect. proactive information on the organization’seconomic and fi nancial position and on planning and public works is present in all the information disclosure rules of the countries analyzed, but these requirements are far less strict than those recommended by the lmi, to provide 9 and 12 items, respectively. in summary, despite the lengthy discussion of these regulations, most mercosur countries have information disclosure policies that are far from being proactive. 77 ta bl e 1: p ol ici es o n m an da to ry p ro ac tiv e tra ns pa re nc y in m er co su r c ou nt rie s re q ui re m en ts lmi bol uru bra par lmi bol uru bra par pr oa ct iv e in fo rm at io n ab ou t t he m un ic ip al c or po ra tio n 15 2 2 4 8 p ro ac tiv e in fo rm at io n ab ou t e co no m ic -fi na nc ia l i ss ue s 9 2 4 2 1  pu bl icse ct or s ta ff, re sp on sib ilit ie s an d sa la rie s  co ns ol id at ed a nd in di vid ua l b ud ge t a pp ro ve d  co m m un ica tio n m ec ha ni sm s  ex ec ut io n of c on so lid at ed a nd in di vid ua l b ud ge t  m iss io n, a im s an d an nu al o pe ra tin g pl an  au di t r ep or t  ac co m pl ish m en t o f t he o pe ra tin g pl an  re cip ie nt s of n on -re im bu rs ab le p ub lic fu nd s  pl an s an d pr og ra m s be in g im pl em en te d  st at ist ica l in fo rm at io n on a re as o f m un ici pa l m an ag em en t o f g en er al in te re st  o rg an ic st ru ct ur e an d re gu la to ry fr am ew or k  bu dg et a m en dm en ts  se rv ice s pr ov id ed  re po rt an d in di ca to rs o f a nn ua l a ct ivi ty  m an ua ls of p ro ce du re  co ns ol id at ed a nd in di vid ua l fi n an cia l s ta te m en ts  de cis io ns ta ke n an d re so lu tio ns a do pt ed  co m pa ra tiv e fi g ur es fo r t he p re vio us p er io d  m in ut es o f m un ici pa l s es sio ns pr oa ct iv e in fo rm at io n ab ou t t he p ro cu re m en t o f g oo ds a nd s er vi ce s 12 3 3 3 2  ar ch iva l a nd d oc um en ta ry in st ru m en ts  pr oc ur em en t o f g oo ds a nd s er vic es  pr ici ng o f m un ici pa l s er vic es  bi ds a nd c on tra ct a wa rd s  co de o f e th ics o r g oo d go ve rn an ce  ag re em en ts a nd c on tra ct s ex ec ut ed  pe rs on ne l: jo b tit le s an d cv  in fo rm at io n on m aj or p ub lic w or ks b ei ng e xe cu te d  o ffi cia l t ra ve l c os ts  co nt ra ct s fo r s tu di es a nd c on su lta nc y pr oa ct iv e in fo rm at io n ab ou t r el at io ns w ith c iti ze ns a nd s oc ie ty 10 0 2 0 2  li st o f p er so ns /o rg an iza tio ns in b re ac h of c on tra ct  pe rs on re sp on sib le fo r r es po nd in g to re qu es ts fo r i nf or m at io n  da te o f c on clu sio n of m aj or p ub lic w or ks  in fo rm at io n ab ou t m ec ha ni sm s fo r c itiz en e ng ag em en t  in fo rm at io n ab ou t p ub lic w or ks e xe cu te d an d ap pr ov ed p en di ng e xe cu tio n  cl ie nt a tte nt io n ce nt er  pu bl ica tio n of th e g en er al t ow n pl an  ap pl ica tio n fo rm s fo r s er vic es  cu rre nt re gu la tio ns o n m un ici pa l t ow n pl an ni ng  in fo rm at io n ab ou t p ro ce du re s fo r a cc es s to p ub lic s er vic es  te nd er in g pr oj ec ts a nd c rit er ia fo r m aj or p ub lic w or ks  pr oc ed ur e to re qu es t i nf or m at io n  co m pa ni es th at h av e te nd er ed fo r m aj or p ub lic w or ks  li st o f r es tri ct ed /c on fi d en tia l in fo rm at io n  li ce ns es , c on ce ss io ns a nd p er m its  ap pe al s pr es en te d ag ai ns t t he o rg an iza tio n  da ta o n m un ici pa l li ce ns es  su bs id ie s, g ra nt s, e tc . o ffe re d  re qu es ts a nd a pp lic at io n by c itiz en s re so lve d by a dm in ist ra tiv e sil en ce to ta l nu m be r o f pr o ac ti ve in fo rm at io n it em s re q ui re d 46 7 11 9 13 lm i: m od el in te r-a m er ica n la w; b o l: b ol ivi a; u ru : u ru gu ay ; b ra : b ra zil ; p ar : p ar ag ua y so ur ce : a ut ho rs ’ o wn c al cu la tio ns 78 3. policy on proactive information transparency and its determinant factors agency, institutional and dependence theory are the approaches most often used to explain policies adopted toward proactive transparency. taking into account these theories, our review of the literature found that various studies have examined both internal and external factors that infl uence public entities’ information disclosure policies. these factors include population size (garcía-sánchez, fríasand rodríguez, 2013),education (evans and yen, 2005), the political ideology of the governing party(tolber, mossberger and mcneal, 2008; guillamón, bastida and benito, 2011), the economic level of the population (mossberger and mcneal, 2008), the infl uence of mandatory information policies (bajoet al., 2009; baginski,hassell and kimbrough, 2004) and the infl uence of technology (debreceny, gray and rahman, 2002; xiao, yang and chow,2004) or of corruption (pina, torres and royo, 2007). accordingly, the following hypotheses are proposed. corruption: pina, torres and royo (2007) examined the relationship between the level of corruption and the level of voluntary information disclosure, and concluded that access to information enables citizens to participate in management, thus reducingopportunities for corruption (bertot, jaeger and grimes, 2010). therefore, it seems reasonable to believe that higher levels of corruption will hamper organizations’policies for voluntary transparency, and sowe propose the following hypothesis: h1: the level of corruption infl uences voluntary information disclosure. political ideology: according to garcía-sánchez, fríasand rodríguez (2013), diff erent political ideologies usually give rise to diff erent styles of government, which can lead to the application of diff erent policies on information disclosure. various studies have analyzed the infl uence of conservative and left-wing governments on the type of proactive transparency policy employed (alt and dreyer, 2006). although some authorshave found left-wing governments to be more likely to employ proactive transparency policies (guillamón, bastida and benito, 2011), others have obtained no conclusive results in this respect (grimmelikhuijsen and welch, 2012). accordingly, we propose: h2: political ideology infl uences voluntary information disclosure. technological development: information disclosure via the internet requires public entities to have suffi cient technological resources and political will. according to relly and sabharwal (2009), technology is a determinant factor of information disclosure, and these authors observed a positive relationship between these parameters; however, other authors have obtained contrary results (tolber, mossberger and mcneal, 2008). in this respect, we propose the following hypothesis: h3: the level of ict development in a country infl uences voluntary information disclosure. size: norris and moon (2005) argued that municipalities with larger populations manage larger budgets and thus are under greater pressure from stakeholders and will provide a higher level of online information disclosure. although some studies have reported a positive relationship between population size and information disclosure, othershave found this relationship to be non-signifi cant (rodríguez, caba and lópez, 2013), and in one case a negative relationshipwas recorded (da costa et 79 al., 2007). therefore, we propose: h4: the size of the municipality infl uences voluntary information disclosure. mandatory proactive transparency: according to kasznik and lev (1995), the organizations that disclose more mandatory information will be less willing to provide voluntary information, in the view that they have already made suffi cient disclosure. in the same line, baginski, hassell and kimbrough (2004) reported that regulated entities subjected to highlevels of mandatory information disclosure are less likely to provide voluntary information. therefore, it seems reasonable to assume that the level of disclosure of mandatory information will infl uence municipal policy regarding voluntary transparency. thus, we propose: h5: a high level of information disclosure due to legal obligation has a negative infl uence on voluntary information disclosure. socio-economic development: it has been argued that a high rate of literacy is required for citizens to access information (martin and feldman, 1998). in this respect, too, evans and yen (2005) reported that an adequate level of education was necessary to access and request information online. similarly, styles and tennyson (2007) argued that the economic level of the population aff ected the degree of fi nancial information disclosure by the local authority. these authors found that cities with a higher per capita income provide greater online disclosure of fi nancial information, although giroux (1989) observed a negative relationship in this respect. since the combination of higher levels of education and greater per capita income gives rise to a higher degree of socio-economic development among the population, we propose: h6: the socio-economic development of the population infl uences voluntary information disclosure. 4. method 4.1. goal 1 in line with other studies of information disclosure (díaz, archundia and nacif, 2007; lópez-ayllón and arellano, 2008), our fi rst study goal was to develop an online mandatory index (omi). the items comprising this index are those specifi ed as being of obligatory provision as proactive information in the relevant law on access to public information. from this general index we then created four partial indexes, according to the nature of the information: a) online mandatory informationonthe organizationprofi le; b) online mandatory information on relations with citizens and society; c) online mandatory information onthe economic-fi nancial situation; d) online mandatory information on service contracts. the general omi and each partial index (are determined by the relation betweenthe total sum of mandatory items identifi ed inthe municipal website (omil) and the total number of items that comprise the total or partial index (lj). to express this as a percentage, it was multiplied by 100. to assign a score,if the item appeared in the website it was assigned a score of 1, otherwise 0. 100 l omi omi l l 1 ×= 100 l omi omi j l lj j j 1 ×= 80 4.2. goal 2 our second goal was to obtain an online voluntary disclosure index (ovi). the items that make up this index are those corresponding to the proactive information requirements of the lmi (table 1). for countries that do not have legislation on access to public information, any information disclosed by local authorities will be voluntary, and arises from self-regulation. for local authorities that are subject to an information disclosure law, the information that is published in accordance with the lmi and in compliance with national legislation is not voluntary but mandatory information disclosure. this index is calculated by the following expression, where ovlmi represents the lmi items that are not mandatory under national law, and ovdi is the sum of voluntary items identifi ed in the municipalwebsite. in the same way as for goal 1, four indexes of voluntary information disclosure were developed, corresponding to the respective information groups. 100 ovlmi ovi ovi v v 1 ×= 100 ovlmi ovi ovi j v vj 1 ×= additionally, to determine to what extent the information disclosure approaches lmi recommendations and how much remains to be done, the voluntary and mandatory indices of information disclosure (otiv) were combined, thus creating an online total disclosure index (oti), with its corresponding sub-indexes. 4.3. goal 3 the independent variables included in the hypotheses described in section 3 were then contrasted with the total and partial indices of voluntary disclosure, taken as the dependent variable. the independent variables were measured using the magnitudes adopted in comparable earlier studies (table 2). table 2: independent variables used for the explanatory factors variable source description hypothesis expected sign corruption (corr) transparencia internacional corruption, measured by the index of perceptions of corruption (year in which the law came into force) h1 political ideology (polide) electoral councils (latest municipal election) dummy variable with the value 1 when the governing party is left-wing, and the value 0 when its ideology is conservative. h2 + technological development (tech) ine (2013) the development of ict,measured by internet penetration h3 + size (size) ine (2013) municipal population h4 + omi (mand) derivedby the authors number of items disclosed in accordance with legal requirements h5 socio-economic development (dvpt) hdi (2013) measured by the hdi h6 + ine: spanish national institute of statistics; hdi: human development index 81 taking into account the structure of the dependent variables, the association between the dependent and independent variables was tested using tobit regression analysis. 4.4. scope of the study the empirical study focuses on analyzing the information disclosed by the local authorities of the mercosur countries, since this level of government is the fi rst level of citizen participation in public aff airs. among the mercosur countries, only brazil, paraguay and uruguay have passed access to public information laws that specifi cally address local authorities and oblige them to disclose information via the internet. however, in paraguay this law was only recently adopted (in september 2014) and will not come into force until later in 2015. thus, local governments in this country are not yet required to disseminate online information, and so for the purposes of the present study, the information that is published in paraguay is considered voluntary. with regard to bolivia, although the right to online public information disclosure is regulated by supreme decree 27329/2004, this does not apply to local governments, and so this information, too, is considered voluntary. following the criteria applied in numerous previous studies, we selected for analysis the 40 largest municipalities (by population) in each of the mercosur countries, thus obtaining a total of 240 municipalities, which represent over 57% of the total population of the region. the analysis was conducted in august-september 2014. it should be noted that only 175 of the local authorities examined had a municipal website. these represented 73% of the total sample and had approximately 50% of the mercosur population. all of the 40 largest municipalities in argentina and brazil had a website, while for the other countries, the corresponding fi gures were venezuela 80%, bolivia 57.5%, paraguay 52.5% and uruguay 47.5%. 5. mandatory vs. voluntary proactive information disclosure in mercosur: results 5.1. compliance with legal obligations as noted above, the local authorities in brazil are outstanding in their level of compliance with mandatory proactive information disclosure requirements, providing 75% of the items stipulated. by contrast, those in uruguay only achieve a compliance rate of 30% (althoughthe number of items required in this country is slightly higher). with respect to information provided online about the municipal corporation, the local authorities in brazil are also at the forefront, providing 87% of the items required under this subindex of mandatory information disclosure. in contrast, although uruguay only requiresthe proactive disclosure of two information items of this nature,barely half of the municipalities examined provide these data. 82 only 16% of the municipalities in uruguay provide information on municipalrelations with citizens and society. brazil does not require the disclosure of any such information. regarding the subindex of mandatory economic-fi nancial information disclosure, very litt le such information is provided by the municipalities analyzed. again, those of brazil (36%) achieve the highest rate of compliance, although this is much poorer than the fi gures corresponding to other types of information. finally, considerably more transparency was observed with respect to municipal service contracts than was the case with economic and fi nancial information. in this fi eld, too, the local authorities in brazil achieve the highest degree of compliance with legal requirements (85%). 5.2. voluntary information disclosure and convergence with the model interamerican law the local governments analyzed voluntarily disclose 30% of the information items identifi ed as being of mandatory disclosure under the lmi. these authorities, thus, are voluntarily contributing to achieving greater homogeneity and transparency in their information disclosure. local managers in brazil are those most closely following the lmi recommendations published by the oas, scoring 50% on the voluntary disclosure index. moreover,when information items that are mandatory in brazil and consistent with the lmi (thus comprising the total disclosure index) are taken into account, this rate increases to 56%, indicating that an eff ort of 44% is required to fully comply with the proactive transparency policy recommended by the oas. table 3: index of proactive information disclosure by mercosur countries, according to the nature of the information argentina bolivia brazil paraguay uruguay venezuela mean information about the municipal corporation omiop 87 54 oviop 48 26 50 22 40 23 34.83 otiop idem idem 60 idem 42 idem 36.83 information about relations with stakeholders and society omirc 16 ovirc 42 15 44 16 36 20 28.83 otirc idem idem idem idem 32 idem 28.17 economic-fi nancial information omifs 36 22 ovifs 31 17 62 11 23 8 25.33 otifs idem idem 57 idem 23 idem 24.50 information about municipal procurement of services omics 85 35 ovics 39 23 48 16 33 12 28.50 otics idem idem 61 idem 39 idem 31.67 index of information disclosure omi 75 30 ovi 41 21 50 17 35 16 30.00 oti idem idem 56 idem 35 idem 31.00 omi: online mandatory disclosure index; ovi: online voluntary disclosure index; oti: online total disclosure index. 83 in uruguay, voluntary information disclosure, with respect to the lmi requirements (35%), is higher than compliance with mandatory disclosure in this country (30%), a rather surprising result which suggests that local authorities tend to ignore the priorities imposed by legislators, preferring to disclose the information (i.e., the data fi elds recommended by the oas) that they believe will confer greater legitimacy. with the exception of argentina, local managers in countries that have a law on access to public information are more likely to comply with lmi stipulations than those with no such legislation (table 3). nevertheless, for argentinian municipalities the absence of legislation in this respect does not hinder the application of voluntary policies on transparency in moderateaccordance (41%) with those recommended by the oas. among the mercosur municipalities analyzed, the information most often disclosed voluntarily is that concerning municipal corporation (34.83%), followed by information on service contracts (28.50%). economic-fi nancial information is least often supplied voluntarily by these local governments; within this area, statistical information on municipal management is the largest single component, but even this is only provided by 38% of the municipalities sampled. the information disclosed voluntarily by these municipalities concerns the mechanisms of communication available (83%) and citizen att ention services (83%). it is striking that in no case are stakeholders informed about what information is considered restricted or about requests and applications that have been resolved by means of ‘administrative silence’. moreover, only 12 information items are off ered by at least 50% of the municipalities analyzed, and so much progress is still needed in this area. as a fi nal observation in this area, compliance with oas recommendations, whether mandatory or voluntary, is only 31%. therefore, to achieve the minimal oas level of proactive information disclosure, a medium-high (69%) information gap remains to be overcome. goal 3: determinant factors before performing the regression analysis, we determined the correlations between the independent variables proposed to test the hypotheses. as shown in table 4, no strong correlations were found between the independent variables. table 4: correlations between the independent variables corr polide tech size mand dvpt corruption 1.0000 political ideology -0.1718 1.0000 technology -0.0522 0.0283 1.0000 size -0.0183 -0.1292 0.1324 1.0000 mandatory disclosure 0.5063 -0.1921 -0.1007 0.3029 1.0000 socio-economic development -0.0881 -0.1396 0.2284 0.3259 0.3412 1.0000 the results of this analysis show that fi ve factors are statistically signifi cant for the voluntary disclosure of the oas recommended items: corruption, technology, size, 84 mandatory disclosure policy and socio-economic development. the other factor proposed, political ideology, was not statistically signifi cant with respect to the total index of voluntary disclosure (table 5). table 5: determinant factors of information disclosure policy total prob> chi2 = 0.00 a prob> chi2 = 0.00 b prob> chi2 = 0.00 c prob> chi2 = 0.00 d prob> chi2 = 0.00 coeff. t coeff. t corr 0.3227074 3.60*** 0.3748279 4.03*** 0.4945435 6.29*** -0.0376883 -0.15 0.6950815 3.51*** polide 3.35499 1.52 2.263243 0.92 4.131846 1.89** 7.343422 1.33 3.311048 0.97 tech 0.072626 3.05*** 0.0535216 2.01** 0.0420058 1.85** 0.1326973 2.33** 0.0632326 1.72* size 2.81e-06 2.67*** 1.38e-06 1.14 2.31e-06 2.32** 7.69e-06 3.12*** 5.04e-06 3.14** mand 2.33982 4.62*** 2.800991 2.63*** 0.2503796 0.05 38.46912 5.21*** 1.619721 0.24 dvpt 50.39908 3.10*** 71.31413 3.93*** 100.0947 6.83*** 59.17001 1.55 57.12196 2.33** * signifi cant at 0.10. ** signifi cant at 0.05. *** signifi cant at 0.01. these results show that municipalities where levels of corruption are lower are more likely to supply online information voluntarily. these fi ndings coincide with the eff ect proposed in our hypothesis, and with the results obtained by pina, torres and royo (2007) and relly and sabharwal (2009). we conclude, therefore, that the local governments in the mercosur region where levels of corruption are highest are the least willing to voluntarily disclose the information recommended by the oas, preferring a policy of non-communication. it could be argued that when corruption is present, municipal politicians seek to create a defensive mechanism by controlling and limiting the data made public. in contrast, the adoption of ict within the municipality has a positive eff ect on the voluntary disclosure of the oas information items, which is in accordance with our hypothesis. following pina, torres and royo (2007),we believe that new technologies facilitate public-sector information disclosure by reducing its cost. our results show that municipal managers are aware that increased internet penetration raises the number of citizens who can obtain information online. this understanding creates a favorable att itude among these managers toward the oas policy on transparency. these results are consistent with those obtained by serrano, ruedaand portillo (2009). the size of the municipality, in terms of its population, is also related to the level of voluntary online information disclosure, which is in accordance with our hypothesis. thus, and in agreement with norris and moon (2005), public managers in large municipalities within the mercosur area deal with larger numbers of citizens requiring information and therefore have a positive att itude toward compliance with oas recommendations on proactive information disclosure. moreover, their task is likely to be facilitated by the fact that large municipalities usually have knowledgeable staff that is fully capable of creating a website for information disclosure. since this task is considered a fi xed cost, economies of scale can be obtained. the socio-economic situation of the municipality is another determinant factor. in general, the higher the level of socio-economic development among the local population, the more information is made available online by municipalmanagers. further85 more, high levels of education usually coincide with stricter ethical standards and demands. thus, and in agreement with evans and yen (2005), we fi nd that in mercosur towns and cities where the population is more highly educated, opacity in governance is less acceptable, and municipal managers are more likely to provide higher levels of voluntary information disclosure. analysis of the latt er factor in conjunction with the level of economic welfare among society revealed a positive association with the level of disclosure by local governments in the mercosur area, which corroborates the fi ndings of styles and tennyson (2007). the last of the parameters found to aff ect municipal policies of voluntary information disclosure is that of mandatory disclosure. in this case, however, the statistical sign measured is contrary to expectations and to that reported by baginski, hassell and kimbrough (2004) and by kasznik and lev (1995). our fi ndings show that the mercosur countries where most information is legally required to be provided, and is so provided, are also those where most information is supplied voluntarily. thus, in towns and cities where information disclosure is mandatory and where municipal managers, therefore, are more accustomed to stakeholder supervision and to informing of the government’s compliance with its election pledges, there is less reluctance to voluntarily provide further information, and thus the effi cient management of local aff airs can be publicized. let us now focus on the variables that aff ect the information disclosed, in terms of the nature of this information. information on the municipal corporation is aff ected by the same factors as those relevant to total information, except for municipalsize, which appears to have no statistical eff ect. thus, the fact that the organization is larger does not lead to managers voluntarily providing more information of this nature to reduce information asymmetries between managers and other stakeholders. neither information on relations with citizens and society nor information on service contracts are aff ected by the existence of a mandatory policy on proactive information disclosure. therefore, the fact that the municipality is subject to external control by the legal obligation to supply information in these areasis of negligible importance in making managers more likely to voluntarily supply information of this kind. however, when control is exercised over economic-fi nancial information, this does make municipal managers less reluctant to disclose it voluntarily. finally, it can be seen that the political ideology of the party in power only seems to be related to the information on relations with citizens and society. in this case, the trend is positive, which means that, in the mercosur countries, left-wing parties are bett er disposed to the disclosure of information of this nature, a fi nding that is in accordance with tolber, mossberger and mcneal (2008). 6. discussion and conclusions numerous authors have noted that to ensure and enhance access to public information, it is useful to create mechanisms to this eff ect. in consequence, the regulation of access to public information has been strengthened throughout latin america and much of the rest of the world. 86 in the legislation passed in this respect, increasing emphasis is being placed on promoting a policy under which basic information disclosure should be made in the broadest possible terms, without the need for prior request, using the internet (i.e., government websites) as a communication channel for this purpose. however, public managers may consider this policy of basic information disclosure insuffi cient to legitimize their governance. accordingly, they may complement this minimal, mandatory disclosure with their own policy of voluntary information provision, and it is this activity that really defi nes the organization’s position with regard to transparency. in the mercosur area, not all member countries have laws on access to public information, and among those that do, despite the long and complex process of adoption, the law often requires only minimal levels of proactive transparency. within the region as a whole, the situation is very heterogeneous, which provokes major diff erences in the policies adopted on transparency, not only among the mercosur countries, but even within the same country. in an att empt to alleviate this situation, the oas has published a model of recommended measures, to act as an instrument of legislative harmonization. the above model should be considered taking into account, for example, that local governments in brazil achieve medium-high levels of mandatory proactive information disclosure, a situation that is totally contrary to that of uruguay, where local authorities virtually ignore the existence of this legal obligation. therefore, in many municipalities, even where there exists a legal framework requiring transparency, the culture of restricting information disclosure that has pervaded the region for so many years has not been eradicated. a great deal still remains to be done for these local authorities to comply with their legal obligations on transparency, and suitable control measures should be established to enforce these requirements. local managers in these countries should be reminded that information disclosure is a legal obligation, and that it is of vital importance to create an eff ective culture of transparency. many local managers in the mercosur countries, whether or not there exists a law of mandatory disclosure, seek to enhance their legitimacy and do so by means of voluntary proactive disclosure policies. nevertheless, the outcome is still far removed from the oas recommendations. outstanding in this respect are the voluntary transparency policies established by municipal managers in brazil and argentina, where a greater eff ort is being made to approach the culture of transparency advocated by the oas, but much remains to be done. the nature of the information that is most often supplied voluntarily by municipalmanagers in the mercosur area concerns the municipal corporation itself. litt le information of an economic-fi nancial nature, which is considered the most sensitive and/or controversial, is off ered voluntarily. on the other hand, although policies on voluntary information disclosure vary widely, at least half of the municipalities analyzed voluntarily provide information on the same twelve information items. it is the brazilian municipalities which, overall, are making greatest eff ort (whether required to do so by law or voluntarily) to approach the culture of transparency 87 recommended by the oas. in contrast, municipal managers in venezuela are furthest from achieving full implementation of these policies on transparency. therefore, more progress is still needed in the mercosur area to make public managers aware of the importance of implementing policies on access to information, because if this culture of opacity were allowed to persist, it would prevent mercosur from achieving its full potential. our analysis of the factors that most infl uence local managers’ decision making in the fi eld of voluntary proactive information disclosure highlights the importance of the level of ict in the municipality, together with its socio-economic development, size, degree of corruption suff ered and compliance with mandatory disclosure stipulations. the mercosur municipalities where new technologies have made most impact are aware that the information supplied online will reach more users, and this understanding encourages them to publish more information and thus enhance their legitimacy. furthermore, municipalities that most fully comply with mandatory disclosure obligations already submit their management to the supervision of stakeholders through mandatory online disclosure, and are less reluctant to provide additional information, believing this will illustrate their effi cient management of local aff airs. the results of our analysis show that the greater the corruption aff ecting a municipality in the mercosur area, the more local managers will tend to maintain traditional policies of non-disclosure and ignore oas recommendations. the data recommended would, of course, be of interest to stakeholders, but municipalmanagers might believe disclosure would also expose their own shortcomings. we found that municipalities with larger populations and higher levels of socio-economic development were closest to meeting the oas recommendations, and assume that this is because a large, prosperous and well-educated population will require more ethical behavior of its government and demand transparency to verify this. with regard to political ideology, our analysis shows that left-wing parties are more likely to follow the oas recommendations for information on relations with citizens and society. this may be because these parties have a greater preference for socially oriented policies, and seek to achieve close affi nity with stakeholders,to determine their needs and wishes in a direct way. and this goal is best achieved through transparency, by providing citizens with abundant information and enabling feedback. transparency continues to be a challenge for local governments in the mercosur area, one calling more for a change of att itude than for new laws. the fact that some of these countries have a law requiring the online disclosure of certain information, of interest and/or value tostakeholders, does not seem to be suffi cient for local managers to do so. the problem is that local 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innovation. the large number of existing defi nitions is yet failing to make the necessary distinction between innovation and other related concepts. there is no agreement about the most relevant dimensions of innovation and, without a proper defi nition of innovation, measurement is more diffi cult. several methods and attempts of measurement – awards and surveys – are identifying different meanings and characteristics of innovation. a more in-depth analysis of a pilot exercise in measuring innovation, namely the european public sector innovation scoreboard 2013, is done in order to examine its methodology and the validity of its fi ndings for the specifi c case of romania. the need for an innovative public sector is generally recognized, and present measurement attempts are actually overestimating the level of innovation. in order to assess this correctly a clearer and narrower defi nition is needed, the framework of the innovative process needs to be further investigated and research designs have to be improved. keywords: innovation, measurement, european public sector innovation scoreboard. measuring public sector innovation sorin dan şandor sorin dan şandor professor, department of public administration and management, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.361 e-mail: sandor@fspac.ro transylvanian review of administrative sciences, no. 54 e/2018 pp. 125-137 doi:10.24193/tras.54e.8 published first online: 2018/06/29 126 1. defi ning innovation ‘if you can’t measure it, you can’t manage it’ is a widely used but incomplete quote often att ributed to deming or to drucker, the original source being – ‘it is wrong to suppose that if you can’t measure it, you can’t manage it’ (deming, 1994, p. 35). osborne and gaebler (1992) use a similar catch phrase in order to emphasize measurement: ‘what gets measured gets done’. starting from the 1990s, performance indicators became more and more popular and in more and more fi elds of activity. governments around the world are widely using measurement systems for innovation thinking that measuring innovation is a must in order to manage it. the fi rst step of any measurement process is defi ning the concept that has to be measured. innovation was explored since schumpeter saw it as a central source for economic development more than a hundred years ago (1911). in schumpeter’s view innovation was the commercial application of a new idea. only by the end of the 1980s the fi rst att empts to defi ne innovation in order to be measured were taken. the oecd working party of national experts on science and technology indicators (nesti) codifi ed innovation in what is known as the oslo manual. the fi rst defi nition of innovation (oecd, 1992) was strictly about technological innovation and comprised two components: product innovation and process innovation. only the third version of the manual was dedicated to all kinds of innovation (not only technological) and the defi nition became ‘an innovation is the implementation of a new or signifi cantly improved product (good or a service), or process, a new marketing method, or a new organization method in business practices, workplace organization or external relations’ (oecd/eurostat, 2005, p. 46). two more components were added: marketing and organization methods as a refl ection of the growing importance of services in the global economy. all the components mentioned by the oslo manual are market-oriented – and as gault (2010, p. 155) considers, public sector innovation measurement and analysis has to be quite diff erent from that in the private sector. katt el et al. (2013) consider that starting from 2000 the literature on public sector innovation intended to move away from the private sector approach but this has been done mostly by adapting it to the public sector realities. a defi nition should present the main characteristics of a phenomenon while clearly distinguishing it from other similar phenomena. we identifi ed 11 main characteristics that have to be addressed when defi ning innovation. 1. innovation – is it a process or a result? in other words, should we measure the process or its results? both are of interest, but we should not mix them. nesta (hughes, moore and kataria, 2011) approach is clearly process-oriented: it measures wider sector conditions, innovation capability, innovation activity and impact. other innovation surveys are taking similar approaches. innovation in the public sector can be defi ned as the process of generating new ideas and implementing them to create value for society, covering new or improved processes (internal focus) and services (external focus) (european commission, 2013). also, innovation can be defi ned as a change (hartley, 2005). if we understand innova127 tion as the results of the innovation process only the outputs of the innovation activity would have been of interest. 2. size – are we discussing small, incremental improvements or are we searching for evolutionary steps? christensen (1997) advocated for radical or disruptive innovations (those with a great impact) – but, instead, more general approaches were preferred – as in european commission (2011) – ‘any signifi cant improvement’ will do. 3. novelty – new idea vs. existing idea. how new should an idea be in order to qualify as an innovation? the oslo manual, fi rst edition, (oecd, 1992, p. 41) classifi ed novelty as: new to the fi rm, the country or the market, or the world. the fi rst two are used in defi ning innovation, as the last might bring an overlap with invention, but the diff erence between being new to the fi rm and being new to the country (market or sector) is a signifi cant one. lynn (1997) emphasizes that innovation should be original. innovation is defi ned by albury (2005) as ‘creation and implementation’, and by the european commission (2013) as generation and implementation of new ideas – creation and generation implying a high degree of novelty. defi nitions that equate innovation with change are not usually specifying the degree of novelty. other defi nitions stick with new to the fi rm, like west and farr (1990): ‘new to the relevant unit of adoption’. 4. adoption – adaptation or imitation? if an innovation can be new only to the institution, being already introduced elsewhere, are we discussing about adaptation or imitation? de lancer julnes and gibson (2016) use in their defi nition the term adoption, west and farr (1990) are talking about introduction and application, european commission (2013) mentions implementation. we do not have a clear answer – is imitation a form of innovation? 5. intentionality – intentional or unintentional? should innovation be intentional or it may just happen? west and farr (1990) in their defi nition stress the intentional character of innovation. in some defi nitions a certain amount of intentionality is implied, especially when mentioning generation or creation. in other defi nitions there is no hint of intentionality. innovation as a process supposes intentionality. many inventions and innovations were adopted against the will of the organizations. 6. origin – mandated vs. voluntary. this is close to the previous characteristic but it is specifi c to public organizations in which change can be imposed from the outside through laws and regulations. if a specifi c law is requiring that an institution has to adopt a specifi c new process can we call that organization as being innovative? 7. scope – product, service, policy or process? the oslo manual had in its fi rst edition only the fi rst two and added other two components later (marketing and organization methods). is this too much already? galindo-rueda and van cruysen (2016) are reporting about confusions made by managers trying to distinguish between components (especially regarding organizational innovation). should we go further than that? is a defi nition like: ‘innovation is about the relationship between service providers and their users’ (hartley, 2005, p. 27) fi tt ing these components or is it adding new ones? what about social innovation (gault, 2010), or governance 128 innovation (hartley, 2005) or european commission’s (2013) innovation through initiatives that foster innovation elsewhere in society. 8. type – radical, architectural, modular or incremental? henderson and clark (1990) distinguish between the types of innovation according to two diff erent criteria – if the system or the linkages in the system and/or the components (the core concepts) have changed. a radical innovation changes both the system and the components, an architectural innovation addresses only the system, a modular innovation the components and an incremental innovation does not change any of them. incremental innovation may not be considered as an innovation by many defi nitions. 9. improvement – do innovations have to be successful? west and farr (1990) consider that innovations have to be ‘designed to signifi cantly benefi t the individual, the group or wider society’ – so intention might be enough. other defi nitions are asking for some degree of success. european commission (2013) sees innovation as creating value for society, innobarometer (2011) demands signifi cant improvements. on the other hand, hartley (2005, p. 31) considers that you can have ‘innovation but no improvement’, in which we can fi nd innovations unsuccessful or not valuable. 10. value – how can we defi ne public value? how can we measure it? cole and parston (2006), and bason (2010) found that public value can be found as outcomes, services, productivity or democracy. the australian framework for measuring public sector innovation lists as outcomes societal and environmental benefi ts, quality, effi ciency and productivity, employee satisfaction, benefi ts for users, trust and legitimacy. as we can see, the list may be extremely long without being exhaustive. there are only few indications on how to measure multidimensional impacts of innovation (katt el et al., 2013). 11. sustainability – do one-time initiatives count? all the defi nitions consider that innovation is a tool to improve the regular services and processes so it has to have a long-lasting eff ect. moore, sparrow and spelman (1997) claim that innovation should be ‘durable enough to appreciably aff ect the operations or character of the organization’. what if some organization fi nds a new way to solve a unique situation – is this innovation or not? 12. diff usion or dissemination? those two terms are often used in an interchangeable way. still, dissemination is indicating a more active process and it is deemed as an important part of the innovation process. nesta (hughes, moore and kataria, 2011) is including dissemination as an innovation activity. in the public sector it is important that successful innovations are transferred to other organizations concerned, but is really dissemination a part of the innovation process? (is an organization more innovative if it does more dissemination?) such characteristics have to be carefully pondered before defi ning innovation. the biggest concern is of confounding innovation with change. de lancer julnes and gibson (2016, p. 3) defi ne innovation as ‘adoption and implementation of change’. such a defi nition is too general – any change might be considered an innovation. 129 2. assessing innovation in the public sector we may distinguish four diff erent ways in assessing innovation: 1. research on specifi c innovations through case studies; 2. best practices or innovation awards; 3. managers’ surveys asking about the use of some innovative practices and technologies; 4. innovation surveys are measuring the innovation state of an entire sector/country, asking about a wide range or all innovation activities and types of innovations implemented over a defi ned time period. as arundel, bloch and ferguson (2016) remarked, these are infl uenced by the oslo manual and the community innovation surveys based on the manual. these are subject-based, dedicated to the measurement of the innovation state. the fi rst method is extremely useful when trying to assess the merits of a specifi c innovation, but is not that useful in trying to compare diff erent innovations (as case studies are refl ecting the particular nature of each innovation) and aggregating data in order to assess the degree of innovation in an industry or sector is impossible due to the small number of cases and to their specifi city. innovation awards are more useful for a larger number of cases as they have to use the same criteria in assessing diff erent innovations in order to identify the best practices. the scientifi c value of such events is not very high as these awards are mostly celebrations or dissemination vehicles and the data is self-reported by the candidates. still the criteria used are instructive. the innovations in american government award organized by the ash center for democratic governance at harvard university is using the following criteria: – novelty, the degree to which the program or initiative demonstrates a leap in creativity; – eff ectiveness, the degree to which the program or initiative has achieved tangible results; – signifi cance, the degree to which the program or initiative successfully addresses an important problem of public concern; – transferability, the degree to which the program or initiative, or aspects of it, show promise of inspiring successful replication by other governmental entities. we can see that innovation has to have a high degree of novelty, has to be successful, to address an important issue and to be transferable in order to get the award. a similar initiative took place in romania, organized by the national agency for public service. ten criteria with diff erent weights are used. we can see that novelty is less important than diff usion and as important as presentation. also, the way in which it was done (as in partnership and with citizens’ involvement) is highly valued. there is no indication about the way in which eff ectiveness, effi ciency and impact are measured (or if and how the self-reported data is checked). 130 table 1: national agency for public service best practices award criteria weight (%) novelty 5 presentation 5 effectiveness 20 effi ciency 17.5 administrative simplifi cation 7.5 replicability and diffusion 17.5 partnerships 10 impact 5 sustainability 10 citizens involvement 7.5 source: national agency for public service (n.d.) managers’ surveys asking about the use of some innovative practices are used in order to fi nd out if and how some innovations are used in the sector (e.g., a survey on the use of quality management practices). these might be used to shed some light if, to what extent and how some practices are used. sometimes innovation is seen in such a research as part of a larger picture. united nations (2015) is assessing the state of e-government, and in the process is also checking for innovative coordination processes and mechanisms for service delivery and citizen engagement and empowerment. innovation surveys for measuring innovation within businesses are becoming more and more popular in the public sector. arundel, bloch and ferguson (2016) list nine diff erent studies done in the last nine years in twelve diff erent countries and one of them in all eu countries. some of them will be presented in the following section. hughes, moore and kataria (2011) are presenting nesta – the public sector innovation indices (uk). innovation is defi ned according to the oslo manual. nesta is proposing an innovation index for public sector organizations, based on a scorecard approach using the innovation framework below. table 2: nesta – the public sector innovation indices impact innovationactivity innovation capability wider sector conditions for innovation improvement in organizational key performance indicators accessing new ideas leadership and culture incentives improvement in service evaluation selecting and developing ideas management of innovation autonomy improvement in effi ciency implementing ideas organizational enablers of innovation leadership and culture improvement context diffusing what works enablers source: hughes, moore and kataria (2011) the pilot survey showed a high degree of innovation in both sectors surveyed – health and local government. 131 the australian public sector innovation indicators (apsii) uses a similar defi nition and a diff erent framework (australian government, 2011). table 3: the australian public sector innovation indicators (apsii) framework inputs process outputs outcomes investment in innovation diffusion of innovation innovation (activities and implementation) societal and environmental impacts human resources and skills for innovation innovation collaborations types of innovation quality, effi ciency and productivity staff attitudes and attributes for innovation innovation management practice innovation novelty improved employee satisfaction sources of innovation innovation culture and leadership innovation intensity benefi ts for users technological infrastructure for innovation innovation strategy intangible outputs other intangible effects (e.g. trust and legitimacy) environmental conditions user demand and supplier capacity wider public sector leadership and culture political and legislative factors other enablers/barriers to innovation (e.g. research basis, skills shortage) source: australian government (2011) while impact and outcomes are more or less similar, apsii has as outputs diff erent characteristics of innovation and as process and inputs we have items related in nesta to capability. a total of 91.3% of institutions introduced some type of innovation over a two year period, mostly (85%) regarding process innovation (australian government, 2013). a similar survey is eu’s innobarometer. data from this research, but also from other sources of data (eurostat, world bank, world economic forum, united nations or oecd), are incorporated into the european public sector innovation scoreboard. 3. european public sector innovation scoreboard 2013 innovation is regarded as ‘any signifi cant improvement in operational practices (either in the product/service range or in support structures)’ (european commission, 2011, p. 13). the framework used by epsis is simpler than nesta or apsii – enablers make activities possible and these activities generate outputs. some of the criteria might be debatable. 3.2. and 3.3 are not innovations made by institutions but innovations ‘through’ the public sector (european commission, 2013). quality of public services and especially the use of e-government are seen both as an enabler and as an innovation. the major fi ndings were (european commission, 2011, p. 8): – at eu level, two-thirds of public administration institutions introduced a new or signifi cantly improved service in the last 3 years before the survey; – the likelihood of service innovation increased linearly with the size of the institutions. state institutions were just as likely as independent ones to introduce innovations; 132 – the single most important driver of innovation in the public sector was the introduction of new laws and regulations, followed by new policy priorities and mandated implementations of an online service provision; – budget cuts are triggering innovation; – major barriers are lack of resources and rigid regulatory framework; – major sources of innovation were: ideas from staff , ideas from management and input from clients or users; – top-down approach of innovation or innovation support is prevalent; – positive eff ects of innovation were identifi ed as: improved user access to information, improved user satisfaction, more targeted services, a faster delivery of services, simplifi ed administration, improved working conditions or employee satisfaction and cost reductions; – new technologies, higher demand from citizens, new policy priorities and new regulations are expected to improve the organizational innovation ability. the results for each country are represented in figure 1. green light on one indicator means that one country is in the top third scores, yellow light that it is in the second third and red light in the bott om third. we can see that out of the 23 criteria table 4: epsis framework enablers activities outputs 1.1 human resources 2.1 capacities 3.1 innovators 1.1.1 employment share of ‘creative occupations’ 2.1.1 share of service innovators that innovate in-house 3.1.1 share of organizations in public administration with services, communication, process or organizational innovations 1.1.2 share of employees in public administration with a university degree 2.1.2 share of process innovators that innovate in-house 3.1.2 share of ‘new’ services out of all services innovations 1.2 quality of public services 2.2 drivers and barriers 3.1.3 public sector productivity 1.2.1 government effectiveness 2.2.1 importance of internal barriers to innovation 3.2 effects on business performance 1.2.2 regulatory quality 2.2.2 importance of external barriers to innovation 3.2.1 improvements in public services for business 1.2.3 increased effi ciency of government services due to the use of ict 2.2.3 active management involvement in innovation 3.2.2 impact of innovative public services on business 1.2.4 online availability of public services 2.2.4 importance of external knowledge 3.3 government procurement 1.2.5 e-government development index (egdi) 2.2.5 share of employees involved in groups that meet regularly to develop innovations 3.3.1 government procurement as a driver of business innovation 3.3.2 government procurement of advanced technology products 3.3.3 importance of innovation in procurement source: european commission (2011) 133 fi gu re 1 : e ps is s co re ca rd so ur ce : e ur op ea n co m m iss io n (2 01 1) 134 romania has four green lights (in university education, share of employees involved in groups that meet regularly to develop innovations, innovators and improved services), eight yellow lights (especially in capacity and drivers or barriers) and eleven red lights (for the quality of public services – data which is not self-reported in the innobarometer, internal barriers, new services and procurement). the image is not of a particularly good performance regarding innovation. only 9.8% of the institutions could have been classifi ed as leading innovators (eu27 – 16.9%) and 36.3% of the institutions (eu27 – 33.7%) are not innovators. there are still some intriguing fi ndings regarding romania, in which the national fi gures are above the eu27 average: 1. the eu27 share of in-house process innovators is quite high at 76%. for small and medium enterprises the eu27 percentage is at 30.3% (proinno europe, 2011). romania has a greater percentage – 82%. 2. management is active in promoting innovation – in romania the percentage of institutions where this is happening is at 46% (eu27 – 41%). 3. in 30% of the romanian public institutions staff meets regularly to develop innovations (eu27 – 22%). 4. the percentage of romanian public administrations that innovate in services, communication, process or organizational matt ers is 93% (eu27 – 90%). 5. in romania, innovation has almost only positive eff ects – 94.8%, (eu27 – 93.8%), litt le negative eff ects – 15.6% (eu27 – 30.3%), mainly costs. 6. new or signifi cantly improved services (out of all innovations) in romania 17% (eu27 – 27%). 7. improvement in public services for business: in romania – 32% (eu27 – 20%). but the impact of innovative public services on businesses is reported only by 12% in romania (eu27 – 15%). these fi ndings appear when we have self-reported data – which might bring a doubt about the results. 4. conclusions public administration seems to be a highly innovative sector. the fi ndings are showing us that: – most of the public institutions are innovating; – in-house innovation is fl ourishing; – management actively promotes innovation and a large number of employees are involved in innovation; – the positive eff ects of innovation are overwhelming compared to negative effects. such results seem too good to be true. the public sector is not a laggard sector but neither a top research and development company (considering its att ributions). sev135 eral possible methodological fl aws might aff ect the quality of the fi ndings: • poor defi nition of innovation and of criteria: – any change can be considered innovation – the formulation ‘any signifi cant new or improved service’ is allowing people to report any change as a significant improvement; – means or tools are confounded with goals and further with success (e-government or administrative simplifi cation are just two examples); – change in the laws and regulations (which we saw that it is the main source of innovation) is actually mandated innovation; when it comes with specifi c indications about the way in which the job has to be done and public institutions are just applying the law, we are not discussing about innovation; – measuring process indicators does not measure outcomes. like in the case of measuring university education (input), it says nothing about innovation; more than that, in many cases, to have a university education is a condition for entering most public service jobs. • the design of the research itself may be an issue – we have institutions as cases. in some institutions there might be more than one innovation. that’s why bigger institutions seem to be more innovative. when discussing about more than one innovation subjects will have some diffi culty in answering. • there is litt le measurement of the public value created – we have questions asking for some possible eff ects, but this is primarily the subjective opinion of the respondents. there are few user satisfaction surveys made on a regular basis in order to assess an increase in user satisfaction. also, the phrasing of the questions is actually adding to the eff ects: ‘have any of your new or signifi cantly improved processes or organizational methods […], had a major positive eff ect by…’ – if several innovations were made in an organization, with diff erent eff ects, we may fi nd more positive eff ects. arundel, bloch and ferguson (2016) consider that measuring outcomes works bett er for single innovations and not very well for multiple innovations. • the use of self-administered questionnaire. self-reporting is usually prone to infl ating the results, especially in areas in which the respondents are more personally involved. questionnaires addressed to an institution will rarely indicate some problems in its functioning and, even less likely, will indicate that there is a problem with management. the main purpose of the survey seems to confi rm the highly innovative status of the public sector. it may be one of the situations in which ‘the measures themselves are easily distorted to suit reporting purposes’ (seddon, 2013, p. 71). in the end, we might have found that the public sector is a changing one, but not necessarily an innovative one. while the innovative state of the public sector might be of concern we should be aware that the public sector is quite heterogeneous. innovation in public education is diff erent from the one in health; innovation in local public administration is also 136 diff erent from the one in central administration. treating the entire public sector as a monolith is not methodologically sound. while the use of innovation frameworks is not a problem per se, adding inputs with outcomes in scorecards surely is. more elaborate frameworks should be build and the relationships between inputs, enablers, activities, outputs and outcomes should be carefully analyzed – something that is missing in many of the studies done until now. a clear defi nition of innovation should clearly distinguish innovation from change, especially when we have mandated change (e.g. mandated by laws and regulations). more information is needed about the novelty, size and type of innovations. measurement of outcomes is diffi cult, but we need to know if it is based on subjective opinions or on objective data. in terms of design while we can start with institutions (discuss about inputs or enablers at organizational level) we might try to discuss about each innovation – in order to fi nd specifi c information about each major innovation that is happening in the organization. it is known, at least since 2011 (galindo-rueda and van cruysen, 2016), that cognitive testing of the questions of the oecd community innovation surveys (a major source of inspiration for nesta, apsii or innobarometer) has shown that many concepts are not properly operationalized and measured and, yet, no improvement was made. still, such eff orts should continue and the recommendations should be applied. 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transforming the public sector, addison-wesley, 1992. 23. proinno europe, ‘innovation union scoreboard 2010 the innovation union’s performance scoreboard for research and innovation’, maastricht economic and social research and training centre on innovation and technology, 2011. 24. schumpeter, j., theorie der wirtschaftlichen entwicklung, berlin: dunkler & humblot, 1911. 25. seddon, j., freedom from command and control: rethinking management for lean service, new york: productivity press, 2005. 26. united nations, ‘united nations e-government survey 2014. e-government for the future we want’, washington, d.c.: united nations department of economic and social aff airs, 2015. 27. west, m.a. and farr, j.l., ‘innovation at work’, in west, m.a. and farr, j.l., (eds.), innovation and creativity at work: psychological and organizational strategies, chichester: wiley, 1990, pp. 3-13. 62 abstract this study explored the innovative use of appreciative inquiry (ai) in the organizational environment for changing the perception concerning the satisfaction of its members’ needs. the experiment started from the assumption that organizations are social constructions generated by the interpretations social actors have about this entity and about themselves, being the result of human interactions. the experiment used the appreciative inquiry as form of intervention, run in the four stages of the 4-d cycle. the results of the intervention show that, although appreciative inquiry was directed chiefly towards changing the perceptions concerning the satisfaction of the need for security, the interpretations given by organization members changed with regard to the satisfaction of all needs (security, basic needs, belonging, esteem and self-actualization). the study shows that motivation can be changed through an appreciative approach of events, through their reinterpretation within a process of dialogue and consensus; the reinterpretation of the organization as a text and the application of appreciative inquiry principles results in an organizational reconstruction as a process that can be run in a relatively short period of time. the positive changes of the organizational environment were also a result of the way the organization was researched. the appreciative interviews resulted in individual reinterpretations of organizational contexts, which were negotiated and assumed in the environment of the collectivity. the changes were supported by the organization members’ involvement in building a shared vision, in making a plan in which every person is a voice in the organization, and in developing attachment and ownership in relation to the developed plans. keywords: appreciative inquiry, needs, motivation, constructionism, security, organizational development, vision, intervention, experimental situation. using appreciative inquiry to change perceptions concerning the satisfaction of organization members’ needs ştefan cojocaru constantin brăgaru ştefan cojocaru associate professor, department of sociology and social work, faculty of philosophy and social sciences, “alexandru ioan cuza” university, iaşi, romania tel.: 0040-744-788.779 e-mail: contact@stefancojocaru.ro constantin brăgaru lecturer, phd, department of business administration and marketing, faculty of economics, “nicolae titulescu” university, bucharest, romania tel.: 0040-758-776.213 e-mail: costin_bragaru@yahoo.com transylvanian review of administrative sciences, no. 35 e/2012, pp. 62-77 63 1. origins of the appreciative inquiry in 1987, cooperrider and srivastva launched the concept of appreciative inquiry, as a response to the action research developed by lewin in the 1940s; appreciative inquiry aimed to be an instrument for social change, chiefly for organizational change. from the point of view of the authors, one of the failures of action research was caused by focusing on the problem, which leads to a shortage of innovative potential. they considered that this focus on the problem leads inevitably to a restraint of imagination and reduces the possibility of creating new theories. the vision of appreciative inquiry turns the problem-focused approach upside-down, taking into account what goes well in an organization, its successes, as identified by its members. any organization faces problems, but researching the problem with the purpose of solving it increases its development; the questions asked during the inquiry become courses of action. focusing the questions on identifying the problems in the organization, during an organizational investigation, directs the organization’s actions towards deepening the problems. the appreciative inquiry does not deny the existence of problems in an organization or community, but, in order for them to be alleviated, positive aspects are identified, cultivated and promoted. cooperrider and srivastva (1987) built the appreciative approach based on kenneth gergen’s constructionism (1985; 1994); gergen sees reality as a social construction and a permanent reconstruction on the interactions between individuals (gergen, 1999). from the constructionist perspective, any organization is a human construction, generated by the interpretations the social actors have about this entity and about themselves, being the products of human interactions, and a social construction (cooperrider, barett and srivastva, 1995, p. 157). some authors place categorically the base of the appreciative inquiry in the foundation of social constructionism, asserting that the appreciative inquiry is a way of thinking about change, built on the assumption of the social construction of an organization’s reality (murrell, 2001, p. 92). in order to change an organization, action must be directed to the way individuals interpret the organization; the appreciative inquiry seeks to identify the best of “what is”. appreciative inquiry can generate new knowledge, help create a collectively desired vision of the future, as well as assist in choosing the actions that can result in the desired future (cooperrider and srivastva, 1994, p. 207). from the description given by the authors, it follows that, in order to expand the domain of knowledge, we must find “the best of what is” in the organization’s experience and, on the basis of these successes, create a collective vision of “what could be”. “what is” does not concern only the present, in the sense of a reality manifesting itself, but also actual interpretations given by agents to past events. “what is” represents a social construction in the moment of analysis, but this can also be a result of the interpretations given to past events. from this perspective, the present is what people think at this moment about the organization. other authors have seen the appreciative inquiry as an instrument that can be used to direct change in an organization or in a community (burke, 2011; cuyvers, 2010; lustig and ringland, 2010). from its introduction, the appreciative inquiry has 64 been applied in numerous domains beyond the area of organizational development: healthcare (hirunwat, 2011; rubin, kerrell and roberts, 2011), evaluation (cojocaru, 2008; messerschmidt, 2008; ojha, 2010; kavanagh et al., 2010), therapy (sandu and ciuchi, 2010; donaldson and ko, 2010; rubin, kerrell and roberts, 2011; gałązka, 2011; wendt, tuckey and prosser, 2011), education (kumar and chacko, 2010; kelly, 2010), research methodology (cojocaru, 2005; kluger and nir, 2010; cowling and repede, 2010), human resources development (rattanaphan, 2010; bushe, 2010). appreciative inquiry can be viewed as an instrument of organizational transformation that focuses on learning from success. instead of focusing on deficiencies and problems, the appreciative inquiry focuses on discovering what works best, why it works and how can success be expanded in the organization (johnson and leavitt, 2001, pp. 129130); the authors state categorically the need to learn from success and the necessity to abandon the orientation manifested in the action research, which aims to identify deficiencies, problems, shortcomings and constraints. bushe reconsiders the concept of appreciative inquiry, building a definition that makes good use of the constructionist perspective on social reality, as a result of creating a collective image about a desired future (bushe, 1995). in his definition, the author underlines the role of a common vision, a “common reading” of the organization and of its future (elliott, 1999, p. 76). the perspective of the appreciative inquiry is a constructionist one, summarized in a few essential elements (cooperrider and srivastva apud cojocaru, 2003, pp. 203204): (1) social order is permanently in a dynamic equilibrium that has an unstable character, and this order is the product of a negotiation or convention between people; this order is generated by the negotiation process itself (powley et al., 2004); (2) human actions are prescribed by ideas, beliefs, intentions, interests, purposes and means, values, habits and theories; the transformation of human behaviour is achieved by changing conventional ideas, beliefs, intentions, interests, purposes and means, values, habits and theories; all these action generators are the result of social construction and have a strong effect in the reconstruction of the future interpretation and action frameworks (chapagain and ojha, 2008); (3) social action is interpreted differently by individuals, who, from actors become social constructors (cojocaru, 2010); from this perspective, social change means a reconstruction of the social architecture, through the negotiation of individual interpretations and the construction of a common positive vision (asif and klein, 2009; sandu and ciuchi, 2010); (4) the actional models developed in the organization can be found in various forms, due to the different individual interpretations, to the permanent negotiations in the organizational environment and to the constant change of social contexts (kanaskie, 2011); (5) the transformation of conventions and interpretations into norms, values, purposes and ideologies is the result of dialogue, of the consensus expressed through language (fitzgerald, oliver and hoxsey, 2010); the latter becomes a map preceding the territory; (6) deep changes in social practices can be generated by changes in linguistic practices (andrus, 2010); (7) social theory can be viewed as an elevated 65 language possessing its own grammar; it can be used as a linguistic instrument capable of creating new models of social action (sandu, 2011); (8) any theory is normative, irrespective of whether this is intended or not, and it has the potential to influence social order, irrespective of whether people have or do not have reactions of acceptance, rejection or indifference (aldred, 2011); (9) every social theory has a moral significance: it has the potential of influencing and regulating interpersonal relations in everyday life (cojocaru, 2008); (10) social knowledge resides in collective interaction: it is created, maintained and used by people in interaction (somerville and howard, 2010); (11) constructionism can be applied for introducing change in approaching organizations, communities, or any other form of social organization (dick, 2011; aldred, 2011), by going beyond the dualisms of subject-object, true-false, good-evil etc. (marshak and grant, 2008). 2. the principles of appreciative inquiry cooperrider et al. (2000, pp. 3-27) consider that the appreciative enquiry is based on five principles: 1. the constructionist principle. this principle asserts that organizations are a result of human creation, or, better put, of the collective interaction among individuals and of the permanent reconstruction generated by our knowledge, beliefs and ideas. the organization is a manifestation of the interactions between our mental models concerning it, constructed socially in a relational process. from this perspective, the organization itself is a reality generated by multiple interpretations, and changing an organization through appreciative inquiry means, in fact, changing these interpretations and building a shared, collective and coherent image. 2. the principle of simultaneity. this principle concerns the fact that at all times research in the organization and change in the same organization are simultaneous. cooperrider considers that any organization or social system changes in the direction towards which the researcher’s attention is focused, calling this a “heliotropic process” (2001), because, “the same as the sunflower turns to follow the sun, so the organization turns to follow its positive image” (johnson and leavitt, 2001, p. 130). action research also considers that the questions asked by research generate changes in the organization due to the presence of the researcher and of the imagination it activates (miftode, 2003, p. 393). according to the simultaneity principle, “even the most innocent questions trigger changes” (cooperrider and whitney apud cojocaru, 2003, p. 206). this principle, formulated by cooperrider and whitney (1999) cancels the myth according to which we first analyze the situation and then decide the change, because when we inquire about certain aspects of the organization, we effectively start a change process inside it. 3. the poetic principle refers to the fact that any organization is a result of the multiple interpretations given by people, expressed through language, which, in its turn, has a formative character, being part of the constructed world. language is not only an image of the world, but truly a form of social action. ideas, representations, images, 66 histories, stories, metaphors, generate events, depending on their emotional charge and on the way they are interpreted. the metaphors describing the organizations are ways of social action for structuring these organizations. all these metaphors describe ways of organization and operation, ways in which their members relate, and also avenues of intervention for change; for example, changing an organization structured as an organism makes us think about it as about a living being, which cannot be turned off in order to be changed, and all changes must happen on the go; the interpretation of an organization as a mechanism gives us a picture of programmed operation, of change that can be achieved by turning the mechanism off, dismantling and modifying it etc. organizations are “like a poem” (elliott, 1999, p. 14) or “can be thought as a text” (elliott, 1999, p. 15) that can be interpreted permanently, and the beauty and the senses of this poem are given by the interpreters. 4. the principle of anticipation states that the destiny of a community is the positive future image constructed through the individual creations that influence present events. one may say that the best way of predicting the future is building it, starting from the desired images, because the map precedes reality: “it is not the territory preceding the map, and it does not survive it, instead the map preceding the territory also generates it (...)” (wachowski apud felluga, 2003, p. 84). in order to argument this principle, cooperrider uses the example of the placebo effect used in medicine and the pygmalion effect, which prove that the image the teachers have about pupils is a strong predictor of the performances of these pupils. 5. the positive principle concerns the potential and the power appreciation has in organizational development, by discovering the positive aspects and by achieving innovative change in correlation with the anticipation of a positive future (whitney, 1998; gonzales and leroy, 2011), because classical change management focuses on the analysis and diagnosis of organizational problems and deficiencies. because oftentimes the positive vision is left out in favour of analyzing obstacles, resistances and deficiencies (whitney, 1998, p. 5), management nowadays is a prisoner of the dysfunctional perspective. formulating and asking the questions is one of the most impacting actions of the agent for change, because what we ask we shall later find in the organization. 3. the process of appreciative inquiry in order to use the appreciative inquiry technique, cooperrider and srivastva (1987) developed the 4-d model (the 4 d-s represent the initials of the stages of the appreciative inquiry: discovery, dream, design, destiny), which explains the stages of the inquiry. 1. the first stage (discovery) of the appreciative inquiry is the stage where “what is best” in the organization is identified and consists in finding positive “histories”, personal and organizational experiences considered successful. this stage involves cross-interviews or focus groups so that people can share their positive experiences 67 related to the research theme. one relatively frequent form of appreciative inquiry uses as initial manner of finding positive aspects and of documenting them a list of questions that generate positive interpretations, handed to every member of the organization (more, 2011; hirunwat, 2011). thus, the individuals have the opportunity and the time to reflect on their experiences, on those of their peers and of the organization. after this first stage, group cross-interviews and focus groups are organized, in which questions from the initial meetings are asked again. the cross-interview involves writing an interview guide, which is supplied to all the participants, and each of them can ask the others questions during the group meetings organized for this purpose in the stages of the appreciative inquiry. starting from the hypothesis that an organization evolves in the direction it is researched, choosing the research topics and constructing the questions become crucially important. 2. the second stage (dream) is the stage where people describe their desires and their dreams related to work, motivations, work relationships, the organization etc. this stage aims to construct a collective vision of “what the organization could be like” in the future, even as an ideal image. the vision is a collective construction of the organization members, drawing on the organization’s potential. an important watchword for this stage is “thinking outside the box”, overcoming the limits of the usual thinking about what has been and constructing images, beliefs and representations about the organization, generated by individual positive desires, and articulating them in a coherent collective image (boerema, 2011). these representations occur in the shape of “provocative propositions” (van der haar, 2002), ambitious, pushing the organization’s or the community’s limits, being at the same time reachable, because they rely on past experience, described as excellence. 3. the third stage (design) aims to build a new organizational architecture, oriented towards “what could be”, designing new organizational structures, processes and relations capable of bringing the organization closer to the imagined vision from the previous stage. according to the poetic principle, in this stage the infrastructure and the management system needed in order to support the system vision are designed. it represents a process of reinventing the organization, based on imagination. starting from the idea that any organization can be interpreted and reinterpreted as a text, elliot considers that the metaphors concerning the organization represent our interpretations in presenting facts, and that “the construction is not isolated from the present and the future” (elliott, 1999, p. 36). this construction is the result of a permanent “negotiation with the others”, of the interpretations based on the members’ memory and imagination. in order to reach the positive vision imagined in the previous stage, the reconstruction of the past is necessary, using imagination (because we can choose different ways of interpreting the same reality) and establishing by consensus concrete short-term and long-term objectives that can lead to the fulfillment of dreams, desires and projects. 68 4. the fourth stage (destiny) is the stage of implementing the plans established in the previous stage and involves the establishment of roles and responsibilities, the development of strategies, the construction of new interaction networks within the organization or community, the use of resources in order to obtain results. having gone through the previous stages, the people in the organization or community become agents for change, having a thorough understanding of the purposes, objectives and tasks that have been constructed through dialogue and consensus. (yoon et al., 2011). 4. methodology the “half-full glass” approach may be considered an experimental-type intervention, examining the way in which appreciative inquiry can change the organizational environment. the appreciative inquiry was applied in a seven-member nongovernmental organization active in the area of child protection (holt romania – iaşi branch), and involved the application of the 4-d cycle for the organization and running of the appreciative inquiry, the aim being to measure how the structure of perception of motivational factors changes within the organization. the independent variable introduced in this “half-full glass” approach was the reconstruction through consensus of the definitions and interpretations regarding motivation inside the organization. in order to be able to measure the changes in terms of how the satisfaction of needs was perceived, a questionnaire was applied to the organization members at two different times: before starting the intervention and a week after it ended. the appreciative inquiry-type research took place over one month and went through several stages: (1) questionnaire application in order to measure the structure of the initial motivation and the perception of need satisfaction; (2) development of an interview guide with a number of questions aimed at identifying the members’ personal “stories”; (3) distribution of the interview guide to all the members and request to answer the questions in an appreciative manner; (4) collection of data from the subjects and interpretation of gathered data; (5) organization of focus-groups in which the agent of intervention was the moderator; (6) application of the questionnaire one week after the conclusion of the appreciative inquiry in order to measure the structure of the initial motivation and the perception of need satisfaction. 5. data collection in order to collect data we used questionnaires and focus-groups. in terms of intervention techniques we used focus-groups and the appreciative inquiry. the focus-group was organized also in order to introduce the intervention, as a form of collective construction of interpretations. in the appreciative inquiry used, the data collection techniques are also intervention techniques, as a form of collective construction of collective interpretations. questionnaire: we used a questionnaire in order to capture the employees’ opinions concerning their personal needs and how well they are satisfied within the organization. 69 we used an attitude scale that included a set of 20 close-ended questions with seven degrees of agreement (totally agree, agree, partially agree, do not know, partially disagree, disagree, totally disagree). the questionnaire is an adaptation of the motivation assessment test (gordon, 1991, pp. 175-176). the questionnaire was self-administered, as the staff’s training and education level is high (with the exception of one person in administration, all the personnel has a university degree in the area). focus-group: the focus-group interview applied is a group interview, focused on the topic of motivation in the organizational environment, conducted by a moderator; it is a qualitative method of data collection used in order to analyze perceptions, motivations, feelings, needs and opinions. this technique was used in the form of a planned group discussion, organized in order to obtain perceptions related to staff motivation, and run in a permissive environment; the discussion was relaxed, pleasant for all the participants. thus, they shared their ideas and perceptions and influenced each other, responding to the others’ ideas and comments. the interview guide included a series of questions presented in a logical funnel-shaped sequence (the questions went from general to very specific), allowing us to cover all the established objectives and to collect a large enough volume of information for analysis, as well as in-depth information concerning the topic under study. the interview was of an appreciative type and included questions along the lines of “what is best?”, “what should be?”, “what could be?”, “what needs to be done?”. 6. application of appreciative inquiry after the questionnaire was applied, all team members received an interview guide containing a list of questions, in order to have the time to identify success stories. the meeting for organizing the first focus-group (discovery) was scheduled for the following week. after discovering positive experiences and significant stories concerning motivating situations, we organized a second focus-group, one week later, in order to proceed to the next stage, dream. during this meeting, images of the future were generated; the team members recreated the circumstances that had resulted in success, viewed from a needs perspective: the basic needs, of security, of belonging, of esteem and self-actualisation. the data analysis showed that the attention of the team members had been focused especially on the need for security. they identified a number of successes, of moments when they enjoyed themselves the most in close relation to the need for security. this confirmed the data obtained from the application of the questionnaire; the data analysis points out that the need for security is perceived as the least satisfied. “i like what i do and i feel good when i manage to solve a difficult case or when i see in the client’s eyes that “something” that can never be expressed through words; it is a spiritual satisfaction that compensates many other situations, less pleasant ones, related to the clients we work with. i enjoyed very much the time when we were a large team, we had long-term funding and things were very secure.” 70 “the most active moments, those when i felt most satisfied, were at the time when we had funding for a costly program, foster care, which was an innovative one. it was always difficult to get the approval of the child protection committee in order to place the child in a foster home, but i felt safe, because i knew we were doing the right thing and we could monitor the quality of the services provided; the foster carers were paid by us and they were answerable to us. it’s very important to feel safe, and at the time this was how i felt (…).” “the times when we had funding for running new programmes was for me one of the most rewarding ones. the funds were enough for organising activities, for being constantly dynamic and active. i remember the feeling of security given by the fact that we had a secure funding for a longer period of time (…).” the questions used during the focus-group were not directed to the need for security, however, the process of discovering positive moments showed some of them as referring to the need for security. after the data was analyzed, a third focusgroup was organized in order to build through dialogue the projection of a desired future, expressed appreciatively through “provocative propositions”, formulated in the present tense affirmative, as if they were already a reality. the meanings of these provocative propositions were “negotiated” by the organization’s members in order to encourage participation in this construction process (repede, 2009; repede 2011). they do not represent the manager’s point of view, being instead the result of all members’ construction, irrespective of position, the members having “equal voices” in the dialogue that reduces the asymmetry of power. these provocative propositions represent a shared, collective vision, rather than a result of acceptation. at this stage, the provocative propositions were the following: (1) we are an organization with enough resources to run innovative social programmes (relates to the need for security); (2) we are a strong team, capable of attracting funds, and with long-term stability (relates to the need for security and belonging); (3) we are a team with plans for the future, with our own resources in the long term, ensuring the development of the organization (relates to the need for security and belonging); (4) the boss not only knows the team’s activity and results, he also knows in detail the activity and the successes of each team member (relates to the need for self-esteem); (5) we feel satisfied and we enjoy the work environment and working with the people we help in our activity (relates to the need for self-actualisation and belonging); (6) we work in collaboration with the public authorities and with the organizations in the area of social assistance (relates to the need for self-actualisation); (7) we understand the organization’s mission and we make an effort to provide quality services to all our clients (relates to the need for self-actualisation and self-esteem); (8) we are known for our capacity to mobilize ourselves and to answer the demands coming from our clients and users (relates to the need for self-esteem); (9) we recognize each other’s unique and special qualities, which represent each member’s contribution to 71 the success of the organization (relates to the need for self-esteem and belonging); (10) we are a team constantly interested in the optimization of services through a flexible, dynamic and proactive attitude (relates to the need for self-actualisation and belonging). after the future was projected and a complex picture, shared by all the members of the organization, was constructed, a third focus-group (design) was organized in order to draft the plans necessary for making the provocative propositions a reality. the key elements of the plan identified by the members were: (1) mobilize the team in order to identify potential donors, assess community needs and write funding proposals; (2) supervision activity – individual sessions for case supervision and for group supervision; (3) flexibility in assessing the clients’ needs – constantly adapting needs assessment instruments and involving the clients in designing the intervention; (4) organize regular meetings with governmental and non-governmental organizations, in order to strengthen the developed partnerships and to establish new ones; (5) maintain the organization assets in working order and at the standards required in the field; (6) permanent communication of successes within the team; (7) using the staff’s abilities and competences in the organization’s activities; (8) maintaining the type of employment contract for all employees; (9) participation in training programs both as trainers and as trainees. 7. results and discussions this appreciative-type intervention carried out according to the principles of the appreciative inquiry meant a change in the way the subjects perceive motivation and the satisfaction of needs; even though other independent variables were not operated, a modification is generated by the mere personal reinterpretations presented and negotiated within the group. during the experimental situations, no independent variables were introduced, such as changes in equipment, salary, bonuses etc. the appreciative approach of personal experiences within the organization resulted in changes concerning motivation, viewed from the angle of the theory of needs. motivation deals with the ideas, beliefs, intentions, interests, knowledge and habits that determine human behaviour and direct this behaviour towards a certain goal, and with how this behavior is supported, including from the perspective of the perception of need satisfaction. as table 1 and table 2 show, each member of the organization recorded a drop in the scores relating to the need for security. the lower the score, the more people perceive the need as better satisfied. the maximum score that can be given to any type of need is 12. through the change in perception, reality itself is changed; therefore, in order to change the organizational environment, we must change the way people perceive motivation and implicitly the satisfaction of needs. 72 table 1: scale for measuring the perception of need satisfaction (at start of intervention) subjects selfactualisation esteem security belonging basic needs subject 1 4 7 10 8 4 subject 2 6 2 11 9 5 subject 3 6 5 8 6 6 subject 4 5 6 9 8 4 subject 5 7 8 9 9 3 subject 6 4 7 7 6 4 subject 7 6 9 9 7 2 total 38 44 63 53 28 table 2: scale for measuring the perception of need satisfaction (at end of intervention) subjects self-actualisation esteem security belonging basic needs subject 1 3 6 6 6 4 subject 2 4 4 6 8 4 subject 3 2 5 5 8 5 subject 4 3 5 5 5 4 subject 5 4 7 6 6 3 subject 6 4 5 4 6 4 subject 7 5 6 7 5 2 total 25 38 43 44 26 at organizational level, the scores obtained before the intervention show that basic needs were perceived by the subjects as the most satisfied (lowest score, 28), whereas the need perceived as the least satisfied is the need for security (score 63). at the end of the appreciative intervention it can be noticed that the most satisfied need is that of self-actualisation (score 25), whereas the need to belong is last, despite recording a significant drop in score (from 53 to 44). table 3: evolution of perception of need satisfaction within the organization (before and after intervention) moment of measurement selfactualisation esteem security belonging basic needs at start of intervention 38 44 63 53 28 at end of intervention 25 38 43 44 26 the most dramatic evolution in perception was recorded in the case of the need for security, which was perceived as the least satisfied at the beginning of the appreciative intervention (the score dropped from 63 to 43 after the intervention). during the intervention we focused on this need through specific questions. the changed the 73 order of needs in terms of degree of satisfaction after the intervention shows that the needs were interpreted as more satisfied after the intervention; their score dropped (see table 4), and the need for security, which we focused on primarily, was perceived as more satisfied due to the fact that the organization’s members took part in the development of a plan in which each of them had a precise responsibility in identifying donors, assessing community needs and writing funding proposals. even though no other changes were operated in variables that may cause needs to be perceived as better satisfied (salary raises, securing funding for a new project, purchase of new equipment, organization of socialisation meetings or of team-building outings), a positive evolution can be noticed in the way people interpreted the satisfaction of these needs. this proves the fact that organizational reality is first and foremost a social construction of the members that compose it. table 4: evolution of the hierarchy of needs in relation to the perception of their satisfaction rank hierarchy of needs in relation to the perception of their satisfaction at start of intervention hierarchy of needs in relation to the perception of their satisfaction at end of intervention 1 basic needs self-actualisation 2 self-actualisation basic needs 3 esteem esteem 4 belonging security 5 security belonging we notice here that the system of values and beliefs of an organization depends on its members. the system of values and beliefs in the organization we studied and in which we intervened through the appreciative inquiry evolved into a new architecture due to the interactions between its members. the figures show that the need for selfactualisation was considered as the most satisfied, whereas the need for security was perceived as more satisfied. the appreciative interpretations and reinterpretations about various events taking place in the organizational environment have a noticeable influence in increasing staff motivation, due to the latter’s involvement in building a shared vision, in making a plan in which every person is a voice in the organization, and in developing attachment and ownership in relation to the developed plans. 8. conclusions the appreciative inquiry is a form of intervention based on the principles of social constructionism; it is a technique that uses the appreciative approach, which can be used in order to effect change in the organizational environment. any organization may be interpreted as a text, and the appreciative inquiry helps us carry out a collective, shared reinterpretation of the organization, which is built during the process of negotiating the individual interpretations of its members. in order to bring about change in an organization that is seen as a constant construction and reconstruction generated by its members’ ideas, beliefs and intentions, we must support the organization members 74 in the process of changing these ideas, beliefs and intentions. the appreciative inquiry proposes an innovative model of change, because it leaves behind the “deficiency paradigm” (cooperrider et al., 2000) used by action research, because it assigns new values to the positive experiences of an organization’s members and amplifies them in order to reach its goals. the appreciative inquiry is not an approach that omits the problems an organization faces; 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58. yoon, m.n., lowe, m., budgell, m. and steele, c.m., ‘an exploratory investigation using appreciative inquiry to promote nursing oral care’, 2011, geriatric nursing, vol. 32, no. 5, pp. 326-340. 75 abstract during the last ten years, inspired by new public management (npm) concepts, significant changes have been brought to the romanian public sector. these changes concerned organization, functioning mechanism, concepts, management, as well as its financial-accounting system. under this new approach, the university education system should be constructed so that it can correlate competencies and abilities of future graduates to the dynamics of the public administration sector. the questionnaire-based research conducted in this paper concerns the investigation of future graduates/ accounting professionals’ perception on the following aspects: public administration sector, government accounting discipline and connection between university curricula and the labor market requirements. the empirical research results have evidenced the following issues: (1) the students’ option (choice) for employment in public administration depends on their opinion on this field and the preponderance of certain disciplines in the undergraduate program’s curricula; (2) the undergraduates’ employment status does not influence their opinion on public administration; (3) the difficulty of transactions’ accounting recognition in government accounting requires a greater volume of time in the curricula. keywords: public administration, undergraduate students, government accounting education. government accounting education for university undergraduates ileana cosmina pitulice alina georgiana profiroiu aurelia ștefănescu ileana cosmina pitulice associate professor, department of accounting and audit, school of accounting and management information systems, bucharest university of economic studies, bucharest, romania e-mail: ileana.pitulice@cig.ase.ro alina georgiana profiroiu professor, department of administration and public management, school of administration and public management, bucharest university of economic studies, bucharest, romania e-mail: alina_profiroiu@yahoo.com aurelia ștefănescu (corresponding author) professor, department of accounting and audit, school of accounting and management information systems, bucharest university of economic studies, bucharest, romania tel.: 0040-744-273.543 e-mail: aurelia.stefanescu@cig.ase.ro doi:10.24193/tras.si2018.5 published first online: 2018/12/28 transylvanian review of administrative sciences, special issue 2018, pp. 75-91 76 1. introduction the idea of this research derives from the discrepancy between the trend of transformations in the public administration sector and the academic and accounting professional environment. all these changes are circumscribed to the new public management policy, which is one of the most important reforms in the public sector during the last 30 years (hințea, profiroiu and țiclău, 2015). as a consequence of the new public management, an important change took place in the financial reporting of romanian public sector entities: transfer from cash accounting to accrual accounting. the accrual accounting concept offers a more transparent, reliable and fair view on public sector’s financial reporting. thus entities’ management can fundament decisions on relevant, trusty, opportune and transparent information for an efficient distribution of public resources and an increased credibility of citizens. however, the studies performed evidenced that among the multiple causes of distortion of the true and fair view in financial reporting there are: insufficient professional training of professionals employed in financial-accounting departments, the insufficient number of professionals in public sector entities, the difficulty of recruiting well trained accounting professionals due to the low level of salaries, limited professional judgment of accountants in financial-accounting departments, incorrect interpretation of accounting regulations (…) (pitulice and ștefănescu, 2016). these were generated by the radical changes in accounting regulations for the romanian public sector, regulations that were incomplete in terms of accrual accounting adoption (tiron-tudor, nistor and carstea, 2012) and of reduced comparability with international public sector accounting standards (tiron-tudor, 2010). in this context, a pertinent analysis of the present educational system and professional training and a realistic approach of curricula are needed. from the accounting profession point of view, the body of experts and licensed accountants of romania (ceccar) are also involved in the training of the future accounting professionals in the government accounting field. an argument in this respect is the inclusion of government accounting discipline (ga) in the syllabus required for the potential ceccar experts’ access examination. as an exception to the ordinary regulation, accounting professionals activating in public sector entities are not required to become ceccar members. also, public services’ employees cannot activate as ceccar experts, and those working in the public sector are required to declare themselves as non-active members. under this perspective, there is a small number of accounting professionals employees that are also ceccar members in the public administration sector. therefore, the access to continuing development training programs offered by ceccar expert status is limited, as well as the relationship with the accounting profession environment. regarding the academic environment, the number of teaching hours for ga in the curricula of the school of accounting and management information systems (amis – part of the bucharest university of economic studies) has decreased in the last years. the bucharest university of economic studies is the only romanian university hav77 ing almost exclusively economic specializations, activating for more than a century in the romanian academic environment and, for that reason, the amis school is representative for the number of undergraduates/ graduates. ga as a discipline has been shifted from the second year of study to the third year (final year), when the interest of students is quite low for anything not related to financial accounting which is their main option for the bachelor’s degree thesis. in this respect, in the university environment, there is a recognized need to increase the romanian students’ interest and involvement in the learning process (profiroiu, 2013). thus, the research idea was to investigate the opinion of the senior year in respect to ga as part of the amis undergraduate curricula and their perception on ga’s importance in their undergraduate curricula. 2. literature review government accounting education is approached in a limited manner in accounting literature. globalization and changes generated by npm require a new profile for accounting professionals and also the curricula’s update. the release of a major review on accounting higher education emphasizes the following milestones: (a) curricula and course content are expected to be more open and relevant to the economic environment; (b) pedagogical techniques need to promote creativity rather than memorization; (c) development of generic skills; (d) focus on technology for decision making; (e) strengthen faculty development and reward systems; (f) implementing strategic directions to enforce the importance and usefulness of general accounting education (albrecht and sack, 2000). university accounting education should be focused not only on technical accounting issues, but also on developing personal skills and competencies that generally help students – future graduates – to be successful in their careers (hurt, 2007). if business accounting education has been constantly reviewed so that it can face the challenges of a permanent changing economic environment, government accounting education has not been updated in the same rhythm. in the past few decades, demand for an advanced government accounting education has increased, due to several factors, such as deficiencies in governmental audits, the issuance of complex public sector accounting and auditing standards as well as the need for highly trained professionals in public sector entities (wilson, 2013). the challenge faced by universities when updating the curricula so that they can develop government accounting together with other types of accounting is that of capturing students’ interest for this subject (miller, 2006). different accounting treatments and techniques for governmental financial reporting, as well as the low interest of undergraduate students in developing a public sector career lead to a very small emphasis on this study subject. the public accounting course is sometimes considered the ‘ugly stepsister’ within the accounting curricula. some colleges and universities include this discipline within an undergraduate program, others offer it as an elective course. there are cases when 78 it is offered as an abbreviated one-credit course. this happens in terms of a global rise of government accounting due to an increased demand for accountability by the democratic and market economies, which is a reality for a few decades (chan, 2003). henry (2005) considers that the academic response to the increasing needs of highly trained professionals in the government accounting field was minimal. the exposure of business students to government and not-for-profit accounting did not increase with the same speed as the development of these two sectors. a study from 2007 investigates the perceptions of professors regarding the relative importance of governmental and non-profit accounting topics coverage in an undergraduate accounting course. major findings such as slow curricula redesign, lower convergence of the profession demands or lack of appropriate time to cover all materials, generated some conclusions: the need for innovative learning methods and a permanent critical assessment of structure, content and presentation methods (daniels, gupta and pridgen, 2007). specific romanian research had demonstrated the usefulness of accrual accounting and added arguments for the increasing implication of accounting in the public sector management and its importance to the efficiency and effectiveness of public sector management (deaconu, nistor and filip, 2011). in 2015, the national agency of civil servants from romania (nacs) had conducted a national research study in order to assess the connection between the higher education quality perception and the labor market requirements. the sample focused on 240 students, from 20 romanian universities. almost 25% of the respondents express a critical opinion about the public administration system, 44% of respondents would like to work in romania or to continue their studies and 2/3 would consider a career in public administration, the main reason being the job stability. more than 45% of respondents considered that their academic training is strongly correlated with the job requirements for public servants, legal courses being more relevant than the management ones. on the other hand, the majority of the respondents consider that the academic programs are mostly focusing on technical knowledge and competences, whereas competences and skills in communication and public relations need to have a higher weight within the curricula (nacs, 2015). from this point of view, the nacs’s findings are not convergent to those in our research, but the explanation could be that of the students’ profile: while nacs’s research questioned public administration undergraduates, our research is based on accounting undergraduates’ responses. however, in what regards the opinion towards public the administration system we concluded that our research is convergent to that of nacs as a consequence of the high percent of the respondents offering low-ranking answers or being undecided. 3. research objective the choice of the research goal was supported by the idea that ga should not remain just an isolated discipline in public administration programs’ curricula, but it has to get more and more importance as the public sector follows the same trend of globalization. moreover, the need for efficient governance and transparency requires 79 well trained employees, professionals who bring a plus of reliability to the public sector entities reporting. we set three objectives in our research, each one of them being tested through several hypotheses. the objectives and the hypotheses derived from them are listed below and the results of their testing are extensively described in the empirical results section. objective 1: examine if undergraduate students’ decision of being employed in the public sector is determined by their opinion towards this domain and the curricula’s orientation on public sector particularities. h1. there is a connection between undergraduate students’ choice of being employed in the public administration and their opinion about public administration. (q1-q2) h.1.1. undergraduate students’ interest for getting a job in public administration is low. h2. there is a connection between undergraduate students’ choice of being employed in the public administration and the typology of courses in their program’s curricula. (q2-q4) h6. there is a connection between undergraduate students’ employment status and their opinion about the public sector. (q1-q16) h8. there is a connection between the typology of courses studied by undergraduate students and the choice of getting employed in the public sector. (q2-q3) objective 2: examine if undergraduate students’ interest for ga is determined by the time volume allocated in the program’s curricula. h3. there is a connection between undergraduate students’ assessment of ga’s particular concepts and the time volume allocated to this discipline. (q6-q9) h4. there is a connection between the undergraduate students’ assessment of transactions’ recognition in ga and the time volume allocated to this discipline. (q7-q9) h5. there is a connection between the undergraduate students’ choice for advanced ga courses and the usefulness of studying adjacent information. (q8-q11) objective 3: examine undergraduate students’ opinion on the competencies delivered by the program’s curricula as being correlated or not to the requirements of the labor market. h7. there is a connection between the undergraduate students’ employment status and the mandatory competencies to be included in the curricula. (q5-q16) 4. research methodology the sample analyzed in this research paper consists of 279 students from the senior year of amis school, bucharest university of economic studies the cohort graduating in july 2016. the students were asked to fill in a questionnaire (included in the annex) designed to obtain their opinions on the relative importance of ga topics, which 80 ta bl e 1: d efi ni tio n of v ar ia bl es va ria bl e va ria bl e’ s ex pl an at io n ty pe s of v al ue s an d th ei r c od es fo r s ta tis tic al a na ly si s q ue st io n to a dd re ss it v1 o pi ni on o n ro m an ia n pu bl ic ad m in ist ra tio n 1 -v er y ba d 2 b ad 3 n ot b ad , n ot g oo d 4 g oo d 5 v er y go od q 1 v2 po te nt ia l jo b’ fi el d 1 c en tra l p ub lic a dm in ist ra tio n (c pa ) 2 l oc al p ub lic a dm in ist ra tio n (l pa ) 3 p riv at e/ no ngo ve rn m en ta l s ec to r ( ps ) q 2 v3 ac qu ire d kn ow le dg e fa cil ita tin g a pu bl ic se ct or jo b 1 a cc ou nt in g 2 l aw 3 m an ag em en t q 3 v4 m ai n re fe re nc e in s ch oo l’s cu rri cu lu m 1 p riv at e se ct or a cc ou nt in g 2 o th er ty pe s of a cc ou nt in g q 4 v5 co m pe te nc ie s to b e in clu de d in c ur ric ul um b y su bj ec ts to b e as se ss ed b as ed o n a sc al e: 1 o nl y fe w; 5 m us t b e en tir el y in clu de d f or e ac h su bj ec t q 5 v6 di ffi cu lty o f g a’ s sp ec ific co nc ep ts -2 v er y di ffi cu lt -1 d iffi cu lt 1 no t v er y di ffi cu lt 2 no t d iffi cu lt at a ll 0 i c an ’t ap pr ec ia te q 6 v7 ac co un tin g re co gn itio n of tr an sa ct io ns -2 v er y di ffi cu lt -1 m or e di ffi cu lt 0 e qu al d iffi cu lt 1 l es s di ffi cu lt 2 n ot d iffi cu lt at a ll q 7 v8 us ef ul ne ss o f a dd itio na l kn ow le dg e in g a 2 v er y us ef ul 1 u se fu l -1 n ot s o us ef ul -2 u se le ss 0 i c an ’t ap pr ec ia te q 8 v9 ti m e vo lu m e al lo ca te d to g a 1 e no ug h 2 n ot e no ug h 3 c an ’t ap pr ec ia te q 9 v1 0 g en er al a ss es sm en t o f g a de sc rip tiv e qu es tio n – se pa ra te ly di sc us se d q 10 v1 1 pr ob ab ilit y of a tte nd in g ad va nc ed c ou rs es in g a 1 y es 0 n o 2 d on ’t kn ow q 11 v1 2 ba ch el or ’s de gr ee p ap er re fe re nc e to g a 1 y es 0 n o q 12 v1 3 ba ch el or ’s de gr ee p ap er re fe re nc e to g a de sc rip tiv e qu es tio n – se pa ra te ly di sc us se d q 13 v1 4 ag e to b e fill ed in b y th e in te rv ie we e q 14 v1 5 g en de r 0 f em al e 1 m al e q 15 v1 6 em pl oy m en t s ta tu s 1 e m pl oy ed 0 n ot e m pl oy ed q 16 81 have been studied during the second semester of their final year. the questionnaire was filled in face-to-face, thus avoiding the risk of a low response rate, and it was delivered one month before the exam session; therefore, we can consider that their opinion was not influenced by the exam results. the questionnaire was designed based on the program’s curricula as reference and questions were mainly closed-ended, but we aimed to test their general opinion on ga, so two open-ended questions were also included. in order to respect the ethical guidelines of conducting a survey, the questionnaires respected the anonymity criteria. the 16 questions delivered demographic data and undergraduate students’ opinions over particularities and usefulness of this discipline, as well as their interest in ga and their view over the main competencies needed for an accounting professional in public administration. the open-ended questions are separately discussed in the results section. table 1 explains the variables and their codifications used in the analysis, as well as the questions they refer to. 5. empirical results this section is organized so that we answer to the three main objectives of the study by individually assessing the hypotheses we have presented in the section where the objectives were discussed. the r soft has been used to investigate the existence of statistical differences among several groups. for studying the first objective, as described before, we have investigated six hypotheses and the results are detailed as follows. table 2: frequencies table for q1, q2 and q3 contingency table between q1, q2 and q3 absolute frequencies accounting juridical management total % of students bad central public admin (cpa) 1 0 0 1 0% local public admin (lpa) 3 1 0 4 1% private/non-gov sector (ps) 52 11 4 67 24% good central public admin (cpa) 6 1 0 7 3% local public admin (lpa) 2 1 0 3 1% private/non-gov sector(ps) 37 1 2 40 14% no_good_ no_bad central public admin (cpa) 12 3 0 15 5% local public admin (lpa) 3 1 0 4 1% private/non-gov sector (ps) 109 15 1 125 45% very_bad central public admin (cpa) 1 0 0 1 0% local public admin (lpa) 0 0 0 0 0% private/non-gov sector (ps) 4 0 2 6 2% very_good central public admin (cpa) 1 0 0 1 0% local public admin (lpa) 3 0 0 3 1% private/non-gov sector (ps) 2 0 0 2 1% total % of students central public admin (cpa) 8% 1% 0% local public admin (lpa) 4% 1% 0% private/non-gov sector (ps) 73% 10% 3% 82 table 2 from above shows the frequencies table for q1, q2 and q3. several hypotheses are confirmed or infirmed: – h1. there is a connection between undergraduate students’ choice of being employed in the public administration and their opinion about this sector. (q1-q2) => 14% of students choose to work in a private, non-governmental sector while they have a good opinion about public administration; 45% of students have a neutral opinion about public administration, but they choose also the private, non-governmental sector; 24% of students have a bad opinion about public administration and choose to work in the private, non-governmental sector. – h.1.1. undergraduate students’ interest for getting a job in public administration is low => only 14% of students prefer to work in the public administration, while 86% would go to the private, non-governmental sector. – h8. there is a connection between the typology of courses studied by undergraduate students and the choice of getting employed in the public administration. (q2-q3) => 73% of students believe that accounting knowledge represents a must for working in the private, non-governmental sector; 10% of them think that legal knowledge is essential for the same working sector. table 3: frequencies table for q1, q2, q4 and q16 contingency table between q1,q2,q4 and q16 bad good no_good no_bad very_bad very_good not_work cpa companies’s accounting 0 2 3 0 1 other types of accounting 1 0 5 0 0 lpa companies’s accounting 1 0 1 0 0 other types of accounting 0 0 2 0 2 ps companies’s accounting 23 10 32 1 2 other types of accounting 6 4 15 2 0 work cpa companies’s accounting 0 2 4 0 0 other types of accounting 0 3 3 1 0 lpa companies’s accounting 2 1 1 0 1 other types of accounting 1 2 0 0 0 ps companies’s accounting 33 15 52 2 0 other types of accounting 5 11 26 1 0 %work 11% 6% 21% 1% 2% % not work 15% 12% 31% 1% 0% cpa companies’s accounting 4% other types of accounting 5% lpa companies’s accounting 3% other types of accounting 3% ps companies’s accounting 61% other types of accounting 25% table 3 from above shows the results of a frequency table between q1, q2, q4 and q16. these results are used to evaluate the following hypotheses: – h2. there is a connection between undergraduate students’ choice of being employed in the public administration and the typology of courses in their pro83 gram’s curricula. (q2-q4) => 61% of total students prefer to work in the private or non-governmental sectors while the courses in their program’s curricula refer to the accounting of companies; – h6. there is a connection between undergraduate students’ employment status and their opinion about public administration. (q1-q16) => except the neutral opinion (for 52% of students), 15% of students that are not employed have a bad opinion about public administration, 12% have a good opinion, while 11% of students that are employed have a bad opinion about public administration, and 6% have a good opinion. we have continued with the second main objective of the study, namely to investigate if undergraduate students’ interest for ga might be connected with the time allocated in the program’s curricula. for studying this aspect, we have elaborated four hypotheses, as presented in the previous section. table 4: frequencies table for q6, q7 and q9 students’ assessment of ga’s concepts cannot_appreciate difficult less_ difficult not_ difficult very_ difficult % of total almost_the_same cannot_appreciate 0 1 2 1 0 1% enough_time 0 10 31 3 0 16% not_enough_time 0 10 37 6 0 19% easier cannot_appreciate 0 0 0 0 0 0% enough_time 0 3 1 1 1 2% not_enough_time 0 3 3 0 0 2% more_dificult cannot_appreciate 0 3 3 0 0 2% enough_time 0 16 19 1 0 13% not_enough_time 2 61 42 1 4 39% very_difficult cannot_appreciate 0 0 1 0 0 0% enough_time 0 0 0 0 2 1% not_enough_time 0 8 1 0 2 4% % of total cannot_appreciate 0% 1% 2% 0% 0% enough_time 0% 10% 18% 2% 1% not_enough_time 1% 29% 30% 3% 2% the table from above answers to the following hypotheses: – h3. there is a connection between undergraduate students’ assessment of ga’s particular concepts and the time volume allocated to this discipline. (q6-q9) => 29% of students believe that there is not enough time allocated to the discipline and that the particular concepts are difficult; 30% of students believe the same about allocated time, but consider that particular concepts are not very difficult (less difficult). – h4. there is a connection between the undergraduate students’ assessment of transactions’ recognition in ga and the time volume allocated to this discipline. (q7-q9) => 39% of students who believe there is not enough time allocated to the discipline also see the assessment of transactions’ recognition in ga as more difficult than the accounting of companies, while 19% of the same category of 84 students believe that the assessment of transactions’ recognition in ga is almost the same as the accounting of companies in terms of study difficulty. table 5: frequencies table for q8 and q11 the usefulness of courses and the possibility of attending advanced courses do not know no yes % of total cannot_appreciate 5 12 2 7% less_useful 19 42 6 24% not_useful 1 11 0 4% useful 79 73 14 59% very_useful 6 3 6 5% % of total 39% 51% 10% table 5 shows the confirmation or not of the following hypothesis: – h5. there is a connection between the undergraduate students’ choice for advanced ga courses and the usefulness of studying adjacent information. (q8q11) => 60% of students believe that there is a need to study other disciplines and only 10% of them will take advanced courses such as masters or phds. continuing our research, we have answered to the last important objective of our study, namely we will examine the opinion of the undergraduate students regarding the connection between the competencies delivered by the program’s curricula and the labor market requirements. table 6: students’ opinion about competencies by employment status high bad medium very_high very_bad % (high+very_high) of total % (bad+very_bad) of total communication not_work 24 11 21 43 14 24% 9% work 28 18 32 72 16 36% 12% mangement not_work 23 19 29 23 19 16% 14% work 39 24 50 25 28 23% 19% law not_work 35 8 24 37 9 26% 6% work 50 12 42 51 11 36% 8% companies’ accounting not_work 19 2 8 81 3 36% 2% work 22 5 12 118 9 50% 5% others types of accounting not_work 33 8 23 43 6 27% 5% work 46 13 25 79 3 45% 6% it not_work 26 11 27 34 15 22% 9% work 51 17 27 56 15 38% 11% taxation not_work 36 5 14 56 2 33% 3% work 52 11 22 79 2 47% 5% the table above provides the answer of the hypothesis h7: – h7. there is a connection between the undergraduate students’ employment status and the mandatory competencies to be included in the curricula (q5-q16) => the majority of employed students consider that taxation, information technology and accounting (companies and other entities) have a high or very high importance and should be included in the curricula; most of unemployed students 85 believe that law competencies, accounting and taxation are important and should be included in the curricula. the difference between opinions of employed and unemployed students is that, while employed students consider it as an important competence, the unemployed students consider law as an important competence and this shows the discrepancy between what students believe is important for the labor market and what is really important and required by employers, once they start working. table 7: students’ opinion about competencies delivered by university high bad medium very_high very_ bad %(high+very_high) of total communication 52 29 53 115 30 60% management 62 43 79 48 47 39% law 85 20 66 88 20 62% companies_accounting 41 7 20 199 12 86% others_accounting 79 21 48 122 9 72% it 77 28 54 90 30 60% taxation 88 16 36 135 4 80% the above table shows that the most important competencies delivered by the program’s curricula must be accounting (both for companies and other entities), taxation and law. it is interesting to analyze the students’ vision about management, because they do not consider this competence as an important one that could be developed by school. another analysis performed concerned pearson’s chi-squared results. figure 1: pearson’s chi-squared test results figure 1 from above show the pearson’s chi-squared test results applied on couples of variables (defined by contingency tables) in order to identify if the variables are independent of each other. the output called x2 shows the extended pearson’s chi-squared test results for variables v8 and v11, while the table above this output is the synthesis of 8 tests, represented by variable 1 (var1), variable 2 (var2) and the test’s associated p-value. this r output comes to confirm or infirm the hypotheses presented for each defined objective. we could observe a dependency between v1 and v2 (students’ opin86 ion about public administration and students’ choice of being employed in the public sector), v2 and v4 (students’ choice of being employed in the public sector and the predominant courses in their program’s curricula), v7 and v9 (students’ assessment of transactions’ recognition in ga and the time volume allocated to this discipline), v8 and v11 (the usefulness of studying adjacent information and students’ choice for advanced ga courses), because the p-value associated to pearson’s chi-squared test is lower than 0.05, at a level of significance of 95%. on the other hand, it is interesting that variables like v1 and v16 (students’ opinion about the public sector and their employment status), v2 and v3 (the choice of getting employed in the public sector and the typology of the predominant accounting courses studied by undergraduate students), v2 and v15 (the choice of getting employed in the public sector and the respondents’ gender), v6 and v9 (students’ assessment of ga’s particular concepts and the time volume allocated to this discipline) are independent. in addition, we used another method to analyze contingency tables like the correspondence analysis. the correspondence analysis may be applied on contingency tables that are composed of variables v1 and v2 (image 1), v7 and v9 (image 2), v8 and v11 (image 3), as a result of significant dependency between rows and columns, proved by pearson’s chi-squared tests. from this point of view, the correspondence analysis results (figure 2 above) may be interpreted in terms of the symmetric plot or biplot of rows and columns (plot realized in two dimensions that explain all variability of data). because only the distance between rows or the distance between columns may be interpreted, it is possible to draw the following conclusions: – students who would choose to work in the local public administration often have a very good opinion about public administration, while students who would choose the central public administration have a very bad opinion about public administration. – students who believe that transactions’ recognition in ga is easier comparing to companies’ accounting consider that there is enough time volume allocated to this discipline, while students who cannot appreciate the time allocated consider that transactions’ recognition in ga is very difficult compared with companies’ accounting; and – students who find studying adjacent information very useful would take into consideration to continue advanced ga courses (like master or phd), while students who think that studying adjacent information is useful are still undecided about continuing the advanced ga courses. open-ended questions generated a number of interesting responses. thus, 68 of the respondents consider that ga is more difficult than private companies’ accounting that they have studied during the first two years of accounting school. another 28 respondents think of ga as very useful in their future professional career, while 11 respondents consider it more complex than what they have previously studied. the 87 1 2 3 figure 2: correspondence analysis – symmetric plot for v1 and v2, v7 and v9, v8 and v11 number of those respondents who consider ga useless, boring or illogical (compared to private companies’ accounting) is relatively small for the dimension of the sample that is 10 individuals. the rest of the sample delivered isolated answers leading to a general view over ga as a relevant, complex, detailed discipline that needs more time 88 to be studied and understood than private companies’ accounting. what appears to be very interesting in these open answers is that only one individual out of 283 in the sample considered ga useless because of the low level of salaries in the public sector and thus of no interest for future graduates as a possible workplace option. 6. conclusions, limits and future research this research has approached a relatively limited theme in what the dedicated literature is concerned, considering the integrated relation between public administration sector – future accounting professionals – university curricula. the first objective of the research is considered to be fulfilled, that is undergraduate students’ decision of being employed in public administration is determined by their opinion towards this domain and the curricula’s orientation on public sector particularities. the management of the public administration sector and the academic environment are fundamental for the creation and promotion of the motivational and professional framework so that future graduates are oriented towards the labor market in the public sector. in this respect, the option of future graduates for being employed in public administration depends on the preponderance of the disciplines in the program’s curricula. 61% of total students prefer to work in the private or non-governmental sectors while the courses in their program’s curricula refer to the accounting of companies. the second objective of the study was to investigate if undergraduate students’ interest for ga might be connected with the time allocated in the program’s curricula. 39% of students believe there is not enough time allocated to the discipline and also see the assessment of transactions’ recognition in ga as more difficult than the companies’ accounting, while 19% of the same category of students believe that the assessment of transactions’ recognition in ga is almost the same as the accounting of companies in terms of study difficulty. in terms of a relation between the undergraduate students’ choice for advanced ga courses and the usefulness of studying adjacent information, 60% of students believe that there is a need to study other disciplines and only 10% of them will take advanced courses. the inclusion of ga discipline in the second year of study’s curricula should also lead undergraduates towards a bachelor’s degree paper with a ga subject. as for the third objective – opinion of the undergraduate students on the connection between competencies delivered by the program’s curricula and the labor market requirements – the analysis reveals that the most important competencies delivered by the program’s curricula must be accounting (both for companies and other entities), taxation and law. it is interesting to analyze the students’ vision about management, because they do not consider this competence as an important one that could be developed by school. the limits of our research concern the sample area referring only to undergraduates of amis school from the bucharest university of economic studies. nevertheless, there is no risk in altering the research results considering that the bucharest 89 university of economic studies is the only romanian university having exclusively economic specializations, activating for more than a century in the romanian academic environment and that amis school is representative for the number of undergraduates/graduates. as future research directions, we intend to continue the research by investigating other aspects concerning the development of competencies for future professionals in public administration sector. references: 1. agenția națională a funcționarilor publici, ‘corelarea învățării cu piața muncii. raport de cercetare’, 2015, [online] available at http://www.anfp.gov.ro/r/doc/2015 /studii%20si%20prezentari/sinteza%20raport%20studiu%20cipm.pdf, accessed on september 20, 2018. 2. albrecht, w.s. and sack, r.j., accounting education: charting the course through a perilous future, sarasota: american accounting association, 2000. 3. chan, j.l., ‘government accounting: an assessment of theory, purpose and standards‘, 2003, public money and management, vol. 23, no. 1, pp. 13-20. 4. daniels, b.w., gupta, r.d. and pridgen, a.k., ‘faculty perspectives on governmental and nonprofit accounting topics’, 2007, the accounting educators’ journal, vol. 17, pp. 1-12. 5. deaconu, a., nistor, c.s. and filip, c., ‘the impact of accrual accounting on public sector management: an exploratory study for romania’, 2011, transylvanian review of administrative sciences, vol. 32e, pp. 74-97. 6. henry, b.k., ‘a survey of governmental accounting education studies’, 2005, journal of public budgeting, accounting & financial management, vol. 17, no. 2, pp. 166-179. 7. hințea, c.e., profiroiu, m.c. and țiclău, t.c., ‘strategic planning and public management reform: the case of romania’, 2015, transylvanian review of administrative sciences, special issue, pp. 30-44. 8. hurt, b., ‘teaching what matters: a new conception of accounting education’, 2007, journal of education for business, vol. 82, no. 5, pp. 295-299. 9. miller, g.j., ‘trends and challenges in governmental accounting education’, 2006, journal of government financial management, vol. 55, no. 2, pp. 20-24. 10. pitulice, i.c. and ștefănescu, a., ‘research on the accurate image supplied by the financial reporting. the case of the local public administration entities form romania’, international conference on accounting and management information systems, bucharest, 8-9 june 2016. 11. profiroiu, a.g., ‘lecturer and student perspective regarding teaching public administration in romania’, 2013, transylvanian review of administrative sciences, special issue, pp. 141-155. 12. tiron-tudor, a., ‘romanian public institutions financial statements on the way of harmonization with ipsas’, 2010, accounting and management information systems, vol. 9, no. 3, pp. 422-447. 13. tiron-tudor, a., nistor, c.s. and carstea, a., ‘the way of public institutions to accrual accounting – case study romania’, 2012, euroeconomica, vol. 31, no. 3, pp. 57-74. 14. wilson, e., ‘an historical perspective on governmental accounting education’, 2013, journal of accounting education, vol. 31, no. 6, pp. 244-251. 90 annex questionnaire for testing students’ perception on government accounting 1. what is your opinion on romanian public administration? (1 very bad; 2 bad; 3 not bad, not good; 4 good; 5 very good) very good; good; not bad, not good; bad; very bad. 2. once you graduate, would you choose to get a job in: a. central public administration (cpa); b. local public administration (lpa); c. private/non-governmental sector (ps). 3. from the attended courses, which do you think delivered the most important knowledge that would facilitate a potential job in the public sector (only one option accepted). a. accounting knowledge; b. law/juridical knowledge; c. management knowledge. 4. courses in your school’s curricula are mainly referring to: (only one option accepted) a. private sector accounting; b. accounting for other types of entities (financial institutions, public sector entities, not-for-profit entities, authorized professionals, etc.). 5. the following abilities/competencies should be included in the school’s curricula? (assess them based on a scale: 1only few should be included; 5 must be entirely included). communication skills management law/juridical (e.g., interpretation of legal regulations) private companies accounting accounting for other types of entities (financial institutions, public sector entities, not-for-profit entities, authorized professionals, etc.) it taxation 6. when studying government accounting, its specific concepts seem to be (financing stages, public domain assets’ recognition, etc.): a. very difficult; b. difficult; c. not very difficult; d. not difficult at all; e. i can’t appreciate. 7. by reference to private companies’ accounting, accounting recognition of government accounting’s transaction is: a. very difficult; b. more difficult; c. equal difficulty; d. less difficult; e. not difficult at all. 91 8. do you consider as useful additional knowledge in government accounting courses (as prevention financial control, budgeting process, engagement, liquidation, ordering of paying and payment of budgetary expenses)? a. very useful; b. useful; c. not so useful; d. useless; e. i can’t appreciate. 9. how would you appreciate the time volume allocated to the government accounting’ course? a) enough for understanding and practical use of concepts; b) not enough for understanding and practical use of concepts; c) i can’t appreciate. 10. based on what you have studied so far, how would you appreciate government accounting (by referring to private sector accounting studied so far)?....................... ........................................................................................... 11. would you consider the possibility of attending advanced courses (post-graduate) in government accounting? a. yes; b. no; c. i don’t know. 12. the main theme of your bachelor’s degree paper refers to government accounting? a. yes; b. no. if the answer is b), then please answer also question 13. 13. if government accounting had been studied in the second year, would you have considered it when choosing bachelor’s degree paper? ................................................ ....................................................................................... 14. your age: years 15. you are: a. female; b. male. 16. at present, you have are employed: a. yes; b. no. 104 abstract the integrated territorial investment mechanism (iti) was implemented in romania to the territory of iti danube delta in the 2014-2020 programming period. in this respect, the present article aims to analyze the process of implementation of the iti mechanism on the danube delta territory in order to find out the impact of its implementation on the socio-economic development of the area and on its resilience, as well as the main problems encountered by the responsible authorities for managing this programme and the beneficiaries of these funds. the research methodology consists of a survey conducted by using two questionnaires designed by the authors. the study had 42 participants from the fund managers’ category and 71 participants from the beneficiaries’ group. the study revealed a positive perception among all the participants which considered that iti impacts the resilience of the danube delta territory to a medium extent. the most important problems encountered in the implementation process were the pre-financing process, the guides’ conditions that are not adapted to the beneficiaries’ needs and the public procurement process. the research revealed a high degree of satisfaction from both types of respondents regarding the iti mechanism and a good relation between the managing institutions and beneficiaries. keywords: danube delta territory, iti mechanism, cohesion policy, sustainable development, resilience. perceptions on the implementation of the integrated territorial investment mechanism (iti) and its impact on sustainable development and resilience of danube delta*1 alina georgiana profiroiu corina-cristiana nastacă mirela caraman (pufleanu) alina georgiana profiroiu professor, ph.d., department of administration and public management, bucharest university of economic studies, bucharest, romania e-mail: alina.profiroiu@amp.ase.ro corina-cristiana nastacă teaching assistant, ph.d., department of administration and public management, bucharest university of economic studies, bucharest, romania e-mail: corina.nastaca@amp.ase.ro mirela caraman (pufleanu) ph.d. candidate, management doctoral school, bucharest university of economic studies, bucharest, romania e-mail: mirela.caraman@gmail.com * acknowledgment. this work was supported by a grant of the ministry of research and innovation, cncs–uefiscdi, project number pn-iii-p4-id-pccf-2016-0166, within the pncdi iii project ‘regroweu — advancing ground-breaking research in regional growth and development theories, through a resilience approach: towards a convergent, balanced and sustainable european union’. doi: 10.24193/tras.si2021.6 published first online: 12/15/2021 transylvanian review of administrative sciences, special issue 2021, pp. 104–126 105 1. introduction the territorial dimension was one of the cohesion policy’s priorities in the 2014–2020 programming period (szilard and lazăr, 2012). in this respect, the policy supported measures for stimulating employment, social inclusion, education, competitiveness and institutional capacity development, using new tools such as integrated strategies (the integrated territorial investment — iti — mechanism). the purpose of using integrated approaches was to support sustainable local development, to strengthen cities’ resilience and to improve the use of the european funds (kogut-jaworska, 2019). in romania, the iti mechanism is implemented in the danube delta territory. the focus of iti is linked to the thematic objectives as stated in the operational programmes. besides the specific issues regarding the urban areas within the iti territory, iti danube delta tries to solve the problems of the rural areas within the same territory. therefore, the iti targets mainly issues such as: innovation and competitiveness, environmental protection, renewable energy and low carbon economy, regional disparities and employment, maritime challenges, it&c, being considered a main factor of territorial governance. the reason for introducing the iti mechanism is that the cohesion policy should focus more on the territorial or place-based dimension and should consider more the specificities of each territory. because the cohesion policy aims to enhance territorial governance, the iti mechanism was created in order to approach all the problems encountered within a single territory using only one programme. this approach promotes the cooperation between administrative units and the implementation of common projects, facilitating the absorption of non-reimbursable eu funds. in this respect, the main objective of the present research is to analyze the process of implementation of the iti mechanism in the iti danube delta territory and the main problems encountered by the responsible authorities for managing this programme and the beneficiaries of these funds so as to determine if there is an impact of this programme on the development and resilience of this area. the article is structured in four main sections: introduction, followed by the second section which presents the literature review regarding the development of the integrated territorial instruments in the european union, followed by the description of the research methodology (section 3) and the main findings of the study related to the perception of the beneficiaries and employees responsible from the management authorities regarding the implementation of iti mechanism and its impact on the danube delta territory (section 4). in the last section, there are conclusions and recommendations. 106 2. the development of integrated territorial instruments in the european union by the end of the 1990s, oecd (2001) proposed a new approach of the regional policy where competitiveness and economic cohesion could be better achieved using regions’ endogenous potential based on three principles: ‘endogenous development (aimed at enhancing territorial units’ own opportunities for expansion); sustainable development (aimed at reconciling the objectives of economic efficiency, social cohesion and ecological balance) and more accountable governance’ (oecd, 2001, p. 27). this represents the place-based approach where the administrative boundaries of a region are less important, the attention being focused on the regions’ potential, development barriers and main challenges (barca, 2009; oecd, 2009). studies in the field suggested that the cohesion policy’s interventions would be more effective if the sectoral and solidarity approaches would be replaced with interventions aiming to stimulate regional potential. using regions’ endogenous potential means to introduce the territorial dimension, to create intersectoral interventions and develop a multi-level governance system as to achieve competitive advantage at regional and national levels (musa and petak, 2015; kaczmarek and kociuba, 2017; muksin and avianto, 2021). the implementation of the cohesion policy did not have the expected results in the 2007–2013 programming period and its interventions did not generate permanent economic growth (rodríguez-pose and fratesi, 2004; gorzelak, 2014; nyikos and kondor, 2019). consequently, in the 2014–2020 programming period, the most important elements of the cohesion policy were the place-based approach and the multi-level governance (szlachta and zaucha, 2012; mendez, 2011; van der zwet, miller and gross, 2014; smékalová, 2018). the policy introduced new tools in order to support the endogenous potential of regions and countries (camagni and capello, 2015) and the place-based approach was introduced in the europe 2020 strategy (european commission, 2010). the cohesion policy aimed to focus on results and maximize the impact of eu funding instruments using thematic concentration and a strategic and integrated approach. in this respect, considering the need for strengthening the integrated approach in the eu, the integrated territorial investment (iti) tool was created, by combining policies, sectors and funds. iti introduced the urban dimension to the cohesion policy (european commission, 2014), being considered a driving force for integrating activities that will lead to urban areas’ sustainable development (kociuba, 2018). the iti mechanisms’ purpose is to introduce the concept of thematic concentration by channeling the cohesion policy’s interventions on strategic areas in order to determine regions’ long-term competitiveness. the interventions are limited to particular categories of intersectoral activities which respond to urban areas’ needs and problems (kociuba, 2018). iti mechanisms are implemented in 19 eu countries, using different thematic, geographic, financial and organizational approaches (binek et al., 2016). 14 out of 19 107 countries use itis to achieve sustainable urban development. in poland, the czech republic and slovakia the mechanism supports functional urban areas while in belgium and germany it is only applied in some selected regions. spain, romania and portugal implement the mechanism in their coastal areas while in finland, iti supports the development and implementation of the six city strategy. more than that, the number of established iti territories varies among member states. in romania there is only one iti territory — the danube delta, while the czech republic created seven iti territories (marin, 2017; kociuba, 2018). the financial allocation of the integrated territorial investments was €13.8 billion in the 2014–2020 period. the european regional development fund financed €11.8 billion, the european social fund funded €1.7 billion and €0.3 billion were allocated through the cohesion fund. almost 80% of this allocation was concentrated in nine member states. poland received the highest allocation (€3.8 billion) and romania received €1.11 billion (marin, 2017). figure 1: territory covered by iti danube delta source: the integrated strategy for sustainable development iti danube delta (2016) in romania, the iti instrument has been applied to the territory of iti danube delta (presented in figure 1) which brings together seven rural administrative units and one urban area in the danube delta biosphere reserve, urban and rural administrative-territorial units partially located on the danube delta biosphere reserve territory from tulcea and constanța counties, as well as one town and eight communes located in the vicinity of the danube delta biosphere reserve (government of romania, 2016). the introduction of this integrated approach in the danube delta territory might also have a positive impact on sustainable development and resilience within this area. resilience refers either to a system’s capacity to absorb disturbances or shocks and keep its basic functions and structures (walker and salt, 2006; radu, 2018; țiclău, 108 hințea and andrianu, 2020) or the capacity to adopt and implement changes in order to evolve to a new state of equilibrium (folke et al., 2010). other authors (carpenter et al., 2001, p. 765) considered that resilience of a system can be described following three characteristics: ‘(1) the amount of disturbance a system can absorb and still remain within the same state or domain of attraction, (2) the system’s capacity of self-organization, and (3) the ability to build and increase the learning and adaptive capacities’. these characteristics lead to the idea of persistence, because in its efforts to surpass the shocks’ impact, a system will try to maintain its main characteristics and functions. persistence is the element that links resilience with sustainable development because the purpose is to develop prosperous systems for the future (pisano, 2012). financing measures which lead to a sustainable socio-economic development of the danube delta communities might help at strengthening their resilience in face of shocks. there is a gap in the literature referring to the impact of iti mechanism on enhancing resilience or sustainable development of an area. even if the implementation process of the iti mechanism is not finished, if the mechanism positively influences aspects such as employment, migration or economic growth, through its contribution to the socio-economic development of the area, it will also influence the territory’s resilience in face of shocks. this aspect is particularly important considering that strengthening the territory’s resilience will help communities to be prepared for future shocks and will decrease the negative impact of the economic crisis caused by the covid-19 pandemic on the socio-economic development of danube delta territory. also, there are studies focused on the effectiveness of this particular instrument in different member states that showed iti’s effectiveness as a tool of the cohesion policy. most studies regarding the iti mechanism implementation were conducted on iti territories within poland (wyrwa, barska and jędrzejczak-gas, 2017; glinka, 2017; kogut-jaworska, 2019) and revealed that the mechanism contributed to the development of cities and urban functional areas because it identified the specific needs of these areas, it unlocked their potential, it offered integrated support that led to a more effective policy approach, it increased the cooperation between the local government units from the functional urban areas, built a multi-level management system and helped the mentioned areas, which had structural problems, to fulfill the objectives of the regional policy. integrated territorial approaches planned for the 2014–2020 period are often based on experiences from the previous programming periods. nevertheless, the new approaches also contain new elements which have had a considerable impact on programming and governance structures, and will also affect the management and implementation of the esi funds. it is too early to comment with certainty on whether these approaches will also lead to new, and better, results. 109 3. research methodology 3.1 the main objectives of the study and research questions the present paper aims to analyze the process of implementation of the iti mechanism within the iti danube delta territory. the main purpose of the study is to analyze the impact of the implementation of this instrument and the main problems encountered by the responsible authorities for managing this programme and the beneficiaries of these funds, and its influence on developing this area’s resilience. the objectives of the study are: 1. to investigate the perception of the two categories of groups involved in this mechanism, namely: the beneficiaries (both private or public) and those responsible for managing the funding instruments (managing authorities, intermediate bodies, etc.), regarding the process of implementation of the iti danube delta mechanism and its contribution to eu funds management; 2. to investigate the differences of perception between the fund managers and the beneficiaries regarding the main problems encountered in the implementation process and the impact of iti mechanism; and 3. to investigate respondents’ perceptions regarding the iti mechanism’s impact, especially on the resilience of iti danube delta territory. the study is based on four hypotheses: h1: significant differences between the fund managers and the beneficiaries’ perceptions regarding the aspects improved by iti funding mechanism implementation will be observed. h2: significant differences between the fund managers and the beneficiaries’ perceptions regarding the contribution of iti mechanism to the implementation of eu funds will be observed. h3: significant differences between the fund managers and the beneficiaries’ perceptions regarding the main problems encountered in the implementation process will be observed. h4: significant differences between the fund managers and the beneficiaries’ perceptions regarding the impact of iti mechanism on resilience in iti territory will be observed. 3.2 research design and data collection the research methodology consists of an opinion survey conducted using two questionnaires designed by the authors for each category of respondents: management authorities and beneficiaries, respecting the characteristics of each targeted group. the purpose was to create a comprehensive image regarding the implementation process of the iti danube delta from both perspectives because the management authorities and the beneficiaries might have different opinions. regarding the questionnaires, the first one was addressed to the managers within the management authorities and comprised 15 questions. the first four questions 110 were addressed in order to reveal respondents’ characteristics: the management authority in which they worked, the number of employees within the institution, the positions they held (management or execution), and their experience in the european programmes’ implementation. the other 11 questions were designed to measure respondents’ perceptions regarding the management of eu programmes, the difficulties in understanding the operational programmes’ documentation, their opinion regarding the collaboration process between beneficiaries and authorities responsible for eu funds’ management, problems encountered during the process of projects’ implementation and the impact of the iti danube delta mechanism. the second questionnaire was designed for the beneficiaries of the projects implemented through the iti danube delta mechanism, comprising 17 questions. the first five questions investigated respondents’ characteristics such as the field of activity, the type of organization where they worked, the area where the organization was located — urban or rural, and the number of employees. the other 12 questions aimed to analyze beneficiaries’ perception concerning the relation with the management authorities, the impact of the projects implemented on their organizations, the operational programmes to which they applied, the number of projects they participated in, the iti danube delta mechanism, and its impact on socio-economic development. the questionnaire was administered via e-mail between may and august 2020 to all institutions and organizations included in the sample. knowing the perception of the two categories of respondents regarding the impact of using the iti mechanism is important because these are persons highly involved in the implementation of the submitted projects. thus, the first category — fund managers — appreciates the impact of using this instrument in an overall picture. to be exact, they evaluate the impact on a large scale, taking into consideration each project at a time. also, they can draw conclusions regarding the output given by the use of iti, not focusing on individual projects and the needs fulfilled by their implementation. the second category — the beneficiaries — appreciates the impact of using the iti instrument taking into consideration their personal experiences within the projects they implement. these projects could be one per respondent or 10 per respondent. the analysis of the specific indicators regarding the impact of iti implementation in the territory is set to be conducted after we assess the differences in perception between the two categories of respondents. therefore, indicators such as unemployment rate could be calculated for each territory, but the evolution of this particular indicator does not state the real impact given by the implementation of the submitted projects. so, whereas the evolution of unemployment might be on a descending trend, as a result of the implemented projects, this indicator can easily be influenced by the global pandemic. this is the reason why the perception of the two stakeholders is equally important. 111 4. the main findings of the study regarding iti mechanism’s implementation and its impact on the danube delta territory 4.1 the main characteristics of the sample the two questionnaires were applied to the two categories of respondents, as follows: the fund managers and the beneficiaries. in the fund managers’ case, the exhaustive sampling method was used, as the questionnaire was sent to all the organizations involved in the implementation of the iti danube delta mechanism. consequently, the fund managers were chosen from the following institutions: the intercommunity development association (adi) — iti danube delta, the south-east regional development agency, the eight management authorities for each programme as part of iti mechanism — the managing authority for regional operational programme, the managing authority for national rural development programme, the managing authority for large infrastructure operational programme, the managing authority for human capital operational programme, the managing authority for competitiveness operational programme, the managing authority for administrative capacity operational programme, the managing authority for fishing and maritime affairs operational programme, the functional working group within the ministry of european funds, and to the seven intermediate bodies for each programme. the questionnaire was sent to all the organizations included in the sample. considering the number of employees that are working with the iti mechanism, 3–4 responses were asked from each institution. the response rate was 100% as all the institutions accepted to participate in the study, and 42 responses were received. the beneficiaries from iti danube delta were selected through the convenience sampling method. it should be mentioned that the number of contracted projects is bigger than the number of beneficiaries because there are beneficiaries with more than one project. consequently, the questionnaire was sent to all 38 local public administrations within the iti danube delta territory, the public institutions within the territory, the two county councils (tulcea and constanța) involved in the mechanism, and to 150 private firms. the private firms were selected randomly from all fields of activity (taking into consideration the pillars from the strategy for iti danube delta). from all the mentioned institutions and private firms, 71 persons agreed to participate in the study. the 42 participants in the study from the fund managers’ category came from all the organizations included in the sample. the distribution of respondents based on the institution in which they worked is the following: 50% of the respondents worked in a managing authority (from all the programmes funding the iti danube delta mechanism), 21.4% in the intercommunity development association — iti danube delta, 14.3% came from the intermediate bodies (from all the programmes funding the iti mechanism) and 14.3% worked in other types of organizations (e.g., the functional working group within the ministry of the european funds, local action 112 groups financed through the national rural development programme or fishing and maritime affairs operational programme). regarding respondents’ distribution (within the fund managers group) by their level of power, 21.4% of them occupied management positions whereas the other 78.6% occupied execution positions within the institutions included in the sample. concerning the size of the organizations where the fund managers worked, the majority of respondents — 25 (60%) came from institutions with more than 100 employees, 15 (35%) worked in institutions with 10–50 employees, while 2 (5%) worked in organizations with 50–100 employees. regarding participants’ distribution (within the fund managers group) by seniority in the institutions they worked in, it can be observed that the majority — 21 (50%) had more than 10 years of experience, 14 (33.3%) had between 5 and 10 years of experience and only 7 (16.7%) had between 1 and 5 years of experience. as regards respondents’ experience (within the fund managers group), measured by the number of projects analyzed in 2007–2013 and 2014–2020 periods, in the previous programming period, 19% of respondents analyzed 1–10 projects, 33.30% analyzed 10–50 projects, and 26% analyzed more than 50 projects. in the current programming period, 31% of the respondents analyzed 1–10 projects, 14.3% analyzed 11–20 projects and 52.40% of the respondents analyzed more than 20 projects, revealing the fact that the study’s participants were experienced in analyzing eu funding projects. as mentioned before, the questionnaire was also sent to representatives of the beneficiaries of iti danube delta and 71 persons agreed to participate in the study. regarding beneficiaries’ distribution by their field of activity, most of them (30%) came from public administration, followed by tourism and ecotourism (12.7%), agriculture, forestry, fishing, and aquaculture (11.3%), and construction fields (7%). the rest of them submitted different answers, such as consultancy, recreational activities, service for ships and boats, auto service and research and development. the majority (54.9%) worked in private firms, followed by the local public administration institutions (25.4%) and the rest of them worked in central public administration (2.8%), autonomous directions (2.8%), in institutions subordinated to the central or local public administration (8.4%), ngos (4.3%) and cult units (1.4%). regarding the size of the organizations where the participants activated, the majority of respondents (58%) came from small organizations, with less than 10 employees (representing small enterprises), followed by organizations with more than 100 employees (27%) (representing the institutions from the public sector), 12% worked in organizations with 10–50 employees, and 3% came from organizations with 50–100 employees. more than that, 71.8% of the respondents worked in organizations situated in urban areas, and 28.2% in organizations located in a rural area. 113 4.2 the fund managers’ perception concerning the implementation of iti mechanism in the danube delta territory 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% very good good neither good nor poor poor very poor not applicable 33,3% 38,1% 4,8% 0,0% 0,0% 23,8% 50,0% 28,6% 21,4% 0,0% 0,0% 0,0% 2007-2013 2014-2020 figure 2: fund managers’ perception regarding the management of european funds’ implementation in the two programming periods source: authors (2021) figure 2 presents respondents’ perception regarding the management of the european funds’ implementation by the institutions where they activated in the previous programming period (2007–2013) and the current programming period (2014–2020). the answers revealed a positive perception concerning the process of managing the implementation of these funds for both programming periods. for the 2014–2020 period, the proportion of participants who had a good and very good perception regarding the management process of the european funds increased compared to the previous period (78.6% vs. 71.4%). none of the respondents had a poor or very poor perception. also, the column illustrating the answer ‘not applicable’ was an answer variant only for the 2007–2013 period. the registered answers are from the respondents who work in the intercommunity development association (ida) iti danube delta or in the functional working group iti danube delta within the ministry of european funds, two structures that did not exist in the previous programming period. regarding the degree of difficulty concerning the understanding of the programming documents used in the 2014–2020 period, 26.2% of the fund managers found the programming documents difficult and very difficult to understand. however, the majority of the respondents — 57.1% — attributed them a medium degree of difficulty, while 16.7% considered them easy to understand. on the whole, the results have shown a positive perception regarding the degree of difficulty in understanding the programming documents, but the authorities should simplify these documents considering their importance in the implementation process. 114 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% very difficult difficult medium easy very easy 4,8% 21,4% 57,1% 16,7% 0,0% figure 3: perception on the degree of difficulty in understanding the programming documents in the 2014–2020 period source: authors (2021) table 1: importance of the problems encountered by managing authorities in the projects’ implementation process answer variants average restricted levers of action for organizations closer to the beneficiaries 3.52 the guide’s conditions are not adapted to the beneficiaries’ needs 3.83 the public procurement process 3.88 the reimbursement process 3.86 poor communication between institutions 3.60 reporting mechanism and methods of documents’ uploading on digital platforms 3.55 source: authors (2021) the degree of importance of the problems encountered by the management authorities in the projects’ implementation process (see table 1) was measured on a scale from 1 to 5, where 5 meant extremely important and 1 meant not very important. according to the results, the main problems were the public procurement process (3.88), the delays in the reimbursement process (3.86), and the guides’ conditions that were not adapted to the beneficiaries’ needs (3.83). table 2: fund managers’ satisfaction on collaboration between authorities and beneficiaries answer variants percentage very satisfied 19% satisfied 52.4% neither satisfied nor dissatisfied 23.8% dissatisfied 2.4% very dissatisfied 2.4% source: authors (2021) 115 the present question intended to emphasize respondents’ perception regarding the collaboration process between the authorities responsible for the european funds’ management and the beneficiaries or the applicants in the 2014–2020 period. given the fact that these authorities acted also as beneficiaries of the technical assistance programme (for instance, ida iti danube delta is an authority responsible for the management of the european funds and also a beneficiary), their answer could be considered from both perspectives. as it can be observed, 71.4% of the respondents demonstrated a positive perception regarding the relationship between the authorities involved in the european funds’ implementation and the beneficiaries, 23.8% of the respondents had a neutral opinion, and only 4.8% of them had a negative perception. 4.3 the beneficiaries’ perception concerning the implementation of iti mechanism in danube delta territory table 3: beneficiaries’ degree of satisfaction on financial opportunities in two programming periods: 2014–2020 and 2007–2013 answer variants percentage to the smallest extent 5.6% to a small extent 1.4% to a medium extent 21.1% to a high extent 18.3% to the highest extent 53.5% source: authors (2021) the beneficiaries were asked if the existing financing programs addressed the organizations’ financing needs. 71.8 % of the respondents considered that their needs were fulfilled by the existing financing opportunities to a high and the highest extent, whereas only 7% considered that their needs were fulfilled only to a small and the smallest extent. within the sample, a large majority of the respondents (94.4%) have applied for european union funding in the 2014–2020 programming period, but only 59.2% of the respondents applied in the 2007–2013 programming period. the respondents were asked about the financing programmes to which, either they or their organizations, applied in the 2007–2013 and 2014–2020 programming periods (see table 4). most of them applied to the regional operational programme, followed by the rural development national programme and the large infrastructure operational programme (2014–2020) or the environment operational programme (2007–2013). under the section ‘others’, respondents answered the fishing and maritime affairs operational programme, the interreg europe programme, the romania-ukraine 2014–2020 programme, eni cbc black sea basin, the technical assistance operational programme. in addition, it can be observed that the number 116 of applications to the regional operational programme and the national rural development programme increased compared to the previous period. 0,00% 20,00% 40,00% 60,00% 1 projects 2-3 projects more than 3 projects none 30,99% 16,90% 12,68% 39,44% 57,75% 15,49% 22,54% 4,23% 2007-2013 2014-2020 figure 4: respondents’ experience (within beneficiaries’ group) in project implementation source: authors (2021) figure 4 presents respondents’ experience in project implementation as members of the implementation teams in both programming periods. the results are slightly predictable because the number of representatives of smes in the sample is high and, in the previous programming period, smes were allowed to apply for only one project in most cases. it can be observed that the number of respondents who worked in one project or in more than three projects increased significantly in the 2014–2020 period and the proportion of the respondents who did not have experience in any projects decreased considerably. it can be assumed that the high proportion of respondents who did not participate in any project in 2007–2013 is caused by two reasons: either the financing opportunities did not meet their needs or they were new employees in their organizations. table 4: european financing programs accessed by beneficiaries: comparison of the 2007–2013 and 2014–2020 programming periods 2007-2013 2014-2020 2007– 2013 2014– 2020 answer variants percentage rural development national programme rural development national programme 18.3% 28.2% regional operational programme regional operational programme 32.4% 49.3% transport sectoral operational programme large infrastructure operational programme 1.4% 23.9% environment operational programme 14.1% 23.9% human capital operational programme 7.0% operational programme increasing economic competitiveness competitiveness operational programme 8.5% 1.4% administrative capacity operational programme administrative capacity operational programme 5.6% 14.1% others others 11.3% 14.1% not applicable not applicable 7% 26.8% source: authors (2021) 117 0,00% 20,00% 40,00% 60,00% 80,00% very useful useful neither useful nor unuseful useful in a small extent unuseful 77,46% 18,31% 4,23% 0,00% 0,00% figure 5: beneficiaries’ perception regarding iti danube delta mechanism’s impact on facilitating access to financing opportunities in the 2014–2020 period source: authors (2021) the majority of the respondents (77.5%) appreciated that the mechanism was very useful, considerably facilitating access to financing opportunities, revealing a very good perception regarding the iti mechanism. to the highest extent to a high extent to a medium extent to a small extent to the smallest extent 0,00% 20,00% 40,00% 60,00% 80,00% 100,00% 80,28% 15,49% 2,82% 1,41% 0,00% figure 6: beneficiaries’ perception regarding ida iti danube delta’s support source: authors (2021) more than that, the beneficiaries were asked if ida iti danube delta supported them throughout the entire process, namely applying to financing and implementing the projects. the majority (95.77%) appreciated that ida iti danube delta offered support for their organizations to a high and to the highest extent, and only 1.4% considered that the association supported them to the smallest extent, the results showing a high degree of appreciation concerning the activity of ida iti danube delta. 4.4 the comparative analysis between the managers’ and the beneficiaries’ perception regarding the main problems encountered in the implementation process and the impact of iti danube delta mechanism on the socio-economic development of the territory in order to investigate the impact of the projects implemented through the iti mechanism, the respondents were presented eight areas, being asked to choose to what extent the projects implemented through the iti danube delta mechanism had 118 an impact on the development of the mentioned areas, on a scale from 1 to 5, where 1– meant to the smallest extent, 2– to a small extent, 3– to a medium extent, 4– to a high extent, and 5– representing that the iti mechanism influenced the mentioned areas to the highest extent. the average distribution of responses is presented in a comparative manner to observe the differences in perception within the two groups. table 5: distribution of the responses on the impact of projects implemented through the iti danube delta mechanism answer variants fund managers beneficiaries differences combating migration (v7) 2.46 2.9 0.44 reducing the effects caused by the demographic aging phenomenon (v8) 2.52 2.9 0.38 employment (v9) 3.00 3.9 0.90 economic growth (v10) 3.57 4.1 0.53 supporting new sources of renewable energy (v11) 2.90 3.5 0.60 developing circular economy (v12) 3.31 3.5 0.19 developing physical and digital connectivity (v13) 3.19 3.2 0.01 improving citizens’ life quality (v14) 3.62 4.0 0.38 source: authors (2021) table 5 shows the impact of the projects implemented through the iti danube delta mechanism. the fund managers considered that the implemented projects influenced the most: the citizens’ life quality (3.62), economic growth (3.57), development of the circular economy (3.31), and the development of physical and digital connectivity (3.19). the projects’ implementation influenced the least migration (2.46) and the effects caused by the demographic aging phenomenon (2.52). on the whole, the fund managers considered that the implemented projects influenced the presented factors to a medium extent, the average of the answers being 3. the beneficiaries believed that the implemented projects influenced the most, from a medium to a high extent, economic growth (4.1), the citizens’ life quality (4), and employment (3.9). the projects’ implementation influenced at least the migration phenomenon (2.9) and the effects caused by the demographic aging phenomenon (2.9). on a whole, the respondents considered that the implemented projects influenced the presented factors from a medium to a high extent, the average of the answers being 3.5. in order to test the first hypothesis of the study (significant differences between the fund managers and the beneficiaries’ perception regarding the aspects improved by iti funding mechanism implementation will be observed), the independent sample t-test was used. the t-test showed that the first hypothesis was partially validated considering that the level of significance was lower than 0.05 only in three cases. consequently, significant differences of perception between the two groups could be observed only regarding the iti mechanism’s impact on: employment; economic growth; and support on new sources of renewable energy. in all three cases the ben119 eficiaries appreciated that the mechanism had a higher impact on the development of these areas compared with the fund managers. they might have more subjective opinions or might perceive the impact based on their personal experiences with the citizens of the territory. in order to find out the contribution of the implementation of iti danube delta mechanism on the european funds’ management, the participants were asked to choose from a scale from 1 to 5 to what extent some aspects have been improved after the implementation of the iti danube delta mechanism, where the scale meant: 5– to the highest extent; 4– to a high extent; 3– to a medium extent; 2– to a small extent; and 1– to the smallest extent. the average distribution of the fund managers’ answers reveals that the specific conditions from the applicants’ guides (with an average of 4.3) and the available financial allocation (with an average of 4) were the aspects which improved the most, while the time of response to various requests represented the aspect which improved the least (with an average of 1.5). the beneficiaries contable 6: the independents sample t test’s results levene’s test for equality of variances t-test for equality of means f sig. t df sig. (2-tailed) mean difference std. error difference 95% confidence interval of the difference lower upper v7 equal variances assumed 67.369 .000 -1.852 111 .067 -.51945 .28042 -1.07513 .03623 v8 equal variances assumed 32.059 .000 -1.280 111 .203 -.34943 .27301 -.89043 .19157 v9 equal variances assumed 6.759 .011 -3.950 111 .000 -.85915 .21752 -1.29018 -.42813 v10 equal variances assumed .044 .835 -3.098 111 .002 -.55533 .17928 -.91058 -.20008 v11 equal variances assumed 23.799 .000 -2.282 111 .024 -.57411 .25154 -1.07255 -.07567 v12 equal variances assumed 29.341 .000 -.654 111 .514 -.16499 .25209 -.66452 .33454 v13 equal variances assumed 52.401 .000 -.126 111 .900 -.03488 .27584 -.58146 .51171 v14 equal variances assumed 2.370 .126 -1.869 111 .064 -.36687 .19631 -.75588 .02214 source: authors (2021) 120 sidered that the specific conditions from the applicants’ guides (with an average of 4.1) and the available financial allocation (with an average of 4) were the aspects that improved the most, while the time of response to various requests represented the aspect which improved the least (with an average of 1.5). table 8: the independent sample t test’s results levene’s test for equality of variances t-test for equality of means f sig. t df sig. (2-tailed) mean difference std. error difference 95% confidence interval of the difference lower upper v1 equal variances assumed .505 .479 .986 111 .326 .24782 .25138 -.25031 .74595 v2 equal variances assumed .219 .640 -.329 111 .743 -.06170 .18742 -.43309 .30968 v3 equal variances assumed .139 .710 -.071 111 .944 -.01174 .16642 -.34151 .31804 v4 equal variances assumed 3.679 .058 -.571 111 .569 -.11536 .20209 -.51581 .28510 v5 equal variances assumed .153 .697 .296 111 .767 .05902 .19912 -.33555 .45359 source: authors (2021) the independent sample t test’s result was also used to test the second hypothesis of the study (significant differences between the fund managers and the beneficiaries’ perception regarding the contribution of iti mechanism to the implementation of eu funds will be observed). the hypothesis did not validate considering that the level of significance was higher than 0.05 in all cases, which meant that there were table 7: comparison of perceptions on the contribution of the implementation of iti danube delta mechanism on the european funds’ management answer variants fund managers beneficiaries differences specific conditions from the applicants’ guides (v1) 4.3 4.08 -0.22 available financial allocation (v2) 4 4.01 0.01 submitting the financing requests and reporting projects’ progress (v3) 2.8 2.85 0.05 the support offered by the responsible structures for the european funds implementation (v4) 2.4 2.59 0.19 time of response to various requests (v5) 1.5 1.46 -0.04 source: authors (2021) 121 no significant differences, the perceptions of the two studied groups (fund managers and authorities) being very similar as well as the scores attributed to each mentioned aspect. table 9: respondents’ perception on importance of problems encountered in the projects’ implementation process answer variants fund managers beneficiaries differences pre-financing process (v16) 4.8 3.8 1 the conditions within the guides that were not adapted to the beneficiaries’ needs (v17) 4.7 3 1.7 the public procurement process (v18) 4.6 3.3 0.7 the reimbursement process (v19) 3.2 2.4 0.8 the reporting mechanism and the methods of uploading the documents on the digital platform (v20) 2.6 1.8 0.8 poor communication with ida iti danube delta (v21) 1.1 source: authors (2021) the degree of importance of the problems encountered in the projects’ implementation process (see table 9) was measured on a scale from 1 to 5, where 5 meant ‘extremely important’ and 1 meant ‘not very important’. for the managers, the main problems were the pre-financing process (4.8) and the guides’ conditions that were not adapted to the beneficiaries’ needs (4.7), while the poor communication with ida iti danube delta was considered the least important problem with an average of 1.1. according to the beneficiaries, the main problems were the pre-financing process (3.8) and the public procurement process (3), while the reporting mechanism and methods of uploading the documents on the digital platform was considered the least important problem with an average of 1.8. the opinions of the fund managers and beneficiaries were similar. however, the beneficiaries considered that the pre-financing process and the stated conditions within the guides that were not adapted to their needs as being of the same importance with a 3.8 average, while the fund managers considered the pre-financing process as being the main problem (4.8 average), followed by the conditions stated in the guide with a 4.7 average. the t-test was used to test the third hypothesis (significant differences between the fund managers and the beneficiaries’ perception regarding the main problems encountered in the implementation process will be observed), which was partially validated because the differences of perception were significant only regarding one problem — the reimbursement process. in order to investigate the impact of iti mechanism on resilience development in iti territory, the participants were asked if the mechanism improved the danube delta territory’s capacity to deal with economic, social, technological and environmental shocks, on a scale from 1 to 5, where 1 meant ‘to the smallest extent’ and 5 122 ‘to the highest extent’. both groups of respondents considered that the mechanism improved the iti territory’s capacity to deal with shocks to a medium extent. the beneficiaries had a better perception than the fund managers concerning the impact of iti mechanism on resilience development on the studied territory. this could be caused by the fact that the beneficiaries have better knowledge about the situations occurring within the territory and were confronted with problematic situations more than the responsible authorities. table 10: the independent sample t test’s results levene’s test for equality of variances t-test for equality of means f sig. t df sig. (2-tailed) mean difference std. error difference 95% confidence interval of the difference lower upper v16 equal variances assumed 2.375 .126 .603 111 .548 .168008 .278817 .384487 .720504 v17 equal variances assumed .173 .678 .193 111 .847 .03924 .20283 -.36269 .44116 v18 equal variances assumed 5.602 .020 1.419 111 .159 .26157 .18428 -.10358 .62672 v19 equal variances assumed .845 .360 6.054 111 .000 1.18578 .19586 .79768 1.57388 v20 equal variances assumed .284 .595 -.016 111 .987 -.00402 .24716 -.49378 .48574 source: authors (2021) 1 2 3 4 fund managers beneficiaries 3,05 3,5 figure 7: respondents’ perception regarding the impact of iti mechanism on resilience development in iti territory source: authors (2021) 123 table 11: the independent sample t test’s results levene’s test for equality of variances t-test for equality of means f sig. t df sig. (2-tailed) mean difference std. error difference 95% confidence interval of the difference lower upper v15 equal variances assumed 37.561 .000 -1.808 111 .073 -.44534 .24627 -.93334 .04266 source: authors (2021) the last hypothesis of the study (significant differences between the fund managers and the beneficiaries’ perception regarding the impact of iti mechanism on resilience development in iti territory will be observed) did not validate, the perception of the two groups being similar. 5. the main conclusions of the study and discussions the study revealed similar perceptions between the fund managers and the beneficiaries regarding the iti mechanism’s implementation, in most of the cases. the general conclusion of the survey is that the implementation of the iti mechanism brought many benefits within the territory compared to the previous programming period. however, even if the benefits of this financing mechanism are obvious, both beneficiaries and fund managers encountered problems regarding access to funds, but also in the implementation process, such as the pre-financing process, the guides’ conditions, that are not adapted to the beneficiaries’ needs, and the public procurement process. more than that, the study has shown that implemented projects influenced the development of certain areas such as citizens’ life quality, economic growth, circular economy, physical and digital connectivity or employment, from a medium to a high extent. also, the mechanism is perceived to influence, to a lower extent, aspects such as migration and the effects caused by the demographic aging phenomenon. however, a better perception of the beneficiaries regarding the iti mechanism’s impact on the socio-economic development of the area could be observed. also, a positive perception was observed regarding the impact on the danube delta territory’s capacity to deal with economic, social, technological and environmental shocks. the respondents, both beneficiaries and fund managers, considered that the iti mechanism improved this capacity from a medium to a high extent, supporting the idea that this integrated approach positively influences the development of resilience within the danube delta territory. the research also revealed that the iti mechanism had a positive impact on the european funds’ management, influencing aspects such as the specific conditions from the applicants’ guides and the available financial allocation. in addition, the 124 respondents had a positive perception regarding iti’s impact on the danube delta territory’s resilience, considering that the mechanism influenced this aspect to a medium extent. on a whole, even if the implementation of the iti mechanism is not finished yet, it can be affirmed that the implementation of this integrated approach had a positive impact on the development of iti danube delta territory, contributing to the socio-development of the area and helping at improving the management of the european funds. 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approaches in cohesion policy 2014–2020’, iq-net thematic paper no. 352, european policies research centre, university of strathclyde, glasgow, 2014. 29. walker, b. and salt, d., resilience thinking: sustaining ecosystems and people in a changing world, washington: island press, 2006. 30. wyrwa, j., barska, a. and jędrzejczak-gas, j., ‘integrated territorial investments as a tool of building the capability of functional areas – illustrated with an example of poland’, 2017, public policy and administration, vol. 16, no. 4, pp. 567–582. 148 abstract the consolidation perimeter of the public sector is the most important line between the micro and macro systems of government accounting. this paper focuses on the public sector boundary and assesses the potential impact on key reported figures – such as the ‘maastricht’ deficit and debt ratios – that would result from moving public corporations inside the perimeter of the consolidated general government sector, public corporations that currently lie outside the general government sector. after examining 90 spanish local governments with populations of over 50,000 during the 2010-2012 period, our results show that including public corporations within the general government sector perimeter leads to substantial differences in deficit and debt ratios, and that these differences significantly increase the number of municipalities in violation of fiscal limits imposed by the government. we also find that municipalities’ preand post-consolidation debt ratios are significantly different depending on the ruling party’s political ideology. keywords: national accounting, public accounting, esa 2010, consolidation perimeter, debt, deficit. to what extent should public corporations be consolidated? considering the effects on public deficit and debt in spanish municipalities*1 marta de vicente lama magdalena cordobés madueño mercedes torres jiménez marta de vicente lama (corresponding author) lecturer, department of financial economics and accounting, loyola andalucía university, córdoba, spain tel.: 0034-957-222.214 e-mail: mvicente@uloyola.es magdalena cordobés madueño senior lecturer, department of financial economics and accounting, loyola andalucía university, córdoba, spain e-mail: cordobes@uloyola.es mercedes torres jiménez senior lecturer, department of quantitative methods, loyola andalucía university, córdoba, spain e-mail: mtorres@uloyola.es * acknowledge. we gratefully acknowledge comments and suggestions from two anonymous referees, ana gisbert and seminar participants at the xi workshop on empirical research in financial accounting. we acknowledge financial contribution from junta de andalucía (sej-425). transylvanian review of administrative sciences, no. 52 e/2017, pp. 148-164 doi:10.24193/tras.52e.9 published first online: 2017/10/31 149 1. introduction the scope of potential research on consolidation practices has been extended by ongoing debates regarding the convergence and harmonization among public accounting systems in eu member states and the convergence of micro and macro systems of government accounting information. achieving these convergences is understood as a prerequisite to improving the comparability of accounting and statistical information between states, and to enhancing governmental decision-making (dabbicco, 2015; heald and georgiou, 2000). in this context, the consolidation perimeter of the public sector is one of the most important areas of divergence between the micro and macro systems of government accounting (dasí et al., 2016; jorge et al., 2014; lequiller, 2014). in the eu, public deficit and debt figures are assessed based on the national accounting system (the macro system), and both figures depend fundamentally on the criteria used to define the consolidation perimeter of the public sector. eu member states prepare national accounts in accordance with the european system of national and regional accounts (esa), which provides guidance on sector boundaries between the general government sector (ggs), the public financial corporations sector (fs) and the public non-financial corporations sector (nfs). a precise delineation of the ggs is critical in the eu, as it is the basis for determining government deficit and debt ratios that are key figures in monitoring member states’ compliance with the maastricht convergence criteria. since 2014, the conceptual framework for elaborating national accounts has been the esa 2010 (european parliament and the council, 2013), under which the ggs consolidates entities that are controlled by a government and are non-market oriented (i.e., the price at which they sell their products or services differs markedly from market-oriented entities). in several european countries, most public services at the local level have become involved in a series of externalization-oriented activities, and there has been a drive to create separate corporations to provide various municipal services (grossi and reichard, 2008). the market/non-market output analysis for classifying these public corporations in the ggs or in the nfs is operationalized by employing the concept of economically significant prices, which has been shown to be sensitive to interpretation (dabbicco, 2015). therefore, the boundary of the ggs and, in particular, the issue of which public corporations are inside or outside the ggs is an important issue that should be clearly explained and thoroughly researched because it directly affects government deficit and debt figures. spain is one of the most decentralized european countries and, in recent years, the number of public corporations owned by municipalities has increased significantly more than in other countries. this increase has been particularly important since the application in 2001 of the first law of budgetary stability (law no. 18/2001), which prohibits all levels of government (central, regional and local) from running non-financial deficits. additionally, the spanish government established local government 150 debt limits restricting total municipal debt in the local tax authorities act (royal decree-law no. 2/2004). at the local level, a 2012 report by the spanish general intervention board of the state administration (igae, 2012) revealed that local governments hold shares in nearly 1,300 decentralized corporations. indeed, there are nearly 1,100 corporations whose accounts are not consolidated with those of their parent municipality when computing non-financial deficits and debt levels. therefore, the spanish context seems to be an ideal setting in which to simulate the effects on non-financial deficit/surplus and debt ratios that would result from including within the perimeter of ggs consolidation those public corporations that currently lie outside this perimeter. second, this study analyzes whether including these companies within the perimeter of ggs consolidation leads to a significant increase in the number of municipalities in violation of deficit and debt requirements, which is particularly important because missing the deficit or the debt limits may have significant legal consequences for municipalities. the penalty for non-compliance with the targets is that the municipality will be under scrutiny and will have to prepare a ‘rebalancing plan’ to meet the target within one year. moreover, if non-compliance persists, credit transactions may not be authorized, and the municipality may not have access to certain funding mechanisms. ultimately, persistent breach that is considered harmful to the general interests can even lead to the dissolution of certain municipal bodies. finally, building upon the previous literature, municipalities’ political ideology, political competition and population size may affect these measures. thus, the different impact that these factors may have across municipalities should also be examined. with these goals in mind, we examine a sample of 90 spanish local governments with populations of over 50,000. we focus on larger municipalities to ensure consistency in the nature of the public services offered by the municipality, as they depend on the number of inhabitants of the municipality (law no. 7/1985). the sample period runs from 2010 to 2012. this period is particularly interesting because during that time, the central government was concerned about local governments’ debt levels and deficits, and tightened the restrictions on local governments. we contribute to the prior literature in three ways. first, to the best of our knowledge, studies that analyze the delineation of the public sector are rare, and the few studies that do address this topic mainly use qualitative approaches to analyze the conceptual framework of national accounting (dabicco, 2015). in our study, we employ a quantitative approach to address the issue, and we quantify the potential effects of enforcing different consolidation perimeters of the ggs on key local government ratios. additionally, prior studies suggest that municipalities may create separate entities to elude legal restrictions on public deficit and debt. in this paper, we directly observe the potential impact of including these entities within the perimeter of ggs consolidation on the degree of compliance. finally, we contribute to the ongoing debate about the accounting harmonization and the comparability of accounting and statistical information in eu member states. 151 the remainder of the paper analyzes as follows: section two introduces the regulatory framework for classifying public corporations under the esa concept of the ggs, section three reviews the previous literature and proposes hypotheses, section four describes the data and the methodology, and section five presents the results. finally, section six offers final conclusions. 2. regulatory framework eu member states are required to prepare their national accounts in accordance with the esa, and government deficit and debt statistics are strictly based on the esa concept of the ggs. under the maastricht treaty, member states must comply with specific fiscal discipline rules, particularly those that require states to maintain public account deficits below a threshold of 3% of the gdp benchmark, and public debt levels below 60% of gdp. in spain, the central government has imposed several restrictions on sub-national public administrations to control public deficit and debt levels. law no. 18/2001 imposed an annual budget balance on all levels of government, which means that non-financial revenues must at least cover non-financial expenses. furthermore, this law and royal decree-law no. 2/2004 restrict total municipal debt. in particular, the central government prohibited local governments from accruing new long-term debt if their total debt exceeds 110% of their operating revenues. as the economic situation has evolved since those laws were originally enacted, the limit has undergone several changes (from 100% in 2009 to 75% in 2011 and 2012). according to esa 2010, an entity is classified in the ggs if it is an institutional unit, it is controlled by the government, and it is a non-market producer. the non-market nature of an entity means that its products or services are provided free of charge or sold at economically non-significant prices. however, the concept of economically significant price is difficult to define in practice, and the boundary between market and non-market production is far from distinct, such that a pragmatic rule is used in these cases. this test is referred to as the ‘50% market test’, which primarily means that if sales cover a majority of the production costs over a sustained period (3 years or more), the entity is considered market (and hence included in the nfs); otherwise, it is considered non-market (and therefore included in the ggs). moreover, compared to the previous esa 95 (european union council, 1996), esa 2010 emphasizes the qualitative aspects of the criteria for delimiting the ggs such that only public corporations driven by market competition are excluded from the ggs, and a significant increase in the number of corporations within this sector is expected. 3. literature review and hypotheses development prior researches in spanish municipalities have studied the determinants of debt levels (benito and bastida, 2004; garcía-sanchez et al., 2011; benito et al., 2011; brusca alijarde et al., 2012; cuadrado ballesteros et al., 2013b; pérez lópez et al., 2013; pérez lópez et al., 2014), the effectiveness of general fund balanced budgets and debt con152 straints at limiting debt levels (cabasés et al., 2007) and, more recently, the type of restrictions that are most often breached in this context (benito et al., 2015). some of these studies – which are generally closely related to our research – find a positive relationship between municipal decentralization and the level of debt and conclude that local governments may create new entities to assume transfers of municipal debt, which then show up on the financial statements of these corporations. however, although these studies do not consider whether these new entities are classified as ggs or nfs corporations, they intuitively suggest that local governments use such decentralization to avoid debt limits. regarding regional governments or autonomous communities, fernández-llera and garcía-valiñas (2013) find a significant link between public debt outside the consolidation perimeter of the ggs and the number of public corporations, which suggests that regional governments decentralize to circumvent fiscal rules (the ‘shift effect’). drawing on this prior literature, as long as municipalities attempt to avoid debt limits by creating new entities to which they transfer their municipal debt (cuadrado ballesteros et al., 2013b; fernández-llera and garcía-valiñas, 2013; pérez lópez et al., 2014), we expect that including nfs and pc corporations within the perimeter of ggs consolidation will increase the debt ratio; in other words, the increase in outstanding debt is larger in proportion than the increase in total current revenues. accordingly, we posit our first hypothesis as follows: h1: moving public corporations that are currently outside of ggs consolidation within the ggs perimeter will lead to a significant increase in the debt ratio of municipalities. with respect to non-financial deficit/surplus, to the best of our knowledge, no empirical study has yet assessed the relationship between decentralization and public deficit. however, in a closely related and interesting study, jorge et al. (2014) examine the relationship between non-financial deficit/surplus based on both micro and macro systems of government accounting and find material divergences between the two systems related to the definition and scope of the reporting entity (i.e., the ggs perimeter). taken together with results from previous studies, this result suggests that local governments may use decentralization to elude legal limitations, and it would thus be reasonable to expect a significant deterioration in non-financial deficit/surplus ratios as a result of including public corporations within the ggs consolidation perimeter. accordingly, we propose the following as our second hypothesis: h2: moving public corporations that are currently outside of ggs consolidation within the ggs perimeter will lead to deterioration in the non-financial deficit/ surplus ratio of a municipality. as a consequence, assuming that municipalities use public corporations whose deficit and debt are not consolidated as a means of circumventing fiscal rules, including these companies within the perimeter of ggs consolidation will lead to a 153 significant increase in the number of municipalities that violate deficit and debt requirements. accordingly, we stipulate our third hypothesis as follows: h3: moving public corporations that are currently outside of ggs consolidation within the ggs perimeter will lead to an increase in the number of municipalities that violate deficit and debt limitations. in line with previous studies that have examined the influence of political factors and population size on regional and local government decentralization and municipal debt levels, we also believe that the impact of consolidating these public corporations within the perimeter of the ggs will differ depending on political factors, such as the locality’s political ideology, political competition, and on the size of the population. previous empirical research has yielded mixed results regarding political ideology. on the one hand, some studies find that right-wing parties favor low levels of public debt (blais and nadeau, 1992; kiewiet and szakaly, 1996; dickson and yu, 1997; fernández-llera and garcía-valiñas, 2013) and favor decentralization processes (dijkgraaf et al., 2003; walls et al., 2005; cuadrado ballesteros et al., 2013a). on the other hand, other studies do not find any significant relationships in this regard (abizadeh and gray, 1993; benito and bastida, 2004, gonzález-gómez and guardiola, 2009; bel and fageda, 2010; benito et al., 2011; pérez lópez et al., 2014). the second political factor is political competition. some studies have reported higher levels of decentralization and debt with lower levels of political competition (ni and bretschneider, 2007; smith and fridkin, 2008; cuadrado ballesteros et al., 2013a, 2013b; pérez lópez et al., 2014). however, other studies have found that municipalities characterized by weaker political competition report lower levels of public debt (ashworth et al., 2005; benito et al., 2011). with regard to the influence of population size, several studies have found that population size positively influences the level of debt and decentralization because citizens in larger municipalities tend to make greater demands for public services (vallés giménez and zárate marco, 2001; escudero and prior, 2002; mora agudo and montesinos julve, 2007; brusca alijarde et al., 2012), which is particularly significant in spain because the law establishes a range of services to be rendered by the municipalities based on population size. however, other studies found no such significant relationship (brusca alijarde and labrador barrafón, 1998; benito and bastida, 2004). drawing upon previous studies, we believe that changes in municipalities’ non-financial deficit and debt ratios before and after consolidation will depend on the municipality’s size, political ideology and political competition. thus, we posit our fourth hypothesis as follows: h4: moving public corporations that are currently outside of ggs consolidation within the ggs perimeter will have a differential impact on the change in non-financial deficit/surplus and debt ratios that depends on a given municipality’s size, political ideology and political competition. 154 4. methodology 4.1. research design the goal of this paper is to assess the potential impact on key local government ratios that would result from including nfs and pc corporations within the perimeter of ggs consolidation (i.e., as a result of the application of the new esa 2010). in particular, we study the impact on the following two ratios: 1. the non-financial deficit/surplus ratio (deficit/surplus), defined as the net lending/net borrowing of the consolidated units divided by current revenues. ��������������� = ����������������������������������������� [1] 2. the debt ratio (debt), defined as the outstanding debt of the consolidated units divided by current revenues. [2] the methodology used in our empirical study unfolds over several stages. first, we obtained the consolidated financial budget of the spanish local governments in our sample, which consisted of the financial budget of a given municipality and the budgets of the autonomous bodies dependent on it. second, all public corporations owned by those municipalities were identified in order to obtain their financial information and to classify them as included in the ggs or as nfs or as lacking classification under the esa. this approach allowed us to identify the public corporations that were outside the ggs perimeter of consolidation (nfs and pc corporations). third, we aggregated1 the financial information of the municipality and its subsidiaries classified as ggs corporations under the esa, and then we added to the latter the financial information of the nfs and pc corporations. as a result, this second database also consists of public corporations that are currently outside the scope of consolidation. finally, we calculate the deficit/surplus and debt ratios before and after the inclusion of nfs and pc corporations within the scope of consolidation (designating these ratios as deficit/surplus_before, debt_before and deficit/surplus_after, debt_after). hypotheses 1 and 2 (h1 and h2) both predict a deterioration in the deficit/surplus and debt ratios as a result of including nfs and pc corporations in our ggs consolidation. to examine the differences in these key ratios, we first analyzed the descriptive statistics and the changes in the items used to calculate these ratios. the shapiro-wilk test was used to test for normality. we can confirm that in our sample, financial ratios do not follow a normal distribution; therefore, we run non-parametric wilcoxon sign-rank tests to look for significant differences in the means of the ratios before and after the consolidation. 1 one limitation in our data is that we cannot consolidate (as opposed to aggregate) financial information. 155 second, to test hypothesis 3 (h3) we analyzed the compliance with deficit and debt limits before and after consolidation to assess whether consolidating public corporations outside the ggs perimeter increased the number of municipalities that violated the deficit and debt limits. to examine the relationship between the level of compliance before and after consolidation, we used a comparison test of proportions. finally, based on the previous literature and in alignment with hypothesis 4 (h4), we expected that the variation in municipalities’ non-financial deficit and debt ratios before and after consolidation would differ based on the municipality’s size, dominant political ideology and political competition. as discussed above, the same 90 municipalities comprise our sample over three years; therefore, panel data methodology was applied to test h4. the dependent variable was the comparability index (ci) for each of the ratios considered, and political ideology, political competition and size were the independent variables. the comparability index for municipality i was calculated as follows to determine the percentage of variation in the ratios before and after consolidation: [3] the independent variables included in the model were as follows: – political ideology: we employed a dummy variable with the value of 1 if the dominant political party in the municipality was identified as ‘left-wing’, and 0 otherwise. the methodology followed in grouping the dominant party in the municipality is in line with the approach adopted by pérez lópez et al. (2014). – political competition: we employed a dummy variable taking the value of 1 if the political party in the municipality leadership has won an absolute majority in the elections, and 0 otherwise. – population: we measured the size of the municipality in terms of the number of inhabitants. the following databases were used in our analyses: 1. information regarding consolidated financial budgets, outstanding debt and the population of municipalities were obtained from the virtual local government financial coordination office of the ministry of economy and finance (oveell, 2010, 2011 and 2012). 2. to identify those public corporations owned by the municipality and to obtain their classification, we used reports regarding the composition and structure of state companies and foundations released annually by the igae (igae, 2010, 2011 and 2012). 3. financial information regarding public corporations was obtained from the sistema de análisis de balances ibéricos (sabi) database (sabi, 2004). 4. information regarding the political ideology and political competition in a given municipality was obtained from published electoral results (spanish ministry of home affairs, 2010-2012). 156 4.2. data selection we restricted our sample to those municipalities with populations of over 50,000 inhabitants (145 municipalities) for two main reasons. first, it has been argued that population size is an appropriate criterion in public municipality sample selection, as the slate of public services that larger municipalities provide is more homogenous. in addition, financial information is both more readily available and more reliable for larger municipalities than for smaller municipalities. the sample period runs from 2010 to 2012 because it corresponds to the most recent available data. in addition, the central government tightened requirements for local governments during this period based on concerns regarding uncontrolled debt levels, and because of the non-fulfillment of budget balances by many sub-central governments. our initial sample consisted of 145 municipalities but not all had subsidiaries, leaving us with a sample of 123 municipalities that own a total of 516 public corporations. financial information for 107 companies was unavailable mainly because they were being liquidated, which reduced the sample to 409 public corporations. this sample corresponds to 148 ggs corporations (36.2%), 206 nfs corporations (50.4%) and 55 pc corporations (13.4%). furthermore, the subsidiaries of 33 municipalities in 2010 and 2011 and 38 municipalities in 2012 were all classified as ggs corporations, which means that they did not hold shares in any corporations outside the ggs perimeter, and they were thus excluded from the sample. as a result, our final sample consists of 90 municipalities in 2010 and 2011 and 85 in 2012 (265 observations), and 181, 187 and 176 public corporations in 2010, 2011 and 2012, respectively (544 observations). 5. results 5.1. descriptive statistics table 1 shows the descriptive statistics for the impact of including nfs and pc corporations within the perimeter of ggs consolidation. regarding the items used to compute the ratios, the average increase in current revenues is 6.1%, which is less significant than the average increase in net lending/net borrowing (average 21.4%) and debt (average 23.4%). consequently, the descriptive statistics for deficit/surplus_before, deficit/surplus_after, debt_before and debt_after ratios show that the level of debt (outstanding debt to current revenues) increased from 0.708 to 0.815, and that the deficit/surplus ratio dropped from -0.003 to -0.006 after including nfs and pc corporations within the perimeter of consolidation. the shapiro-wilk tests for the null hypothesis (that the ratios and the differences in the ratios are normally distributed) must be rejected for all the variables (p = 0.000), which means that non-parametric tests are used subsequently. 157 table 1: descriptive statistics of debt and deficit/surplus ratios mean median min max n shapiro-wilk test (p-value) panel a: impact of consolidation on current revenues, net lending/net borrowing and debt % change in current revenues 6.1106% 2.9344% -53.0950% 174.8175% 265 % change in net lending/net borrowing 21.4077% 0.1015% -1,759.7240% 8,767.5090% 265 % change in debt 23.4232% 9.7724% 0.0000% 295.7076% 265 panel b: descriptive statistics of debt and deficit/surplus ratios and test of normality deficit_before -0.0026 0.0021 -2.0988 0.6880 265 0.0000 deficit_after -0.0064 -0.0086 -1.2111 1.2092 265 0.0000 difference -0.0038 -0.0106 0.8877 0.5212 265 0.0000 debt_before 0.7080 0.6397 0.0064 3.0480 265 0.0000 debt_after 0.8152 0.7180 0.0081 3.3857 265 0.0000 difference 0.1072 0.0783 0.0017 0.3377 265 0.0000 5.2. differences in ratios we applied the non-parametric sign test to examine hypotheses h1 and h2. notably, the sign test does not require assumptions regarding the form of the distribution of the measurements, and it is thus used for testing the null hypothesis that positive and negative changes in differences are equally likely (or, equivalently, difference in the median values is zero). table 2 shows the differences (and the statistical significances) between the median values of the deficit and debt ratios both before and after including nfs and pc corporations within the consolidated ggs perimeter. both tests are significant at the level of p < 0.1 for both the deficit/surplus ratio and the debt ratio. we must therefore reject all the null hypotheses that the difference in the median values of the ratios before and after consolidation is different from zero. these results thus confirm h1 and h2, and we can conclude that moving public corporations that are currently outside of ggs consolidation within the ggs perimeter leads to a substantial deterioration of the deficit/surplus and debt ratios of the municipalities. table 2: medians of ratios and wilcoxon sign-test results ratio before (median) after (median) difference change in % sign-testp-value result deficit 0.0021 -0.0086 -0.0065 -311.28% 0.0880 accept h1 debt 0.6397 0.7180 0.0783 12.25% 0.0000 accept h2 5.3. the impact of consolidation on compliance with deficit and debt limits this section will address hypothesis 3 (h3). in addition to the significant changes in the value of the debt and deficit/surplus ratios, we are interested in testing whether they led to an increase in the number of municipalities that would now violate 158 the limits. as noted in section 2, all levels of government (central, regional and local governments) are prohibited from running non-financial deficits, and total municipal debt is also restricted. with regard to the debt limit, the ratio of total debt over current revenues was prohibited from exceeding 110% in 2009, but the central government increased this limit to 125% in 2010, and then reduced it to 75% in 2011 and 2012. in our tests, we used the 75% limit for every year to segregate the effects of the change in the consolidated ggs perimeter from the effects of the change in debt limits on the level of compliance. a test of proportions is performed to test the null hypothesis that the proportion of municipalities that violate the limit is equal before and after consolidation against the alternative that it is more likely following consolidation (i.e., the difference between proportions is negative). table 3 shows that there were 96 cases before consolidation (36.2%) and 125 cases (47.2%) following consolidation in which the municipalities were in violation of legal limits. the results in table 3 also show that the difference between these two proportions is statistically significant (p-value = 0.010). we run the same test with regard to the deficit limit (no deficit). table 4 shows that there were 129 pre-consolidation cases (48.7%) in which the municipalities were in breach of the deficit limit, and that number increased to 143 (54.0%) following consolidation. however, there is no significant difference in the proportions, as table 4 shows (p-value = 0.224). table 3: test of the equality of proportions: debt limits total cases number of non-compliance cases proportion before 265 96 0.362 after 265 125 0.472 p-value 0.010 table 4: test of the equality of proportions: deficit limits total cases number of non-compliance cases proportion before 265 129 0.487 after 265 143 0.540 p-value 0.224 5.4. the influence of political factors and municipality size on the differences in ratios as reported earlier in the literature review section, prior research regarding the influence of political factors on decentralization and on the level of debt was not conclusive. several studies showed that the political ideology of the ruling party and local government fragmentation influence the level of debt carried by and the decentralization of a municipality. concretely, these studies found that right-wing parties and local governments characterized by weaker competition were more likely to rely on 159 public corporations to deliver public services. regarding debt levels, municipalities with right-wing parties and those that were characterized by a strong political majority in the leadership of the municipality tended to have higher levels of debt. therefore, we believe – in line with our hypothesis 4 (h4) – that the impact on the changes in the deficit/surplus and debt ratios as a result of consolidating public corporations within the ggs will vary depending on these political factors. furthermore, based on the previous literature, we also believe that there will be a differential impact on changes in both the deficit/surplus and debt ratios based on the size of the population of a given municipality. as noted in section 4.1, a panel data methodology was applied to test h4. the dependent variable was the ci for each ratio considered, and political ideology, political competition and size were included as the independent variables. the breusch-pagan lagrange multiplier test for random effects clearly recommends this alternative in lieu of ordinary least squares (ols) estimation, in which the dependent variable is the ci based on the debt ratio. in addition, the hausman test used in order to choose between fixed and random effects estimators finds different results depending on the model. however, the breusch-pagan lagrange multiplier test recommends an ols estimation in which the ci is based on the deficit/surplus ratio. we therefore run the ols pooled estimation for the ci based on the deficit/surplus ratio and run the fixed effect specification for the ci based on the debt ratio. table 5 shows the results of the estimation for the ols model, and the results using the fixed effect estimator for the ci based on the deficit/surplus and debt ratios, respectively. the population size of the municipality and political competition do not seem to be significant variables in this analysis. regarding the political ideology variable, the variation in the debt ratio is higher when the dominant political party in the municipality is identified with a ‘right-wing’ ideology. this result is in line with those of fernández-llera and garcía-valiñas (2013) and cuadrado ballesteros et al. (2013a). however, there is no significant relationship between the variation in the deficit/surplus ratio and the political ideology of the party in charge of the municipality. table 5: fixed effects with ‘cluster’ for the comparability index (ci) based on the deficit/surplus and debt ratios dependent variable ci_deficit/surplus ci_debt ols fixed effects political ideology 0.5455 -0.3188 (**) political competition 0.1368 0.0176 population 0.1612 -2.7006 constant -1.4892 3.2240 number of observations 265 265 r2 0.0042 0.1241 f test 0.22 3.97 (***) hausman test χ2 --8.79 (**) * , **, and *** denote statistical significances at the 10%, 5% and 1% levels, respectively. 160 6. conclusions the macro monitoring of fiscal policy in the european union is performed using deficit and debt figures derived from ggs accounts that are based on the esa concept of the ggs. regarding public corporations controlled by governments at every level (central, regional or local governments), the ggs consolidates only those that are non-market. our results show the expected significant worsening of spanish municipalities’ deficit/surplus and debt ratios when public corporations are moved from outside to within the perimeter of the ggs. thus, a number of municipalities that meet the deficit and debt targets before consolidation fail to meet them after consolidation. however, we find a significant difference in the proportion of municipalities that fail to comply with the targets only with regard to the debt limits. this result is in line with previous researches that suggest that public corporations may be used to hide debt and circumvent debt limits (cuadrado ballesteros et al., 2013b; fernández-llera and garcía-valiñas, 2013). furthermore, our results show that the variation in the debt ratio is higher when the political party in the municipality is identified by a ‘right-wing’ ideology. however, no significant variation relationship is found for the size of the population or political competition. taken together, our results show that different interpretations of the elements that influence the classification of entities inside or outside the perimeter of the general government (e.g., a market/non-market analysis) might lead to major differences in these two key figures. different classifications may also result in a greater number of municipalities violating the deficit and debt limits imposed on the governments, which is important because many countries, spain among them, levy severe penalties on sub-central governments that fail to meet debt ceilings or that run non-financial deficits. policy makers in the eu require high-quality comparable accounting data from the ggs to produce the information on which many eu policies are based, and to reasonably monitor and control budget deficits and public debt. in this sense, our results have certain implications for policy makers, who must consider that the complete and exhaustive identification and correct classification of units is critical to accurately delineating the ggs, and to ensure that deficit and debt figures are comparable across countries. consequently, eu policy-makers should ensure the homogeneous application of the criteria set forth in the esa for classifying units in the ggs among eu member states, particularly the application of the qualitative requirements that are more sensitive to interpretation. furthermore, data reported for the convergence criteria under national accounts (macro system) are obtained from the public accounting systems of each country (micro system), and prior researches have revealed significant conceptual differences between the two systems, particularly regarding the ggs consolidation perimeter. most eu members do not require the preparation of consolidated annual accounts at the local level. if standard-setting bodies were to impose consolidated financial reporting requirements under the public accounting 161 system, it would help to improve decision-making and reduce the gap between the two accounting systems, in addition to contributing to the transparency and quality of public information. we believe that this paper contributes to the ongoing debate about the convergence between the micro and macro systems of government accounting information in the eu member states, particularly regarding consolidating public entities’ accounts within the ggs perimeter. such consolidation is considered the largest conceptual difference between national accounting and public sector accounting. furthermore, esa 2010 is meant to expand the perimeter of ggs consolidation, and this paper simulates the impact on deficit and debt from considering a larger ggs consolidation perimeter. therefore, public policy makers and politicians alike may find this information useful for both their decision making and for drafting future policies. references: 1. abizadeh, s. and gray, j., ‘provincial government expenditures in canada: an empirical 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590-613. 5 abstract currently, there is intense debate about what determines the difference between a policy failure and a policy success. in this article we assume that top-down policy design is a poor manner of decision-making and that without the involvement of employees (public professionals) who identify with new policies, policy failure is likely. therefore, we concentrate our attention on public professionals (and their opinions, perceptions, and feelings) applying the concept of policy alienation developed by lars tummers. in particular, this paper deals with the consequences of reform in the labor offices of the czech republic for the employees of these institutions. this reform was a top-down policy designed without communication or discussion with stakeholders. the reform led to a number of problems, some of which originated in the policy-making process, and others of which arose in the implementation of the reforms. in this article, we explore the hypothesis that employees who were not consulted or involved in the design and implementation of the reforms suffered from feelings of policy alienation. our research is based on quantitative methods and we apply a reliable, validated policy alienation scale created by lars tummers. we also assume that there is a relationship between policy alienation and job satisfaction, and between policy alienation and commitment to the aims of the organization. keywords: labor office, policy alienation, job satisfaction, organizational commitment, public professionals. policy alienation among employees of the labor office of the czech republic*1 michaela hiekischová michaela hiekischová lecturer and researcher, faculty of social and economic studies, jan evangelista purkyně university, ústí and labem, czech republic tel.: 00420-604-385.854 e-mail: michaela.hiekischova@ujep.cz * acknowledgement: this paper was supported by the faculty of social and economic studies of the jan evangelista purkyně university in ústí and labem (project no. ujepigs-2018-45-001-1). transylvanian review of administrative sciences, no. 57 e/2019 pp. 5-20 doi:10.24193/tras.57e.1 published first online: 06/25/2019 6 1. introduction this paper deals with the consequences of reform of the labor offices in the czech republic for the employees of those institutions. we consider this reform to be an example of a policy failure. the decision-making process for the reform had a top-down design that lacked communication or discussion with the employees of the labor offices. the reform caused many problems. we assume that without the involvement of the employees of the labor offices as professional public servants in the design and implementation of the new policies, they could not be successful. in short, one of the causes of that policy failure was lack of communication and discussion by management with the employees who would have to implement the new program. this led to alienation of the employees from the policy and consequently to low job satisfaction and low organizational commitment. we focus only on one element of this policy failure, lack of communication and discussion with employees, the importance of which has been highlighted by many experts, e.g., bovens and ´t hart (2011), mcconnell (2015), bovens, ´t hart and peters (2001). the major goal of this article is to learn whether we can use tummers’s previously validated scale for measurement of policy alienation under different conditions, that is, in different history, cultures, target groups, and public domains. the czech republic was part of the soviet bloc (from 1968 to 1989). the regime was autocratic and this long experience can currently influence the present policy-making process (its formal and informal rules). we have not found any article in the literature on policy alienation in the czech republic and in other states of central and eastern europe. in the west, however, the concept is often discussed (see, for example, van engen, 2017). we consider the examination of policy alienation in the czech and eastern european context to be the first contribution of this article. this article’s second contribution is related to the assumption that policy alienation influences job satisfaction. like tummers (2012 and 2013), we want to find out whether and to what extent job satisfaction is influenced by the degree each of the sub-dimensions of policy alienation is present among employees. we assume that the links between the policy level (particularly the implementation level) and the psychological level in the minds of employees are very important and studying them can offer a new perspective to policy-makers. a third dimension, the employees’ commitment to the organization (‘organizational commitment’) is also related to the assumption that policy alienation affects job satisfaction. organizational commitment has not yet been studied in relation to policy alienation. we consider our examination of that relationship to be a third contribution of this paper, because we believe that the several sub-dimensions of policy alienation negatively influence organizational commitment as much as they do job satisfaction. we would like to find out whether and to what extent that is true. in general, our paper is based on an assumption that without communication by managers, top-down policy-making leads to a high degree of policy alienation among employees, stemming particularly from their powerlessness to affect poli7 cy and the lack of meaningful input they are allowed to provide to policy-makers (tummers, 2012). we believe such feelings can cause low job satisfaction and low organizational commitment. in the end, those feelings impact performance of the employee’s duties and the employee’s attitude toward their clients (farmer, 2011; cole, panchanadeswaran and daining, 2004). this article is focused on the policy level and on the impact of policy-making on employees. we believe that the policy level is as important as the organizational level (see, e.g., asencio, 2016; mendes, carlos and lourenco, 2014). this article is structured as follows: first, we provide a brief overview of the reform of the labor offices. second, we discuss the theoretical framework, which predicts policy alienation and its impact on job satisfaction and organizational commitment. third, we use a quantitative approach, analyzing a survey of 1,334 employees of the labor offices who work in the employment department and the non-insurance social benefits department. our analysis is based on descriptive statistics, correlation and linear regression. in the conclusion, we discuss the contributions of this paper to the literature. 2. brief overview of the government’s reform of the labor offices in 2011, the czech government introduced an organizational reform of the labor offices under the ministry of labor and social affairs. this reform was extensive and focused on two functions of the labor offices. the first area was employment assistance and the second was non-insurance social benefits (particularly need-based payments and disability benefits). the first stage of the reform concentrated on the organizational structure. it meant a big change in that structure, from decentralized to centralized control. seventy-seven labor offices, each of which had been its own legal entity, were transformed into one centralized labor office of the czech republic. we analyzed and explored the history of these state institutions from their establishment in 1990, when the labor offices were set up with a decentralized structure. in this time, they realized their own local labor policy (they were allowed to adapt their internal policies to their clients – the unemployed and companies) and we can say that the labor offices created a productive and competitive local labor market. they independently provided public employment services, mainly job brokerage, active labor policies, and administration and management of unemployment benefits. the reform was unexpected and unwanted by the labor office employees. the second stage of the reform involved changes in the content of the public employment services provided by the labor offices. the new services were all non-insurance social benefits (particularly need-based payments and disability benefits). before their addition to the labor offices’ activities they were provided by municipalities. the basic goals of the reform were to unify the agency’s structure and decision-making, and to increase savings, efficiency and effectiveness. these goals can be viewed as resulting from the influence of the ‘new public management’. 8 the whole reform ran into a number of problems during the approval process and its implementation. the approval process is generally considered to have been too quick, non-standard and unprepared. stakeholders complained that during the decision-making process, communication from management was lacking, the controlling legislation was poorly drafted, and the timing of the reform was ill-considered (during the worldwide financial crisis). the stakeholders disputed the contention by the proponents of the reform that it would lead to budgetary savings. implementation problems included the dismissal of many employees resulting in a labor shortage in the offices, an untested and unworkable new integrated ict system and inappropriate space in the offices (see also e.g., kotrusová and výborná, 2015). 3. policy alienation the theory of ‘policy alienation’ was developed by lars tummers and his colleagues, victor bekkers and bram steijn (tummers, bekkers and steijn, 2009, 2012; tummers, 2012; tummers, 2013). they assume that professionals are alienated from a policy if they have difficulty in personally identifying with its goals, which frequently focus primarily on efficiency and financial transparency. the concept of policy alienation is based on the assumption that professionals want to participate in decision-making with regard to policies which they will have to implement. they want to be autonomous and provide society and their clients with added value. if they cannot do that, they become stressed, frustrated and dissatisfied with their jobs. they feel powerless in the implementation of the policy and find the policy to be meaningless to them (for more also, see, e.g., elpers and westhuis, 2008; farmer, 2011). the theory of policy alienation is based on the sociological theory of work alienation, as well as on theoretical concepts of bureaucracy and policy implementation. one of the early, key writers on worker alienation was karl marx (1961) who connected work alienation with economic factors (the main cause is capitalism and private ownership) and with objective meaning. objective work alienation means that workers do not consciously feel that they are alienated, but because they do not own the product of their labor or the means of production, they objectively are in fact alienated. in contrast to marx, current scholars focus more on subjective work alienation (that is, how much alienated workers actually feel they are from their work). the most important paper about subjective work alienation is by melvin seeman (1959). he theorized precisely five basic dimensions of alienation: powerlessness, meaninglessness, normlessness, isolation and self-estrangement. these categories are all significant in theory, but each subsequent researcher has focused on a different, convenient dimension in his or her study for empirical investigation. another author, robert blauner (1964), followed up seeman’s work, and distinguished only four dimensions of work alienation: powerlessness, meaninglessness, isolation and self-estrangement. like blauner and seeman, lars tummers and his colleagues (2009) suppose that alienation is a multidimensional concept. tummers however focuses on policy alienation, whereas blauner remains focused on work alienation. we can call both concepts forms of ‘local alienation’ (kalekin-fishman, 2000). 9 according to tummers, policy alienation is prevalent in the public domain, where public professionals implement public policies. he defines policy alienation as ‘a general cognitive state of psychological disconnection from the policy program being implemented, here by a public professional who regularly interacts directly with clients’ (tummers, bekkers and steijn, 2009, p. 688). he defines public professionals relatively broadly. they are professionals who work in the public sector, or in a sector that is heavily regulated or subsidized by the state in the public interest. public professionals implement public policies. as they do so, they interact directly with clients on a regular basis. according to tummers (2013), public professionals are a broadly defined group of workers that may include medical specialists, teachers, police officers, clerks, and social workers. as mentioned above, the theory of policy alienation is rooted in concepts of bureaucracy and policy implementation. in this field, michael lipsky is interested in the role played by public servants in implementing policies. in his book, he developed a theory of ‘street-level bureaucrats’. street-level bureaucrats are those employees who ‘interact directly with citizens in the course of their jobs, and who have substantial discretion in the execution of their work’ (lipsky, 1980, p. 3). but lipsky says they have some intrinsic problems, mainly when confronted with a top-down approach to policy design and implementation. according to him, street-level bureaucrats become alienated when they are not able to control the pace of their work and when they work only on discrete segments of the organization’s products. as mentioned above, tummers began to explore alienation in relation to policy, not the work itself. the first two articles he co-authored applied a qualitative methodology (tummers, bekkers and steijn, 2009, 2012). the authors investigated physicians and secondary school teachers, and their dissatisfaction and alienation toward policies they had to implement. tummers (2012) subsequently created a validated scale to measure policy alienation. this scale has two dimensions: policy powerlessness and policy meaninglessness. policy powerlessness ‘relates to the degree of influence that public professionals have over shaping a policy program’ (tummers, 2012, p. 518). it is connected with the field of policy formulation and implementation. this major dimension consists of three sub-dimensions: strategic, tactical, and operational. strategic powerlessness refers to the influence professionals perceive they have on decision-making as it concerns the content of policy. tactical powerlessness refers to the influence professionals perceive they have on decisions about how a policy is executed by their institution. operational powerlessness refers to the influence professionals perceive they have on the implementation of policy (tummers, 2012, 2013). policy meaninglessness is connected to understanding the policy that employees are meant to implement. this second major dimension consists of two sub-dimensions: societal and client meaninglessness. societal meaninglessness refers to a perception by professionals that the goals of new policies are not valuable to society or that it is not possible to achieve the goals. client meaninglessness relates to the per10 ception by professionals that a new policy is not providing added value for their clients (tummers, 2012, 2013). 4. policy alienation and its relation to job satisfaction job satisfaction is usually categorized as a topic for research in psychology or sociology. it is rarely linked to the field of policy design and implementation. with regard to job satisfaction, the psychological and sociological perspectives, on the one hand, and the policy and political perspectives, on the other, might seem unrelated at first sight. this may be because ‘job satisfaction is analyzed on the job level, while policy alienation is analyzed on the more specific policy level’ (tummers, 2013, p. 47). however, it has recently been demonstrated that participation in policy-making by employees is likely to have a positive effect on job satisfaction (elpers and westhuis, 2008; dehart-davis and pandey, 2005; aiken and hage, 1966). conversely, we can say that job dissatisfaction can result from policy alienation. nevertheless, the link between participation in policy-making and job satisfaction is complicated, and it certainly should not be assumed that participation by employees is the only factor that influences job satisfaction. on the other hand, it is plausible to assume that if a policy is designed without regard for the perspectives and experiences of the professionals who must implement it, those professionals are more likely to feel alienation from the policy and their work, and more likely to have lower feelings of organizational commitment and job satisfaction. in this context (in tummers’s conceptualization), the theory is based on the idea that employees have the right to provide input into decisions that affect their lives. when we consider the relationship between strategic powerlessness and job satisfaction, we would expect that public professionals who are not able to influence policy design will feel more job dissatisfaction. when we examine the relationship between tactical powerlessness and job satisfaction, we would suppose that public professionals who are not involved in policy-making and who do not take part in discussions about the execution of a new policy will be more dissatisfied with their jobs. next, when we consider the relationship between operational powerlessness and job satisfaction, we would assume that public professionals who cannot decide how best to implement a new policy will be more dissatisfied. when we look at client meaninglessness and job satisfaction, we would expect that public professionals who feel that a new policy is not helping clients will be more dissatisfied. 5. policy alienation and its relation to organizational commitment besides the connection between policy alienation and job satisfaction, we can examine the causal links between policy alienation and organizational commitment. similar to job satisfaction, organizational commitment is a complex, multifaceted construct, which is connected with employees’ psychological state. in this research, we examine the commitment that employees of the labor office feel to their employer. that is, we investigate their ‘attitude regarding the relationship between an employee 11 and his/her workplace’ (goulet and frank, 2002). we particularly focus on affective and normative commitment (meyer, allen and smith, 1993). affective commitment is encouraged by work experiences ‘that fulfil employees’ psychological need to feel comfortable within the organization and competent in the work-role’ (allen and meyer, 1990, p. 4). employees with a high degree of affective commitment remain in an organization because they want to do so. they feel loyalty to their organization and feel a strong sense that they belong to their organization. when we consider the relationship between affective commitment and policy alienation, we assume that employees with low affective commitment to an organization that is being reformed will feel more alienated from an attempt at organizational reform (in each sub-dimension). normative commitment arises from socialization experiences that confirm the rightness of remaining loyal to an organization or simply from the receipt of benefits from it. these factors generate a sense of obligation within employees to reciprocate financial benefits or skill trainings (allen and meyer, 1990, p. 4). essentially, employees with a high degree of normative commitment remain with an organization just because they feel they should. when we look at normative commitment and policy alienation, we would expect that employees with low normative commitment will also feel more alienated from an ongoing reform of the organization (in each sub-dimension). all these factors working together (policy alienation, job dissatisfaction and low organizational commitment) may lead to worse work performance and lower quality of services provided to clients (more in, e.g., farmer, 2011; cole, panchanadeswaran and daining, 2004). 6. goals, research questions and hypotheses the major goal of this article is to verify whether we can effectively use tummers’s validated scale for measurement of policy alienation under different conditions, that is, different history, different cultures, target groups, and public domains. we examine whether public professionals in the czech labor offices are alienated from the policies they are expected to implement and whether this alienation leads to low job satisfaction and low organizational commitment. the first research goal of this article is to find out whether employees of the labor offices experience policy alienation and whether that can be attributed to the reform of the labor offices pursued by the government. in so doing, we ask the following question: to what degree are the several individual sub-dimensions of policy alienation noticeable among the employees of the labor offices? our second research goal is related to job satisfaction. we would like to find out whether or not job dissatisfaction among employees is attributable to alienation from the policy (in this case, from the reform). we ask the following question: to what extent is job satisfaction influenced by each of the sub-dimensions of policy alienation? based upon our theory, we formulate the following hypotheses: (h1) the sub-dimensions of policy powerlessness negatively influence job satisfaction, 12 and (h2) the sub-dimensions of policy meaninglessness negatively influence job satisfaction. that is, the more alienated employees are, the more dissatisfied with their job they are. the third research goal is related to organizational commitment. we would like to find out whether the organizational commitment of employees is influenced by policy alienation. we ask the following question: to what extent are affective commitment and normative commitment influenced by the sub-dimensions of policy alienation? based upon our above-mentioned theory we formulate the following hypotheses: (h3) sub-dimensions of policy powerlessness negatively influence affective and normative commitment, and (h4) sub-dimensions of policy meaninglessness negatively influence affective and normative commitment. that is, the more alienated employees are, the less commitment with their organization they have. 7. methodology the above-mentioned goals and questions were answered by survey research. usually, survey research is not easy to do in public administration. the researcher often faces a whole range of problems that undermine the representativeness of the sample and the validity of the results. the problems include obtaining a reliable sample frame, getting access to employees, ensuring a sufficient response rate and receiving frank and unbiased answers from the employees (newman, cherney and head, 2017; hammerschmid, oprisor and štimac, 2013; veselý, wellstead and evans, 2014). the research presented here consists of a cross-sectional survey of employees from the labor offices of the czech republic. a questionnaire was developed and distributed by the author. the survey was performed in september 2016 (i.e. five years after the implementation of the reform). data was collected on only two days before employees were forbidden by management from filling out the questionnaire. the ban on cooperation with the survey was commanded by the director of the labor offices, without a specified reason. the questionnaire was distributed to 7,822 employees in the labor offices, all of whom were working with clients on a regular basis. we used computer-assisted web interviewing (cawi). contacts with respondents were obtained from the web page of the ministry of labor and social affairs, which provided a list of names and the basic positions of the employees of the labor offices. because we were not able to get more information about employees (such as their age, education and more detailed information about their positions) we had to take a census. we received returns from 1,334 of the professionals, of whom 568 had had experience with the reform. despite the problems with the realization of the survey, the response rate (18.4% after cleaning) was not significantly lower than in other similar surveys found in the literature (hammerschmid, oprisor and štimac, 2013; veselý, 2014). our questionnaire employed a validated scale for policy alienation, job satisfaction and organizational commitment. for the policy alienation variable, tummers’s (2012) 13 validated scale was used. it has two major dimensions: powerlessness and meaninglessness, which are composed of five sub-dimensions: strategic powerlessness (3 items), tactical powerlessness (6 items), operational powerlessness (6 items), societal meaninglessness (4 items) and client meaninglessness (4 items). before analyzing the gathered data, the internal consistency of the scales was examined and cronbach’s alpha for the scale and each sub-scale was determined (alphas were acceptable except the one for tactical powerlessness, 0.55 alpha). the detailed validated scale and its properties is available from the author on request. for the variable on job satisfaction we used another validated scale created by wright and davis (2003). that is a general scale for measurement of job satisfaction which consists of four items. we obtained a 0.77 cronbach’s alpha for it. we used another validated scale devised by meyer, allen and smith (1993) for measurement of organizational commitment in two dimensions, affective commitment (6 items) and normative commitment (6 items). for the scale of affective commitment, we obtained a 0.79 cronbach’s alpha and for the scale of normative commitment we obtained a 0.80 alpha. on all three scales (policy alienation, job satisfaction and organizational commitment) responses were recorded using a five-point likert-type scale (from ‘strongly agree’, coded 1, to ‘strongly disagree’, coded 5). our analysis is based on descriptive statistics, correlation (using pearson’s coefficient) and linear regression. first of all, to meet our first goal (determining whether professionals are alienated from the reform) we used descriptive statistics. to fulfill our second and third goals, we used correlation analysis and, for deeper understanding, regression analysis. in the regression analysis, we present two models. the first explores the relation between job satisfaction and policy alienation, and to what extent job satisfaction is influenced by each sub-dimensions of policy alienation. the second model discovers to what extent organizational commitment (a variable created by merging the two scales, affective and normative commitment) is influenced by each sub-dimension of policy alienation. in both models of regression, policy alienation is an independent variable. 8. results and discussions 8.1. descriptive statistics the employees displayed a high degree of policy alienation (pa) (3.93 compared to 3.82 for the employees surveyed by tummers, 2012). they reported a bit higher feeling of policy powerlessness than policy meaninglessness (4.05 vs. 3.76). it might be assumed that labor office employees felt a little more powerlessness based on how the reform was implemented than on the actual consequences of the reform for their clients. results on both scales are rather high and are similar to those reported by tummers (2012) for dutch health-care professionals. 14 table 1: mean of policy alienation, job satisfaction and organizational commitment variables results (means) strategic powerlessness 4.67 tactical powerlessness 4.34 operational powerlessness 3.13 total powerlessness 4.05 societal meaninglessness 3.93 client meaninglessness 3.62 total meaninglessness 3.76 policy alienation 3.93 job satisfaction 2.67 affective commitment 2.96 normative commitment 3.39 total organizational commitment 3.17 n/policy alienation = 568 (1 = not feel alienated, 5 = definitely alienated) n/job satisfaction, organizational commitment = 1334 (1 = definitely satisfied/committed, 5 = definitely dissatisfied/uncommitted) source: author’s calculations more detailed analysis reveals that from the total sample, the mean findings are 4.67 for strategic powerlessness, 4.34 for tactical powerlessness and 3.13 for operational powerlessness. although operational powerlessness is objectively rather high, compared to the values observed for the other two types of powerlessness it is relatively low. a relatively low value for operational powerlessness was similarly reported by tummers (2012; 3.48). this result can partially be attributed to high self-perceived status among street-level bureaucrats and their ‘substantial discretion in the execution of their work’ as lipsky (1980, p. 3) suggested in his book. it can mean that public professionals have a degree of autonomy and freedom in policy implementation. as for meaninglessness, the employees on average report higher feelings of societal meaninglessness (related to the fulfillment of the goals of the reform) (3.92) than feelings of client meaninglessness (3.62). surprisingly, we do not find significant differences in the average of policy alienation between front-line staff and their direct superiors (3.95 vs 3.90). perhaps both groups wished to be more involved in the design and implementation of the reform than they actually were. we researched the degree of job satisfaction (js) and organizational commitment (oc) for this article. according to our results, we can say that employees overall were dissatisfied with their jobs (2.67) and that they felt a low degree of oc (3.17). employees demonstrate higher normative than affective commitment. this means that they do not feel a sense of obligation to reciprocate benefits from the organization. more detailed analysis (in table 2) reveals that employees who had experience with the reform are less satisfied than those who did not experience it. surprisingly, feelings of organizational commitment do not differ between employees with and without experience with the reform. 15 table 2: mean of job satisfaction and organizational commitment by experience with the reform employees with experience of the reform no experience of the reform job satisfaction 2.71 2.64 organizational commitment 3.17 3.18 n = 1334/experience = 568, no experience = 766 (1 = definitely satisfied/committed, 5 = definitely dissatisfied/uncommitted) source: author’s calculations 8.2. correlation analysis: the relationship among policy alienation, job satisfaction and organizational commitment our results show a statistically significant correlation between pa and js, i.e., the more alienated employees are, the more dissatisfied they are with their jobs (r=0.34, p < 0.01). this confirms the findings of tummers (2012, p. 522), who found that ‘public professionals who score highly on policy alienation are indeed less satisfied with their job’. we will explore the relationship between js and pa in more detail. there is a significant correlation between js and all its sub-dimensions, except for strategic powerlessness (as we can see in table 3). the most important relation is between operational powerlessness and job satisfaction (0.452, compared to only 0.190 in tummers, 2012), i.e., the more operationally powerless employees feel, the more dissatisfied they are with their jobs. client meaninglessness is also very important, so much so that we can claim that public professionals feel a need to provide valuable services to their clients in order to feel happy in their work. as we mentioned above we found no difference in the perception of oc between employees who have experience with the reform and those who do not. however, we observed a relatively strong correlation between oc and pa, i.e., the more alienated employees are, the less commitment to their organization (the labor office) they feel (r=0.33, p < 0.01). more specifically (in table 3), in the relationship between oc and the sub-dimensions of pa we found a significant correlation between them, again, except for strategic powerlessness (at least for affective commitment). the most important sub-dimensions in terms of their impact on oc are operational powerlessness (r=0.33) and client meaninglessness (r=0.28). we can also observe that the correlation between normative commitment and all sub-dimensions is higher than that for affective commitment (except for operational powerlessness). it can mean that public professionals who remain with an organization just because they feel they should are more alienated from the policy. in general, we can assert that policy alienation negatively influences both job satisfaction and organizational commitment. the most obvious impact results from feelings of operational powerlessness and client meaninglessness. it must be noted that these correlations do not necessarily mean that there is a direct causal link between the two. nevertheless, the data provide sufficient evidence for the importance of involving employees into policy design and implementation. we can say that as public 16 table 3: correlation between sub-dimensions of policy alienation and job satisfaction and organizational commitment concept strategic powerlessness tactical powerlessness operational powerlessness societal meaningless. client meaningless. job satisfaction n.s. 0,122* 0,452** 0,209** 0,283** organizational commitment 0.093* 0.177** 0.333** 0.222** 0.282** affective commitment n.s. 0.105* 0.300** 0.146** 0.209** normative commitment 0.113** 0.214** 0.292** 0.254** 0.296** ** p < 0.01; * p < 0.05; n.s. = non-significant source: author’s calculations professionals, they expect a high degree of discretion and autonomy and that the services they provide to their clients should be valuable. 8.3. regression analysis: the influence of sub-dimensions of policy alienation on job satisfaction and organizational commitment as we mentioned above in discussing our goals, we need more detailed and deeper analysis to explain the complicated links between policy alienation and the two variables of job satisfaction and organizational commitment. we used regression analysis to provide that explanation. we present here two models, one of them related to job satisfaction, and the other to organizational commitment. according to the results displayed in table 4, we observe that policy alienation explains 21% of the variability in job satisfaction. again, we observe the strong influence of operational powerlessness, for which the coefficients are the highest (b = 0.521, beta = 0.417), compared to the influence of client meaninglessness. an explanation for the strong relation between operational powerlessness and job satisfaction can be found in the theoretical framework of ‘street-level bureaucrats’ (lipsky, 1980), which suggests that public professionals expect freedom and autonomy in making and implementing policy. thus, we can reasonably expect that if a new policy is imposed top-down instead of bottom-up, public professionals are likely to be more dissatisfied with their jobs. table 4: first model: relation between policy alienation and job satisfaction model 1 – relation between policy alienation and job satisfaction b beta correlation zero-order partial part operational powerlessness 0.521** 0.417 0.452 0.384 0.367 client meaninglessness 0.150* 0.133 0.283 0.119 0.106 societal meaninglessness 0.003 (n.s.) 0.003 0.209 0.002 0.002 tactical powerlessness -0.068 (n.s.) -0.042 0.122 -0.039 -0.035 strategic powerlessness -0.042 (n.s.) -0.30 0.074 -0.029 -0.026 signification 0.000 adjusted r2 0.21 ** p < 0.01; * p < 0.05; n.s. = non-significant source: author’s calculations 17 to achieve our third goal for this research, determining whether affective and normative commitment is influenced by the level of each sub-dimension of policy alienation, we can turn to the data in table 5. we find that this relationship is not as strong as the one with job satisfaction. policy alienation explains only 13% of the variability in organizational commitment. we can say that policy alienation influences feelings of loyalty and obligation to the organization, but not to the same extent as it does job satisfaction. as with job satisfaction, the most important sub-dimension influencing oc is operational powerlessness, and the second most significant variable is client meaninglessness. employees who had experience with the reform and those who did not showed very little difference in feelings of organizational commitment based on policy alienation, as we saw in table 2. a possible explanation is that organizational commitment is more dependent on the particular organization than on a particular policy. therefore, we assume that feelings of loyalty and obligation to an organization are more connected with the leadership of the institution than with how policy is made. table 5: second model: relation between policy alienation and organizational commitment model 2 – relation between policy alienation and organizational commitment b beta correlation zero-order partial part operational powerlessness 0.245** 0.249 0.333 0.229 0.219 client meaninglessness 0.139* 0.155 0.282 0.133 0.124 tactical powerlessness 0.063 (n.s.) 0.050 0.177 0.044 0.041 societal meaninglessness 0.026 (n.s.) 0.030 0.222 0.026 0.024 strategic powerlessness -0.034 (n.s.) -0.031 0.093 -0.029 -0.027 signification 0.000 adjusted r2 0.13 ** p < 0.01; * p < 0.05; n.s. = non-significant source: author’s calculations surprisingly, in both models we can observe an opposite influence of strategic powerlessness. this relation indicates that strategic powerlessness does not negatively affect either satisfaction or organizational commitment. in this analysis, the relationships of js and oc with strategic powerlessness are not significant. we can assert that strategic powerlessness has no impact on job satisfaction or on organizational commitment. also, very small or no impact connected with tactical powerlessness and societal meaninglessness is evident in both models. 9. conclusions in this article, we examined whether we can use tummers’s validated scale for measurement of policy alienation under different conditions. based on our results, we assume that the concept of policy alienation and its measured results in terms of job satisfaction and organizational commitment have theoretical, methodological and practical value. this approach to research is theoretically unique, because it links pol18 icy and psychology. that is, it links the policy-making process and the implementation of policy with the feelings and perceptions of public professionals. according to our results, we can expect that a new policy that is imposed top-down instead of bottom-up will cause public professionals to feel more dissatisfied in their jobs and feel low commitment to their organization. therefore, we can confirm that both of these dimensions of policy alienation, policy powerlessness and policy meaninglessness, are very important to employees of the labor offices and negatively influence their feelings as public professionals. our findings are similar to the results of tummers in the netherlands. it is also unique in terms of its methodology. the policy alienation scale enables us to compare the level of policy alienation of public employees with other theories. we discovered that policy alienation as a whole explains 21% of the variation in job satisfaction and 13% of the variation in organizational commitment. we can expect that the way a policy is designed and implemented has a higher impact on job satisfaction than it does on organizational commitment. our findings also have practical implications because it helps us to understand why policies fail. the measured levels of policy powerlessness and meaninglessness are very important predictors of the policy failure or success and should be taken into account as policy is formulated. politicians should understand that introducing a new policy without prior communication with public professionals can lead to alienation and low job satisfaction. as with all studies, this research has several limitations. first, involving employees in decision-making might have some pitfalls. the expectations of public professionals cannot be met, it can be difficult for the government to manage a great deal of different interests and opinions. it is also possible that employees do not want to participate in the policy-making process. needless to say, there are top-down created policies that can be successful (especially those with a technical problem requiring a clear solution). however, our assumption in this article is that public policies that depend on experienced and skilled public professionals should include them in decision-making process of the new policy. secondly, we cannot always claim that higher policy alienation inevitably leads to higher job dissatisfaction and lower organizational commitment. to fully explain this relationship, we should investigate successful policies and find out whether public professionals feel less (or even no) alienation from the policy and how strongly each of the sub-dimensions of policy alienation is related to job satisfaction and organizational commitment. thirdly, we should interpret the results of our research in light of its limited context and sample size. however, although the data must be interpreted with some caution, there is no sign that it is systemically biased or that its quality differs from other similar surveys (tummers, 2012 and 2013; veselý, 2014). as mentioned above, research into policy alienation has theoretical, methodological and practical significance. future research should test the validity of the tummers 19 scale and explore relationships between policy alienation and other workplace issues. it should also evaluate the impact of successful policies using a similar scale. recently, for example, a new scale of policy alienation has been developed by nadine van engen (2017). she originated the concept of ‘general policy alienation’. her scale measures overall cognitive disconnectedness from government policies, i.e. how much people identify or do not identify with government policies in general. references: 1. allen, n.j. and meyer, j.p., ‘the measurement and antecedents of affective, continuance and normative commitment to the organization’, 1990, journal of occupational and organizational psychology, vol. 63, pp. 1-18. 2. aiken, m. and hage, j., ‘organizational alienation: a comparative analysis’, 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rule dysfunction alienate managers?’, 2005, journal of public administration research and theory, vol. 15, no. 1, pp. 133-148. 9. elpers, k. and westhuis, d.j., ‘organizational leadership and its impact on social workers’ job satisfaction: a national study’, 2008, administration in social work, vol. 32, no. 3, pp. 26-43. 10. farmer, d., ‘increasing job satisfaction among social workers’, 2011, international journal of humanities and social science, vol. 1, no. 1, pp. 1-8. 11. goulet, l.r. and frank, m.l., ‘organizational commitment across three sectors: public, non-profit, and for-profit’, 2002, public personnel management, vol. 31, no. 2, pp. 201-210. 12. hammerschmid, g., oprisor, a. and štimac, v., ‘cocops executive survey on public sector reform in europe: research report’, 2013. 13. kalekin-fishman, d., ‘unravelling alienation: from an omen of doom to a celebration of diversity’, in quah, s.r. and sales, a., (eds.), international handbook of sociology, london: sage publication, 2000, pp. 387-419. 14. kotrusová, m. and výborná k., ‘a policy fiasco: the institutional (non-)reform of czech public employment services in 2011’, 2015, central european journal of public policy, vol. 9, no. 1, pp. 148-158. 20 15. lipsky, m., street-level bureaucracy: dilemmas of the individual in public service, new york: russell sage foundation, 1980. 16. marx, k., ekonomicko-filozofické rukopisy z roku 1844 [economic and philosophical manuscripts of 1844], praha: státní nakladatelství politické literatury, 1961. 17. mcconnell, a., ‘what is policy failure? a primer to help navigate the maze’, 2015, public policy and administration, vol. 30, no. 3-4, pp. 221-242. 18. mendes, l., carlos, v. and lourenco, l, ‘the influence of tqm on organizational commitment, organizational citizenship behaviours, and individual performace’, 2014, transylvanian review of administrative sciences, special issue, pp. 111-130. 19. meyer, j.p., allen, n.j. and smith, c.a., ‘commitment to organizations and occupations: extension and test of a three-component conceptualization’, 1993, journal of applied psychology, vol. 78, no. 4, pp. 538-551. 20. newman, j., cherney, a. and head, b.w., ‘policy capacity and evidence-based policy in the public service’, 2017, public management review, vol. 19, no. 2, pp. 157-174. 21. seeman, m., ‘on the meaning of alienation’, 1959, american sociological review, vol. 24, no. 6, pp. 783-791. 22. tummers, l., ‘policy alienation of public professionals: the construct and its measurement’, 2012, public administration review, vol. 72, no. 4, pp. 516-525. 23. tummers, l., policy alienation and the power of professionals: confronting new policies, cheltenham: edward elgar publishing, 2013. 24. tummers, l., bekkers, v. and steijn, b., ‘policy alienation of public professionals: application in a new public management context’, 2009, public management review, vol. 11, no. 5, pp. 685-706. 25. tummers, l., bekkers, v. and steijn, b., ‘policy alienation of public professionals: a comparative case study of insurance physicians and secondary school teachers’, 2012, international journal of public administration, vol. 35, no. 4, pp. 259-271. 26. van engen, n., ‘a short measure of general policy alienation: scale development using a 10-step procedure’, 2017, public administration, vol. 95, no. 2, pp. 512-526. 27. veselý, a., ‘the profile and work of officials in central and regional administration compared: the case of the czech republic’, 2014, nispacee journal of public administration and policy, vol. 7, no. 1, pp. 107-128. 28. veselý, a., wellstead, a. and evans, b., ‘comparing sub-national policy workers in canada and the czech republic: who are they, what they do, and why it matters?’, 2014, policy and society, vol. 33, no. 2, pp. 103-115. 29. wright, b.e. and davis, b.s., ‘job satisfaction in the public sector: the role of the work environment’, 2003, the american review of public administration, vol. 3, no. 1, pp. 70-90. 24 abstract the sars-cov-2 pandemic has affected almost every aspect of social life. public authorities are trying to combat the effects of the pandemic by introducing specific legal regulations. even though the polish legislature has established a number of regulations to combat the epidemiological threat, they have not regulated the participatory budget process. the obligation to establish it, especially in cities with powiat rights (a city with powiat rights should be understood as a city with over 100,000 residents, governed by a mayor), at a time when local government units seek savings, may result in some important investments not being made. on the other hand, maintaining the involvement of residents in the development of local communities can have a positive impact on participation in the community. in this article, the author attempts to analyze the legal situation of participatory budgets during the sars-cov-2 pandemic under polish legislation, at the same time indicating the possibilities of developing this form of civic participation by using, among other things, technologies that enable remote communication. keywords: administrative law, local government law, sars-cov-2, participatory budget. participatory budget and the sars-cov-2 pandemic in poland jakub baranowski jakub baranowski research assistant, research team for the organization and functioning of the municipal economy, faculty of law and administration, university of szczecin, szczecin, poland tel.: 0048-787-227.628 e-mail: jakub.baranowski@usz.edu.pl https://orcid.org/0000-0002-9863-7864 doi: 10.24193/tras.si2020.2 published first online: 11/23/2020 transylvanian review of administrative sciences, special issue 2020, pp. 24-37 25 1. introduction the global sars-cov-2 pandemic continues to affect many aspects of social activity. the restrictions introduced by the authorities of european countries related to everyday life meant that certain legal participatory mechanisms in local government units had to be adapted to the new circumstances, thus activities under the broadly understood social participation had to be redirected. numerous references in the literature confirm that social participation is an ambiguous term. within the legal sciences, the concept should be understood primarily as participation in the life of a particular community. within the polish legal system, the term participation derives from one of the main principles of the constitution of the republic of poland – the principle of democratic rule of law (augustyniak, 2017, p. 49). according to this principle, the law is a value in itself, and in the material aspect, the law is intended to implement the ideas of justice (tuleja, 2016, p. 2). the principle of citizens’ trust in the state is also directly connected with social participation, which is also linked to the principle of citizens’ legal security. the constitutional tribunal ruled that the principle of trust in the state and law enacted is based in essence on legal certainty, which also ensures the safety of a given individual (judgment of the constitutional tribunal, 2000). the theory of public participation provides for the possibility of citizens’ involvement in making political decisions with a sense of collective responsibility (zittel, 2007, p. 49). therefore, as it results from numerous references in the literature, one of the basic elements of democracy in the context of people’s power is the participation of citizens in the exercise of power (augustyniak, 2017, p. 49). participatory democracy is the basis for citizens’ participation in governing a given community, and public authorities should strive to exercise this participation for the common good. social participation is also the direct involvement of residents in local community affairs. so far, the basis for conducting participatory processes has been direct meetings of residents with public administration bodies. this type of interaction was considered the most effective for building and maintaining a special bond between social activists and the administrative unit. the situation related to the sars-cov-2 virus meant that in a very short time it was necessary to change by 180 degrees the way of thinking about social participation. this is due to the special role of social participation in local government units. this article attempts to present the problematic aspects of organizing the participatory budget process in poland, understood as one of the most important tools of public participation, during the global sars-cov-2 pandemic. the research explores legal regulations in force at the time of the epidemiological threat in the country, attempts at legislative changes, and the procedure of conducting a civic budget illustrated by the example of one of the cities in poland during the pandemic, szczecin. an attempt will be made to answer the question of the extent to which polish legislation was prepared for such an exceptional situation and whether legal mechanisms currently in place enable an effective and safe participatory process. 26 in an effort to answer the above questions, the article uses a legal-dogmatic method, which involves examining the legislation in force in poland in the field of the participatory budget, as well as an empirical method that includes an analysis of the principles of the functioning of the participatory budget exemplified by one of the largest cities in poland. the analysis was carried out on the basis of resolutions of the city council, as well as orders of the city mayor and internal regulations. additionally, the historical-legal method was used, indicating the origin of the participatory budget process and its evolution in recent years. 2. the essence of the participatory budget and legal regulations in poland a civic budget is a form of social consultation conducted with residents of a given local community. it is characterized by flexibility in implementation in a given unit (gilman, 2016, p. 3), due also to different geopolitical locations. it is a method by which residents decide on the allocation of a specific pool of the unit’s budget to the purposes of their choice. the participatory budget1 dates back to the early 1990s; brazil should be considered as the precursor of this form of participation. as confirmed by numerous references in the literature, at that time brazil was one of the countries with the greatest income disparity in the world (sintomer, herzberg and röcke, 2008, pp. 2–3), but the city of porto alegre did not follow this rule to a large extent. in addition, porto alegre was a center of opposition that initiated a change of policy in the city’s sphere: to intensify efforts to improve relations and cooperation with residents (kęszczyk, 2018, p. 2). initially, the most important participatory tools to encourage the citizens of porto alegre to get involved in the participatory budget process were meetings in different parts of the city. at such meetings, every resident over the age of 16 could speak up and propose their own solution for the development of the local community. gradually, the idea of a civic budget moved to europe, including poland. the first edition of a participatory budget took place in 2011 in sopot (maciąg, 2018, p. 3) and then the process was popularized in municipalities and large cities. until 2018, legal regulations of the civic budget were very poor. noticeably, the only basis for conducting the participatory budget process in the municipality was the regulations governing the procedure of launching the public consultation procedure. the constant growth of interest and the development of civic budgets in poland made it necessary to provide a legal framework for the institution of the participatory budget in the polish law. such provisions were laid down in early 2018 (act of january 11, 2018). one of the most important legislative changes was the regulation of the legal nature of the participatory budget. the introduction of a specific type of social con1 in the article the author uses the terms ‘participatory budget’ and ‘civic budget’ interchangeably. 27 sultation was correlated with a clear indication of the obligatory carrying out of this form of social consultation in a given local government unit (article 5a(5) of the act of march 8, 1990 on the municipal government, 19902). the particular nature of the participatory budget is supposed to point to an extremely important element, which is consulting the allocation of certain budget amounts for public purposes with the residents of a given local community (ziółkowski, 2018, p. 13). according to the legislature, the legal nature of conducting a participatory budget in a given unit depends on the legal status of this unit. cities with powiat rights have to create a participatory budget to the amount of at least 0.5% of the expenses resulting from the last submitted report on budget execution, whereas in the case of entities which are not classed as cities with powiat rights, carrying out the process of social consultations with residents has been made optional by the legislature. this change imposed on the largest urban centers an obligation to create a participatory budget each year and to provide residents with the opportunity to choose specific projects in a participatory procedure. this is an important novelty since it is coupled with the binding nature of social consultations: since 2018 the residents’ choice has become an obligation for the local government unit to fulfill. the sars-cov-2 pandemic caused the municipalities to face a serious dilemma: whether to implement the participatory budget procedure and continue the dialogue with residents at a time of epidemiological threat or, on the contrary, to look for additional money to help in the fight against the pandemic through participatory procedures. those municipalities which were not obliged by the legislature to create an annual civic budget could decide not to launch a participatory budget procedure in a given year due to the economic consequences of the pandemic. at the same time, the obligation to create a civic budget continued to apply to cities with powiat rights, with a simultaneous correlation of spending a certain percentage of the city’s budget. this has led to a number of discussions among civic participation practitioners. the unexpected threat of a long-term lockdown of the municipality and its residents led to the necessity of securing additional funds in the already existing budget of a given unit. this, in turn, meant that any subsequent unexpected spending of funds which, from the perspective of the purpose and social reasons, would not be necessary to ensure the proper functioning of the unit, potentially entailed negative financial consequences for this unit. the situation caused by the sars-cov-2 virus and covid-19 has generated increasing costs and more and more funds have been allocated to support, among others, micro and small businesses as well as non-governmental organizations. it was found that as a result of this situation some local government units may have problems with financing current expenses and maintaining already started investments. 2 hereinafter referred to as the act on local government. 28 the legal solution introduced by the polish legislature concerning the crisis situation caused by covid-19 (act of march 2, 20203) provided tools which were supposed to lead to an effective fight against the pandemic. in article 15zn(1) of the above-mentioned act, the mayor was granted the right to transfer financial resources among given sections of the budget classification by means of orders. however, in view of article 5a(5) of the act on local government, special provisions, including i.e. article 15zn of the anti-crisis act, cannot be interpreted broadly as applicable to the provisions regulating the issue of the participatory budget. the only legally effective solution that could regulate the situation of the obligation to create a civic budget in a city with powiat rights in 2020 would be to introduce a derogation from the previously-mentioned mandatory rule. this problem could be regulated in the amendment to the anti-crisis shield by allowing the units which are under the obligation to create a civic budget to suspend the application of the procedure in 2020 and thus transfer the funds saved to the fight against covid-19. such a solution was proposed during the works of the committee on national economy and innovation and the committee on budget and public finance of the senate of the republic of poland (2020) of the 10th term of office during the debate held on march 30, 2020 on the act amending the act on special solutions related to preventing, counteracting and combating covid-19, other infectious diseases, and crisis situations caused by them, and some other acts. in item 59, an entirely new article 31zka was proposed after article 31 zk. paragraph 4 of article 31 zka was to be replaced by the following: ‘in 2020, a decision-making authority of a local government unit may suspend the implementation of the civic budget as well as preparations for the civic budget for 2021’. the provision proposed thereby left the decision-making authority responsible for the fate of the participatory budget in principle for two years, 2020 and 2021. at the same time, the very adoption of the resolution to suspend the implementation of the civic budget meant only stopping the participatory procedure. the provision proposed did not directly grant the power to earmark the funds allocated for the creation of the participatory budget. ultimately, the regulation proposed was rejected by the sejm rp4 and did not enter into force. the changes proposed should be viewed positively, if only because an attempt has been made to resolve this difficult issue. unfortunately, the final lack of legal solutions allowing for the suspension of the establishment of the civic budget in 2020 meant that cities with powiat rights had to take appropriate steps to start the entire participatory procedure. the procedure was exceptional, due to the fact that local governments had to try to find their bearings in a completely new reality in a very short time. 3 hereinafter referred to as the anti-crisis shield. 4 the sejm rp should be understood as the lower chamber of the polish parliament, which adopts acts of law. 29 3. organization of the participatory budget process during the covid-19 pandemic in poland with the example of the szczecin city municipality 3.1. stage of the call for proposals for the 2021 participatory budget the formal beginning of the call for submission of applications for the participatory budget of a given edition is the ordinance of the mayor of the city of szczecin on conducting public consultations with residents of the city of szczecin (ordinance no. 272/20, 2020). this obligation results directly from the rules of procedure of participatory budgets (rules of procedure of conducting public consultations concerning the szczecin civic budget, 20195). it is the mayor who is competent to start a given edition of the civic budget, determine the amount allocated to this process and the territorial division of the city. two models of organizing the participatory budget have been adopted in the polish legislative practice. the first of them is a mechanism in which the main legal act regulating the mode and principles of the participatory process is adopted and is binding every year. in this mode, a resolution does not contain detailed information on the amount allocated to the civic budget in a given year or the territorial division of the unit – such information is specified in a legal act issued by the executive body. the second method is the annual adoption of resolutions for individual editions, which regulate the rules and procedures for each edition separately. it should be pointed out that due to the covid-19 pandemic, the second model would be much more flexible in terms of adjusting the regulations to the prevailing epidemiological threat. as a city with powiat rights, due to the lack of specific regulations concerning the suspension of the participatory budget, szczecin had to prepare for the call for submission of projects for 2021. the covid-19 threat caused the activity of the szczecin city hall to be limited and therefore direct contact between residents and officials remains difficult. the form of the rules of procedure remained unchanged, which meant that the residents of the city could submit projects both electronically through an ict system dedicated to a given edition of the participatory budget, and in a traditional paper form (§12(2) of the rules of procedure). additionally, each project submitted to the civic budget had to include a list of support. this requirement is not particularly difficult to meet, as the list of support must contain signatures of at least 10 city residents. in this respect, there may be doubts as to whether, in the event of a real epidemiological threat, residents should be exposed to direct contact when collecting support for their project; however, it appears that with caution and appropriate sanitary measures, such a statutory requirement can be met under the covid-19 threat. a much bigger problem is the lack of direct contact with officials who specialize in a given matter and residents who want to submit a proposal for a project to a partici5 hereinafter referred to as the rules of procedure. 30 patory budget. it should be recalled that the civic budget is one of the most important processes that build participatory attitudes in a given local community, therefore it is extremely important to accept every idea and assist the residents with its implementation. the good practice so far has been that a resident has had the opportunity to meet in person with an official in order to consult relevant matters and to clarify any problematic issues, such as the cost estimate of a given project or the implementation of a given investment in a specific location. unfortunately, due to the epidemiological threat, the head of the city hall decided to close the building to residents (ordinance no. 146/20, 2020). this decision resulted in the necessity to replace the previous direct contact with a remote one. one of the main elements of the call for submission of the proposals stage is the ‘sbo6 academy’ initiative launched by the city of szczecin. this venture is aimed at supporting residents involved in the participatory budget process both at the stage of submitting project proposals and during voting. the main task of the ‘sbo academy’ at the stage of the call for submission of proposals is to assist the applicants during the process of writing a project proposal. each year, a grant is awarded through a call for tenders for a public task to carry out an information and education campaign on the civic budget in szczecin. the information campaign for this year’s edition is also a particular one due to the threat of covid-19. previously, personal meetings were organized in different parts of the city. in the 2020 edition, the ‘sbo academy’ moved mainly into virtual space. remote workshops on writing proposals for projects for the participatory budget and consultations on individual projects and webinars were held (sbo 2021 academy). a special event was an online meeting with katerina zavizhenets – president of the mi-gracja association, during which the topic of encouraging migrants to submit applications to the participatory budget and to vote was discussed. as can be seen, such an important element of the process as the information campaign has completely moved into the virtual sphere. the call for participatory budget proposals in szczecin started on june 1 and ended on july 1, 2020. as part of the first stage of the participatory procedure, 192 projects were submitted to the szczecin city hall, including 15 paper applications (press release of szczecin city). this means that the number of projects for the civic budget, despite the epidemiological risk caused by covid-19, remains at the same level as in the previous year7. 3.2. social factors as part of the participatory budget process during the pandemic social sensitization of participatory processes should be one of the most important tasks for local government units. although the legislature has equipped the units 6 sbo should be understood as an abbreviation of the participatory budget in szczecin. 7 in the 2020 edition, 199 projects were submitted. 31 with legal tools for organizing the civic budget, the active involvement of citizens in this process is the biggest challenge for them. continuous popularization of participatory democracy should be a priority for local authorities. for many years now, the issue of encouraging citizens to co-determination has been a problem faced by units. focusing only on the institution of the civic budget, we can see that every year since 2011, interest in this form of civic participation has been growing (both in the case of submitting projects and at the voting stage), but the turnout during voting at the level of 5–6% (with all residents of a given unit being entitled to vote) is much below expectations. therefore, it is extremely important to keep building trust in the participatory budget process and to try to involve residents in shared decision-making with respect to it. in the szczecin city municipality, which in this article serves as an example of the implementation of the social factor in the process of the civic budget, attempts have been made to solve this problem almost from the very beginning of the existence of this institution in the city. to ensure this, 2 years after the first edition of the process in 2015, a special community team called the assessment panel was established8. its main task was to approve the list of projects submitted to the participatory budget to be voted on by the city’s residents. in addition, the purpose of the creation of this panel was to include the social factor in the process of the participatory budget as a body independent of officials, which being the community’s representation, will be able to verify the actions of specialists from the city hall. initially, the assessment panel consisted of city residents, members of the city council, and representatives of non-governmental organizations. the panel enjoyed great social support, which was illustrated by the results of the evaluation process conducted by institutions independent of the city (evaluation of the szczecin 2019 edition participatory budget, 2018, p. 20). gradually, the role of the panel grew, which was reflected in the process of introducing significant changes to the rules of procedure of the participatory budget. after the act on local government was amended, it was decided to amend the provisions of the rules of procedure. as a result of the amendment, two social groups were formed: the assessment panel with the same competencies as before was maintained and a new body, the appeals panel, was created. as regards the former panel, clear criteria of its composition were indicated: its members may be residents, representatives of housing estate councils, representatives of non-governmental organizations, and representatives of the youth city council. the members of the appeals panel may be the authors of the winning projects of previous editions of the participatory budget and members of the assessment panel of previous editions of the civic budget. as the name of the panel suggests, its role is to consider appeals filed by residents against the negative decision of the assessment panel in putting a project on the voting list. 8 initially called the szczecin civic budget panel. 32 the role of social teams during the covid-19 pandemic is even more significant; until now, the rule was that team meetings were held in situ. the author whose project has been negatively assessed by specialized municipal units, has the right to participate in the panel’s work and present their position. on more than one occasion during panel meetings, attended by both the authors of the task and representatives of the city units, a compromise was reached and changes were made to the project so it could be included on the voting list. therefore, these direct meetings were treated as a kind of opportunity for mediation and dialogue between residents and officials. a significant role was played here by the members of the panel as community activists who looked at a given state of affairs from a completely different perspective. at present, during the covid-19 pandemic, face-to-face meetings are not possible and re-modeling the work of the panels should be a priority for those supervising the participatory budget process in the city. just as in the case of remote work and along the lines of distance communication, during an epidemiological threat, the panel’s work should rely on the use of available technological tools such as zoom, microsoft teams, or googlemeets. naturally, such a solution has its pros and cons. the biggest advantage of using technological tools in the work of social panels is the possibility of a panel member attending a meeting with the use of modern technologies from practically any place. it is very convenient for those community activists who combine social work with their professional life. additionally, remote work in an ict system dedicated to the city participatory budget will allow for faster and safer work for residents. the disadvantage is, naturally, the lack of direct contact and talk about problematic issues. however, for safety reasons, the risk of sars-cov-2 infection should be minimized. in the future, when the pandemic is over, consideration should be given to good practices of remote work of panels and proposing the so-called hybrid mode of working. 3.3. stage of project selection by residents in a general vote the voting stage is the culmination of the entire participatory budget procedure in a given calendar year. after many months of work of both the officials reviewing the projects in the city units and the social panels working on rejected applications and appeals, the list of projects is ready and the city residents can decide how they want their local community to change. the voting procedure is governed by chapter 4 of the rules of procedure. it should be noted again that the provisions of the above-mentioned rules of procedure have not been fully adapted to the prevailing epidemiological threat, therefore the provisions concerning the voting procedure have not changed. under § 21(4) of the rules of procedure, voting on projects is conducted in electronic and paper form. voting in electronic form should be understood as a city resident voting in an ict system dedicated to a given edition of the participatory budget. in the case of paper ballots, the city hall makes the voting card available on the internet and in the specially 33 designated places intended for voting only in the traditional manner. every resident of the city has the right to vote. by analyzing the voting rules and trying to adapt them to the current constraints of the covid-19 pandemic, two conclusions can be drawn. firstly, a broad information campaign should be conducted to encourage residents to use the ict system and thus vote in electronic form. in the previous edition of the participatory budget, almost 94% of the voting cards were those cast in the ict system (evaluation of the szczecin 2020 edition participatory budget, 2020, p. 46). this shows that the vast majority of residents participating in the vote make use of new technologies. however, in the current situation, it is necessary to pay special attention to this and additionally encourage those social groups which most often vote in the paper form (mainly seniors) to use this form of voting. the second point to consider is that it is not legally possible to bypass the second voting method, the traditional paper form. the provisions of the rules of procedure are precise on this issue: anyone who would like to cast their vote in the traditional way should be able to do so. a problem arises ere as to how to carry out this form of voting. at the turn of june and july this year, presidential elections were held in poland in a hybrid form, i.e. traditional in polling stations and by post. to this end, guidelines (guidelines of the minister of health and the chief sanitary inspector, 2020) were created to indicate clear sanitary rules for the elections conducted. on the one hand, it is not possible to compare presidential elections in which, according to official data of the state election commission, more than 20 million polish citizens took part (announcement of 13 july 2020, state election commission, 2020), to a participatory procedure in a city of almost 400 thousand inhabitants and which lasts for 14 days. however, it seems reasonable for the district sanitary inspector to provide general guidelines on epidemiological safety during voting in a participatory budget. this is all the more important because most often it is the seniors who are the beneficiaries of the traditional form of voting. this is particularly important from the point of view of this year’s participatory budget schedule (schedule of the szczecin 2021 edition participatory budget, 2020), which indicates that the vote is to take place in november and, as epidemiologists claim, a return of the sars-cov-2 pandemic and an increase in the incidence of covid-19 can be expected at that time. 4. summary polish rules on the participatory budget are not geared to the current epidemiological situation related to covid-19. the attempt to change the current legal status was not effective. as a result, individuals faced the difficult task of organizing the participatory process during the real threat of sars-cov-2 infection and deteriorating public finances. cities with powiat rights, on which the legislature has imposed an obligation to create an annual civic budget, must try to adapt the current situation to the conditions prevailing in a given unit. the process of a participatory budget is characterized 34 by a high degree of complexity, starting with the preparation of legal acts for a given budget edition and ending with the residents voting on specific proposals. this article attempted to analyze how the process is organized by one of the largest cities in poland, szczecin. the considerations undertaken suggest that, despite the lack of possibility to suspend the participatory budget in 2020 and the lack of changes in the rules of procedure, the process can continue smoothly. obviously, the inconveniences connected with the continuing restrictions associated with covid-19 make it necessary for both units and residents to develop a new level of cooperation. the use of new technologies, both at the stage of the call for the submission of projects, the participation of the social factor in the verification of tasks and finally at the voting stage, should be a priority for units carrying out the civil budget process during the pandemic. a positive effect of the restrictions introduced, in the form of a ban on direct contact, should be the development of remote forms of communication. in the future, the remote way of conducting the sessions of the assessment panel or the appeals panel could be a permanent element of the civic budget process; additionally, maintaining an appropriate sanitary regime will allow for the safe conduct of voting in the traditional form. the sars-cov-2 virus pandemic shows that the legislature should, to an extent not provided for in the existing regulations, respond to changes much quicker. the author is critical of the failure to allow units to suspend the creation of participatory budgets in 2020. the situation in each unit is different as some of them pay much more attention to providing help to business, others to the finalization of key public investments. the money originally earmarked for the civic budget could be used to help those who need it much more. however, an analysis of the current situation shows that the legislature, while maintaining the current regulations, caused the participatory budget process in larger units not to be stopped. citizens can still get involved in the affairs of the local community, which has a positive impact on building a sense of community. at this difficult time of the pandemic, this can have a positive effect on building civic society and ultimately pay off in the future. the consequences of the current state of the pandemic in poland, and also in the whole world, should be legislative changes in the area of dialogue with residents. the methods used so far, which were mostly based on direct contact between residents and officials, should be supplemented by the widest possible use of remote instruments. consideration should be given to the participatory budget process taking place in a hybrid way; where possible, direct contact should be replaced by virtual contact. as indicated in the article, this has its pros and cons but the current situation related to the sars-cov-2 pandemic shows that the legislature should introduce such legal tools, albeit of a temporary nature, which will prepare cities to carry out the participatory budget process also only remotely. it can also be assumed that once the pandemic is over, the question of assessing whether some of these virtual elements of the procedure can be permanently maintained will become a legitimate one. 35 furthermore, despite the mandatory nature of the participatory budget, provisions should be made for the possibility of suspending the implementation of the civic budget in a given year in the event of an urgent and unpredictable situation. such situations undoubtedly include a state of natural disaster or an epidemic that paralyzes the work of the entire state. making the participatory process more flexible will mean that in cases of a state of emergency, in which local authorities decide whether to allocate specific funds to help people or to transfer them to the participatory process, this decision should be made by local authorities. the above experience shows that the legislature should be prepared for every crisis situation regardless of its specific nature. this means that it is reasonable, and even necessary, to create a wide range of legal instruments which, depending on the specific nature of the crisis situation, would reduce the risk of being unable to carry out the procedures required by law, such as the participatory budget analyzed in this article. this statement stems from the conviction that the world after the sars-cov-2 pandemic will no longer be the same, but the implementation of tasks, which are based on dialogue with residents and which are important for local communities (such as the participatory budget, consultations, and referendums) must be guaranteed. to this end, it is necessary to introduce legal tools that will enable the proper and safe realization of the interests of residents in the event of a crisis. references: 1. *** ‘evaluation of the szczecin 2019 edition participatory budget’, 2018, [online] available at http://konsultuj.szczecin.pl/konsultacje/files/2237564233da4140b64a4e09501ad763/ew aluacja%20sbo2019%20-%20raport.pdf, accessed on july 26, 2020. 2. *** ‘evaluation of the szczecin 2020 edition participatory budget’, 2020, [online] available at http://konsultuj.szczecin.pl/konsultacje/files/4d594cf09a1040d1961623c0692fc3c8/sb o2020_raport_z_ewaluacji.pdf, accessed on july 26, 2020. 3. *** ‘sbo 2021 academy’ website, undated, [online] available at https://www.akademias bo.szczecin.pl/wydarzenia, accessed on july 26, 2020. 4. *** act of 11 january 2018 amending certain acts in order to increase the 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(eds.), participatory democracy and political participation. can participatory engineering bring citizens back in?, london, new york: routledge, 2007. 54 abstract during the covid-19 pandemic, china has achieved high recovery efficiency. one of the most important reasons behind this is the effective policies of promoting work resumption. why can such policies maintain steady performance despite the high level of environmental uncertainties? this question can be answered from the perspective of policy resilience. this study employed a policy evaluation model for analyzing quantitative data of 342 policies of promoting work resumption. we evaluate the policies through the policy modeling consistency (pmc-index) model and text mining methods. the results show that: first, the contents and elements of all policies have consistent characteristics, including the combination of multiple policy tools, the combination of support for work resumption and pandemic control, the incentives to support effective policy implementation, and the reasonable match between macro and micro policies as well as short-term and long-term policies. second, among the nine policies that are randomly selected from the sample, one is rated excellent and the other eight are good, indicating that china’s policies of promoting work resumption have good resilience. keywords: covid-19 pandemic, policy resilience, china’s policies of promoting work resumption, pmc-index model. a case study on china’s policies of promoting work resumption during the covid-19 pandemic — perspective of policy resilience*1 qicheng lu bin rong yijia li qicheng lu professor, phd, business school of yunnan university of finance and economics, kunming, yunnan, china e-mail: luqicheng@aliyun.com bin rong (corresponding author) ma candidate, business school of yunnan university of finance and economics, kunming, yunnan, china tel.: 0086-199-1694.5502 e-mail: rbrongbin@aliyun.com yijia li associate professor, information school of yunnan university of finance and economics, kunming, yunnan, china e-mail: tilburg@sohu.com * acknowledgement: supported by national natural science foundation of china (no. 71872160, no. 71663057, no. 72064043), key program of applied basic research plan in yunnan province (no. 2019fa026), graduate innovation fund program of yunnan university of finance and economics (no. 2021yufeyc069). doi: 10.24193/tras.si2021.4 published first online: 12/15/2021 transylvanian review of administrative sciences, special issue 2021, pp. 54–76 55 1. introduction why could china overcome the covid-19 pandemic peak and achieve rapid economic and social recovery? in recent decades, the losses caused by global crisis events have escalated (abdulkareem, elkadi and breane, 2018, p. 176; saja et al., 2018, pp. 862–863), and various new risks have emerged one after another. the economic development of a country is inevitably impacted or disturbed by factors such as economic recessions, technological innovation, natural disasters and even terrorism. thus, the capacity of national crisis management is highly required. in particular, the outbreak of the covid-19 pandemic has caused serious and lasting impact on the global economy and societies (milani, 2020, pp. 1–2). it brings serious challenges of economic resilience, especially policy resilience. in 2020, the world’s total gdp decreased by 3.3% year-onyear, while china’s gdp increased by 3.1%, which is the only country with an increase of gdp among the top 15 countries. in fact, most of the emerging economies have been seriously troubled by the covid-19 pandemic, and their economic development has stagnated or even declined. after analyzing the deeper reasons, we found that the chinese government has designed and issued a series of policies to promote work resumption after the covid-19 pandemic outbreak, so as to guide enterprises to effectively realize the resumption of work and production, and help enterprises overcome difficulties from the aspects of taxation, epidemic prevention, law, employment and so on. under the circumstances of limited time and uncertain environment, the policies formulated by the chinese government have shown strong resilience and effectively promoted the high-quality economic and social recovery. what is the nature of a policy with strong resilience is worth studying by scholars, and it is also an urgent problem to be solved through policy design. this study explores china’s policies of promoting work resumption from the perspective of resilience, aiming to promote the development of resilience theory, provide new thinking for policy-making, and have important value for the government to enhance its emergency management ability. resilience, also known as elasticity and recovery, refers to the adaptability, recovery and sustainable development ability of various subjects when they encounter external risks, pressures and damages (walker et al., 2004, p. 2; alexander, 2013). resilience has originated from physics and is used to represent the property that an object recovers to its original state after being deformed by external forces (bozza, asprone and manfredi, 2015, p. 1730). in the 1950s, psychology used resilience to denote the ability of individuals or families to actively face and adapt to adversity. in the 1970s, holling (1973) introduced resilience into system ecology, indicating the ability of the ecosystem to maintain the operation of main functions and structures after being impacted by the outside environment. after that, human beings gradually extended resilience from system ecology to social ecology for the purpose of maximizing social benefits and minimizing environmental impact (berkes, folke and colding, 1998). with vuca (volatility, uncertainty, complexity and ambiguity) becoming the pronoun of current environmental characteristics, economic resilience has increasingly become a strategic issue that countries all over the world must pay attention to in the pursuit of 56 economic development. it can ensure that economies can make rapid adjustment in the event of impact, and it is the basis for supporting the fine operation of economic and social systems (martin and sunley, 2015, p.13). among them, policy resilience significantly helps to improve economic resilience and is the main driving force for healthy and high-quality development of economy and society after the outbreak of the crisis (ma, xiao and yin, 2018, p. 247; swanson et al., 2010, p. 924). it refers to the adaptive adjustment ability, reform ability and the vitality stimulated by the policy system when the economic and social system are impacted by the crisis (capano and woo, 2017). it resists and solves the consequences of the impact by adjusting policies and reallocating resources, as well as restoring the original economic and social development. for example, after the outbreak of covid-19 pandemic, more than 20% of the policies of china’s promoting work resumption stimulated the demand for electricity through phased measures such as reducing the price of electricity, subsidies for the use of electricity, and no power failure after arrears. the year-on-year growth rate of power consumption in the second quarter of 2020 increased by 10.4% compared with the first quarter (people’s daily, 2020), which is regarded as the ‘barometer’ of economic operation. it reflects the good trend of china’s economic recovery (people’s daily overseas edition, 2020), and reflects the remarkable effect of the policies of promoting work resumption. policy design is a complex process, involving multiple actors and multiple interest demands. when facing vuca situation, this puts forward stricter requirements for policy-making. but the research on policy resilience can provide guidance for the government’s effective decision-making. policy is an important way to improve economic resilience (briguglio et al., 2006). however, gaps exist in the current field due to the lack of research on specific policies from the perspective of resilience. the deficiencies are as follows: first, no study has found a suitable perspective and method to analyze the radical advantages of china’s policies of promoting work resumption, the possible reasons for this are the limited empirical evidence, lack of policy evaluation tools and inadequate policy resilience theory. second, as one of the three values of public administration, resilience often contradicts the bureaucratic norms and procedural principles of efficiency. the introduction of resilience theory needs to balance its relationship with other values (hood, 1991, p. 11). however, the lack of research on the paradigm of policy resilience seriously restricts the consideration of resilience in policy design. third, policy evaluation mainly focuses on the period or after policy implementation, such as markov analysis, cost benefit analysis and comparison method. in these two stages of evaluation, policies often waste time and resources because of some inappropriate contents, and these play little role in a highly uncertain environment. meanwhile, there are few policy evaluation methods before policy implementation, but the evaluation methods have the problem of strong subjectivity, which cannot ensure the objectivity and scientificity of the evaluation results (yi and feiock, 2012; suddaby, 2006; baniya, giurco and kelly, 2021). in order to solve the limitations of the previous studies, from the perspective of policy resilience, this study analyzes china’s policies of promoting work resumption 57 by comprehensively using pmc-index model and text mining tools. the difference between this model and the previous policy evaluation model is that it is based on the hypothesis of omnia mobilis as the guiding ideology, the main purpose of this model is that everything in the world is moving and connected. therefore, any relevant variable should not be ignored or considered unimportant (ruiz estrada, yap and nagaraj, 2008, p. 188). when selecting variables, the scope of consideration is wider. the analysis system based on this can effectively test the adaptability and stability of policies. meanwhile, the model adopts the method of text mining, which can avoid the subjectivity of expert scoring and make the policy evaluation more objective and scientific. pmc-index model has been applied to new energy, cultivated land protection, science and technology and other fields for policy evaluation (yang, xing and li, 2020; kuang et al., 2020; du, yuan and gao, 2019), showing good adaptability and scientificity. the novelty of this study includes three aspects: (1) taking the covid-19 pandemic as the research opportunity, this study analyzes the reasons for the steady performance of china’s policies of promoting work resumption from the perspective of policy resilience, which responds to recent calls (dutt, 2016, p. 377). this provides practical value by suggestions on policy making of economic recovery for other countries, especially emerging economies; (2) policy resilience is mainly reflected in the stability and adaptability of policies in an uncertain environment (dutt, 2016, p. 375). guided by these two characteristics, this study applies pmc-index model to analyze policy, which is a new attempt in the field of policy resilience research; (3) before the implementation of the policy, we can comprehensively analyze its content and characteristics through text mining and quantitative evaluation of the policy text. it can enhance the objective fairness of the evaluation results and put forward scientific and comprehensive policy optimization paths to provide useful enlightenment for improving policy resilience. 2. describing the case at the beginning of 2020, covid-19 pandemic broke out all over the world, affecting the normal operation of economy and society. china was also seriously affected by it. the closure of cities began on january 23, and enterprises stopped production in a wide range, resulting in a year-on-year decrease of 6.8% in china’s gdp in the first quarter of 2020. however, it reversed the growth to 3.2% in the second quarter. china’s ‘working arrangements for covid-19 pandemic prevention and control and economic and social development’ conference was released in february 23, 2020, which has made strict arrangements for the next epidemic prevention and control and economic and social development, and has begun the work of promoting work resumption. after that, china’s state council, provinces, municipalities directly under the central government and autonomous regions have successively issued a series of policies on promoting work resumption in a short time, effectively helping enterprises to resume production smoothly and realizing the ‘v-shaped’ reversal of gdp during the epidemic. during this period, china helped the stagnant economic and social system revitalize through 58 policies that aimed at repairing the broken industrial chain, restore transportation, provide financial and resource support, and restore personnel mobility. an example of such as policy is ‘emergency notice on work resumption and dispatching arrangement of key material production enterprises for epidemic prevention and control’. before the full work resumption, the chinese government supported the survival of enterprises by maintaining and rebuilding the basic resources needed for enterprise operation. especially for basic medical protection resources, the government was increasing the production subsidies and reserves, and directly provided them to employees returning to work, so as to prevent and control the epidemic and help enterprises solve the difficulties. in order to solve the major problem of enterprise employees maintaining realistic social distance (radu, 2021, p. 128), the government issued ‘special action plan for digital empowerment of small and medium-sized enterprises’ and other policies. among these policies, the government has applied new mobile phone applications such as ‘travel track card’ and ‘health code’ through information technology to scientifically and accurately track epidemic transmission paths. these policies also guide enterprises to realize online office, online financial management, and remote cooperation and so on through digital tools. at the same time, these policies support and guide enterprises to build a supply chain system and sales network through digital operation, which combines online procurement and sales, offline optimal inventory and unmanned distribution, and intelligent logistics. through a series of policies, the enterprise’s ability to deal with sudden crises and the stability of operation have been improved. even if there is some structured evidence-based basis in the process of policy design, the implementation effect is not ideal due to the deviation of decision makers’ subjective cognition of events or issues, the lack of knowledge, and the change of environment or issues. the governments of most countries have performed poorly in the face of covid-19 pandemic, but the chinese government has formulated a series of highly resilient policies for work resumption in a short time. in the face of severe uncertainty in the future, it has played a steady performance and played an important role in economic and social recovery. at the peak of the epidemic in the first half of 2020, china’s economy and society achieved a high-quality recovery, which provided a rare opportunity to study policy resilience. therefore, from the perspective of resilience, this study makes a detailed analysis of the content and characteristics of china’s policies of promoting work resumption. 3. constructing the analysis model of policy this study analyzes policies of promoting work resumption through pmc-index model, which has several advantages. first, it can analyze the internal consistency of policy to reflect the degree of adaptability and stability of policy. second, the advantages and disadvantages of individual policies can be analyzed. the overall evaluation of policies can be carried out through pmc index, and pmc surface intuitively and 59 vividly reflects the advantages and disadvantages of policies from a multi-dimensional perspective in the images, which can be used as a basis to optimize policies and improve the resilience of policies. the application of pmc-index model includes the following four steps: (1) classification of variables and identification of parameters; (2) establishing multiple input-output tables; (3) measurement of pmc index; and (4) building pmc surfaces. 3.1 samples and sorting of policies policies of promoting work resumption studied in this paper come from the official websites of the central government of china and the governments of all provinces and municipalities directly under the central government. the time range of the selection is from january 1, 2020 to june 30, 2020. irrelevant documents such as meeting minutes and receipts were filtered out, and 342 representative policy documents were selected. these included 7 policy documents issued by the state council and the central government, 73 policy documents issued by national functional departments, and 262 policy documents issued by regional governments. these 342 documents are sorted out in detail according to policy types (see table 1). table 1: types of policies for promoting work resumption policy types details quantity proportion restraint strength operable strength planning (160) statute 1 0.3% strong weak plan 2 0.6% medium strong weak opinion 52 15.2% medium strong medium weak measure 105 30.7% medium strong weak implementing (182) notice 180 52.6% medium weak medium strong regulation 2 0.6% medium strong medium strong total 342 100% source: authors’ elaboration 3.2 comparative analysis of policy types from the perspective of policy implementation, this paper further divides policy types into planning and implementing policies. planning policy means that it only puts forward the ultimate goal and planning path, and lacks the implementable guidance of policies. the implementing policy elaborates the content of each measure in the policy document, and specifies the specific implementation methods and principles of each measure (du, yuan and gao, 2019, p. 102). by comparing the two main types of policies for resumption of work and production, we found that the implementing policies accounts for 53.2%, which are more operational and restrictive, reflecting the strong intervention of government in promoting work resumption. the government hoped to strengthen the guidance and control of work resumption by policies, so as to promote economic and social recovery. 60 3.3 variables before establishing the pmc-index model of policy, this paper first needs to determine the relevant variables of the policy. by sorting out 342 policies of promoting work resumption, we use text mining method, rostcm6.0 and ucinet tool to extract key words, establish social network and calculate centrality. the detailed steps are shown in figure 1. policy text (document set) pretreatment (segmentation word,organize documents,extracting feature words) text mining analysis （centrality analysis，word frequency analysis，keywords network analysis） document intermediate form （effective word frequency） evaluation index of policy resilience figure 1: the process of text mining source: authors’ elaboration 3.3.1 word frequency analysis 342 policy texts are imported into the text mining database of rostcm6.0 software to form a document set for text word segmentation. further, the word frequency statistics of the document set are carried out, and the results are sorted according to the frequency. words like ‘support’, ‘development’ and ‘key’ that have no impact on the construction of evaluation indicators but have a high frequency were removed. afterwards, we summarized effective high-frequency vocabulary. the top 60 words are listed in table 2. table 2: effective words and quantities words quantity words quantity words quantity enterprise 11791 sme 1084 start a business 686 pandemic 6529 platform 1032 demand 675 service 4887 security 1018 guide 663 policy 2546 difficulty 1002 science and technology 642 work resumption 2206 economics 1001 emergency management 637 guarantee 2184 transport 908 hygiene 618 obtain employment 1842 technology 894 examine and approve 605 staff 1732 consumption 875 human resources 604 61 words quantity words quantity words quantity finance 1706 guidance 852 traffic 601 project 1616 supervise 848 novel 586 loan 1556 healthy 840 supply 565 fund 1518 subsidy 830 informationize 527 management 1397 agriculture 801 business 527 sociology 1394 industry 779 travel 464 insurance 1357 apply 776 logistics 454 resources 1224 innovate 766 law 451 material 1207 mechanism 746 passageway 432 bank 1153 pneumonia 739 coronavirus 421 financing 1125 medical care 710 graduate 400 market 1108 epidemic prevention 703 green 390 3.3.2 keywords network analysis in this study, the policy keywords are processed by rostcm6.0 software to get the policy keyword network (see figure 2). the size of the circle in the figure indicates the frequency of keywords in the policies. the length of the line connecting keywords represents the tightness between keywords, reflects the text semantics and forms a social relationship network diagram. the social network diagram of the policy can visually reflect the core structure and radiation degree of the policy and provide a basis for determining the primary and secondary variables of pmc index. 3.3.3 centrality analysis through the net-degree function in ucinet software, the values of ‘centrality’ and ‘network centralization’ of the keyword network of policies of promoting work resumption are obtained, and some effective words required to establish the evaluation system were selected, as shown in table 3. table 3: some effective words and centrality words degree words degree words degree enterprise 46537 market 29029 public 22834 pandemic 46422 meet an emergency 28743 insurance 22797 service 44115 special 28539 logistics 22594 guarantee 43837 apply 28421 traffic 22476 policy 42491 perfect 28223 hygiene 22108 return to work 37889 supervise 27699 obtain employment 20855 pneumonia 37594 security 27258 minor enterprises 20152 management 35781 new type 27156 informationize 20120 continuation on page 63 62 fi gu re 2 : k ey w or d ne tw or k so ur ce : a ut ho rs ’ e la bo ra tio n 63 words degree words degree words degree capital 35463 epidemic prevention 26807 virus 20046 personnel 34358 innovate 26439 coronal 19945 platform 33738 technology 26072 industry 19255 project 33359 resources 25942 investment 18873 material 33111 reduction 25875 start a business 18636 mechanism 32862 green 25401 system 18242 guide 31871 finance 24728 environment 17174 healthy 31468 medical care 24665 unemployment 15991 demand 30339 examine and approve 24525 support 15493 sociology 29584 novel coronavirus 23490 operate 15124 transport 29223 economics 23347 staff 14532 finance 29136 bank 22888 science 14248 note: network centralization = 23.42% source: authors’ elaboration the centrality value can represent the position of a keyword in the whole keyword network. the higher the centrality of a keyword, the higher its position in the network, and the more likely it is to become an indicator of research policy. for example, the word ‘pandemic’ ranks second in the overall centrality ranking, which is also the background of the research topic, so it is also in a more important position in the keyword table and keyword network diagram. 3.3.4 classification of variables and identification of parameters referring to the idea of constructing the index system by ruiz estrada (2011, p. 527), and combined with the analysis of high-frequency words and keywords, this paper combines the characteristics of the policies on promoting work resumption with the pmcindex model to construct the pmc evaluation index system. the indicator system includes 10 primary indicators and 50 secondary indicators (see table 4). table 4: variable setting no. primary variable no. secondary variable no. secondary variable x1 nature of policy x1:1 forecast x1:2 supervise x1:3 proposal x1:4 describe x1:5 guide x2 policy function x2:1 market regulation x2:2 business assistance x2:3 promoting employment x2:4 encourage entrepreneurship x2:5 perfect mechanism x2:6 strengthen supervision x2:7 ensure safety x2:8 epidemic prevention guidance table 3 continuation on page 64 64 no. primary variable no. secondary variable no. secondary variable x3 policy perspective x3:1 macroscopic x3:2 microcosmic x4 effective time x4:1 temporary (t≤6 months) x4:2 short-term (6 months<t≦12 months) x4:3 medium-term (12months<t≤24months) x4:4 long-term (24 months<t) x5 issuing agency x5:1 state council and general office x5:2 national ministries and commissions x5:3 provincial and municipal prefectural party committees x5:4 provincial and municipal departments and bureaus x5:5 other x6 policy field x6:1 economics x6:2 social services x6:3 technology x6:4 medical treatment x6:5 insurance x6:6 system x6:7 finance x6:8 industry x6:9 traffic x6:10 agriculture x7 guarantee incentive x7:1 project support x7:2 legal guarantee x7:3 tax preference x7:4 resource support x7:5 financial support x7:6 approval optimization x7:7 platform services x8 policy system x8:1 include basis x8:2 include goals x8:3 include plans x9 policy receptor x9:1 country x9:2 region x9:3 industry x9:4 enterprise x9:5 other x10 policy disclosure source: authors’ elaboration 3.3.5 multiple input-output table multiple input-output table builds a set of optional data analytical framework, which can store a large amount of data and facilitate the statistics and analysis of any single variable. it is composed of ‘m’ primary indicators and ‘n’ secondary indicators, and the multiple input-output table does not limit the number of indicators. all indicators have no ranking importance and have the same weight (see table 5). table 4 65 table 5: multiple input-output table x1 x2 x1:1 x1:2 x1:3 x1:4 x1:5 x2:1 x2:2 x2:3 x2:4 x2:5 x2:6 x2:7 x2:8 x3 x4 x3:1 x3:2 x4:1 x4:2 x4:3 x4:4 x5 x6 x5:1 x5:2 x5:3 x5:4 x5:5 x6:1 x6:2 x6:3 x6:4 x6:5 x6:6 x6:7 x6:8 x6:9 x6:10 x7 x8 x7:1 x7:2 x7:3 x7:4 x7:5 x8:1 x8:2 x8:3 x7:6 x7:7 x9 x10 x9:1 x9:2 x9:3 x9:4 x9:5 x10 source: authors’ elaboration 3.4 calculating the pmc index according to the method of mario arturo ruiz estrada (2011, p. 527), the calculation of pmc index is divided into four steps. first, put the primary and secondary variables into the multiple input-output table. second, assign values to secondary variables through text mining, formula (1) and formula (2). third, calculate the score of the primary variables through formula (3). fourth, summing up the primary index scores of the policies according to formula (4) to obtain pmc index. x ~ n[0,1] (1) x={ xr : [0 ~ 1] } (2) ) ( ( 1 )  = n j ij ij t xt x x t = 1,2,3,4,5,6,…,∞ (3) in the formula, ‘t’ is the primary variable and ‘j’ is the secondary variable.                   ++++ +++ ++ =          = = = = = = = = = 7 1 3 1 5 1 987 4 1 5 1 10 1 654 5 1 8 1 2 1 321 10) 5 (9) 3 (8) 7 (7 ) 10 (6) 5 (5) 4 (4 ) 2 (3) 8 (2) 5 (1 p q r rqp l m n nml i j k kji x x x x x x x x x x x x x x x x x x x pmc (4) finally, the calculated results are evaluated according to the criteria for evaluating policies (see table 6). 66 table 6: criteria for evaluating policies score 9-7 6.99-5 4.99-3 2.99-0 criterion excellent good acceptable bad 3.5 building pmc surfaces pmc surface is based on pmc index, which can more vividly and intuitively reflect the advantages and disadvantages of policy primary indicators and the consistency level of policies. to build a pmc surface, it is first necessary to generate a pmc matrix. considering the balance of pmc surface and the symmetry of matrix, x10 is excluded when constructing pmc surface to form a third-order matrix, and pmc surface such as formula (5) is constructed. (5) 4. empirical research 4.1 selecting the evaluation object based on the above analytical framework about policies of promoting work resumption, this study selects 9 policies for evaluation: one item by the state council and the central government, and two items by national ministries and commissions; one policy issued by wuhan city, a serious disaster area of covid-19 pandemic. according to the covid-19 pandemic cumulative number of confirmed cases, the disaster area is divided into five grades, and a policy is randomly selected in each grade of area. these nine policies are abbreviated as p1 to p9 (see table 9). 4.2 calculating pmc index in order to make the evaluation results fairly and objectively, the text mining method is used to calculate the secondary variables, which is also better than other evaluation methods. in this study, the nine policies to be evaluated are imported into the text mining database, and the keywords are determined by word segmentation. if there is a keyword corresponding to the name of the secondary variable in the policy text, the secondary variable is assigned 1, otherwise it is 0. according to the assignment of secondary variables, we build a multiple input-output table, further calculate the pmc index, evaluate the policy according to the policy evaluation criteria in table 6, and calculate the means of 9 policy primary indicators for horizontal comparison (see table 10). the depression index is calculated according to pmc index, and they are both presented in the line chart (see figure 3). 67 ta bl e 9: p or tfo lio o f e va lu at io n po lic ie s no . na m e is su ed n um be r pu bl is he d re gi on p1 th e ce nt ra l le ad in g gr ou p of c ov id -1 9 pa nd em ic s ho ul d ac tiv el y an d or de rly pr om ot e w or k r es um pt io n w hi le ef fe ct ive ly pr ev en tin g an d co nt ro lli ng th e p an de m ic . gu o fa m in g di an (2 02 0) n o. 1 3 st at e co un ci l an d ce nt ra l p2 no tic e on g ivi ng fu ll pl ay to th e ro le o f t ra de a ss oc ia tio ns a nd c ha m be rs of c om m er ce to s up po rt th e re su m pt io n of w or k an d pr od uc tio n of p riv at e sm es . fa g ai b an t i g ai (2 02 0) n o. 1 75 na tio na l d ep ar tm en t p3 op in io ns o n st ab ili zi ng la bo r r el at io ns a nd s up po rti ng e nt er pr is es to w or k re su m pt io n du rin g th e pr ev en tio n an d co nt ro l o f c ov id -1 9 pa nd em ic . re n sh e bu f a (2 02 0) n o. 8 p4 se ve ra l p ol ic ie s an d m ea su re s to s up po rt en te rp ris es to re su m e w or k an d pr od uc tio n an d pr om ot e st ab le d ev el op m en t i n w uh an . w u ba n w en (2 02 0) n o. 6 w uh an p5 no tic e on is su in g po lic ie s an d m ea su re s to o ve rc om e th e co vi d19 p an de m ic an d su pp or t s m es to o ve rc om e di ffi cu lti es . e zh en g ba n fa (2 02 0) n o. 5 hu be i p ro vin ce (k > 1 0. 00 0) p6 po lic y s ug ge st io ns o n pr ev en tin g an d co nt ro lli ng c ov id -1 9 pa nd em ic an d su pp or tin g sm al l a nd m ic ro e nt er pr is es to o ve rc om e di ffi cu lti es . pr ov in ci al e pi de m ic p re ve nt io n an d co nt ro l ( 20 20 ) n o. 9 zh ej ia ng p ro vin ce (1 .0 00 ≤ k ≤ 9 .9 99 ) p7 op in io ns o n se ve ra l fi sc al a nd ta x po lic ie s on o ve ra ll su pp or t f or c ov id -1 9 pa nd em ic p re ve nt io n an d co nt ro l a nd e nt er pr is es w or k re su m pt io n. he i c ai b an (2 02 0) n o. 9 he ilo ng jia ng p ro vin ce (5 00 ≤ k ≤ 9 99 ) p8 so m e m ea su re s on s up po rti ng th e de ve lo pm en t o f r ea l e co no m y. yu n zh en g fa (2 02 0) n o. 1 1 yu nn an p ro vin ce (1 00 ≤ k ≤ 49 9) p9 si xt ee n m ea su re s to ta ck le th e co vi d19 p an de m ic an d su pp or t s m e’s re su m pt io n of w or k an d he al th y d ev el op m en t. xi n zh en g ba n fa (2 02 0) n o. 7 xi nj ia ng u yg ur au to no m ou s re gi on (1 0 ≤ k ≤ 99 ) no te : k = c um ul at ive n um be r o f c on fir m ed p at ie nt s so ur ce : a ut ho rs ’ e la bo ra tio n 68 table 10: pmc index summary p1 p2 p3 p4 p5 p6 p7 p8 p9 mean (x1) nature of policy 0.6 0.4 0.4 0.6 0.8 0.8 0.6 0.4 0.6 0.578 (x2) policy function 0.625 0.875 0.5 0.875 0.75 0.5 0.25 0.625 0.875 0.653 (x3) policy perspective 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 (x4) effective time 0.5 0.5 0.5 0.75 0.5 0.25 0.25 0.5 0.5 0.472 (x5) issuing authority 0.4 0.4 0.2 0.4 0.2 0.2 0.2 0.2 0.2 0.267 (x6) policy field 0.4 0.7 0.5 0.8 0.5 0.4 0.6 0.8 0.8 0.611 (x7) guarantee incentive 0.429 0.714 0.571 1 0.857 0.429 0.429 1 0.714 0.683 (x8) policy system 1 1 1 1 0.667 0.667 0.667 0.667 0.667 0.815 (x9) policy receptor 0.6 0.8 0.8 0.8 0.6 0.8 0.8 0.8 0.6 0.733 (x10) policy disclosure 1 1 1 1 1 1 1 1 1 1 pmc index 6.054 6.889 5.971 7.725 6.374 5.545 5.296 6.492 6.456 6.311 grade good good good excellent good good good good good figure 3: depression index and pmc index source: authors’ elaboration this paper introduces the policy cobweb graph to compare with pmc surface (see figure 4). the cobweb graph can intuitively display the scores of policy primary indicators, and can also compare policies horizontally. although the cobweb graph is not three-dimensional and detailed as pmc surface, it provides another research idea for evaluation policy when only primary indicators need to be analyzed. however, compared with the policy cobweb graph, the surface graph can intuitively reflect the index advantages and disadvantages of a single policy and the depression degree of the policy, which is conducive to the in-depth analysis of a single policy. 69 figure 4: policy cobweb graph source: authors’ elaboration 4.3 draw pmc surface graph according to the calculation results of pmc index, we gather 9 primary indicators into matrix of 3×3, and then draw the pmc surface in the three-dimensional coordinate system according to the corresponding coordinate positions of each primary indicator. this article only shows the pmc surface diagram of policies p4 and p7 (see figure 5 and figure 6). on the pmc surface, the areas of each shading represent different values. the concave areas of the surface have relatively low scores, and the convex areas of the surface have relatively high scores. figure 5: pmc surface of policy 4 70 figure 6: pmc surface of policy 7 4.4 analysis of policy evaluation results based on the data results of the above policy analysis, we can analyze and evaluate the policies from two aspects. one is horizontal evaluation, it compares and evaluates various policies, or compares and analyzes the policies to be evaluated with the mean value. the other is vertical evaluation, it analyzes the advantages and disadvantages of individual policies with the help of depression degree and surface graph, and puts forward targeted suggestions. from the first point of view, the score ranking of pmc index is p4 > p2 > p8 > p9 > p5 > p1 > p3 > p6 > p7. as the policies of promoting work resumption are emergency management policies, it tends to be temporary and short-term in effective time, so scores are concentrated at 0.5. in the index policy nature x1, the scores of policies p1, p4, p5, p6, p7 and p9 are higher than the average, accounting for 66.7%, indicating that more attention is paid to the form of policy support. as for policy receptor x9, the scores of p2, p3, p4, p6, p7 and p8 are higher than the average level, indicating that the coverage objects of policy regulation are considered comprehensively in this kind of policy formulation, so as to expand the penetration impact of the policy, which is beneficial to ensure the stable effect of the policy in a highly uncertain environment. in the guarantee incentive x7, the scores of p2, p4, p5, p8 and p9 are higher than the average level, indicating the importance of incentive measures for promoting work resumption in policy formulation. in terms of policy function x2, issuing authority x5, policy field x6 and policy system x8, more than 50% of the policies scored lower than the mean value in these four primary indicators. therefore, from the overall level of policy evaluation, the policy of promoting work resumption can be improved in four aspects: policy function, issuing authority, policy field and policy system. among them, the highest pmc index is p4, with a score of 7.725 as an excellent level policy, which fully shows that the hardest hit areas attach great importance to 71 the resumption of work and production. the lowest score of pmc index of p7 among the policies to be evaluated is 5.296, indicating that the resilience of the policy has a certain room for improvement. the scores of policy function x2, effective time x4 and guarantee incentive x7 are significantly lower than the average level, and the score gap is more than 0.2. the scores of some primary indicators are also lower than the means to varying degrees, accounting for 60%. in terms of policy function x2, p7 only involves promoting employment and ensuring security. the score of primary index x2 is 0.25 and less than the average score of 0.403. therefore, attention should be paid to expanding the scope of policy support. in terms of effective time x4, it is found that the policy only involves the role within 6 months and has no long-term plan, so it is not specific and forward-looking. in terms of guarantee incentive x7, the policy only involves project support, tax preference and financial support. the guarantee and incentive measures are not comprehensive enough. policy makers should pay attention to the improvement of this aspect and ensure the effective implementation of policies. through the analysis of p6 policy, to improve the pmc index, we need to focus on the promotion in the order of x2-x7-x4, but there is a linkage effect between the indicators, so the order is not unique. the specific implementation process should be combined with the specific situation. according to the depression index of the policy and the pmc surface graph of the policy, we can also evaluate policies vertically. according to figure 3, the depression index can be divided into three levels: low depression index (0.1–3); acceptable depression index (3.1–4); high depression index (4.1–5). among them, p4 is the low depression index, p1, p2, p5, p8 and p9 are the acceptable depression index, and p3, p6 and p7 are the high depression index. as shown in figure 3, it can be observed that the depression index is inversely proportional to the pmc index. the order of depression degree of the nine policies from strong to weak is p7-p6-p3-p8-p1-p5-p9p2-p4. among the nine policies, p7 has the highest depression index. combined with the pmc surface graph of p7 in figure 5, p7 has a high depression in four primary indicators: policy function x2, effective time x4, issuing authority x5 and guarantee incentive x7. it can be seen from the policy text that the policy function x2 only involves promoting employment and ensuring safety. policy makers can consider expanding the function of the policy from market regulation, business assistance, encouraging entrepreneurship, perfect mechanism, strengthening supervision or epidemic prevention guidance, so as to achieve the ultimate goal of helping enterprises with epidemic prevention and normal operation. in terms of x4 effective time, only six months’ opinions are involved without long-term deployment. therefore, some forward-looking opinions and suggestions can be put forward to make the policy play the role of long-term coherence. since the policy is issued separately by the heilongjiang provincial department of finance, the score of x5 is low. in order to give full play to the linkage effect of the policy, policies could be formulated jointly with other government functional departments. in terms of x7 guarantee incentive, it includes project support, tax preference and financial support. it aims to reduce 72 the operating pressure of enterprises by providing financial and tax support. it does not provide incentive and guarantee measures such as law, resources, approval and platform services. the government should comprehensively use incentive measures according to the actual situation to ensure that the policy has strong resilience in the implementation process. therefore, taking p7 as an example, in order to improve policy resilience, the policy optimization path is x5-x2-x4-x7, which is different from the first idea. the policy improvement path is not unique and should be determined in combination with the specific situation. 5. conclusion and implications based on the analysis of empirical data, several conclusions can be drawn. first, from the perspective of resilience, this paper deeply analyzes the content and element characteristics of china’s policies of promoting work resumption. (1) the policies not only considered the industries which were seriously affected by covid-19 pandemic, but also paid close attention to the stable operation of medical treatment, insurance and other fields in supporting the work resumption. (2) the government has effectively combined various policy tools, using a variety of policy tools such as market regulation, business assistance and encouraging entrepreneurship to promote the resumption of work and production. this also helps to prevent the outbreak of the epidemic again by strengthening supervision and epidemic prevention guidance. the united states issued ‘guidelines for opening up america’ on april 26, 2020, focusing on promoting work resumption by regions and stages. however, at this time, the covid-19 pandemic was not controlled, and there was no scientific protection, strict monitoring and management for the work resumption, resulting in repeated rebound of the covid-19 pandemic and hindering the work resumption. (3) the government ensures the implementation of policies in terms of law, taxation, funds and services. for example, in order to solve the contradiction between the rework of employees across provinces and the inconsistency of pandemic prevention policies among provinces, the governments of zhejiang province and fujian province, through consultation, have cooperated to arrange special vehicles to pick up and transport employees in key positions to return to work. similar to china, singapore supports the effective implementation of policies by means of employment training, issuing shopping vouchers, increasing community development subsidies and providing one-time financial subsidies for public health prevention clinics. (4) the chinese government not only makes policies from the macro and micro policy perspectives, but also combines short-term and long-term policies to provide comprehensive guidance for macro strategic planning and specific implementation. secondly, the evaluation of 9 randomly selected policies shows that there are 1 excellent grade policy and 8 good grade policies. the results show that china’s policies of promoting work resumption have good resilience. (1) the policies of promoting work resumption made by the superior government and the subordinate government exhibit 73 excellent consistency, which shows that the subordinate government strongly trusts and supports the superior government. also, the subordinate government itself has excellent policy implementation ability. (2) the policies of promoting work resumption formulated by different regions have good consistency. in this way, governments can ensure the synchronous recovery of industrial chain and supply chain, and avoid conflicts caused by different recovery processes between regions. this shows that when solving the same problem, the governments of different regions have made high resilience policies through mutual learning and communication. the united states, italy, sweden and other countries have highly decentralized their powers in promoting economic and social recovery, while the power of control and coordination has been weakened. due to the imbalance in the severity of the covid-19 pandemic, the level of economic development and the speed of work resumption among regions, the conflicts between central and regional governments as well as between different regional governments have been intensified. therefore, the macro-control policies issued by the state could not be implemented, which damaged the speed and effect of work resumption. although china has many levels of government management, it implements unified dispatching by the central government, and has set up joint prevention and control mechanisms at all levels to promote cross sectoral cooperation. south korea and singapore have adopted similar approaches to ensure strong policy resilience. south korea has established a central disaster and security strategy headquarters led by the prime minister. they set up local disaster and security strategy headquarters in each region, which are mainly responsible for the local government. singapore has set up an interdepartmental working group composed of eight government departments, with the deputy prime minister as the adviser and the ministers of health and national development co-chairing the work. these cases show that the state’s unified leadership and rapid decision-making, and the regional governments’ mutual coordination and rapid action can help the national and regional governments make and implement strong resilient policies which promote very efficient resumption of work and production. the contribution of the research mainly includes three aspects. firstly, from the perspective of resilience, this study deeply studies the content and characteristics of china’s policies of promoting work resumption during the covid-19 pandemic. secondly, this study introduces the pmc-index model to analyze policies of promoting work resumption from the perspective of resilience for the first time, so as to provide reference for future policy evaluation and resilience related research. finally, this study puts forward a new perspective and method for the analysis of policies of work resumption. before the implementation of the policy, through text mining and quantitative analysis, it can save time and resources to the greatest extent, and make the evaluation results objective, scientific and traceable. therefore, targeted, specific and objective suggestions are put forward to provide reference for policy makers to formulate strong resilient policies in a short time and highly uncertain environment. based on the research results and comprehensive analysis, this paper provides practical implications. first, after the impact of the crisis, the market regulation mechanism 74 is slow and often needs government intervention. governments should fully realize the important role of policy resilience in economic health, high-quality and sustainable development, and strengthen the resilience thinking of policy design. effective benign interaction mechanisms should be established between national and regional governments, between regions seriously and lightly affected by the epidemic, and between regions with good and poor economic and social recovery. according to the characteristics of different tasks, the national system should shift or delegate the decision-making power upward, and establish a coordination mechanism for resumption of work and production between governments at different levels. the state guides and supervises regional policies, and the region builds trust in the state and gives timely feedback. the governments further evaluate and revise policies according to the implementation effect of policies and regional feedback. avoiding conflict, mutual learning and guidance among regional governments can improve the government’s response speed, realize the coordinated development of the policies of work resumption, and enhance the policy resilience. second, the policies issued by a single functional department are one-sided and limited, so multiple departments should be encouraged to cooperate to introduce the policies of work resumption. the severely divided functional departments need to establish institutionalized or procedural arrangements, make full use of the information technology platform, build a real-time interactive mechanism for the exchange and communication of work resumption policies, increase the linkage of policies, and finally form an efficient policy public service system. third, the government can improve policy resilience from two policy design perspectives: the first perspective is to increase the proportion of implementation policies, avoid the number of planning policies to exceed implementation policies, and ensure the enforceability of policies. the second perspective is the combination of long-term and short-term policies. the long-term policy can clarify the overall direction of efforts to stimulate and promote social recovery and ensure the stability of policy effect. the short-term policy can avoid falling into the trap of path dependence, which helps to continuously learn and improve the policy according to the monitored and feedback resumption process and the effect of policy implementation, so as to shape the flexibility of the policy. finally, the government can improve policy resilience in the content of policy design. there are structural uncertainties in the resumption of work and high cognitive uncertainties of policy makers. in order to ensure high policy resilience, policymakers need to combine multiple policy tools to match the actual situation of the country or region. at the same time, policy makers should predict the difficulties that employees and enterprises may encounter in the process of work resumption, and formulate corresponding support and incentive measures to ensure that the policies can be effectively implemented. the policy resilience measurement model constructed in this study takes china’s policies of work resumption as a sample, and does not involve other countries and different types of policies. future research can conduct comparative research on more countries and types of policies. 75 references: 1. abdulkareem, m., elkadi, h. and breane, m., ‘from engineering to evolutionary, an overarching approach in identifying the resilience of urban design to flood’, 2018, international journal of 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increased urbanization, fi scal adjustments and decentralization, central governments were pushed towards accepting the idea of local government accessing the private fi nance sources for their public infrastructure and service development investments. while the importance of borrowing increases for local developments, the main challenge many small municipalities have to face is the diffi culty to access private fi nancing sources. one obstacle is related to the creditworthiness of the municipal debtor or bond issuer. sub-national governments can overcome the problem of creditworthiness through the use of credit enhancement mechanisms or techniques. the present paper is the fi rst to discuss the situation of credit enhancements for romanian municipal bond fi nancing, its consequences and the path that might be followed for their further development. the absence of appropriate credit enhancements can be considered among the factors that contributed to the underdevelopment of the romanian municipal bond market segment mainly between 2011 and 2014. in order to improve the municipal bond market profi le, romanian local governments should not ignore credit enhancements for any future bond issue and a combination of internal credit enhancements and bond pooling, as external credit enhancements seem to provide a feasible solution. keywords: bonds, municipalities, credit enhancement, romania. credit enhancements and the romanian municipal bond market cornelia pop maria-andrada georgescu cornelia pop professor, phd, department of business, faculty of business, babes-bolyai university, cluj-napoca, romania e-mail: cornelia.pop@tbs.ubbcluj.ro maria-andrada georgescu associate professor, phd, department of economics and public policies, faculty of public administration, national university of political studies and public administration, bucharest, romania e-mail: maria-andrada.georgescu@administratiepublica.eu transylvanian review of administrative sciences, no. 48 e/2016, pp. 104-123 105 1. introduction and literature review the importance of sub-national borrowing as an element of development strategy at municipal or local level is continually increasing given three important trends identifi ed since the 1980s and discussed by peterson (2000), magrassi (2000), venkatachalam (2005), kehew, matsukawa and petersen (2005), martell and guess (2006), canuto and liu (2010), and usaid (2009). these trends are: a) the growing pace of urbanization which requires considerable infrastructure and urban services expansion; therefore the need for local investments is mounting and the demand for fi nancial resources to support them increases accordingly; b) the decentralization trend, a process through which sub-national governments are granted increased responsibilities and more important roles in planning capital investments, establishing priorities, and implementing chosen projects; also the diffi cult responsibility for fi nancing the needed investments is transferred to local governments; c) fi scal adjustments which require governments at all levels to reduce budget defi cits; one of the favored instrument is the cut back of central government subsidies for local infrastructure fi nancing; since sub-national governments rarely maintain cash surpluses necessary for medium and large-scale investment projects, this trend also enhances the need of local authorities for alternative fi nancial resources as a way to support their development projects. as highlighted by venkatachalam (2005), these three trends have challenged the traditional approach of fi scal federalism, under which borrowing at sub-national levels was not favored, especially in developing economies. under the combined pressure of increased urbanization, fi scal adjustments and decentralization, central governments were pushed towards accepting the idea of local governments accessing private fi nancing sources for their public infrastructure and service development investments. moreover, the use of credit for these developments is supported by the idea of inter-temporal equity which requires future generations to partake in supporting the costs of current infrastructure investments, as highlighted by peterson (2000) and venkatachalam (2005). this inter-temporal equity is ensured through the standard rule holding that the period of a local debt repayment should approximate the useful life of the project, as such matching the time profi le of costs and benefi ts (peterson, 2000). while the importance of borrowing increases for local developments, the main challenge many small municipalities have to face is the diffi culty to access private fi nancing sources. the hardship is generated mainly by the relative small amount of capital needed for (potentially profi table) projects/developments, often combined with the lack of frequency in accessing market sources, which limit or even deny the access of local governments to market fi nancing at att ractive (borrowing) rates. other factors that increase the diffi culty of accessing private fi nance sources are: the limited credit experience, the limited knowledge of fi nancial markets, and, when available, poor credit ratings. this diffi culty of small local governments in accessing the market fi nancing alternatives is briefl y discussed by noel (2000), petersen (2006), blommestein and rhee (2009), and schmith et al. (2011). 106 another problem that impairs local government access to capital market resources arises from the fact that investors are not always fully aware of the true credit quality of the municipal borrower/issuer given the infrequent access to capital market, which reduces the investors’ familiarity with the respective entity; moreover, the analysis of a local government fi nancial performances is a daunting task given the diffi cult access to fi nancial information, as highlighted by peng (2002). this problem is related to the creditworthiness of the municipal debtor or bond issuer. sub-national governments can overcome the problem of creditworthiness through the use of credit enhancement mechanisms or techniques. moreover, through credit enhancements the problem of small borrowed amounts can also be surmounted, since these mechanisms can help the issuer to market their debt to investors (platz , 2009). credit enhancements consist of a variety of provisions used to reduce the credit risk of a municipal debtor or municipal bond issuer, by providing additional collateral, insurance, and/or a third party guarantee that the debtor/issuer will meet its obligations (petitt , pinto and pirie, 2015). few academic papers are dedicated to discuss credit enhancement only since these mechanisms are closely linked with the credit market developments relative to sub-national borrowers. among the most recent academic works discussing the credit enhancements are platz (2009), mandel, morgan and wei (2012), schmit et al. (2011), and petitt , pinto and pirie (2015). a comprehensive presentation of credit enhancements can be found in ziegler (1985). two main types of credit enhancements exist: internal, put in place by the debtor or bond issuer, and external, provided by a third party to the debtor or bond issuer. the internal credit enhancements rely either on the collateral value or on the structural features concerning the priority of payments (petitt , pinto and pirie, 2015). according to fabozzi et al. (2005) these credit enhancements infl uence the cash fl ow characteristics of the loan, even in the absence of default. being put in place by the debtor, these credit enhancements are less costly, except the opportunity costs for reserve funds. often, at least a form of credit enhancement is required to exist before external credit enhancements are put in place by a third party. the following types of internal credit enhancements are the most common in case of local governments borrowing: overcollateralization, reserve accounts or reserve funds, and debt subordination. these three types of internal credit enhancements are briefl y presented below. the overcollateralization represents the practice through which the debtor or issuer of bonds off ers collateral that has a greater value than the borrowed amount (crawford, 2005; banks, 2005; petitt , pinto and pirie, 2015). the excess collateral pledged by the debtor creates a buff er that can cover a series of unexpected risks. through overcollateralization, the debtor’s credit profi le becomes stronger and this might trigger a higher credit rating and lower interest rates for the borrowed amount. thus, overcollateralization might prove to be expensive if the tied up collateral (mainly in the case of assets) cannot be used for other purposes. a supplementary mechanism that 107 completes the overcollateralization is represented by the intercept of (central) state aid to local governments dedicated to meet debt service payments. reserve accounts or reserve funds. a reserve account/fund is established either voluntarily by the debtor/bond issuer or at the request of the lender or guarantor. such an account/fund might come in one of the two forms: a) a cash reserve fund1 (crawford, 2005) is a deposit of cash resulting from the cash proceedings; a portion of the obtained loan is placed in an escrow reserve account, out of the debtor’s reach; a drawn against such account or fund is made if a loan installment is not paid when due; it might take the form of a hypothecated fund that typically is invested in money market instruments, and it is held at a custodian or trustee; this cash reserve account/fund is often used in conjunction with a lett er of credit, an external form of enhancement; b) excess spread account (petitt , pinto and pirie, 2015) is a reserve account funded by the excess spread; the excess spread is the diff erence between the cash fl ow received from the assets used to secure the issue and the interest paid to the investors; also, it can be funded by an extra interest paid by the debtor or bond issuer. the excess spread account is most often established in the case of debt subordination and is considered the fi rst line of protection against credit losses; this account must be completely used (exhausted) before even the most subordinated tranches incur losses (mandel, morgan and wei, 2012). moreover, in a process called turboing, the excess spread account might be used to retire the principal (to pay the principal in advance) and thus, to reduce the default risk for the respective issue. debt subordination, also called senior/subordinated structure, refers to the ordering of claims over a loan. according to petitt , pinto and pirie (2015) and crawford (2005) the loan/debt is structured in at least two tranches: a senior tranche (called class a) and a subordinate or junior tranche (called class b). the subordinated/junior tranche acts as a protective layer to the senior tranche; the subordinated/junior tranche will absorb any potential losses. basically, the subordinated/junior is a buff er or collateral to the senior tranche. the senior tranche has priority claims, and is the fi rst repaid in case of default, while the junior tranche incurs the losses. moreover, the senior tranche is unaff ected by losses unless these exceed the amount of the subordinated/ junior tranche. due to this structure, the senior tranche has a high credit quality, a high rating, and a low yield. the junior tranche, given its high credit risk and the greater default risk exposure, is supposed to have a higher yield. furthermore, the subordinated/junior tranche will have a low rating or no rating at all. debt subordination is also known as waterfall structure and more than one senior and junior tranche might exist with various levels of claim priorities. 1 an alternative form of this cash collateral account is funded by the debt issuer not with a portion of loan proceedings but with another loan from a third party bank or affi liate. the amount of this fund is immediately invested in high rated, short term commercial papers. thus, this alternative is seldom used as municipal bond credit enhancement. 108 the external credit enhancements, provided by a third party, increase the creditworthiness of the debtor. external credit enhancements bear a high cost, mainly for small local borrowers. moreover, they expose both the borrower and the investors to the third party credit risk. the debtor benefi ting from external credit enhancements fi nds its creditworthiness strongly related to that of the credit enhancement provider, any downgrading of this entity will trigger a downgrading of the borrower, as discussed by fabozzi et al. (2005) and petitt , pinto and pirie (2015). moreover, the investors have a double task: to perform a credit analysis on the debtor, and another credit analysis on the third-party, the credit enhancement provider, by bearing in mind the extreme situation that the respective provider might not be able to meet its obligations, as highlighted by fabozzi et al. (2005) and petitt et al. (2015). the most common types of external credit enhancements are: stand-by lett ers of credit, various types of guarantees, surety bonds, credit wraps, and bond pooling. these types of external credit enhancements are briefl y presented below. the stand-by lett er of credit is a contingent lett er of credit representing an obligation of the issuing bank on a designated third party (the benefi ciary) that becomes eff ective only if the drawing customer fails to perform on a specifi c transaction or under the terms of a contract with the benefi ciary (banks, 2005; petitt , pinto and pirie, 2015; mandel, morgan and wei, 2012). the stand-by lett er of credit obligates the bank to ensure that investors receive timely payment on the issued debt/bond, or to ensure that investors receive payment in the event of market disruptions; later, the bank will att empt to recover the loss from the customer. the issuance of the lett er of credit implies the payment of a fee; the fee depends on the required credit enhancement amount which becomes the lett er of credit balance. the issuance of a lett er of credit may also require the existence of a reserve account or an excess spread account and/or other forms of internal and external credit enhancements. the stand-by lett er of credit can provide coverage based on the remaining outstanding in the pool, which would be constantly decreasing or could be based on the original amount issued that would provide an increased percentage of coverage as the balance of the pool decreases (banks, 2005; petitt , pinto and pirie, 2015). the rating of the lett er of credit issuer is important for the rating of its customer. various types of guarantees: a guarantee is a contractual agreement where the guarantor provides payment to the benefi ciary should the contracting party default on its obligations. through the provision of the guarantee, the obligations of the contracting party assume the credit rating of the guarantor (banks, 2005). the guarantees are off ered mainly by international fi nancial institutions, highly rated banks or especially created/dedicated funds. the main types of guarantees are: a) comprehensive guarantees or full credit guarantees that cover the principal and the interest payment regardless of the cause of debt service default; they are very seldom off ered given the risk of municipal debts; b) partial credit guarantees where a guarantor covers a portion of debt service payments regardless of the cause of debt service default; there are also partial risk guarantees when the sharing of borrower default risk is based on the 109 cause of such default; the partial credit guarantees are more often used, the guarantee being expressed as a percentage of the principal and it amortizes in proportion to the bond or loan; the percentage of the guarantee can increase or decrease in the later years depending upon the needs of the borrower or creditor. surety bond is a fi nancial agreement under the form of a policy writt en by an insurance company to protect another party against loss or violation of a contract; the insurer assumes the role of the contracting party in completing a transaction or project in the event the contracting party defaults on its performance obligation (mcelravey, 2005; banks, 2005). the surety bond is similar to an insurance policy designed to cover the benefi ciary against losses, and is provided by a multiline rated and regulated insurance company. usually, one or more levels of credit enhancements are required to cover losses before the surety bond is used. often, this type of guarantee is provided only for securities rated bbb or higher. surety bonds (sometimes called performance bonds) are commonly used in project fi nancing, and in municipal or governmental developments. a surety bond includes three parties (banks, 2005; tavakoli, 2003): a) the principal or the obligor (the purchaser of the bond) is the entity responsible for performing on the underlying contract, task or transaction; it has the primary responsibility to perform the obligation; b) the surety or the insurer (multiline insurance company that backs the bond) performs upon the default of the principal; it is the part with the secondary responsibility of performing the obligation if the principal/obligor fails to perform; c) the obligee (the entity that requires the bond) is the party to whom the right of performance is owed. the rating of a surety bond is strongly related to the rating of the insurance company, and has an important infl uence upon the rating of the debt or bond issue for which it was purchased. credit wrapping is an external guarantee whereby a monoline bond insurer2 agrees to cover the interest and principal payments if the debtor or bond issuer cannot fulfi ll its obligations (banks, 2005). it refers to a specifi c loan or debt, and the amount of the enhancement depends on the deal structure, and is expressed as a multiple of the expected loss level (tavakoli, 2003). the monoline insurance company may choose to pay back a certain amount of interest or principal on the defaulted loan or may buy back a portion of the loan. the credit wraps are considered fi nancial guarantees and are used to supplement other forms of credit enhancements. the highest rating possible on a wrapped loan is the rating of credit wrapping provider. bond pool or pool fi nancing is a technique through which small loans are aggregated or pooled into a larger and more effi cient grouping. the main idea is to create a portfolio of loans that can be remarketed in bulk towards the security market as the obligation (bond) of a specialized fi nancial institution. through loan pooling a required ‘critical mass’ can be att ained in order to bring att ractive market fi nancing 2 monoline insurance companies off er only guarantees to bond issuers, mainly in the form of credit wraps. these insurance companies do not off er other insurance lines such as life, property or causality. 110 within the reach of small local government entities (schmit et al., 2011). based on this loan portfolio the sponsor sells an issue of bonds and the proceeds of the issuer are divided between the small borrowers, cities or organizations of public interest. the pooling allows small sub-national borrowers, which individually are of no interest to private capital markets, to achieve economies of scale related to underwriting costs, credit enhancement costs, and interest rates as highlighted by gilbert and pike (1998). the bond issue based on loan portfolio (pool) is carrying a variety of other credit enhancements like reserve funds, intercept provisions, and bond insurance. the pool diversity provides fi nancial stability and mitigates the overall credit risk. usually a combination of internal and external credit enhancements is used in order to obtain the desired creditworthiness in order to achieve the targeted debt rating (when used) and interest rate. the use of a type or another of the credit enhancements is closely related to the type of credit systems that support the development of local credit markets. two main systems were identifi ed according to peterson (2000) and schmit et al. (2011): one based on credit institutions and one based on municipal bond fi nancing. a brief description of these two models is presented below. credit institutions model: within this model, two main subtypes can be identifi ed: a) the model based on specialized municipal credit institutions (mcis), and b) the model based on commercial banks. a) mcis represent a specialized niche of lending institutions and, in some countries (e.g. netherlands), such institutions are over a century old. an mci can be either a municipal bank or a funding agency specialized in providing fi nancial services to municipalities; the main goal is to reduce the borrowing cost for local governments through the mci complex activity (schmit et al., 2011). the main service that an mci off ers is debt fi nancing for local governments and other public entities, usually within a given region like a province or county. mcis also off er loans for local infrastructure project fi nancing and for public-private partnership projects (schmit et al., 2011). moreover, mcis off er a wide range of support services acting as advisers and assistants for various aspects related to local investment projects. in fact, mcis develop a quasi-permanent relationship with local governments; this evolved into the philosophy of relationship banking and bundled services as described by peterson (2000) and peterson (2003). mcis were established either as customer-oriented entities or member-owned credit cooperatives3 (schmit et al., 2011). in the case of customer-oriented entities the equity capital is owned either by the state (central government), local governments or by both, as in the case of austria and norway (schmit et al., 2011). in the case of credit cooperatives, the equity capital is formed by members, mainly 3 schmit et al. (2011) also mention the bank nederlandese gemeenten as a third type of structure. this institution is a two-tier company under dutch law, with 50% of its equity capital owned by the dutch state, and the remaining half owned by municipal and provincial authorities, and by a water board (schmit et al., 2011). 111 local governments, which are also the benefi ciaries of the provided fi nancial services, as in the case of sweden and denmark (schmit et al., 2011). a detailed description of mcis in western europe is provided by peterson (2000), magrassi (2000) and andersson (2014). in all cases, mcis benefi ted by a special status enforced by law which allowed these institutions to access cheap long-term fi nancial resources in order to fulfi ll their goal of providing low cost fi nancing to local governments. moreover, mcis benefi ted by some form of state guarantee, either explicit or implicit, under the form of maintenance statement (schmit et al., 2011). the deregulation process within the fi nancial sector of the 1980s put an end to this special status of mcis, mainly in france, germany, and forced them to compete against other banks for funds on the fi nancial markets. thus, the aftermath of the recent fi nancial crisis forced regulators and central governments to reconsider the special status of mcis taking into consideration the paramount importance of infrastructure projects for the economic development. according to andersson (2014) and fmdv (2012) countries like france, germany, great britain, and italy are reconsidering the model of nordic countries (denmark, finland, norway and sweden), and the creation of local government funding agencies (lgfas) was proposed as a way to enhance local governments’ possibilities to access the capital markets while maintaining costs at the lowest levels. b) the lending model based on commercial banks developed mainly in emerging economies where the mcis were virtually unknown (peterson, 2003), and where the deregulation of fi nancial services did not allow the creation of lending institutions with a special status. due to the fact that for commercial banks municipal lending represents only a fraction of their operation portfolio, the range of products dedicated to local governments is narrower, and the lending period is shorter. since municipal lending is included in a larger operation portfolio, commercial banks often allocate litt le time and fewer resources to develop the needed special understanding and expertise in municipal fi nancing. therefore, commercial banks seldom off er support services, and the relationship banking with local governments is virtually inexistent. moreover, standard commercial banking loans have the tendency to be more costly given the fi nancial resources accessed. municipal bond fi nancing model: the model of municipal bond fi nancing is based on the direct access to capital market fi nancing through bond issuance. therefore, the system is based on competition among lenders, and public disclosure of municipal information. the relationship banking and bundle services disappear under this model, as highlighted by peterson (2000, 2003). nevertheless, municipal bond fi nancing has proven to be a diffi cult process mainly for small local governments or entities which access the capital market with a low frequency and for modest amounts, compared to large municipalities. these small municipalities incurred high borrowing costs by trying to access capital market fi nancial resources. in order to overcome this problem, in 1956 canada launched the municipal fi nancial corporation/authority model; the model was followed by the opening of the fi rst bond bank in the us in 112 19704 (gilbert and pike, 1995; blommestein and rhee, 2009). these institutions, generically called municipal bond banks or mbbs, have been created for a similar reason as mcis: to lower the borrowing costs of local governments. thus, their role is achieved in a diff erent manner than in the case of mcis. mbbs operate as credit enhancement institutions by pooling the borrowing needs of small local governments and public institutions, adding credit enhancements at local level and issuing bank bond debts into national or international markets (gilbert and pike, 1995; blommestein and rhee, 2009). the main benefi ts for sub-national borrowers are represented by the economies of scale that result from the reduction of the interest rates, and also from the diminished administrative cost and credit enhancement costs. in october 2011, the europe 2020 project bond initiative was launched and became operational during the second half of 2012. the initiative has two main objectives (rosales and vassallo, 2012): a) to reopen debt capital markets as fi nancing sources; b) to help individual infrastructure projects to att ract the needed fi nancing resources. the lgfas mentioned in relation with mcis are also connected to this initiative, and lgfas are expected to play a role not only as classic lenders but also to pool european sub-national borrowers needs similar to mbbs. the credit institution model was prevalent in western european countries while the municipal bond fi nancing is traditionally linked to the us and canada (peterson, 2000). the system based on credit institutions which provides most of the fi nancing under the form of long-term (bank) loans is linked with the use of internal credit enhancements. the municipal bond fi nancing gives preference to external credit enhancements5 which, in turn, require some form of internal credit enhancements. therefore municipal bond fi nancing implies the use of a combination of internal and external credit enhancements. developing countries have the choice between the two main credit system models, or bett er still a combination of both in order to build their local credit systems. as peterson (2000) shows, the existence of municipal credit institutions or commercial bank lending to local governments can operate side by side with a municipal bond market. in order to encourage this kind of development, in many developing countries municipal development funds (mdfs)6 were established. a presentation in extenso of various countries’ experiences is given by peterson (2000). romania, as a developing country, needed also to follow the path of municipal credit system development. at the end of the 1990s, peterson (2000) mentions 4 peterson (2000) presents a detailed evolution of bond banks in the us. 5 the importance of bond insurance as credit enhancement was discussed in extenso by godfrey and york (1994) and peng (2002). 6 municipal development funds (mdfs) were established with the assistance of international fi nancial institutions and were mainly used to on-lend international program funding to local authorities; mdfs were seen as transitional institutions which were supposed to pave the way for self-sustaining municipal credit systems (peterson, 2000). 113 that romania was taking tentative steps towards establishing a municipal development fund based on external support. however, this initiative never took shape and through law no. 189/1998, romanian sub-national governments were allowed to borrow money from capital markets based on bond issuance, within a ceiling based on their revenues. while this development seemed to be in line with the trends on international markets, for sure it was relatively a too large step for the unprepared and underdeveloped romanian capital market. moreover, the development was pursued in complete ignorance of the importance of internal and external credit enhancements and overlooked the signifi cance of bond rating mainly for the international investors, dominant within the romanian investing environment. this paper is the fi rst to discuss the situation of credit enhancements for romanian municipal bond fi nancing, its consequences and the path that might be followed for their further development. 2. romanian municipal bond market and the virtual absence of credit enhancements the introduction of municipal bonds on the romanian main capital market, bucharest stock exchange (bvb), was made in november 2001, and it aimed to open the access of local governments to private fi nancing, and also to diversify the securities traded on the market, which were represented only by domestic shares as of october 2001. a brief evolution of the municipal bond market segment within bvb is presented in table 1 and refl ects the modest position of this sector. after a slow start, a more promising evolution followed between 2004 and 2007. the peak reached in 2008 was generated by the investors’ desire to exit the equity market and purchase alternative securities less infl uenced by the fi nancial crisis turmoil. the interest towards the municipal bond sector dwindled between 2009 and 2011 and reached the lowest level in 2012. the years 2013 and 2014 show also modest evolutions indicating a lack of interest. in depth analyses of this sector evolutions and causes can be found in lăcătuș and văduva (2009), pop and georgescu (2011, 2015). at the launch of the municipal bond market, romania had in place the following two regulation mechanisms, of the four identifi ed by ter-minassian and craig (1997), according to nalas (2010) based on a questionnaire investigation: direct control through which borrowing at local level is subject to approval by the central government; in the case of romania this approval is given by the commission for the authorization of local loans, functioning within the ministry of finance; and, the rule-based approach, a ceiling on the level of indebtedness is set by the legislation; the fi rst set of romanian regulations established the ceiling of local debt ratio at 20%; this limit was later increased at 30%, level currently in place; more details regarding the calculation of the debt ratio are available in moșteanu and lăcătuș (2008a, 2008b), and pop and georgescu (2011). the att empt to identify the credit enhancements available for the listed municipal bonds revealed the following aspects: a) romania is among the countries where an 114 table 1: municipal bond sector at bvb year listed bonds new listings traded bonds number of trades volume value (eur mil.) % of total bvb bond sector 2001 2 2 2 5 45 0.00 100.00 2002 4 2 3 10 59,050 0.25 100.00 2003 9 8 7 12 29,310 0.34 95.66 2004 19 12 12 85 51,945 1.32 10.02 2005 13 5 11 60 25,632 0.71 2.38 2006 11 3 10 60 80,658 2.04 3.80 2007 16 7 12 58 119,695 2.96 2.00 2008 20 9 18 175 323,793 8.51 15.92 2009 31 13 18 154 221,394 4.57 1.65 2010 35 5 19 88 254,207 5.46 0.99 2011 36 2 16 47 107,839 2.01 1.91 2012 36 0 6 8 5,992 0.10 0.04 2013 37 1 9 111 64,548 0.62 0.65 2014 35 0 12 150 74,382 0.58 1.65 source: author’s calculations based on data available online at www.bvb.ro explicit declaration exists regarding the fact that state guarantees are not available in any circumstances; this situation is also highlighted by nalas (2010); b) within every municipal bond prospect, in the guarantee section, there is a standard declaration that the respective local government pledges all its collected revenues to support any payment default7; nevertheless, this collateral cannot be drawn on directly when the default occurs; further details show that in order for a lender to receive the due payments based on the collateral, a commercial court order is required8. therefore, the usefulness of the established collateral is diminished due to administrative procedures. based on point b) presented above, only this form of overcollateralization could be identifi ed as credit enhancement for the romanian listed municipal bonds; its existence is hindered by administrative procedures. no other form of credit enhancement could be identifi ed. 7 all municipal bond issued between 2001 and 2003 and two issues of 2004 (dev08a and sac07) included in their prospect the following general formula regarding their promise to repay the principal and coupons: ‘the local government guarantees with its full taxing power’. the only exception is the local government of the city of arad (ara06) which specifi es the revenues pledged as collateral. for the majority of the municipal bonds issued in 2004 and for all the other issues launched between 2005 and 2012, the formula changed as such: ‘the local government guarantees the entire payment of principal and coupons with a part of its own revenues (for the period of loan maturity) through the assignment of claim or interest over these revenues disclosed in the accounts opened at the local treasury unit’. 8 the requirement for a court order is in fact an administrative procedure through which an offi cial statement is made that the respective local government failed to fulfi ll its payment promises/ obligations and that the lender can proceed further by drawing on the collateral. another reason, given the romanian experience, is that this administrative procedure is also a way of protection against abusive lender conducts. 115 the absence of other credit enhancements, with the exception of overcollateralization by pledging the local governments’ own revenues, derived from a combination of lack of knowledge and lack of market sophistication, the absence of a rating system, and the intention to maintain the borrowing costs at the lowest possible levels. moreover, when the municipal bonds were launched on the market and the listing started, the demand for new securities largely overpassed the off er. the main investors seeking and buying large quantities of local government bonds were the domestic institutional investors as highlighted by pop and georgescu (2015). the overcollateralization was considered enough despite the high interest rates, given the relative small amount borrowed and the short-term maturities9. the absence of rating10, a common situation for central and eastern europe, as highlighted by szilagyi, fetherston and batt ern (2004), generated the lack of external credit enhancements. in romania the monoline insurance companies remained virtually unknown, as are the bond pooling system and the bond banks. by off ering only a simple form of internal credit enhancement, romanian local governments using bond fi nancing, kept their cost related to collateral at zero since the pledged collateral was never insulated in a reserve account. between 2001 and 2008 no problems were reported in the frequency of coupon and installment payments for the outstanding municipal bonds listed at bvb. the situation changed in 2009. two small municipalities, băile herculane (bhr20) and oravița (orv27) announced delays in meeting coupon and installment payments (miricescu, 2009, bunescu, 2010, pop and georgescu, 2015). an unanswered question persists: why was bhr20 accepted to be listed at bvb (listing started on december 23rd 2009) if doubts existed regarding its capacity to meet the announced payments? no offi cial explanation was ever provided. an educated guess points towards the unsatisfi ed demand for listed municipal bonds. later on, it was brought to the surface that bhr20 had not met its scheduled coupon and installment payments since june 2009 while sending periodic reports to bvb that the payments were made (musgociu, 2013). the case of bhr20 became public at the end of june 2013 when an offi cial complaint was fi led by an investor with the financial supervisory authority (fsa) showing that the local government of băile herculane ceased the payments; fsa launched an investigation at the end of july 2013, according to musgociu (2013). bvb suspended bhr20 for fi ve hours during july 25th 2013. starting with july 26th 2013, bhr20 was again tradable; no trade was registered with 9 between 2001 and 2005 the average outstanding principal was of ron 22.34 million, the average coupon of 24.03% and the average maturity of 40 months. for the period 2006-2012, the average outstanding principal was of ron 515.18 million, the average coupon of 9.11% and the average maturity of 208 months. 10 the only two municipalities that have an international rating provided by fitch are bucharest for its international bond issue of 2005 through which an amount of eur 500 million was borrowed (bursa, 2015), and oradea which required the fitch rating in 2007 at the initiative of its mayor (bihorstri.ro, 2014). currently, oradea has no outstanding municipal bond issue. 116 bhr20 between february 26th and november 7th 2013 when it was last traded on the main market. the mayor of băile herculane was fi ned as of december 10th 2013 by fsa with the amount of ron 10,000 (eur 2,245)11 for failing to announce the default on payments12. bvb announced that starting with december 23rd 2013, bhr20 was under monitoring due to the absence of a designated intermediary to handle the payments13; a period of six months was established as limit for the situation to be solved. no mention was made to the arrears and bhr20 remained tradable. as of july 3rd 2014 no intermediary was appointed, therefore bvb suspended bhr20; as of july 28th 2014 bhr20 was transferred on the unlisted segment; since then no transaction was registered. in december 2014, it was announced that the town of băile herculane had paid a fraction (about 20%) of its arrears (pricop, 2014). no further information was made available during 2015. in november 2013, the mayor of băile herculane declared to the media that a request was forwarded to caraș-severin county government in order to assist the town with the payments of its arrears (radu, 2013). in fact, this declaration was an indirect acknowledgement that băile herculane’s own revenues were insuffi cient to cover the debt arrears and, therefore, the declared overcollateralization did not exist de facto. the media also announced that only one institutional domestic investor, certinvest14, used the existing administrative procedure and recuperated the due coupons and installments through foreclosure (musgociu, 2013; pricop, 2014). the actions of certinvest were motivated by the ownership of what it considered to be an important number of bhr20 bonds. it is not clear when the legal action had taken place; the media mention the year of 2012. in february 2013, certinvest sold the majority of its bhr20 bonds, according to radu (2013), and the trading history indicated in february 15th 2013 a number of 14 transactions with a total volume of 6,275 bonds. the closing price for february 15th 2013 of bhr20 dropped by almost 12% compared to the previous day. it is not clear if certinvest had notifi ed fsa and, if notifi ed, why the authority had not taken any action before july 2013. according to certinvest representative, the security market regulator body was informed about the bhr20 situation; though it is not clear when (musgociu, 2013; pricop, 2014). the only explanation for any action or investigation in the case of bhr20 can be given by the creation of an integrated supervisory authority and by the transfer of responsibilities that took place at the end of 2012 and during the fi rst months of 2013. this clarifi cation off ers 11 the offi cial exchange rate on december 10th 2013 was eur/ron = 4.4536, national bank of romania, [online] available at www.bnro.ro. 12 according to autoritatea de supraveghere financiară (financial supervisory authority), [online] available at htt p://www.bvb.ro/infocont/infocont13/bhr20_101213.pdf. 13 according to bursa de valori bucurești s.a. (bucharest stock exchange), [online] available at htt p://www.bvb.ro/press/2013/anunt_primaria_baile_heculane_20122013.pdf. 14 certinvest is a romanian investment management company currently operating as fund manager for 11 open-end and closed-end domestic funds and also off ering management services for private portfolios larger than ron 100,000. 117 no justifi cation for what can be (mildly) interpreted as an indiff erent att itude of the supervisory body. it only increased the mistrust of domestic individual investors regarding the protection of their rights. during 2013, allegations emerged regarding certinvest bhr20 bond selling based on inside information. given romania’s lack of clear regulations and procedures, these allegations cannot be proved. moreover, the fact that bvb did not suspend bhr20 after the declaration of default, and only put it under monitoring due to the absence of a dedicated intermediary for handling (the absent) payments, indicates that there are no clear procedures for default even at the trading market level. the complicated situation of bhr20 only reveals the fragility of the overcollateralization used as credit enhancement by romanian local governments. the need for at least a reserve account or fund cannot be disputed. the case of the town of oravița (orv27) seems simpler; oravița managed to cover its missed payments, still the mistrust in its capacity to pay the coupons and installments persisted. during 2014 orv27 was frequently traded and the price decreased abruptly from 92.32% as of may 2014 to 46.08% as of december 2014. the minimum price of 42% was reached on october 23rd after 12 trades, and a volume of 5,564 traded bonds; the activity on that day was 14 times larger than that on an average trading day for orv27. currently, as of the end of april 2015, the price of orv27 recovered slightly, reaching 57%. in november 2014, another small municipality, the town of siret (sre28), announced that it has diffi culties in meeting the payments for the respective year; however, no default was declared (ionescu, 2014). the announcement triggered a rapid reaction on the market and sre28 price dropped from 98.99% as of october 2014 to 24% as of december 2014, with a minimum price of 23.90% reached on december 2nd. currently, as of the end of april 2015, the price has begun slightly to recover, reaching 31.29%. the low price level continues to refl ect the investors’ mistrust despite the fact that the local government of siret managed to pay the small arrears that occurred. during 2014, several other municipal bonds fell under the infl uence of investors’ mistrust concerning their issuers’ capacity to meet the scheduled payments; these were: predeal (prd26), alba-iulia (alb25a), timișoara (tim26), and the county of hunedoara (hue26). prd26 is the only bond issued by a small municipality. alb25a is issued by a medium-size town with other three outstanding series of bonds. tim26 is issued by the city of timișoara with a growing economy; thus the city also has four other outstanding series of bonds. hue26 is issued by the county of hunedoara; this county is one with a moderate poverty risk and a relative high unemployment rate due to the closure of the mining fi elds and of other industries within its territory. the situations presented above show that romania experienced what the academic literature has already revealed: that the bonds issued by small municipalities and underdeveloped counties represent risky investments. the absence of credit enhance118 ments, along with the absence of clear procedures to be followed, and the absence of a law regarding the default of municipalities, increase the respective risk even further. 3. discussions and conclusion romanian authorities made an important change in 1998 when the new regulation allowed sub-national governments to use the capital market in order to access private fi nancing sources. however, this important step followed by the opening of the municipal bond market segment at bvb, did not yield the expected results. in 2001, romania’s capital market had a low level of development as shown by skully and brown (2006), and pop and georgescu (2015), being defi cient in providing important information like the risk free rate and easy accessible information regarding the revenue level for borrowing municipalities. moreover, the romanian domestic investors lacked the knowledge and sophistication for requiring and accepting the debt subordination as credit enhancement. since the bond rating was not required, the need of external credit enhancement was completely ignored by the romanian municipalities. the absence of appropriate credit enhancements can be considered among the factors that contributed to the underdevelopment of the romanian municipal bond market segment mainly between 2011 and 2014. avoiding the transitional step represented by the municipal development funds (mdfs) in establishing a local credit market, romania also missed out the expertise it could have acquired for the future growth of the municipal credit sector. therefore, seeking to prove its new openness towards decentralization, romania allowed any municipality, regardless of associated risk, to access the capital market through municipal bond fi nancing, moreover without any appropriate credit enhancements. as presented in section 2, the capacity to reimburse the money borrowed by small municipalities came under pressure starting with 2009, in the aftermath of the fi nancial crisis; the slowdown of economic growth and the diffi culties in collecting local revenues generated cash fl ow gaps and delays in scheduled payments or, as in the case of băile herculane, the cessation of payments. more appropriate for the romanian municipalities would have been a segmentation of the local credit market, similar to the czech republic and columbia, where the smallest municipalities borrow primarily from parastatal lenders, mid-size towns borrow principally from commercial banks, and large cities mainly use municipal bond fi nancing, as shown by peterson (2000). similar to the czech experience, romanian municipalities can borrow from commercial banks. however, the number of domestic banks that could be identifi ed as offering loans for local governments through a special dedicated section on their websites is small, only fi ve banks out of 28. the fi ve banks are the romanian commercial bank, raiff eisen bank, bancpost, cec bank, and eximbank; the last bank specifi es that it off ers only investment loans for municipalities. the dominant position of the romanian commercial bank on the domestic credit market is highlighted by nalas (2010). also a german bank, dexia kommunalbank deutschland is an active lender 119 to romanian municipalities through its subsidiary dexia kommunalkredit romania ltd15. given the relative small number of outstanding municipal bond issues, of which about one third are successive series launched by the same local government, it is reasonable to believe that currently, the bulk of private borrowing at local level relies on commercial banking. due to the private nature of bank contracts, the collateral required by banks could not be determined. in order to improve the municipal bond market profi le, romanian local governments should not ignore credit enhancements for any future bond issue. at the level of the internal credit enhancements, the existing overcollateralization should be completed by a reserve fund or account that can be rolled over at the level of every year, holding in reserve only the amount needed to cover the payments for the respective year. the problems that occurred in 2013-2014 with the small municipalities of băile herculane (bhr20), oravița (orv27) and siret (sre28), and to some extent with predeal (prd26) indicate that these local governments need to be monitored even if the amount they borrow is small and their access to municipal bond fi nancing is infrequent. concerning this matt er, for romania the most appropriate solution is bond pooling, with all of its advantages. given the recent evolutions in european union countries such as germany, france and italy, the creation of a central local government funding agency (lgfa) or several lgfas at regional level would be an important step ahead. moreover, the creation of lgfas in romania could be supported by europe 2020 project bond initiative. lgfas could either act as parastatal lenders or could be shaped using the model of municipal bond banks (mbbs). either way, they will increase the sub-national governments’ possibilities to access private fi nancing sources at low costs, off ering external credit enhancements and assistance, while lowering the risks for investors through the creation of a diversifi ed loan portfolio. nevertheless, romanian central and local authorities should also increase their transparency, mainly at sub-national level, through a standardized disclosure format of respective government fi nancial position and audited fi nancial situations. moreover, the diff usion of accurate and timely information is of outmost importance in order to keep the investors’ trust and interest alive. last but not least, there is a need for a clear legislation, monitoring and information release procedures in the case of local governments’ default or bankruptcy. the three municipalities with problems during 2013-2014 will have to face an increased investors’ aversion in the years to come if they will consider municipal bond fi nancing again. an external credit enhancement as bond pooling will be a bett er option, if it will be available. 15 according to european banking resources – ecbs.org, [online] available at htt p://www.ecbs.org/ banks/romania/dexia-kommunalkredit-romania-s.r.l./view-details.html, and dexia group, 2012; 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(ed.), fiscal federalism in theory and practice, washington: international monetary fund, 1997, pp. 156-172. 41. usaid, ‘fs series #1: enabling sub-sovereign bond issuance. primer and diagnostic checklist’, february 2009, [online] available at htt p://pdf.usaid.gov/pdf_docs/pna du683.pdf, accessed on april 15, 2015. 42. venkatachalam, p., ‘innovative approaches to municipal infrastructure financing: a case study on tamil nadu, india’, 2005, working paper series no. 05-68, development studies institute, london school of economics and political science, [online] available at htt p://www.lse.ac.uk/internationaldevelopment/pdf/wp/wp68.pdf, accessed on april 15, 2015. 43. ziegler, j.a., ‘financing the nation’s water projects: state options’, 1985, journal of applied business research, vol. 1, no. 1, pp. 92-102. 44. ***, bursa, ‘raiff eisen, nomura international şi bt securities intermediază emisiunea de obligaţiuni a primăriei capitalei’, january 16, 2015, [online] available at htt p:// www.bursa.ro/raiffeisen-nomura-international-si-bt-securities-intermediaza-emisi unea-de-obligatiuni-a-primarie...&s=piata_de_capital&articol=258490.html, accessed on april 15, 2015. 45. ***, bihorstiri.ro, ‘oradea e stabilă, zic cei de la fitch’, december 24, 2014, [online] available at htt p://bihorstiri.ro/oradea-e-stabila-zic-cei-de-la-fi tch/, accessed on april 15, 2015. 137 abstract the article presents an analysis of the functioning of e-administration in municipal offices in the silesian province in poland. it was evaluated by handicapped people with various degrees of disability, of different ages and different educational backgrounds. in poland the disabled, similarly to abled-bodied people, have to take care of various official matters in offices. it is important that all these clients, in particular the handicapped, can arrange things without leaving their home. the following hypothesis has been formulated in the present article: more frequent use of electronic tools for communication with the office leads to increased satisfaction of the disabled client with the functioning of e-administration. based on the study conducted, the following variables received the highest scores: functioning of an office’s website under various browsers (score 4.89); providing a service in a safe way (4.76); polite and friendly attitude of employees towards clients having trouble using the e-office (4.75); employees’ assistance for the client in the event he/she makes a mistake when using the e-office (4.75). the lowest rated issues among the investigated variables include: promptness of employees’ response to e-mails (4.29), promptness of e-service provision (3.34), and taking care of official business on the first attempt (4.42). keywords: e-administration, development, the disabled persons, poland, silesian province, municipal office. problems of the functioning of e-administration in the silesian region of poland from the perspective of a person with disabilities*1 radoslaw wolniak bożena skotnicka-zasadzień michał zasadzień radoslaw wolniak associate professor, faculty of organization and management, silesian technical university, gliwice, poland tel.: 0048-322-777.311 e-mail: radek_wol@o2.pl bożena skotnicka-zasadzień assistant professor, faculty of organization and management, silesian technical university, gliwice, poland e-mail: bozena.skotnicka@polsl.pl michał zasadzień assistant professor, faculty of organization and management, silesian technical university, gliwice, poland e-mail: michal.zasadzien@polsl.pl * acknowledgement: the analysis in this publication has been made in the course of the research project ‘appointment profile model of factors affecting the level of customer service with a disability in terms of sustainability of public administration on the example of the silesian province’, umo-2012/05/b/hs4/01144 university symbol pbu-12/ roz3/2013, funded by the national center for science in the opus. transylvanian review of administrative sciences, no. 57 e/2019 pp. 137-155 doi:10.24193/tras.57e.9 published first online: 06/25/2019 138 1. introduction in every society there are disabled people who also have to take care of all kinds of administrative businesses in municipal offices. all public institutions, in particular municipal offices, must be adjusted to the needs of the handicapped (garbat, 2013). an office is a place where very important issues are arranged, such as registration of residence, issuance of identity cards and passports etc., therefore these public institutions should be equipped with different facilities for the disabled so that the latter could access the office in a comfortable way, get around it and take care of all of their matters (pradela, 2014). clerks should undertake any necessary measures to ensure that the clients, especially the handicapped, are served at the highest possible level (bartnicka and mleczko, 2013). 2. types of disability pursuant to the law included in the journal of laws no. 123, item 176 as of 1997, with subsequent changes in 2002, concerning professional and social rehabilitation as well as employment of the disabled, the definition of a disabled person is as follows: ‘the disabled are people whose physical, psychological or intellectual condition permanently or periodically hinders, limits or makes impossible the fulfilment of social roles, in particular limiting their abilities to perform professional work’. disabled persons very often make use of services provided by public institutions, which include municipal offices. it is important that self-government units are prepared to provide services to the disabled, both the ones visiting the office in person and those using e-administration (kažemikaitiene and bilevičiene, 2008). handicapped persons have different degrees of disability, therefore it is essential to ensure for them the possibility of taking care of their official business in offices (garbat, 2013). a municipal office that provides high-level services and fulfils its role should become the major goal for the management of every office (ruso et al., 2013). the quality of services should be controlled and monitored on a regular basis; offices have to pay attention to and promptly eliminate any problems in communication between the client and the clerks (kasprzyk, 2011). it is important that these organizations immediately react to problematic situations and remove their causes. municipal offices are institutions which provide services for all citizens; a resident of a given town cannot move to the so-called competitors, therefore in offices, which are monopolists in this situation, the level of provided services should be evaluated on a permanent basis and problems eliminated straight away. the disabled live in every society, constituting a large group of people. the degree of disability is very different. six types of disabilities can be distinguished (kasprzyk, 2011): – sensory impairment – disorder, damage or lack of sensory functions; such impairments include the blind, the deaf, the aurally impaired, the visually impaired and persons suffering from disorders related to hearing and sight perception). – intellectual impairment, which includes mental retardation and senile dementia. 139 – social functioning impairment; this group includes disorders related to neural balance, emotional balance and mental health. – communication impairment related to hindered verbal contact; disorders in this group include autism, speech impediments, stammering. – motor impairment – people with motor organ dysfunction. it can be inborn or acquired. cerebral palsy – damage to foetus brain. – psycho-physical impairment caused by physical illnesses, such as: neoplasms, brain tumor, diabetes (frankfort-nachmias, nachmias and dewaard, 2014). the most frequent causes of disability include inborn defects (for example down syndrome, genetic diseases). chronic diseases account for 80% of all causes of disability; motor disability is most frequently caused by rheumatic diseases and dementia (pradela and żabińska, 2015). a large number of handicapped people point to sudden accidents, such as transportation injuries, accidents in a workplace as well as injuries and poisonings as the cause of their condition. all the reasons lead to a sudden loss of mobility, sensory and intellectual capacity. in 1980 world health organization presented an international classification of impairments, disabilities and handicaps (bickenbach et al., 2012; bogucki, 2005). according to this division, the concept of disability has been deemed as biological. the process of becoming a disabled person can be related to three dimensions: injury related to a disorder of the structure of organs, mental disorder due to an inborn defect or as a result of a sudden event (wiliński, 2010; tὀza, 2013). depending on the degree of a person’s disability (table 1), the disabled make use of the services provided by a municipal office in a direct way, visiting the office, or settle administrative matters via the internet, using the so-called e-administration for this purpose. 3. functioning of e-administration in municipal offices development of e-administration in poland is related to the project ‘strategy for development of information society in poland until 2013’. this project defined the activities that needed to be undertaken in order to improve the availability and effectiveness of services provided by public administration. one of the major goals of this project was to reduce the internal circulation of paper documents. the second goal was to increase citizens’ access to documents in an electronic form. all these activities were an element of a european commission’s concept which assumed that in the years 2011-2015 the functioning of e-administration and application of informative-communication technologies in public services should have been improved (kasprzyk, 2011; banasikowska and stanek, 2012; izdebski and kulesza, 2004). implementation of e-administration brings benefits for public administration institutions, such as reduced costs involved in the provision of information and services, and increased effectiveness of work performed (batta, sethi and kaur, 2012). providing online information is cheaper (banasikowska and stanek, 2012; szewczyk, 2007). 140 ta bl e 1: s el ec te d co nd itio ns a nd d iso rd er s ca us in g a di sa bi lity in th e m ed ica l u nd er st an di ng ty pe o f d is or de r m ed ic al d efi ni tio n m ed ic al d es cr ip tio n of th e co nd iti on po st -a cc id en t b ra in d am ag e da m ag e or d ist ur be d fu nc tio ni ng o f a p ar tic ul ar b ra in s tru ct ur e as a re su lt of h itt in g th e he ad o r s ku ll p en et ra tio n by a fo re ig n ob je ct pa th ol og ica l c ha ng es in th e ce nt ra l n er vo us s ys te m in clu di ng le sio ns (d am ag e) o f b ra in ti ss ue di so rd er s of c ar di ova sc ul ar s ys te m ci rc ul at or y sy st em d ise as es re la te d to h ea rt an d bl oo d ve ss el s (v ei ns an d ar te rie s) pa th ol og ica l c ha ng es in p er ica rd iu m c or on ar y ar te rie s an d ao rta s of ve in s, a rte rie s an d ca pi lla rie s ep ile ps y ch ro ni c ne ur ol og ica l d ise as e, c ha ra ct er ize d by a tta ck s of d ist ur be d no rm al (b io el ec tri c) a ct ivi ty o f t he b ra in , r es ul tin g fro m n eu ro na l i nst ab ilit y ab no rm al b io el ec tri c fu nc tio n of th e br ai n, in w hi ch a n ex ce ss ive fr equ en cy o f e le ct ric al d isc ha rg es th ro ug ho ut th e br ai n or in it s pa rt ar e ob se rv ed he ar in g di so rd er s da m ag e to th e ex te rn al , m id dl e, in te rn al e ar a nd c oc hl ea r n er ve (a nd au di to ry p at hw ay s of th e br ai n an d au di to ry c or te x) pa th ol og ica l c ha ng es in th e au di to ry s ys te m th e bi ol og ica l f un ct io n of w hi ch a re p ro ce ss es o f p er ce pt io n, tr an sm iss io n, p ro ce ss in g an d in te gr at io n of s ou nd s tim ul i in to a ud ito ry im ag es vi sio n di so rd er s da m ag e to e ye ba ll, vis ua l p at hw ay a nd v isu al c en te rs in th e br ai n (a m on g ot he rs v isu al c or te x) c ha ra ct er ize d by re du ce d vis ua l a cu ity , fie ld o f v isi on a nd s en sit ivi ty to c on tra st ) pa th ol og ica l c ha ng es in th e vis ua l s ys te m , t he b io lo gi ca l f un ct io n of wh ich a re p ro ce ss es o f p er ce pt io n, tr an sm iss io n, p ro ce ss in g an d in te gr at io n of v isu al s tim ul i in to v isu al im ag es o rth op ae di c da m ag e da m ag e of m us cu lo sk el et al s ys te m – p ro gr es siv e (d eg en er at ive ) o r ac ut e (s ud de n) pa th ol og ica l c ha ng es – d eg en er at ive o r re su ltin g fro m in ju rie s – in m us cu lo sk el et al s ys te m re sp on sib le fo r b io lo gi ca l f un ct io ns o f m ov in g an d lo co m ot io n so ur ce : w iliń sk i, 20 10 141 further benefits include shorter time of service provision thanks to the possibility of completing a form online, a lower number of people visiting offices and, in consequence, smaller queues to desks, reduced expenses and employment, a lower number of complaints, as the majority of forms are completed electronically, reduced quantities of purchased office materials (omariba bosire and okebiro omari, 2015). benefits for citizens include: better monitoring of citizen’s matters, shorter time for waiting and settling a particular matter. apart from benefits resulting from the implementation of e-administration, municipal offices also have to bear the costs of this process (holliday and yep, 2005). major expenses include: purchase of computer hardware, computer service, purchase of software, system modernization, website updating, training of staff and visitors (vrabie, 2015) as well as the implementation of effective forms of data security (garcía et al., 2015), marketing and advertising (strejcek and theil, 2002). table 2 presents the benefits and costs of e-administration implementation. table 2: benefits and costs of e-administration implementation effects public administration clients financial costs − purchase of equipment and infrastructure; − change of employment structure; − costs of outsourced services; − operational costs; − maintenance costs; − marketing and advertising; − security system. − real cost of internet access; benefits savings related to: − delivery of services; − staff reduction; − reduction of office area, office materials; − reduction of low-skilled jobs. − savings related to the preparation and shipment of documents in a paper form, arriving in the office, cheaper services; non-financial costs − streamlined circulation of documents; − shortened time of handling official business; − effective communication with citizens; − streamlined organizational structure; − reduced congestion of facilities; − reduced number of complaints; − faster collection of public amounts due; − creating new services; − easier control; − reduced level of bureaucracy; − greater transparency of office functioning. − time savings related to access to the office; − shorter time of handling official business; − greater independence; − better access to matters monitoring; − comfortable access to services; − better access to a larger amount of information; − integrated process of application and settling matters. source: brodnicki, kubiszewska and tymoszuk, 2012 functioning of e-administration is very important – it considerably improves the quality of citizens’ living, and in the case of the disabled, it brings even greater tan142 gible benefits. summing up, it can be stated that universal advantages and benefits of using e-administration in public services include comfort, reduced time and geographical barriers, financial savings and a wider range of services offered (teicher, hughes and dow, 2002; dečman, stare and klun, 2010). in european union countries citizens’ and economic units’ service was introduced long time ago. in the countries where such a system is functioning there are notable savings in public administration (ndou, 2004; betchoo, 2016a). the quality of public office customer service is also evaluated better (brinkerhoff and brinkerhoff, 2002). 4. e-administration in poland e-administration has been implemented in nearly all municipal offices in the silesian province. implementation of this kind of e-administration service, e-government, considerably improves the quality of living of residents who use services provided by municipal offices (betchoo, 2016b). this is particularly important for the handicapped, irrespective of the degree of their disability. these people prefer to settle all kinds of official matters without leaving their homes, which is confirmed by survey studies. the advent of the internet and development of communication-related technology allowed for changing the broadly understood administration from ‘paper’ to electronic work, which is much more comfortable and faster. most countries in the european union, including poland, contact each other about official matters electronically. in poland the situation is different, but in the majority of provinces it is average or good (banasikowska and stanek, 2012; salvatore, 1998). public administration in poland is the state’s plethora of instruments, consisting of relevant structures which have been created to perform particular tasks of the state. major tasks of such bodies include undertaking actions in the following areas of life: education, culture, trade, residential housing, railway and urban transport as well as environmental protection. public administration in poland is divided into state and self-government administration (banasikowska, 2009; wolniak and skotnicka-zasadzień, 2010). according to the european commission’s definition, e-administration is the use of information and communication technologies in public administration, which is closely related to the need of introducing necessary organizational changes, including the improvement of the quality of provided services. in poland the difference between traditional administration and e-administration is connected with a change of role, namely, traditional administration was a body having power over citizens, whereas e-administration is an institution providing all kinds of administrative services via the internet. any e-administration activities should be undertaken in line with the regulations contained in the administrative procedure code (the journal of laws no. 30 item 168 as of july 14, 1983). implementation of e-administration throughout the country will have to be legally regulated. until present the issues of electronic signature and elec143 tronic data archiving have been legally regulated (banasikowska and banasikowski, 2008; liu and yuan, 2015). apart from legal regulations related to the functioning of e-administration, it is very important to create an appropriate platform for carrying out public administration tasks. the internet has become a natural channel for delivering e-government services. the major services provided by e-administration include: – in the case of private persons: health care service, social benefits, building permits, police – handling reported crimes and car registration, identity documents, employment agency, information about a change of residence, public libraries, civil registry, personal income tax, registration at universities; and – in the case of enterprises: obligatory social insurance, corporate tax, vat, registration of enterprises, registration in central statistical office, customs declaration, environmental agency permit, public orders (banasikowska, 2009; bogucki, 2005). both the government of poland and the european union should be engaged in the development of e-administration in poland. any activities of these bodies should support particular public authorities carrying out e-administration tasks. in poland many sectorial and cross-sector projects aimed at implementing e-services have been launched. such projects include: electronic platform for electronic services (epuap), electronic platform for public administration services (epuap2), public administration ict network (stap), electronic income statements of companies (e-statements 1 and e-statements 2), national registers (pesel2), central vehicle and driver register (cepik), subject electronic platform ms, informative portal for notaries, solicitors, debt collectors and attorneys, integrated system for state budget management of erp class, a platform made available to entrepreneurs of services and digital resources of medical registers, electronic platform for gathering analyses and making digital resources about medical events available, a platform for communication with msp and persons from social support area, integrated labor market and social security system, labor supply and demand forecast system, e-taxes, icon, cadastre system, national official register of the territorial division of the country, georeference database of topographic structures, public statistics information system, consolidation and centralization of customs and tax systems, central business activity informatization (banasikowska, 2009; izdebski and kulesza, 2004). 5. methods in this article the results of the studies on the functioning of e-administration in municipal offices of the silesian province as evaluated by disabled people are presented. the province of silesia is the second largest voivodeship in poland in terms of population, and, at the same time, it has the largest number of towns of all the provinces in poland (wolniak and skotnicka-zasadzień, 2012). towns to be included in the studies were chosen by the stratified sampling method, whereas disabled persons in particular towns were randomly selected. in the first stage, 33 from among 71 towns in the silesian province were chosen. 144 next, random selection was applied to choose handicapped people who use the services of particular municipal offices. survey studies were conducted in 2014. they resulted in obtaining 2,846 correctly completed questionnaires. table 3 presents the detailed characteristics of the respondents participating in the studies. table 3: characteristics of the respondents in the studies specification number of people surveyed percentage of respondentsdivision criterion range sex woman 1,421 50% man 1,425 50% education basic 570 20% secondary 1,591 56% higher 651 23% no answer 34 1% degree of disability considerable 400 14% moderate 1,057 37% average 1,384 49% no answer 5 type of disability sensory impairment 644 23% intellectual impairment 182 6% social functioning impairment 399 14% communication impairment 444 16% motor impairment 1,153 40% no answer 24 1% age below 20 years of age 225 8% 20-29 years 763 27% 30-39 years 758 27% 40-49 years 641 22% 50 years and more 459 21% source: authors’ own study first, the methods used most frequently by the disabled people for contacting with the public institutions were determined. methods of client’s communication with the office fall into two categories – traditional and electronic ones. traditional methods include a traditional visit and taking care of official business directly at the office, sending traditional letters by post and telephone conversations with clerks. electronic communication methods primarily consist of the latest solutions, i.e., full e-administration systems; besides, they also include communication via electronic mail or instant messengers. particular methods correspond to variables (variables were evaluated on a scale from 1 to 7, where 1 corresponds to ‘very seldom’ and 7 – ‘very often’): – k1 – personal visit in an office; – k2 – e-mail; 145 – k3 – instant messengers; – k4 – telephone call; – k5 – letters, and – k6 – e-administration systems. in the case of using e-office services, the following variables were taken into consideration in the studies (variables were evaluated on a scale from 1 to 7, where 1 corresponds to ‘not important’ and 7 – ‘very important’): – zu1 – promptness of settling a matter; – zu2 – possibility of settling a matter without leaving home; – zu3 – office is open 24 hours a day; – zu4 – easier access to services for the disabled; – zu5 – safety; – zu6 – no queues; – zu7 – improved communication with the office, and – zu8 – reduced costs of using the office. the following variables regarding the client’s satisfaction with e-administration have also been taken into account in the research process (variables were evaluated on a scale from 1 to 7, where 1 corresponds to ‘i definitely do not agree’, and 7 – ‘i definitely agree’): – j1 – promptness of provision of e-services; – j2 – readability of the e-administration website; – j3 – safety of service provision; – j4 – easiness of finding e-office links on the website; – j5 – comprehensible support regarding the use of e-office; – j6 – the e-office website is user-friendly; – j7 – promptness of services provided by the e-office; – j8 – matters in the e-office are settled on the first attempt; – j9 – use of e-office is safe; – j10 – employees are willing to provide information on how to use e-office; – j11 – employees provide without delay information on problems with the functioning of the e-office; – j12 – employees promptly respond to e-mails; – j13 – employees are willing to help clients; – j14 – e-office keeps the client informed of their matter processing; – j15 – employees are polite and friendly towards clients who have problems with e-office functioning; – j16 – employees help the client if he/she has made a mistake related to the use of e-office; – j17 – there are no problems to log in on the website, and – j18 – the website functions under various browsers. 146 the research had the following goals: (a) defining the scope of e-administration use by the disabled; (b) identifying the advantages of using e-administration from the point of view of a handicapped person, and (c) analyzing disabled persons’ satisfaction with the functioning of e-administration in municipal offices of the silesian province. before beginning the studies the following hypothesis was formulated: h1. more frequent use of electronic tools for communication with the office leads to increased satisfaction of the handicapped client with the functioning of e-administration. 6. results figure 1 presents the tools used by the disabled people for communication with municipal offices. evaluation was carried out using a scale from 1 signifying ‘very seldom’ to 7 ‘very often’. as indicated by the studies conducted, traditional methods are still prevalent – number one is a traditional personal visit at the office – score 5.24; the second place – a telephone call – 4.34. the majority of the surveyed disabled people do not use electronic tools when they have to take care of a matter at the office; instead they physically arrive at the office or call if they have any questions or problems. among traditional methods only letters have become less important – currently they are used very seldom – 2.97. 5,24 3,31 2,69 4,34 2,67 3,37 e-administration system letters telephone call internet communicators email personal visit in the office figure 1: methods of communication with the office used by the surveyed disabled people source: authors’ own study 147 among electronic communication methods, e-administration systems and e-mails are used only on an average level (3.27 for e-administration systems and 3.31 for e-mails respectively). the least frequently used electronic communication tools are instant messenger applications – 2.69. the second investigated issue was to find out which were the biggest advantages of using the e-office in the opinion of the surveyed handicapped. the results have been given in figure 2. the surveyed disabled decided that the lack of queues was the major benefit (score 5.83 on the seven-grade scale). other very important advantages included: easier access to services for the disabled 5.65, and possibility of settling a matter without leaving home – 5.45. 5,43 5,46 5,83 5,44 5,65 5,21 5,61 5,45 reduced costs of using the office improved communication with the office no queues safety easier access to services for the disabled office open 24h a day possibility to settle a matter without leaving home promptness of settling a matter figure 2: benefits of using an e-office source: authors’ own study the results for the advantages are high, which means that the disabled people perceive real benefits from using electronic means of communication with the office. the last stage of the conducted studies was analyzing the client’s satisfaction with e-administration in the municipal office in 33 investigated towns. for this purpose, 18 variables were defined, which have been discussed in the previous chapter. the results of evaluation for particular variables have been presented in figure 3. the conducted research indicates that the best assessed areas of e-administration are: – functioning of the office’s website under various browsers (score 4.89); – providing a service in a safe way (4.76); 148 – polite and friendly attitude of employees towards clients who have problems with e-office functioning (4.77); – safety of using the e-office (4.75); and – employees help the client when they have made a mistake when using the e-office (4.75). 4,34 4,56 4,76 4,64 4,65 4,71 4,52 4,42 4,75 4,62 4,51 4,29 4,67 4,55 4,77 4,75 4,70 4,89 j1 j2 j3 j4 j5 j6 j7 j8 j9 j10 j11 j12 j13 j14 j15 j16 j17 j18 figure 3: evaluation of clients’ satisfaction with e-administration in a municipal office source: authors’ own study the lowest evaluated issues among the examined variables included: – prompt reaction of employees to emails (4.29); – prompt provision of an e-service (3.34); and – settling matters practically on the first attempt (4.42). table 4 contains data concerning satisfaction with e-administration, divided into particular types of disability analyzed in the monograph. this variable only slightly differentiates the examined issues. annova kruskal-wallis test (stanisz, 2007; frankfort-nachmias, nachmias and dewaard, 2014) has revealed the existence of statistically significant dependencies only in the case of two variables: j6 and j10, and only in the case of the lowest assumed level of significance α=0.05. satisfaction with the functioning of e-administration in municipal offices was rated the best by persons 149 suffering from communication impairment (score 4.71), and the worst – by people with intellectual impairment (4.48). the differences are statistically important for the following variables: – the variable regarding the user-friendliness of the website (variable j6) was given a score of 4.92 by persons with communication impairment, whereas people suffering from intellectual impairment rated it 4.54; – the variable regarding the issue of employees’ willingness to provide information on the use of the e-office (variable j10) was assessed at the level of 4.73 by persons with communication impairment, whereas people with intellectual impairment gave it a score of 4.3. table 4: client’s satisfaction with e-administration according to the type of disability variables type of disability sensory impairment (n=644) intellectual impairment (n=182) social functioning impairment (n=399) communication impairment (n=444) motor impairment (n=1153) j1 4.36 4.06 4.40 4.36 4.35 j2 4.67 4.41 4.53 4.62 4.53 j3 4.75 4.63 4.81 4.85 4.73 j4 4.72 4.43 4.53 4.73 4.65 j5 4.70 4.42 4.62 4.76 4.62 j6 4.79 4.54 4.69 4.92 4.61 j7 4.56 4.36 4.50 4.59 4.52 j8 4.47 4.41 4.39 4.55 4.37 j9 4.83 4.66 4.75 4.79 4.70 j10 4.60 4.30 4.58 4.73 4.68 j11 4.47 4.30 4.51 4.58 4.53 j12 4.36 4.36 4.22 4.40 4.24 j13 4.67 4.57 4.61 4.75 4.69 j14 4.59 4.52 4.59 4.65 4.50 j15 4.83 4.53 4.71 4.87 4.76 j16 4.78 4.69 4.68 4.87 4.74 j17 4.84 4.65 4.66 4.79 4.63 j18 5.03 4.83 4.82 4.99 4.82 average 4.67 4.48 4.59 4.71 4.59 source: authors’ own study 7. discussion many problems related to issues regarding disabled customer service in municipal offices, including in particular issues such as location of the office, its opening hours or architectural barriers making it difficult for the disabled to get around the office, can be solved by using e-administration tools. 150 an analysis of results by means of u mann-whitney test (corder and foreman, 2014) revealed that for all the variables except the variable related to letters there are statistically significant differences in the use of particular communication tools between people preparing traditional and electronic form of communication. understandably, persons preferring the electronic form use it much more frequently. for example, in the area of e-administration systems’ use, people preferring the electronic form declare the use of e-administration on a level of 4.47, whereas the ones who prefer the traditional form – only 2.88. a similar situation is observed in the case of emails, the use of which was evaluated on a level of 4.24 by people preferring electronic communication, while persons preferring the traditional form of communication rated it as 2.9. the opposite situation is observed in the case of issues related to traditional means of communication. then the difference between the preferences and actual use of a particular tool is smaller. the research shows that e-administration is not developed enough to be able to replace a traditional visit at the office or a telephone call. it is worth noting that even people who prefer the electronic form of communication, when asked about the use of particular communication tools, resort to a traditional visit at the office slightly more often (4.63) in comparison with e-administration systems (4.47). it is therefore clear that the barrier is not only on the side of persons using e-administration systems, but is also caused by the fact that these systems are not sufficiently developed and it is impossible to settle all matters electronically. the analysis of correlations by means of anova kruskall-wallis test (fagerland and sandvik, 2009) did not reveal statistically significant dependencies on any of the assumed levels of statistical significance between the degree of disability and the applied form of communication with the office. on the other hand, in the case of analysis in terms of disability degree, such a correlation exists for variables k2, k3, k5 and k6 on the level of statistical significance α=0.001, whereas for the remaining variables it reaches α=0.05. an interesting fact is that before the research was conducted, it was assumed that the electronic form of communication would be more frequently used by persons with motor impairment – due to architectural barriers. however, the results showed a completely different picture of the situation. it turns out that issues related to social disorders encourage the surveyed disabled people to use new means of communication to a greater degree, enabling them to take care of official business without personal contact, which is important for people with this kind of disability. on the other hand, persons with motor impairment continue to stick to traditional communication by visiting the office in person. taking into consideration the results of studies in the previous chapter, the fact that safety issues are rated highly should be considered a positive thing, because safety-related issues are very important for e-services; in many cases a threat in this area is one of the major causes responsible for slow development of this form of communication. 151 on the other hand, the main drawback is the promptness of e-administration. issues related to e-services’ functioning in terms of procedures or a possibility to settle matters on the first attempt are not always the responsibility of the office, but an alarming thing is that promptness of responding to emails was rated so poorly. this might also be a reason why email communication is not widely applied by clients. clients prefer to call because then they receive an answer straight away, whereas in the case of email they have to wait longer, which is perceived as less convenient. such reasoning is confirmed by the results of v-crammer correlation between the use of emails as means of communication (variable k2) and evaluation of the promptness of clerks replying to emails (variable j12). this correlation is statistically significant on the level of α=0.001 and reaches 0.28. this means that if somebody thinks that clerks promptly respond to emails, he or she uses this form of communication more often, whereas in the event they believe this reaction is too slow, they use it less frequently. in the end, it is also worth looking at some interesting results of spearman’s correlation between client’s satisfaction and methods used to communicate with the office (table 4) and advantages of using the e-office (table 5). the collected data indicates that between the majority of variables there are positive correlations, statistically significant at the level of α=0.001. in the case of e-administration advantages, this indicates that if a disabled person using e-administration is satisfied with the level of service, he or she also positively perceives the benefits of using e-administration. on the other hand, in the event somebody encounters problems with the functioning of e-administration, they evaluate the benefits of its use much worse, which seems a natural thing. particularly interesting seems the analysis of table 6. it indicates that the client’s satisfaction with e-administration is positively correlated with variables k2, k3, k4 and k6 – i.e., the variables regarding the frequency of using e-administration. this indicates that the more often a particular person uses public e-services, the better he or she rates them. in general, e-services are evaluated worst by people who use it on a seldom basis. it seems that this is a positive conclusion, proving that the system of e-administration functions quite well, and problems result mainly from psychological barriers, the lack of computer skills (above a correlation between the level of computer literacy and satisfaction with using public e-administration has been proved) and similar factors. on the other hand, if somebody starts using the new electronic tools of communication with the office more frequently, they assess them as positive. 152 table 5: spearman’s correlation between client’s satisfaction with e-administration and methods used for communication with the office k1 k2 k3 k4 k5 k6 j1 -0.01 0.29 0.16 0.07 0.03 0.40 j2 0.06 0.23 0.14 0.15 0.04 0.35 j3 0.06 0.23 0.08 0.09 -0.03 0.36 j4 -0.01 0.22 0.12 0.14 0.01 0.31 j5 0.01 0.25 0.15 0.14 0.04 0.35 j6 0.05 0.25 0.16 0.15 0.06 0.35 j7 0.01 0.24 0.15 0.09 0.01 0.37 j8 0.00 0.25 0.17 0.10 0.03 0.37 j9 0.01 0.23 0.08 0.10 0.00 0.33 j10 -0.01 0.22 0.11 0.12 0.00 0.31 j11 0.01 0.25 0.17 0.12 0.03 0.36 j12 -0.04 0.28 0.19 0.08 0.12 0.31 j13 0.03 0.22 0.11 0.13 0.02 0.32 j14 0.00 0.26 0.15 0.13 0.04 0.35 j15 0.06 0.22 0.09 0.14 0.00 0.31 j16 0.05 0.24 0.13 0.16 0.01 0.31 j17 0.04 0.23 0.13 0.14 0.01 0.34 j18 0.05 0.22 0.07 0.09 -0.02 0.32 source: authors’ own study the results of studies conducted confirm hypothesis h1. more frequent use of electronic tools for communication with the office leads to increased satisfaction of the disabled client with the functioning of e-administration. table 6: spearman’s correlation between client’s satisfaction with e-administration and benefits of using the e-office zu1 zu2 zu3 zu4 zu5 zu6 zu7 zu8 j1 0.28 0.23 0.28 0.27 0.29 0.23 0.29 0.25 j2 0.32 0.27 0.27 0.30 0.26 0.30 0.30 0.21 j3 0.34 0.33 0.31 0.35 0.34 0.34 0.34 0.26 j4 0.28 0.26 0.26 0.29 0.25 0.26 0.29 0.24 j5 0.27 0.25 0.27 0.29 0.26 0.30 0.31 0.21 j6 0.28 0.25 0.26 0.29 0.25 0.27 0.29 0.23 j7 0.26 0.23 0.27 0.28 0.28 0.24 0.31 0.22 j8 0.22 0.23 0.25 0.29 0.28 0.24 0.31 0.23 j9 0.29 0.28 0.31 0.31 0.31 0.30 0.33 0.25 j10 0.24 0.27 0.27 0.31 0.29 0.27 0.30 0.25 j11 0.21 0.23 0.25 0.30 0.28 0.25 0.30 0.24 j12 0.22 0.14 0.17 0.22 0.24 0.18 0.24 0.22 j13 0.25 0.26 0.28 0.30 0.24 0.28 0.29 0.20 j14 0.24 0.22 0.24 0.29 0.25 0.25 0.29 0.20 j15 0.29 0.27 0.23 0.30 0.24 0.31 0.31 0.23 j16 0.28 0.25 0.23 0.30 0.23 0.31 0.30 0.22 j17 0.27 0.26 0.23 0.28 0.25 0.30 0.31 0.25 j18 0.30 0.26 0.25 0.26 0.22 0.30 0.28 0.21 source: authors’ own study 153 8. conclusion the studies presented in this publication allowed for proving the formulated research hypothesis regarding a correlation between more frequent use of electronic tools of communication with the office and the client’s satisfaction with the functioning of e-administration. the investigations conducted allowed for confirming the above hypothesis. the research also indicates that disabled clients’ satisfaction with the functioning of e-administration is relatively high. another positive fact is that satisfaction is growing in the group of people who frequently deal with e-administration and can serve e-office systems. such a situation bodes well for the future and suggests that as the disabled become better acquainted with e-administration systems, their use of these systems will also increase. references: 1. banasikowska, j. and banasikowski, p., ‘poziom rozwoju e-government w polsce’, in pańkowska, m., porębska-miąc, t. and sroka h. 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(eds.), icf core sets manual for clinical practice, göttingen: hogrefe publishing gmbh, 2012. 9. bogucki, d., ‘e-government w unii europejskiej’, 2005, e-administracja, vol. 1, pp. 15-28. 10. brinkerhoff, j. and brinkerhoff, d., ‘government-nonprofit relations in comparative perspective: evolution, themes and new directions’, 2002, public administration and development. special issue: government-nonprofit relations in comparative perspective, vol. 22, no. 1, pp. 3-18. 11. brodnicki, k., kubiszewska, k. and tymoszuk, e., ‘e-administracja w ujęciu jakościowym i finansowym’, 2012, zarządzanie i finanse, vol. 3, no. 3, pp. 55-64. 12. corder, g.w. and foreman, d.i., nonparametric statistics: a step-by-step approach, hoboken, nj: john wiley and sons, 2014. 154 13. dečman, m., stare, j. and klun, m., ‘e-government and cost-effectiveness: e-taxation in slovenia’, 2010, transylvanian review of administrative sciences, vol. 31e, pp. 48-57. 14. fagerland, m.w. and sandvik, l., ‘the wilcoxon-mann-whitney test under scrutiny’, 2009, statistics in medicine, vol. 28, no. 10, pp. 1487-1497. 15. frankfort-nachmias, c., nachmias, d. and dewaard, j., research methods in the social sciences, new york: worth publishers, 2014. 16. garbat, m., ‘społeczne i ekonomiczne modele niepełnosprawności’, 2013, kwartalnik niepełnosprawność i rehabilitacja, vol. 1, pp. 9-14. 17. garcía, b., gómez, a., conde, r., hernández, y. and valero, m.a., ‘breaking the web barriers of the e-administration using an accessible digital certificate based on a cryptographic token’, 2015, advances in software engineering, vol. 3, pp. 1-11. 18. holliday, i. and yep, r., ‘e-government in china’, 2005, public administration and development, vol. 25, no. 3, pp. 239-249. 19. izdebski, h. and kulesza, m., administracja publiczna – zagadnienia ogólne, warszawa: liber, 2004. 20. kasprzyk, b., ‘aspekty funkcjonowania e-administracji dla jakości życia obywateli, nierówności społeczne a wzrost gospodarczy’, uniwersytet rzeszowski, rzeszów, 2011. 21. kažemikaitiene, e. and bilevičiene, t., ‘problems of involvement of disabled persons in e.government’, 2008, technological and economic development, vol. 14, no. 2, pp. 184-196. 22. liu, s.m. and yuan, q., ‘the evolution of information and communication technology in public administration’, 2015, public administration and development, vol. 35, no. 2, pp. 140-151. 23. ndou, v., ‘e – government for developing countries: opportunities and challenges’, 2004, the electronic journal of information systems in developing countries, vol. 18, no. 1, pp. 1-24. 24. omariba bosire, z. and okebiro omari, j., ‘characterising e-participation levels in e-governance’, 2015, international journal of scientific research and innovative technology, vol. 2, no. 1, pp. 157-166. 25. pradela, a., ‘determinants of the employment of people with disabilities in poland’, international multidisciplinary scientific conference on social sciences and arts sgem2014, conference proceedings, september 1-9, 2014, book 2, vol. 1, pp. 105-112. 26. pradela, a. and żabińska, i., uwarunkowania zatrudnienia osób niepełnosprawnych w województwie śląskim, gliwice: pracownia komputerowa jacka skalmierskiego, 2015. 27. ruso, j., krsmanovic, m., trajkovic, a. and rakicevic, z., ‘quality management in public e-administration’, 2013, international journal of management science and engineering, vol. 7, no. 10, pp. 550-554. 28. salvatore, s.c., ‘government employment and pay: the global and regional evidence’, 1998, public administration and development, vol. 18, no. 5, pp. 457-478. 29. stanisz, a., przystępny kurs statystyki z zastosowaniem statistica pl. analizy wielowymiarowe, kraków: statsoft, 2007. 30. strejcek, g. and theil, m., ‘technology push, legislation pull? e-government in the european union’, 2002, decision support systems, vol. 34, pp. 305-313. 31. szewczyk, a., społeczeństwo informacyjne – problemy rozwoju, warszawa: wydawnictwo difin, 2007. 155 32. teicher, j., hughes, o. and dow, n., ‘e-government: a new route to public sector quality’, 2002, managing service quality: an international journal, vol. 12, no. 6, pp. 384393. 33. tὀza, i., ‘virtual reality and public administration’, 2013, transylvanian review of administrative sciences, vol. 38e, pp. 202-212. 34. act of august 27, 1997 on professional and social rehabilitation and employment of disabled people dziennik ustaw no. 123. pos. 776 with later changes in 2002. 35. vrabie, c., ‘education-a key concept for e-administration’, 2015, procedia – social and behavioral sciences, vol. 186, pp. 371-375. 36. wiliński, m., ‘modelowe strategie pomocy osobom z ograniczeniami sprawności: medykalizacja – usprawnianie – włączanie’, in brzezińska, a.i., kaczan, r. and smoczyńska, k. (eds.), diagnoza potrzeb i modele pomocy dla osób z ograniczeniami sprawności, warszawa: wydawnictwo naukowe scholar, 2010. 37. wolniak, r. and skotnicka-zasadzień, b., ‘ocena czynników jakości usług w administracji samorządowej’, 2010, marketing i rynek, vol. 6, pp. 32-36. 38. wolniak, r. and skotnicka-zasadzień, b., ‘the concept study of servqual method’s gap’, 2012, quality and quantity, vol. 46, no. 4, pp. 1239-1247. 25 abstract the social work profession was revived in romania in 1994, when the first generation of university graduates went to the field. however, only in 2011, when the law no. 292 of social work was issued, the framework for the activity of social workers in the rural communities was settled. although the legislation provided a proper context for the unfolding of a meaningful social work in rural settings, the labor market was far from being able to absorb the great number of needed professionals. on the one hand, the paper intends to present the barriers that marked the beginning of social work in the romanian rural space. on the other hand, the paper briefly describes the particularities and the opportunities for social work in the rural areas. also, through the voice of professionals, the main social problems in the countryside are exposed and some possible interventions aiming at the improvement of the life conditions among the villagers are proposed. the study is based on 43 qualitative interviews carried out in 2016-2020 with professionals employed as social services workers by commune or village local councils. the collected data were explored and interpreted using thematic analysis. one conclusion is that the field is dynamic and in need of substantial improvement. keywords: social work, qualitative study, romania, rural communities. social work in romanian rural communities: an inside perspective from a qualitative study cristina faludi nicoleta neamțu cristina faludi assistant professor, ph.d., m.s.w., b.s.w., social work department, faculty of sociology and social work, babeș-bolyai university, cluj-napoca, romania tel.: 004-0264-424.674 e-mail: cristina.faludi@ubbcluj.ro nicoleta neamțu associate professor, ph.d., m.s.w., b.s.w., social work department, faculty of sociology and social work, babeș-bolyai university, cluj-napoca, romania tel.: 004-0264-424.674 e-mail: nicoleta.neamtu@ubbcluj.ro doi: 10.24193/tras.61e.2 published first online: 10/28/2020 transylvanian review of administrative sciences, no. 61 e/2020, pp. 25-45 26 1. background 1.1. romanian rural areas and their particularities in romania, 46.3% of the population is living in rural areas (romanian statistical yearbook, 2018). however, the rural communities are far behind the urban ones in terms of economic and social development. constantly, the rural areas have faced multiple and interconnected challenges in the fields of education, health, social inclusion, basic infrastructure, diversification of employment, outward migration, and population ageing (european commission [ec], 2016). romania has 2,861 communes including 12,957 villages. the majority of the communes and villages face the same challenges: they have a small size, have a low level of administrative authority, maintain weak cooperation across counties and are not capable of building projects to integrate rural and urban communities. rural areas are heterogeneous, with great differences between villages located in the proximity of big urban areas and remote villages and between communes far from and close to european roads. the majority of communes rely heavily on central funding due to low levels of economic development. only for 135 communes the local revenues represented more than 50% of the budget (ec, 2016). agriculture, the prevailing occupation in rural areas, represents 29% of total employment in romania, but contributes with only 5% to the gdp. the rural workforce is predominantly involved in subsistence or semi-subsistence agriculture, involving informal or non-remunerated family work. on long term, employment in subsistence agriculture has been associated with low productivity and poverty (chirică and teșliuc, 1999; ec, 2016). the prevalence of seasonal farming activities is maintaining the phenomenon of underemployment (jigău et al., 2002, p. 16). consequently, 55% of rural residents were at risk of poverty or social exclusion, compared to 28% of city residents (ec, 2016). in romania, the population employed in agriculture is ageing1. in 2011, the skilled workforce in agriculture consisted of 54.5% people aged 55 years and older, and only 30.6% were young people aged 15-24 years. the percentage of young people not involved in employment, education or training, and of those dropping out of school is high among the rural population. most of the secondary and higher education institutions are situated in urban areas, hampering the access of pupils from the rural areas because of distance, time and financial costs issues. in 2013, only 5% of the rural young people aged 14-24 graduated from high school compared with 20% of their urban counterparts (ec, 2016). pupils from rural areas have higher enrolment rates in vocational education and training (vet) compared to those from urban areas. on the one hand, the scarcity of specialized agricultural high schools limits the level of skills in the sector (ec, 2016). 1 according to the national strategic framework for the sustainable development of the agro-food sector and the rural space 2014-2020. 27 on the other hand, there is a conflict between the new opportunities to get employed in industry versus the opportunity to use the vocational skills in the agricultural sector. thus, a significant part of the young force work in rural areas do not want to return to their own farms and use their acquired skills, deciding rather on getting a job and a salary, and this mentality is unlikely to disappear in the near future (jigău et al., 2002, p. 18). the rural areas have provided few attractive employment alternatives to agriculture so far (chirică and teșliuc, 1999). in 2014, 55.3% of children from families entitled to child rearing benefit or backto-work bonus lived in rural areas. furthermore, over 80% of children from families which qualified to benefit from family allowance were located in rural areas (ministry of labor, family, social protection and elderly, 2014). in rural areas there is limited access to healthcare due to cost, distance or waiting times. in 2014, health insurance coverage was lower in rural areas compared to urban areas (76% versus 95%, respectively). there still exist large health inequalities between rural and urban areas in terms of infant mortality rate, life expectancy and vaccination rates for children (ec, 2016). 1.2. rural social work as described in the literature the basic aim of social workers is to assist, support and enable those affected by poverty, disadvantages and who suffer from the negative effects of social inequalities. they work effectively in a variety of multi-disciplinary contexts and for them, the core professional values, including human rights and social justice, are more important than organizational structures. the functions of social work include social integration and dealing with failures of policy in the areas of health, education or crime (asquith, clark and waterhouse, 2005). during the last three decades, there has been an active debate in the literature about the specific characteristics of rural social work (rsw). there is still not a widely accepted definition of rsw; however, there is a consensus that rsw is not a distinct field of practice (daley, 2010); instead, it ‘encompasses a blended type of intervention’, as rurality implies a blended type of community (mellow, 2005). rsw is based on ‘community-oriented practice’ (riebschleger, 2007). at the same time, when addressing problems at all levels of human systems – individuals, families and groups, organizations and the community itself – rsw implements ‘a generalist model of practice’, embedded in the ‘person-in-environment perspective’ (daley, 2010). in the rural settings, social workers face a severe scarcity of human and financial resources (turbett, 2004). rural poverty is described by social workers as ‘common and extreme’ (miller and conway, 2002 apud riebschleger, 2007). ‘social exclusion, ill health and limited labor market opportunities’ are common issues for all european countries with a large proportion of population living in rural areas. ‘the activity of the rural social workers is made more difficult’ by the geographical distance of the remote villages from the big cities, by the weak development of the means of access 28 and communication in some villages (asquith, clark and waterhouse, 2005), and by the lack of social services for the most vulnerable categories of inhabitants. there are two valuable assets which supplement the scarcity of social services in rural areas. firstly, when the social worker is a resident of the local community, he/ she is ‘known, trusted by the village, contactable, and possibly the only social welfare personnel the citizens usually see’ (halloran and calderón, 2005, p. 5). secondly, in a village, those in need still rely on relatives or neighbors. however, the quality of help these two types of resources provide could be jeopardized by the fact that the informal providers, mostly women, are not adequately protected, resourced and supported (pillinger, 2001), and by the fact that, as a community member, the social worker is exposed to dual relations and faces difficulties to maintain confidentiality (daley and hickman, 2011). regarding romania, many communes have not organized yet their social work compartments, the specialized structures which are supposed to manage and provide the social work benefits and the social services to the local rural communities are under the authority of public administration (teșliuc, grigoraș and stănculescu, 2015). furthermore, in a large number of communes, where a social work department exists, it is not accredited as a public provider of social services and it does not have a valid license for the social services offered. one of the criteria to receive accreditation as a social service provider is to prove the employment of at least one qualified social worker, who graduated with a bachelor’s degree in social work or an employee with graduate studies in social services management (law no. 197/2012 regarding quality assurance in the domain of social services). the main priority of all rural communities from romania is to employ a professional social worker, but in many cases they employ only a civil servant with social work duties or a social caretaker, and not a qualified social worker. 1.3. legal and organizational context of rural social work in romania the elimination of social work during the totalitarian regime period and the revival of this field only after the change of regime in 1989, gives social work the character of a relatively young profession in the democratic romania (lazăr, 2015). the framework legislation for the actual social work system in romania is provided mainly by the social work law no. 292/2011 and by the o.g. no. 68/2003 regarding social services, which include the framework of the activity of social workers in the rural communities and the organization and functioning of different types of social services all over the country. these regulations include a requirement for local public administration to provide social work public services (swps). until now, the villages’ local councils, which work under the authority of the local public administration, were not able to absorb the great number of professionals much needed in the field of social work. even though there were some national programs, funded by the central government, to encourage the development of swps in rural areas with qualified social workers, like the program of national interest called ‘capacity development of 29 swps from administrative territorial units’, started in 2018, very few rural communities have applied for funding to use these opportunities. this program is covering the salary payment for a qualified social worker employed by the public administration in the rural communities until 2021 (as part of the minimum standard to offer community social work services). in romania, social work is included as part of the minimum package of public services needed and it is required to be delivered at each administrative-territorial level/unit (atu), in both urban and rural areas. 1.4. the objectives of the paper the paper is based on a qualitative research study which had three main objectives – scientific, practical and educational – intertwined and achieved at the same time: (i) to identify the specific characteristics of the rural social work as reported by the professionals in the field; (ii) to build an extended database about the profile of the social workers employed in rural areas and about the socio-medical problems and needs of the most disadvantaged categories of the population; (iii) to inform educational staff about the process of improving the quality of education for the master’s students, to be able to address better the social problems and needs from the romanian rural areas. based on the collected data, the paper explores the profile of the social services workers employed by rural local councils, and evaluates the most relevant aspects related to their main responsibilities, social problems of the rural localities they serve, the missing (public or private) social services, how the social worker is perceived by the rural community, and main opportunities and challenges of their job. 2. methodology 2.1. study design this paper is based on a qualitative methodological design. the research was part of the evaluation working plan of master’s students enrolled in the master’s program ‘management of social services’ of the faculty of sociology and social work at ‘babeș-bolyai’ university, who have enrolled in the elective course ‘development of communities and of rural social work’. the data were collected between 2016 and 2020. the data was collected with a face-to-face interview using a semi-structured interview guide. the instrument for collecting data comprised open questions, covering 20 topics, among which the following are relevant for this article: main problems of the local community and the causes which generate and maintain them; the unmet needs of the social beneficiaries and of the people residing in the rural community; perceptions of the legislation used in everyday practice and suggestions for improvement; main types of services and social benefits offered to the beneficiaries; depiction of a regular working day of the social worker; how the professional is dealing with the large amount of work; the kind of help and resources the social workers need to improve 30 the quality of their work; how the social worker is perceived by the community; which are the opportunities and challenges in the social work field in the rural areas. the interview guide ended with a section aiming to capture the profile of the study participant. it included questions about: gender, age, place of residence and if the employee resided in the community in which he/she worked, highest level of education, specialization in social work, number of years of work in the field of social work, position at the institution, and who supervised his/her work. 2.2. participants and data collection the research focused on countryside social work, including social services workers employed by the local councils of the rural communities. the rural atus were selected based on the principle of accessibility and, in most of the cases, reflected the home region of the master’s students who conducted the interviews. during the research study, 43 interviews with practitioners providing social work in the countryside were performed. the study covered 5 development regions of the country and included 13 romanian counties. 2.3. ethical considerations the students who served as interviewers followed the same procedure. first, they identified a particular rural community, where they conducted one interview with the person employed as social worker. after that, the students established an agreement with the local commune/village hall, through which the mayor allowed them access to the commune hall and agreed to interview the social worker about his/her work in that community. informed written consent was obtained from each social worker before the beginning of the interview. the document included details about the interviewer, the purpose of research, the rules of the interview, a short presentation of the types of questions from the interview guide, the request to record the interview, and the commitment to respect the anonymity of the interviewed person. since it is known that, in most cases, there is only one social worker employed by the local council of a rural community, knowing the name of the commune would allow identification of the social services worker. in order to respect the anonymity of the study participants, the name of the commune was not recorded. instead, only some basic socio-demographic information about the involved communes were collected. each interview lasted between 15 and 50 minutes and was digitally recorded. the study participants were informed that the recording will be destroyed after the transcription of the interview and that the content of the recording will be used only for the evaluation project and to achieve the specified research objectives. 2.4. data analysis the technique of thematic analysis was used for data analysis and the interpretation of results. the thematic units which guided the data analysis were based on the 31 interview guide, as follows: (a) the socio-demographic and professional profile of employees in rural social work; (b) main activities and responsibilities of social workers in rural communities; (c) a diagnosis of the social problems and unmet needs in the rural areas; (d) an inventory of missing social services and forms of interventions; (e) opportunities and challenges of social work in the rural areas. 3. results 3.1. a short description of the rural communities included in the research data from table 1 (see the appendix) present the communes included in the study by development region and by county. the north-west development region was the best represented region, by including 5 counties (bn – bistrița-năsăud, cj – cluj, mm – maramureș, sm – satu mare, sj – sălaj) and 28 communes, most of them from cluj and sălaj counties (16, and 5, respectively). the north-east and center development regions included 3 counties each (bt – botoșani, nt – neamț, sv – suceava, and ab – alba, ms – mureș, sb – sibiu, respectively), and a total of 10 communes. the west and south-west development regions included one county each (hd – hunedoara and gj – gorj, respectively), with 3 communes. altogether, a total of 42 communes were included in the research study. in one of the communes from cluj county, two social workers were interviewed. figure 1 shows the distribution of the 13 counties included in the research study on the map of romania. figure 1: romanian counties included in the research study 32 table 1 (see the annex) also provides information about four socio-demographic indicators of the studied rural communities2, namely: the siruta3 unit for each commune; the total size of population4; the percentage of the roma population5; and the marginalization rate6. the investigated communes varied with regard to the selected indicators. regarding the population size, the communes from cluj county were the most heterogeneous, including two extreme cases: a very small village (1,412 inhabitants) with a high percentage of roma population (18.34%), but with a null marginalization rate7, and an extremely large and economically developed commune (22,813 inhabitants, of whom 4.89% are roma), in the proximity of a big city.8 in the north-east region, the commune from neamț county, although with a population higher than 2,000 inhabitants, due to higher fertility rates, is disadvantaged due to its spatial isolation9, as it is located more than 25-30 km from the nearest cities. seven communes (from sm, sj, sv, ab and ms counties) had marginalization rates above the national level. three communes from cj county recorded high percentages of roma (over 15%), but were not marginalized. only in two communes with more than 2,000 inhabitants (from sm and sj counties), the high percentage of roma was accompanied by a high marginalization rate. 3.2. the socio-demographic and professional profile of employees in rural social work the professional profile of the practitioners providing social work in the countryside is quite diverse, and therefore the reference will be made to employees of the social services from the local council, in order to include all types of framing related to their position/ occupation within the institution. in romania, to become social worker a person must receive a bachelor’s degree in social work, certified by an accredited university, specialized in the field of social 2 these four indicators are selected and defined according to the atlas of rural marginalized areas and of local human development in romania, 2016. 3 siruta represents the unit attributed to each commune, to indicate the level of local human development for each commune. 4 the small communes – with less than 2,000 inhabitants – are the most disadvantaged with regard to the economic, human and social development (teșliuc, grigoraș and stănculescu, 2015). 5 a rural community is called a roma community if more than 20% of the population identify themselves as roma. if the percentage varies between 0.01 and 19.99 then there is a mixed community. where the percentage is 0%, the rural community is considered non-roma. 6 the marginalization rate at the national level is 6.2, according to the data from the 2011 census. 7 a rural community with a high percentage of roma people or a roma community are not always disadvantaged or marginalized communities, even though the two characteristics are frequently associated (teșliuc, grigoraș and stănculescu, 2015). 8 mihalache (2019) explained that this type of rural community has known a recent accelerated socio-economic development and benefited from an important flux of migration from the urban area to the rural area. 9 a commune is considered spatially isolated from the administrative perspective when the distance from the nearest city is larger than 25 km (stan et al., 2015). 33 work. the academic studies in social work can be of long duration/ form (4 years) or of short duration/ form (3 years) (art.1, para. (2), law no. 466/2004 regarding the status of social worker). regarding the socio-demographic characteristics of the participants, 41 out of 43 were women, and 75% of them were up to 45 years old (the youngest was 27 years old and the oldest was 63 years old). among the interviewed professionals, 31 out of the 37 who originated from rural areas resided within the commune in which they worked. in the study population, the length of service had an average of 10 years, with 75% of them having up to 15 years of experience in social services delivery in rural areas (with a minimum experience of 9 months and a maximum of 24 years). figure 2 describes the level of education of the study participants. the most common level of education among the social workers in the rural atus included in the research study was: bachelor’s degree’ (65%), followed by a master’s degree’ (28%). only a minority of them had only a high school or post-high school diploma (about 5%). having postgraduate training was also a rarity among participants. high school or post-high school graduates; 4.7 bachelor’s degree; 65.1 master’s degree; 27.9 postgraduate training; 2.3 figure 2: the distribution of level of education (%) among study participants source: generated by the authors regarding the field of undergraduate and graduate studies, table 2 shows that the majority of respondents had a graduate diploma in the field of social work (44.3%) and the combination of a bachelor’s degree with master’s degree either in the same field of social work or social work combined with theology (14%). it is important to mention that, with only two exceptions (those with high school diplomas), the fields of bachelor’s and of master’s degrees of the study respondents were more or less related to social work: public administration, psychology, economics or law, in different combinations, as indicated by the distribution presented in table 2. 34 table 2: distribution of the field of undergraduate and graduate studies for the study participants field of undergraduate and graduate studies n % social work/ theology-social work 18+1 44.3 psychology 2 4.7 public administration 4 9.3 law 1 2.3 economics 2 4.7 social work + ms in social work 4 9.3 social work/ social work-theology + ms in theology 1+1 4.7 social work + ms in psychology 1 2.3 social work + ms in public administration 1 2.3 social work + ms in european studies 1 2.3 social work & social pedagogy + ms in law 1 2.3 psychology + ms in social work 1 2.3 public administration + ms in public administration 1 2.3 social work + postgraduate training in public administration 1 2.3 medical high school 1 2.3 generalist high school 1 2.3 total 43 100 source: generated by the authors romania is not unique with regard to the diversity of educational backgrounds of those employed in social work. for instance, among those who were identified as social workers in usa in 2015, only 25% mentioned social work as their major field of study, followed by those who had psychology (18%), and sociology (8%) as their fields of study. in the social work compartment of the local council from the rural atu, the respondents held different positions and titles for their job, as illustrated in figure 3. almost half of the participants (46.5%) declared they were employed as social workers, and almost a third (30.2%) that they were employed as civil servants with social work duties. the civil servants specialized in social work represented a minority among the participants, with a percentage of 16.3%. the proportions of those employed as social care workers (with a medium level of study, and who completed a short training course in the social-work or socio-medical field) or manager of social services were very small. 35 social worker; 46.5 civil servant specialized in social work; 16.3 civil servant with social work duties; 30.2 manager of social services; 2.3 social carer; 4.7 figure 3: distribution of occupation/ title of the job/ position held in the local council of the commune for the study participants source: generated by the authors 3.3. main activities and responsibilities of social workers in rural communities speaking about their professional life, the social services workers emphasized that their main activities and duties concern the primary counseling, providing social benefits and office activities, with limited opportunities for field work. ‘the social work service within our local council offers only primary services, namely primary counseling and guidance for specialized counseling when appropriate. our commune does not offer accredited social services to the community, but only social benefits (i5, 3,065 inhabitants, cluj).’ they complained that their responsibilities involved a multitude of tasks, and the lack of enough human resources in the social work department makes these duties burdensome. ‘i would like to have someone to coordinate my work. sometimes i feel powerless with a thousand problems. i would need to know the laws better, to be able to help more people (who) are so powerless and ignorant. ... it is not enough to just give a person a social aid or a bag of food from the european union. there is so much more to do: dependent people due to chronic diseases would need support; then the alcohol addicts for whom we could do something; roma community; isolated elderly ... these are just some of the categories that come to my mind’ (i15, 1,846 inhabitants, sălaj). 3.4. a diagnosis of the social problems and unmet needs in the rural areas the interviewed local social services employees identified several structural factors that negatively affect the wellbeing of rural inhabitants. poverty acts both as a 36 cause and as an effect of the precarious situation faced by the villagers. in the disadvantaged families, children’s quality of life is most affected. ‘poverty is one of the causes of rural problems… we have families with a very poor financial situation, parents who work day to day to support their family. in the homes of these families i saw children who didn’t know what a toy was. they were playing with the tins received from the aids’ (i18, 1,428 inhabitants, alba). the limited financial resources of the local authorities and the lack of entrepreneurial initiatives at the community level hamper the opportunities for career development of the workforce and for the connection of the community with external resources. ‘in the community, it is necessary to create jobs for the villagers and to initiate actions regarding the insufficient means of travel to the city’ (i5, 3,065 inhabitants, cluj). the vulnerable categories of rural inhabitants more frequently mentioned during the interviews were – apart from the children from poor families and the unemployed young people – the dependent elderly, the marginalized roma communities, and the chronically ill adults, including those addicted to alcohol. ‘we have two aged villages, most of the inhabitants need assistance and care, which is quite complicated, because there are not many people to do this work’ (i16, 2,321 inhabitants, cluj). ‘it is a roma community (at the edge of one village of the commune) ... where six families live with their children. the living conditions are difficult, without electricity, without running water, and none of the adults is employed. unfortunately, most of them are also abusing alcohol’ (i15, 1,846 inhabitants, sălaj). 3.5. an inventory of missing social services and forms of interventions the type of individual and family support and services which are not available in the rural communities, included: child day-care, services for teenage pregnancy, support and home-based services for senior citizens, assistance required to preserve, and where possible, to restore the family unit, meet the needs of adults affected by a disability or a chronic illness or develop the proper social functioning of rural inhabitants. ‘people with disabilities would need a community center for recovery ... there is a need for a support group for those with serious illnesses, moved’ (in the commune) (i3, 22,813 inhabitants, cluj). ‘there is no day center in the community for children from vulnerable families or for the elderly and other disadvantaged categories’ (i5, 3,065 inhabitants, cluj). 37 ‘at the local level we do not have social services. the most needed, in my opinion, is the establishment of a home care service for the elderly’ (i6, 2,021 inhabitants, cluj). 3.6. the perceptions of the social worker in the rural communities given that academic social work training in romania was reinvented after 1990, and the first framework law regarding the social work system was promulgated in romania in 2001, it was not a surprise to find out that the professional competencies of social workers are not clearly understood by the general population. ‘in general, people’s mentality about social work was that they only deal with roma people or with those who must benefit from social assistance ... who have poor conditions. but it is not so, it benefits absolutely all categories of people, from the poor to the super rich’ (i3, 22,813 inhabitants, cluj). for multiple reasons the professional identity of social workers among the inhabitants of villages and even among their colleagues is still not clearly outlined and it does not reflect the truth about the profession. ‘the mentality towards the job of social worker is somewhere unreal, because it is considered unimportant, although it may be more important than many activities, many jobs ... and the most serious problems can be solved by social work’ (i14, 1,197 inhabitants, alba). although there are still misunderstandings about the complexity of social work in the rural communities, the other professionals from the local authority, who can observe the number and the variety of cases, appreciate the huge amount of work involved in the delivery of social assistance. ‘unfortunately, in our country the profession of social worker is not promoted and appreciated at its true value’ (i8, 2,857 inhabitants, maramureș). ‘many (colleagues) tell me that they can’t do what i do here, that you do a lot’ (i4, 7,028 inhabitants, sibiu). 3.7. challenges and opportunities of social work in the rural areas the main challenges at their workplace are: too many responsibilities, bureaucracy, risk of getting ill by working face to face with sick people, the poor collaboration with the local or regional public authorities, and the lack of a professional team. ‘there is ... even the risk of illness, because (the social worker) comes into contact with all sorts of people who ... (live in) poverty ...; where there is poverty, there are also diseases’ (i14, 1,197 inhabitants, alba). a great challenge is the caseload or the quantity of work. the study participants mentioned the burden of paperwork, heavy caseloads, and the hardship of working with difficult clients. 38 ‘the beneficiaries are people without an elementary education, and sometimes there are communication barriers and you have to explain them many times until they understand something .... most of the social assistance applicants are always dissatisfied ... and consider that they are given less than what they think they deserve ... i had situations when i was verbally abused by some social beneficiaries’ (i17, 4,451 inhabitants, neamț). social work is a demanding profession that is usually generating a lot of stress. working within statutory institutions implies frequent changes of social politics and practices and severe lack of resources. there is a high level of dissatisfaction due to the combination of the emotional wear involved in providing social assistance and the low level of remuneration. ‘there are social workers who face stress and exhaustion due to the large number of cases allocated and the insufficiency of the staf’ (i8, 2,857 inhabitants, maramureș). ‘the legislation does not protect the social worker on the labor market and does not guarantee quality services for the disadvantaged categories. we face many problems, especially regarding remuneration ... but i better not comment about it’ (i18, 1,428 inhabitants, alba). 4. discussions 4.1. lessons learned about the contemporary social work in rural areas having its function associated with the traditional female nurturing role, similar with nursing and teaching, social work is practiced mostly by women, as also indicated by this study and by another recent report on the social work workforce in the us (salsberg et al., 2017). however, social work is not a female-dominated profession, as women prevail only numerically. women are the foot soldiers, while the power and control positions in social work are still held by men (o’neill, 1994, and rauch, 1975 apud mcphail, 2004). most of the recent studies have showed that the employees in rural social work did not hold a ‘solid specialized background’ and have followed different training paths (csesznek and șimon, 2019, p. 23). although the number of social work graduates in romania is increasing every year, there is still a great need for professionals in the rural areas. despite its noble aims, there is not too much recognition of the value of the social worker’s profession among the beneficiaries and also among other professionals. it is still perceived as a profession with a low prestige and small income, at the local, regional, national and international level (asquith, clark and waterhouse, 2005). the villagers are inclined to appreciate the social workers based on the kind of help received or problems solved, rather than on their degrees, years of education or areas of specialization (davenport and davenport, 1995). 39 regarding the problems present in rural communities, similarly to the findings from another recent study carried out in the underprivileged communities of brașov county (bódi, 2019), the major areas of unmet needs in the rural communities mentioned by our study participants were: 1. basic material needs: problems associated with substandard housing and overcrowed housing (perceived as having a greater occurrence among roma low-income groups), food and nutrition, and inadequate public transportation for the inhabitants to travel to the urban areas. 2. health-related needs: problems with general health care, deficit of qualified medical and social care personnel, need for home health care and health education, and alcoholism problems. 3. economic security: dramatic changes in employment opportunities, changes in the labor force and in the structure of population (increasing rates of older people), lack of suitable jobs, problems due to unemployment, severe poverty and risks of social exclusion for some groups of rural inhabitants. similar to a recent report from hungary (halloran and calderón, 2005), in romania, despite a major policy change which empowers local authorities, the essential social services, such as home-based care, child welfare and family support, are still concentrated in the county seat municipality and, therefore, difficult to access by people residing in remote rural areas. csesznek and șimon (2019) also have shown that the diversity of rural vulnerable groups requires the development of good quality and accessible services, able to respond efficiently to their complex and diverse social problems. primary and community social work services, which are using the generalist social work methods and strategies of intervention, are dominant in romanian rural areas while the specialized social interventions provided by professionals are not available in the majority of the communes. social workers employed by the local public administration in communes and villages are usually in the situation of doing all things for all people from that community. the main types of missing professional social services are the following: residential centers for children, adults with disabilities and older people, services for personal social care, recovery and rehabilitation services, social integration and reintegration services, and home-based social services. the integration of social services with health, educational, and occupational services must be improved at the level of the rural administrative units. the data generated by the present research study about the human resources in the social work field and about the socio-medical problems and needs at the countryside may enable reciprocal interactions and cooperation in order to increase the potential of the local resources to better serve the most disadvantaged categories of beneficiaries. 40 4.2. suggestions for improvement of rural social work in romania this section will provide suggestions for improvement, motivated by this paper and also by the literature in the field. an important observation is that the study has provided a better picture of the main social problems and unmet needs of the rural communities from the perspective of the social services workers employed by local councils. this is a bottom-up approach that may inform the social policy makers and the political decision-makers when future legislation regarding the field of social protection and the settlement of social services will be under consideration. the changes they would implement to their profession to make their job as social workers more efficient are related mainly to legislation and to the direction of ‘creating and consolidating the work teams’ (csesznek and șimon, 2019, p. 23). one of the major legislative changes which can help the social workers become more efficient in their work is to provide standards for maximum active caseloads, and workloads in general, that could be allocated per social worker either weekly or monthly, based on realistic professional judgements. clear procedures and protocols for different professionals to cooperate within multidisciplinary teams, in order to implement effective case management for children and families, adults with disabilities, older people and homeless persons, are also much needed and will have the potential to significantly improve the results of social interventions. practicing social work is ‘very complex and very demanding’ (csesznek and șimon, 2019, p. 23). a high level of stress is often encountered in the activity of a social worker, which is negatively affecting the degree of professional satisfaction. staff shortages and lack of adequate supervision (kim and stoner, 2008) increase the level of professional stress. stress management is important in order to avoid the professional exhaustion (neamțu and huzum, 2018). therefore, there is a great need ‘of various forms of support from within the work setting, especially mutual group support, accompanied by individual differences linked to good self-esteem, personal hardiness and resilience’ to increase the satisfaction social workers feel about their work (collins, 2008, p. 1173). 5. conclusions the paper provides a useful addition to the already existing data from the romanian literature regarding the profile of the social workers and the specific characteristics of social work in rural areas. first of all, our research has implications for practice. data from the interviews has emphasized the need for qualified social workers in rural areas, the need for stress management skills, burnout prevention and self-care activities for personnel, the need for professional supervision in social work and the need for supplementary professionals in social work in each commune. secondly, our research has implications for social policies. a new public policy designed to introduce required professional and managerial supervision in social services in all atus and the development of swps is clearly needed. the effects of profes41 sional supervision and support, received by social workers from their line-managers and peer colleagues, will be a well-worth investment for the organization/employer. an emergency investment in the social work national system from romania must include professional supervision done by qualified and experienced social workers, and the supervision function of social services management being made a requirement in all social work settings, from both the public and private sector. these solutions will improve the quality of work life for qualified social workers, will prevent burnout and turnover of the professional staff, will increase the quality of services, and will raise the effectiveness of the public institutions and organizations which provide social services. without supportive and educational functions of supervision applied to social work practice, the administrative supervision, done by line managers who are not social work professionals, is not enough and it is even inadequate in a profession where the workers must use their personal self as a tool for needs assessment and interventions in the social work processes. thirdly, we conducted a small research study, not based on a probabilistic sample, and of an exploratory nature. however, our results indicate the need to extend the research in the field. further and deeper investigations are needed about: job analysis and job design, work satisfaction, performance evaluation of social workers and civil servants, and risk of burnout for professional staff in rural social work. romanian legislation also needs another major change that will be of help for professional social services, to make illegal the employment of non-professionals and paraprofessionals in civil servant jobs which require social work duties. if this measure is not taken immediately the social work system will function even worse, and it will be a waste of valuable human and financial resources, a lose-lose situation for the clients of social services, for the providers of swps, and for the romanian society at large. we recommend the design of new social policies, to satisfy the real social needs identified in the local rural communities by the social workers during their field work, together with the design and development of social services which can offer innovative responses to the unmet needs found in different communes and villages, as a result of participation of services users in the decision making processes. in the process of planning and implementing social services it is necessary to acquire a better understanding of population’s needs, adding to the socio-economic indicators the voices of citizens regarding to what they wish. local networking and co-operation are indispensable in order to deliver high quality and accessible services, 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(coord.), ionescu, i., asiminei, r. and lupu, a.l., ‘studiu-diagnostic privind nevoile de servicii sociale și securitate comunitară în mediul rural din regiunea nord-est’ [diagnostic study on the needs of social services and community security in rural areas in the north-east region], organizația salvați copiii [save the children], iași, 2015. 22. teșliuc, e., grigoraș, v. and stănculescu, m. (coord.), ‘studiu de fundamentare pentru strategia națională privind incluziunea socială și reducerea sărăciei 2015-2020’ [substantiation study for the national strategy on social inclusion and poverty reduction 2015-2020], bucharest: world bank group, 2015. 23. turbett, c., ‘a decade after orkney: towards a practice model for social work in the remoter areas of scotland’, 2004, british journal of social work, vol. 34, no. 7, pp. 981-995. 24. comisia prezidențială pentru politici publice de dezvoltare a agriculturii: cadrul național strategic pentru dezvoltare durabilă a sectorului agroalimentar și a spațiului rural în perioada 2014-2020 [national strategic framework for the sustainable development of the agro-food sector and the rural space 2014-2020], [online] available at http://www.acad.ro/ forumuri/doc2013/d0701-02strategiecadrulnationalrural.pdf, accessed on april 10, 2020. 25. european commission, commission staff working document, ‘country report romania, including an in-depth review on the prevention and correction of macroeconomic imbalances’, brussels, 2016. 26. ministerul muncii, familiei, protecţiei sociale şi persoanelor vârstnice [ministry of labor, family, social protection and elderly], ‘evoluții în domeniul asistenței sociale în anul 2014’ [evolutions in the social work domain in 2014], [online] available at http://www. mmuncii.ro/j33/images/buletin_statistic/asistenta-2014.pdf, accessed on april 10, 2020. 27. *** atlasul zonelor rurale marginalizate şi al dezvoltării umane locale din românia [the atlas of rural marginalized areas and of local human development in romania], 2016. 28. *** law no. 197/2012 regarding quality assurance in the domain of social services. 29. *** law no. 466/2004 regarding the status of social worker. 30. *** romanian statistical yearbook, 2018. 44 annex 1. main characteristics of the communes included in the research study10 id. no. region of romania county no. of villages code siruta population % of roma marginalization rate10name abbreviation 1 north-west bistrița-năsăud bn 1 179720 1,407 0.00 0 cluj cj 16 55687 10,685 3.86 0 55838 10,317 6.39 0 56210 4,856 19.81 0 56425 2,021 0.40 0 56773 1,993 4.01 0 56988 3,065 0.59 0 57644 2,564 16.15 0 57706 22,813 4.89 0 58008 3,889 7.33 0 58142 4,263 2.21 0 58259 4,270 0.84 0 55277 5,423 1.49 0 60169 2,321 2.33 0 59130 1,412 18.34 0 55311 1,798 0.22 0 59826 1,947 3.24 0 maramureș mm 3 106368 2,857 0.07 0 108348 9,264 0.03 0 106648 2,659 0.00 0 satu mare sm 3 137443 2,215 15.4 24+% 138618 2,182 5.87 0 139287 2,067 4.40 0 sălaj sj 5 140379 2,586 15.93 12≤24% 140823 2,641 4.24 0 140869 1,864 8.37 0.1≤6.1% 141786 1,846 1.95 0 142337 2,405 6.61 12≤24% 2 north-east botoșani bt 1 39694 3,420 0.00 0 neamț nt 1 123790 4,451 0.00 0 suceava sv 2 146860 6,719 0.70 12≤24% 151479 5,136 6.54 12≤24% 10 the methodology used to identify marginalized rural areas is based on data from the 2011 census. six key indicators were selected for each of the three criteria used to define marginalized rural areas, namely (a) human capital, (b) declared jobs and (c) living conditions. 45 id. no. region of romania county no. of villages code siruta population % of roma marginalization rate10name abbreviation 3 center alba ab 3 4008 1,197 0.17 0 6976 1,428 0.00 0 7348 2,411 5.02 6.1≤12% mureș ms 2 118995 3,748 7.55 12≤24% 119466 4,233 3.09 0 sibiu sb 1 143557 7,028 1.37 0 4 west hunedoara hd 2 86883 1,983 0.25 0 90431 1,207 0.00 0 5 south-west gorj gj 1 79834 5,133 0.06 0 source: atlasul zonelor rurale marginalizate şi al dezvoltării umane locale din românia [the atlase of rural marginalised areas and of local human development in romania], 2016. 88 abstract this article considers the eu policymaking process from the national perspective, emphasizing the involvement of civil society organizations (csos) in the process of formulating national positions prior to negotiations in the council of the eu. its scope is limited to the stagist model of policy analysis, focusing on the policy formulation stage and 20 of the most salient eu legislative proposals on the eu agenda between 2008 and 2010. it is argued that slovenia seems to neglect the expertise and information held by csos during the process of forming national positions. the current system for coordinating eu affairs anticipates only a narrow role for csos. the national position is typically formed at a lower bureaucratic level and based on the european commission’s proposal. while national officials recognize the benefits of including csos in the whole process, they are afraid of greater work, more bureaucratic processes, and corruption. keywords: eu policymaking, coordination of eu affairs, formulating national positions, civil society organizations, representation, slovenia. formation of national positions on eu legislative proposals in slovenia: what role for civil society organizations? damjan lajh meta novak damjan lajh associate professor and jean monnet professor, ph.d., faculty of social sciences, university of ljubljana, ljubljana, slovenia head of the centre for political science research, faculty of social sciences, university of ljubljana, ljubljana, slovenia tel.: 00386-0-1-5805.227 e-mail: damjan.lajh@fdv.uni-lj.si meta novak (corresponding author) assistant professor, faculty of social sciences, ph.d., university of ljubljana, ljubljana, slovenia researcher, centre for political science research, faculty of social sciences, university of ljubljana, ljubljana, slovenia tel.: 00386-0-1-5805.227 e-mail: meta.novak@fdv.uni-lj.si doi: 10.24193/tras.61e.5 published first online: 10/28/2020 transylvanian review of administrative sciences, no. 61 e/2020, pp. 88-104 89 1. introduction when thinking about policymaking, we initially consider the question of jurisdiction – what the government has decided to do or not to do (dye, 1972). however, the recent globalization and europeanisation processes mean there is often more than one source of authority available. probably the clearest case of the intertwined relationship of national and supranational policymaking perspectives is the european union (eu). successful participation in eu policymaking requires member states to effectively formulate national positions prior to negotiating in the council of the eu. preparing strong and convincing national positions is an important challenge in terms of their efficiency and democratic legitimacy. in this article, we are thus interested in characteristics of the eu policymaking process from the national perspective, especially the involvement of ‘civil society organizations (csos)’ while formulating national positions before negotiations begin in the council of the eu. eu policymaking never takes place in a vacuum, but instead in the context of multiple locations where policy issues are addressed, namely local to global levels and involving both formal and informal processes (wallace, 2010, p. 90). with power divided vertically and horizontally, eu decision-making is affected by the combination of the multitude of access points and the demanding rules of governing decision-making process (princen, 2009, p. 40), requiring that any differences between domestic and eu policymaking settings be overcome by streamlining and adapting national actions to the sectoral divisions and ‘rhythm’ of the eu policy process (gärtner, hörner and obholzer, 2011, p. 80). observations of eu policymaking must consider the multilevel setting of the eu. in many policy sectors, the eu is an essential – if not the most important – decision-making venue where governments play for high stakes. decisions taken in brussels can have far-reaching consequences for the member states. therefore, it is no surprise that at least in some policy areas there is particularly intense pressure on governments to effectively coordinate their activities with respect to eu policymaking (kassim, 2001, p. 9; fink-hafner, 2007; žurga, 2018). as such, national political institutions are vital components of the eu’s institutional architecture. according to wallace (2010, p. 89), national actors play important and influential roles at all stages of the eu policy process. of course, the roles held by these actors here vary slightly from those they perform at the national level. national ministers, for example, sit together in the council and have an important role in adopting legislation, albeit one where they represent their own interests and those of their constituents (young, 2010, p. 50). special importance is given here to the formation of national policy preferences and positions. participation in the council calls for coordination since meetings must be prepared and positions defended at different levels and across different sectors (kassim, 2001, p. 10). however, the forming of national policy preferences does not take place in splendid domestic isolation, but is also subject to exogenous pressures (kassim, 2001, p. 10), especially from various organized interests. however, opportunities for access and influence are not evenly 90 distributed within member states (wallace, 2010, p. 89), forcing organized interests to seek different channels beyond the state1 to influence the eu-level decision-making by way of either direct access to eu institutions or via institutionalized bodies (i.e., the economic and social committee and committee of the regions). learning how to manage this extra dimension of national public policy has in the past 50 years been a key challenge for national governments (wallace, 2010, p. 89). especially the new member states from central and eastern europe face several specific domestic challenges that impede the efficient coordination of and effective participation in the policymaking process: a shortage of resources and expertise concerning eu affairs, financial constraints, the lack of certain skills among civil servants (i.e., insufficient knowledge of the formal/ informal working mechanisms and rules of eu policymaking, deficient language skills), the politicization of the bureaucracies, all occurring while governments (often coalitions) in those countries regularly change (gärtner, hörner and obholzer, 2011, pp. 80-82), leading to frequent (institutional) alterations in how eu affairs are coordinated at the domestic level. in our analysis we focus on the case of slovenia. we believe slovenia is a good selection among newer member states when looking at the inclusion of csos in eu policymaking from the (bottom-up) perspective of national administrations. slovenia is a new democracy with a socialist past, a newer member often characterized as ‘a good student’ (fink-hafner and lajh, 2008). further, it is a small state with modest resources (krašovec and lajh, 2010), and a country with a vibrant civil society (črnak-meglič and rakar, 2009, p. 240). with this study we want to contribute to the question how national positions are formed prior to starting negotiations in the council from the perspective of the role of csos2 in the domestic public sector, i.e. in the process of domestic coordination of eu affairs. the article uses varied methodology from secondary analysis of legislation that define the coordination of eu affairs in slovenia, a survey conducted among national officials at slovenian ministries working in the area of eu affairs (mzz, directorate for eu affairs), analyses of two stakeholder meetings (2015a, 2015b) and interviews conducted among national officials that cooperated in the preparation of national positions on the 20 most salient eu directive proposals (www.intereuro.eu; also see beyers et al., 2014). after the introductory section, the article is structured as follows. the second section offers an overview of the current coordination of eu affairs in slovenia and 1 the practical reality of a huge number of organised interests within the eu is that, if they are to influence public policy in their sector, they need to act cross-nationally and get themselves to brussels (richardson, 2006, p. 232). 2 in this article, we define csos very broadly, considering the european commission’s definition as including ‘the trade unions and employers’ organisations (‘social partners’); nongovernmental organisations; professional associations; charities; grass-roots organisations; organisations that involve citizens in local and municipal life with a particular contribution from churches and religious communities’ (european commission, 2001, p. 14). 91 the ways csos are included in this process. the third section relies on survey data to analyze the inclusion of csos in formulating the national position regarding eu legislative proposals. finally, the fourth section summarizes the main findings and evaluates how the slovenian political system has been adapted to eu policymaking. the article argues that coordination of eu affairs in slovenia does not anticipate the participation of csos in preparing national positions towards eu proposals. in this way, the expertise and information held by csos are neglected. although national officials recognize the benefits of csos’ inclusion in preparation of national positions, they also have reservations since they are afraid they would be overburdened, this will lead to more bureaucratic work and that such participation may lead to corruption and non-transparent practices. the national position is typically formed at a lower bureaucratic level and based on the european commission’s proposal. 2. forming national positions on proposed eu legislation in slovenia: limited access for csos? csos can be relevant actors in the practice of forming national positions vis-à-vis eu legislative proposals. they can make the policymaking process more efficient since csos often encompass relevant information and expert opinions lacking among national officials and ensure the citizens’ participation in the whole process (saurugger, 2008, pp. 1276-1277). the ways csos are included in formulating national positions on eu legislation often depend on a particular country’s system for coordinating eu affairs. after joining the eu, slovenia has started actively participating in forming eu policies and legislation. consequently, this aspect of eu affairs becoming part of domestic policies demanded changes be made to slovenia’s political system. the newly established relationship between the slovenian and eu political systems was defined by amendments to the constitution introduced in 20033. a year later (in march 2004), the national assembly – government relationship in decision-making on eu affairs was codified4. the executive branch took over the role of representing and arguing slovenia’s position in eu institutions. the national assembly, in contrast, is included in formulating the national position regarding eu affairs5. eu membership was a turning point in the development of coordinating eu affairs at the slovenian national administrative level. following the initial polycentric stage, the coordination of eu affairs began to exhibit tendencies towards centralization. 3 the constitutional amendment, represented by article 3.a, allows for the delegation of execution of some sovereign rights to international organisations, provided that: a) these international organisations are based on the observation of human rights and fundamental freedoms, democracy and the rule of law; and b) the international treaty which sets down this delegation is ratified by the national assembly of the republic of slovenia by a two-thirds majority vote (see uz3a, 47, 68 2003). 4 see the act on cooperation between the national assembly and the government in eu affairs. 5 for a more detailed analysis of the aforementioned political system adaptations, see fink-hafner and lajh, 2005, pp. 82-86. 92 it started with the establishment of the ‘government office for european affairs (goea)’ (at the end of 1997), led by a minister without portfolio, and the formation of the negotiating team of the republic of slovenia for accession to the eu (fink-hafner, 2007, pp. 818-819). in the period of eu membership (coinciding with the change of government in autumn 2004), the central political coordination point in the hierarchy of the domestic management of european affairs shifted towards the prime minister, where it was finally consolidated during slovenia’s presidency of the council of the eu (lajh, 2010). following slovenia’s formal entry to the eu, eu affairs then became ‘internalized’ as a domestic matter. this process impacted the majority of officials at the national level, although the shortage of ‘european specialists’ in slovenia’s relatively small administration was quite evident during the phase of slovenia’s accession to the eu and has also continued in the country’s eu membership (lajh, 2012). the problem of limited staff became especially acute during slovenia’s presidency of the council of the eu (fink-hafner and lajh, 2008). it is also noteworthy that a considerable share of so-called eu staff/ specialists have moved to either eu institutions or the permanent representation of the republic of slovenia to the eu in brussels. member states have very different systems in place for coordinating eu affairs (fink-hafner, 2007, p. 805). it is characteristic for new member states from central and eastern europe that the coordination of eu affairs is not yet permanently established and often changes (dimitrova and toshkov, 2007). following the alteration of slovenia’s administrative system for coordinating eu affairs in 2004, a new change came in 2012 – the abolition of the goea and transformation of its tasks and most staff to a special directorate within the ministry of foreign affairs (which again coincided with a change in government in the spring of 2012). the relationship towards eu institutions is defined in chapter 6.4 of the government’s rules of procedure. the current system for coordinating eu affairs in slovenia entails the cooperation of the following actors: (a) the government; (b) the central coordination unit at the ministry of foreign affairs; (c) the permanent representation in brussels; (d) working groups that prepare national positions in response to eu legislative proposals; (e) working groups for eu affairs; and () the national assembly. the central coordination unit was taken over by the ministry of foreign affairs. specifically, the directorate for eu affairs ensures the procedurally correct preparation and submission of national cross-sectoral alignment positions on eu proposals that are decided on later at the council of the eu by working groups, committees and ministerial meetings (rules of procedure of the government of the republic of slovenia, 2014; mzz, coordination of european affairs, 2016). the ministry responsible for eu affairs tasks the competent ministry or governmental office with preparing the national position regarding particular eu legislation and, via a special government resolution, it designates the participating ministries and competent working groups. the preparation and endorsement of the national position takes place in the government information system, the so-called eu portal. the eu portal’s functioning is assured by the ministry of foreign affairs (article 49.d, rules of 93 procedure of the government of the republic of slovenia, 2014). cross-sectoral alignment positions emerge by way of cross-sectoral meetings, meetings of working groups for preparing a position, regular meetings of the working group for eu affairs, led by the ministry of foreign affairs, and meetings of the group for eu affairs (article 49.g, rules of procedures of the government of the republic of slovenia, 2014). the ministry or a government agency prepare the republic of slovenia’s draft position which is then considered and adopted by the government. positions on legislative proposals that, due to their content and according to the constitution and national legislation, fall within the competence of the national assembly are submitted to the national assembly by the secretary general of the government also through the eu portal. the position is then discussed and considered by the committee for eu affairs and the responsible working committee (article 49.h, rules of procedures of the government of the republic of slovenia, 2014). the slovenian position can be later amended or extended if substantial changes emerge in the process. any changes are prepared by the ministry or a government agency and adopted using the same procedure as for the first position (article 49.i, rules of procedures of the government of the republic of slovenia, 2014). slovenian representatives6 participating in a meeting of the council of the eu are obliged to advocate the national position previously published and confirmed on the eu portal (article 49.p, rules of procedures of the government of the republic of slovenia, 2014; mzz, position preparation procedure, 2016). representatives must later report on the content of the meetings and the enforcement of decisions made by slovenia in eu institutions (article 49.r, rules of procedures of the government of the republic of slovenia, 2014). figure 1: coordination of eu affairs in slovenia source: authors the process of forming the national position is relatively rigid, closed and does not allow csos near also because the eu portal where preparation of the national 6 representatives of slovenia are members of government, the state secretary, head of the permanent representation in brussels, his/her deputy, head of the government service, officials from ministries or government departments and the state attorney (article 49.č, rules of procedure of the government of the republic of slovenia, 2014). 94 position occurs is closed to both the public and csos (stakeholder meeting, 2015a; 2015b). recently, some minor changes were made. since june 1, 2016, each ministry can decide whether to publicly release the materials discussed at governmental meetings or not. in this way, the eu portal has also become accessible to civil society, but the scope is very limited: (1) the documents published are mostly national positions adopted at the governmental session, by which time is already relatively late to allow the more meaningful inclusion of civil society; (2) only a share of civil society representatives are informed about the change; and (3) it is mostly ministries that are already open to civil society that publish such documents7. consequently, civil society cannot provide feedback, comments or suggestions on the national position. according to the normative arrangement of the coordination of eu affairs, slovenian csos are largely excluded from the process of forming national positions on proposed eu legislation8. much depends on the individual engagement of competent authorities and policy officials. neither legislation defining relations between the executive and the national parliament nor internal governmental acts concerning the coordination of eu affairs provide for any inclusive role for csos. formal access to facilitate the cooperation of the interested public, i.e. also csos, is only defined generally and never specifically when it comes to eu affairs. article 46 of the national assembly’s rules of procedure states that the working committee of the national assembly, with the intention to gather information, may ‘organize public hearings and invite experts and other persons who might provide useful information’, but, again, this is only defined generally and not specifically relative to the eu. another window of opportunity may be the ‘lobbying approach’ of csos in policymaking. however, here the inclusion of csos is constrained by the negative connotation attributed to lobbying in slovenia. lobbying activity is regulated by the law on integrity and prevention of corruption (zintpk, 2011), which provides: ‘the activity of lobbyists who, on behalf of interest groups, engage in non-public efforts to influence on the decision-making of state bodies and local community bodies and holders of public authority while considering and adopting regulations and other general acts. (…) an act of lobbying is considered to be every non-public contact of a lobbyist with a lobbied person that aims to influence the content or the process of adopting the said decisions (zintpk, 2011)’.9 7 eight documents have been made public by the ministry of agriculture, forestry and food, five by the ministry of foreign affairs and four each by the ministry of economic development and technology as well as the ministry of the interior and ministry of finance. 8 although the rules of procedure of the government of the republic of slovenia and the resolution on legislative regulation anticipate the inclusion of the public, civil society, and experts in forming legislative acts and regulations, the role of the civil society is not explicitly defined when it comes to eu affairs (rules of procedure of the government of the republic of slovenia, 2001; rendej, 2009). 9 in the literature, we may find different definitions of lobbying. austen-smith and wright (1992) define lobbying as ‘information transmission’. the idea is that lobbyists possess information that de95 the definition of lobbying is thus closely connected with corruption and the strict regulation of lobbying activities10 discourages national officials from including csos in policymaking. hence, csos require a proactive approach, entailing the use of different strategies (beyers, 2002, p. 585) to influence decision-makers at either the bureaucratic or political level. the next section offers an overview of csos’ inclusion in eu policymaking, followed by analyses of the forming of slovenian national positions on proposed eu legislation and csos’ role in these processes. 3. empirical evidence on the inclusion of csos in forming national positions on proposed eu legislation 3.1. methodology for the purpose of our analysis, we consider the stagist model of policy analysis while focusing on the policy formulation stage, usually defined as the critical stage which reveals the key power relations among those involved in policymaking. this stage namely not only involves placing issues on the agenda, but is also closely linked to the search for alternative policy solutions (see hogwood and gunn, 1984; parsons, 1995) and also represents a window of opportunity for the involvement of csos. the literature still appears to be deficient regarding how policy is formulated in those segments where supranational and national processes interlink. in this article, we are interested in one of these inter-linkages – the way national positions are formed prior to commencing negotiations in the council, particularly the role played by national csos in these processes. in answering this, we focus on 20 of the most salient eu legislative proposals on the eu agenda between 2008 and 2010. we selected these eu legislative proposals according to their appearances in the mass media. we decided on policy-centered sampling and to include the most salient issues to ensure that lobbying would be entailed11 (beyers et al., 2014). after all, much eu legislation is very technical and not of much public interest. although our study looks at the case of slovenia, the measure of saliency is not based on slovenian national media sources because eu topics, especially issues relating to eu legislative proposals, are not sufficiently covered by slovenian sources. we, therefore, selected proposals covered cision-makers need but do not have. a lobbyist is prepared to exchange this information and to persuade a decision-maker to act in his/her interest. the process is not simple as there may be different interest groups with different interests. but austen-smith and wright define the lobbying activity more positively, by stating: ‘a legislator will on average make ‘better’ decisions with lobbying than without, and that the more important is an issue to a special interest group, the more likely is the legislator to make the correct full-information decision’ (austen-smith and wright, 1992, p. 229). 10 at the same time, the ‘interest group’ definition is also quite negative by directly connecting an interest group’s activity with lobbying and limiting it to lobbying by stating that an ‘interest organisation is a legal entity of private law or another unregulated form of the association of natural or legal persons on behalf of and for whose account a lobbyist is performing lobbying activity’ (zintpk, 2011). 11 if we had used a simple random sample of eu-level legislation, this may have resulted in highly technical proposals that could mean the mobilisation of fewer or zero csos. 96 by at least one european source (agence europe or european voice) and by at least two non-slovenian national sources (frankfurter allgemeine zeitung, le monde or financial times)12. the analysis is based on mixed-methods research whose empirical part includes a secondary analysis of relevant national legislation, quantitative and qualitative analysis of 35 face-to-face interviews conducted with national officials, and analysis of stakeholder meetings held in 2015. the empirical part also includes analysis of interviews with key actors involved in preparing national positions on eu legislation as part of the project ‘improving consultation practices in decision-making on eu affairs at the national level’ carried out in 2015 by the ministry of foreign affairs, directorate for eu affairs. empirical data covering the period 2008–2015 concern the formation of national positions prior to negotiations in the council, especially the role of csos in these processes, also considering certain relevant recent reforms since then. it is particularly important to investigate this period because it includes the second and third government terms during slovenia’s full eu membership, enabling a discussion of the research problem following initial adaptations of the slovenian political system to fit in with the established coordination of eu affairs that were later consolidated after slovenia’s presidency to the council of the eu in 2008. 3.2. results the normative arrangement for coordinating eu affairs in slovenia described in the second section can deviate from practice. the analysis of our interviews with national officials shows the official national position on an eu legislative proposal is chiefly formulated at a lower bureaucratic level. the official responsible for responding to a legislative proposal formulates the first draft of the national position. in some cases, national positions have also been drafted during inter-departmental/ ministerial coordination if the proposed legislation exceeds the jurisdiction of one ministry. only very rarely is formation of the national position based on government – national parliament exchanges or almost never in working groups with stakeholders. only one ministry (ministry of agriculture, forestry and food) regularly organizes consultations with national stakeholders regarding eu affairs, and two ministries arrange such consultations quite regularly. formal consultations like meetings and conferences as well as informal consultations such as telephone calls and emails are used (mzz, directorate for eu affairs, 2015).13 a lot depends on how an individual official prepares and leads the process of preparing a position (stakeholder meeting, 2015b). the national position is in fact formed at a low bureaucratic tier by officials at a professional level of the line ministry responsible for formulating the national position. 12 after the sampling, we crosschecked the presence of selected eu legislative proposals in the slovenian national daily newspapers delo and dnevnik. 19 of 20 legislative proposals were mentioned in at least one of these newspapers, showing these issues were also salient in slovenia. 13 in march 2015, the directorate for eu affairs at the ministry of foreign affairs conducted a short survey among ministries on advisory practice concerning eu affairs. the response rate was 100%. 97 this national position is thus formed in such a way that officials do not have problems and the position is sufficiently general to contain enough space for negotiating in the council (stakeholder meeting, 2015a). something similar has been noticed, for example, among dutch public officials, especially in less europeanised policy sectors. amidst the absence of any clear political position or political leadership, they prepare the national position themselves based on the last known political position. this may also mean opposing the eu legislative proposal than supporting it to ensure enough negotiation power in the council (geuijan and hart, 2010). 2.88 1 2.21 0.76 1.06 0.68 1.94 0 1 2 3 4 figure 2: crucial practices in the formulation of a national position (mean values, 1 – strongly disagree, 5 – strongly agree) source: intereuro survey, 35 interviews with national officials the draft national position is often entirely based on the commission’s proposal. in fact, regarding the 20 proposed directives in the sample, the national position always supported the acceptance of the eu’s proposal legislation. the possible objectives were to remain general and derived from the ambition to involve the fewest changes to the national legislation as possible. the officials were inclined to propos98 als that only minimally altered national legislation. this has led to slovenia’s ‘reputation’ as ‘a country with no opinion’ (stakeholder meeting 2015a). especially during the presidency, slovenia consciously avoided taking a position, which probably put an end to the chances of domestic csos in the country influencing eu policymaking. the same national position with hardly any changes is afterwards adopted by the whole ministry involved and the government. for national positions that must be submitted to the national assembly, the committee for eu affairs discusses the position. analysis of reports about such discussions in the sample of 20 national positions on eu legislative proposals reveals they are quite short, with questions being more the exception than the rule and the position usually being accepted without changes also due to the time pressure in the process (stakeholder meeting, 2015a). the national assembly does not have a position of its own (in the cases in the sample), but according to the procedure becomes acquainted with the national position and accepts it. the result of the current locus of forming the national position is that the very position formed at the professional level in the line ministry also enters the eu legislative process. it is no surprise that national officials rank the line ministry as the authority with the greatest influence on how the national system for coordinating eu affairs functions, followed by the permanent representation office in brussels, and only later by the government, the goea (until 2012) and the national assembly. although the role of the national assembly as a representative institution is very weak despite its official task of approving the national position, it should not be overlooked when it comes to informing the public and voters. all governmental and parliamentary documents on proposed eu legislation are available at the national assembly’s official website.14 this is particularly important as government sessions are closed to the public. however, after such sessions the government holds press conferences and publishes press releases that summarize the conclusions of those government meetings and, as mentioned, since june 2016 some documents are made public. considering that national positions formed in the line ministry at a professional level almost without any changes enter negotiations with the council of the eu, the expertise of csos would be a valuable input. in fact, almost all ministries believe that consultations with csos would be useful to ensure the formulation of well-considered national positions (mzz, directorate for eu affairs, 2015). similarly, officials at the european commission agreed that it is important to include civil society and thus maintain a relationship with them in order to receive specific and technical information (koeppl, 2001). despite the need for information, especially from experts in the field, consultations at ministries are not a regular practice when it comes to eu affairs. why are officials restrained from organizing regular open consultations with civil society? first of all, they miss at least the minimum principles for state – 14 access to eu-related documents at the national assembly’s website, [online] available at http:// www.dz-rs.si/wps/portal/home/delodz/zakonodaja/zadeveevropskeunije. 99 non-state sector cooperation concerning eu affairs. officials also express concern regarding the increased administrative work that such consultations would create due to staff shortages at the ministries, particularly in the timeframe given for preparing national positions, which is usually short and requires flexibility from officials. additional new regulations on organizing consultation with regard to eu affairs could also lead to over-regulation. some ministries also recognize they are not very familiar with eu legislation regarding the different forms of consultation and all would like to participate in training on consultation processes for eu affairs. problems are also detected on the side of civil society, such as: insufficient knowledge of the political system and decision-making procedures, excessively high expectations for a slovenian influence in negotiation processes, insufficient knowledge of legislative proposals, the lack of professionalism and expert knowledge among civil society, and the unresponsiveness of civil society actors. last but not least, officials are afraid of lobbyist, partial and private interests that are out of step with common and general goals (mzz, directorate for eu affairs, 2015). while, on the one hand, the coordination of eu affairs in slovenia does not foresee the inclusion of csos in forming national positions, on the other, csos remain passive in their activities. this is in line with assessments that civil society in central and eastern europe remains weak (börzel, 2010, p. 4). csos are unresponsive, even when ministries invite them to comment on proposed eu legislation (stakeholder meeting, 2015a; 2015b). the lack of various csos’ engagement and their passive role in policymaking may be observed when looking at the frequency of the strategies employed during the decision-making process. the use of different techniques is dispersed; in 4 5 44 3 4 19 5 11 2 1 2 2 7 3 10 7 0 0 1 0 2 4 1 3 1 0 2 4 6 8 10 12 14 16 18 20 most influential 2 most influential 3 most influential government goea line ministry inter-ministerial coordination structures parliament permanent representation in brussels government agencies ministry of foreign affairs other figure 3: crucial institutions for managing eu affairs (frequencies) source: intereuro survey, 35 interviews among national officials 100 fact, each technique is rarely used. to a slightly bigger extent, csos rely on building coalitions with foreign organizations, creating an extensive body of technical expertise and knowledge, and publishing position papers. but even these strategies are not often employed. 4. conclusion forming national positions on eu legislation is an important phase of the policy process for any member state by allowing a country to express its expectations and intentions concerning new legislation. based on the position adopted, countries then negotiate on the final version of eu legislation. in the process of forming national positions on proposed eu legislation, csos should be included. first, the representatives of csos can bring in expert knowledge and experience not possessed by civil servants yet important for the country. second, they represent a bridge between the public and decision-makers that contributes to more legitimate and democratic decisions. slovenia seems to neglect the expertise and information held by csos in the process of forming its national positions. the current system for coordinating eu affairs does not anticipate any role for csos. the national position is typically formed at a lower bureaucratic level in such a way that it is based on the commission’s proposal, thereby avoiding any bigger changes to national legislation and remaining sufficiently broad to enable negotiations. the role of the national assembly (a representative 0.7 0.57 0.67 0.85 0.73 0.56 0.06 0.53 1.06 0.94 0.94 0 1 2 3 not at all very frequently figure 4: strategies of non-state stakeholders, the view of national officials (mean values) source: intereuro survey, 35 interviews with national officials 101 body of citizens) is minor and passive. national officials, on the other hand, recognize the benefits of including csos in the whole process but are afraid of greater work, more bureaucratic processes, and corruption (for the latest, see also radu, 2017). at the same time, csos also remain quite passive. recently, some changes have been noticed due to the individual engagement of policy officials and certain competent authorities. one advance is the public availability at least of a few documents via the eu portal. in the future, more systematic rules to ensure the inclusion of csos in eu policymaking at the national level should be prepared. although greater changes and progress concerning the inclusion of civil society in eu policymaking at the national level have often been limited by the shortage of staff, economic crises, absence of new employment and work overload due to big events like accession to the eu (2004), adopting the common currency euro (2007), accession to the schengen area (2007) and the presidency (2008), after 15 years of eu membership, during which time eu affairs have become interiorized, the national process of eu policymaking is still far from ideal. criticism can be expressed at all levels. at the political level, a clear and forward-thinking national strategy of goals and interests concerning the eu should be adopted. at the civil servants’ level, the significance of eu legislation should be better recognized, along the maximum inclusion of csos in the process of formulating national positions on proposed eu legislation. at the level of csos, greater professionalization, higher quality staff and a proactive approach are needed. although the article analyzed the case study of slovenia, the research results can be highly relevant for other eu member states mostly from central and eastern europe. these countries all have in common a socialist past, delayed development of the civil society sector, and represent newer eu members. for the increase of legitimacy of national positions presented in the council of the eu, it is necessary to give a clear role to csos in the coordination of eu affairs especially when and where civil society is still in the process of developing. we recommend the preparation of guidelines for national officials on how to bring csos in forming national positions, as well as the introduction of more transparency in the process of adopting national positions. acknowledgements: the analysis is based on research as part of the international project intereuro (www.intereuro.eu; also see beyers et al., 2014), conducted under the auspices of the european science foundation, and financially supported by the slovenian research agency under grants n5-0014 and p5-0136. the analysis is also based on research by the ministry of foreign affairs, directorate for eu affairs, in the framework of the project ‘improving consultation practices in decision-making on eu affairs at the national level among key actors in eu policymaking at national level’. we wish to give special thanks for providing us with the data. the authors would also like to thank the participants at the ‘governing across jurisdictions’ panel at the ipsa 2016 world congress for all their useful 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(eds.), policy-making in the european union, oxford, new york: oxford university press, 2010, pp. 69-104. 38. young, a.r., ‘the european policy process in comparative perspective’, in wallace, h., pollack, m.a and young, a.r. (eds.), policy-making in the european union, oxford, new york: oxford university press, 2010, pp. 45-68. 39. zintpk (zakon o integriteti in preprečevanju korupcije) [integrity and prevention of corruption act], official journal of the republic of slovenia, no. 69/2011. 40. žurga, g., ‘project management in public administration. tpm – total project management maturity model. the case of slovenian public administration’, 2018, transylvanian review of administrative sciences, 53e, pp. 144-159. 37 abstract the study explores followership resilience in three bulgarian municipalities. its purpose is twofold: first, to draw the attention of researchers and managers on followership resilience, and second, to explore proactivity and trust as factors of followership resilience in administrative structures. the study is based on a qualitative approach, and uses a combination of two research strategies – exploratory and descriptive. data is collected through semi-structured interviews with a sample of 35 municipal employees (10.2% from the general population). followership resilience is analyzed by means of followers’ psychological readiness to participate in the decision-making process and to trust superiors. four types of followers are identified and strengths and weaknesses of each type are discussed. the preference of the majority of interviewees (69%) to follow instructions and not to trust leaders is interpreted. it is concluded that the formula for successful followership resilience in terms of proactivity and trust involves achieving balance and coherence. keywords: follower, followership resilience, proactivity, trust, administrative structure, public administration. followership resilience in administrative structures: a new perspective emil kotsev emil kotsev associate professor, department of business development and innovations, faculty of business and management, university of ruse, ruse, bulgaria tel.: 0035-988-88.38.250 e-mail: ekotsev@uni-ruse.bg doi: 10.24193/tras.si2021.3 published first online: 12/15/2021 transylvanian review of administrative sciences, special issue 2021, pp. 37–53 38 1. introduction scholars’ interest in followership has been steadily increasing since the beginning of the 21st century (bligh, 2011). a growing number of academic and business publications recognize that without followers there can be no leaders (collinson, 2006), and that it is the followers rather than the traditional leaders who make things happen in today’s organizations (mullen, 2016). however, research on followership still lags behind leadership studies: only 8% of all articles published in the leadership quarterly at the end of 2017 used the term ‘follower’ (or a derivative) in their title, compared to 83% that used the term ‘leader’ (bastardoz and van vugt, 2019). according to bligh (2011), the concept of followership is entering the second stage of conceptual development, one of evaluation, critical reviews, and augmentation (reichers and schneider, 1990). another new and growing concept in management research is organizational resilience. in times of global pandemic and economic collapse research on opportunities that strengthen organizational capabilities to respond quickly and adapt to adverse changes in the external environment is becoming particularly relevant (duchek, 2020). it is up to science to take the lead and to suggest new strategies and approaches to resource efficiency by trying to identify opportunities that organizations either do not recognize or underestimate. it is in this context that followership comes into play. although there are some preliminary indications that followership can play an important role in the development of organizational resilience (e.g., andersson, 2018; eriksson, 2018; andersson et al., 2019), the relationship between the two constructs remains unclear. tengblad (2018, p. 39) stresses the importance of constructive followership as part of the organizational social resources, and states the ‘need of taking a holistic perspective in decision-making and the ability to act swift, agile and imaginatively for preventing crises and to exploit opportunities’. similarly, cruickshank (2020) contends that employees need to be resilient and proactive to improve organizational resilience. past research on employee resilience suffers from a lack of conceptual and methodological clarity (britt et al., 2016). most publications refer to employee resilience as an individual capacity (luthans, 2002; bonanno, 2004), trait (fredrickson, 2003) or ability (smith et al., 2008). individual factors concerning mental and physical health reactions to stress after adverse external challenges are the preferred objects of research and analysis. the opportunities provided by the specifics of organizational subordination and interpersonal relationships are considered only from the point of view of the leader as a role model and a person responsible for strengthening follower resilience (e.g., caniëls and hatak, 2019; lin and liao, 2020; eliot, 2020; rezaee et al., 2021). concepts such as leadership (or leader) resilience and employee resilience are widely explored, while the construct of followership resilience remains not developed yet. the concept of resilience in all of its configurations can be applied in various bodies, but it is important to be recognized by local and state governments, particu39 larly in times of disturbances and temporary perturbations. unpredictable crises like the covid-19 pandemic are expected to occur far more frequently than ever before and administrative structures will have to adapt quickly and effectively (marks and knassmüller, 2021). when surprised institutions are forced to act fast and decisively, they have to make use of all resources available. among the most valuable, yet neglected social resources are subordinate employees. in an attempt to present a new perspective to the problem of developing organizational capabilities to respond and adapt, i argue that followership resilience is a holistic construct that goes well beyond the dimensions of mental and physical health at an individual level and plays an important role in the overall effectiveness of administrative structures. in the course of defending this thesis, the study provides an important contribution to the research in public administration performance management. the paper is organized into five sections. the next section explores the conceptual framework of the study. the third section describes the methods used in the study, while the fourth section is dedicated to empirical results and discussion. finally, conclusions, limitations, and future research directions are outlined. 2. literature review and conceptual framework management scholars have long known that followership is essential to organizational leadership (uhl-bien et al., 2014). mary parker follett was among the first to recommend more research into a subject matter that she stated was ‘of the utmost importance, but which has been far too little considered, and that’s the part of followers…’ (follett, 1949, p. 41). sporadic attempts to study obedience (milgram, 1965) and the influence of followers on leaders (dansereau et al., 1975; herold, 1977) have been made since her call, but for a long time, followership has remained out of the focus of researchers’ attention. among the provocateurs of increased interest are the leader-member exchange (lmx) theory of dienesch and liden (1986), the theory of followership of kelley (1992), and many other concepts (gabarro and kotter, 1980; biggart and hamilton, 1984; schriesheim and hinkin, 1990; wayne and ferris 1990) that gained popularity in the late twentieth century. over the last two decades, the interest in followership has gradually begun to catch the attention paid to leadership (baker, 2007; kelley, 2008; carsten et al., 2010; sy, 2010). in parallel, researchers have changed their attitude towards the role of the follower, considering it ‘a fundamental necessity for effective organizational functioning’ (lapierre and carsten, 2014, p. 159). most of them tend to agree with kelley (1992) who contends that followers have more influence on organizational performance than leaders and that little can be accomplished without followers. depending on the situation and the demands of the organization, leaders, and followers can change their roles (townsend, 2002) — a capability that can prove invaluable in a highly turbulent environment. 40 it is this interchangeability that reveals the true nature and importance of resilient followership as an organizational resource and a part of a dynamic system for reaction and adaptation to adverse events, whether they originate from the external or internal environment of the organization. although contemporary scholarship has already acknowledged a relationship between employee resilience and organizational resilience, ‘interventions aimed at developing employee resilience tend to use stress and well-being as proxy resilience indicators, focusing primarily on individual rehabilitation’ (kuntz et al., 2017, p. 223). in this sense, the concept of resilience is not limited to systems within an employee (or a follower) as a human being (e.g., stress-response system, immune system, cardiovascular system) or even to the whole person as a system (masten and narayan, 2012). having in mind followers, franken et al. (2020, p. 93) recognizes employee resilience as beneficial for organizations and describes it as ‘the capacity to continuously adapt and flourish, even in the face of challenge’. therefore, followership resilience is not only about the physical and psychological health of followers. followership resilience is about the healthy readiness of followers to pursue organizational goals and achieve desired outcomes despite adversities. it can be thought of as a sub-system of administrative resilience, explained by sarker et al. (2019, p. 717) as ‘the ability of the administrative system to provide appropriate measures to uncertainties’. it is clear that dimensions affecting the ability of followers to minimize risks and adapt to uncertainties are more than what they appear on the surface. to better understand the multidimensional nature of followership resilience a more in-depth approach is needed. drawing on the work of hughes and bushell (2013), at least five interrelated dimensions can be identified: physical and mental health, appropriate attitudes, innovation potential, contingency resources, and organizational support. the former four dimensions concern followers as individuals, while the latter dimension refers to organizational aspects such as communication and culture. as an organizational resource, followership resilience can be regarded as an essential element of the organizational resilience system as a whole. building on the definition of luthans (2002), i define followership resilience as the physical and psychological readiness and capacity of subordinates to rebound, to ‘bounce back’ from adversity, uncertainty, conflict, failure, or even positive change, progress, and increased responsibility. research on followership reveals that subordinates can enact the role of the follower in very different ways – some may choose to stick to their superior’s instructions by displaying a very passive style of followership, while others may support their manager’s ideas or decisions by using a much more proactive approach (carsten et al., 2010). furthermore, some subordinates may prefer to trust superiors, while others may choose to trust their own judgment. observation shows that different attitudes and intentions result in variations in the selection of the ‘best’ course of action in given conditions (byrne, 2014), especially in times of stress and anxiety. 41 it may be argued that diversity in followership resilience extends beyond proactivity and trust – scholars offer ample evidence for the relationship between resilience and other individual differences, including proficiency, adaptivity, optimism, self-efficacy, and assertiveness (e.g., kim, 2020; sarkar and fletcher, 2014; mache et al., 2014). undoubtedly, all of these aspects matter and most of them can contribute to organizational effectiveness after a crisis situation (nguyen et al., 2016). however, the purpose of this paper is not to provide an exhaustive explanation of each possible variation of followership resilience. as it has been stated above, my aim is to reveal and explore only the main perceptions and intentions, related to followership resilience. taking into consideration the object of my research and the specifics of bulgarian public administration, i have chosen to focus my attention on perceptions and preferences, conditioning the decision-making process and teamwork — challenging areas, already observed by bulgarian scholars (e.g., terziev et al., 2017; georgiev, 2020). the link of these areas to proactivity and trust is obvious. proactive followers strive to contribute to the leadership decision-making process (lapierre and carsten, 2014, p. 160), and their proactive personality influences employee resilience (zhu and li, 2021). regarding the second challenging area, research shows a strong relationship between teamwork and trust in management (kiffin-petersen and cordery, 2003), while scholars (longstaff and yang, 2008; li et al., 2019) state the important role of trust in building resilience. there is no doubt that employees in government organizations need to be resilient to manage challenges such as resource constraints, rising demands, and the tensions and contradictions that underlie much public sector work (franken et al., 2020). building on the research of zhu and li (2021) it is logical to assume that followers who tend to take the initiative will be more resilient to adversities than employees who prefer to follow instructions. in addition, in accordance with the observations of longstaff and yang (2008), it is presumable that subordinates in public organizations who are likely to trust their managers will be more resilient to internal and external tensions than public sector employees who are predisposed to trust their own judgment. 3. material and method 3.1 aim, objectives and research questions the purpose of this study is twofold: first, to draw the attention of researchers and managers on followership resilience, and second, to explore proactivity and trust as factors of followership resilience in administrative structures. the main objectives are as follows: o1. to introduce the concept of followership resilience as a multidimensional construct and to analyze its role in organizational readiness to respond adequately to external adversities; 42 o2. to explore the preferences and willingness of employees from three bulgarian municipalities (1) to follow instructions or take initiative, and (2) to trust the superior or trust their own judgment as key followership resilience factors; and o3. to identify opportunities for followership resilience enhancement in bulgarian administrative structures. taking into account the conceptual framework, the following research questions are addressed in this study: q1. what are the prevailing perceptions and preferences of municipal employees regarding their participation in the decision-making process and their readiness to trust superiors? q2. how these perceptions and preferences affect followership resilience in the three municipalities studied? q3. what employees’ attitudes and perceptions serve best the needs of administrative structures in terms of followership resilience? 3.2 research design and data collection the research philosophy of this study adopts an inductive content analysis perspective. the study is based on a qualitative approach with a combination of research strategies. as it aims to introduce a new perspective to the concept of resilience, exploratory research was entailed. the study also aims to explore and describe personal characteristics of public sector employees in bulgaria, for which i used a descriptive strategy. following the recommendations of saunders et al. (2019), semi-structured interviews were used as an instrument of primary data collection. they were conducted from june 2015 to september 2019 on a sample of 35 municipal employees (10.2% from the general population) from three bulgarian municipalities — ruse (15), svishtov (11), and tutrakan (9). data were collected to explore followership resilience by means of followers’ psychological readiness to participate in the decision-making process and to trust superiors. at the end of each interview session, a conclusion about respondents’ perceptions and preferences was drawn and shared with each of them. all participants confirmed the results obtained. secondary data collection involved retrieving information on followership and employee resilience from scientific journals, reports, and books. 4. results and discussion thirty-two interviewees (91%) showed a willingness to leave decision-making to the superior, comfortably accepting the role of the executor. the rest stated their preference to contribute to public administration efficiency with their ideas and to take personal responsibility in solving emerging problems. in this paper, the former interviewees are called strict followers and the latter — creative initiators. based on the information gained from the interviews, a short description of these characters and their relation to followership resilience is presented below. 43 strict followers are reluctant to be actively involved in the decision-making process. they prefer to follow detailed instructions and report to their superiors at every step. thus, their responsibility is limited only to the quality of implementation of decisions made by another. regarding followership resilience, they have three significant advantages. first, strict followers do not waste their superior’s time in an argument or discussion. this could be very important for the organization, especially in a time of crisis, when every minute is valuable. second, they accept the fact that superiors are better acquainted with the general organizational context. thus, (1) leaders are confident in the exact following of their instructions and timely achievement of the desired result, and (2) the risk of making a decision based on incomplete information is reduced. and third, strict followers are tolerant of new orders. they agree that superiors have their motives for the change and do not question its expediency. however, the shortcomings of strict followers are not less important: – strict followers show restraint in presenting their own point of view to the superior. reluctance in sharing their opinion can be explained both by fear of a possible mistake and by the anxiety of taking on more responsibility. in both cases, the efficiency and competitiveness of the organization decrease due to the limited range of opportunities taken into account. – when performing unstructured tasks with a high degree of uncertainty (situations in which followership resilience comes into play), strict followers take a lot of superior’s times for preliminary directions and additional instructions. this overload distracts managers from crisis mode, reduces the chances of a quick response, and leads to a decreased organizational efficiency as a whole. – in case of a changed situation or circumstances, strict followers tend to wait for new instructions. this slows down the reaction time and reduces the chances of dealing with the crisis. given the nature of public sector work, sometimes their hesitation can be fatal and cause irreparable damage. although significantly fewer in number, creative initiators are also found in the surveyed municipalities. during the interviews, they all revealed a common distinctive feature — their proactive personality. strict followers discussed above can also show significant activity, but it is primarily related to the exact following of goals and tasks set by the superior. apart from action, however, proactivity also includes the notion of ‘acting in advance’ (in this sense, a sign of equality can be placed between initiative and proactivity as personal qualities). creative initiators strive to participate in the initial phase of the problem-solving process — the decision-making phase. they prefer to have relative independence in determining how to perform the task and to accomplish the final goal. creative initiators bring some benefits to followership resilience in public administration. first, they are not simply trying to avoid routine and monotony, but are embracing uncertainty. creative initiators are constantly looking for new challenges 44 and inventing innovative approaches to carry out the task. this explains their tolerance for change and their rapid response (often adequate) to unexpected situational fluctuations — a highly valued feature with respect to followership resilience, especially in administrative structures with a dynamic internal and external environment. as a second benefit, the participation of creative initiators in decision-making broadens the horizons of their superiors. more alternatives are being considered and better decisions are being made. moreover, the mutual interaction creates in them strong moral incentives for even higher proactive behavior and consequently strengthens followership resilience by providing opportunities to use one’s full potential. finally, and maybe most importantly, creative initiators are able to achieve good results even with a relatively incapacitated superior — their independence to some extent neutralizes his/her shortcomings. their enthusiasm is contagious and allows subordinates to do what the superior is unable to do. in case their initiative is accompanied by appropriate competence, they can rely on the support and assistance of other organizational members and thus, enhance followership resilience as a whole. nevertheless, the interviews identified some limitations of creative initiators: – they seldom realize that their information is insufficient. they tend to decide and act hastily, based on a subjective assessment of the situation, with no idea of the general picture of the organization. the lack of awareness of their insufficient information leads to underestimation of the risks and avoidance of support from the superior. one of the interviewees confessed that he considers it a matter of honor to cope with the problem on his own. unfortunately, sometimes this ‘coping’ does not lead to its solution, but its deepening. – in case of following certain mandatory parameters of decisions imposed on them from above, creative initiators may lose part of their motivation. at the same time, their preference for non-programmed decisions and unstructured tasks creates tension in others and increases the stress intensity in the administrative structure as a whole. in other words, instead of dealing with a crisis, they may provoke it. – ongoing decision-making discussions can be time-consuming. the willingness of creative initiators to present and defend different points of view and opinions may exceed the time available to the superior to listen to them. this does not bring competitive advantages to the organization, especially in crises. the analysis shows that it is not possible to state definitively which of the two types (strict followers or creative initiators) favors greater followership resilience. in disasters and crises that have arisen before a decision to respond is made, the benefits of strict followers outweigh the harms. it is assumed that the superior is familiar with the problem and sees the big picture. in such cases, the strict adherence to the instructions received enhances followership resilience. however, when adversity appears unexpectedly to subordinates during their routine work, the need for a prompt 45 and adequate response may be decisive. in such situations, the qualities of creative initiators come to the fore and increase the chances of followers to ‘bounce back’ successfully. a second objective of the interviews was to explore respondents’ preference to trust leaders or to trust their own judgment. only eight interviewees (23%) declared their readiness to trust superiors, while the rest twenty-seven (77%) were more inclined to trust their own judgment. here, the former interviewees are called trustful conformists, and the latter are named skeptical dissenters. relatively constant readiness of employees to perceive other people’s ideas as their own can be defined as conformity orientation. research shows that it increases in people who are afraid of disapproval or rejection (boyatzis, 1991). but, in addition to the psychological readiness to trust, it also depends on the personality of the superior. for example, subordinates who feel the manager’s support and care can have a higher degree of trust in this particular leader (mcallister, 1995) and eventually can change their orientation with another manager. therefore, if followers who are afraid of disapproval or rejection have received constant support from previous managers, they will be inclined to adapt their opinion to the ideas of the superior. trustful conformists do not question the goals and tasks assigned to them by superiors. they agree that the position of the superior provides a more comprehensive view of the organization, while followers’ limited horizons do not favor the development of reasoned opinions. in terms of followership resilience, the following advantages of trustful conformists were identified: – trustful conformists are predictable team players, who reduce the level of internal uncertainty in the organization. they are ready to accept organizational goals as personal. superiors generally approve when subordinates leave it to them to set important goals and priorities. seeing that followers share their goals and tasks, superiors tend to consult with subordinates more often and delegate more responsibility to them (graen and scandura, 1987). in addition, because of the mutual confidence, superiors are less concerned about performance control. paradoxically, this increases the independence of trustful conformists. – trustful conformists maintain good relations with superiors. the level of conflict between the two parties is kept low without much effort. this significantly reduces the overall level of work stress and increases the likelihood that the follower will receive support from the leader in adversities. – all trustful conformists among the interviewees reported enhanced communication with superiors. obviously, the level of information exchange between the two levels is high and, on this basis, the management decisions taken by both parties timely reflect unexpected changes in the situation. however, two weaknesses of trustful conformists also have to be taken into consideration. first, they tend to avoid confrontations with the superior. thus, they plant 46 a sense of infallibility in superiors which is a prerequisite for ignoring some warning signs of imminent danger and underscoring the importance of crisis prevention. and secondly, conflicting goals and tasks paralyze trustful conformists, as it is difficult for them to decide which one to follow. the available evidence suggests that this condition is due to high dependability on the superior’s decisions and lack of anticipation of possible complications. skeptical dissenters are at the other extreme. they do not tend to accept the ideas of the superior, but to trust their own judgment. usually, their reluctance is based on suspicion of superiors’ competence or disagreement with their views. this attitude does not bother professionally and morally mature managers who highly value the independence of their subordinates and prefer it to team-working skills (buckingham and coffman, 2014). experimental evidence shows that subordinates are more inclined than their superiors to avoid direct confrontation with the other party, and for this reason, leaders may be left with an inaccurate idea of the real feelings of distrust on the part of followers (fitness, 2000). this often makes their skepticism difficult to detect by the manager. they may prefer to hide their disagreement with the leader deep inside to avoid possible complications. despite their reluctance for teamwork with leaders, skeptical dissenters can be beneficial for followership resilience in administrative structures for the following reasons: – skeptical dissenters do not automatically execute the superiors’ decisions, usually due to their belief that more efficient approaches can be found (as one of the interviewees put it: ‘there is always a better way to get a job done’). based on the information at their disposal, they try to understand the meaning of the decisions and modify them depending on the conditions of the specific situation. in consequence, a crisis can be prevented. – skeptical dissenters make the most of their knowledge and skills. as a result of their efforts, the organization receives reliable information ‘from the line of fire’. this allows a quick response and usually, their adequate judgments are not susceptible to manipulation by a superior. – skeptical dissenters warn of problems and identify favorable opportunities. they often act as a ‘devil’s advocate’, which allows them to recognize system faults or malfunctions as early as possible. in addition to their direct impact on followership resilience, skeptical dissenters indirectly affect organizational resilience in general. by being skeptical, they unconsciously improve the individual results of their superiors. as leaders expect resistance from distrustful followers (explicit or implicit), they pay more attention to the quality of decisions made, devoting additional time to gathering detailed information, analyzing alternative approaches, and refining their argumentation. thus, leaders maintain consistently high standards in their work, which has a positive effect on organizational resilience. 47 the influence of skeptical dissenters on leader’s decisions can be considered positive if it is accompanied by high technical competence in the relevant field. from the standpoint of their knowledge and experience, they are able to make changes that will increase decision effectiveness. if their competence is in question, their attitude may have a negative impact on organizational performance. however, the shortcomings of skeptical dissenters can be manifested even by competent employees. they arise primarily from the permanent risk of communication problems and conflict. as a rule, the information exchange between skeptical dissenters and superiors is not particularly intense. communication between the two levels is rarely sincere and open. each of the parties seeks to attract more supporters — an aspiration that takes a lot of energy from employees, and in its extreme can affect negatively not only followership resilience but the effectiveness of the administrative structure as a whole. a fertile ground for confronting different points of view and increasing resistance is the internal environment of administrative structures that are characterized by ambiguous or unreasonable goals. in such structures, decisions may become more subjective under the influence of individual, group, or party interests. research shows that when there are problems in leader-follower relationships, the first thing to consider is the appropriate interpretation of the goals and the methods that contribute most to their achievement (boccialetti, 1995). in other words, a difference in the goals of the two parties involved and in methods for achieving them is a serious prerequisite for corrosion of relations. thus, skeptical dissenters risk not only their career but also the effectiveness of their joint, not particularly synergistic, performance. in organizations with a predominant number of skeptical dissenters (like the three municipalities studied), the likelihood of losing focus and coordination increases. the lack of trust between different hierarchical levels leads to a waste of time for explanations and inspections. in its extremes, it becomes difficult to reach an agreement even on the main purpose and direction of the organization. in summary, the results of the interviews discussed above are presented in figure 1. the uneven distribution of respondents in the general matrix is impressive. at first glance, the gathering of the majority of interviewees (69%) in one quadrant and their complete absence in another is puzzling. furthermore, it seems illogical for such a large part of employees to show a preference to follow instructions, but at the same time not to trust leaders. most likely this can be explained by the peculiarities of the municipalities in bulgaria as administrative structures. the practice of appointing supporters to key positions in the municipality by the party that won the local elections is very common and has become almost traditional. worried about their jobs, lower-level employees prefer not to take responsibility but to follow instructions. at the same time, most of the newly appointed managers do not have the competence and experience needed to gain the trust of their subordinates. as one interviewee put it: ‘why should i give my boss advice if he wouldn’t listen to reason, and in the end, i’ll be the guilty one!?!’ 48 0 creative initiators / trustful conformists 3 creative initiators / skeptical dissenters 8 strict followers / trustful conformists 24 strict followers / skeptical dissenters high willingness to participate in decision-making low high low readiness for teamwork figure 1: division of interviewees according to their willingness to participate in decision-making and readiness for teamwork source: own calculation based on semi-structured interviews with 35 municipal employees the very limited presence of creative initiators in the studied municipalities is also worrying — two in ruse and one in tutrakan. the question rightly arises as to how municipalities meet the expectations for new public management if they do not have proactive employees needed to take full advantage of favorable opportunities and to rebound from adversities in order to improve the lives of people in their communities. probably this partly explains the focus of bulgarian municipalities on routine activities such as developing projects to apply for various eu support funds, neglecting activities that have proven their importance for job creation and living standards enhancement, such as attracting private investment and improving the business environment (nikolov, 2019). definitely, depending on the specifics of the situation, each of the four types of followers can be beneficial to the organization. knowledge of their strengths and weaknesses, as well as their even dispersion in public administration, have the potential to increase the followership resilience and effectiveness of institutions. in other words, the formula for successful followership resilience in terms of proactivity and trust involves achieving balance and coherence. due to human resources key role in organizational resilience as a whole, it is legitimate to expect that strengthening followership resilience of public administration employees will make institutions more resilient. 5. conclusions and future research directions the study explores followership resilience in three bulgarian municipalities. its purpose is twofold: first, to draw the attention of researchers and managers on followership resilience, and second, to explore proactivity and trust as factors of followership resilience in administrative structures. the study is based on a qualitative approach within a combination of research strategies — exploratory and descrip49 tive. data is collected through semi-structured interviews, to explore followership resilience by means of followers’ psychological readiness to participate in the decision-making process and to trust superiors. four types of followers are identified and strengths and weaknesses of each type are discussed. it is concluded that the formula for successful followership resilience in terms of proactivity and trust involves achieving balance and coherence. the attempt to introduce and define followership resilience is definitely a strength of this study. positive features are also the identification of four types of followers and attraction of attention on their uneven dissemination in some bulgarian municipalities. in order to overcome this weakness and strengthen the overall organizational resilience, public administration employees need to undergo special training for self-analysis of their resilience as followers. however, the study is not without limitations. first, the limited number of administrative structures and followers surveyed makes it useless to apply statistical methods, which compromises the reliability of the study, leaves doubt that the results obtained are context specific and prevents the formulation of significant conclusions. second, it disregards the impact of individual diversity (ethnicity, gender, age, sexual orientation, etc.) on followership resilience in public administration. third, the study only hints at the link between followership and leadership resilience, leaving it unclear how they exactly correlate with organizational resilience and effectiveness. perhaps future researchers will be interested to explore more explicitly the relations between these constructs. finally, followership resilience factors in administrative structures need to be considered in a more systematic approach. how is their combined influence mediated by other public administration characteristics like the nature of the job or the hierarchical level to which they relate? how does organizational culture affect followership resilience? what is the role of local communities and civil society as catalysts for new public 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framework for policy innovation normally used in federal systems to a comparative analysis of two unitary states – poland and norway. the analysis serves to highlight how the effectiveness of horizontal, non-coercive diffusion mechanisms relies on established norms and traditions for local political self-rule. a key finding is that the prospects of success for ‘soft’ central government steering seem to rely not least on the resourcefulness of the local units. the study furthermore highlights the importance of historical trajectories for internal as well as external determinants for policy innovation. keywords: climate change, multilevel governance, local government, comparative policy analysis, policy innovation, poland, norway. the rabbit and the tortoise. climate change policy development on the local level in norway and poland*1 jan erling klausen katarzyna szmigiel-rawska jan erling klausen associate professor, ph.d., department of political science, faculty of social sciences, university of oslo, oslo, norway e-mail: j.e.klausen@stv.uio.no katarzyna szmigiel-rawska (corresponding author) assistant professor, ph.d., department of local development and policy, faculty of geography and regional studies, university of warsaw, warsaw, poland tel.: 0048-22-552.06.50 e-mail: k.szmigiel@uw.edu.pl * the empirical data is taken from the project polcitclim (organizing for resilience. a comparative study on institutional capacity, governance, and climate change adaptation in poland and norway) funded by norway grants in the polish-norwegian research programme and conducted by researchers from the university of warsaw and the norwegian institute for urban and regional research. transylvanian review of administrative sciences, no. 52 e/2017, pp. 38-58 doi:10.24193/tras.52e.3 published first online: 2017/10/31 39 1. introduction in modern societies, public policy is to a great extent executed in systems of multi-level governance (bache and flinders, 2004; piattoni, 2010). the scope for centrist political control is commonly seen to be delimited by a growing dispersion of authority upwards to supranational institutions as well as downwards to regional and local governments (marks and hooghe, 2004, p. 15). a common observation is that the governing role played by central government institutions and actors has been diminished (bartolini, 2011, p. 3). as a consequence, there is a growing interest in non-centralized mechanisms for policy development, subsumed under headings such as policy innovation (berry and berry, 2014), policy transfer (dolowitz and marsh, 1996), institutional design (lowndes and wilson, 2001) and lesson-drawing (rose, 1993). the underlying assumption of these and other related concepts is that policy change and dispersion of new policies among lower-level tiers of government are not necessarily or even primarily results of hierarchical central government steering. rather, the focus is on how new policies are invented and spread across jurisdictions horizontally, through voluntary mechanisms (stone, 2012). such mechanisms of horizontal policy innovation have primarily been studied in the context of international relations or in federal systems (graham, shipan and volden, 2013), including notably among us states (walker, 1969; allen, pettus and haider-markel, 2004), among eu member countries (bulmer, 2007) or on the regional level in european federal states (benz, 2007). less attention has been paid to decentralized, non-coercive mechanisms for policy change in unitary states. one of the reasons for this bias is probably that lower-level tiers of government are on the whole more autonomous in federal systems than in unitary states (pollitt and bouckaert, 2011, p. 51). the legislative and budgetary powers retained by central governments in unitary states, leave more leeway for centrist control and less for local policy development than what is the case in federations (bouckaert and kuhlmann, 2016, p. 8). but unitary states should not be seen as a homogenous group. the scope of decentralization and autonomy varies widely between countries (sellers and lidström, 2007). lower-level tiers in unitary states in many cases enjoy considerable ‘jurisdictional integrity’ (skelcher, 2005). furthermore, public spending on the local level tends to be higher in unitary states than in federations (bertrana and henielt, 2011, p. 309). local governments in unitary states should, as a consequence, be seen as more than just implementers of central government policies. central government controls are not always authoritative, and rely sometimes more on ‘prayers’ than on ‘muscle’ (gormley, 1989). this calls for increased focus in comparative studies about how lower-level tiers of government in unitary states contribute to policy development through horizontal, non-coercive diffusion mechanisms. this article seeks to provide a more nuanced understanding about non-centralized policy invention and diffusion in the multi-level governance systems in unitary states. specifically, it contributes by showing that approaches to policy innovation that originate from the study of federal and multinational governance can be applied 40 to the comparative study of unitary states, and under which circumstances. in order to highlight non-coercive diffusion mechanisms, the analysis deals with an emerging policy issue that has not, as of yet, been transformed into binding central government regulations. this design choice is in line with schneider and ingram’s (1990, p. 524) perspective on changes in the use of policy tools as a given policy area matures. on a general level, these authors expect newer policies to rely on learning tools, inducements and capacity building. climate change adaptation policy in local governments in poland and norway is a pertinent empirical case of policy innovation in unitary states. climate change adaptation can be defined as adjustment of social and economic practices to match (inevitable and irresistible) shifts in underlying climate conditions (howlett, 2014). the need for policy measures to enhance the capacity of societies to cope with the effects of climate change is increasingly being recognized (keskitalo, 2010), and subnational governments across the globe have taken up the challenge (jones, 2014). local and regional governments are often seen as key actors due not least to their responsibilities related to planning, infrastructure, water and sewage and other relevant services (ipcc, 2014). although such policies are promoted by the eu and to varying extent by national governments, adaptation policy has not (as yet) been transposed into legally binding requirements for local and regional governments in the two countries. as a consequence, the pattern of policy adoption has been found to vary a lot, domestically and between countries (o’brien and selboe, 2015). the absence of coercive measures for adoption of specific policies, as well as the recognized need for developing policies that take local and regional contingencies into account, means that this policy area is highly illustrative for a comparative study of non-centralized policy invention and diffusion. in unitary states, and in the absence of coercive centrist control, policy innovation and diffusion relies heavily on the proclivity of local governments to identify and respond to emerging policy challenges. the comparison of poland and norway serves to illuminate how such capacities are shaped by historical trajectories. while the present-day system of democratic local governments in poland was established in 1990 following the fall of the iron curtain, norway’s current system is to a great extent a continuation of the system that was established as early as in 1837. local self-rule has been an integral part of norway’s system of government for almost two centuries; however, corresponding value sets have not had the same amount of time to take root in poland. a key point in the analysis will be to what extent the effectiveness of horizontal, non-coercive diffusion mechanisms relies on established norms and traditions for local political self-rule. the article is structured as follows. in the section ‘policy innovation in systems of multi-level governance’ key theoretical considerations to do with non-centralized policy invention and diffusion in unitary states are elaborated upon, and the analytical model is presented. the section on data and methods presents a survey questionnaire distributed to local governments in the two countries, as well as other data 41 sources. the results section presents the operationalization of the model, and the empirical results of the regression analysis. the discussion section draws implications of the results for the understanding of policy innovation mechanisms in multi-level governance systems in unitary states. the conclusions section maps out key findings on the preconditions for use of ‘soft’ steering mechanisms in multi-level governance processes in unitary states. 2. policy innovation in systems of multi-level governance a reasonable starting point for a discussion about policy innovation is the term’s underlying assumptions about ‘newness’ – perhaps the most intuitively obvious element of the term innovation, and a recurring issue in the debate. from early stages on, it has more or less been agreed upon that innovation does not by necessity equate invention. in his seminal study of diffusion of policy among us states, jack l. walker (1969) defined innovation as ‘a program or policy which is new to the states adopting it, no matter how old the program may be or how many other states may have adopted it’ (p. 881). a similar approach was taken in early studies of organizational innovation (mohr, 1969, p. 112). later contributions have upheld this position. in a recent study, policy innovation is defined so as to include not just invention of new policies, but also diffusion to new units, and the identification of new effects of existing policies (jordan and huitema, 2014, pp. 389-390). this broadly inclusive definition seems helpful not least from an empirical perspective, because the initial ‘first mover’ may be hard to identify. invention of policies that are ‘novel to the world’ (sørensen and torfing, 2011, p. 850) are probably rare in a networked and integrated society. indeed, it has been argued that the flow of policy images and ideas in society is such that one would be hard pressed to trace the origins of emerging policies at all: ‘the impetus for the spread of ideas does not lie with the persuasiveness of the originator of the idea (…) all ideas are in the air all the time and are implemented depending on the purpose at hand’ (weick and quinn, 1999, p. 376). but to regard diffusion as a form of invention is not to say that adoption of a policy that pre-existed in other jurisdictions removes the element of ‘newness’ from the term innovation. as noted by diane stone in a recent review article (2012), a burgeoning literature ‘query and contest assumptions of undiluted dichotomous diffusion or unmediated ‘import’ of transferred ideas’ (p. 488). by speaking of ‘lesson drawing’, rose (1993) emphasized the creative processes involved in voluntary and smart uptake of ideas from a jurisdiction’s environment, and the resulting scope for adaptation of broadly diffused policies to local contingencies. the term ‘policy transfer’ is used as a headline for various approaches to the analysis of policy innovation in such a perspective. in a multi-level context, the scope for local adjustments and ‘translation’ of diffused policies (prince, 2010) may however be highly variant. as noted in an earlier review article, transfer of policy between jurisdictions is not necessarily voluntary (dolowitz and marsh, 1996). direct and indirect coercion are alternative transfer mechanisms. 42 the former scenario occurs when one government forces another to adopt a policy; the latter emphasizes how various forms of interdependency may cause pressure to adopt a policy that is already in place in another jurisdiction (pp. 347-349). this distinction between voluntary and coercive forms of policy innovation has later been conceptualized in the context of eu policy diffusion as a trichotomy of transfer types, based on the type of governance that gave rise to the new policy (bulmer and padgett, 2005). while hierarchical governance gives rise to coercive policy transfer, agreements reached by consent or majority are often associated with transfer by negotiation. a third category of transfer is facilitated unilateralism, which signifies voluntary adaptation in policy areas where member states retain national sovereignty. a number of voluntary mechanisms for diffusion of new policies have been suggested. in some cases, policies aimed at giving one government economic advantage are adopted by other governments in order to even the score (berry and berry, 2014, p. 312). governments tend to imitate practices in governments that seem similar to themselves, for instance in terms of resources and ideologies (dolowitz and marsh, 1996, p. 353). a variation of this mechanism is emulation of best practice, where governments adopt solutions that are generally seen as successful, regardless of similarity or geographical proximity with the exporting government. mimetic strategies can be interpreted as an economical approach to policy development in light of uncertain knowledge about the relative merits of different policies, in other words a boundedly rational strategy (simon, 1957). but emulation of best practice may also be interpreted as manipulation of symbols; a strategy for gaining legitimation by giving an appearance of modernity, regardless of the actual merits of the policy in question (dimaggio and powell, 1991). a more tangible mechanism for diffusion with roots in the early literature (hägerstrand, 1967; hudson, 1969) is geographical proximity (karch, 2007, pp. 57-59) – learning from neighbors. spatial diffusion processes are seen as ‘contagious’ or ‘hierarchical’. whereas contagious diffusion denotes diffusion among neighbors, hierarchical diffusion refers to the spread of new policies first adopted by the largest cities and locations highest in the urban hierarchy. however, these types of diffusion often coexist in the same space and time. a powerful mechanism for policy diffusion is the extensive participation of local governments in intergovernmental networks (rhodes, 1991, p. 205). because such networks may include members from a wide geographical area, they can potentially mitigate the importance of geographical proximity for policy diffusion. extensive participation in intergovernmental networks may heighten the importance of the individuals who represent their local government in the network arenas as agents of diffusion. but the literature provides scant evidence for making assumptions about the relative importance of such ‘personalized’ diffusion mechanisms as compared to other mechanisms. an alternative strategy for studying policy innovation is to investigate internal determinants for adoption of new policies; in other words, to look for characteristics that may explain why some governments appear to be more innovative than others (berry and berry, 1990; 2014). the internal determinants and the diffusion effects 43 should be seen as complementary. a focus on internal determinants does not presume that governments innovate in isolation. rather, the question is one of why some governments are quicker than others in terms of picking up ideas that float about, and transform these into working policies. berry and berry (2014) suggest that three classes of internal determinants deserve particular attention. the first of these is related to problem perception and motivation for innovation. the assumption is that a government will be highly motivated to innovate if a policy problem is perceived as severe. this class of internal determinants also includes the character of public opinion and electoral competition, as well as other ad hoc motivation factors that can push a new policy higher on the agenda (berry and berry, 2014, p. 326). the second class of internal determinants relates to ‘obstacles to innovation and the resources available to overcome them’ (berry and berry, 2014, p. 324). organizational capacity, financial resources, economic development in the jurisdiction and the availability of slack resources are some of the main determinants mentioned. with reference to mainstream policy analysis theory, they note that the existence of policy entrepreneurs and policy windows (kingdon, 1984) or strong advocacy coalitions (jenkins-smith et al., 2014) may be key factors for inducing change. the third class of internal determinants relates to other policies. this determinant is based on the assumption of ‘innovation interrelationships’ developed by mahajan and peterson (1985, pp. 39-40 apud berry and berry, 2014, p. 329). the gist of this is that the probability of adoption of policy b will increase provided that the two policies are complementary (a creates precedence for b) or contingent (b depends on the prior implementation of a). if the two policies are substitutable however, adoption of a will inversely affect the probability for adopting policy b. berry and berry’s unified model of government innovation (berry and berry, 2014) combines these internal determinants for policy innovation with external determinants, in other words diffusion effects such as the ones briefly discussed above. the basic model is presented in figure 1. figure 1: the unified model of government innovation source: berry and berry, 2014. 44 the generic nature of this model necessitates contextual operationalization for empirical analysis. this is presented in the results section. the following section presents the empirical basis for the analysis, the method used and specifics about the national context in the two countries. 3. data and methods 3.1. survey questionnaire to local governments the empirical research in poland and norway was carried out separately by the two project member institutions in 2014, based on a shared approach. the research included a survey questionnaire to local governments, as well as case-studies in selected cities. in norway, the survey was conducted by means of the web survey program beetrieve. an invitation to participate in the survey was issued to the public email address of all of norway’s 428 local governments. the email message asked for the invitation to be passed on to the person responsible for climate change adaptation. if this responsibility was not allotted to a specific person or position, the email was to be sent to the head of the planning department. the invitation was repeated three times. a total of 218 municipalities completed the entire, or parts of, questionnaire, resulting in a response rate of 50.93%. in light of previous studies to the same group of respondents, this is a satisfactory result. the municipalities that responded to the survey were compared with the universe of municipalities in order to assess potential bias in the data. the participating municipalities were on average larger (17,417 inhabitants) than those that did not participate (7,220 inhabitants). the geographical spread is satisfactory, although local governments in northern norway are somewhat underrepresented. the participating municipalities were fairly similar to the universe in terms of income level and level of education in the population.1 because the analysis will contain a variable to assess the effect of municipal size, the bias in the composition of the data material is controlled for in the analysis. in poland, the survey was conducted by means of internet questionnaire, but the form could also be returned by land mail. all of poland’s 2,479 municipalities received an invitation to participate via their public email addresses. the invitation was to be passed on to the person responsible for climate change adaptation. if the responsibility was not allotted to a specific person or position, the invitation was to be sent to the mayor or someone who is on the top level of the municipality’s management. the invitation was repeated two times. a total of 1,311 questionnaires were completed entirely or partly, resulting in a response rate of 52.9%. in light of previous studies to the same group of respondents, this is a satisfactory result. the municipalities that responded to the survey were compared with the universe of municipalities in order to assess potential bias in the 1 the authors will supply data on the distribution of the sample upon request. 45 data and the set of answers can be considered as representative in relation to types of municipalities and in relation to spatial distribution. 3.2. method empirical studies of policy innovation are commonly carried out by means of event history analysis (berry and berry, 1990; box-steffensmeier and jones, 1997; allison, 2014) or other methods that accommodate the use of pooled time series data. event history analysis provides estimates of the ‘hazard rate’ for implementation of a new policy by jurisdiction i in year t, by constructing a data set in which each unit denotes one jurisdiction/year. each unit is allocated the value 0 on the dependent variable until the policy in question is implemented, in which case the value changes to 1. logistic regression is commonly used for estimating the effects of internal and external innovation drivers for the probability of value = 1 on the dependent variable (allen, pettus and haider-markel, 2004). event history analysis enables the researcher to analyze varying rates of policy innovation through a set period. the purpose of the analysis in this article is to test the effects of internal and external drivers for policy innovation based on cross-sectional data for one single year. this approach has definite disadvantages in terms of analytical leverage as compared to event history analysis. our analysis cannot capture differences between early adopters and latecomers, nor can it identify changing patterns in the rate of policy innovation over time. the key advantage of our approach is economical, in the sense that it allows analysis of policy innovation in cases where pooled time series data are unavailable – not an uncommon occurrence in political science. the analytical model takes the following general form: adopti,t = f(motivationi,t, resourcesi,t, otherpoliciesi,t, externali,t, e). in this model, policy innovation (defined as adoption of a new policy in jurisdiction i in one given year t) is a function of four variables that affect jurisdiction i’s motivation to adopt, available resources to innovate, the presence or absence of other policies that may affect jurisdiction i’s probability to adopt, and diffusion effects due to the pattern of adoption in other jurisdictions. the specification of the variables is described in the results section. 3.3. the national context norway and poland are both highly decentralized unitary states. according to swianiewicz’ (2013) categorization, poland along with hungary and slovakia is a ‘type 1’ country, termed ‘champions of decentralization’ (p. 303). this category has a lot in common with the established ‘northern european’ model of local governments in the comparative literature (hesse and sharpe, 1991; page and goldsmith, 1987), which includes norway. in this sense, norway-poland is probably as far as one can get in terms of conducting a most similar case design (gerring, 2007) for comparative 46 study of an established western democracy and a country with far shorter traditions for local self-rule. norway has a three-tier system of government. there are 428 local governments and 19 county governments including the capital. local governments are spatial planning authorities as well as local environmental authorities. they are in charge of technical services including water and sewage, local infrastructure including roads and parks, environmental issues in addition to a wide range of welfare services (fiva, sørensen and hagen, 2014). the ministry of climate and environment and the norwegian environment agency are in charge of climate change adaptation policy at the central level. currently, information and capacity building measures (schneider and ingram, 1990) directed towards local governments comprise the main thrust of national adaptation policy (moce, 2013). poland has a four-tier system of government. each of the 2,479 municipalities has directly elected mayors and councils. the 380 counties and 16 regions all have directly elected councils. municipalities were introduced by law in 1990 and the counties, and the regions in 1999. the basics of local government are also defined in the polish constitution of 1997. all municipalities have the same functions and are responsible for the provision of public services in areas such as education, culture, healthcare, transportation, water and sewage systems, waste collection and environmental protection. the largest 66 polish cities have county rights, and are in charge of functions normally carried out by municipalities and counties. in poland, climate change policy is not listed as a mandatory task of local governments. nevertheless, local governments are responsible for implementing measures to protect the environment and the health of residents. 4. results 4.1. operationalization the relevant parameters for operationalization of the analytical model were identified from a review of previous research on factors that enable or constrain adaptation to climate change. this review was conducted by the united nations’ intergovernmental panel on climate change (ipcc), published in the 5th assessment report of the ipcc (klein et al., 2014). it includes a number of variables that align well with explanatory variables used in the general literature on policy innovation. in addition to the data gathered by means of the survey questionnaires in norway and poland, data on some indicators were gathered from other sources. see appendix a for specifics on the measurement of variables. dependent variable: in the analysis, policy innovation (adaptation of new policy) is operationalized by means of an index variable – climate change adaptation propensity (ccap). the variable is based on survey data, and is composed by a selection of variables that indicate how far each individual local government has progressed in terms of developing adaptation strategies and measures. adaptation is an emerging 47 issue not least in poland, and local governments in poland and norway vary a lot in terms of such propensity. in order to capture adaptation policy innovation in an earlier stage, a number of indicators were included even though they fall short of actual policy implementation. the purpose is to capture the relative degree of attention to adaptation in the policy development phase – hence the term ‘propensity’. in the poland analysis, the ccap index was computed as the non-weighted sum of four binary variables taken from the survey. the respondents were asked to identify activities conducted by the municipality related to climate change mitigation and adaptation. they were also asked if the municipality had produced a strategy, plan or other document entirely or partially devoted to responding to climate change. accordingly, the ccap is coded with values ranging from 0 to 4, representing an increasing propensity for climate change adaptation policy development. in the norway analysis, the ccap index is constructed as a non-weighted additive index based on ten binary variables taken from the survey. respondents were asked whether or not climate change adaptation has been addressed in five specific planning documents. they were also asked to indicate whether or not five specific measures related to climate change adaptation had been implemented; flood protection, landslide protection, building restrictions, erosion prevention and surface water management. the norway ccap is coded with values from 0 to 10, denoting increasing propensity to address climate change adaptation issues. motivation: the theoretical assumption is that risk perception will encourage policy innovation. according to the ipcc, risk perception is positively associated with the probability of implementing climate change adaptation measures (klein et al., 2014, p. 911). in the poland analysis, this assumption is tested by the inclusion of data from the polish ministry of finance. the indicator used is budgetary expenditure of municipalities on dealing with the effects of natural disasters 2008-2013 (pln per capita).2 in the norway analysis, the motivation assumption is tested by the inclusion of data on compensations from the norwegian national fund for natural damage assistance. this scheme provides compensation for damages to private property caused by natural disasters including floods, landslides and storm surges, to the extent that these cannot be covered by private insurance schemes.3 this data set comprises of the number and monetary value of annual compensations in each municipality.4 154 2 during this six-year period, 83% of the municipalities that answered to the questionnaire received direct grants from the central government for repairing damages to local infrastructure caused by natural disasters. a total of pln 246 million (eur 56 mill.) were allocated. for most of the municipalities (95%) the sum per head was less than pln 1,000 (eur 230). 3 the scheme is managed by the norwegian agriculture agency (naa), pursuant to the natural damages act of 1994. data on compensations in the period 2008-2013 have been made available by courtesy of the naa. 4 during this six-year period, 9,250 reparations were made in all, for a total of nok 876 million (eur 94 mill.). 48 of the 178 municipalities who responded to the survey questionnaire received payments during this period. for poland as well as for norway, the assumption is that a relative high rate of damages will be associated with a corresponding awareness of climate-related risk, and so enhance the motivation for adaptation policy innovation. resources and obstacles to innovation: berry and berry (2014, p. 326) suggests that the jurisdiction’s level of economic development, the professionalism of its legislature and ‘factors indicating the presence (and skills) of interested policy entrepreneurs or the strength of advocacy coalitions in the jurisdiction’ are relevant variables for this determinant. according to the ipcc, economic and financial constraints affect adaptation inversely (klein et al., 2014, pp. 914-915). smaller local governments have been found to be slow adopters of new policies, due to capacity limitations (shipan and volden, 2008; krause, 2011). conversely, local governments with larger political-administrative capacities are expected to be more innovative because they are more resourceful and therefore able to absorb emerging policy signals and adopt new policies than smaller local governments. accordingly, a variable denoting the number of inhabitants in each local government (transformed) was included in the analysis for both countries. furthermore, it was assumed that the degree of interest in climate change adaptation issues by local ngos, the local press and the citizens is a resource for policy innovation. accordingly, the analysis included the variable interest, denoting the respondent’s assessment of the degree of interest in climate change adaptation issues by local ngos (both countries), the local press and the citizens (poland). other policies: this determinant is based on the assumption of ‘innovation interrelationships’ developed by mahajan and peterson (1985, pp. 39-40 apud berry and berry, 2014, p. 329). ipcc findings suggest that a more general prioritization of environmental management is often seen in conjunction with stronger emphasis on adaptation policy (klein et al., 2014, p. 916). the poland analysis included an indicator of the respondent’s assessment of the frequency with which the different issues were debated in recent years in the municipality at the council sessions or meetings with inhabitants of municipality’s authority. the ensuing variable, polact, is a sum of three values describing activity undertaken in waste management, water pollution and extreme weather occurrences policies, which can be identified as complementary policies. the norway analysis includes the variable rwa which indicates whether or not the municipality has considered climate change hazards in their riskand vulnerability assessment. such assessments include a broader scale of risks than climate change-related ones. data has been made available courtesy of the norwegian directorate for civil protection. diffusion effects: the assumption about diffusion of policies between neighboring jurisdictions is a staple element in the policy innovation literature (karch, 2006). in studies of policy diffusion between us states for instance, a common operationalization is to include data on states with common borders (berry and berry, 1990, p. 404). similar approaches are less practical in local government systems with numerous individual units. instead, we apply a procedure inspired by knutsen (2014) whereby 49 each local government’s score on the dependent variable is subtracted from the mean value on the dependent variable for all local government in the same county (excluding the local government in question). this procedure creates a unique value for each unit on the geographical diffusion variable. the variable denotes the degree of climate policy innovation in neighboring local governments, and is expected to co-vary positively with the dependent variable. in addition to the geographical diffusion variable, a personal diffusion variable was included. this variable denotes policy diffusion through participation in seminars and networks by local officials, based on a question from the survey. descriptive statistics for all variables are presented in appendix b. the results of the analysis are presented in table 1. table 1: the results of the analysis model indicators poland b (std. error) norway b (std. error) motivation natural damages 0.46 (0.00) 0.19# (0.12) resources and obstacles size 0.16** (0.00) 0.54** (0.17) local interest 0.16** (0.03) 0.14* (0.06) other policies polact/rva 0.14** (0.12) 1.04 (0.72) diffusion effects spatial diffusion 0.07* (0.11) -0.03 (0.21) personal diffusion 0.10* (0.05) 1.21** (0.47) constant -0.14 (0.20) -4.09 (2.21) adj. r2 0.121 0.245 significance: ** = 0.01, * = 0.05, # = 0,1. the model explains a modest amount of the variation observed on the dependent variable (adj. r2 = 0.121 and 0.245 for poland and norway, respectively). the results indicate that berry and berry’s (1990; 2014) integrated approach is appropriate, in the sense that internal as well as external determinants are found to co-vary significantly with the dependent variable. motivation, the first internal determinant, gave rise to the expectation that previous experience with climate-related damages would increase risk perception and, as a consequence, motivate local governments to take up climate change adaptation measures. due to the low n in the norway study, a significant result at the 10% level is reported. this estimate indicates that previous experience with climate-related damages can stimulate local innovation in the field of climate change adaptation. in the poland analysis, compensation for damages incurred by natural disasters also correlates positively with the dependent variable. however, the results are not sufficiently robust to reject the null hypothesis within established requirements for statistical significance. both indicators for the second internal determinant, resources and obstacles, were found to co-vary in the expected direction for both countries. these results are statistically significant. in poland as well as in norway, larger local governments are found to have higher innovation propensity than smaller ones. local interest in the policy 50 issue at hand, however, is also found to be a significant internal determinant. this indicates that internal determinants should be observed both within the local political-administrative system and in its surroundings. as noted, the third internal determinant, other policies, is included to analyze how policy innovation in one specific field is affected by previous implementation of complementary or contingent policies. the results from the poland analysis indicates that the degree of political attention to issues related to waste management, water pollution and extreme weather occurrences positively affect the propensity for addressing the issue of climate change adaptation. the norway analysis, however, did not identify any significant correlation between including climate change in a preceding risk assessment analysis, and the dependent variable. the results of the analysis of the external determinant in the analytical model, diffusion, reveal interesting patterns. the effect of geographical proximity is only significant in the poland analysis, but the findings on ‘personal’ diffusion mechanisms are consistent in both country studies. 5. discussion the context for the study is an emerging policy area of increasing political salience that has not, at present, been transformed into statutory central government requirements. the study indicates that in such a context, the mechanisms that drive local level policy innovation in the multi-level governance systems of unitary states are quite similar to the mechanisms that have been found to be at work in federations and multinational systems in previous studies (bulmer, 2007; benz, 2007). if so, the absence of coercive, hierarchical diffusion mechanisms tends to nullify the differences between these classes of systems, in terms of their potential for local level policy innovation. this is an important finding, because it demonstrates that it makes sense to apply analytical models developed in the context of federations and multinational systems to the study of unitary states, within certain constraints. these constraints are posed mainly by variations in the availability of catalytic, hortatory and coercive central government controls respectively (gormley, 1989). the availability of these classes of tools may vary greatly between different classes of multi-level systems, notably between federations and unitary states. central governments in unitary states generally speaking tend to hold more extensive powers over sub-national tiers of government than do their counterpart in federations. a prerequisite for applying similar models for analysis of policy innovation and diffusion in both classes of multi-level systems is clearly to determine the scope for centrist control and local level discretion prior to the analysis of the diffusion mechanisms at play. because both cases included in this study are unitary states, however, our main analytical interest is about identifying systematic differences between different types of unitary mlgs. the analysis indicates that internal as well as external drivers are relevant for explaining policy innovation in multi-level governance systems of unitary states. however, the comparative analysis highlights interesting differences be51 tween the two countries included in the study. these differences may provide the basis for developing more differentiated theories about policy innovation. as noted, motivation based on previous experiences of natural disasters as a determinant for policy innovation did not yield significant results in the poland analysis, but a positive and significant effect was reported in the norway analysis. this indicates that compared to their polish counterparts, local governments in norway have more highly developed capabilities in terms of acting upon risk perception – identifying emerging challenges and transforming these into items on the policy agenda. this finding may be attributed to the key difference between the two countries in the most similar cases design used in this study, namely, the highly variant institutional histories of the two local government systems. norway’s long-standing traditions for local self-rule have apparently provided its local governments with greater propensities for acting autonomously upon own risk perceptions. in both countries, larger local governments were found to be more innovative than smaller ones. population size is an important determinant for the local tax base as well as for central government grants. relative resourcefulness translates into increased potential for administrative specialization and tackling of emerging issues. due to capacity differences, larger local governments are in a better position than smaller ones for developing specialized administrative competencies, as well as for processing a wider range of issues politically. it is noteworthy that this effect is not affected by the different institutional histories of the two local government systems. one feasible implication is that highly fragmented local government systems, with many small units, may not be optimal for non-centralized policy invention and diffusion. the results indicate that local interest plays an important role in terms of pushing emerging policy issues higher on the political agenda, regardless of differences in the institutional history of local government systems. this finding is interesting not least in light of the different results on the motivational variable noted above. apparently, administrative capacity and civic awareness provide a boost for policy innovation that is more significant and consistent than risk perception due to previous experience. one possible explanation for this is that climate change policy is based on rather complex knowledge that does not lend itself easily to policy development. as shown by previous research (pearce, 2014), the process of transforming quantitative, science-based climate change data to implementable policies is quite demanding. the level of local government engagement in climate change policy has been found to be affected by the degree of citizens’ participation and engagement due to the high financial and developmental costs of this policy (kwon, jang and feiock, 2014). thus, the resourcefulness of local administrations as well as the engagement of local specialized ngos creates innovators’ advantages that may be more important than actual experience of climate risk. interestingly, the ‘neighboring effect’ – a staple element in policy diffusion studies – was not identified in the norway analysis, but in the poland analysis it yielded the 52 expected, positive results. a ‘personalized’ diffusion mechanism however was identified in both countries. in other words, diffusion has become de-spatialized in the norwegian context to an extent not observed in poland. this can be taken as an indication of a more highly developed system of supra-local networks in the norwegian local government system. while differences in available resources probably allow local officials in norway to travel more extensively than their polish counterparts, it is also relevant to assume that the long-standing institutional history of norway’s local government system to a great extent has been a history of network-building. this line of argument suits well with findings from previous research on transnational municipal networks namely, that activity in climate change policy networks is characteristic of pioneers – the most active and strongest political actors (kern and bulkeley, 2009). 6. conclusions the overall conclusion of the study is that the viability of non-coercive mechanisms for promoting new policies among lower level governments in multi-level governance systems varies between unitary states. the prospects of success for ‘soft’ central government steering seem to rely not least on the resourcefulness of the local units – in terms of building specialized administrative competencies, managing to transform complex knowledge into policy, participating in non-local networks and engaging with civil society groups. as a consequence, soft steering in multi-level governance systems need to include capacity building measures (schneider and ingram, 1990), not least in order to bridge the gap between the larger and more innovative units, and the smaller ones with less capacity. the study furthermore highlights the importance of historical trajectories for internal as well as external determinants for policy innovation. long-standing traditions for local autonomy probably enhances the local units’ propensity for transforming emerging problems into policies even in the absence of coercive central government controls – possibly because the capacity for autonomous action depends on attitudes and role conceptions that need time to develop. furthermore, the study indicates that patterns of policy diffusion may change from a purely local ‘neighborhood’ effect to a more non-local, network-based pattern as local government systems mature. the implication is that central governments may need to support efforts to develop and utilize non-local networks in settings where these have not had the time to reach maturity. acknowledgements: this research received support from norway grants in the polish-norwegian research programme under the project titled polcitclim – organizing for resilience. a comparative study on institutional capacity, governance, and climate change adaptation in poland and norway. the project was conducted by researchers from the university of warsaw and the norwegian institute for urban and regional research. the research team consisted of paweł swianiewicz (principal investigator), jørn holm-hansen, gro sandkjær hanssen, adam gendźwiłł, jan erling klausen, joanna krukowska, marta lackowska, katarzyna szmigiel-rawska, 53 marte marte winsvold. any opinions, findings, and conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the founder. references: 1. allen, m.d., pettus, c. and haider-markel, d.p., ‘making the national local: specifying the conditions for national government influence on state policymaking’, 2004, state politics & policy quarterly, vol. 4, no. 3, pp. 318-344. 2. allison, p.d., quantitative applications in the social sciences: event history and survival analysis, 2nd edition, thousand oaks, ca: sage publications, 2014. 3. bache, i. and flinders, m., multi-level governance, oxford: oxford university press, 2004. 4. bartolini, s., ‘new modes of european governance. an introduction’, in 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(eds.), markets, hierarchies and networks. the coordination of social life, london: sage, 1991, pp. 203-214. 47. rose, r., lesson-drawing in public policy: a guide to learning across time and space, chatham, n.j.: chatham house, 1993. 48. schneider, a. and ingram, h., ‘behavioral assumptions of policy tools’, 1990, journal of politics, vol. 52, no. 2, pp. 510-529. 49. sellers, j.m. and lidström, a., ‘decentralization, local government, and the welfare state’, 2007, governance, vol. 20, no. 4, pp. 609-632. 50. shipan, c.r. and volden, c., ‘the mechanisms of policy diffusion’, 2008, american journal of political science, vol. 52, no. 4, pp. 840-857. 51. simon, h.a., models of man: social and rational-mathematical essays on rational human behavior in a social setting, new york: wiley, 1957. 56 52. skelcher, c., ‘jurisdictional integrity, polycentrism, and the design of democratic governance’, 2005, governance, vol. 18, no. 1, pp. 89-110. 53. stone, d., ‘transfer and translation of policy’, 2012, policy studies, vol. 33, no. 6, pp. 483-499. 54. swianiewicz, p., ‘an empirical typology of local government systems in eastern europe’, 2013, local government studies, vol. 40, no. 2, pp. 292-311. 55. sørensen, e. and torfing, j., ‘enhancing collaborative innovation in the public sector’, 2011, administration & society, vol. 43, no. 8, pp. 842-868. 56. walker, j., ‘the diffusion of innovations among the american states’, 1969, american political science review, vol. 63, no. 3, pp. 880-899. 57. weick, k.e. and quinn, r.e., ‘organizational change and development’, 1999, annual review of psychology, vol. 50, pp. 361-386. 57 a pp en di x a : t he m ea su re m en t o f v ar ia bl es va ria bl es m ea su re m en t, no rw ay + m ea su re m en t, po la nd + cc ap (c lim at e ch an ge ad ap ta tio n pr op en sit y) in de x (d ep en de nt v ar ia bl e) ar e cli m at e ch an ge c on ce rn s in te gr at ed in to (1 ) m un ici pa l p la nn in g st ra te gy (2 ) m un ici pa l s oc ie ta l p la n (3 ) s pa tia l p la n (4 ) p ar tia l p la n/ th em at ic pl an (5 ) d et ai le d re gu la tio ns ? ha s th e m un ici pa lity im pl em en te d an y of th e fo llo wi ng m ea su re s fo r c lim at e ch an ge a da pt at io n? (1 ) fl oo d pr ot ec tio n (2 ) l an ds lid e pr ev en tio n (3 ) bu ild in g re st ric tio ns in e xp os ed lo ca tio ns (4 ) e ro sio n pr ev en tio n (5 ) s ur fa ce w at er m an ag em en t1 so ur ce : s ur ve y (1 ) h as th e m un ici pa lity ta ke n on a ny a ct ivi tie s in re ce nt y ea rs , w ith th e ai m o f m itig at in g ad ve rs e im pa ct s of h um an a ct ivi ty o n th e cli m at e? (2 ) ha s th e m un ici pa lity ta ke n on a ny a ct ivi tie s in re ce nt y ea rs , w ith th e ai m of a da pt in g to c lim at e ch an ge ? do es th e m un ici pa lity h av e a do cu m en t ( st ra te gy , p la n, p ro gr am , s tu dy ) th at d ire ct ly co nc er ns th e re sp on se to cl im at e ch an ge ? (3 ) y es , t he m un icip al ity h as a d oc um en t d ev ot ed e nt ire ly to th e re sp on se to cl im at e ch an ge . (4 ) y es , t he m un ici pa lity h as a d oc um en t t ha t c on ta in s a se ct io n on re sp on se s to c lim at e ch an ge .1 so ur ce : s ur ve y m ot iva tio n/ na tu ra l d am ag es co m pe ns at io ns f or n at ur al d am ag es . su m o f an nu al c om pe ns at io ns (n o k, n om in al v al ue s) p ai d in 2 00 820 13 (t ra ns fo rm ed ). so ur ce : n or w egi an n at io na l f un d fo r n at ur al d am ag e as si st an ce bu dg et ar y ex pe nd itu re f or c om pe ns at in g fo r co ns eq ue nc es o f na tu ra l di sa st er s 20 08 -2 01 3 (p ln p er c ap ita ). so ur ce : p ol is h m in is try o f f ina nc e: b ud ge ta ry re po rts o f l oc al g ov er nm en ts re so ur ce s an d ob st ac le s/ si ze nu m be r o f i nh ab ita nt s pr . m un ici pa lity (t ra ns fo rm ed ), 20 14 . s ou rc e: s ta tis tic s no rw ay nu m be r o f i nh ab ita nt s pr . m un ici pa lity (t ra ns fo rm ed ), 20 14 . so ur ce : s ta tis tic s po la nd re so ur ce s an d ob st ac le s/ lo ca l in te re st to w ha t e xt en t i s th e fo llo wi ng c on ce rn ed a bo ut c lim at e ch an ge a da pt atio n in th e m un ici pa lity ? lo ca l p re ss .2 so ur ce : s ur ve y to w ha t e xt en t i s th e fo llo wi ng c on ce rn ed a bo ut c lim at e ch an ge a da pta tio n in th e m un ici pa lity ? lo ca l n g o ’s, lo ca l p re ss , c itiz en s2 . s ou rc e: su rv ey o th er p ol ici es ar e th e fo llo wi ng fa ct or s as se ss ed in th e m un ici pa lity ’s ri sk a nd v ul ne ra bi lity a na lys is? in clu de s as se ss m en t o f f ut ur e ris ks a nd v ul ne ra bi liti es d ue to c lim at e ch an ge ?3 s ou rc e: s ur ve y (2 01 5, n =3 35 /7 8, 3% ) c on du ct ed by n or w eg ia n di re ct or at e fo r c iv il pr ot ec tio n w ith w ha t f re qu en cy th es e iss ue s a re d isc us se d in re ce nt ye ar s i n th e m uni cip al ity d ur in g: c ou nc il se ss io ns o r a ut ho rit ie s’ m ee tin gs w ith c itiz en s? ex tre m e we at he r e ve nt s, w as te m an ag em en t, wa te r p ol lu tio n4 . s ou rc e: su rv ey di ffu sio n ef fe ct s/ sp at ia l ca lcu la tio n ba se d on c ca p (d ep en de nt v ar ia bl e) .5 so ur ce : s ur ve y ca lcu la tio n ba se d on c ca p (d ep en de nt v ar ia bl e) .5 so ur ce : s ur ve y di ffu sio n ef fe ct s/ pe rs on al du rin g th e la st th re e ye ar s, h av e yo u or a ny on e el se in th e m un ici pa lity pa rti cip at ed in a c on fe re nc e, s em in ar , w or ks ho p or o th er m ee tin g ab ou t cli m at e ch an ge ?6 s ou rc e: s ur ve y du rin g th e la st th re e ye ar s, h av e yo u or a ny on e el se in th e m un ici pa lity pa rti cip at ed in a c on fe re nc e, s em in ar , w or ks ho p or o th er m ee tin g ab ou t cli m at e ch an ge ?6 s ou rc e: s ur ve y no te s: + s ur ve y co nd uc te d in n or we gi an a nd p ol ish , t ra ns la te d by th e au th or s. 1 : v al ue s fo r a ll v ar ia bl es in n on -w ei gh te d ad di tiv e in de x: n o= 0, y es =1 , d on ’t kn ow =s ys te m m iss in g. 2: it em m ea su re d on a 1 -5 s ca le (1 =w ho lly u ni nt er es te d, 5 = ve ry in te re st ed , 6 d on ’t kn ow =s ys te m m iss in g) a nd v ar ia bl e is a su m o f r at es v al ue s. 3 : n o= 0, y es =1 , n ot s ur e: s ys te m m iss in g. 4 : i te m m ea su re d on a 0 -4 s ca le (0 =n ev er , 1 =v er y ra re ly, 4 =v er y of te n) . 5 : c ca p is ca lcu la te d us in g th e fo llo wi ng fo rm ul a: (( co un ty m ea n cc ap * nu m be r o f m un ici pa liti es in c ou nt y) – c ca p) / (n um be r o f m un ici pa liti es in c ou nt y – 1) . 6 : m e= 1, o th er s/ no o ne /d on ’t kn ow =s ys te m m iss in g. 58 appendix b: descriptive statistics variables norway (n=178) poland (n=1311) mean s.d. min. max. mean s.d. min. max. ccap (climate change adaptation propensity) index (dependent variable) 5.61 2.57 0.00 10.00 1.06 0.52 0 3 motivation/ natural damages 13.52 1.79 9.11 17.91 187.31 554.24 0 9,511.39 resources and obstacles/ size+ 18,396.53 55,500.24 211 634,463 15,822.86 40,801.52 1,351 758,992 resources and obstacles/ local interest 6.72 3.81 0.00 15.00 1.44 1.26 0 5 other policies 0.90 0.30 0.00 1.00 7.20 1.75 0 12 diffusion effects/ spatial 5.61 1.08 1.60 7.67 1.05 0.62 0 4 diffusion effects/ personal 0.53 0.50 0.00 1.00 0.36 0.66 0 2 notes: + nominal data on population size (before transformation) refer to municipalities that responded to the survey. 26 good governance: characteristics, methods and the austrian examples friederike bundschuhrieseneder friederike bundschuh-rieseneder dr., institute for public science, law faculty, university of innsbruck, austria, tel/fax: 0040-264-431361 email: friederike.bundschuh@uibk.ac.at abstract the paper defines the term “governance” and explores its characteristics such as participation, legitimacy, transparency, effectiveness and efficiency or accountability. furthermore, it contains the description of different methods such as government business process reengineering, public private partnership, new public management or the reform of public administration. also the paper shows procedures and trends in austria, for example the establishment of e-government including its legislation and developments of the national infrastructure. transylvanian review of administrative sciences, 24e/2008 pp. 26-52 27 i. what is good governance? 1. introduction in democratic or democratizing systems government exists to fulfill functions such as maintaining security, providing public services and ensuring equal treatment under the law. the specific nature of these functions may vary over the time but in western systems it forms a kind of “contract” between government and citizens. this “contract” exists in different levels, as the constitution defines the principles of the contract, national and sub-national laws and regulations provide a more specific framework and the contract becomes more than less operational at the local level. that means citizens participate in government to define the contract, to manage and monitor it. in practice good governance means favorable political framework conditions for social, ecological and market oriented development as well as responsible use of political power and public resources by the state. this includes the process in which public institutions conduct public affairs, manage public resources and guarantee the realization of human rights. good governance accomplishes this free of abuse and corruption and with due regard for the rule of law. the really question lies in the possibility of the institutions of government to guarantee effectively the right of health, adequate housing, sufficient food, quality education, fair justice and personal security. 2. definitions the concept of “governance” has been applied to the processes through which the public decisions are made. so in example landell-mills and serageldin (1991) have defined governance as “…the use of political authority and exercise of control over a society and the management of resources for social and economic development” (landell-mills and serageldin, 1991, p 3). this definition emphasizes the political nature and the management aspect of governance but it does not define the nature of relationship between the authorities and the public. another definition is offered by charlick (1992) for the usaid africa bureau democracy and governance program, as governance is “… the effective management of public affairs through the generation of a regime which set rules, accepted as legitimate for the purpose of promoting and enhancing societal values sought by individuals and groups” (charlick, 1992, p 3). the definition of charlick provides a more normative dimension to the concept in terms of the outcomes of the process and the nature of the relationship between “power holders” and the “rest of society”. it is also spoken about the quality of the management process. all in all these definitions are reflected in the following characteristics which many observers attribute “good governance”. the cotonou partnership agreement defines good governance as “the transparent and accountable management of human, natural, economic and financial resources for the purposes of equitable and sustainable development, in 28 the context of a political and institutional environment that upholds human rights, democratic principles and the rule of law” (cotonou partnership agreement art 9.3). other definitions range between social and political concerns and those of a more technical economic nature. an overview of donors’ definitions illustrates these different perspectives well: – technical dimension: “economic aspect of governance, namely the transparency of government accounts, the effectiveness of public resources management, and the stability of the regulatory environment for private sector activity” (imf); – social dimension: “to build, strengthen and promote democratic institutions as well as tolerance throughout society” (osce); – political dimension: “the legitimacy of government, the accountability of the political elements of government and respect of human rights and the rule of law” (oecd, 1997). 3. characteristics concerning the definition above one has to distinguish different characteristics of good governance as there are in example openness, participation, legitimacy, transparency, effectiveness, efficiency, accountability, availability, predictability or coherence (see oecd, 1997, p. 60 ff; wimmer, 2004, p. 310, com(2001) 428 final). a) openness openness means that the decision-making institutions should work in an open manner. concerning to the eu the institutions should actively communicate together with the member states about what the eu does and which decisions it takes. the institutions should use a language which is accessible and understandable for the general public because this is of importance in order to improve the confidence in complex institutions. b) participation participation refers to the involvement of citizens in the development process. beneficiaries and groups affected by a project need to participate that the government is able to make informed choices with respect to their needs and social groups can protect their rights. participation in governments can be promoted by improving interface between the public and private sectors, empowering local government by letting it take ownership of a project or using ngos´ as vehicles for mobilizing and reaching project beneficiaries. improved participation is likely to create more confidence in the end result and in the institutions which deliver policies. therefore participation depends on central governments following an inclusive approach when developing and implementing (eu) policies. participatory democracy is a process emphasizing the broad participation (decision making) of constituents in the direction and operation of political systems. while etymological roots imply that any democracy would rely on the participation of its 29 citizens, traditional representative democracies tend to limit citizen participation to voting leaving actual governance to politicians. that means participatory democracy strives to create opportunities for all members of a political group to make meaningful contributions to decision-making, and seeks to broaden the range of people who have access to such opportunities. c) legitimacy legitimacy is a measure of the political acceptability or perceived fairness of an assessment to a user. a legitimate assessment process is one which has been conducted in a manner which allows users to be satisfied that their interests have been taken into account and that the process has been a fair one. in other words legitimacy means the publics’ acceptance of the authority of those in power, therefore the existence of a sanctioned set of rules, processes and procedures. the participants must believe that their interests, concerns, views and perspectives were included and given appropriate weight and consideration. d) transparency transparency is an important principle of good governance and refers to the availability of information to the general public and clarity about government rules, regulations and decisions. it can be strengthened through the citizens’ right to information with a degree of legal enforceability. transparency in government decision-making and public policy implementation reduces uncertainty and may help inhibit corruption among public officials. this implies that stakeholders are answerable to those whom they represent on the fulfillment of their obligations, and that they undertake to inform and consult their constituencies at regular intervals. this will require clearly delineated tasks and responsibilities, effective flows of information and mechanisms ensuring that decisions and sanctions are enforced. in terms of the quality of public services, the principle of transparency underpins the need for regulations to be as clear, straightforward and accessible as possible in their drafting, promulgation, codification and dissemination. transparency of regulations is also important to the performance of the economy, last but not least because it guards against special interests gaining undue influence in markets. it generates greater trust on the part of consumers. it assures and satisfies investors that there is a level playing field and encourages new entrants to sectors. e) effectiveness and efficiency policies have to be effective delivering what is needed on the basis of clear objectives, an evaluation of future impact and – in case of availability – of past experience. effectiveness moreover depends on implementing policies in a proportionate manner and on taking decisions at the most appropriate level. the management of effectiveness includes particularly a technical dimension because effectiveness concerns the ability of public bureaucracies to skillfully and efficiently transform public resources into 30 services and infrastructure which correspond to publicly determined priorities. performance orientation and transparent procedures are key facts of effective public management. effective regulation requires clear, achievable objectives and ensuring that these policy goals remain to the fore throughout the regulatory process. an objectiveled approach to regulation places greater emphasis on performance and outcomes. however, the assumptions underlying the stated objective must also be clear. these are the important events, conditions or decisions outside the regulation that must nevertheless prevail for the objective to be attained. further, an associated element of regulatory effectiveness is the need to minimize unintended outcomes. that means avoiding the creation of unnecessary barriers which can frustrate and inhibit innovation, repress economic activity by reducing entry and exit to particular sectors and markets. therefore effectiveness is also ensuring that regulations are precise, not only in identifying the right targets, but also in confining the extent of their impact. in fact that means doing the right things in the right way. this raises the question of downstream enforcement and compliance with regulations. this is often inadequately considered in terms of identifying acceptable and unacceptable levels of compliance, the range of enforcement options available and the likely costs involved. these aspects are important because they will ultimately determine whether or not regulations are observed. f) accountability and availability roles in the legislative and executive processes need to be clearer. each institution has to explain and take responsibility for what it does – especially eu institutions in europe. but there is also a need for greater clarity and responsibility from member states and all those involved in developing and implementing european policy at whatever levels. furthermore, accountability is assured by the process for selecting power holders and by the procedures by which public decision-making processes and the results they produce are held up to public scrutiny and feedback. accountability is fundamental because of the complexity of the regulatory process and the range of participants involved. the concept of a regulatory chain is often used to describe the regulatory process and it is critically important that the links in that chain – from originator to regulated party – are clearly defined. regulatory accountability means having clarity and certainty about the roles of: those originating regulation; those who must enforce or otherwise achieve compliance; the regulated parties; those charged with adjudicating on appeals; and those reviewing and evaluating. integrating the tiers of accountability while regulations are being designed is important. however, given the complexity and evolving nature of regulatory institutions and roles, changes in one regulatory area or to the responsibilities of one agency may have knock-on effects in other areas. of particular importance is the question of fair, open, efficient and effective appeals procedures. increasingly, this aspect of accountability has informed developments 31 within the public service, for example, through initiatives to improve customer service and through the work of the ombudsman. there is a need to ensure that this concept is replicated and expanded within the regulatory framework, including sectored regulatory areas. in practice accountability means that decision-makers in government, the private sector and civil society organizations are accountable to the public, as well as to institutional stakeholders. concerning to these aspects availability of information includes that information flow is the currency of all linkages between civil society and government. it permits the public to judge the effectiveness of those in power and their bureaucracies. the public ability to participate and to hold those in power accountable depends on the availability of information about laws, procedures and results. g) predictability one country’s legal basis has to be conducted by development. a government must be able to regulate itself per laws, regulations and policies which encompass well defined rights and duties, mechanisms for their enforcement and impartial settlement of disputes. therefore predictability means the fair and consistent application of these laws and implementation of government policies. h) coherence policies and actions have to be coherent and easily understood. the need for coherence in the european union is increasing because the range of tasks has grown, the enlargement will increase diversity and challenges such as climate and demographic change cross the boundaries of the sectored policies on which the union has been built, regional and local authorities are increasingly involved in the eu’s policies. as a result, coherence requires political leadership and a strong responsibility on the part of the institutions to ensure a consistent approach within a complex system. 4. interlinks among the characteristics of governance conceptually the characteristics indicated above tend to be mutually supportive and reinforcing. accountability often is related to participation and is besides the safeguard of predictability and transparency. in the absence of accountability to affected groups predictable decision-making of autonomous government agencies may result in the latter placing agency interests above those of the former. also transparency and information openness can not be assured without legal frameworks which balance the right to disclosure against the right of confidentiality and without institutions which accept accountability. furthermore, predictability in the functioning legal framework would be helpful for ensuring the accountability of public institutions. also predictability requires transparency because without information about how similarly placed individuals have been treated it may be difficult to ensure adherence to the rule of equality before the law. finally, a transparent system facilitates governmental accountability, participation and predictability of outcomes. 32 ii. civil society, government and governance a consolidated democracy as basis for good governance requires “civil society”, which can be defined as an arena of the policy where self-organizing groups, movements and individuals attempt to articulate values, create associations and solidarities and are able to advance their interests relatively autonomous from the state. in example, the term “civil society” includes trade unions, employers’ organizations, non-governmental organizations, professional associations such as journalists or lawyers, grass-roots organizations, charities besides social movements, i.e. women’s groups, neighborhood associations, religious groups or intellectual organizations (see i.e. oj 1999 c 329 p 30). furthermore, this definition is to be complemented by an additional description of the relationship between civil society and government. this relationship includes understandings for civil society in example – civil society as a source of stability and legitimacy for government; – civil society as a source of resistance against arbitrary, oppressive and overweening government; – civil society as independent of government exists prior to government; – civil society as dependent of government for providing for its legal structure, its recognition or fiscal support; – civil society as developing in partnership with government; – civil society as substituting for the failings of government (benedek, 2006, p 25). that means in practice that governments must be under the attention of the system of checks and balances in order to become closer to the ideal of good governance which civil society is part of. iii. governance and sustainability sustainability cannot be achieved without good governance. with growing tensions over globalization and regionalization, traditional systems of regulation are being subjected to growing pressure for reform. while states will continue to play a significant, if changed, role in the future, the importance of players from business and civil society is increasing. sustainable development requires this change. such an intraand intergenerational concept cannot be achieved with a top-down approach, but rather needs the participation of all. therefore in fact the governance of sustainable development requires the exploration of new forms of both social co-operation and confrontation. by doing so the different levels such as global and local, players such as the state, company and civil society, control structures as hierarchy, market and public-private and fields of action need to be taken into consideration. iv. methods of good governance in practice there exist different methods of good governance such as government business process reengineering (gbpr), public private partnership (ppp), new public management (npm), e-government or the reform of public administration. 33 1. government business process reengineering a) definition government business process reengineering (gbpr) is a radical improvement approach that critically examines, rethinks and redesigns mission product and service processes within a political environment. reengineering can be defined as the “fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, speed and service”. in recasting this definition concerning government one can say that government business process reengineering can be defined as a radical improvement approach which critically examines, rethinks and redesigns mission product and service processes within a political environment. it achieves dramatic mission performance gains from multiple customer and stakeholder perspectives. it is a key part of a process management approach for optimal performance which continually evaluates, adjusts or removes processes. in practice that means organizations are able to pinpoint areas which are wasteful or inefficient by deconstructing processes and grading them in terms of whether they are value-added or non value-added activities. because government only differs from the commercial sector in its different kinds of controls and customers the definitions, principles and transitions used for business process reengineering (bpr) may be used for governmental administrative procedures. but even with this focus there are some elements of the public sector which will not change and remain challenging for reengineering implementers. in example, government agencies are subject to greater political executive management and oversight. election cycles and administration changes at least every four years also impact reengineering efforts. furthermore governments can not revise or depart from their missions and operations whereas in the private sector there is much greater discretion to change business operations. legislation, taxpayer accountability, competition for funding and resources, continuous change as well as partnerships with international stage and local governments will continue to challenge government agencies as their reengineer. b) reengineering principles and benefits the following principles of reengineering would streamline work procedures, achieve savings and improved product quality and time management: – organization around outcomes, not around tasks; – identification of all processes in an organization and prioritization of them in order of redesign urgency; – integration of information procedures into the real work which produces information; – linkage from parallel activities in the workflow instead of just integration of their results; – put the decision point where the work is performed and build control into the process; – capture information once and at the source. 34 the task of re-examining mission and how it is being delivered in the day to day basis will have fundamental impacts on an organization especially in terms of responsiveness and accountability to customers and stakeholders. there are many rewards of reengineering such as: – empowering of employees; – eliminating waste, unnecessary management and inefficient processes; – producing significant reductions in cost and time cycles; – enabling improvements in business and administration procedures as measured by quality and customer service. c) transitions in government reengineering approach the following transitions have to take place in any government reengineering approach such as the transition from paper driven to electronic based, from hierarchical to networked, from compliance oriented to performance oriented, from control oriented to benchmark oriented procedures, from slow response to prompt response, from business as usual to routinely improving, from delayed to instant access or from information-limited to information-unlimited environment. d) success factors from government experience the following factors which ensure government reengineering initiatives may achieve the desired results: – understand reengineering: that means the understanding of the process fundamentals and the reengineering, and to differentiate and integrate process improvement approaches. – build a business and political case: this includes having the necessary and sufficient business delivery reasons for reengineering, having the organizational commitment and capacity to initiate and sustain reengineering and the secure and sustain political support for reengineering projects. – adopt a process management approach which means the understanding of the organizational mandate and set mission-strategic directions and goals cascading to process-specific goals and decision-making across and down the organization, define and prioritize business processes which are important for mission performance, practice hands-on senior management ownership of process improvement through personal involvement, responsibility and decision-making, adjust organizational structure to better support process management initiatives and create an assessment program to evaluate the process management. – measure and track performance continuously: that means the creation of organizational understanding of the value of measurement and how it will be used and to tie performance management to customer and stakeholder current and future expectations. – practice change management and provide central support including the development of human resource management strategies to support reengineering, the building of information resources management strategies and a technology framework to support the process change, the creation of a central support group 35 to assist and integrate reengineering efforts and other improvement efforts across the concerned organization and the creation of a project-specific internal and external communication and education program. – manage reengineering projects for results which means to have clear criteria to select what should be reengineered, to place the project at the right level with a defined reengineering team purpose and goals, to use a well trained expert team to ensure the optimum project performance and to follow a structured approach for reengineering. 2. public private partnership a) definition the term ‘public private partnership’ (ppp) is generally used for very different kinds of co-operation between the public sector (government) and the private sector (particularly industry). in a legal sense the term usually describes an institutionalized and long-term co-operation between public and private actors to execute a project or a service which is typically provided by the public sector. often funding, construction, renovation, management or maintenance of an infrastructure or the provision of a service is the main issue covered by the public private partnership (com(2004) 327 final, p 3). typical for ppps is that both partners the public as well as the private sector benefit from the co-operation and work together on an equal basis. while the public sector fulfils its duties regarding services of public interest, the private partners on the other hand, draw profits in a field from which private actors used to be widely excluded in the past. since the beginning of the early 1990’s also in europe ppps are ever more often used to implement large-scale projects, above all in the transport and construction sectors but also in public health, education and national security. reasons for this development are budget constraints confronting most countries as well as the lack of specialized skills on the side of public entities to run complex and long-term projects. another important point which fosters the use of ppps for particular projects is their flexibility. ppps make it possible to allocate the different risks to the party which in the respective case is best able to manage them. in many cases, private partners are better prepared to minimize and control arising risks and costs at the same time, particularly the risks all businesses typically implys, and the public sector wants to benefit from this know-how. moreover, the advantages of ppps don’t always prevail, so it has to be decided on a case to case basis whether a ppp is the right means to provide the public service in question or if another, maybe more traditional approach like the award of a contract following public sector procurement rules is more appropriate. in general, there are two different models of public-private partnerships which have to be distinguished according to the main focus of the co-operation with the public body. on the one hand, the private partners of a ppp can be responsible for operating public premises (operator model) on behalf of the public authority or, on the other hand, they get the right to provide goods and/or services of public interest on their own behalf and on basis of a concession (concessive model). when the 36 concessive model is chosen, the revenues resulting from the ppp activities accrue directly to the private partners, whereas in the operator model the revenues go to the public authority which pays a pecuniary consideration to the private partners. in most cases, a ppp will be a hybrid of the both models, so criteria of both can be found and the ppp will not be clearly classifiable as one or the other. the details of any ppp are laid down in a ppp contract which is normally made after very extensive and long negotiations. b) facility management the alternative to the concept of ppp is that the investment is done by the public and the private partnership exists only in operating or managing the respective activity which is named facility management. which of these alternatives should be chosen depends on the issues the public entity is following. if it shares and delegates the risks and investments its influence decreases and also the possibility of taking account of its public responsibility. the other version has the contrary effect, namely more risks and efforts but also more political influence. however this modern form of performing public services in any case should be regulated in a modern concession law. c) legal framework of ppp in setting up a ppp the public body initiating the co-operation with private entities is always obliged to follow domestic law, including public sector procurement rules in particular. at the same time, international economic law1 and supranational law like european community law have to be observed. besides, international treaties and agreements have to be taken into consideration, often already in the early stages of project development. which laws have to be applied in the individual case largely depends on the kind of ppp which is intended, especially on whether the private partner has to be considered an operator or a concessionaire. not in all cases ppps are based on private contracts. at least in austria a public-private partnership can also be affected as an act of state ie either explicitly by law or by the authority having jurisdiction in the subject matter. the latter in fact has a long tradition in austrian public administration and requires that the authority issues a ruling or regulation consistent with the applicable law. when a private person or entity is authorized to act as an administrative authority in specific matters this is called ‘beleihung’2 in austrian legal terminology (mandl, 1997, p 108 ff). also a public concession is usually awarded through a ruling or regulation and can include a ‘beleihung’. when a private person or entity is obliged by law or an individual act of state to assist the public authority and carry out certain duties without running a financial risk the austrian legal term is ‘inpflichtnahme’3, but in default of any private profits arising from the execution of those duties they cannot be considered ppps as defined above. the austrian doctrine is of the opinion that only private contracts are subject to public sector procurement, but a recent judgment4 of the european court of justice points into another direction. according to it also an authorization of private actors in the form of an act of state has to meet the requirements of public procurement, 37 unless the restriction on the freedom of establishment and the freedom to provide services is proportionate and serves aims which might justify it. domestic laws, particularly in the member states of the european union, usually provide a whole set of rules regarding public sector procurement, tendering procedures and the award of contracts. as far as written contracts for pecuniary interest which have to be considered as public work or public service contracts are concerned, several and detailed community directives5 and countless judgments of the european court of justice have effected a harmonization of such domestic laws within the european union but also in countries which are not yet part of the european union. in most cases those rules will be applicable to the selection of the private partners for the public private partnership. with the growing importance of public private partnerships in europe the european authorities found it necessary to step into action. so, in april 2004 the european commission presented a green paper on public private partnerships and community law on public contracts and concessions, a communication of the european commission on public-private partnerships and community law on public procurement and concessions com(2005) 569 final followed in november 2005. although neither of the documents is itself legally binding, they are relevant sources for the interpretation of existing community law as far as ppps and public procurement are concerned. 3. new public management a) philosophy one of the popular slogans of modern public administration, which also influences the good governance, is new public management (npm). generally speaking, this means a new orientation of public administration, changing from a hierarchical model to a performance orientated system. new public management is an element of the philosophy and the politics of the ‘lean state’. that means the transformation of the welfare state to a liberal state, which has been significant for austria since the end of world war ii, dominated by slogans like deregulation, liberalization, market and competition. due to the fact that all these values are also principles of the eu treaty the ongoing political, legal and administrative transformation is also a necessary harmonization with fundamental eu-standards (see in general mastronardiand schedler, 2004; mitterlehner and kyrer, 1998; neisser and hammerschmid, 1998; oecd,1997; promberger and bernhart 1995). b) elements aa) management systems new public management is made up of a series of principles and elements, which are linked together. the starting point is the implementation of modern management models in public administration such as management by objectives, by exception or by delegation (thommen and achleitner, 2003, p 833 ff; wimmer, 2004, p 234 ff). competences within the public body are shifted top down thus improving motivation and efficiency of the authorities as a whole. the necessary guidance is given by a 38 description of issues and goals and not – as in the “ancient” system – by rules and instructions. bb) products and contracts a core element of new public management is the assessment of the public tasks in form of products. between the political level (mandatory) and the executive level (contractor) contracts are concluded (zielvereinbarungen). these contracts define the output and the financial resources. within this frame, the contractor is free to decide on the modalities of its output. insofar he is responsible for the results of his performance (contract management) (bauer, 1998, p 8 ff; wimmer and müller, 2006, p 2 ff). cc) benchmarking the idea behind this contracting-management is to stimulate competition between suppliers of the same product. benchmarking projects and “best practice” models help to identify how to best realize a certain task of public administration. as a long range goal an advanced form of functional benchmarking should enable the top administrative level to decide whether it is better and more efficient to realize a defined product by itself, by another administrative unit or, at least, by private enterprises. therefore benchmarking as an element of npm is an important method to develop and guarantee good governance (camp, 1994). dd) controlling there are close relations between new public management and controlling which also serves the steering of decision-making processes. by providing the necessary information regarding programming, budgeting, execution and evaluation of the administrative activities controlling is an integrated element of new public management (bundeskanzleramt, 1996; promberger, 1995). c) steps of implementation in austria in austria some tentative steps have been made to integrate new public management in daily practice of public administration. in particular, the specification of administrative goals by defining them as products, as mentioned above, has already advanced to a certain degree. another practical impact of new public management in austria is the introduction of forms of contract management. thus, to give an example, the management of the universities in austria is marked by a chain of agreements, which correspond to contract management, as described above: the ministry for universities concludes an agreement with the rector, in which the goals and also the financial resources, which are dedicated to these goals by the central state, are described. on the basis of this global agreement the rector himself makes contracts with all deans of the university. part of these contracts is the expected performance of the faculties and the remuneration for this performance. as a third – and last – step, the dean concludes contracts with the chairs of the several departments of his faculty. so the opening of 39 the universities to the ideas of new public management has brought a new cataract of contracts, which replace the old hierarchical system. d) summary of course, at the moment, it is too early to give a final qualification of the results new public management has brought to the administrative practice. but there is no doubt that our administrative system with its very long tradition has been modernized in different ways and directions, as there are: introduction of management methods, improvement of performance orientated management, introduction of quality management, benchmarking, citizen orientation or deregulation. in fact new public management cannot substitute all hierarchical structures of public administration but, doubtlessly, a new wind of change has brought modernization to public authorities, bodies and enterprises. 4. e-government a) introduction modern information and communication technologies (ict) allow public administration to provide new electronic services on the internet. therefore it is no longer necessary to make one’s way to an office. the services offered are available electronically, irrespective of time or place. it is important to bear in mind that administrative matters can, but need not, be dealt with on the internet. these services – called e-government – are offered as an alternative, but are not compulsory. the traditional office continues to be open to all those who prefer personal contact with the authorities or who are not yet familiar with the new technologies. these developments and changes of public administration affect not only austria but all member states of the european union. e-government can be used 24 hours a day. a number of austrian administrative procedures can already be conducted entirely on the internet. sustainability, security and data protection are of fundamental importance (bogumil and kißler, 1997; bundschuh-rieseneder, 2007; gisler and spahni, 2001; plökkinger-duursma and mayrhofer; 1995). b) e-government and e-governance e-government supports the e-governance procedures. that means e-government applies to governmental procedures especially public administration in electronic form. therefore, e-government is part of e-governance as one can see in the following graphic. 40 c) the conception of e-government aa) requirements a successful system of e-government is based on three fundamental pillars: a) a clear legal framework which can be understood easily and thus can become part of public awareness from the very beginning; b) secure and thus sustainable systems and services as a precondition for nationwide implementation and increase of confidence of citizens in electronic administration services; and c) the use of sustainable technology on the basis of open standards and defined interfaces in order to ensure continuous adaptation to new technology (bundeskanzleramt, 2006, p 6). bb) definition and principles aaa) definition many attempts have been made to define e-government. summing them up one can say that at eu-level e-government is defined as „the use of information and communication technologies in public administration combined with organizational change and new skills in order to improve public services and democratic processes and strengthen support to public policies“ (com (2003) 567 final; http://europa.eu.int/ informationsociety/eeurope/ 2005/index_ en.htm). this is also valid for e-government in austria. bbb) principles e-government in austria is based on some important principles (bundeskanzleramt, 206, p 24 ff), such as: proximity to citizens: the administration must be at the service of citizens and not vice versa. convenience through efficiency: citizens expect greater convenience from online procedures, i.e. no need to go to an office, no restrictive office hours, no waiting, not being sent from one authority to the next. in order to meet these expectations, public administration must optimize processes by automating them. 41 confidence and security: the electronic contact with public administration must be just as secure as the classic visit to an office. therefore, in the electronic world the identification and authentication of persons is ensured by sector specific personal identifiers and the electronic signature.6 the secure exchange of information and transfer of data is guaranteed by defined security standards. accessibility: services provided by public authorities must be available to anyone without discrimination. this also applies to the new electronic administration. egovernment is to be available to all social classes and groups and technical and social barriers must be abolished. usability: the range of electronic services offered has to be structured in an easily comprehensible and clear manner. a standard layout for forms and portal structure facilitates clarity and usability. data protection: citizens place a high degree of confidence in the austrian administration with regard to data protection. the use of new technologies in administration allows that confidence to be extended to electronic administrative systems also. the use of the electronic signature for the purpose of authenticating persons and of encryption mechanisms guarantees that the current high standard of data protection is maintained. sector specific personal identifiers, the mechanism developed specially for the purpose of identification conforming to data protection standards ensures that, as has been the case to this day, only authorized persons within the administration can obtain access to personal data. sustainability: the modular structure facilitates change management, which permits continuous further development. open e-government contributes to improve competitiveness and thus to safeguard the austrian position as a location for business. in this regard, the strategic coordination of the use of new technologies within the administration is of fundamental importance. d) austrian e-government legislation aa) generalities austria is developing a nationwide and uniform e-government. security and data protection are the top priorities of this development. therefore, the main legal basis is the e-government act, the constitutional law on access to information, the data protection act 2000, the electronic signature act or the e-commerce act. in addition, many other austrian acts imply e-government regulations, for example the code of civil procedure. the following is intended to explain the main legal basis mentioned above (bundschuh-rieseneder, 2007, p 95 ff). bb) e-government act the e-government act7 serves as the legal basis for the instruments used to provide a system of e-government and for closer cooperation between all authorities providing e-government services. the new mechanisms – such as electronic signature for authentication, source pin, sector-specific personal identifiers for identification or electronic service of documents – may also be used by the private sector. the most important principles, as defined in the act, are freedom of choice between means 42 of communication for submissions to the public administration, security for the purpose of improving legal protection by creating appropriate technical means such as the citizen card8, unhindered access to information and services provided by the public administration for people with special needs by the end of 2007 by the way of compliance with international standards governing web accessibility. the e-government act has been complemented by the administrative signature regulation9, the sector classification regulation10, the source pin register regulation11 and the supplementary register regulation12, each of which defines in more detail some provisions of the e-government act and facilitates its implementation. cc) the constitutional law on access to information the constitutional law on access to information13 is a freedom of information law that contains provisions on access to public information for the federal and regional levels. it stipulates a general right of access and obliges federal authorities to answer questions regarding their areas of responsibility, in so far as this does not conflict with a legal obligation to maintain secrecy. but it does not permit citizens to access documents, just to receive answers from the government on the content of information. on the basis of the provisions on this constitutional law, the nine austrian provinces have enacted laws that place similar obligations on their authorities. dd) the data protection act 2000 by implementing the directive on data protection14 the austrian data protection act 200015 provides for a fundamental right of privacy with respect to processing of personal data which entails the right to information, rectification of incorrect data and erasure of unlawfully processed data. it regulates the preconditions for the lawful use and transfer of data including mandatory notification and registration obligations with the data protection commission. finally it provides for judicial remedy in case of breach of its provisions and lays down the respective procedures before the data protection commission and civil courts as well as penal and administrative sanctions for its infringement. ee) the electronic signature act the electronic signature act16 came into force on january 1st 2000 and made austria the first eu member state to implement the directive 99/93/ec17 on a community framework for electronic signatures. the act legally recognizes electronic signatures (bundeskanzleramt, 2006, p 101 ff; bundschuh-rieseneder, 2007, p 100 ff) satisfying certain security requirements and provides some evidential value to less secure electronic signatures. it is complemented by the electronic signature regulation18. the conditions for the use of electronic signatures on the public sector, as well as for the use of citizen cards and sector specific personal identifiers are regulated by the e-government act. ff) the e-commerce act the e-commerce act19 implements the directive 2000/31/ec20 on electronic commerce. the act deals with certain aspects of information society services, i.e. 43 commercial online-services. according to the act, such information society services are for example online-distribution, online-information, online-advertisement, access services or search engines. therefore the act is applicable to virtually all services provided on the internet. it sets the principles of freedom of service provision21 and of country of origin22 and provides for certain information obligations of providers of information society services for the benefit of their (potential) customers. e) national infrastructure aa) help.gv.at help.gv.at is an internet portal designed to guide austrian citizens through administrative procedures. citizens shall be able to prepare and complete these procedures quickly and without difficulties. therefore, help.gv.at provides citizens and residents with a single point of entry to detailed information about public services and administrative procedures, organized around approximately 200 life events or situations, like birth, marriage or passports. an online forum enables the user to submit enquiries or suggestions, to download official administrative forms and to conduct an increasing number of procedures online. a special service is provided for some specific groups – i.e. foreigners living and working in austria or people with disabilities too. help.gv.at is continuously developed further into a transactional portal interconnected with regional and local government systems and was awarded for the best barrier free german language information portal in 2006. bb) electronic file system the electronic file system was introduced in order to replace paper based filing and archiving in all austrian ministries. an electronic file is created for every written request requiring an answer and every internal work of possible further interest. therefore, every procedure can be audited anytime by viewing the file. this system at federal level means that many procedures can be conducted faster. thereby, reaction and processing time can be reduced. several provincial administrations in austria have also introduced similar electronic file systems. cc) electronic delivery system in 2004 the austrian government launched an official electronic delivery service,23 which is designed to enable administrative procedures to be conducted by citizens from the application stage to delivery via internet. citizens who wish to have documents served electronically can register with a delivery agent using their citizen card. then they receive administrative documents via that delivery agent. therefore, it allows public administrations and citizens to exchange messages with the guarantee that messages are effectively sent and received. in order to subscribe to the service any user needs an electronic signature. moreover, the document can be sent in encrypted form and only the holder of the decryption key can the decrypt it. the system is compatible with the citizen card and is meant to gradually replace all paper based notifications from public authorities to citizens. 44 f) summary e-government gives rise to a new kind of relationship between citizens and the public authorities. new means of communication and technologies offer free and open access to the virtual world of public institutions to their users. therefore egovernment gives citizens the chance to participate directly in opinion forming and decision-making processes which is very important for the realization of good governance. in future, the virtual world will make it easier to involve citizens in legislative processes at an early stage. austria was one of the first eu member states to adopt comprehensive legislation on e-government. as security and trust are critical factors in e-government and e-commerce, austria uses the same standards and tools for both areas, i.e. citizen card function, electronic signature and electronic payment. this is a major contribution to securing the austrian position as a business location. in the annual benchmarking of 20 basic e-government services austria moved up to a leading position, improving its overall ranking from 11 in 2003 to 4 in 2004. after running up in 2005, austria achieved first place in the 2006 survey. 5. reform of public administration a) introduction reform is the constituting principle of public administration and consequently for good governance. the reason lies in the possibility that public administration is able to meet the changing requirements of society. the reform of public administration has to comply with political rationality and efficiency. the importance of these goals may differ and depend on the relevant political issues. sometimes, there exists a higher level of democracy and participation, sometimes the improvement of social performances, sometimes reduction of state responsibility by means of deregulation and privatization. these goals contradict each other as do public reforms themselves. the international trend to reduce government responsibilities and to make public administration more efficient has been met by measures which have been taken also in austria. in particular, the tentative implementation of the action program provided by the new public management is a signal for the will and the ability of all public actors to modernize public administration. it is evident that the reform concepts could not be realized one to one. the actors often were forced to compromise and to meet the opponents halfway. furthermore, it is understandable that the recent public reform can not be seen as a general concept characterized by logical consistency but as a project consisting several parts with different levels of realization. therefore the ongoing reforms in austria do not only have to be seen as a success but more than this: as a promise for the future. b) understanding the reform when speaking about the reform of public administration, the term “reform” could be mistaken insofar as one single reform, which covers all items and issues. but there are several kinds of reform measures, which may be described under many different 45 points of view. in abstract form, but also with reference to the ongoing reforms in austria, the following distinctive aspects are to be specified: – extent of the reform: total reform, partial reform, punctual reform; – subject of the reform: federal reform, reform of the provinces, reform of cities and municipalities; – object of the reform: this means institutions which are to be reformed, like reform of the counties, chambers, court system, public enterprises, etc; – substantial reforms: material reforms may take place in all subject matters of public administration, like health, education, universities, reform of fundamental rights, constitution, penal rights, etc; – legitimacy of the reform: reform down to top by participation of the citizens, reform top down only by the administration itself; – duration of reform: short-, mediumand long-term reforms; – persons, who are concerned by the reform activities: service regulation regarding teachers, judges, civil servants, policemen, etc; – structural changes: centralistic-federalist reforms; – ideological effects of reforms: liberal-social reforms; – international relevance: national, european, international (i.e. in the framework of gatt and uno) reforms. according to this, the reform of public administration in austria can not be described as a whole, but only by illustrating several “areas” of reforms, which are going on. of course, this presentation opens a wide space of discretion but the following issues and topics represent the mainstream of reforms in austria. c) harmonization measures aa) horizontal measures special attention has to be paid to the development of horizontal administrative measures in order to ensure the efficient and effective performance of the administrative system as a whole and the development of an effective human resource management system, including enhancement of skills and training capacities. one of the key measures in improving public administration is to strictly separate policy making from policy implementation. this can only be achieved by a higher degree of autonomy of present centralized institutions together with effective forms of balanced accountability, tailored to different functions such as implementation of the policy, regulatory functions and supervision of functions of licensing. bb) professional civil service on the basis of these measures, the administrative system should be transformed from a predominantly administrative type into a system of managerial accountability. the rebuilding of the structure of administrative bodies has to go hand in hand with the developing of a professional civil service. integrated elements of such a reform are items as follow: • systematic evaluation of productivity and effectiveness of the autonomous units; 46 • human resource management, i.e. introduction of a permanent, competent and politically neutral civil service by measures such as objective recruitment by announcing competitions to the available vacancies; incentives (financial and non-financial) for civil servants; disciplinary sanctions upon civil servants in case of misconduct in office; training and improvement of qualifications; special training of civil servants in the field of preparation for the membership in the european union; adequate remuneration of civil servants linked to their qualifications and better performance. cc) reform of institutions by decentralization and privatization in addition to these reforms of administration staff rationalization within the institutions has to go on. this includes in all reform countries the improvement of the relationship between the central and local government and especially the promotion of local government as one of the priorities. involvement of decentralized institutions is indispensable in the application of the acquis, especially in the sphere of administering the european union assistance program. therefore, the general guidelines of the new institution building must be decentralization and de-concentration. furthermore, one of the most discussed forms of administration reform is privatization. in this context, it means – differently to the privatization of undertakings in the economic area which will be mentioned later – the transfer of functions under the public administration to non-profit organizations or enterprises, i.e. by public private partnership. this item covers a wide range of activities such as social welfare, social care, care for disabled or elder persons, neighborhood, etc. of course, this transfer of functions only makes sense if also the costs of the overtaken activities are partly paid by the private institutions or at least minimized through their engagement. if this transfer of functions is combined with public subsidies, an efficient control must be guaranteed. dd) landmarks of the reform some few remarks should be sufficient to show the direction in which the reform of administration in the eu and non member, respectively pre-accession states is moving. these landmarks are: the rule of law, defined competences, autonomy, decentralization, de-concentration, professionalism and motivation of the staff, privatization and democratization. of course, these items are intentions and goals which will be realized only step by step and modified by reality and opportunity of the applicants. but the main point is that none of the pre-accession states has a chance to adopt the complex regulations and institutions of the european union if it does not implement the above mentioned principles. d) european administrative science furthermore, the publications of the european council should be mentioned, in particular, those of its “council for local and regional authorities in europe”. these publications deal with central topics of local government units such as protection of the environment, participation of citizens, public transport, public services, public management, intergovernmental cooperation, etc. 47 all these publications constitute a treasure which should be of highest interest for the domestic discussion regarding administrative items. in particular, this is concerning the studies regarding the territorial reforms which have taken place in western europe within the past 25 years by which the principles of decentralization, federalism and regionalism were implemented to a more or less high extend. all these reforms were the precondition for strengthening local government and improving the autonomy of the municipalities and regions (for efforts made in croatia see kopric, 2007). with other words: the modern term of institution building, which is based on multiple analysis (legal, financial, functional, gap analysis, etc.), is nothing else than what has been done in western europe within the last 30 years. there is no doubt that the ongoing territorial reforms in eastern europe, which have to be realized not only to improve efficiency of administrative structures, but also with regard to the harmonization process within the united europe, could take a lot of profit out of these publications of the european council. one does not exaggerate in saying that these publications could be the fundament of a new european administrative science and consequently for european governance. e) some reform areas aa) fare well to the “welfare state” the reform of public administration in austria, which has taken place in recent years, also reflects the transition from a welfare state to a lean state (mandl, 1997; metzen, 1994; naschhold and bogumil, 2000), which is significant for the last period in the most western european states. in austria this development was accelerated by the changing of the majority in parliament from a social-democratic to a conservativeliberal. even now, under the auspices of a social-democratic-conservative coalition, which was the result of the parliamentary elections in november 2006, it cannot be expected that the reforms of public administration will be cancelled in order to reanimate the “ancient regime”. there is broad agreement between all parties that the liberal reform package was necessary for the modernization of austrian public administration as well as for the society in general. it must also be remarked that the new defined standards and responsibilities – assessed in comparison with other western states – constitute austria also today as a “welfare state”, maybe in a lighter form. bb) the major areas in general, the reform activities of the recent years can be structured as follows (wimmer, 2004, p 402 ff; regarding similar areas of reform in croatia see kopric, 2007): – legal reforms – reform of public tasks and services – organizational reforms – technical reform e-government (see above) – new public management (see above). 48 the following remarks are dedicated to some aspects of this reform. according to the multi-lateral approach the reform measures do not constitute a coherent action, such as a “big bang”, but their realization is determined by a strategy of incrementalism and step by step implementation. aaa) legal reform among the measures of legal reform there has to be distinguished between quantitative and qualitative deregulation (i.e. wimmer, 2004, p. 403 ff). the overall issue of the quantitative deregulation is the reduction of legal provisions in order to simplify the existing bureaucratic system and – hand in hand – to reduce the costs of public administration. in addition, special efforts have been made to make the legal system more comprehensible and transparent. as far as we can see now, the results are rather poor because of the low standard of legislation in our country, on the one hand and the inevitable interference of eu law, on the other hand. insofar, the austrian legal system shares the qualitative standards of most of the european countries. bbb) reform of public tasks and services the vision of a lean state is based not only on ideological premises, like freedom and self responsibility of the citizens, but it is also a consequence of the financial situation of most of the european states and their growing budget deficits. apart from the question how public tasks can be fulfilled more efficiently and at lower costs, the reduction of public tasks themselves has to be considered. in the year 2001 the austrian government started a “reformdialog” to clarify these questions and to elaborate appropriate reform measures. several commissions were set up, amongst them the “aufgabenreformkommission”, which made a lot of proposals to improve the organisational basis of public administration. the first issue of the “aufgabenr eformkommission”, the reduction of public tasks, could not be solved as it did not succeed in defining the core competences of the state, which would have been a precondition. in daily life, the question which tasks and services have to be executed by the state in the interest of its citizens is determined by pressure groups, lobbies and also bureaucracy and, moreover, is – first of all – an ideological question. in any case, it cannot be solved neither by means of an academic discussion nor by establishing another commission. thus, it is only logical that the “aufgabenreformkommission” was not able to successfully realize its ambitious program. nevertheless, it opened the way to a more objective discussion of the state competences as an alternative to an exclusively political decision. ccc) organizational reforms by one-stop-shop the reform of administrative structures in order to improve efficiency as well as performance and citizen orientation is the overall goal of the above mentioned initiatives. in particular, the reform under the title “one stop shop” (gisler and spahni, 2001; p. 174 ff; wimmer, 2004, p. 406) tries to improve the access of the citizens to the decision making units of public administration. in future, instead of the existing “labyrinth of competences”, citizens have to get in touch with only one public authority 49 at local level, the “bezirksverwaltungsbehörde”. this authority has to coordinate all permanent permissions for a project which has been applied by a citizen. thus, the principle of „one-stop-shop“ means a concentration of several procedures according to the diverse subject matters to one common procedure. the one-stop-shop saves time and money of the applicant. he is not confronted with several decisions of several authorities anymore but with one competent civil servant. f) summary the normal state of public administration is not stability but mobility. only by this institutional mobility public administration is able to meet the changing requirements of society. ideally, the overall issue of reform should be the transformation of public administration into a system which by itself reacts on its changing tasks and automatically modifies the framework of decision making. of course, reform of public administration must be in compliance with political rationality and efficiency. importance and significance of these goals may differ and depend on the relevant political issues. sometimes, it may be a higher level of democracy and participation, sometimes the improvement of social performances, sometimes reduction of state responsibility by means of deregulation and privatization. these goals contradict each other as do public reforms themselves. considering these contradictions the simple question whether a public reform is “good” or “bad” is not to be answered easily. this is also the reason why public reforms, if they are more than technical improvements, normally do not get a general consent. there is no doubt that the recent efforts of public reforms in austria are positive. the international trend to reduce state responsibilities and to make public administration more efficient has been met by measures which have been taken also in austria. v. concluding remarks summing up, one has to say that good governance consists of a mixture of many procedures and measures. these measures concern the relations of the government with civil society, its influences on the government, and different management methods up to the developments in e-government. but all the aspects mentioned above show just “a piece” of good governance including austrian examples because good governance is not only a national but also a european commitment. fact is that politicians in the european union are facing a real paradox: on the one hand, citizens want them to find solutions to the major problems confronting their societies and expect the union to act as visible as national governments. on the other hand, people increasingly distrust institutions and politics or are simply not interested in them. the problem is acknowledged by national parliaments and governments and is particularly acute at the european level. concerning good governance, this means in consequence that democratic institutions and the representatives of the people at national and european levels should try to connect europe with its citizens as starting condition for more effective and relevant policies. these facts were the reason why the european commission identified a reform of governance as one of its four 50 strategic objectives in early 2000, proposed a “white paper for european governance” (com(2001) 428 final) and reported the procedures started and going on in 2003. furthermore, the commission proposed possibilities for “better governance” as there are i.e. the greater use of skills and practical experience of regional and local actors or the building of public confidence in the way policy makers use expert advice. these proposals should be considered and transformed to establish good governance not only in member states but also in the whole european union. references: 1. asghari (ed), e-government in der praxis, s&s verlag frankfurt, 2005. 2. bauer, biwald, and dearing (ed), public governance. öffentliche aufgaben gemeinsam erfüllen und effektiv steuern, nwv verlag wien – graz, 2005. 3. bauer h., produkte – eine neue sicht der aufgabenerfüllung im öffentlichen bereich, ögz, 1998, h 3, p 8 ff. 4. benedek (ed), civil society and good governance in societies in transition, nwv verlag wien graz, 2006. 5. bogumil and kißler (ed), verwaltungsmodernisierung und lokale demokratie, nomos verlagsgesellschaft baden-baden, 1997. 6. budäus (ed), organisationswandel öffentlicher aufgabenwahrnehmung, nomos verlagsgesellschaft baden-baden, 1998. 7. budäus and eichhorn (ed), public private partnership. neue formen öffentlicher aufgabenerfüllung, nomos verlagsgesellschaft baden-baden, 1997. 8. “bundeskanzleramt”, administration on the net. abc guide to austrian e-government, digitales österreich, 2006. 9. “bundeskanzleramt” (ed), controlling handbuch für die öffentliche verwaltung, verlag österreich wien, 1996. 10. bundschuh-rieseneder, “österreich als online-republik? e-government – eine zwischenbilanz”, in recht-politik-wirtschaft. dynamische perspektiven. festschrift für norbert wimmer, springer verlag wien new york, 2007, p 87-110. 11. camp, benchmarking, hanser verlag münchen, 1994. 12. charlick, the concept of governance and its implications for aid´s development assistance program in africa, burlington, 1992. 13. fremuth (ed), wirtschaft und öffentliches interesse. neue wege aus einem alten konflikt, manz verlag wien, 1998. 14. gisler and spahni (ed), e-government. eine standortbestimmung, 2nd edition, haupt verlag bern 2001. 15. hammer and champy, reengineering the corporation. a manifesto for business revolution, first harperbusinessessentials, 2003. 16. kopric, regionalism and regional development policy in croatia, 2006 (not yet published). 17. kopric, “priority areas in reforming governance and public administration in croatia”. http://unpan1.un.org/intradoc/groups/public/documents/un/unpan017009.pdf (04.01.2007). 18. landell-mills and serageldin, governance and the external factor, world bank, washington, 1991; 19. mandl, das lean management-konzept, rwz 1997, p 108 ff. 20. mastronardi and schedler (ed), new public management in staat und recht, 2nd edition, haupt verlag bern, 2004. 51 21. metzen, schlankheitskur für den staat. lean management in der öffentlichen verwaltung, campus, 1994. 22. mimicopoulos, e-government funding activities and strategies. united nations new york, 2004. 23. mitterlehner and kyrer (ed), new public management. effizientes verwaltungsmanagement zu sicherung des wirtschaftsstandortes österreich, 2nd edition, österreichischer wirtschaftsverlag, 1998. 24. naschhold and bogumil, new public management in deutscher und internationaler perspektive, 2nd edition, leske + budrich verlag opladen, 2000. 25. neisserand hammerschmid (ed), die innovative verwaltung. perspektiven des new public management in österreich, signum verlag wien, 1998. 26. oecd, “issues and development in public management”. survey 1996-1997. puma, 1997. 27. oecd, “managing across levels of government”, oecd paris, 1997. 28. oecd, “the e-government imperative”, oecd paris, 2003. 29. plökkinger-duursma and mayrhofer (ed), internet-recht, nwv verlag wien graz, 2004. 30. promberger, controlling für politik und öffentliche verwaltung, verlag österreich wien, 1995. 31. promberger and bernhart (ed), modernisierung der öffentlichen verwaltung, 2nd edition, arbeitsheft europäische akademie bozen, heft 26, 2001. 32. püttner, verwaltungslehre, 3rd edition, ch beck verlag münchen, 2000. 33. thommen and achleitner, allgemeine betriebswirtschaftslehre. umfassende einführung aus managementorientierter sicht, 4th edition, gwv fachverlage wiesbaden, 2003. 34. wimmer, dynamische verwaltungslehre, springer verlag wien newyork, 2004. 35. wimmer and kahl, die unternehmen im freien markt, manz verlag wien, 2001. 36. wimmer and müller, zielvereinbarungen im verwaltungsalltag, zfv 2006, p 2 ff. 1 for example competition rules or intellectual property rights. 2 examples of austrian companies subject to a ‘beleihung’ are austro control gmbh, asfinag, energie-control gmbh. 3 prime example for such an ‘inpflichtnahme’ is the employers’ duty to retain taxes on wages and salaries and pay them over to the competent revenue office. 4 ecj 6 november 2003, case c-243/01, gambelli and others, rec 2003, i-13031. in the judgement the ecj applies a wide definition of services within the scope of articles 43 and 49 respectively and calls upon the national court to examine whether the legislative restrictions for betting activities which require licence or authorisation under the national monopoly and which are accompanied by criminal penalties up to one year’s imprisonment infringe the basic freedom to provide services. 5 see council directives 92/50/eec (public services), 93/36/eec (public supply), 93/37/eec (public works), 93/38/eec (water, energy, transports and telecommunications sector) and amending/supplementing directives of later date. 6 see below the explanations to the citizen card. 7 e-government-act, bgbl i 2004/10 as amended on bgbl i 2008/7. 8 i.e. bankcards (maestro or credit cards); in austria one can use the health card, students card or bankcard. the austrian citizen card enables the use of electronic signature. that means each resident registered in the central register can use electronic offers from the 52 governmental sector, i.e. application forms for birth, marriage, passports, driving licenses, etc which one has to fill in, sign and send it in an electronic way. therefore this card holds the electronic identity for identification and the electronic signature for authentication from any resident using the citizen card. 9 bgbl ii 2004/159. 10 bgbl ii 2004/289. 11 bgbl ii 2005/57. 12 bgbl ii 2005/241. 13 bgbl 1987/286 as amended on bgbl i 1998/158. 14 directive 95/46/ec, abl 1995 l 281/31 as amended by regulation 1882/2003/ec, abl 2003 l 284/1. 15 bgbl i 1999/165 as amended on bgbl i 2008/2. 16 bgbl i 1999/190 as amended on bgbl i 2008/59. 17 abl 2000 l 13/12. 18 bgbl ii 2008/3. 19 bgbl i 2001/152. 20 abl 2000 l 178/1. 21 the provision of information services does not require specific licences or permissions. 22 service providers merely have to satisfy the legal requirements for the provision of those services of their home country, ie the country in which the providers conduct their business operation. 23 see delivery act, bgbl 1982/200 as amended by bgbl i 2008/5. 41 abstract the scientific assessment of the quality of innovation development institutions plays an important role in the modernization of regional innovation systems. at present, the scientific tools that allow us to assess the quality of innovation development institutions are not sufficiently developed, which limits the opportunities for institutional design of the regional economy. the goal of this study is to develop a systems-based approach to assessing the effectiveness of the institutional structure of regional innovation systems, and to identify the factors that determine the quality of innovation development institutions. functional cost analysis is the basis of the methodological approach. results of the research showed that an increase in financing the regional innovations resulted in a positive effect only in a third of the total number of the explored regions. in other cases, activation of innovative activity did not happen. such result is explained partially by the lack of regional innovation systems (ris) institutions in particular regions. the results of the analysis showed that the institutional environment of the regional innovation system in polyethnic regions plays an important, but not critical role. socio-cultural factors and informal institutions have much more significant value; they either promote or interfere with the performance of ris functions. keywords: regional innovation system, institutions, effectiveness, innovation policy, polyethnic region. analysis of the effectiveness of the regional innovation system. a case study on polyethnic regions of the russian federation svetlana panikarova svetlana panikarova professor, phd, department of regional economics, innovative entrepreneurship and security, ural federal university, ekaterinburg, russia e-mail: panikarova_s@mail.ru doi:10.24193/tras.si2019.3 published first online: 2019/12/21 transylvanian review of administrative sciences, special issue 2019, pp. 41-58 42 1. introduction the modernization of the economy, which is focused on a qualitative change in the structure and sources of long-term economic growth, inevitably involves the modernization of the institutions which determine the development of national and regional innovation systems. problems in designing innovation system institutions are particularly acute at the regional level. this is due to a high level of socio-cultural diversity and the characteristics of the economic, social and spatial development of individual regions. in the course of formation and implementation of innovative policy in the countries with a high level of a regional variety, it is necessary to consider all features of the regional innovation system, including institutional and socio-cultural characteristics of the region. ignoring or undervaluing the institutional factors leads to serious problems of regional and national innovative development. the institutional characteristics of ris of polyethnic regions of the russian federation were analyzed for an illustration of this thesis. although polyethnic regions are researched in the paper, the offered methodical approach goes beyond this group of regions. this method can be applied in the countries with a high level of a regional variety (including geographical, economic, social, etc.) to the justification of innovation policy tools. the innovation systems of russian polyethnic regions have been selected as the objects of the study in accordance with the following reasons: a) polyethnic regions of russia are more independent in justification of regional innovation policy than other regions thanks to the special subfederal status (republic or autonomous region). b) polyethnic regions demonstrate a high level of differentiation in innovative development despite relatively equal initial socio-economic parameters, which allows for a thorough study of the reasons for such deceleration, especially in the field of the institutional support of innovation policy. the polyethnicity of the economic space is a historical feature of russia, where representatives of more than 100 nationalities and ethnic groups reside in a vast territory. 29 of the 85 regions of the russian federation are polyethnic. in some cases, they have the special status of a national-territorial entity (autonomous region or republic). in others, the share of ethnic russians living in these regions is less than 70% of the total population. many publications have been devoted to assessing the innovation potential, innovation development and innovation climate in the regions of russia. currently, there are various systems of assessment for the innovation development of subjects of the russian federation, which are aimed at identifying the leaders of innovation development in russia. table 1 presents the positions of polyethnic regions in three ratings at the end of 2016: association of the innovative regions of russia (airr), higher school of economics (hse), and national association of innovation and information technology development (naiitd). in the presented assessment systems (ratings), the approach 43 of european innovation surveys (the european innovation survey, the regional innovation survey and the union innovation survey) is used as a starting point. rosstat data is used as the initial information base for the regions of russia. table 1: polyethnic regions in innovation development ratings (rank among the regions of russia) no. subject of the federation hse airr naiitd 1 2 3 4 5 1 tatarstan 2 3 2 2 bashkortostan 20 16 11 3 ulyanovsk region 11 12 27 4 chuvashia 5 18 37 5 mordovia 17 20 28 6 tyumen region 18 40 10 7 republic of crimea 30 8 khanty-mansi autonomous area 32 68 26 9 komi 36 48 52 10 yamalo-nenets autonomous area 34 77 38 11 astrakhan region 49 61 44 12 udmurtia 67 38 47 13 mari el 57 31 70 14 buryatia 48 52 72 15 adygea 66 47 67 16 sakha 55 65 63 17 karelia 68 63 58 18 altai 56 75 62 19 north ossetia alania 64 70 64 20 kabardino-balkaria 69 64 78 21 dagestan 72 67 77 22 tyva 74 80 68 23 khakassia 71 73 81 24 chukotka autonomous area 75 72 80 25 kalmykia 78 76 75 26 karachay-cherkessia 81 78 79 27 chechen republic 82 83 73 28 nenets autonomous area 79 81 85 29 ingushetia 83 82 84 table 1 shows that the positions of polyethnic regions in various ratings differ quite significantly. this especially applies to regions like the republic of chuvashia (ranked 5 in the hse rating but only 37 in the naiitd rating), tyumen region (ranked 10 in the naiitd rating and 40 in the airr rating), the khanty-mansi autonomous area (ranked 26 in the naiitd rating and 68 in the airr rating) and the yamalo-nenets autonomous area (ranked 34 in the hse rating and 77 in the airr rating). researchers are unanimous regarding the regions of siberia, the far east and the north caucasus. these regions occupy the lowest positions in all presented ratings. 44 according to the results of the integrated assessments, polyethnic regions, with a few exceptions, are mostly falling behind in innovation development. only 8 of the 29 regions rank in the first half of the rating; the rest noticeably lag behind the average russian values. therefore, study and assessment of the effectiveness of the functioning of the innovation development institutions in polyethnic regions is of great importance in the modernization of regional innovation systems, and the formation of adequate state policy tools to stimulate innovation development and qualitative economic growth. the goal of this study is to develop a systems-based approach to assessing the effectiveness of the institutional structure of regional innovation systems based on a functional cost analysis of innovation development institutions, as well as to identify the factors which determine the quality of regional innovation institutions. this goal is relevant due to the insufficient development of the scientific tools which allow us to assess the quality of innovation development institutions and identify existing institutional dysfunctions, traps, atrophies and degenerations emerging in the process of innovation. their development is caused by the formation of the institutional environment and the specifics of the regional socio-economic system, which limits opportunities for institutional design in the regional economy. the study consists of several parts. the first part provides an overview of existing approaches to understanding the institutional nature of regional innovation systems (ris), and describes the economic categories used in the study. the second part describes the methods and techniques of the study. the third part is an evaluation of the author’s approach to assessing the effectiveness of ris institutions. the fourth part is devoted to the analysis of shortfalls in the institutional environment of regional innovation systems of polyethnic regions in russia. the final part contains conclusions and recommendations on the adjustment of innovation policy in the studied regions. 2. literature review the concept of an ‘innovation system’ was first used by lundvall in 1985 (lundvall, 1985). later, the idea of a national innovation system was developed in the works of acclaimed scientists (furman et al., 2002; boschma and lambooy, 2002; lundvall, 2007). in addition, the concept of a sectoral innovation system (breschi and malerba, 1996; malerba, 2004) and the concept of local/regional innovation systems (cooke, 1992; cooke, uranga and etxebarria, 1997; isaksen, 2001; cooke and memedovic, 2003; iammarino, 2005) were introduced. scientists use different approaches to define the concept of a ‘regional innovation system’. cooke (1992) emphasizes that the essence of identifying the ‘regional innovation system’ category is the ability to lay the foundation for an extended discussion about the financial possibilities to stimulate innovation and to institutionalize education and a culture of innovative production in the region. nelson (1993) defined a regional innovation system as a system which includes a set of regulators and practices which ensure the production of innovations. 45 according to cooke (2013), the regional innovation system includes two sub-systems: (a) a subsystem for the application and use of knowledge, represented mainly by commercial firms; and (b) a subsystem of knowledge generation and diffusion, which includes non-profit organizations as a general rule (mainly, the education sector and academia). leydesdorff and strand (2013) distinguish three functions of national and regional innovation systems: (a) the achievement of economic growth, (b) the production of technological innovations, and (c) the state regulation of the scientific and technical progress. doloreux (2002) stresses the importance of the availability of innovative energy in the region (provided mainly by knowledge-generating enterprises and organizations), and emphasizes an important ability of the regional authorities’ system – to promote and support interactions between organizations involved in the innovation cycle. some researchers propose defining a regional innovation system as an interactive, dynamic structure that provides cooperation in regional production (lambooy, 2002; 2004) or even as a complex of adaptable systems (cilliers, 1998; pavard and dugdale, 2006). the author defines a regional innovation system as a set of organizations and institutions whose main functions are the generation, commercialization and introduction of knowledge into the region’s economy. the core of the regional innovation system is formed by scientific and educational organizations, innovative business and regional and municipal authorities providing the implementation of scientific and technical policies, as well as regional innovation institutions which set the rules, norms and mechanisms by which they function, and that ensure the implementation of research and development work. in a broad sense, the term ‘institutions’ refers to the formal and informal rules of a society which define relationships between people (veblen, 1898). in a narrow sense, this term refers to organizational units and procedures (commons, 1924). institutions make up the main part of the social capital – a key factor in economic growth. the main function of institutions is to structure relationships between economic entities. the institutional structure consists of a set of institutions. the institutional structure is closely connected to the institutional environment, which consists of system-forming rules. in accordance with the terminology developed by north and davis, the institutional environment is a set of fundamental political, social and legal ground rules that establish the basis for production, exchange and distribution (north, 1997). the institutions of a regional innovation system perform the following functions: (1) regulation of innovation activity, (2) financing innovation activity, (3) organizational support for the transfer and diffusion of innovations, (4) stimulation of innovation activity, and (5) information support of innovation activity. the institutional environment of regional innovation systems in polyethnic regions is strongly influenced by socio-cultural factors. studies indicate that basic cultural values affect not only the economic development, health, lifespan, well-being and happiness of the population, but also the ingenuity and innovative dispositions of 46 the individual (inglehart and baker, 2000; diener, 2000; triandis, 1994; shane, 1995). studies conducted in the usa (shane, 1992) show that individualistic and non-hierarchical (‘horizontal’) societies are more resourceful and prone to innovation. another international study found that originality and innovativeness depend on the socio-cultural context (kharkhurin and motalleebi, 2008). institutional factors, i.e., cultural, political and social characteristics, are more significant in polyethnic regions. innovation is introduced faster when it is combined with these factors, and it is introduced more slowly or not at all when they are incompatible. thus, klimanov and bylov conducted a spatial-temporal analysis of the spread of market institutions in russian regions in the 1990s. the results of the analysis showed that most republics were outsiders in this regard (klimanov and belov, 1997). based on the analysis of cultural values and attitudes towards innovations in various regions of the russian federation, lebedeva and yasin substantiated the idea that russia’s innovative weakness was largely due to the specific features of the culture and social institutions of ‘ethnic’ regions. neglecting these features during the implementation of innovation policy has hindered the spread of innovation in russia (yasin and lebedeva, 2009). pilyasov believes that if these features are taken into account, outsider regions can become leaders in innovative development because cultural and ethnic differences, intellectual differences and openness to the outside world stimulate the innovation process (pilyasov, 2009). the polyethnic regions of the russian federation have, for the most part, lower levels of innovation development. development trends in the economic space of the russian federation suggest that this level will decrease in the future. in this regard, it is necessary to study not only the economic and geographical factors, but also the institutional factors behind the innovation level gap of polyethnic regions. a number of academics have recently attempted to assess the effectiveness of regional innovation system institutions (buesa et al., 2006; chen and guan, 2012; d’allura et al., 2012). stejskal et al. (2018) suggested the method of assessing regional innovation systems based on the assessment of qualitative and quantitative indicators using wsa methods (weighted sum approach methods). de marchi and grandinetti (2017) conducted a quantitative assessment of the effectiveness of regional innovation systems in italy using statistical data. the author considers the interconnection of the innovation system’s elements as the main criterion of ris effectiveness. leydesdorff and porto-gomez (2017) consider the synergistic effect of innovation as the main criterion of the effectiveness of ris institutions: these scholars used geographic, technological and organizational parameters to analyze the institutional structure of ris in spain. despite the interest in the study of ris effectiveness, economic science still has no unified methodological approach to analyzing the formation and functioning of the innovation development institutions, and assessing their effectiveness. at the same time, analysis of institutions and institutional structures which ensure the functioning of regional innovation systems will lead to a different qualitative level of studying the processes involved in financing research activities in the regions. development of 47 a ris analysis methodology will provide an opportunity to formalize the conditions contributing to the increase in the management efficiency of knowledge generation processes, and the development of the regional innovation systems as a whole. the rapid development of institutional theory greatly enriches the methodological tools of economic studies. however, the institutional analysis is of qualitative nature in most studies. in addition, there is still no consensus among institutionalists on the criteria to measure an institution’s effectiveness. the development of quantitative analytical tools for assessing the effectiveness of innovation development institutions, and identifying institutional dysfunctions in the regional innovation system will provide a scientific information base for decision makers in the field of regional economic and innovation development. 3. methods of study the methods and approaches used for solving the present research problems are based on the theoretical and methodological instruments of regional economy, as well as institutional and economic-mathematical analysis. the methodological instruments of regional economy include well-known methods such as integrated assessments and ratings. the methodological instruments of institutional analysis include the systematization of institutions, and the author’s developments in assessing institutional dysfunctions. furthermore, correlation analysis was also used. the research included three stages. at the first stage, the assessment of the efficiency of a regional innovation system was carried out. at the second and third stages, the reasons for insufficient efficiency of ris and the lack of institutional support for innovative activity were analyzed. the first stage of the study consists of the approbation of the author’s methodical approach to analyzing the effectiveness of innovation development institutions. this approach is based on the assumption that a change in innovation development costs proportionally changes the results of innovation activity in the region if the ris institutions function effectively. the data source is the official regional statistics. the values of the volume of innovative goods and services were used as variables characterizing the results of the innovation system. the values of the internal research and development costs were used as variables characterizing the costs of the creation and operation of innovation institutions. correlation and functional cost analysis were used as methodical tools. in the second stage, the analysis of the institutional environment for innovation activity was carried out based on the criterion of the presence of development institutions performing essential functions of ris. the author analyzed data from the official websites of regional authorities and the website for innovation and business support ‘innovation and entrepreneurship’; on this portal, a summary of the registered organizations of the russian federation contributing to innovative development is provided. in the third stage, the institutional capacity of regional innovation policy was analyzed. the information base consisted of the websites of regional authorities and data 48 from the institute for statistical studies and economics of knowledge at the national research university higher school of economics. 4. main results of the study 4.1. assessment of the effectiveness of ris institutions the author uses a functional approach to assess the effectiveness of ris institutions and to analyze the quality of ris. the analysis aimed to assess: 1. the extent to which the institution performs its main functions, i.e. achieving performance/efficiency targets; and 2. the ratio of the innovation financing volume and the parameters characterizing these functions in the studied ris. in economics, innovation is ‘the end result of innovation activity, embodied by a new or improved product introduced to the market; a new or improved technological process used in practical activities’ (hobday, 2005). innovation activity involves a whole range of scientific, technological, organizational, financial and commercial events, which together lead to innovation. therefore, it can be assumed that each monetary unit invested in r&d in an effective ris not only pays off, but also multiplies in the form of an innovative product sold on the market. therefore, the effectiveness of ris should be assessed by a direct dependence between the parameters of innovation financing and the parameters of innovation effectiveness. correlation analysis is one of the methods which can confirm or disprove the existence of a link between the two variables. in order to assess the quality of innovation development institutions, the author conducted an analysis of the correlation dependencies between the series of values of innovation development costs and the series of values of innovation activity indicators in russian polyethnic regions for the period 2004-2016. further conclusions about the quality of ris institutions were based on the following assumptions: – if the value of the correlation coefficient is less than -0.5, i.e. there is a medium/ high negative correlation, then there is an institutional trap. in institutional theory, an institutional trap is an inefficient sustainable norm (an inefficient institution) of a self-sustaining nature; – if the value of the correlation coefficient is between -0.49 and 0.49, then this is an institutional dysfunction – a disruption of the functions of an economic institution for innovation development, mainly of a qualitative nature; – if the value of the correlation coefficient is between 0.5 and 0.69, then the institution for innovation development is not effective, or the institution is at the formation (development) stage; – if the value of the correlation coefficient is more than 0.7, then the institution is effective. the study took into account the regional variation of the innovation cycle, which includes several stages: fundamental research, exploratory research, applied research, 49 development, production mastering, implementation, and spread. the duration of the innovation cycle and its individual stages depend on a variety of factors determined by the characteristics of its socio-economic environment. therefore, the author assumed that the optimal average duration of the innovation process is different in various regions. therefore, the correlation analysis was carried out taking into account the time lags of 1-5 years. the author used official regional statistics on r&d costs and innovation activity performance indicators in the period 2004-2016 as data sources. the correlation coefficients between the indicators were calculated taking into account the time lags, since the duration of the innovation cycle in different regions varies (depending mainly on the structure of the economy) (table 2). thus, the high quality of ris institutions is typical for the following regions: the republic of tatarstan, the republic of bashkortostan, ulyanovsk region, the chuvash republic, the republic of mordovia and tyumen region (i.e., regions which occupy the top positions in all the ratings). the republic of adygea is the exception in the group of regions with high-quality institutions: innovation development institutions in the region perform their functions effectively despite a low rating. a high level of institutional efficiency is also noted in the innovation systems of regions like the yamalo-nenets autonomous area, the astrakhan region, udmurtia and karelia. however, the duration of the innovation cycle in these regions is 4-5 years due to the structural features of their economies. regional innovation systems with developing institutions are typical for the following regions: the komi republic, the sakha republic and the republic of buryatia. the listed regions take middle positions in the ratings of innovative development of the russian federation. ris institutions of these regions with identical probability can both pass into the category ‘effective’, and become dysfunctional over time. institutional traps in regional innovation systems were identified in the republics of dagestan, ingushetia, kabardino-balkaria and north ossetia, and in the chukotka autonomous area. in these regions, the effectiveness of innovation activity decreases with increasing r&d funding. a thorough analysis of each of the listed regions is required to identify the reasons for such a serious violation of ris activities. the innovative systems of the remaining polyethnic regions are dysfunctional, i.e. the innovation institutions do not perform the functions for which they were created. consequently, an increase in r&d funding in these regions will not have the expected effect until a detailed review of the entire institutional infrastructure for innovation activity takes place. 50 ta bl e 2: a ss es sm en t o f i nn ov at io n sy st em in st itu tio ns in p ol ye th ni c re gi on s no . re gi on co rre la tio n of in te rn al re se ar ch a nd d ev el op m en t c os ts an d th e vo lu m e of in no va tiv e go od s an d se rv ic es ri s ch ar ac te ris tic t t+ 1 t+ 2 t+ 3 t+ 4 1 2 3 4 5 6 7 8 1 re pu bl ic of t at ar st an 0. 98 ** ** 0. 99 ** ** 0. 97 ** ** 0. 93 ** ** 0. 90 ** ** in st itu tio ns a re e ffe ct ive 2 ba sh ko rto st an 0. 95 ** ** 0. 96 ** ** 0. 97 ** ** 0. 98 ** ** 0. 90 ** ** in st itu tio ns a re e ffe ct ive 3 ul ya no vs k re gi on 0. 76 ** ** 0. 67 ** ** 0. 50 ** * 0. 68 ** ** 0. 71 ** ** in st itu tio ns a re e ffe ct ive 4 ch uv as h re pu bl ic 0. 81 ** ** 0. 67 ** ** 0. 60 ** ** 0. 52 ** * 0. 61 ** ** in st itu tio ns a re e ffe ct ive 5 re pu bl ic of m or do via 0. 78 ** ** 0. 78 ** ** 0. 85 ** ** 0. 96 ** ** 0. 87 ** ** in st itu tio ns a re e ffe ct ive 6 ty um en re gi on 0. 69 ** ** 0. 83 ** ** 0. 73 ** ** 0. 66 ** ** 0. 70 ** ** in st itu tio ns a re e ffe ct ive 7 re pu bl ic of c rim ea in su ffi cie nt d at a 8 kh an ty -m an si au to no m ou s a re a -0 .2 7* -0 .0 4 -0 .1 8 0. 39 ** 0. 31 ** in st itu tio ns a re d ys fu nc tio na l 9 ko m i r ep ub lic 0. 39 ** 0. 39 ** 0. 47 ** * 0. 50 ** * 0. 58 ** ** in st itu tio ns a re a t t he fo rm at io n st ag e 10 ya m al one ne ts a ut on om ou s a re a -0 .3 6* * -0 .5 3* ** -0 .4 9* ** 0. 15 0. 78 ** ** in no va tio n cy cle ≥ 5 ye ar s; in st itu tio ns a re e ffe ct ive 11 as tra kh an re gi on 0. 42 ** * 0. 58 ** ** 0. 69 ** ** 0. 81 ** ** 0. 74 ** ** in no va tio n cy cle ≥ 4 ye ar s; in st itu tio ns a re e ffe ct ive 12 re pu bl ic of u dm ur tia 0. 62 ** ** 0. 69 ** ** 0. 75 ** ** 0. 83 ** ** 0. 59 ** ** in no va tio n cy cle 3 -4 y ea rs . i ns tit ut io ns a re e ffe ct ive 13 m ar i e l r ep ub lic -0 .2 9* -0 .2 1* -0 .1 1 -0 .1 0 -0 .4 0* * in st itu tio ns a re d ys fu nc tio na l 14 re pu bl ic of b ur ya tia 0. 55 ** * 0. 39 ** 0. 32 ** 0. 32 ** 0. 20 * in st itu tio ns a re a t t he fo rm at io n st ag e 15 re pu bl ic of a dy ge a 0. 91 ** ** 0. 96 ** ** 0. 88 ** ** 0. 91 ** ** 0. 96 ** ** in st itu tio ns a re e ffe ct ive 16 re pu bl ic of s ak ha 0. 56 ** * 0. 54 ** * 0. 57 ** * 0. 52 ** * 0. 62 ** ** in st itu tio ns a re a t t he fo rm at io n st ag e 17 re pu bl ic of k ar el ia -0 .1 7 -0 .2 0* -0 .3 1* -0 .6 3* ** * -0 .7 9* ** * in no va tio n cy cle ≥ 5 ye ar s. in st itu tio ns a re e ffe ct ive 18 re pu bl ic of a lta i -0 .4 0* * -0 .2 3* -0 .3 8* * -0 .1 7 -0 .1 1 in st itu tio ns a re d ys fu nc tio na l 19 re pu bl ic of n or th o ss et ia -0 .0 6 -0 .1 1 -0 .1 1 -0 .1 2 -0 .5 5* ** in st itu tio na l r is tr ap 20 ka ba rd in oba lka ria 0. 43 ** * 0. 40 ** 0. 22 * 0. 00 2 -0 .5 8* ** * in st itu tio na l r is tr ap 21 re pu bl ic of d ag es ta n -0 .3 3* * -0 .4 4* ** -0 .4 8* ** -0 .5 3* ** -0 .4 4* ** in st itu tio na l r is tr ap 22 re pu bl ic of t yv a 0. 32 ** 0. 47 ** * 0. 49 ** * 0. 26 * 0. 01 in st itu tio ns a re in eff ec tiv e 23 re pu bl ic of k ha ka ss ia 0. 26 * 0. 25 * 0. 06 0. 11 -0 .0 2 in st itu tio ns a re d ys fu nc tio na l 24 ch uk ot ka a ut on om ou s a re a -0 .3 8* * -0 .3 6* * -0 .5 4* ** -0 .3 6* * 0. 11 in st itu tio na l r is tr ap 25 re pu bl ic of k al m yk ia in su ffi cie nt d at a (0 ,0 2) 26 ka ra ch ay -c he rk es sia -0 .1 -0 .2 1* 0. 04 0. 02 -0 .3 7* * in st itu tio ns a re d ys fu nc tio na l 27 ch ec he n re pu bl ic -0 .4 5* ** in su ffi cie nt d at a in st itu tio ns a re d ys fu nc tio na l 28 ne ne ts a ut on om ou s a re a in su ffi cie nt d at a 29 re pu bl ic of in gu sh et ia 0. 51 ** * 0. 56 ** * 0. 18 0. 3* 0. 33 ** in st itu tio na l r is tr ap no te : * s ig ni fic an ce 1 0% , * * s ig ni fic an ce 5 % , * ** s ig ni fic an ce 1 % , * ** * s ig ni fic an ce 0 .1 % so ur ce : a ut ho r’s w or k 51 5. analysis of shortfalls in the institutional environment of regional innovation system assessment of the effectiveness of ris institutions showed that from 29 studied regions only ten regions have ris with institutions that effectively perform the functions on institutional supporting innovative activity, ris institutions of three regions are at a development stage, and ris institutions of other regions are dysfunctional or institutional traps. with the purpose to find out the inefficiency reasons of ris, the existence and the number of institutions performing the ris separate functions in each region were investigated. for this research, the ris institutions presented in table 3 were considered. table 3: institutions in the regional innovation system function of ris institutions regulation of innovation activity innovation activity coordination authorities financing innovation activity r&d financing funds; and venture funds stimulation of innovation activity business incubators; technological incubators; and technology parks organizational support of transfer and diffusion of innovations innovation and technology centers; and technology transfer centers information support of innovation activity centers of scientific and technical information source: author’s work afterwards, the institutional support of regional innovation policy was analyzed in each region. the analysis was based on the criterion of the presence of the most important elements of institutional environment such as: (1) a strategy of innovation development in the region (or the profile section in the strategy of regional development); (2) specialized legislation defining the principles, directions and measures of state support for innovation activities in the region; (3) a program or a set of state support measures aimed at the development of innovation in the region; (4) the availability of specialized innovation policy coordinating authorities; and (5) regional innovative fund for the financing of innovative activity. the results of the conducted research are presented in table 4. the results of the analysis of the institutional capacity of the innovation activities in russian polyethnic regions (columns 3-7 of table 4) show that the leaders of innovation development among the studied regions have not experienced a shortage of the institutions that perform ris functions. a high level of institutional support for innovation activity has been observed in such regions as the republic of tatarstan, the republic of bashkortostan, the chuvash republic, the republic of mordovia and tyumen region. the main problems of the development of ris in the komi republic lie in the formation of regional innovation policy: it is necessary to develop regional programs to 52 ta bl e 4: in st itu tio na l e nv iro nm en t o f r eg io na l in no va tiv e sy st em in p ol ye th ni c re gi on s no . re gi on al in no va tio n sy st em in st itu tio ns in st itu tio na l s up po rt of re gi on al in no va tio n po lic y organizational support of transfer and diffusion of innovations regulation of innovation activity stimulation of innovation activity financing innovation activity information support of innovation activity strategy of innovation development specialized legislation program or a set of state support regional innovative fund innovation policy coordinating authorities 1 2 3 4 5 6 7 8 9 10 11 12 re gi on s wi th e ffe ct ive r is in st itu tio ns 1 re pu bl ic of t at ar st an 9 9 14 6 2 + + + + + 2 ba sh ko rto st an 3 6 1 6 3 + + + + + 3 ul ya no vs k re gi on 7 1 3 3 + + + 4 ch uv as h re pu bl ic 1 2 2 3 2 + + + + + 5 re pu bl ic of m or do via 2 2 2 2 3 + + + + + 6 ty um en re gi on 3 2 3 1 4 + + + 7 re pu bl ic of a dy ge a 2 + + 8 ya m al one ne ts a ut on om ou s a re a 0 1 0 1 0 + + + + 9 as tra kh an re gi on 2 3 5 + + 10 re pu bl ic of u dm ur tia 7 2 4 4 + 11 re pu bl ic of k ar el ia 6 3 4 + + + re gi on s wi th d ev el op in g ri s in st itu tio ns 12 ko m i r ep ub lic 1 2 2 2 3 + + + 13 re pu bl ic of s ak ha 1 1 3 4 + + + + + 14 re pu bl ic of b ur ya tia 1 3 1 3 + + + + 53 re gi on s wi th d ys fu nc tio na l r is in st itu tio ns 15 kh an ty -m an si au to no m ou s a re a 1 1 2 + + + 16 m ar i e l r ep ub lic 1 2 2 + + + 17 re pu bl ic of a lta i + + 18 re pu bl ic of t yv a 2 1 1 + + + 19 re pu bl ic of k ha ka ss ia 2 1 + + + 20 re pu bl ic of k al m yk ia 2 + 21 ka ra ch ay -c he rk es sia 1 + 22 ch ec he n re pu bl ic 1 + + + 23 ne ne ts a ut on om ou s a re a in st itu tio na l t ra ps in r is in st itu tio ns 24 re pu bl ic of n or th o ss et ia 2 + + 25 ka ba rd in oba lka ria 2 + + + 26 ch uk ot ka a ut on om ou s a re a 27 re pu bl ic of in gu sh et ia 1 + + + 28 re pu bl ic of d ag es ta n 2 3 1 2 + + + so ur ce : a ut ho r’s w or k 54 support and finance innovation activities. the republics of buryatia and sakha lack the ris institutions which perform financing functions. at the same time, a lack of specialized regional institutions for innovation development was identified in most polyethnic regions of the russian federation. engineering and technology centers, technology transfer centers, innovation activity coordination authorities, technology parks and business incubators are absent in 12 of the 29 regions. there is a lack of venture funds and financial companies focused on innovative business in 20 regions. an extremely low level of institutional support for innovation activities was observed in regions like the chukotka autonomous area, the republic of kalmykia, the karachay-cherkess republic, the chechen republic, the nenets autonomous area, the republic of ingushetia, the republic of altai, the republic of north ossetia-alania and the kabardino-balkaria republic. as a result, these regions have fallen significantly behind the leaders in terms of the effectiveness of ris institutions. thus, the analysis of institutional capacity has shown that it is necessary to have all the elements of an institutional ris subsystem (performing the functions of regulating, financing, organizing, stimulating and informing) for the innovation development of a region. the aforementioned specialized regional institutions for innovation development play an essential role in shaping an institutional structure conducive to the development of innovations in polyethnic regions. at the same time, the effectiveness of these institutions is partly determined by the quality of regional innovation policy, and its institutional component in particular. the results of the analysis of institutions providing innovative policy (columns 8-12 of table 4) showed that the following polyethnic regions have the best institutional support for innovation policy: republic of tatarstan, republic of bashkortostan, republic of yakutia (sakha), chuvash republic and republic of mordovia. it should be noted that these regions have a high efficiency of ris institutions. in contrast, regions with underdeveloped innovation policy institutions occupy lower positions: chukotka autonomous area, karachay-cherkess republic, nenets autonomous area, republic of kalmykia, republic of north ossetia-alania, and republic of altai. thus, the presence of institutions performing these functions promotes but does not guarantee that the regional innovation system achieves high indicators of effectiveness and efficiency (for example, republic of dagestan has low ris efficiency, despite rather high support for innovative institutions). also, on the contrary, ris institutions can be effective in the absence of enough formal institutions for innovative development (for example, republic of adygea). according to the author, the main reason for this phenomenon are the disparities and contradictions in the interaction of formal and informal institutions. the scientific literature describes the following ways in which informal institutions can affect the effectiveness of formal ones: (1) an informal institution can lead to an increase in the efficiency of a formal one with the help of a ‘complement effect (complementarity)’ and an ‘accommodation effect (adaptation)’; and (2) an informal institution can lead to a decrease in the efficiency of a 55 formal institution due to a ‘substitution effect’ and a ‘competition effect’ (helmke and levitsky, 2004). the competition between clan protectionism and innovation development institutions in the republics of south siberia (tyva, khakassia and altai) and the north caucasus (dagestan, ingushetia, kabardino-balkaria, north ossetia, etc.) is an example of the negative impact of informal institutions on innovation development. informal social regulation based on kinship, solidarity, trust and mutual assistance is much more developed in these regions. there are no ‘career elevators’ outside the clan; social and generational hierarchies within the clan are very strong. the most promising areas of commercial activity are monopolized by the ruling elites at republic and district levels. as a result, innovators do not have access to the resources of innovation development institutions. at the same time, the informal institutions of polyethnic regions can stimulate innovation activity. for example, the interaction of informal institutions of ethnic solidarity and formal institutions of the network economy1 in the volga republics (tatarstan, bashkortostan, chuvashia and mordovia) has led to the ‘complement effect’. this increases the effectiveness of formal institutions for innovation development. 6. conclusions the author offered a method of economic efficiency assessment for ris institutions, which allowed to reveal qualitative and dysfunctional institutions and also institutional traps of innovative development of the russian polyethnic regions. regional authorities can apply this method for the justification of financial mechanisms for stimulation of innovative activity in regions. the results of the research showed that the increase in financing regional innovations resulted in a positive effect only in a third of the total number of the explored regions. in other cases, activation of innovative activity does not happen. partially, such a result is explained by a lack of ris institutions of particular regions. research of ris institutional environment allowed to conclude that the lack or absence of institutions on one and more ris functions naturally lead to a decrease in efficiency of the entire system. based on the results of the analysis, it is also possible to conclude that institutions providing innovative policies play an important, but not critical role. socio-cultural factors and informal institutions have much more significant value; they either promote or interfere with the performance of ris functions. 1 a network economy is an economic system based on the interconnection of three elements: social (economic) networks; the technological specifics of the post-industrial lifestyle; and the institutional specifics of the post-industrial economy (computer technologies, international trade, entertainment and tourism, real estate management and the cultural and creative industries). trust based on shared ethnic identity forms ‘ethnic’ social (economic) networks and reduces potential transaction costs associated with distrust (for example, the use of intermediaries acting as guarantors in business becomes redundant). 56 the results of the study suggest that most polyethnic regions face a common problem: a low level of institutional capacity in innovation development associated with a lack of the necessary ‘bridges’, norms and rules for connecting disparate innovation system organizations. this problem must be solved during regional innovation development. the problem is also aggravated by the fact that the innovation development institutions, which function effectively in most parts of the country, often cease to perform their functions in polyethnic regions. in summary, the author identifies several main directions of regional policy aimed at increasing the effectiveness of innovation development institutions in the studied regions: 1. initiation of researches on actors’ economic innovative behavior, taking into account the action of informal institutions and socio-cultural factors; 2. formation of new financing mechanisms for innovative projects, which consider socio-cultural features of regions; 3. implementation of large-scale infrastructure projects designed to link large enterprises, small businesses, scientific organizations and universities; 4. development of institutional support for innovation policy; and 5. development of the informational, expert-consulting and educational infrastructure of innovation activity. references: 1. boschma, r.a. and lambooy, j.g., ‘knowledge, market structure and economic coordination: dynamics of industrial districts’, 2002, growth and change, vol. 33, no. 3, pp. 291-311. 2. breschi, s. and malerba, f., ‘sectoral innovation systems: technological regimes, schumpeterian dynamics and spatial boundaries’, in edquist, c. (ed.), systems of innovation: technologies, institutions, and organizations, london: pinter, 1997, pp. 130-156. 3. buesa, m., heijs, j., martínez pellitero, m. and baumert, t., ‘regional systems of innovation and the knowledge production function: the spanish case’, 2006, technovation, vol. 26, no. 4, pp. 463-472. 4. chen, k. and guan, j., ‘measuring the efficiency of china’s regional innovation systems: application of network data envelopment analysis (dea)’, 2012, regional studies, vol. 46, no. 3, pp. 355-377. 5. cilliers, p., complexity and postmodernism: understanding complex systems, new york: routledge, 1998. 6. commons, j., the legal foundations of capitalism, new york: mcmillan, 1924 (reprint – madison: university of wisconsin press, 1968). 7. cooke, p., complex adaptive innovation systems: relatedness and transversality in the evolving region, new york: routledge, 2013. 8. cooke, p., ‘regional innovation systems: competitive regulation in the new europe’, 1992, geoforum, vol. 23, no. 3, pp. 365-382. 9. cooke, p. and memedovic, o., strategies for regional innovation systems: learning transfer and application, vienna: strategic research and economics branch, united nations industrial development organization (unido), 2003, pp. 1-38. 57 10. cooke, p., uranga, m. and etxebarria, g., ‘regional innovation systems: institutional and organizational dimensions’, 1997, research policy, vol. 26, no. 4-5, pp. 475-491. 11. d’allura, g.m., galvagno, m. and mocciaro li destri, a., ‘regional innovation systems: a literature review’, 2012, business systems review, vol. 1, no. 1, pp. 139-156. 12. de marchi, v. and grandinetti, r., ‘regional innovation systems or innovative regions? evidence from italy’, 2017, tijdschrift voor economische en sociale geografie, vol. 108, no. 2, pp. 234-249. 13. diener, e., ‘subjective well-being: the science of happiness, and a proposal for a national index’, 2000, american psychologist, vol. 55, no. 1, pp. 34-43. 14. doloreux, d., ‘what we should know about regional systems of innovation’, 2002, technology in society, vol. 24, no. 3, pp. 243-263. 15. furman, j., porter, m. and stern, s., ‘the determinants of national innovative capacity’, 2002, research policy, vol. 31, no. 6, pp. 899-933. 16. helmke, g. and levitsky, s., ‘informal institutions and comparative politics: a research agenda’, 2004, perspectives on politics, vol. 2, no. 4, pp. 725-740. 17. hobday, m., ‘firm-level innovation models: perspectives on research in developed and developing countries’, 2005, technology analysis & strategic management, vol. 17, no. 2, pp. 121-146. 18. iammarino, s., ‘an evolutionary integrated view of regional systems of innovation: concepts, measures and historical perspectives’, 2005, european planning studies, vol. 13, no. 4, pp. 497-519. 19. isaksen, a., ‘building regional innovation systems: is endogenous industrial development possible in the global economy?’, 2001, canadian journal of regional science, vol. 24, no. 1, pp. 101-120. 20. klimanov, v.v. and belov, g.v, ‘пространственная диффузия маркетинговых инноваций в россии’ (spatial diffusion of market innovations in russia), 1997, вестник ргнф: науки о человеке и обществе (rfbr newsletter: the science of man and society), no. 5, pp. 12-19. 21. lambooy, j., ‘knowledge and urban economic development: an evolutionary perspective’, 2002, urban studies, vol. 39, no. 5-6, pp. 1019-1035. 22. lambooy, j., ‘the transmission of knowledge, emerging networks, and the role of universities: an evolutionary approach’, 2004, european planning studies, vol. 12, no. 5, pp. 643-567. 23. leydesdorff, l. and porto-gomez, i., ‘measuring the expected synergy in spanish regional and national systems of innovation’, 2017, journal of technology transfer, vol. 41, no. 1, pp. 189-209. 24. lundvall, b.å., product innovation and user-producer interaction, aalborg: aalborg university press, 1985. 25. lundvall, b.å., ‘national innovation systems – analytical concept and development tool’, 2007, industry and innovation, vol. 14, no. 1, pp. 95-119. 26. malerba, f., sectoral systems of innovation: concepts, issues and analysis of six major sectors in europe, cambridge: cambridge university press, 2004. 27. nelson, r.r., national innovation systems: a comparative analysis, oxford: oxford university press, 1993. 58 28. north, d., ‘институциональные изменения: рамки анализа’ (institutional changes: framework for analysis), 1997, вопросы экономики (voprosy ekonomiki (issues of the economy)), no. 3, pp. 6-17. 29. pavard, b. and dugdale, j., ‘the contribution of complexity theory to the study of socio-technical cooperative systems’, in minai, a.a. and bar-yam, y. (eds.), unifying themes in complex systems, berlin: heidelberg, 2006, pp. 39-48. 30. pilyasov, a.n., и последние станут первыми. северная периферия на пути к экономике знания (and the last shall be the first: the northern periphery on the road to the knowledge economy), moscow: librikom, 2009. 31. rosstat, russian statistical yearbook, moscow: rosstat, 2017. 32. shane, s., venkatarman, s. and macmillan, i., ‘cultural differences in innovation championing strategies’, 1995, journal of management, vol. 21, no. 5, pp. 931-952. 33. shane, s., ‘why do some societies invent more than others’, 1992, journal of business venturing, vol. 7, no. 1, pp. 29-46. 34. leydesdorff, l. and strand, d., ‘the swedish system of innovation: regional synergies in a knowledge-based economy’, 2013, journal of the american society for information science and technology, vol. 64, no. 9, pp.1890-1902. 35. stejskal, j., kuvíková, h. and meričková, b.m., ‘regional innovation systems analysis and evaluation: the case of the czech republic’, in stejskal, j., hajek, p. and hudec, o., knowledge spillovers in regional innovation systems, cham, switzerland: springer international publishing, 2018, pp. 81-113. 36. triandis, h.c., culture and social behavior, new york: mcgraw-hill, 1994. 37. veblen, t., ‘why is economics not an evolutionary science’, 1898, quarterly journal of economics, vol. 12, no. 4, pp. 373-397. 38. yasin, e.g. and lebedeva, n.m., ‘культура и инновации: к постановке проблемы’ (culture and innovation: problem statement), 2009, форсайт (foresight), vol. 3, no. 2, pp. 1626. 180 transylvanian review of administrative sciences, no. 2(36 e)/2012, pp. 180-183 book review dacian-cosmin dragoş and bogdana neamţu (editors) instituţia ombudsmanului: justiţie alternativă? (the ombudsman institution: alternative justice?) bucharest, c.h. beck, 2011 the volume edited by dacian-cosmin dragoş and bogdana neamţu is welcomed in the area of scientific literature regarding the complex issues surrounding the institution of the ombudsman. in fact, it is known, and this volume emphasizes it, that the debates regarding this institution can be integrated in the wider theoretical sphere of issues regarding the principles of good governance, the problematic relation between the various state institutions and the relation between these institutions, and the citizen. this volume comes as a corollary of the research project financed by cncsis1 between 2008 and 2011, and reunites prestigious researchers from romania, the netherlands, canada, belgium, france, great britain, argentina and south africa, whose contribution is unified by the scientific strictness of the public administration department at babeş -bolyai university. a good starting point for the review of this book is given in the chapter written by alex brenninkmeijer, who from 2005 is the national ombudsman of the netherlands. in an original manner, he chooses to state his opinion regarding public management by starting off with the vision franz kafka outlines in his well-known novel, the trial. the dutch ombudsman reminds us that, at a superficial level, this novel describes a chaotic world, in which the huge and absurd mechanism of the uncontrolled bureaucracy crushes the citizen through an endless series of unjustified measures. obviously, the czech novelist distorts the reality, emphasizing its flaws in order to suggest the idea of an absurd universe, but the observations of the dutch researcher make us question the extent to which reality comes close to kafka’s vision. moreover, alex brenninkmeijer 1 cncsis project – idei 2008: ‘transparency, responsibility and civic involvement: the role of the ombudsman institution in the development of the good administration principles’. this project is included in a wider research, developed under the sponsorship of the robert schuman centre, european university institute and european group of public administration. 181 makes a statement that can come as a surprise for the romanian reader, whose tendency is to admire without reservation the well-functioning of the northern european administration: ‘in my role as national ombudsman of the netherlands, i see many cases that seem kafkaesque and center on the loss of autonomy experienced by the citizen who finds himself in the toils of some vast and incomprehensible bureaucratic power’ (p. 168). even though some might argue that the dutch researcher exaggerates, his objective is to draw attention to ‘the gulf that divides the citizen as a person and government as a system (or set of subsystems)’ (p. 172). the main idea advanced in this volume is that the ombudsman institution has as a primary objective the decreasing of the gulf mentioned by brenninkmeijer. there are three major themes that the editors lay out in the introduction: the fundamental role of the ombudsman in the state and the general principles that regulate its activity; secondly, the way the ombudsman can involve in good administration and the relations he maintains with other state institutions; finally, the paper sets out to give an empirical research through which it can evaluate the practical functioning of the ombudsman and its institutional perception, in order to identify the essential issues that derive from the confrontation between theoretical principles and reality. the first part includes five chapters that analyze the way the institution of people’s advocate2 works. the first chapter, written by dan balica and bianca radu, firstly gives a welcomed historical perspective in order to show the origins and the evolution of this institution. it is interesting to note the paradoxical fact that the authors consider to be the main cause of the ombudsman’s evolution in the modern society: the importance of the institution grew exponentially as the welfare state consolidated, an aspect that, after all, draws attention to the risks that come with democracy and prosperity. the analysis the two researchers make starts with the distinction that linda reif makes between the classical ombudsman – whose activity is focused on supervising and correcting the administrative activity of the executive power – and the hybrid ombudsman, that can be, in its turn, an ombudsman orientated towards protecting human rights or an ombudsman with specific attributions. one of the conclusions is that the romanian ombudsman can be classified as hybrid, oriented towards protecting human rights. the second major idea of this chapter is similar to the idea that the next four chapters support about the romanian ombudsman and it regards the solutions for its activity optimization. the relationship between the people’s advocate and the executive power, the legislative power and the judicial power is analyzed in order to see that the attributions of this institution are rather limited, even though in the last few years there has been some progress in this matter. with a respectable competence in this area, dana apostol tofan examines the relations between the people’s advocate and the constitutional jurisdiction and observes a satisfying evolution in this matter especially regarding the number of unconstitutional exceptions that were claimed and admitted by the constitutional 2 people’s advocate (avocatul poporului) is the romanian equivalent for ombudsman. 182 court. finally, the idea that the increasing of the prerogatives of this institution might decisively contribute to the consolidation of the rule of law is emphasized. an interesting perspective is outlined in the fourth chapter. laura hossu uses nils brunsson’s concept of organizational hypocrisy to describe the attitude the people’s advocate is forced to adopt in his activity. the hypocritical behavior is seen as a solution for coping with inconsistent requirements and is described as a behavior through which an institution is required to: ‘speak in a way to satisfy a wish, to decide in another way to satisfy another wish and to offer products to satisfy a third party’ (p. 96). laura hossu identifies three phases in the evolution of the romanian ombudsman, separated by the way it relates to its objectives and to the environment it acts in. other concepts taken from brunsson are used in order to show that, in a preliminary phase, between 1997 and 2001, the people’s advocate was an action-organization, it became in 2001 a political organization and in 2005 it transformed into a hypocrite organization. the second part of the volume investigates the ombudsman in different countries, offering a comprehensive and clarifying perspective over the specific matters related to this institution. the limited space determines us to briefly and selectively present this part, with an emphasis on the common points identifiable in the eight chapters. one can observe that the functioning of the ombudsman’s institution comes close to the optimal situation in states like the netherlands, canada, belgium or the uk. the two authors that deal with the dutch model, gio ten berge and philip langbroek, underline a series of positive aspects, including citizens’ trust, adequate legislation, efficient distribution of attributions, good relations with judicial institutions and, especially, with public administration institutions. the analysis that laverne jacobs makes for the federal commissioner for information is very useful. the author firstly discusses the two well-known conflict resolution patterns – the inquisitorial model and the adversarial model – and then argues the fact that the efficient involvement of the ombudsman can provide a more adequate alternate model. the vast empirical research undertaken is meant to confirm the initial hypothesis and to signal the positive evolution of the way in which the federal commissioner functions. belgium’s case is equally interesting and is presented by ludo m. veny, ivo carlens and bengt verbeek. after describing the various types of ombudsman the authors identify the main issue this institution faces: the great number of claims that have to be rejected because they do not fit the prerogatives of the institution. the causes of this situation are given by the interference areas between the competence spheres of public administration, judicial institutions and ombudsman, specifically – the insufficient distinction between appeal and complaint as forms of citizen’s reaction against some actions of the state. in another chapter, hélène pauliat gives a comprehensive perspective of the french mediator and of the way he is required, in the author’s opinion, to prevent and to fight against possible abuses or errors of justice. beyond the numerous punctual aspects discussed, the volume makes a solid argument for the idea that the debate regarding the ombudsman’s institution is a relatively new segment, but a very consistent one, belonging to the theoretical area 183 centered on the functioning of the rule of law. dana apostol tofan firmly states that the fundamental mission of this institution is to compensate the judicial gaps, the faulty framing of laws and the difficult access to judicial institutions (p. 36). this statement comes close, after all, to the theoretical perspective of thompson, kirkman and buck. the british researchers do not foresee the substitution of the judicial and executive power with a fourth power, but their justified reinforcement in such a manner that the idea of lawfulness is adjoined with the ideas of rightness, responsibility and integrity. the opinions of alex brenninkmeijer are aligned in the same sense: the author underlines that the principle of lawfulness has to be completed by the principle of honesty and that the decisions of authorities should be not only legal, but justified and timely (p. 169). the dutch ombudsman is preoccupied by the gap between the abstract order of the system and the concrete order of the society. to depict this distance, he comes up with an eloquent analogy with the computer, whose abstract and sophisticated operating system requires interfaces in order to be used by the common individual. in essence, the interfaces are instruments that decrease the gap we mentioned, adapting the system to the needs of the individual. the entire volume edited by dacian dragoş and bogdana neamţu pleads for such an image of the ombudsman as a fundamental institution meant to function as an interface between the system and the citizens it is supposed to serve. in simple words, it needs to offer ‘a way to adapt the world of the system to the world of humanity’ (p. 175), to make the system more humane, compensating the distance between its abstract and rigid organization and the complex and lively structure of reality. cristian radu lecturer, communication and public relations department, faculty of political, administrative and communication sciences, babeş-bolyai university, cluj-napoca, romania tel.: 0040-264-431.505 e-mail: cristian.radu@polito.ubbcluj.ro 103 abstract this paper assesses three sustainable development strategies – the european union’s sustainable development strategy in its revised version, the mediterranean strategy for sustainable development and slovenia’s development strategy – according to the level of sustainability these strategies provide. deriving from three diverse sustainable development regimes, selected strategies are scrutinised for the presence of the five general principles of effective sustainable development strategies promoted by the united nations and the organization for economic cooperation and development. building on george and kirkpatrick’s (2006) framework for analysis, we concentrate on principles of strategic planning and sustainable development, and a coordinated set of measures to ensure their implementation. the results reveal that the major differences between the assessed strategies are present in the sophistication of the theoretical bases and the integration of three main pillars of sustainable development (i.e. environmental, economic and social). in general, the assessed strategies reflect a high degree of inclusiveness of a variety of interests. however, there is a common weakness among them in terms of implementation, be it in the provision of adequate resources, the guarantee of adequate implementing capacity of the institutions designated for implementation or the precise definition of the institutional framework responsible for the implementation of the strategy. keywords: sustainable development, sustainability assessment, european union sustainable development strategy, slovenia’s development strategy, mediterranean strategy for sustainable development, sustainable development principles, slovenia. towards our common future: comparative assessment of the sustainable development strategies of the european union, the mediterranean and slovenia tomaž deželan alem maksuti tomaž deželan assistant professor, department of political science, faculty of social sciences, university of ljubljana, ljubljana, slovenia tel.: 00386-1-580.52.31 e-mail: tomaz.dezelan@fdv.uni-lj.si alem maksuti ph.d. candidate, faculty of social sciences, university of ljubljana, ljubljana, slovenia e-mail: alem.maksuti@gmail.com. transylvanian review of administrative sciences, no. 43 e/2014, pp. 103-121 104 1. introduction sustainable development has become a catchphrase in political and bureaucratic discourse in the past two decades, despite – or rather because of – the absence of any consensus regarding its explicit meaning. its genealogy and the power-related nature of its definitions (see richardson, 2004) make it a tool for frequent misuse, primarily in politico-administrative language. as an indication of this, a former world bank official identified 72 relevant definitions of sustainable development (rogers et al., 2008, p. 22), thus adding weight to the argument (see drhová, 2011; rogers et al., 2008) that sustainable development entails a polity-specific definition of values and principles for achieving a sustainable society on a long-term basis. determination of sustainable development is therefore seen as being subject to judgement based on prevailing values and ethical norms in a given time and space (holmberg and sandbrook, 1992, p. 23). the lack of consensus regarding the state of the world’s ecosystems and the role of humanity should be understood in the same light. the origins of this plethora of definitions are frequently traced to the much-criticised lack of clarity and broad strategic framework of the concept of sustainable development formulated in the bruntland report titled our common future (see united nations, 1987), which failed to become a definitive guideline for policymaking (drhová, 2011) and opened the door for power-related criticism (richardson, 2004). at the same time, it has to be noted that there is no universal path or societal structure for a sustainable society (becker et al., 1997), which allows different regimes1 to take up different but equally successful paths. in addition, despite notable differences in the determination of paths to a sustainable society, all paths tackle the challenge of management of the material conditions of societal reproduction and the character of their transformation. hence, drhová (2011, p. 87) argued that sustainable development should be understood more as the way to achieve a sustainable society than as a target state. sustainable development strategies are in effect visions of ‘a way to achieve a sustainable society’ since they present a ‘coordinated, participatory and iterative process of thoughts and actions to achieve economic, environmental and social objectives in a balanced and integrative manner’ (meadowcroft, 2007, p. 154). by analyzing them we hope to reveal the actual level of normative commitment of individual communities and regimes to a sustainable future and should also indicate whether these strategies truly have the character of a sustainable development strategy – i.e. whether they adhere to a set of principles of strategic planning and sustainable development and a coordinated set of measures to ensure their implementation, as is set out in the agenda 21 and post agenda 21 documents. 1 in this paper we employ a generic understanding of the term ‘regime’. we understand sustainable development regimes as a set of rules and cultural, political and social norms that regulate the operation of sustainable development in the polity. 105 since sustainable development regimes are not bound to a single level (i.e. the state level) and may in fact be overlapping,2 the pivotal aim of this paper is to examine the efforts of selected sustainable development regimes individuals may be impacted by in the slovenian context. disregarding the potential existence of local agenda 21s, we focus on the state level as well as on levels beyond the state (international and supranational), assess the efforts of three sustainable development regime levels – supranational (the european union), regional (the mediterranean region) and national (slovenia) – and their vision for the future and ways of attaining it. with this assessment of existing strategic planning mechanisms based on george and kirkpatrick’s (2006) framework for analysis, we identify the areas that should be improved by policymakers in order for the analysed sustainable development regimes to comply with existing sustainable development principles. as a result, this study provides information for all relevant stakeholders from different levels on the areas in which improvements are needed. in section 2 we continue with a general framing of sustainable development and a brief evolutional screening of key events and documents that determine the field on a global level. section 3 sets forth the very extensive research framework and data utilised for this study, while in section 4 we provide detailed results of the sustainability assessment of each of the three analysed strategies. the concluding section provides a brief comparative discussion of common and diverse aspects of selected strategies as well as tentative suggestions for future drafters. 2. framing sustainable development sustainable development increasingly pervades the everyday life of global population despite having been coined by the international union for conservation of nature and natural resources a quarter of a century ago (seema, 2010). notwithstanding the wide-spread belief that the concept of sustainable development represents one of the most ancient ideas in human heritage, its current understanding of the way of reconciling the needs of development with protection of the environment certainly represents something new (voigt, 2009, p. 12). sustainable development is no longer about integrating environmental considerations into the economic development process, but about a development process of a qualitatively different nature that represents an epistemic shift to a new paradigm since not only economic and ecological systems need to be addressed (jensen, 2007, p. 511). this paradigm shift is a consequence of greater awareness of environmental degradation, poverty, social disruptions and humanitarian crises through the club of 2 citizens and residents of any locality may carry a burden of, or enjoy the fruits of, several sustainable development regimes at the same time. for example, in addition to local, substate/regional and national sustainable development regimes, regional and supranational regimes across state borders may be in operation (e.g. the mediterranean region, the european union (eu)). 106 rome and the stockholm declaration that no longer regarded development solely in terms of gross national product but as a policy aimed at better living conditions for all (voigt, 2009, p. 13). the world conservation strategy from 1980 is one of the first international documents to explicitly deal with development and environmental limits (voigt, 2009, p. 14); however, via the brundtland report sustainable development became a broad policy objective and gave the impetus to install the sustainable development concept in all documents of the united nations conference on environment and development (unced) (blewitt, 2008, p. 15). while some earlier approaches to sustainable development were oriented to ecology as well as its utilisation and expressed the relevance of environmental protection for the socio-economic interests and needs of developing countries, it is the brundtland report that has had the most far-reaching implications for the overall transformation of policy and law based on the sustainable development concept (voigt, 2009, p. 15). the rio declaration (agenda 21) introduced a new approach with a central focus on the brundtland report and the mainstreaming of environmental protection into developmental progress. according to agenda 21, governments should adopt national sustainable development strategies (nsdss) to improve or restructure the decision-making process in order to integrate socio-economic and environmental considerations and ensure a broader range of public participation (un, 1992, chapter 2). to reinforce the trend of preparing proper sustainable development strategies, international organisations and clubs of states have taken up ownership of sustainable development and are actively exploring new and better indicators to measure progress and drafting new guidelines to foster it (voigt, 2009, p. 19). for example, the organization for economic cooperation and development’s (oecd) development assistance committee established a set of principles and the united nation’s (un) department of economic and social affairs drew up similar principles, which are designed to provide countries with in-depth information on possible approaches to and methodologies for achieving a sustainable society (george and kirkpatrick, 2006, p. 147). the pivotal document on the global level nevertheless remains agenda 21 and represents a basis for various supranational, supranational-regional, national and local sustainable development strategies (dalal-clayton and bass, 2002; haughton and counsell, 2004; baker et al., 2005). during the last two decades contemporary regional sustainable development strategies were also prepared as long-term approaches to integrating the economic, social and environmental policies of different states with shared characteristics, challenges and vulnerabilities (dalal-clayton and bass, 2002, pp. 70–72). examples of regional supranational sustainable development strategies are the mediterranean strategy for sustainable development (mssd) and the eu sustainable development strategy (eu sds). focused on issues and priorities of a regional nature, these strategies are essentially independently linked to the nsdss of countries from the mediterranean region and/or member states of the eu (hoballah, 2006; pallemaerts and azmanova, 2006). however, this regional planning could also be understood as an additional connect107 ing potential between national, regional and subnational planning systems (pridham and konstandakopulos, 2005). overall, a variety of approaches have been used to assess this diverse set of sustainable development strategies (oecd, 2005; undesa, 2005). individual states as well as clubs of states have also conducted more or less formalised assessment exercises, some periodically and some with the support of external experts. however, most of these assessment exercises have refrained from establishing clear benchmarks against which shortcomings may be judged and progress monitored (george and kirkpatrick, 2006, p. 147). as a result, this paper rests on the assessment methodology proposed by george and kirkpatrick (2006), which avoids the above-mentioned criticisms and scrutinises selected strategies for the incorporation of sustainable development principles. selected assessment criteria have been designed to provide an overall assessment of a particular principle and to deliver useful information for the policymakers responsible for strategy improvements and incremental revision of existing documents. 3. method and data a sustainability assessment as an integrative concept (gibson, 2006) demands a holistic approach. in this paper we employed the frequently verified assessment methodology of george and kirkpatrick (2006) to evaluate strategic planning processes of three sustainable development strategies3/regimes. our scrutiny focuses on sustainable development strategies that serve as standardised artefacts (wolff, 2004, p. 284) and that can be legitimately used to make assumptions about the intentions and ideas of their creators and the sustainable development regime they represent. the basic principles of effective sustainable development strategies concentrate on ‘principles for strategic planning and sustainable development, and a coordinated set of measures to ensure their implementation’ (george and kirkpatrick, 2006, p. 146). the united nations department for economic and social affairs (undesa) and the oecd identified five general principles of effective sustainable development strategies at the national level: a) integration of economic, social, and environmental objectives; b) participation and consensus; c) country ownership and coordinated policy process; d) comprehensive and coordinated policy process; and e) targeting, resourcing and monitoring. the first two principles are regarded as sustainable development principles, while the other three are more general principles of strategic planning and management (george and kirkpatrick, 2006, p. 148). these categories also provide a useful tool for assessing long-term strategies on the subnational level. in accordance with these five general principles, four assessment criteria were devised (see table 1). 3 mediterranean strategy for sustainable development: a framework for environmental sustainability and shared prosperity; the eu sustainable development strategy and renewed eu sustainable development strategy; and slovenia’s development strategy. 108 table 1: criteria for assessment of strategic planning mechanisms against sustainable development principles a. integration of economic, social, and environmental objectives criterion a1 integration strategic planning in the country is based on a comprehensive and integrated analysis of economic, social, and environmental issues, which clarifi es links between the three spheres, resolves confl icts between them where practicable, and negotiates appropriate trade-offs where confl icts remain. criterion a2 social and poverty issues strategic planning in the country integrates poverty eradication, gender issues, and the short-term and longterm needs of disadvantaged and marginalized groups into economic policy. criterion a3 environmental and resource issues strategic planning in the country integrates the maintenance of sustainable levels of resource use and the control of pollution to maintain a healthy environment in economic policy. criterion a4 international commitments measures are in place to ensure compliance with international agreements which the country has entered into, on environmental and social issues. b. participation and consensus criterion b1 involvement of stakeholders the country’s processes of strategic planning, implementation, monitoring, and review include the participation of stakeholders, including government, decentralized authorities, elected bodies, non-governmental and private sector institutions, and marginalized groups. criterion b2 transparency and accountability the management of the country’s strategic planning processes is transparent, with accountability for decisions made. criterion b3 communication and public awareness measures are taken to increase public awareness of sustainable development, to communicate relevant information, and to encourage the development of stakeholder involvement in the strategic planning process. criterion b4 long-term vision and consensus the country’s strategic planning processes are based on a long-term vision for the country’s development, which is consistent with the country’s capabilities, allows for short-term and medium-term necessities, and has wide political and stakeholder support. c. country ownership and commitment criterion c1 high-level government commitment the process of formulating and implementing the national strategy is led by government, with evidence of high-level commitment. criterion c2 broad-based political support the country’s strategic planning process has broad-based political support. criterion c3 responsibilities for implementation responsibility for implementing strategies is clearly assigned to bodies with the appropriate authority. criterion c4 coordination with donors the country’s strategic planning process is coordinated with donor programmes. d. comprehensive and coordinated policy process criterion d1 build on existing processes the national strategy for sustainable development is based on existing strategic planning processes in the country, with coordination between them, and mechanisms to identify and resolve potential confl icts. criterion d2 analysis and information strategic planning in the country is based on a comprehensive analysis of the present situation and of forecasted trends and risks, using reliable information on changing environmental, social, and economic conditions. criterion d3 realistic goals the national strategy is based on a realistic analysis of national resources and capacities in the economic, social, and environmental spheres, taking account of external pressures in the three spheres. criterion d4 decentralization the country’s strategic planning processes embrace both national and decentralized levels, with two-way iteration between these levels. 109 e. targeting, resourcing, and monitoring criterion e1 budgetary provision the sustainable development strategy is integrated into the budget process, such that plans have the fi nancial resources to achieve their objectives. criterion e2 capacity for implementation the sustainable development strategy includes realistic mechanisms to develop the capacity required to implement it. criterion e3 targets and indicators targets have been defi ned for key strategic economic, social, and environmental objectives, with indicators through which they can be monitored. criterion e4 monitoring and feedback systems are in place for monitoring the implementation of strategies and the achievement of their defi ned objectives, for recording the results, and for reviewing their effectiveness as strategies for sustainable development, with effective mechanisms for feedback and revision within the planning process. source: george and kirkpatrick (2006, p. 149) indicators showing the extent to which each criterion has been met are defined as a qualitative coding scheme offering scores for each criterion. the methodology allows for four descriptive assessment scores for analysed sustainable development strategies: a) all requirements of the criterion are fully met; b) all requirements of the criterion are satisfactorily met, although some more improvements are desirable; c) some requirements of the criterion have been satisfactory or fully met, but others have not yet been satisfactory met; and d) few requirements of the criterion have, as yet, been satisfactory met (george and kirkpatrick, 2006, p. 150). in addition to scoring schemes, the acquired results are accompanied by a short supporting text containing the main arguments for each individual score. 4. results 4.1 sustainable development in the european union and the european union sustainable development strategy (eu sds) in december 1999 the helsinki meeting of the european council invited the european commission (ec) to prepare a proposal for a long-term strategy for dovetailing policies for economically, socially and ecologically sustainable development (european council, 1999). the ec issued a consultation paper in 2001 focusing on initial views of the challenges and opportunities for a long-term strategy. after a few months of coherent coordination at different levels, a sustainable development strategy (eu sds) was prepared and adopted at the european council meeting in june 2001 in gothenburg (european council, 2001). the strategy was based on the principles of coordinated economic, social and environmental development and harmonisation of policies at the supranational, national and local level (european council, 2001). under the new strategy, major european policy proposals were to include a sustainable impact assessment, improvement of internal policy coordination by eu institutions between different sectors and development by member states of national sustainability plans and strategies (dalal-clayton and bass, 2002, pp. 71–72). 110 the strategy document from gothenburg was just a step on a long journey that requires prolonged actions to fulfil agreed-upon objectives (bernheim, 2006). in 2005, the european council asked the ec to propose a ‘more comprehensive and more ambitious’ strategy (bernheim, 2006, p. 89). after intensive stocktaking and coordination between the member states, the ec prepared a revised eu sds in december 2005. the new strategy did not replace the former strategy, but it did expose some of its unclear priorities and sharing of responsibilities, as well as the absence of clear monitoring mechanisms. the ec has also introduced progress reports for reviewing priorities and has encouraged member states to review their national strategies in light of the eu sds, to enhance mutual learning. original documents from 2001 and revised documents from 2006 were included in our analysis. the eu sds emerged as an ambitious attempt to act as a holistic, long-term sustainable development strategy. it could be understood as a framework strategy, with high potential to encourage member states and local authorities to prepare and implement their own sustainability strategies. wide-range inclusion of different stakeholders from the preparation process is also foreseen in the strategy’s implementation process. the strategy’s inclusion of wider international background is evident, as well as coherence with sustainable development regimes from other levels. this is particularly highlighted in the revised document in which closer articulation between the local, national and european levels of governance is stressed as one of the guiding principles (see also pridham and konstadakopulos, 2005). positive features of the assessed strategy also encompass commitment to continuous cooperation between the eu and its member states in the field of policy coordination, periodic assessment and the establishment of measurable indicators for the strategy’s evaluation and future decisions; however, these points have proved to be very idealistic in real life. the revised eu sds addressed some weaknesses of the original document (e.g. vague priorities, lack of clear monitoring mechanisms). it clarified set objectives, provided clear monitoring mechanisms, emphasised deeper integration of different policies and intensified cooperation with member states for further development and review of indicators (see also bernheim, 2006). despite the modifications introduced in the renewed strategy, it still suffers from an absence of clarity. firstly, it is rarely clear when determining institutional competencies and is ambiguous when elaborating on its translation into relevant policies. in terms of eu policies, the relationship between sustainable development and environmental protection and action to combat climate change is not always clear, let alone the relationship with the lisbon strategy, which aims to strengthen innovation and economic growth (see also schaik et al., 2009). it is unclear whether the eu sds is considered to be separate and complementary to the lisbon strategy, separate and in direct competition with it or an environmental addition to it (see pallemaerts, 2006; schaik et al., 2009). the relationship is therefore à la carte, since the eu sds is sometimes presented as an ‘overarching objective’, an integral part of the lisbon strategy or even disconnected from it due to the separate temporal and political tracks (pallemaerts, 2006, p. 32). finally, the eu sds falls with in the remit of dg environment, which should indicate that sustainable development 111 table 2: assessment of the european union sustainable development strategy (eu sds) principles criteria and scores remarks 1 2 3 4 a. integration and sustainability b c c b strong formal connection between the three sustainability pillars (i.e. environmental, economic and social) is obvious, while additional internal policy coordination between different sectors remains a general commitment of eu institutions (a1). overall and operational objectives in the sphere of social and poverty issues are presented in with the context of the poverty problem at the global level. basically, all planned actions for solving these problems depend on eu member states’ policies (a2). climate change and clean energy are identifi ed as one of the key challenges, in light of the measures of eu and un conventions on climate change (a4). the realisation of objectives for preventing climate change and providing clean energy is highly dependent on eu member states (a3). b. participation and consensus b c b b a multi-stakeholder approach is employed in the preparation process (b1). transparency and accountability for decisions made rely on eu member states. the latter also have a key role in targeting communication to the most appropriate level. in the renewed document, the ec has undertaken to prepare a guide to the strategy, including good practices and policies (b2, b3). besides long-standing commitments to sustainability in the eu, the strategy also emphasises global solidarity and the importance of cooperation with partners outside the eu (b4). c. ownership and commitment b a b d eu institutions and member states declare full commitment to implementation of the strategy – member states indirectly (through national strategies) and eu institutions through permanent assessment of the situation – and improving internal policy coordination between different sectors (c1, c3). eu sds is the result of the political commitment and support of all interested actors from different levels (c2). success of the strategy is primarily dependent on eu and member states’ policies and fi nancial inputs (c4). d. comprehensive and coordinated policy process b b b a eu sds includes goals from previous/parallel initiatives (e.g. lisbon strategy) (d1). the renewed strategy provides for comprehensive analysis of the present situation through progress reports (d2). the ec has undertaken to prepare a set of measurable indicators for realistic implementation of the strategy (d3). two-way interaction and perpetual coordination between the eu and member states is anticipated (multilevel approach) and essential for successful implementation of the strategy (d4). e. targeting, resourcing, and monitoring c d b b financing the implementation of the strategy depends on structural reforms in the fi eld of economy, taxation, energy consumption, etc., and synergy between various community and other co-fi nancing mechanisms (e1). implementation capacity is dependent on the economic situation. some deadlines anticipated in the eu sds of 2001 have already expired (e2). monitoring of indicators is provided in close cooperation with the ec and member states (e3). permanent feedback from the latter is essential for monitoring and objective evaluation of implementation of the strategy (e4). is primarily considered to be an environmental issue within the daily practice of eu policymaking (see also schaik et al., 2009). 112 the crucial test for the eu sds lies in its implementation (bernheim, 2006, p. 92). together with the lisbon strategy for economic renewal, it has to work towards bringing the concept of sustainability in the eu to life. but its implementation capacity is strongly dependent on the economic situation in eu member states and worldwide. in the revised eu sds, envisaged financing and economic instruments are mainly packed into reforms of the economy, taxation and energy consumption. necessary actions are set loosely, with no clear measures or deadlines for their implementation (e.g. ‘to promote market transparency and prices that reflect the real economic, social and environmental costs of products and services’ (council of the european union, 2006, p. 24)). member states are invited to consider further steps related to policies, and some co-financing mechanisms are only scheduled as an option – but the ec is committed to preparing a roadmap for the reforms in all sectors in the future. considering the fact that some deadlines anticipated in the original eu sds have already expired, the ongoing economic crisis in europe and the consequences that will come from that, it is logical to expect that implementation of the eu sds remains a great challenge for the eu and its member states. 4.2 sustainable development in the mediterranean region and the mediterranean strategy for sustainable development (mssd) three years after stockholm and the setting up of the united nations environment programme (unep), sixteen mediterranean countries and the european community adopted the mediterranean action plan (map), which is the first scheme to be adopted as a regional seas programme under the auspices of the unep (united nations, 2011). with the objective of assisting mediterranean countries to assess and control marine pollution, formulate national environment policies, improve the governments’ ability to identify better options for alternative patterns of development and optimise choices for the allocation of resources, the plan became the action plan for the protection of marine environment and sustainable development of the coastal areas of the mediterranean (map phase ii) in 1995 (united nations, 2011). the dynamic that led to the revision of map also initiated the decision to establish a mediterranean commission on sustainable development (mcsd) in montpellier in 1996 (mediterranean action plan, 2011). the latter presents a forum for dialogue and proposals where the contracting parties of the map define a sustainable development strategy for the mediterranean region. mcsd acts as an advisory organ to the map and is composed of representatives of the contracting parties as well as civil society actors. after reaching an agreement on a common vision, the mcsd drafted six key challenges to sustainable development that should be addressed in the mediterranean, making development and environmental protection a top priority (hoballah, 2006). the preparatory process was designed and presented at the annual mcsd meeting in 2002, and structured as a series of synchronized actions aimed primarily at promoting a participatory and multi-stakeholder approach (hoballah, 2006, pp. 160-161). instead of engaging a small team of experts to prepare the regional strategy, the mssd has been drafted on the basis of strategic integration of representa113 tives from mediterranean states, local authorities, business groups and environmental ngos from the national and supranational levels. after a long process of preparation, mcsd prepared the wide-ranging mediterranean strategy for sustainable development (mssd) in 2005 (cantore et al., 2011, p. 1). the mssd calls for action to pursue sustainable development goals, taking into account regional idiosyncrasies. according to hoballah (2006, p. 157), the mediterranean is a prototypical regional test case due to its common economic, social and environmental context and ubiquitous issues such as coastal urbanisation, rapidly growing tourism, scarcity and contamination of water supply, pollution of coastal waters and loss of biodiversity (see also koboević et al., 2012). hence, the gaps between developed and developing countries is well acknowledged, and the necessity to help the transition of some mediterranean countries in the east adriatic, the south and the east mediterranean is well identified (mediterranean action plan, 2005). overall, the strategy is designed for mediterranean countries to benefit from the strategy equally by exposing four main objectives: contributing to economic development by enhancing mediterranean assets; reducing social disparities and improving cultural integration; changing unsustainable production and consumption patterns as well as ensuring sustainable management of natural resources; and improving governance at local, national, and regional levels (mediterranean action plan, 2005). the first implementation assessment of the mssd for the period 2005–2010 was done in 2011. the purpose of the assessment was to evaluate the work done and to offer recommendations to the members of mcsd on how to improve and update mssd indicators for implementation in the future (cantore et al., 2011). the report exposed some new, emerging priorities that should be included in revised version of the mssd in the future and suggested actions to improve the implementation of the strategy. for the purpose of overall assessment, the main document from 2005 and the report on assessment of the implementation from 2011 were included in our analysis.4 the mssd is a framework strategy and plays a catalytic role in the further promotion of sustainable development in mediterranean countries. however, despite its strategic orientations the mssd is not strictly binding on national governments. it is primarily designed to promote sustainable development in the mediterranean region, to strengthen the commitment and solidarity between countries and to provide suggestions on the modalities by which countries can incorporate mssd principles into national strategies. positive features of the assessed strategy comprise the inclusive approach taken during the preparation process, the (allegedly) active involvement of stakeholders in the implementation process, its consistency with other strategic documents from the regional, supranational and global levels, and its impact on countries 4 for proper use of the selected methodology and bett er insight into the area, this examination also includes some information from the publication’s plan blue: observation, analysis and the prospective center responsible for highlighting the environment and development issues in the mediterranean region ([online] available at htt p://planbleu.org/en/publications, accessed october 1, 2013). 114 table 3: assessment of the mediterranean strategy for sustainable development (mssd) principles criteria and scores remarks 1 2 3 4 a. integration and sustainability c b a b strong integration of three sustainable development pillars is detected on a normative level. economic, social and environmental issue indicators strictly relate to seven priorities (a1). reducing social disparities by improving living standards and gender equality is stated as a major objective. somewhat neglected areas are the problems and needs of marginalised groups (a2). requirements for the environment and renewable sources of energy are met and fully operationalised (a3). improved governance is based on shared responsibility between developed and developing countries. strategy is inextricably linked with nsdss and consistent with international agreements, especially in the area of the environment (a4). b. participation and consensus b d b c a multi-stakeholder approach was employed in the preparation process. long-term vision is clear and supported by the vision for sustainable development of all mediterranean countries. implementation strongly depends on political authorities at the national and local levels that are in charge of transmission and implementing all planned projects (b1, b4). accountability for decisions is dispersed and dependent on all mcsd members (b2). stakeholder involvement is provided during the implementation, which in principle provides for education in sustainable development with a participatory approach and public access to information (b3). c. ownership and commitment d d d b responsibility for implementation of planned projects and the required political support are the domain of national and local authorities (c1, c2, c3). different fi nancial initiatives are provided, and long-term measures for the more favourable fi nancial environment in all countries needed to support sustainable development processes in least-favoured rural areas, cities and neighbourhoods (c4). d. comprehensive and coordinated policy process d d d a the mssd does not affect policy actions in single countries, and it omits detailed suggestions about how national strategies should be designed and implemented. situation assessment and continuity of planned actions fall to the national and local authorities and other stakeholders, which means decentralisation per se (d1, d2, d4). how realistic goals are depends on planning processes at the national and local levels, which can vary from country to country. the heterogeneity of mediterranean countries complicates delivery of an accurate assessment of how realistic the strategy’s goals are (d3). e. targeting, resourcing, and monitoring d d a b the voluntary fi nancial contributions provided by countries are crucial for successful implementation. capacity for implementation depends heavily on national budgets and realistic plans for sustainability projects (e1, e2). vague indicators were updated with the fi rst implementation assessment, making them clearer and more quantifi able (e3). continuous monitoring is anticipated. two-year monitoring cycles are provided to assess progress in implementation. in-depth assessment is planned for every fi ve years, the fi rst occurring in 2010 as a special assessment for the third world summit on sustainable development (e4). 115 that are preparing nsdss. in a certain way, the mssd presents a framework for formulation, review or updating of national strategies, and an effective partnership in the efforts towards sustainability. the key structural barrier of the mssd is its dependence of its success on the implementation of planned actions by national and local governments. the lack of supranational high-level authority and the permanent dependence on voluntary financial contributions also significantly determine the success of the strategy. the actual exercise is de facto unimaginable without integration of mssd principles into specific policies designed and led by national governments or institutions of supranational political authorities (e.g. the eu). integration of principles of sustainability from different levels strengthens the concept of sustainable development and increases its potential for successful implementation of defined measures and achievement of goals. 4.3 sustainable development in slovenia and slovenia’s development strategy (sds) deliberations on sustainability in slovenia date back to the early 1990s, when the government adopted the starting-points for regulating development planning in the republic of slovenia in 1992 and the proposal to regulate annual and development planning in the republic of slovenia in 1993 (radej, 2000, p. 48). the strategy for economic development of slovenia (seds), adopted in 1995 and renewed in 2001 by the slovenian institute of macroeconomic analysis and development, defined sustainable development as a ‘new development paradigm’, combining the economic, social and environmental aspects of welfare equality. seds also laid the groundwork for slovenia’s national development programme for 2002–2006, another important document for sustainable development in slovenia. in addition to those documents, which gave priority to reducing the economic development gap, the national environmental action programme (neap) was prepared in 1999, with objectives and measures for the field of environmental protection and the use of natural resources. neap directly highlighted the environmental dimension of sustainable development and addressed agenda 21. based on broad consensus and comprehensive public debate, in june 2005 the government of the republic of slovenia adopted slovenia’s development strategy (sds). the basic idea was to set up a strategy that would establish the principle of sustainability in all development documents in the country (černe, 2004, p. 95). after the adoption, the government appointed the reform committee, a working group of approximately 150 experts, to propose concrete measures for the implementation of the strategy in terms of competitiveness, higher economic growth and employment. the sds is primarily oriented towards the lisbon goals, as it mainly exposes economic issues but does not completely neglect the social and environmental component of sustainable development. it emphasises five key development priorities, the fifth of which is oriented towards sustainability (see šušteršič et al., 2005). a revision of the sds was planned with the involvement of the national council for sustainable development (ncsd). the revision of the strategy started in 2008 116 with a scenario-building exercise, in order to identify gaps in the current strategy and achieve a consensus about priority measures for the future. in march 2011 the government initiated the renewal of the strategy, with the intention of facilitating the eu 2020 strategy. the dominance of the ‘lisbon rhetoric’, therefore, remains embedded in the core of slovenia’s upcoming sustainable development strategy. the ministry of economic development and technology of the republic of slovenia prepared the first draft of the renewed sds in august 2013 (mers, 2013), but the document is still in the drafting phase. summary results of the assessment of the sds are provided in table 4. table 4: assessment of the slovenia’s development strategy (sds) principles criteria and scores remarks 1 2 3 4 a. integration and sustainability c c d d separated development priorities with weak integration (a1). social and poverty issues are presented separately in the fourth development priority. principles of solidarity and better social inclusion of vulnerable groups are mentioned (a2). poorly defi ned measures for further integration of environmental policy into other sectoral policies and consumer patterns (a3). strategy is primarily oriented towards the lisbon goals (a4). b. participation and consensus b b d c a bottom-up drafting process, with the cooperation of various experts and stakeholders. the strategy’s implementation rests primarily on government and ministries; local authorities and stakeholders are neglected (b1). responsibility for decision-making is the domain of ministries without provided mechanisms for transparency and communication with the public (b2, b3). sustainability is addressed as a separate development priority with two-year actions plans (b4). c. ownership and commitment b b a d signifi cant government involvement during the preparation and implementation of the strategy (c1). the reform committee, a working group of approximately 150 experts, is preparing a proposal of concrete measures to deliver sds objectives and provides additional political and expert support (c2). responsibility for implementation is clearly assigned to authorities with appropriate competences (ministries) (c3). donor programs are completely neglected in the document (c4). d. comprehensive and coordinated policy process b d c d the sds is primarily oriented towards the lisbon strategy (d1). suffers from vague and universal formulations. comprehensive analysis of the current situation is also overlooked; proposed objectives and measures are desirable rather than real (d2, d3). decentralisation is barely mentioned. focus is only on the establishment of regions and providing better conditions for the development of the local economy (d4). e. targeting, resourcing, and monitoring d c d b lacks budgetary provisions. does not have a special chapter on fi nancing and implementation of the strategy (e1). provision of fi nancial resources needed for implementation depends on privatization of state property, tax reform and launching of public-private partnerships (e2). suffers from vague indicators for all pillars of sustainable development (e3). the slovenian development report (prepared annually by the institute of macroeconomic analysis and development (imad)) monitors the implementation of the strategy and is a document adopted by the government as a guideline for formulation of national economic and development policies (e4). 117 in its current form, the sds of 2005 appears to be a failed attempt to develop a holistic long-term strategic document, as it has proved deficient in a majority of its set goals. the biggest shortcoming is the fragmentation of goals and weak integration of policy sectors across the entire document. sustainability is superficially presented as a separate development priority with no deeper integration into other sectoral policies. according to the criteria from the qualitative scoring scheme, besides the responsibility of actors for the strategy’s implementation, none of the requirements are fully met. this is particularly the case with environmental provisions, natural resource issues, budgetary provisions and the inclusion of local authorities and stakeholders in the implementation process. some positive features of the strategy are the inclusiveness of its preparation process and in the phase of preparing measures to deliver its objectives. slovenia as a case on the state-level reflects more or less a similar image of vagueness as mssd and eu sds, especially in terms of non-transparency when it comes to sustainable development. it has manifested a moderate amount of commitment to the provisions of agenda 21, as it has a tremendous sectoral focus, which is contradictory to agenda 21’s cross-sectoral orientation. however, some important steps forward have been taken, most notably with the creation of the slovenian council for sustainable development which was set up to adopt guidelines and recommendations for sustainable development in the republic of slovenia, assess the documents related to sustainable development and take part in discussions and give suggestions referring to the neap and other sectoral strategies based on the principles of sustainable development. nevertheless, the council has proved to be more or less inactive. 5. concluding discussion it is difficult to compare sustainable development strategies, especially if they represent the vision of a sustainable future at different levels, and to determine the most elaborated and complete strategy among the examined ones, although there are differences between the scores in the qualitative coding scheme. the major differences between the assessed strategies are in the sophistication of the theoretical base and the integration of three main pillars of sustainable development. the mssd and eu sds stand out in a positive way – especially the revised eu sds, which reflects ambitious targets for the key internal and external sustainable development challenges classified under six headings, for which concrete actions are provided. on the other hand, slovenia’s development strategy primarily exposes economic issues, with weak integration of the three main pillars of sustainable development, since the social and environmental components are barely mentioned and only the fifth key development priority is reserved for sustainable development, which is otherwise not a cross-cutting issue. however, a positive feature of all assessed strategies is a ‘bottom-up’ drafting process with the cooperation of different authorities, experts and stakeholders. another positive attribute is that on the conceptual level all analysed strategies planned for monitoring procedures, including close cooperation of different authorities and stakeholders from various levels. some weaknesses that are more or less common to all 118 assessed strategies are imprecise elaboration of development goals, unreachable objectives of sustainability and vague measures for the objectives’ fulfilment. virtually all evaluated strategies also lack important practical elements, which diminishe their importance on the level of implementation. for example, they do not have clear deadlines and financing provisions for planned projects. in some cases deadlines anticipated in assessed strategies have already expired (eu sds and sds), while financing of planned projects depends on reforms in the future or on voluntary contributions (e.g. the mssd). overall, the assessed strategies suffer from a lack of guaranteed financial resources for successful implementation, or at least from a lack of clear financial planning, which at the core determines their future. a pivotal deficiency of regional strategies, particularly the mssd, is that their implementation depends on political authorities at the national and local levels. those authorities are in essence in charge of transmission and implementation of all planned projects common to member states. in effect, this disperses the accountability for adopted decisions and also, in the case of the eu sds, imposes a burden of implementation on the national and subnational authorities, whether they like it or not and whether they have the capacity or not. the ec and the mcsd are responsible for monitoring at the supranational/regional level and for preparing progress reports. however, these limited obligations clearly have fallen short of reaching anticipated targets (see bernheim, 2006; hoballah, 2006). the implementation of the slovenian development strategy is the domain of national ministries, while there is a weak connection to subnational levels, with decentralisation barely being mentioned. given the importance of national and subnational authorities to the implementation of regional/ supranational strategies, the missing link to the subnational level presents a serious barrier to effective implementation of the entire set of strategies. this assessment of strategic planning mechanisms in three sustainable development regimes thus maps the necessary paths to future improvements. in the case of the eu sds and the mssd, it is essential to assess realistically the actual implementation capacity of the national and subnational authorities responsible for implementation of planned objectives. in parallel, specific instruments allowing for the implementation of capacity building (e.g. financial and human resources) by national and subnational authorities have to be devised. it is, moreover, necessary to prepare and implement mechanisms for monitoring and evaluation that are based on measurable indicators set to achievable levels, thus taking into account the implementation capabilities of involved actors and the timing with which the planned projects are carried out. in the case of the slovenian development strategy, significant mainstreaming of the social and environmental component of sustainability is needed, since the current orientation is heavily tilted towards the economic issues set out by the lisbon strategy and the eu 2020. ultimately, therefore, sustainable development in the three assessed regimes has a great deal to do with genuine commitment to its principles, a deep reflection of the current state of the society, and 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carpenter et al., 2001) and currently represents a key concept in many areas, such as: regional science, economics and economic geography (di caro, 2014; martin and sunley, 2015); territorial and urban planning (magoni, 2017; banică et al., 2020); social sciences (linnel, 2014; cheshire, esparcia and shucksmith, 2015); political science (bourbeau, 2015; martin and roman, 2021). in the last years, in the global context characterized by an increasing number of more and more various crises, of marked instability and consequent increase in opportunity costs, the scientific research on resilience has intensified (i.e., resilience was a key concept in 21 clarivate-indexed papers in 1999, in 444 papers in 2000, in 2,555 papers in 2010 and in 16,355 papers in 2020); moreover, the resilience concept was rapidly ‘absorbed’ by public policies in all the countries of the world. the european union holds the top position in this trend, the acquis communautaire including the word ‘resilience’ grew from 6 documents in 1990 to 186 in 2010 and to 1,127 in 2020 (official journal of the european union, 1990–2021). through its short-term social, economic and political impact, i.e. overcoming the crisis, as well as through its long-term one, i.e. sustainable development, convergence and conditionalities determined by the european green deal, the covid-19 pandemic has clearly reinforced resilience-based policies, which is mainly reflected in the next generation eu plan (european commission, 2020a). until 2026, more than €800 billion will be invested in eu member states mainly through ‘the recovery and resilience facility’ (the facility) within the national recovery and resilience plans (nrrps). by promoting ‘a greener, more digital, more resilient’, more equal, safer and healthier development (european commission, 2019), the main objective is to make sure that member states’ economies do not only recover after the crisis generated by the coronavirus pandemic but manage to reach a level above the one prior to the crisis. in literature, such a perspective on resilience is proposed by the ‘evolutionary approach’, according to which resilience does not only imply the capacity of a system to recover its carmen pintilescu professor, department of accounting, economic informatics and statistics, faculty of economics and business administration, alexandru ioan cuza university, iași, romania e-mail: carmen.pintilescu@uaic.ro ramona țigănașu researcher, centre for european studies, faculty of law, alexandru ioan cuza university, iași, romania e-mail: ramona.frunza@uaic.ro 79 functions, employment and prosperity (‘bounce back’) and return to the initial equillibrium (jrc-ec, 2015) but also to engage in structural transformations and adaptive processes focused on reaching a new balance and a more performant development model (‘bounce forward’) (reggiani, de graaff and nijkamp, 2002). from the european governance perspective, a fundamental question arises, i.e. to what extent do member states have the capacity to efficiently implement these plans and to consequently become more resilient in facing the current and forthcoming challenges, transforming, eventually, their socio-economic systems in line with the development perspectives recently reflected in the eu green deal? which are the factors that this transformative capacity depends on and how can these be capitalized on? which are the main triggers of resilience, in various contexts and for different types of shocks? can new structural, territorial, social and economic disparities, bearing long-term risks for the integration process, result from this? these questions are more relevant in the case of central and eastern european countries confronted with weak institutions which may have a negative impact on the implementation of nrrps. unfortunately, despite the fact that, for more than thirty years, an extremely rich literature on resilience drivers and a wide agreement of the strong interdependence between institutions and development have been in place (north, 1990; acemoglu, johnson and robinson, 2004), for a long period, resilience literature has paid little attention to the role of institutions and of the governance system (swanstrom, chapple and immergluck, 2009; bristow, 2010), thus significantly diminishing the explanatory power of the resilience theory. moreover, despite the fact that, at the eu level, solid economic structures and institutions are considered essential for countries’ economic resilience and long-term prosperity (european central bank, 2016), the institutional approaches in relation with the differences in resilience performance and/or capacity of the eu member states are hardly reflected in the literature and even less in the current nrrps. consequently, the aim of this paper is to analyze the importance of the institutional dimension for economic resilience and to identify the key institutional drivers in the resilience performance for the 11 ceecs (poland, romania, bulgaria, hungary, latvia, lithuania, estonia, croatia, the czech republic, slovenia and slovakia). the institutional dimension is assessed by using the six governance indicators released by the world bank namely, voice and accountability, political stability and absence of violence/terrorism, government effectiveness, regulatory quality, rule of law, control of corruption. for assessing economic resilience, we used the most common indicators from the literature, namely the gdp growth rate (%) and the employment rate (%). the analysis covers the 1996–2019 period, long enough to highlight the institutional dynamics and its impact on the economic resilience when a deep shock occurs. key conclusions with normative relevance for resilience-based policies from the institutional thinking perspective will be provided. first of all, the methodological approach implies a cross-country time-series panel regression, using the annual data from 1996 until 2019 and, secondly, in order to capture the country specificities, a 80 principal component regression. the paper is structured as follows: in section 2 we provide a survey of the literature on economic resilience and the institutional dimension. section 3 introduces the data and the methodology used for the estimation of economic resilience. in section 4, we present the empirical analysis for the 11 ceecs; the last section presents the main conclusions. 2. literature review in the economic development studies, resilience could reflect the capacity of a socio-economic system (city, region, country) to be placed on a long-term development path, incorporating a large set of internal and external conditionalities (martin and sunley, 2015; cellini and torrisi, 2014; suzuki and nijkamp, 2017). as such, resilience analysis can outline the vulnerabilities within a system in relation to various types of shocks (natural disasters, climate change, social and economic crises, wars etc.), which may further explain its capacity to resist, recover and transform by adopting a new growth and development pattern. thus, the resilience analysis of a system can generate findings that have a highly strategic relevance for policy making. from this perspective, conceptual clarifications and a deeper understanding of the drivers of resilience are required, considering the multitude of sometimes contradictory approaches in literature. since a detailed analysis of the multiple conceptual delimitations is beyond the purpose of this paper, we will limit our exemplification to foster (2007, p. 14) who defines resilience ‘as the ability of a region to anticipate, prepare for, respond to, and recover from a disturbance’. also, hill, wial and wolman (2008, pp. 4–5) consider resilience as ‘the ability of a region to recover successfully from shocks to its economy that either throw it off its growth path or have the potential to throw it off its growth path but do not actually do so’, while in briguglio’s et al. study (2008, p. 5), economic resilience is defined as ‘the policy-induced ability of an economy to recover from or adjust to the negative impacts of adverse exogenous shocks and to benefit from positive shocks’. the complexity of the concept primarily derives from the multitude of interconnected factors that influence resilience. for example, hill, wial and wolman (2008, pp. 9–10) consider that there are three main explanations for economic resilience: governance responses, industry or firm responses and the way in which institutional characteristics (including institutional structure, institutional history, and institutional culture) respond to economic shocks. bristow et al. (2014) argue in favor of the existence of four categories of factors which provide specificity at the regional level while influencing resilience to economic shocks, i.e.: businesses, economy and the business environment, people and the population, place-based characteristics, and community and societal characteristics. healy’s analysis model (2020, p. 10) is in line with the above mentioned study, with the difference that the fourth category is clearly named ‘institutions’ and that the role of policy-making is discussed separately, with a stress on the influence it exerts on the other categories. 81 moreover, an increasing body of literature emphasizes the role of institutions as ‘the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction (…) they structure incentives in human exchange, whether political, social, or economic’ (north, 1990, p. 3) in understanding and reinforcing economic resilience (acemoglu et al., 2003; sonderman, 2017). the study of briguglio et al. (2008) points to the fact that good governance is essential for the appropriate functioning of an economic system and can, moreover, contribute to the consolidation of its resilience. sonderman (2017) also brings arguments in favor of the role that the quality of institutions plays in the capacity of an economy to absorb shocks and empirically demonstrates that the probability of a severe economic crisis is significantly reduced in a flexible and adaptable institutional environment. the interference between the institutionalist theory and resilience analysis becomes even more relevant from the evolutionist perspective. the integration of institutional change processes and their endogenous causes, of some phenomena such as path dependency, of lock-in within the economic resilience analysis can certainly contribute to the further improvement and development in the field (sjöstedt, 2015). nevertheless, in various studies, institutions have an integrated, horizontal conditionality on resilience. for example, the european central bank study outlines two aspects of resilience: ex-ante and ex-post. the ex-ante resilience refers to the capacity of an economy to resist to a shock, while the ex-post resilience refers to the capacity of an economy to recover rapidly, with moderate costs, after a shock. in the ex-ante stage, the magnitude and depth of a recession or crisis depend on the institutional framework of that particular country (ecb, 2016, p. 9). consequently, understanding the role of institutions (both formal and informal) in increasing the resilience of socio-ecological systems and of their interdependence is essential for sustainable development; however, the key question which arises is ‘what institutional arrangements are more convenient for enhancing resilience?’. informal institutions are generally strong but flexibile formal institutions better support the various systems’ adaptability to changes. thus, the key conclusion is that the identification and assessment of resilience-favorable institutions must be carried out by taking into account the specificity of the systems and conditions they evolve in. therefore, we consider that an analysis of the impact that institutional factors have on economic resilience, especially focused on the role of the institutional dynamics, is most appropriately carried out on the former communist countries in central and eastern europe. the way these economies reacted to the ‘shock’ produced by the change of the system must be taken into account. once the communist regime collapsed, ceecs implemented various types of reforms according to which they can be grouped in: countries which adopted the shock therapy (poland), countries which preferred gradualism (romania, bulgaria), and countries with a stable progressive development (estonia, slovenia, czech republic) (frunză, 2011; țigănașu, pascariu and baciu, 2014). therefore, some countries were inspired and brave enough to take advantage 82 of the opportunity provided by the fall of the totalitarian system which they capitalized on by implementing measures aimed to build a society based on economic liberalism (socoliuc, 2014), while others lagged behind due to persistent corruption, bureaucracy and inefficiency which obstructed development. nevertheless, these measures explain only to a limited extent why some countries were successful while others failed. beyond the rhythm and sequence of reforms, other country specific factors (for example, initial conditions, the ideological values of transition governments, people’s values and attitudes) (iacobuță, 2012) should be considered in order to explain the different economic results of the transition countries. the economic dynamic in this part of europe can also be explained by the way in which history conveyed its messages and effects in time (vlăsceanu, p. 112); moreover, in these countries, institutional development was marked by the path dependency which essentially states that history is extremely important and that systems can never break with the past entirely. therefore, the institutions’ reconstruction process coexisted with the old structure-specific inertia as well as with the perpetuation of obsolete mentalities (frunză, 2011). it should also be noted that, while the integration process contributed to the economic growth of these countries, it did not necessarily manage to reduce the gaps between them because results depend on the specific conditions of every country, on the business environment attractiveness, stability, good governance, etc., essentially on the institutional systems’ quality and on the way these interfere in different contexts (țigănașu, pascariu and baciu, 2014). in this context, an analysis of the way institutional dynamics influences economic resilience becomes extremely important in the case of ceecs since the institutional gaps and weaknesses of these countries challenge their possibilities to recover after a crisis as well as to improve their resilience capacity, with high relevance for the successful implementation of the nrrps. 3. data and methodology in this paper, we analyze the economic resilience for 11 ceecs, members of the eu, through an institutional approach. the sources for the data used in the analysis are the world bank (worldwide governance indicators and world development indicators) and the heritage foundation. the time period concerns the years 1996–2019. some missing values were replaced by simple imputation methods. for assessing economic resilience, we have used indicators reflecting the economic growth and the labor market. for economic growth we selected the gdp growth rate (%) (i.e., the annual percentage growth rate of gdp at market prices), an adequate measure of resilience since it indicates how fast the economy is growing or falling. besides, as shown in the existing literature (cellini and torrisi, 2014) and applicable to our study, a gdp measure may better capture the economic fluctuations since some of the countries in our sample display a greater institutional rigidity. the rationale for focusing also on the labor market is related to the fact that the impact of 83 a crisis is particularly strong in such markets since, in order to reduce costs, companies will adjust their labor force (fingleton, garretsen and martin, 2012). in line with several recent studies, we use the employment rate (%) to capture the labour market conditions due to the issues raised by the use of unemployment data (pintilescu and viorică, 2019; kitsos and bishop, 2018). the empirical research has two parts. in the first part, due to the short time period of data, we have used the panel data analysis and in the second part, in order to identify the country specific effects, we have applied the principal component regression. for panel data estimations, in terms of specification, we have chosen, as control variables, two components of the government size category from the heritage foundation index of economic freedom, the tax burden and the government spending, and the open markets pillar (from the same index) which includes the trade freedom, investment freedom and financial freedom. the hausman test has been applied to add fixed or random effects and, according to the results of this test, we have estimated a simple pooled ols model with country fixed effects. the econometric specifications used for panel data is as follows: 𝐺𝐺𝐺𝐺𝐺𝐺��� = 𝛽𝛽� + 𝛽𝛽�𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉��� + 𝛽𝛽�𝑅𝑅𝑉𝑉𝑅𝑅𝑅𝑅𝑅𝑅��� + 𝛽𝛽�𝐺𝐺𝑉𝑉𝐺𝐺𝑉𝑉𝐺𝐺𝐺𝐺𝐺𝑉𝑉𝐺𝐺𝐺𝐺��� + 𝛽𝛽�𝐺𝐺𝑉𝑉𝑅𝑅𝑉𝑉𝑃𝑃𝐺𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃��� + 𝛽𝛽�𝑅𝑅𝑅𝑅𝑅𝑅𝑉𝑉𝐺𝑅𝑅𝑃𝑃𝑅𝑅��� + 𝛽𝛽�𝐶𝐶𝑉𝑉𝐺𝐺𝐺𝐺𝑅𝑅𝐶𝐶𝑃𝑃��� + +𝛽𝛽�𝐺𝐺𝑉𝑉𝐺𝐺𝑉𝑉𝐺𝐺𝐺𝐺𝐺𝑃𝑃𝑉𝑉𝐺𝐺𝑉𝑉��� + 𝛽𝛽�𝑂𝑂𝐶𝐶𝑉𝑉𝐺𝐺𝐺𝑂𝑂𝑃𝑃𝐺𝐺𝑂𝑂𝑉𝑉𝑃𝑃𝑃𝑃��� + 𝜀𝜀��� (1) 𝐸𝐸𝐸𝐸𝐸𝐸𝐸𝐸��� = 𝛽𝛽� + 𝛽𝛽�𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉𝑉��� + 𝛽𝛽�𝑅𝑅𝑉𝑉𝑅𝑅𝑅𝑅𝐸𝐸��� + 𝛽𝛽�𝐺𝐺𝑉𝑉𝐺𝐺𝑉𝑉𝐺𝐺𝐺𝐺𝐺𝑉𝑉𝐺𝐺𝐺𝐺��� + 𝛽𝛽�𝑃𝑃𝑉𝑉𝐸𝐸𝑉𝑉𝑃𝑃𝐺𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃��� + 𝛽𝛽�𝑅𝑅𝑅𝑅𝐸𝐸𝑉𝑉𝐺𝐸𝐸𝑃𝑃𝑅𝑅��� + 𝛽𝛽�𝐶𝐶𝑉𝑉𝐺𝐺𝐺𝐺𝑅𝑅𝐸𝐸𝑃𝑃��� + +𝛽𝛽�𝐺𝐺𝑉𝑉𝐺𝐺𝑉𝑉𝐺𝐺𝐺𝐺𝐺𝑃𝑃𝑉𝑉𝐺𝐺𝑉𝑉��� + 𝛽𝛽�𝑂𝑂𝐸𝐸𝑉𝑉𝐺𝐺𝐺𝐸𝐸𝑃𝑃𝐺𝐺𝑂𝑂𝑉𝑉𝑃𝑃𝑃𝑃��� + 𝜀𝜀��� (2) where gdpi,t is the gdp growth rate (%) and empli,t is the employment rate (%). the coefficients βi, i=1,2,3,4,5,6 are the coefficients associated with the explanatory variables and the term ε is the error term, i indicates the countries and t the time period. for principal component regression, we first applied the principal component analysis in order to extract the factors that explain the most important variance of the variables. the selection of factors is based on kaiser’s criteria, which corresponds to eigenvalues greater than 1, and on the percentage of variance explained by each factor. the factors extracted were then used as explanatory variables in the econometric models, considering the same two measures for economic resilience, gdp growth rate and employment rate, as dependent variables. 4. empirical analysis the analysis presented in this section highlights the institutional dynamics in ceecs in relation with the economic dynamics reflected through gdp and employment, as key indicators for reflecting the economic resilience performance. 84 4.1 dataset description in terms of institutional dynamics, the literature is highly divided between the ‘path dependency’ perspective, the institutions’ stability and rigidity (particularly in the case of the informal ones) and the evolutionist perspective, i.e., of institutional transformation as a reaction to various stressors or alteration of the social, economic or political context through reforms (pascariu and țigănașu, 2017). looking at the ceecs, based on the institutional indicators included in our analysis, we first found a high institutional instability. given the fact that all ceecs, particularly estonia, latvia, lithuania (figure 7, annex 1), registered significant gdp falls in the first year after the onset of the crisis, we are obviously wondering whether, prior to the 2008/2009 crisis, there had been an institutional deterioration associated with a low resistance capacity in these countries. regarding the institutional dynamics, beyond existing differences, we generally observe a positive evolution in the period before the crisis in terms of political stability (figure 2, annex 1), of regulatory quality (figure 4, annex 1), rule of law, while government effectiveness (figure 3, annex 1), voice and accountability (figure 1, annex 1) and control of corruption (figure 6, annex 1) have deteriorated. after the crisis, the most unfavorable evolution was registered in terms of voice and accountability (except estonia), political stability (except estonia, croatia and lithuania). it is also worth mentioning the fact that, as a whole, the institutional climate in ceecs improved during the period under analysis (except in hungary and poland), particularly in terms of regulatory quality, rule of law, government effectiveness and control of corruption although, in most cases, the values prior to the crisis were not reached, thus reflecting a low level of institutional resilience. high heterogeneity is another important observation deriving from the analysis of the linkages between institutional dynamics and economic dynamics. a pattern able to cluster these countries based on the quality of institutions or economic performance could not be identified; consequently, a detailed country-analysis, whose conclusions are illustrated in 4.3, became necessary. moreover, given the fact that economic growth rates did not reach the levels before the crisis, we notice that the instability of institutions and their low resilience occurred not only in relation with ceecs’ limited capacity to resist to shocks but also with their limited recovery capacity. the evolution of the gdp growth rate in ceecs between 1996–2019 was clearly related, at least during the first stage, to the market economy transition process and to the reforms undertaken with this purpose by each country. the integration process also implied institutional transformations and economic restructuring adapted to the already existing national models. hence, the heterogeneity of the situations which followed the severe economic downturn in the early 1990s and which were further reflected during the 2008/2009 crisis (iacobuță, asandului and căutișanu, 2020). overall, the gdp growth rate significantly declined from 2008 to 2009 and, in the post-crisis period, the evolution is, in most cases, positive although it has not reached the pre-crisis level, except in the case of hungary. 85 also, the labor market proved highly resilient and absorbed the shock without any effects on its growth tendency: at the end of the period under analysis, all ceecs registered employment levels above the ones before the crisis. in correlation with the gdp dynamics, it is shown that the economic growth was rather extensive than productivity-based which points to the fact that the growth model was not more efficient and, consequently, implied no improvement in terms of resilience capacity. 4.2 panel data estimations according to hausman test results, we estimated a simple pooled ols model with country fixed effects, taking into account the gdp growth rate (%) and employment rate (%) as dependent variables (table 1). we chose this model to capture heterogeneity between countries through the individual intercept value. table 1: coefficients for the panel data estimations using as dependent variables gdp growth rate (%) and employment rate (%) variables model with gdp growth rate model with employment rate constant 3.402 (2.423) 78.945*** (1.341) voice and accountability -0.707 (1.831) -10.402*** (1.105) regulatory quality -0.309 (1.501) 0.062 (0.807) government effectiveness 1.896 (1.822) 1.529* (0.894) political stability 2.173** (1.108) -1.990** (0.520) rule of law -9.353*** (1.995) 6.057*** (0.989) control of corruption 5.898*** (1.605) 2.183** (0.786) government size -0.006 (0.018) 0.003 (0.009) open markets 0.024 (0.025) -0.0008 (0.013) adjusted r2 0.106 0.851 f-statistic 2.735 84.641 observations 264 264 standard errors in parentheses. ***p<0.01; **p<0.05; *p<0.1. the estimations show the statistically significant influence of political stability, rule of law, and control of corruption on the gdp growth rate. political stability, and control of corruption react positively to increasing gdp growth rate among ceecs, while the rule of law has a negative influence. for employment rate, estima86 tions show a significant statistical influence of voice and accountability, government effectiveness, political stability, rule of law, and control of corruption. voice and accountability, and political stability have a negative influence on employment rate, while government effectiveness, rule of law, and control of corruption have a positive influence. according to our results, the institutions under analysis in this research have a stronger impact on the labor market than on the economy, as a whole. voice and accountability has a negative impact on the gdp and employment rate although statistically insignificant on gdp. the explanation may reside in the fact that, in these countries, where systems were adapted to an autocratic rather than democratic regime, reforms acted as a shock. for example, sirowy and inkeles (1990) mention an untrade-off between democracy and economic growth which seems to apply in the ceecs’ case. under the impact of integration, these countries rapidly adopted democratic reforms by pushing governments towards growth-oriented policies with negative effects on the labor market which is, generally, a rigid one. in countries with a long history under authoritarian regimes, democratic systems’ implementation is generally associated with a period of reduced public policies’ effectiveness. as for political stability and control of corruption, our gdp analysis shows that they both encourage investments, capital accumulation, business development and quality of institutions and that they have a strong direct effect (samarasinghe, 2018). unlike control of corruption, which has a constant positive impact on the labor market, political stability has a negative one. one possible explanation for this may be in the fact that, in these countries, political parties are still young, with a rather fluctuant electorate and, once in power, they try to hold on to it (i.e., the electorate) by complying with salary claims, by raising the minimum wage, by granting various social benefits and incentives to companies for hiring certain social groups, thus stimulating the labor market and triggering positive effects on employment. in a context of political stability, these benefits are no longer granted and the effect on employment becomes negative. finally, the rule of law provides predictability on the labor market and stimulates employment but, at the same time, the induced institutional rigidity reduces the capacity of the economy to find bottom-up solutions, to innovate and create new institutions in real time when the old ones prove inefficient in case of a shock and, in this case, the relation with the economic dynamics is a negative one. although it strengthens the resistance of the system, the rule of law limits recovery opportunities. obviously, beyond these general results, we find situations which are specific to each country. in order to test the null hypothesis of homogenous coefficients in the panel structure, we perform the wald test. the results obtained show the presence of heterogeneity for the estimated models. due to the countries’ heterogeneity, we will continue our analysis using country-specific estimations. 87 4.3 country-specific estimations for the identification of the country-specific characteristics, we applied principal component regression. we chose this method in order to avoid the multicollinearity between variables. we first performed a principal component analysis (pca) in order to select the factors that explain the most important part of the variance of statistical variables. the selection of factors is based on kaiser’s criteria, which corresponds to eigenvalues greater than 1, and on the percentage of variance explained by each factor. the variables that explain these factors were selected according to their factor loadings, higher than 0.7. the factors extracted were then used as explanatory variables in the econometric models, considering the gdp growth rate and employment rate as dependent variables. 4.3.1 selection of the factors by applying pca and using varimax as a method of rotation of the axes, we extracted the factors that explain the most important part of the variance of statistical variables. put otherwise, institutions were grouped depending on the annual amplitude of the statistical variance, with f1 including factors with the highest instability and f2 including factors with the lowest instability (table 2). in the next stage, by using regression analysis, we could determine those institutions which play a key role in economic resilience, thus correlating the institutions’ dynamics with economic dynamics and enabling the assessment of the resilience of countries under analysis during the 2008/2009 crisis from a new perspective, which has not been specifically dealt with so far in the literature. according to the data in table 2, instability was the main characteristic of the institutional systems in these countries in the period under analysis. for the majority of countries, most of the analyzed variables cluster in factor 1 (with strong annual variations): regulatory quality (9 countries), rule of law (8 countries), government effectiveness (7 countries) and, to a lower extent, voice and accountability (6 countries). political stability and control of corruption were relatively more stable. the analysis also highlights the heterogeneity of institutional transformations in these countries, which points to the importance of adopting ‘institutions–sensitive’ policies in resilience-based approaches, particularly when significant conditionality on the economic system is identified. in order to assess these conditionalities and to consequently evaluate the extent to which the identified factors have an impact on economic resilience as well as how powerful the interdependecies between institutional and economic dynamics are in each analyzed country, factor 1 and factor 2 were included in the regression analysis as explanatory variables for both gdp growth rate and employment rate. 88 table 2: factors loadings for the factors extracted by applying pca countries factors extracted voice and accountability political stability government effectiveness regulatory quality rule of law control of corruption bulgaria factor 1 0.915 0.851 0.907 factor 2 0.909 0.760 croatia factor 1 0.859 0.717 0.894 factor 2 0.890 0.717 0.776 czech republic factor 1 0.852 0.888 0.770 0.833 factor 2 0.905 estonia factor 1 0.942 0.763 0.935 0.845 0.905 factor 2 -0.957 hungary factor 1 0.883 0.946 0.868 0.792 factor 2 0.956 0.730 latvia factor 1 0.905 0.956 0.951 0.924 factor 2 0.981 lithuania factor 1 0.916 0.854 0.805 0.712 factor 2 0.918 0.919 poland factor 1 0.878 0.773 factor 2 0.924 0.825 romania factor 1 0.873 0.874 0.934 factor 2 -0.935 slovakia factor 1 0.876 0.934 0.873 0.91 factor 2 -0.873 0.753 slovenia factor 1 0.869 0.844 -0.758 factor 2 0.905 4.3.2 regression coefficients by clustering institutions with the most significant annual variation (instability which can be associated with the institutional weakness in these countries as well as with a high transformation/adaptation potential), factor 1 had a relevant statistical impact on economic growth which was lower compared to that on the labor market. the effects on economic growth were statistically relevant only in the case of hungary (f1 including government effectiveness, regulatory quality, and rule of law) and of slovenia (f1 including voice and accountability, political stability, and government effectiveness) (table 2 and table 3), while in terms of employment rate, these were relevant in bulgaria, estonia, hungary, latvia, lithuania, poland and slovenia (table 4). 89 table 3: regression coefficients for the econometric models with gdp growth rate as dependent variable f1 f2 bulgaria regr. coeff. std. coeff. t-statistic 1.562 0.314 1.647 1.863* 0.374 1.964 croatia regr. coeff. std. coeff. t-statistic 0.740 0.231 1.445 -2.056*** -0.641 -4.016 czech republic regr. coeff. std. coeff. t-statistic -0.142 -0.054 -0.247 -0.307 -0.116 -0.537 estonia regr. coeff. std. coeff. t-statistic -0.919 -0.167 -0.821 -1.788 -0.325 -1.598 hungary regr. coeff. std. coeff. t-statistic -0.876* -0.329 -1.956 1.457** 0.547 3.254 latvia regr. coeff. std. coeff. t-statistic -1.326 -0.237 -1.232 2.263** 0.405 2.101 lithuania regr. coeff. std. coeff. t-statistic 0.487 0.098 0.456 -0.722 -0.145 -0.676 poland regr. coeff. std. coeff. t-statistic -0.498 -0.310 -1.515 -0.263 -0.164 -0.801 romania regr. coeff. std. coeff. t-statistic 0.808 0.194 1.009 1.811** 0.434 2.261 slovakia regr. coeff. std. coeff. t-statistic 0.039 0.012 0.056 0.511 0.160 0.742 slovenia regr. coeff. std. coeff. t-statistic 1.188* 0.395 1.997 -0.439 -0.146 -0.738 *p<0.10; **p<0.05; ***p<0.01 table 4: regression coefficients for the econometric models with employment rate as dependent variable f1 f2 bulgaria regr. coeff. std. coeff. t-statistic 2.262** 0.659 4.338 -0,983* -0.286 -1.886 croatia regr. coeff. std. coeff. t-statistic -0.056 -0.041 -0.220 0.684** 0.508 2.705 czech republic regr. coeff. std. coeff. t-statistic 0.260 0.141 0.697 0.629 0.343 1.690 estonia regr. coeff. std. coeff. t-statistic 1.463*** 0.698 6.721 1.122*** 0.535 5.152 hungary regr. coeff. std. coeff. t-statistic -3.732*** -0.834 -10.957 -1.913*** -0.428 -5.617 latvia regr. coeff. std. coeff. t-statistic 2.453*** 0.895 10.124 -0.505** -0.184 -2.085 lithuania regr. coeff. std. coeff. t-statistic 0.392* 0.188 1.773 1.782*** 0.854 8.062 poland regr. coeff. std. coeff. t-statistic 1.004** 0.625 3.801 -0.333 -0.207 -1.260 romania regr. coeff. std. coeff. t-statistic -0.859 -0.342 -1.688 -0.335 -0.134 -0.658 slovakia regr. coeff. std. coeff. t-statistic -0.148 -0.163 -0.849 0.406** 0.447 2.332 slovenia regr. coeff. std. coeff. t-statistic -1.331*** -0.698 -4.483 0.105 0.055 0.355 *p<0.10; **p<0.05; ***p<0.01 with a different f1 structure from one country to another, the linkages between institutional dynamics and economic resilience are obviously extremely heterogenous. however, we may observe that there are some similarities between bulgaria, estonia, hungary, latvia and lithuania in terms of three common components which had an impact on the labor market dynamic: government effectiveness, regulatory quality, and rule of law. voice and accountability is another statistically relevant factor in terms of impact; nevertheless, it is associated with a different group of countries: estonia, hungary, poland and slovenia. government effectiveness and rule of law are generally identified as elements whose dynamics influences economic resil90 ience in most of the countries under analysis. as far as the f2 factor is concerned, by clustering lower variation institutions, the impact on the gdp growth rate proves statistically significant in a number of countries: bulgaria, croatia, hungary, latvia and romania (table 3); as far as employment rate is concerned, it is statistically significant in bulgaria, croatia, estonia, hungary, latvia, lithuania and slovakia (table 4). however, this time, the more relevant indicators were political stability, government effectiveness, and control of corruption. it is also important to note the fact that in 9 countries, the impact of the institutional dynamic was negative either on the gdp/ employment rate or on both variables (table 3 and table 4) although not statistically significant in all cases, as seen above. the most serious negative relations on the gdp rate were identified in croatia, hungary and slovenia, while the most serious negative relations on the employment rate were identified in hungary. thus, with the specific statistical analysis limitations in mind, we may assume the fact that, as a result of the institutional system’s resilient adaptability, the institutional dynamics in these countries has had a rather negative than transformative impact on economic resilience. moreover, during the period under analysis (1996–2019), ceecs went through various fundamental transformations (economic, social, legislative, institutional) and, at the same time, became acquainted with the integration process dynamics. following the accession waves of 2004 and 2007, legislation adaptation to european norms generated a convergence process. however, as a consequence of the 2008/2009 crisis, of the refugee crisis, of the eu eastern border conflict, macroeconomic instability, corruption intensification, violation of norms and regulations, political instability, excessive bureaucracy, protests, etc. became more and more apparent and further deepened economic and institutional vulnerabilities in this part of europe. also, in these countries, the attempt to adapt the new democratic values to the lingering systems of former autocratic regimes has limited the efficiency of growth policies. 5. conclusions in the context of the crisis generated by the covid-19 pandemic, the analysis of resilience and of the factors which influence it is a key topic at the international level. this pandemic seriously challenges the idea of governance and the governments’ capacity to manage change in highly uncertain conditions (țiclău, hințea and andrianu, 2020). the 2020 rule of law report of the european commission draws attention to the fact that the current health crisis represents a ‘stress test for rule of law resilience’ (european commission, 2020b, p. 6), while the oecd report (2020) supports the major role that some resilient institutions have in ‘navigating’ through the crisis. hence, the need to seriously consider the significance that institutional arrangements have in consolidating economic resilience in this period becomes urgent. the paper highlights the influence of institutional factors and of institutions’ dynamics, in particular, on the economic resilience of ceecs – eu member states. on 91 the one hand, we have aimed to analyze whether institutional factors have influenced economic resilience and to identify those institutions which have had a stronger influence on economic resilience; on the other hand, we have aimed to emphasize how institutional dynamics influences economic resilience. our results are in line with previous studies (european central bank, 2016; sonderman, 2017), thus confirming the influence of institutional factors on economic resilience. our panel data estimations show the statistically significant determinism of political stability, rule of law, and control of corruption on the gdp growth rate. regarding the employment rate, the institutional variables voice and accountability, and political stability have a negative influence on it, while government effectiveness, rule of law, and control of corruption have a positive influence. we note the fact that the rule of law and control of corruption influence both variables measuring the economic resilience in our study. this aspect essentially shows that, to a great extent, economic resilience depends on the rule of law and control of corruption. moreover, in the literature, as well as in official documents, both institutional factors are referred to in close relation with resilience issues. the importance of the rule of law in consolidating economic resilience is the focus of numerous studies and reports (ebbesson, 2010; european commission, 2020b) and, as far as corruption is concerned, we may refer, for example, to osei’s empirical study (2011) which demonstrates that corruption, closely related to the quality of government, and as an obvious effect of poor governance, negatively influences economic resilience. also, the estimations we have reached support the fact that, in many ceecs, the institutional factors selected after pca have a higher significant statistical influence on the employment rate compared to the gdp growth rate, thus demonstrating that the labor market in these countries is more sensitive to the quality of the institutional environment and, at the same time, more resilient. we believe this conclusion is very important given the role that the labor market has in ex-post resilience (european central bank, 2016) or, put otherwise, in the recovery period. the analysis of country-specific characteristics has enabled us to identify the interdependencies between economic resilience and institutions’ dynamics. the research has essentially emphasized the institutional instability and the heterogeneity of interdependencies with the gdp growth rate and employment rate as indicators used to reflect resilience performance; for this reason, we are unable to identify a pattern for these interdependencies. the bottom line is that, in many of the countries under analysis, institutional instability had a negative effect on economic resilience, which means that ceecs’ institutions are rather fragile, with a low resilience capacity and ability to adapt/recover in crisis conditions or to support transformative processes in their economies. from the resilience-based policies’ point of view, firstly, the need to have a strong institutionalist perspective, focused on those institutions which are particularly relevant in increasing resilience performance in these countries, is urgent. secondly, the heterogeneity of conditionalities identified in our analysis draws attention to the 92 risk implied by using a standard approach, common to all countries, and to reducing institutionalist approaches in these states to the potential convergence generated by integration. consequently, the ‘recovery and resilience’ concerns at the eu level must go beyond investment and development 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(politics and development. romania where to?), bucurești: trei, 2001. 96 a n n ex 1 : d at as et d es cr ip ti on v oi ce a nd a cc ou nt ab ili ty v oi ce a n d ac co u n ta bi li ty a ss es se s th e p er ce p ti on s of t h e ex te n t to w h ic h a c ou n tr y ’s c it iz en s ar e ab le t o p ar ti ci p at e in s el ec tin g th ei r go ve rn m en t, a s w el l as f re ed om o f ex p re ss io n , f re ed om o f as so ci at io n , a n d fr ee m ed ia . .3.4.5.6.7 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia -.4-.2.0.2.4.6.8 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia 0. 7 0. 8 0. 9 1. 0 1. 1 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p 0. 9 1. 0 1. 1 1. 2 1. 3 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y .6 5 .7 0 .7 5 .8 0 .8 5 .9 0 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia 0. 84 0. 88 0. 92 0. 96 1. 00 1. 04 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia 0. 6 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d .2 5 .3 0 .3 5 .4 0 .4 5 .5 0 .5 5 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia 0. 6 0. 7 0. 8 0. 9 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia 0. 9 1. 0 1. 1 1. 2 1. 3 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia fi gu re 1 : t he va lu es fo r v oi ce a nd a cc ou nt ab ili ty fo r 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld w id e go ve rn an ce in di ca to rs , [o nl in e] a va ila bl e at h ttp s: //i nf o. w or ld ba nk .o rg /g ov er na nc e/ w gi /, ac ce ss ed o n ju ly 10 , 2 02 1. 97 po lit ic al s ta bi lit y an d ab se nc e of v io le nc e/ te rr or is m t h is i n di ca to r m ea su re s p er ce p ti on s of t h e li ke li h oo d of p ol it ic al i n st ab il it y a n d/ or p ol it ic al ly m ot iv at ed v io le n ce , i n cl u di n g te rr or is m . -.2.0.2.4.6 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia -0 .20. 0 0. 2 0. 4 0. 6 0. 8 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p 0. 5 0. 6 0. 7 0. 8 0. 9 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia 0. 4 0. 6 0. 8 1. 0 1. 2 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y 0. 0 0. 2 0. 4 0. 6 0. 8 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia 0. 0 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d -.4-.2.0.2.4.6.8 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia 0. 8 0. 9 1. 0 1. 1 1. 2 1. 3 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia fi gu re 2 : t he va lu es fo r p ol iti ca l s ta bi lit y f or 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld w id e go ve rn an ce in di ca to rs , [o nl in e] a va ila bl e at h ttp s: //i nf o. w or ld ba nk .o rg /g ov er na nc e/ w gi /, ac ce ss ed o n ju ly 10 , 2 02 1. 98 g ov er nm en t ef fe ct iv en es s g ov er n m en t ef fe ct iv en es s ca p tu re s p er ce p ti on s of t h e qu al it y o f p u bl ic s er vi ce s, t h e qu al it y o f th e ci vi l s er vi ce a n d th e de gr ee of i ts i n de p en de n ce f ro m p ol it ic al p re ss u re s, t h e qu al it y o f p ol ic y f or m u la ti on a n d im p le m en ta ti on , an d th e cr ed ib il it y o f th e go ve rn m en t’ s co m m it m en t to s u ch p ol ic ie s. -.4-.2.0.2.4 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia .0.2.4.6.8 96 98 0 0 02 04 06 08 10 12 14 16 18 c r o a t ia 0. 6 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia 0. 0 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia .3.4.5.6.7.8.9 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d -.6-.5-.4-.3-.2-.1.0 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia 0. 4 0. 5 0. 6 0. 7 0. 8 0. 9 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia fi gu re 3 : t he va lu es fo r g ov er nm en t e ffe ct ive ne ss fo r 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld w id e go ve rn an ce in di ca to rs , [o nl in e] a va ila bl e at h ttp s: //i nf o. w or ld ba nk .o rg /g ov er na nc e/ w gi /, ac ce ss ed o n ju ly 10 , 2 02 1. 99 re gu la to ry q ua lit y r eg u la to ry q u al it y c ap tu re s p er ce p ti on s of t h e ab il it y o f th e go ve rn m en t to f or m u la te a n d im p le m en t so u n d p ol ic ie s an d re gu la ti on s th at p er m it a n d p ro m ot e p ri va te s ec to r de ve lo p m en t. -.2.0.2.4.6.8 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia -.2.0.2.4.6 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia 0. 6 0. 8 1. 0 1. 2 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p 1. 2 1. 3 1. 4 1. 5 1. 6 1. 7 1. 8 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia 0. 4 0. 6 0. 8 1. 0 1. 2 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 1. 3 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia 0. 7 0. 8 0. 9 1. 0 1. 1 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d 0. 6 0. 8 1. 0 1. 2 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia -.2.0.2.4.6.8 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia 0. 5 0. 6 0. 7 0. 8 0. 9 1. 0 1. 1 96 98 00 02 04 06 08 10 12 14 16 18 s e r 01 fi gu re 4 : t he va lu es fo r r eg ul at or y q ua lit y f or 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld w id e go ve rn an ce in di ca to rs , [o nl in e] a va ila bl e at h ttp s: //i nf o. w or ld ba nk .o rg /g ov er na nc e/ w gi /, ac ce ss ed o n ju ly 10 , 2 02 1. 100 ru le o f la w t h e r u le o f la w i n de x as se ss es t h e ex te n t to w h ic h c ou n tr ie s/ te rr it or ie s ad h er e to t h e ru le o f la w i n p ra ct ic e by e xa m in in g ei gh t fa ct or s, n am el y , co n st ra in ts o n g ov er n m en t p ow er s, a bs en ce o f co rr u p ti on , op en g ov er n m en t, f u n da m en ta l ri gh ts , or de r an d se cu ri ty , r eg u la to ry e n fo rc em en t, c iv il j u st ic e an d cr im in al j u st ic e. -.4-.3-.2-.1.0.1 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia -.8-.6-.4-.2.0.2.4.6 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia 0. 6 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p 0. 4 0. 6 0. 8 1. 0 1. 2 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia 0. 2 0. 4 0. 6 0. 8 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y 0. 0 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia 0. 2 0. 4 0. 6 0. 8 1. 0 1. 2 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia .3.4.5.6.7.8.9 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d -.4-.2.0.2.4 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia .1.2.3.4.5.6.7 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia 0. 8 0. 9 1. 0 1. 1 1. 2 1. 3 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia 0. 5 0. 6 0. 7 0. 8 0. 9 1. 0 1. 1 96 98 00 02 04 06 08 10 12 14 16 18 s e r 01 fi gu re 5 : t he va lu es fo r r ul e of la w fo r 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld w id e go ve rn an ce in di ca to rs , [o nl in e] a va ila bl e at h ttp s: //i nf o. w or ld ba nk .o rg /g ov er na nc e/ w gi /, ac ce ss ed o n ju ly 10 , 2 02 1. 101 c on tr ol o f co rr up ti on c on tr ol o f co rr u p ti on c ap tu re s p er ce p ti on s of t h e ex te n t to w h ic h p u bl ic p ow er i s ex er ci se d fo r p ri va te g ai n , i n cl u di n g bo th p et ty a n d gr an d fo rm s of c or ru p ti on , a s w el l as ‘ ca p tu re ’ of t h e st at e by e li te s an d p ri va te i n te re st s. -.4-.3-.2-.1.0.1.2 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia -.6-.4-.2.0.2.4 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia .2.3.4.5.6.7 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p 0. 4 0. 6 0. 8 1. 0 1. 2 1. 4 1. 6 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia .0.2.4.6.8 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y -.4-.2.0.2.4.6 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia .0.2.4.6.8 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia 0. 0 0. 2 0. 4 0. 6 0. 8 1. 0 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d 0. 6 0. 8 1. 0 1. 2 1. 4 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia -.8-.6-.4-.2.0 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia -.1.0.1.2.3.4.5 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia 0. 7 0. 8 0. 9 1. 0 1. 1 1. 2 1. 3 96 98 00 02 04 06 08 10 12 14 16 18 s e r 01 fi gu re 6 : t he va lu es fo r c on tro l o f c or ru pt io n fo r 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld w id e go ve rn an ce in di ca to rs , [o nl in e] a va ila bl e at h ttp s: //i nf o. w or ld ba nk .o rg /g ov er na nc e/ w gi /, ac ce ss ed o n ju ly 10 , 2 02 1. 102 g d p gr ow th r at e (% ) – a n n u al p er ce n ta ge g ro w th r at e of g d p a t m ar ke t p ri ce s ba se d on c on st an t lo ca l cu rr en cy -1 5 -1 0-50510 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia -8-4048 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia -6-4-202468 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p -1 5 -1 0-5051015 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia -8-4048 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y -1 5 -1 0-5051015 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia -1 6 -1 2-8-404812 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia 02468 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d -8-404812 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia -8-404812 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia -8-4048 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia fi gu re 7 : t he va lu es fo r g dp g ro w th ra te fo r 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: w or ld b an k, w or ld d ev el op m en t i nd ic at or s, [o nl in e] a va ila bl e at h ttp s: //d at ab an k. w or ld ba nk .o rg /s ou rc e/ w or ld -d ev el op m en t-i nd ic at or s, ac ce ss ed o n ju ly 10 , 2 02 1. 103 em pl oy m en t r at e (% ) – t h e em p lo y m en t ra te is c al cu la te d by d iv id in g th e n u m be r of p er so n s ag ed 2 0 to 6 4 in e m p lo y m en t by th e to ta l p op u la ti on o f th e sa m e ag e gr ou p . 6468727680 96 98 00 02 04 06 08 10 12 14 16 18 b u lg a r ia 676869707172 96 98 00 02 04 06 08 10 12 14 16 18 c r o a t ia 7476788082 96 98 00 02 04 06 08 10 12 14 16 18 c z e c h _r e p u b li c 7678808284 96 98 00 02 04 06 08 10 12 14 16 18 e s t o n ia 606468727680 96 98 00 02 04 06 08 10 12 14 16 18 h u n g a r y 6870727476 96 98 00 02 04 06 08 10 12 14 16 18 p o la n d 747678808284 96 98 00 02 04 06 08 10 12 14 16 18 li t h u a n ia 72747678808284 96 98 00 02 04 06 08 10 12 14 16 18 la t v ia 666870727476 96 98 00 02 04 06 08 10 12 14 16 18 r o m a n ia 7475767778 96 98 00 02 04 06 08 10 12 14 16 18 s lo v a k ia 7274767880 96 98 00 02 04 06 08 10 12 14 16 18 s lo v e n ia fi gu re 8 : t he va lu es fo r e m pl oy m en t r at e fo r 1 1 ce nt ra l a nd e as te rn e ur op ea n co un tri es fr om 1 99 6 un til 2 01 9 da ta s ou rc e: e ur os ta t, [o nl in e] a va ila bl e at h ttp s: //e c. eu ro pa .e u/ eu ro st at /w eb /m ai n/ da ta /d at ab as e, ac ce ss ed j ul y o n 10 , 2 02 1.